Kulim Bursa.indb - Bursa Malaysia Stock

Transcription

Kulim (Malaysia) Berhad (23370-V)
We CARE for
Tomorrow
Suite 12B, Level 12
Menara Ansar
65 Jalan Trus
80000 Johor Bahru
Johor
MALAYSIA
Tel
Fax
Email
Website
+607 226 7692
+607 226 7476
+607 222 3044
+607 222 3022
info@kulim.com.my
www.kulim.com.my
Annual Report | 2011
We CARE for Tomorrow
Annual Report 2011
CONTENTS
SECTION 1: 2011 Synopsis
4
5
6
22
24
26
29
30
2011 Highlights
Simplified Group Statement of Financial Position
Statement to Stakeholders
Corporate Event Highlights 2011
Sustainability Event Highlights 2011
Recognitions and Accreditations
In the News
Financial Calendar
SECTION 2: About Kulim
34
37
40
42
44
53
55
Corporate Profile
Corporate Milestones
Group’s Significant Subsidiaries
Corporate Information
Board of Directors
Management Team
Organisation Chart
WE C.A.R.E
SECTION 3: Performance
Highlights and Statistics
Kulim (Malaysia) Berhad believes that the spirit of caring is
58
61
62
63
integral to the prosperity and survival of our business.
Our concept of caring integrates and extends beyond our
capital providers, to include our employees, our society and
COMPETITIVE
capacity with intense biasness towards ACTION in generating
our environment. It means building our
profitable growth whilst being firmly guided by our pledge to
be
RESPONSIBLE and ETHICAL.
We CARE, so we ensure our shareholders are rewarded with
superior returns.
We CARE, so we teach and nurture the same spirit among
our employees.
67
68
69
71
73
Group 5-Year Financial Statistics
Group Quarterly Performance 2011
Group Statement of Value Added
5-Year Plantation Statistics:
•
Group
•
Malaysia
•
Papua New Guinea
•
Solomon Islands
5-Year Foods and Restaurants Statistics
Human Capital Statistics
Shareholding Statistics
Warrantholding Statistics
Share Price Performance and Volume Traded 2011
SECTION 4: Segment Review
We CARE, so we contribute and enrich the lives of our
community and society.
We CARE, so we treat the earth with respect for it has given
us our reason for being.
We
CARE, so we share…
Plantation
76
100 Foods and Restaurants
108 Intrapreneur Ventures
SECTION 5: Sustainability
116 PART I: Kulim’s Sustainability in Context
•
Policy Framework
•
Policy, Strategy and Management System
•
Stakeholders Engagement
•
Commitments and Targets
122 PART II: Environmental Performance
•
Protecting and Conserving Biodiversity
•
Water Conservation
•
Addressing Climate Change Issues
128 PART III: Social Performance
136
•
Labour Standards
•
Employees Retention
•
Occupational Health and Safety
•
Empowering Women
•
Community and Economic Contributions
PART IV: Doing Our Part for the Palm Oil Supply Chain
SECTION 6: Governance Statement
142
153
160
164
165
Corporate Governance Report
Internal Control Statement
Audit Committee Report
Additional Compliance Information
Additional Disclosure
SECTION 7: Financial Statements
VISION
DELIVERING VALUE
To excel in delivering value to all our stakeholders
through high performance teams who are committed
to the highest standards of ethics, integrity and
professionalism.
167 Group Financial Statements
SECTION 8: Other Corporate Information
280 Locations of the Group’s Palm Oils Division Operations
282 Properties of the Group
MISSION
•
Malaysia
We aim to be the most progressive, efficient, profitable
and respectable corporate organisation.
•
Papua New Guinea
We shall:
•
Solomon Islands
•
Enhance and deliver value to the stakeholders
•
Optimise the use of resources
•
Produce superior quality products
•
Be a socially and environmentally responsible
corporate citizen
•
Operate with due regard for the welfare, health and
safety of employees, the local community and the
wider public.
Notice of Annual General Meeting
297
301 Statement Accompanying Notice of Annual General Meeting
Proxy Form
SECTION 1: 2011 SYNOPSIS
4
2011 HIGHLIGHTS
5
SIMPLIFIED GROUP STATEMENT OF FINANCIAL POSITION
6
STATEMENT TO STAKEHOLDERS
22
CORPORATE EVENT HIGHLIGHTS 2011
24
SUSTAINABILITY EVENT HIGHLIGHTS 2011
26
RECOGNITIONS AND ACCREDITATIONS
29
IN THE NEWS
30
FINANCIAL CALENDAR
C
OUR COMPETITIVE SPIRIT WILL CONTINUE TO DRIVE US TO FORGE
AHEAD EXPANDING OUR MARKET REACH AND GLOBAL PRESENCE
OUR VISION IS CLEAR AND RESOLUTE – TO DELIVER VALUE TO OUR STAKEHOLDERS. IMPERATIVE TO
THE REALISATION OF THE SET VISION AND ULTIMATELY OUR SURVIVAL IS OUR ABILITY TO COMPETE
IN THE FAST-CHANGING AND DYNAMIC MARKET PLACE. THE THRUST TO OUR COMPETITIVENESS LIES
IN OUR FAR-SIGHTED STRATEGY, BEING DRIVEN BY A CUSTOMER-CENTRIC AND MARKET-ORIENTED
ATTITUDE, COMPETENT WORKFORCE, COHESIVE TEAMWORKING AND MORE PROFOUNDLY,
A PASSION FOR EXCELLENCE.
4
| annual report 2011
2011 HIGHLIGHTS
PBT from continuing operations
Revenue
28.3
RM7,041.77 M
75.4
RM1,364.80 M
from RM5,488.94 million
from RM777.90 million
%
%
to
to
OPERATIONAL
2011
2010
– Group
24.36
21.66
– Malaysia
21.89
19.01
– PNG
25.49
23.60
– SI
24.37
21.97
– Group
22.07
21.78
– Malaysia
20.20
20.24
– PNG
22.85
22.42
– SI
21.86
21.63
Yield per hectare (tonnes)
OER (%)
SHAREHOLDERS’ RETURNS
2011
2010
%
sen
%
sen
– Interim
20
5.00
15
7.50
– Special
–
–
85
42.50
Gross dividends for year ended 31 December:
Share price (RM)
– Lowest
3.10
7.04
– Highest
4.22
14.20
annual report 2011 |
5
SIMPLIFIED GROUP STATEMENT OF FINANCIAL POSITION
TOTAL ASSETS
5%
6%
7%
8%
Property,
plant and equipment
8%
7%
Intangible assets
Investments
2%
2011
6%
2010
Inventories
Receivables
10%
Cash
11%
64%
66%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
7%
1% 3%
1% 2% 2%
13%
16%
9%
Share capital
9%
Other reserves
7%
Retained earnings
2011
21%
Non-controlling interests
2010
Borrowings
Deferred tax liabilities
23%
Payables
Current tax liabilities
21%
Others
23%
21%
21%
6
STATEMENT TO STAKEHOLDERS
To all our stakeholders,
On behalf of the Board of Kulim (Malaysia) Berhad (“Kulim” or “the Group”) we
are pleased to present the Annual Report and Audited Financial Statements
of the Group for the financial year ended 31 December 2011.
WE CARE FOR TOMORROW
The Group achieved a record breaking year with revenue in
excess of RM7 billion while for the first time ever, profit before
tax breached the billion mark, at RM1.36 billion. All 3 divisions:
Plantation, Foods and Restaurants and Intrapreneur Ventures,
contributed higher revenues and profits.
The achievement is a testament to the contributions of our
many stakeholders whose engagement helps drive our long-term
sustainability and shareholder’s value. Indeed, our stakeholders
have contributed immeasurably to the Group’s great success this
year with their unstinting support. We thank and congratulate
them on the deserved outstanding result achieved.
As the theme for the report this year – ‘We Care for Tomorrow’
suggests, we are setting in place a leaner organisational structure
to drive our strategy, drawing together, along with the right
systems, skills, people and shared values, all the elements to
forge a higher performance company that will deliver sustainable
returns for our shareholders in the coming years. All whilst taking
cognisance of our role and responsibilities as a sizable player in
our industries to help satisfy global needs while ensuring the
protection of the environment and care for the well-being of the
communities that we operate in.
In the Plantation Division, more milestones have been achieved.
Fruit production and profits hit record highs of 2.38 million tonnes
and RM1.13 billion, a reflection of both the excellent performance
by our operational personnel as well as the strong fundamentals
in the oils and fats markets during the year. Similarly important is
the fact that these encouraging results had been achieved as a
culmination of various key corporate exercises undertaken during
the past 2 years. Our London-listed subsidiary New Britain Palm
Oil Limited’s (“NBPOL”) palm oil refinery in Liverpool in the UK
continues to capture new markets and we will be commissioning
a bakery margarines and fats plant, whose products will be
sustainable and fully traceable.
Our Foods and Restaurants business opened more new outlets and
continues to invest in expanding the KFC franchise in India. Our
Intrapreneur Ventures Division has also shown improved results.
There remains much to be done to further enhance our
businesses to best position the Group to capitalise on all potential
opportunities and meet the challenges of tomorrow.
We are however quietly confident that our objective to promote
economically viable, socially equitable and environmentally
sustainable production, processing and trade of palm oil can
be achieved.
7
“THE GROUP ACHIEVED A RECORD BREAKING YEAR
WITH REVENUE IN EXCESS OF RM7 BILLION WHILE
FOR THE FIRST TIME EVER, PROFIT BEFORE TAX
BREACHED THE BILLION MARK, AT RM1.36 BILLION.“
KULIM AND SUSTAINABILITY
CORPORATE DEVELOPMENTS
We regard the sustainable palm oil
programme as one of our Corporate
Responsibility fundamentals. Our goal is to
integrate business into serving a higher social
cause, adding value to creation, embracing
the sustainable use of land and water,
advocating appropriate treatment of wildlife,
and leaving a lasting heritage for our future
generations. Our active representation in the
Roundtable on Sustainable Palm Oil (“RSPO”)
and the adoption of the RSPO Principles and
Criteria denote our systematic and planned
approach to achieve a balance between
People, Planet and Profit. Towards this end,
Kulim has established a comprehensive set of
policies and adopts an integrated approach
in developing the policy framework for our
sustainable development. Our environmental
performances on biodiversity and soil
conservation are covered in more detail in
this report along with coverage of our social
programmes and involvement with the
communities in which we operate and live.
Our sustainability policy framework interrelates with our Corporate Vision and Mission
and is embraced within our corporate
governance processes to ensure it has
direct relevance to the overall set corporate
strategy and direction. The policy thus serves
as the foundation and overriding philosophy
of the Group’s continuous progress towards
delivering value to all our stakeholders.
In March 2012, we embarked on a capital
restructuring exercise to make our shares
more affordable and enable a wider spread
of investors to participate in Kulim’s growth.
The exercise that involved share split,
issuance of bonus shares and free warrants,
has also helped to enhance the liquidity
and marketability of Kulim shares on the
Main Market of Bursa Securities. Kulim
currently has 1.26 billion tradable shares as
opposed to 312.35 million shares previously.
On top of that, the bonus shares and free
warrants have rewarded Kulim’s existing
shareholders for their continuous support
and will allow them to further participate
in the future growth of the Group when the
warrants are exercised.
Kulim at its core is an agriculture company
with palm oil as its dominant business.
Thus we were pleased that after repeated
pursuits, our majority shareholder, Johor
Corporation (“JCorp”), finally agreed to divest
a significant portion of its oil palm estates
to us. On 16 August 2011, Kulim announced
that its wholly-owned subsidiary, Mahamurni
Plantations Sdn Bhd (“MPSB”) had entered
into conditional Sale and Purchase
Agreements (“SPA”) with JCorp for the
proposed acquisition of 6 oil palm estates of
approximately 13,687 hectares, and 2 palm
oil mills, for a total consideration of RM700
million. An Extraordinary General Meeting
(“EGM”) was convened on 22 December 2011
and shareholders’ approval was obtained for
the proposed acquisition. As at 31 December
2011, Stage 1 of the proposed acquisition
involving Sungai Papan Estate and Siang
Estate was completed, injecting some 6,000
hectares of productive oil palm estates
into the Group. Stage 2 of the proposed
acquisition is targeted for completion within
the first half of 2012.
For several years, our then listed subsidiary,
Sindora Berhad, had failed to meet the
shareholding spread requirement of a
listed entity. On 16 August 2011, Kulim
announced a voluntary general offer to
acquire the remaining Sindora shares at an
offer price of RM3 per share. The offer price
was subsequently revised to RM3.10 per
share in September 2011. Subsequently on
25 October 2011, Kulim announced that it
had acquired greater than nine tenth (9/10)
of the nominal value of Sindora shares
and accordingly invoked the compulsory
acquisition of outstanding Sindora shares
pursuant to Section 222(1) of the Capital
Market and Services Act 2007. On 30
November 2011, Sindora was removed
from the official listing of Bursa Securities.
Completion was on 5 December 2011, upon
the bulk transfer of Sindora shares to Kulim.
Sindora since then has become a whollyowned subsidiary of Kulim.
On 14 December 2011, Kulim announced
that that the Board of Directors of QSR
Brands Bhd (“QSR”) and KFC Holdings
(Malaysia) Bhd (“KFCH”) had, respectively,
received letters from Massive Equity Sdn Bhd
(“MESB”) which set out MESB’s conditional
offer to acquire nearly all the businesses
and undertakings, including substantially all
8
STATEMENT TO STAKEHOLDERS (continued)
of the assets and liabilities, of QSR and KFCH
respectively. Subsequently on 21 December
2011, the Board of Directors of QSR and
KFCH accepted the respective offers subject
to the execution of the relevant Sale
of Business Agreements (“SBA”). Further
announcements by QSR and KFCH on 23
April 2012 indicated that the parties are in
the process of finalising the SBA.
Group stands to record a substantial gain
from this exercise. We are proud of our record
in growing the business and increasing its
value. It has been an exhilarating period
and we are pleased to recognise the many
individuals for their contribution and in
particular the role played by Jamaludin Md
Ali, the Managing Director of KFC Holdings
(Malaysia) Bhd and QSR Brands Bhd.
Subject to the completion of the whole
exercise, Kulim will effectively exit the Foods
and Restaurants business. The impact of this
move to the Group’s financial performance
and position upon deconsolidation is
expected to be significant. Nonetheless,
should the divestment come to fruition, the
An equally significant development is the
announcement by NBPOL on 25 April 2012
that it had issued 3,333,147 new NBPOL
shares to the Independent Public Business
Corporation of Papua New Guinea (“IPBC”)
as consideration for the acquisition of 20%
interest in Kula Palm Oil Limited (“KPOL”).
KULIM AND KFCH
2002-2006
2007-2011
60
188
RM1.07 billion
(31.12.2006)
RM3.05 billion
(31.12.2011)
Revenue
5.1%
12.9%
Shareholders’ Funds
6.5%
15.2%
Share Price
12%
23.3%
11.1%
6.9%
New Stores
Market Capitalisation
CAGR* (%)
FBM KLCI
* Compound Annual Growth Rate
This results in Kulim’s shareholding in NBPOL
being reduced from 50.68% to 49.54% and
renders NBPOL to be an associate company
of Kulim, instead of a subsidiary.
The issuance of 3.33 million new shares to IPBC,
other than to streamline the shareholding
structure at KPOL, is also strategically aimed
to enhance the existing good cooperation
and relationship between NBPOL and the
provincial governments in PNG. A further 1.7
million shares are also planned to be issued
to New Britain Nominees Limited to assist in
potential acquisition of approximately 20,000
hectares of new leases in PNG, and to New
Ireland Development Corporation (“NIDC”)
to streamline shareholdings in KPOL’s
subsidiary, Poliamba Limited, representing
the continuation of NBPOL’s long term
established process of land acquisition.
Going forward, Kulim will no longer
consolidate NBPOL’s accounts and instead
their results will be equity-accounted.
Nonetheless, we expect that impact to the
Group’s cash flow and Group’s bottom-line
at Profit After Tax and Minority Interests
(“PATMI”) level to be minimal.
The imminent exit from the Foods and
Restaurant business as well as the change in
status of NBPOL from subsidiary to associate
company will reduce borrowings at Group
level, thus further strengthening the Group’s
Balance Sheet.
9
REVIEW OF EXTERNAL BUSINESS
ENVIRONMENT
The Arab Spring and the monetary travails of
the Eurozone were the defining backdrops
for the year 2011. Overall, global growth
eased from 3.8% in 2010 to 3.2% in 2011
even as the global recovery broadened to
encompass more firms, more countries and
more components of aggregate demand.
There is cautious optimism that improving
labour market conditions in high-income
countries and strongly expanding domestic
demand in developing countries will
continue to spur global economic recovery.
The Malaysian economy recorded a steady
pace of growth of 5.1% in 2011 (2010:
7.2%), despite the challenging international
economic environment. Growth was lower
in the first half of the year, particularly in
the second quarter, as the economy was
affected by the overall weakness in the
advanced economies and the disruptions
in the global manufacturing supply chain
arising from the natural disaster in Japan.
Although the global economic environment
became increasingly more challenging and
uncertain in the second half-year, Malaysia’s
economic growth improved due to stronger
domestic demand.
coupled with a jump in productivity contributed to the large increase. Despite this massive
uplift in production, world demand remained robust. Growth would have been higher but
for the consumption slowdown observed in the European Union owing to unstable macro
economic conditions. Food demand increased by 4% with much of the growth coming
from China, India and other emerging economies while growth from matured economies
was almost flat.
Palm oil accounts for 21% and 47% of the global oils and fats production and trade
respectively. Both Malaysia and Indonesia together are the world’s largest producers and
exporters of palm oil holding 84% and 90% shares of world palm oil production and
export, respectively. Palm oil has played an increasingly dominant role in the world oils
and fats supply and demand equation during the past 40 years. The ascent of palm oil as
a powerhouse in the global oils and fats market augurs well for palm oil in its role as the
driving force of the world oils and fats economy and the future prospects on the Group’s
core plantation business in Malaysia, Papua New Guinea and the Solomon Islands.
GROUP FINANCIAL RESULTS
All 3 core business divisions recorded growth in terms of revenues and operating profits.
REVENUE 2011
EBIT 2011
3% -1%
6%
20%
RM7.04
billion
46%
RM1.44
billion
48%
From a global perspective an unprecedented
increase in global palm oil production of 9%
to some 50.13 million tonnes was boosted
by a very good cropping year in 2011. The
expansion in Indonesia and other regions
78%
Plantation
Foods and Restaurants
Intrapreneur Ventures
Others
10
REVENUE
The Group’s Foods and Restaurants as
well as Plantation Divisions were the
largest contributors to Group revenue,
at 48% (2010: 55%) and 46% (2010: 38%)
respectively; the Intrapreneur Ventures
(“IV”) division’s contribution remained fairly
constant with 6% (2010: 5%).
Revenue rose by RM1.55 billion to RM7.04
billion in 2011, the highest ever revenue
recorded in Kulim’s history and an increase
of 28.3% over the RM5.49 billion recorded
in 2010.
The significant increase in revenue was
mainly due to higher palm product prices
fetched during the year by the Plantation
Division as compared to 2010. Average
CPO prices per tonne achieved in Malaysia
ascended to RM3,193 (2010: RM2,604) and
in Papua New Guinea (“PNG”) and Solomon
Islands (“SI”) to USD1,108 (2010: USD850).
This year the Group’s accounts also reflect
Kula Palm Oil Limited’s (“KPOL”) full-year
revenue versus 8 months results in 2010.
The Foods and Restaurants segment
recorded a solid 10.3% increment adding
sales of RM314.08 million to reach RM3.35
billion compared to RM3.04 billion in the
corresponding period. The growth was
mainly driven by the restaurants business
with the opening of new KFC and Pizza
Hut restaurants locally and regionally. 16
new Pizza Hut restaurants, 42 Pizza Hut
Delivery (“PHD”) outlets, and 24 new KFC
restaurants were added in 2011. This
was in addition to the launching of the
KFC 500th Restaurant Celebration, the ‘So
Good’ thematic campaign, and extensive
marketing programmes as well as the
introduction of innovative new products.
The revenue from the IV Division also
recorded commendable growth of
RM103.82 million or 35.5%, from RM292.80
million to RM396.62 million in 2011 mainly
driven by shipping business under E.A.
Technique (M) Sdn Bhd (“EA Technique”)
and its subsidiary, Orkim Sdn Bhd (“Orkim”),
with the successful deliveries of 10 newly
constructed vessels, all of which had secured
long-term contracts with oil majors.
PROFITABILITY
Earnings before interest and tax (“EBIT”)
increased by a remarkable 68.9% to
RM1.44 billion from RM850.79 million
in the prior year. Consequently, the EBIT
margin improved to 20.4% from 15.5% in
the previous year.
Significantly, pre-tax profit from continuing
operations had increased by RM586.90
million or 75.4% to RM1.36 billion in 2011
from RM777.90 million in 2010. Pre-tax
profit margin from continuing operations
improved to 19.4% from 14.2% in 2010.
As in the previous year, the Plantation
Division still accounted for the largest
share of the Group’s EBIT at 78% (2010:
78%); Foods and Restaurants Division came
next, albeit lower at 20% (2010: 32%); and
IV Division contributed 3% (2010: 2%).
The growth in the Group’s profitability
was substantially driven by the stellar
performance of the Plantation Division,
particularly by the PNG and SI operations
whose profits alone almost doubled to
RM893.22 million. High prices obtained
for other palm products also were a
contributing factor, along with increased
11
productivity, as well as better fresh fruit
bunch (“FFB”) yields and palm product
extraction rates.
In Malaysia, the increase in estate operating
costs, arising mainly from higher labour
and fertiliser costs, were absorbed by the
higher production of FFB. The unit cost of
production in 2011 was steady at RM1,790
per tonne CPO (2010: RM1,775 per tonne
CPO), before kernel credits.
In addition, profitability also improved
from the full-year profit before tax (“PBT”)
contribution from the KPOL estates of USD57.8
million compared to the 8-month result of
approximately USD29 million in 2010.
The Foods and Restaurants Division, despite
recording steady growth in revenue,
turned in only a marginally 2.4% higher
operating profit than last year. While the
Pizza Hut and KFC restaurants in Malaysia,
Singapore and Brunei were recording good
levels of profit growth, the overall result
was tempered by losses incurred by the
operations in Cambodia and India as well
as costs associated with the start of the
new KFCH International College campus in
Johor Bahru.
The loss recorded by KFC India was mainly
due to high initial start-up costs as it is
still in the gestation period. Following the
opening of the new KFCH International
College’s Bandar Dato’ Onn campus in
Johor, the education segment incurred
higher marketing expenses for advertising
and promotions in the media. Aggressive
promotion to solicit student intake was
undertaken via participation in education
fairs and career talks, collaboration with
Government agencies, and by running short
courses and certification programmes.
“THE GROWTH IN THE
GROUP’S PROFITABILITY
WAS SUBSTANTIALLY
DRIVEN BY THE STELLAR
PERFORMANCE OF THE
PLANTATION DIVISION...”
Results from the Cambodian operations
were damped by a weak economy although
it is now showing signs of recovery. KFC
Cambodia registered encouraging sales but
its profitability was affected by the high cost
of both local poultry products and imported
raw materials. Steps are being taken actively
to source for cheaper alternative suppliers
and review the marketing programmes
to improve sales throughput at the
restaurants. Impairment on fixed assets
for 4 non-performing restaurants was also
prudently taken.
to
from RM5.49 billion
REVENUE
%
28.3
RM7.04 B
PBT FROM
CONTINUING
OPERATIONS
%
75.4
RM1.36 B
to
12
In addition, the integrated poultry segment
registered a lower profit as it was significantly
affected by the higher cost of feed for its
broiler farming as well as increased energy,
storage and other operating costs. The
segment also incurred a higher cost for
broiler purchases from the open market
to meet the increasing demand by KFC
Malaysia’s operations.
The IV Division recorded a substantial
improvement in operating profit of 224.5%
or RM29.71 million, from last year’s RM13.23
million, mainly driven by the new tanker
deliveries and the commencement of income
generation from these tankers as all are fully
secured with long-term contract with oil
majors. The operating profit margin on the
IV business also improved significantly to
10.8% from 4.5% in 2010.
Finance cost increased by 12.3% to RM91.48
million from RM81.44 million in 2010, mainly
due to a higher interest expense recorded
by NBPOL as a result of the refinancing of
the 12-month USD200 million loan for the
acquisition of KPOL with a USD240 million
long-term loan.
Interest cover was more than satisfactory,
increasing to 15.92 times as compared to
10.55 times in the previous year due to the
higher EBIT recorded this year.
Earnings per share (“EPS”) from continuing
activities increased to 45.90 sen for the
current year from 18.73 sen in 2010 (adjusted
for share split and bonus shares), reflecting
this year’s record highest profits attributable
to shareholders in the Group’s history.
SHARE PRICE MOVEMENT 2011
40%
KLCI
Plantation Index
BALANCE SHEET
The Group’s cash position as at the end of
2011 improved notably to RM645 million
from RM452 million last year demonstrating
the financial health of the business.
The Group’s total borrowings stood at RM2.62
billion, a significant 36% increase from last
year’s RM1.93 billion, mainly attributable to
an additional RM375 million loan acquired to
part finance the acquisition of JCorp estates,
a USD240 million term loan secured by
NBPOL to refinance the short-term USD200
million loan obtained previously to fund
the acquisition of KPOL, and an increase in
Sindora’s and QSR’s borrowings of RM163
million and RM101 million respectively,
mainly for expansion purposes.
As a result, gross and net gearing increased
to 0.38 times and 0.29 times respectively
(2010: 0.35 times and 0.27 times respectively),
never theless staying within prudent
parameters.
Kulim
30%
Group shareholders’ funds recorded a
commendable improvement of 20.4% to
RM4.29 billion as at December 2011 from
RM3.57 billion in December 2010, reflecting
the high PATMI recorded in 2011. Net assets
per share also increased to RM3.48 from
RM2.80 in 2010 (adjusted for share split and
bonus shares).
20%
10%
0%
Kulim : 35.73%
FBM KLCI : -0.18%
Plantation Index : 0.36%
-10%
-20%
Jan
Feb Mac Apr May Jun
Jul
Aug Sep
Oct Nov Dec
SHARE PRICE MOVEMENT 2011 – LISTED SUBSIDIARIES
40%
NBPOL
QSR
30%
KFCH
20%
RETURNS TO SHAREHOLDERS
SHARE PRICE
From a closing price on 31 December 2010
of RM12.74, Kulim’s share price recorded
strong growth during the first 2 months
of 2011, trading at its highest level ever at
RM16.00 per share. After the share split (1
share split into 2 shares) and issuance of
bonus shares (1 for 1) was completed on
24 February 2011, Kulim’s share closed at
RM3.63 on even date.
Kulim also issued free warrants (1 free
warrant for every 8 shares) as reward to its
owners. This exercise was completed by early
March 2011.
10%
0%
-10%
NBPOL : -19.49%
QSR
: 30.05%
KFCH : 1.75%
-20%
-30%
Jan
Feb Mac Apr May Jun
Jul
Aug Sep
Oct Nov Dec
Kulim’s share price grew by 35.73% in 2011,
well outperforming the FBM KLCI and the
Plantation Index which tracked a gain of
0.36% and loss of 0.18%, respectively. Kulim’s
market capitalisation reached RM5.21 billion
as at 31 December 2011, a 31% improvement
from RM3.98 billion as at 31 December 2010.
13
All listed subsidiaries within the Group,
except NBPOL, also recorded positive
growth in their share prices, reflecting the
improvement in market sentiment during
the year and investors’ confidence. NBPOL’s
share price rallied from the start of the year
before peaking at the end of the second
quarter and ending the year lower.
DIVIDENDS
The Group declares and pays annual
dividend after taking due consideration on
various factors including the level of available
cash and cash equivalents, retained earnings
and projected levels of capital expenditure
and other investment plans. During the
year, Kulim declared an interim dividend
for the year ending 2011 of 20% or 5 sen
net per ordinary share of RM0.25 each. The
lower dividend is reflective of several major
“...THIS INTERIM DIVIDEND
THEORETICALLY CAN BE
TRANSLATED INTO A NET
DIVIDEND OF 20 SEN PER
ORDINARY SHARE OF RM0.50
EACH, OR 40% BASED ON
KULIM’S PREVIOUS PAR
VALUE.”
corporate exercises undertaken during the
year. Nonetheless, for Kulim’s shareholders
who have owned Kulim shares prior to the
capital restructuring at end of February 2011,
this interim dividend theoretically can be
translated into a net dividend of 20 sen
per ordinary share of RM0.50 each, or 40%
based on Kulim’s previous par value. The
interim dividend was paid in December 2011
amounting to RM61.72 million.
have the effect of increasing the value of
shares outstanding in the hands of our
shareholders, will continue to remain a
practical strategy when the Board believes
the market is under-pricing the shares.
Further exercises will be evaluated at
opportune times.
The share volume traded in 2011 was 4.24
billion units (2010:1.20 billion units). Warrant
conversion in 2011 amounted to 500 units.
SHARE BUY-BACK
The programme was carried out in 2011
with 14.84 million shares bought back at an
average purchase price of RM3.40, signalling
to the market that the management believes
that Kulim’s share price is undervalued. As
at 31 December 2011, total treasury shares
held by Kulim was 27.48 million, averaged
at RM3.50 per share. Share buy-backs, which
As part of our effort to promote robust
and effective investors’ relations, we held
6 meetings, 2 conference calls, 5 company
visits and participated in 4 roadshows,
including 2 international roadshows during
the year. Foreign shareholding of Kulim stood
steadily at around 16% in 2011, signalling the
confidence long-term investors, including
those abroad, have in Kulim.
14
SEGMENT HIGHLIGHTS
PLANTATIONS
GROUP’S FFB
PRODUCTION
%
19.6
2.38
to
million tonnes
from 1.99 million tonnes
The Group’s plantation operations turned
in yet another strong performance in 2011
with a record harvest of 2,375,388 tonnes of
FFB from the Malaysian, PNG and SI estates.
This represented a positive growth of 19.6%
against a total of 1,985,619 tonnes of Group
FFB produced in 2010, the upswing owing
to a cyclical biological surge in the crop
and good weather. The Malaysian estates
produced 27% of total Group FFB (2010:
28%); PNG estates produced 68% (2010:
66%), whilst the SI estates’ contribution
shrunk slightly to 5% (2010: 6%). The Group’s
planted area to oil palm increased to 118,655
hectares as compared to 112,224 hectares in
2010.
The Group continues to pursue its “30:30”
initiative with the objective of raising fruit
yields to 30 tonnes per hectare and palm
product extraction rates to 30%. Results this
year have been positive and well over the
Malaysian industry standard. Further gains
are anticipated by the recent replanting with
higher yielding hybrids and the lowering of
the average age of the trees.
Malaysian Plantations
The Malaysian estates recorded a marked
increase in FFB production of 15.6%, mainly
due to better rainfall and the benefit of a
relatively more stable workforce compared
to the labour conditions prevailing in 2010,
producing a total of 636,761 tonnes of
FFB in 2011. The yield per hectare in 2011
increased to 21.89 tonnes from 19.01 tonnes
in the preceding year.
In Malaysia, total CPO production was
185,666 tonnes in 2011 which was higher by
13.74%, than the 163,233 tonnes in the prior
year. PK production was 53,678 tonnes, an
increase of 12.39% from the 47,758 tonnes in
2010. The Group’s Malaysian mills’ extraction
rates were affected by wet weather in early
2011 and higher purchases of variable
quality third party crop that increased from
345,281 tonnes in 2010 to 365,151 tonnes in
2011. So in terms of oil yield, the Malaysian
plantations recorded an increase from 5.63
tonnes CPO per hectare in 2010 to 6.38
tonnes in 2011.
15
To sustain higher production, the Group is
committed to improving the age profile of
its plantations. In Malaysia, 868.29 hectares
were replanted in 2011. By the end of 2011,
taking into consideration the 6,000 hectares
of oil palm estates acquired from Johor
Corporation, the Malaysian estates’ average
palm age decreased slightly to 12.40 years in
December 2011, from 12.90 years in 2010.
PNG and SI Plantations
With weather conditions across PNG and SI
favourable for crop growth during 2011, the
overall palm product extraction rate for 2011
was 28.21%, an increase from the 2010 result
of 27.50%. FFB production from the PNG
and SI estates increased to approximately
1.74 million tonnes supported by the full
production from the newly acquired KPOL
estates at Higaturu, Milne Bay and Poliamba
in the New Ireland Province, PNG.
In PNG and SI, NBPOL has 78,332 hectares
planted with oil palm of which 68,438
hectares are being harvested with the
balance being immature oil palms that were
planted over the last three years. Yield of FFB
per hectare over the area under harvest was
25.4 tonnes (2010: 23.7 tonnes per hectare).
“THE MALAYSIAN ESTATES RECORDED A MARKED INCREASE IN
FFB PRODUCTION OF 15.6%, MAINLY DUE TO BETTER RAINFALL
AND THE BENEFIT OF A RELATIVELY MORE STABLE WORKFORCE
COMPARED TO THE LABOUR CONDITIONS PREVAILING IN 2010...”
In PNG and SI, NBPOL continued to expand
their palm oil production base with the
addition of 1,582 hectares of new plantings
in West New Britain and Ramu Agri-Industries
Limited (“Ramu”). Replanting of 1,544
hectares was completed across Guadalcanal
Plains Palm Oil Ltd (“GPPOL”), Higaturu, Milne
Bay and Poliamba.
Supported by the full year’s contribution of
fruits from the newly acquired KPOL estates
at Higaturu, Milne Bay and Poliamba, the PNG
and SI mills registered a record year with
591,477 tonnes of crude oils (crude palm oil
and palm kernel oil) produced, representing
a 23.5% increase over 2010.
The new mill commissioned at Waraston
increases the total processing capacity in West
New Britain from 260 to 320 tonnes of fruit
per hour. In SI, the mill upgrade at Tetere from
25 to 45 tonnes per hour was completed with
further work on the kernel mill ongoing. At
Ramu, work commenced at the Gusap palm
oil mill during the year to increase the capacity
from 30 to 45 tonnes per hour.
NBPOL’s first methane capture plants in West
New Britain is a major step forward for the
company as it begins to utilise the potent
greenhouse gas as an energy source and
reduce carbon footprint. Commissioning of
the plants is expected in the first half of
2012. The power will be utilised to supply
the housing estates and refinery as well as
supplying the local grid in support of rural
electrification through an agreement with
PNG Power.
NBPOL is embarking on the construction of
a further 3 CDM projects in West New Britain,
Higaturu and Milne Bay. In West New Britain,
the team is proud to have completed the
second fractionation plant at the Kumbango
refinery, which will supply specialised palm
products to Ferrero Rocher.
16
Palm Oil Refinery in Liverpool, United
Kingdom
In Liverpool, New Britain Oils Limited (“NBOL”)
refinery operation, as a result of a further
multi-million pound investment, is scheduled
to produce its first packed products for sale
into the UK bakery and foodservice sectors
in the first quarter of 2012. This will give
NBOL the largest range of fully traceable
sustainable products in the market.
Sugar production
During the year, the operation harvested
some 397,328 tonnes of cane from 7,311
hectares. This was an improvement on
2010 when 375,822 tonnes of cane was
harvested. The sugar factory with a capacity
of processing 500,000 tonnes of cane was
therefore under little pressure. Overall sugar
recovery from cane processing improved in
2011 to 81.4% from 79.3% in 2010.
Beef Production
NBPOL remains the largest producer of
beef in PNG. However, beef production will
continue to play only a minor role in the
overall investment strategy. The herd size
showed some growth with 20,000 cattle
managed in 2 separate locations. The herd
produced some 1,284,000 kilograms of beef
for the PNG market, generating revenue of
PGK14.9 million. Additional investment in
stock yards and machinery for both silage
production and pasture improvement are all
contributing to better efficiencies.
International College expanded further
during the year, now spanning 2 campuses,
and is positioned to provide the Foods and
Restaurants business with trained candidates
for managerial roles.
FOODS AND RESTAURANTS
In 2011, the total number of outlets operating
under our Foods and Restaurants brands –
Pizza Hut, KFC, Kedai Ayamas and RasaMas –
exceeded the 1,000 mark for the first time by
growing to 1,063 units from 978 in 2010. By
December 2011, we had 307 Pizza Hut and
756 KFC/Kedai Ayamas/RasaMas restaurants
and we now operate across 5 countries in
Asia, from Brunei to India.
All our brands were strengthened in 2011
and the recent expansion of KFC into India
was consolidated. QSR Brands Bhd (“QSR”)
and its subsidiaries continued to add new
outlets and executed their programmes
for image enhancement, always reaching
out to new markets and strengthening
the loyalty of existing customers. KFCH
Revenue at the Foods and Restaurants
Division in 2011 rose by 10.3% to RM3.35
billion. However profit before tax increased
only marginally, by 1.2% to RM269.96 million
against RM266.86 million in the previous
year, as a consequence of start-up costs and
rising expenses at the new KFC restaurants
in Cambodia and India.
2011 brought QSR widespread recognition.
Yum! Brands presented Pizza Hut Malaysia
with the Franchisee of the Year Award in the
dine-in category, the People’s Choice Best
Remodel Award, and the Best Advertising
Award. BrandLaureate voted Pizza Hut the
Best Brand in the Food & Beverage Pizza
category, and Readers’ Digest presented us
with their Trusted Brand Gold Award.
At KFC’s 13 outlets in India, in Pune, Mumbai
and Aurangabad, sales more than tripled to
RM19.8 million. Capitalising on the Indian
passion for Cricket, KFC India was an Official
Partner in the 2011 ICC World Cup. The staff
donned special tournament T-shirts, and
customers took advantage of the limitedtime offer of meals served in a cricketthemed Fan Bucket.
17
“BY DECEMBER 2011, WE
HAD 307 PIZZA HUT AND
756 KFC/KEDAI AYAMAS/
RASAMAS RESTAURANTS AND
WE NOW OPERATE ACROSS
5 COUNTRIES IN ASIA, FROM
BRUNEI TO INDIA. “
KFCH International Colllege enrollment
currently stands at 700 students on
campuses in Puchong and Johor Bahru.
On offer are 9 diploma programmes in a
variety of hospitality-related disciplines, as
well as Early Childhood Education, Business
Administration, Information Technology, and
Electrical & Electronics.
The food sector is relatively resilient but
it faces inflationary cost pressures. QSR
plans to generate earnings by continuing
to drive the topline aggressively through
new and repeat customer purchases. QSR
is also continuously seeking better cost
efficiencies and improving productivity at
all its business segments. Culinary skills
and great service will continue to reinforce
customer loyalty, while creative products
and marketing will entice new customers as
well as long-time customers.
INTRAPRENEUR VENTURES
Results at the Intrapreneur Venture (“IV”)
Division were encouraging. Revenue in 2011
increased by 35.5% to RM396.62 million, from
RM292.80 million in the previous financial
year. Operating profit more than doubled to
RM42.94 million from RM13.23 million.
The good performance this year was
attributable mainly to the growth of the
shipping segment. The IV portfolio’s other
start-ups are in the early stage of investing,
building prototypes and gathering feedback
and data from their customers to build
sustainable businesses. We will continue
identifying promising start-ups for incubation
and give them access to the resources needed
to grow, prosper, improve earnings, add value,
and maximise returns to shareholders.
Our subsidiaries EA Technique and Orkim
have propelled the Group to becoming an
important player in the maritime sector
and positioned us as the second biggest
shipping company in Malaysia in the clean
petroleum product tanker category.
Both companies operate in niche markets
providing long-term charter contracts for the
transportation of clean petroleum product,
and upstream exploration support, for oil
majors. The substantial improvement in
performance in both companies in 2011 was
the result of the successful deliveries of 10
newly constructed tankers for commission
under long-term charter contracts. The
higher full year contributions from these
new vessels will be felt in 2012.
The Group also provides offshore support
vessels and manages third party vessels.
Currently, EA Technique provides 9 vessels
for offshore support services that includes 2
fast crew boats, 4 mooring boats, 2 harbour
tugs and a security boat, while Orkim
manages 2 vessels owned by a third party
for an oil major. The construction of the
18
PROSPECTS AND PLANS
The global economy is expected to post
a more moderate growth in 2012. The IMF
has lowered its forecast for 2012 global
growth to 4%. The US economy is proving
to be resilient and is expected to grow
about 2.3%, an improvement from 2011
but well below the rate needed to make
much of a dent in the unemployment rate.
In the housing market, on a downtrend for 5
years, price expectations have changed from
negative to positive. Consumer confidence
is up. Ramped up motor vehicle assemblies
are helping revive industrial activity, while
oil and gas production has increased
sharply, buoyed by higher prices. Consumer
spending has benefited from improving
employment gains, and cash flows are being
bolstered by sharply lower borrowing costs
that have accelerated refinancing activity.
Solid corporate profits are exceeding
expectations so far in 2012 and will help
boost confidence of business managers,
encouraging more hiring and investment. A
strong, sustained expansion though remains
elusive in an election-year with uncertainty
about tax rates and the spending cuts
necessary to trim the federal deficit.
“THE SUBSTANTIAL
IMPROVEMENT IN
PERFORMANCE IN
2011 WAS THE RESULT
OF THE SUCCESSFUL
DELIVERIES OF 10
NEWLY CONSTRUCTED
TANKERS FOR
COMMISSION UNDER
LONG-TERM CHARTER
CONTRACTS. THE
HIGHER FULL YEAR
CONTRIBUTIONS FROM
THESE NEW VESSELS
WILL BE FELT IN 2012.”
new tankers, and disposals of ageing vessels,
have resulted in a much lower average age
profile for the fleet and enabled the Group
to position itself to seize opportunities in the
shipping market ahead of competitors.
Our shipbuilding and ship repair facility,
Johor Shipyard and Engineering Sdn
Bhd (“JSE”) has the potential to become
a major contributor considering that the
high demand for ship repairing facilities is
currently being met by a limited number of
yards around the region.
JSE has identified a 10-acre site at Hutan
Melintang, Bagan Dato, Perak for its
permanent base. Currently, JSE is preparing
basic facilities for the shipyard that is
expected to become fully operational by
the end of 2012. The shipyard will be able to
accommodate vessels of up to 10,000 deadweight tonnage (“dwt”) for construction
or repair. Besides shipbuilding, to diversify
revenues, the yard will also become involved
in steel fabrication for the offshore oil and
gas industry.
The still unfolding Euro zone debt crisis is
hurting the region’s growth outlook and
weighing on the exports of the European
Union’s key trading partners, which includes
China. In Europe, rising unemployment will
work against any quick recovery in light of
the unprecedented structural adjustments
related to wages and productivity needed
to regain export competitiveness. Household
deleveraging in the more highly indebted
developed nations will continue, with most
countries embarking upon a multi-year
period of fiscal consolidation. Fortunately,
there appears to be greater confidence that
the developing economies have engineered a
soft rather than a hard landing. Construction
and investment activity remains quite firm,
helping to keep employment and spending
in the relative fast lane of growth.
However the rise in the price of crude oil
poses a growing threat to many incomeconstrained consumers and businesses
around the world, and a risk to many emerging
nations battling domestic inflation. Crude oil
prices began to firm up in the second half of
last year as escalating geopolitical tensions
again in the Middle East, this time involving
potential supply disruptions surrounding
Iran and Syria, caused the price of crude oil
19
to jump close to USD110 a barrel, a level
previously reached in the first quarter of last
year that contributed to the cooling down of
US and global growth.
Amid the more challenging external
environment, Malaysia’s economy is projected
to experience a steady pace of growth of 4%
– 5% in 2012. Domestic demand is expected
to remain resilient and will continue to be
the anchor for growth. Several measures
that were announced in the 2012 Budget
are expected to provide support to private
consumption. These include the upward
revision of public sector wages and the oneoff financial assistance to low and middleincome groups. Private investment will be
supported by domestic-oriented industries
and the ongoing implementation of
projects under the Economic Transformation
Programme (“ETP”).
The Malaysian public sector will remain
supportive of growth in 2012, with higher
capital expenditure by both the Federal
Government and the non-financial public
enterprises. The implementation of the
Special Stimulus Package through Private
Financing Initiative that was announced
in the 2012 Budget would provide further
impetus to real activity during the year.
While the domestic drivers appear positive,
global concerns may weigh down on the
near-term outlook of the Malaysian economy
and economic growth will likely get bumpier
in the months ahead.
Production in Indonesia, the world’s top
palm oil producer, is estimated to rise by
as much as 1.5 million tonnes next year
to 25 million tonnes. The major swings in
palm oil prices would come from Malaysia’s
production, which will grow at an even
smaller rate, thanks to limited acreage. Next
year, Malaysia’s output is expected to rise.
Both countries account for more than 90
percent of global supplies of the edible
oil, which is used in products such as food,
cosmetics and biofuels, which is likely to hit
48 million tonnes for 2012.
With production growth normalised in
2012, demand should grow steadily along
with increasing population and incomes. As
supply is not going to be affected, we are
going to see the global economic scenario
driving the oil market. Southeast Asian palm
oil prices may come under pressure as
looming concerns over the global economy
weigh on Brent crude oil. Palm oil investor
“AVERAGE PALM OIL PRICES ARE LIKELY TO BE SUSTAINED
AT AROUND RM3,000 (USD990) PER TONNE LEVEL NEXT
YEAR ON THE ANTICIPATION OF TIGHT SUPPLIES AFTER
SPELLS OF ERRATIC WEATHER AND STABILISING GLOBAL
ECONOMIC OUTLOOK. ”
sentiment has improved in recent weeks as
dominant Southeast Asian producers enter
the rainy season and the La Nina weather
pattern is seen to be returning.
Average palm oil prices are likely to be
sustained at around RM3,000 (USD990) per
tonne level next year on the anticipation of
tight supplies after spells of erratic weather
and stabilising global economic outlook.
On the positive side, robust demand from
emerging markets is likely to offset the early
effects of the Euro zone and its sovereign
debt crisis that has been weakening demand
for raw materials. An important factor in
2012 could be the intensifying competition
between Malaysia and Indonesia to capture
market share. Indonesia has the early
advantage with the introduction of a new
tax structure.
We expect a positive impact next year from
the acquisition of the plantation assets
from JCorp, by way of higher volumes of
FFB, CPO and PK in 2012. So far, we have
completed the acquisition of 2 estates with
the other 4 estates plus 2 palm oil mills
expected to reach completion by mid-2012.
Including the impact of these acquisitions,
crop production from the Group’s Malaysian
operation is expected to increase in 2012
going forward.
Underlining the importance of research in
producing high quality planting materials,
the Group will construct a new purposebuilt dedicated R&D complex in Malaysia,
scheduled to be ready by 2013 which will
also include the Group’s in-house genome
research facility. Along with other major
players, the goal of the research is to
develop and utilise biotechnological tools
to support and complement our crop
improvement and agronomic research
programme, which encompasses oil palm
breeding, tissue culture, pests and diseases
control and agronomy.
NBPOL has commissioned its 12th palm oil
mill in West New Britain, adding an annual
processing capacity of over 300,000 tonnes
of FFB, giving NBPOL increased capacity and
flexibility to mill the rising West New Britain
crop. NBPOL also increased its processing
capacity in the SI from 30 to 45 tonnes of
fruit per hour.
Our RSPO certification process continues
and in 2011 NBPOL successfully completed
the audit at Poliamba. We are targeting to
have our remaining sites at Milne Bay and
Higaturu audited under RSPO as part of our
commitment to have all units and supply
chains certified as fully sustainable and
traceable by the end of 2012.
20
“THE GROUP EXPECTS TO COMMISSION ITS FIRST
METHANE CAPTURE PLANT IN MALAYSIA AND 2 IN
WEST NEW BRITAIN DURING THIS YEAR WHICH WILL
SUBSTANTIALLY REDUCE OUR CARBON FOOTPRINT
AS WELL AS DELIVER RENEWABLE ENERGY FOR OUR
OPERATIONS AND THE WIDER COMMUNITY.”
The reporting and mitigation of carbon
dioxide and other greenhouse gas emissions
can now be quantified and NBPOL has
released its first Carbon Footprint report.
As palm oil is such a ubiquitous product,
we feel that this will prove to be another
persuasive argument for companies to
switch to sustainable palm from the Group.
To tap another stream of income in the
coming years, we are embarking upon
downstream processing, turning the mills’
by-products such as biomass, POME and
biogas into high value-added end-products
that can generate additional revenue. The
Group expects to commission its first
methane capture plant in Malaysia and 2 in
West New Britain during this year which will
substantially reduce our carbon footprint
as well as deliver renewable energy for our
operations and the wider community.
With the acquisition of the JCorp estates, the
Group’s focus henceforth in the Plantation
segment will be primarily on the Malaysian
operation. The estate operation’s strong
growth since the sixties was achieved through
acquisitions and distinctive plantation
management practices which emphasised
continuous improvements in yields and
cost efficiencies. As a major player in the
palm oil industry, which is the third biggest
contributor to the Malaysian economy, Kulim
looks forward to the challenge of ensuring
its future will be as illustrious as its past.
The Group also looks forward to continuing
to receive tremendous value from its
investment in NBPOL and has full confidence
in the Board, and experienced management
team in PNG and SI, to continue delivering
outstanding results.
With a view to consider the possibility of
restarting Nexsol, our biodiesel plant, the
Group is being prepared for the International
Sustainability and Carbon Certification
(“ISCC”). ISCC recognition would offer
access to the EU market and afford us an
additional competitive edge, and further
increase customer loyalty and marketability
of sustainable palm products.
21
WORDS OF APPRECIATION
On behalf of the Board, we would like to
most sincerely thank all our employees
for their loyalty, dedication and hard
work in making 2011 the best year in
history for Kulim. We would also like to
thank all other stakeholders who have
contributed, supported and believed
in Kulim: our financiers, our business
partners, all Government bodies and
Regulatory Authorities that we dealt with
and last but not least, our most valued
loyal customers.
We also would like to take this opportunity
to thank our fellow Board members for
their valuable insights and thoughtful
advice in helping us to steer Kulim into
its current position. To further strengthen
the Board in facing a more challenging
tomorrow, we would also like to take this
opportunity to welcome the new directors
of the Company - Zulkifli Ibrahim, Datuk
Ahmad Zaki Zahid, Wan Mohd Firdaus
Wan Mohd Fuaad, Leung Kok Keong and
Natasha Kamaluddin.
KAMARUZZAMAN ABU KASSIM
Chairman
The status of palm oil as it is today in the
world market is without doubt due to the
significant contribution by the Malaysian
palm oil industry. In fact, the country has
become a role model for many other
palm oil producing countries in their
plans to spur economic development in
the agricultural sector and to gain foreign
exchange through exports of surplus
production.
The Palm Oils business will continue to
form the backbone of our Group and
the industry continues to face new
challenges in the face of globalisation.
Rapid responses are needed to meet the
increasing challenges of the sector as they
unfold. We are prepared to do our part.
We care for tomorrow and we believe
that the best has yet to come for Kulim.
We hope all our shareholders will share
in the excitement that we feel as we work
together to create a progressive business
enterprise that is set to continue growing
profitably. For tomorrow, as is today, our
vision remains unchanged, to excel in
delivering value progressively to all our
stakeholders in a sustainable manner.
AHAMAD MOHAMAD
Managing Director
CORPORATE EVENT HIGHLIGHTS 2011
22
23
10 February 2011
5
10
Kulim was announced as one of
the winners of The Edge Billion
Ringgit Club Award 2011 during
the Gala Dinner held at Shangri-La
Hotel, Kuala Lumpur.
Kulim’s Extraordinary General
Meeting for the Share Restructuring
approval was held at Persada Johor
International Convention Centre,
Johor Bahru.
6
1
13 July 2011
14 February 2011
18 – 19 July 2011
Kulim participated in MPC Mini ICC
Convention – North Region held at
Meritus Pelangi Beach Resort & SPA,
Langkawi.
An annual gathering of Group
employees, Pedoman 2011 with the
theme “Membina & Membela”, was
held at Persada Johor International
Convention Centre, Johor Bahru.
11
Kulim participated in MPC Mini
ICC Convention – South Region
organised by Malaysian Productivity
Corporation (“MPC”), held at
Renaissance Hotel, Melaka.
Kulim participated in Karnival
Mahabbah IKIMfm, held at Kompleks
Mutiara Johor Land, Johor Bahru.
8
18 June 2011
9
23 – 26 June 2011
Kulim participated in Hari Mekar
Johor Corporation 2011 , an
annual event organised by Johor
Corporation (“JCorp”) to promote
total quality initiative, held at
Pe r s a d a J o h o r I n te r n a t i o n a l
19 – 20 October 2011
Kulim participated in the exhibition
during the Ekspo Beli Barangan
Buatan Malaysia held at Persada
Johor International Convention
Centre, Johor Bahru.
23 June 2011
Kulim participated in Karnival
Kerjaya, Perniagaan & Kemahiran
2011 (“KEPAK 2011”) held at Persada
Johor International Convention
Centre, Johor Bahru.
7 – 9 December 2011
16 – 18 December 2011
during MyAgroSis Programme, held
at University Technology MARA
(“UiTM”), Merbok, Kedah.
19 – 23 October 2011
Kulim’s 36th Annual General Meeting
was held at the Puteri Pacific Hotel,
Johor Bahru.
4
27 – 28 September 2011
Kulim participated in the MPC
National Convention 2011, an
annual event organised by MPC,
held at Sunway Pyramid Convention
Centre, Selangor.
Gerak Kemas Perdana 2011 , an
annual event initiated by the
5S Committee to promote the
adoption of 5S ‘house-keeping’
philosophy by focusing on effective
work place organisation.
3
Removal of Sindora Berhad from
official listing of Bursa Securities at
the conclusion of the privatisation
exercise by Kulim.
Kulim participated as the Silver
Sponsor in The CSR Asia Summit
2011, held at Istana Hotel, Kuala
Lumpur.
22 – 24 April 2011
2
30 November 2011
Kulim participated in MPC Mini
ICC Convention – Central Region
organised by MPC, held at Grand
Dorsett Hotel, Subang Jaya.
7
28 – 30 October 2011
during the Malaysia International
Commodit y Conference and
Showcase (“MICCOS”) organised by
the Ministry of Plantation Industries
and Commodities at Malaysia AgroExposition Park, Serdang.
18 – 20 November 2011
Kulim participated in BN Youth Job
Fair 2011, held at Putra World Trade
Centre.
25 - 26 July 2011
19 April 2011
15 November 2011
Kulim was announced as the winner
for Industry Excellence Award (Main
Board) – Plantations and Mining,
during NACRA award presentation
d i n n e r h e l d a t S i m e D a r by
Convention Centre, Kuala Lumpur.
12
22 December 2011
Kulim’s Extraordinary General
Meeting for the acquisition of
plantation assets from JCorp at total
consideration of RM700 million was
SUSTAINABILITY EVENT HIGHLIGHTS 2011
24
1
25
3 January –
12 February 2011
6
25 – 27 April 2011
11
Pre-Retirement Programme, a
programme to emphasise personal
financial factors affecting employees’
retirement planning, was held at
Pulau Sibu.
KSRT Sports Carnival, an annual sports
programme organised by Kelab Sukan
& Rekreasi Tiram (“KSRT”) with the aim
to promote healthy lifestyle among
employees.
12
2
7 May 2011
22 February 2011
Inter Region Sports Carnival organised
by KSRT and opened to all operating
units within Kulim Group to promote
commitment to healthy lifestyle
among employees.
3
6 March – 16 April 2011
13 March 2011
8
2 & 9 April 2011
9
29 October 2011
Through KSRT, Kulim participated in
the Charity Walk ‘World Hunger Relief
2011’ at Putrajaya.
14
11 – 13 December 2011
Break That Pattern! To Maximise Value
Creation – Senior management retreat
held at Selesa Beach Resort, Port
Dickson.
25 June 2011
With the theme ‘Glitz Glamorous’,
KSRT Dinner 2011 was successfully
Kulim Wildlife Defenders (“KWD”)
Programme, a programme opened to
students from surrounding estates,
was successfully held at Sekolah
Kebangsaan Nam Heng, Basir Ismail
Estate.
16 – 17 October 2011
Kulim Family Day with the theme ‘We
Are One’, was held at A’Famosa Resort
Water World, Melaka.
25 June 2011
WOW ( Women OnWards) Carnival
was held at KSRT, with the aim to
promote handcrafting and cooking
skills among female employees within
the Group.
Majlis Maulidur Rasul , a religious
programme attended by Group
employees and surrounding
community, held at Masjid Jamek Ulu
Tiram Estate.
5
13
Jointly organised by Kulim, Wildlife
Conservation Society and several
g ove r n m e n t a g e n c i e s, a p re s s
conference on Tiger Conservation
by the US Ambassador was held
at Persada Johor International
Kulim participated in Johor Corporation
Sports Carnival 2011 and was declared
as the overall champion.
4
12 May 2011
8 October 2011
Infaq 1 Warisan, a tree-planting project
as part of Kulim’s sustainable initiatives,
was held at Mungka Estate, Segamat.
KWD Programme for Sindora Complex
was held at Rengam Estate, Kluang.
7
24 September 2011
Syukur Raya 2011, an annual employee
gathering in conjunction with Aidilfitri
organised by KSRT, was held at Kulim
Corporate Office, Ulu Tiram, Johor.
15
17 December 2011
Karnival Sukan Rakyat & Senandung
Irama KSRT was held to commemorate
traditional games.
2 July 2011
A religious talk by Dr. Fatma Az-Zahra
was held at KSRT, attended by the
Group employees and surrounding
community.
14 – 24 April 2011
Sultan Iskandar Challenge Trophy
2011, an annual shooting competition,
jointly organised by Johor Clay
Target Shooting Association (“JCTSA”)
and Majlis Sukan Negeri Johor
(“MSNJ”) was held at Johor Clay
Target Shooting Club, REM Estate,
Kota Tinggi.
10
16
21 December 2011
Program Seminar Keluarga Bahagia by
Dato’ Dr. Hj. Mohd Fadzilah Kamsah, a
motivational talk jointly-organised by KSRT,
was held at Persada Johor International
9 July 2011
Kulim’s International Women’s Day
(“IWD”) 2011 was held at AKLI with
the theme – ‘Wanita & Ekonomi’.
24 December 2011
1-day trip to Universal Studio,
Singapore, organised by KSRT.
26
AWARDS RECEIVED IN 2011
RECOGNITION AND ACCREDITATION
AWARDED BY
RECEIVING COMPANY/
OPERATING UNIT
NACRA 2011
• Winner of Industry Excellence Award (Main Board) –
Plantations and Mining
National Annual Corporate Report Award
Kulim (Malaysia) Berhad
Industry Excellence Award (Plantation Sector 2010/2011)
•
•
•
Global Leadership Award 2011 - Plantation Sector
The Leaders International
Ahamad Mohamad
(Kulim (Malaysia) Berhad)
The Edge Billion Ringgit Club Award 2011
• Best Performing Stock - Highest Returns to Shareholders
Over Three Years (Plantation Sector)
• Highest Profit Growth Company – Highest Growth in Profit
Before Tax Over Three Years (Plantation Sector)
The Edge
Basis Holdings Sdn Bhd
Malaysia National News Agency (BERNAMA)
Malaysia External Trade Development
Corporation (MATRADE)
Scored ‘A’ in Malaysian Corporate Governance (MCG) Index 2011 Minority Shareholder Watchdog Group (MSWG) Kulim (Malaysia) Berhad
• Industry Excellence (Plantations)
ACCA MaSRA Awards 2011
• Shortlisted - Sustainability Report within Annual Report
ACCA Malaysia
Malaysia’s Best Certificate
Federal Agriculture Malaysia Authority (FAMA)
Kulim Montel Farm
(Basir Ismail Estate)
3 Star (SME Competitiveness Rating for Enhancement)
SME Corp Malaysia
Kulim Civilworks Sdn Bhd
27
PAST AWARDS
AWARDED BY
RECEIVING COMPANY/
OPERATING UNIT
2010
ACCA MaSRA 2010
ACCA Malaysia
• Winner – Best Sustainability Report
• Commendation – Reporting on Strategy and Governance
• Shortlisted – Sustainability Report
• Shortlisted – Sustainability Report within Annual Report
NACRA 2010
Prime Minister’s CSR Awards 2010
• Honorable Mention for Outstanding Work in
Empowerment of Women
Ministry of Women, Family and Community
Development
Scored ‘A in MCG Index 2010
MSWG
Skim Amalan Ladang Baik Malaysia
Department of Agriculture, Malaysia
2009
Certification for “Sustainable Palm Oil Producer”
Executive Board of RSPO
Kulim (Malaysia) Berhad –
Plantations in Malaysia
Global CSR Awards 2009
• Gold Award for Best Environmental Excellence Award
Pinnacle Group International
CICM Responsible Care Awards 2007/2008
Category: Oleochemicals
1. Distribution Code – Merit
2. Process Safety Code – Merit
3. Employee Health and Safety Code – Merit
4. Product Stewardship Code – Gold
Chemical Industries Council of Malaysia
(CICM)
Natural Oleochemicals Sdn Bhd
28
(continued)
AWARDED BY
RECEIVING COMPANY/
OPERATING UNIT
ACCA MaSRA 2009
• Shortlisted
• Winner of Best First Time Reporter
• Commendation - Reporting on Strategy and Governance
ACCA Malaysia
NACRA 2009
• Silver Award for Most Outstanding Annual Report
• Winner of Industry Excellence Award (Main Board)
– Plantations and Mining
MPOB Code of Practice 2009 for:
• Good Agricultural Practice
• Oil Palm Nursery
• Mill Operations
Malaysia Palm Oil Board (MPOB)
Sindora Estate
Sindora Palm Oil Mill
2009 South East Asia Frost and Sullivan Growth Strategy
Excellence Award for Oleochemicals
Frost and Sullivan
ISO 9001:2008 Certification
SIRIM QAS International Sdn Bhd
SIM Manufacturing Sdn Bhd
National MPC 2009
• Overall Champion
• 1st Place for Service Category
• 3-Star Award
Malaysia Productivity Corporation (MPC)
National MPC 2009 – 3-Star Award
MPC
Kulim Montel Farm –
Tereh Selatan Estate
MPC
Good Manufacturing Practice (GMP)
MOODY International
Dubois-Natural Esters Sdn Bhd
NACRA 2008
• Silver Award for Best Annual Report in Bahasa Malaysia
ACCA MESRA 2008
– Shortlisted
ACCA Malaysia
Anugerah Kecemerlangan Pengurusan Keselamatan dan
Kesihatan Pekerjaan Negeri Johor 2008
Ministry of Human Resources
Selai Estate
New Company of the Year Award – 2008
London Stock Exchange
New Britain Palm Oil Limited
Certification for “Sustainable Palm Oil Producer”
Executive Board of RSPO
National MPC 2008 –
3rd Placing for Service Category, 3-Star Award
MPC
Sindora Estate
MPC
ACCA MESRA 2007
– Shortlisted
ACCA Malaysia
HALAL Certification
Jabatan Kemajuan Islam Malaysia
Dubois-Natural Esters Sdn Bhd
Natural Soaps Sdn Bhd
2009 (continued)
2008
2007
29
IN THE NEWS
30
FINANCIAL CALENDAR 2011
QUARTERLY RESULTS
DATE OF ANNOUNCEMENT
SHARES AND WARRANTS
Event
26 August 2011
27 May 2011
1
2
ST
QUARTER
ND
QUARTER
3
4
TH
QUARTER
25 November 2011
29 February 2012
500
Purchase
Date
3,304,700
2,561,900
1,975,000
1,391,400
858,700
300,000
445,000
2,246,300
800,000
100,000
234,200
110,000
70,000
25,600
60,000
30,000
120,000
207,200
10,863,522
8,824,130
6,888,084
4,830,305
2,988,085
1,034,642
1,530,515
7,632,018
2,683,666
334,801
782,660
373,724
235,678
86,502
203,067
102,644
410,690
691,434
17.03.2011
18.03.2011
21.03.2011
22.03.2011
23.03.2011
24.03.2011
25.03.2011
28.03.2011
29.03.2011
30.03.2011
31.03.2011
01.04.2011
04.04.2011
05.04.2011
06.04.2011
07.04.2011
08.04.2011
12.04.2044
14,840,000
50,496,167
As at 31.12.2010
12,642,200*
45,691,040
As at 31.12.2011
27,482,200
96,187,207
2. Share buy-back – ordinary
shares of RM0.25 each
ENTITLEMENT DATE
15 December 2011
23 December 2011
15.08.2011
Units Consideration
Purchased
Paid (RM)
INTERIM - FOR YEAR ENDED
31 DECEMBER 2011
PAYMENT DATE
500
Total warrants converted in 2011
DIVIDENDS
20%
Listing Date
1. Exercise of warrants 2011/2016
– listing of new ordinary shares
of RM0.25 each
Event
RD
QUARTER
Units Listed
and Quoted
Total share buy-back in 2011
Accumulated Treasury Shares
* Adjusted for share split
ANNUAL REPORT AND GENERAL MEETINGS
ISSUANCE OF ANNUAL REPORT 2010
1 June 2011
EXTRAORDINARY GENERAL MEETING
10 February 2011
22 December 2011
36TH ANNUAL GENERAL MEETING
23 June 2011
SECTION 2: ABOUT KULIM
34
CORPORATE PROFILE
37
CORPORATE MILESTONES
40
GROUP’S SIGNIFICANT SUBSIDIARIES
42
CORPORATE INFORMATION
44
BOARD OF DIRECTORS
53
MANAGEMENT TEAM
55
ORGANISATION CHART
A
WE ATTRIBUTE THIS SUCCESS TO OUR ABILITY TO EFFECTIVELY
EXECUTE OUR STRATEGIES – OUR BIASNESS TOWARDS ACTION
KULIM HAS BEEN IN EXISTENCE FOR MORE THAN 7 DECADES. WE HAVE GROWN AND PROGRESSED
FROM A HUMBLE BEGINNING INTO BECOMING A SUCCESSFUL DIVERSIFIED CORPORATE
ORGANISATION. WE TAKE GREAT EFFORT TO ENSURE OUR GOALS AND STRATEGIES ARE TRANSLATED
INTO ACTIONABLE PERFORMANCE MEASURES, CONSISTENT WITH OUR MISSION TO BECOME THE
MOST PROGRESSIVE CORPORATE ORGANISATION.
34
CORPORATE PROFILE
WE CARE FOR TOMORROW
THE FOUNDATION
OF KULIM
Kulim (Malaysia) Berhad’s (“Kulim”) corporate history dated back to 1933 when it was first incorporated
in the United Kingdom as Kulim Rubber Plantations Ltd. Kulim was later incorporated as a public limited
company and was listed on the Kuala Lumpur Stock Exchange (now known as the Main Market of Bursa
Malaysia Securities Berhad) in 1975. Since Johor Corporation became the major shareholder of Kulim in
1976, Kulim has increased its interest in the plantation industry through acquisition of plantation assets
and controlling stakes in Malaysian and regional plantation companies. Currently employing more than
61,000 people, 39,000 of the staff are in Malaysia and the remaining contingent are spread across Papua
New Guinea, the Solomon Islands, Singapore, Brunei, Cambodia, India and the United Kingdom. Over the
years, Kulim has evolved and now focuses on three core business operations – oil palm plantation, foods
and restaurants and intrapreneur ventures. Our diversified business portfolio is a progressive development
from our traditional business of palm oil, pursued in line with our aim to sustain value creation for all our
stakeholders via the adoption of an evolving and balanced business mix. The imminent exit from the foods
and restaurants business would bring us back closer to our root. We welcome the opportunities that this
will bring as greater demand are placed in agriculture.
35
CORE BUSINESSES
PLANTATION
Kulim is recognised as one of the leading
palm oil groups in the world with a unique
geographical footprint – in Malaysia, PNG
and SI. Kulim was amongst the earliest
plantations in the world to be certified
as a sustainable palm oil producer when
its operations under NBPOL in West New
Britain, PNG and in Malaysia were awarded
the RSPO certification in 2008 and early 2009
respectively. Our management and growth
strategy is fundamentally guided by “Vision
30:30” – fruit yields of 30 tonnes per hectare
and combined palm products extraction
rates of 30%, and sustainable development
principles.
Kulim’s subsidiar y, QSR Brands Bhd
(“QSR”), is currently the leading, fully
integrated quick ser vice restaurant
enterprise in Malaysia, Singapore and
Brunei. QSR is also beginning to establish
itself in Cambodia, Mumbai and Pune in
India. In January 2009, KFC Holdings
(Malaysia) Berhad (“KFCH”) officially became
a subsidiary of QSR.
In line with the value-add approach, one
of our principal growth thrusts is the
Intrapreneur Ventures (“IV”) division, which is
involved in a diverse range of businesses.
We also operate a host of auxiliary activities
that support the Group’s core restaurant
business, encompassing feed mills, breeder
farms, hatchery, contract broiler farms,
poultry processing and other processing
plants, sauce manufacturing and seasoning.
Our integrated operation safeguards the
integrity of the supply chain and ensures
all products sold are Halal to meet the
traditional food needs as well as the
industrial needs of the world.
The IV companies are subject to a
systematic and rigorous process of selection,
management and control to ensure they
continue to deliver value and returns to
shareholders. The IV companies will be
developed and nurtured to become leading
players in their respective industries and
transformed into strategic business divisions
of the Group. The Group’s IV companies are
involved in businesses ranging from shipping
and logistics, facilities management and civil
works, agricultural machinery, IT services and
development of IT system, trading of tropical
fruits and integrated poultry farming.
36
CORPORATE PROFILE (continued)
BUSINESS STRATEGY
Plantation and agriculture will dominate our profile. We will continue to invest in businesses that offer superior long-term potential for growth and
profitability that will collectively minimise earning fluctuations so as to enable the Group to provide attractive returns to our shareholders. Our
pursuit of value and growth is firmly underpinned by our commitment to embrace sustainability and strong corporate governance as the
overriding philosophy.
KULIM AND SUSTAINABILITY
As a socially and environmentally responsible
corporate citizen, Kulim embraces the principles
of sustainable development and has continued
to work towards demonstrating sustainability
throughout our operations. We recognise
sustainability as an opportunity to change the
way we do our business. Our Sustainable Palm Oil
(“SPO”) Programme defines its ultimate objective
as to improve Kulim’s business performance and
profitability as well as positioning Kulim as a
world leader in SPO. Our efforts with regards to
sustainable development will continue to guide
our business.
We hope that by being mindful of our
surroundings and the socioeconomic impact of
our actions, we will move forward by developing
business methods that are economically viable,
environmentally appropriate and socially
beneficial.
OUR PROMISE, WE CARE
Kulim has laid solid foundations for its future
growth and will continue to adapt its approach
to the ever-changing needs of its businesses
and environment. The Group will build upon
its strength of experience and expertise in its
established core businesses. Guided by a clear
vision of where it is heading and with a strong
governance culture, the Group is well-positioned
to capitalise on emerging opportunities in the
market place, locally and globally, to deliver value
to all its stakeholders.
We care for tomorrow. We translate this as a
responsibility to aspire to international standards
and global recognition. Kulim has ambitious plans
for this goal: to improve performance, increase
sustainability, and manage risks. That is why we
are transforming the businesses by bringing
technology and teamwork together in innovative
ways, making our assets more productive and our
people more proficient.
We care for tomorrow. We believe that we are
responsible in shaping tomorrow and must act
prudently for the sustainable development of this
planet, our home for our people.
37
CORPORATE MILESTONES
1933
1933 - 1947
THE BEGINNING
Incorporation of Kulim Rubber Plantations Ltd (“KRPL”) in the United Kingdom (“UK”) on 4
July.
1947
KRPL began operations with a 190 hectares rubber plantation in Johor, Malaysia.
1970
1976
On 16 July, KRPL changed its name to Kulim
Group Limited (“KGL”) and listed its shares
on London Stock Exchange (“LSE”).
The Johor State Economic Development
Corporation (now k nown as Johor
Corporation or JCorp) became a shareholder
of Kulim.
1973
1970 - 1979
“REBRANDING” AND
RESTRUCTURING
KGL’s businesses expanded from oil
palm and rubber plantations, to include
property development in the UK, hotels
in the Trinidad and Tobago islands in the
Caribbean and a rubber plantation in
Nigeria.
CONSOLIDATION
AND GROWTH
KGL withdrew from the LSE and became
a subsidiary of Kulim. KGL transferred
to Kulim all its assets and liabilities and
divested its assets in the UK.
1979
1975
Incorporation of Kulim (Malaysia) Sdn Bhd
on 3 July and was later made public as
Kulim (Malaysia) Berhad (“Kulim”) on 18
August. On 14 November, Kulim was listed
on the main board of the Kuala Lumpur
Stock Exchange (now known as the
Main Market of Bursa Malaysia Securities
Berhad).
1980 - 1993
1977
Kulim ventured into property development
through its wholly-owned subsidiary,
Advance Development Sdn Bhd (“ADSB”).
1980
1993
Kulim disposed of Minister Bay Hotel Limited
in Trinidad and Tobago.
Kulim acquired 49% of Yule Catto Plantations
Sdn Bhd, now known as Mahamurni
Plantations Sdn Bhd (“MPSB”), which owns
7,033 hectares of oil palm with a palm oil
mill and rubber estate.
1982
Kulim disposed of Mount Irvine Bay Hotel
Limited in Trinidad and Tobago.
1988
Kulim acquired 60% of Selai Sdn Bhd.
1989
Kulim acquired Labis Bahru Estate, a 2,110
hectares of oil palm and rubber estate.
1990
Kulim disposed of its entire equity in
Waterside Rubber Estates Ltd, Nigeria to
focus on its Malaysian plantation.
Kulim acquired 70% equity in Skellerup
Industries (Malaysia) Sdn Bhd, a rubber-based
products manufacturer.
Kulim constructed the 21-storey modern
intelligent building, Menara Ansar, which was
completed and launched in 1997.
38
CORPORATE MILESTONES (continued)
1994 - 2007
DIVERSIFYING
AND FURTHER
GROWTH
1994
2001
Kulim diversified into the oleochemicals
business by acquiring 91.38% of Natural
Oleochemicals Sdn Bhd (“NatOleo”) in July.
Kulim disposed of 3,104 acres of land in Ulu
Tiram Estate for RM313.7 million.
2004
The acquisition of MPSB was completed
along with Mutiara Estate and Sungai
Sembrong Estate.
Kulim made an entry into Kalimantan,
Indonesia when it acquired 100% equity in
EPA Management Sdn Bhd (“EPA”).
1995
Kulim acquired 92.99% stake in Kumpulan
Bertam Plantations Berhad, injecting an
additional 1,016 hectares of plantation land
into the Group.
NatOleo entered into a joint-venture with
Stearinerie Dubois Fils, a French company to
produce specialty esters. NatOleo took 55%
equity in the new company, Dubois-Natural
Esters Sdn Bhd (“DNE”).
1996
Kulim’s regional expansion began with the
acquisition of 90% stake in New Britain Palm
Oil Limited (“NBPOL”) in Papua New Guinea
(“PNG”).
Kulim’s subsidiary, Kulim Plantations
(Malaysia) Sdn Bhd, ventured into plantations
in Indonesia through a 60% stake in PT
Padang Bolak Jaya and PT Multrada Multi
Maju in Sumatra.
Johor Land Berhad (“JLand”) became a
subsidiary of Kulim and was subsequently
listed on the main board of KLSE.
1997
Commissioning of DNE’s ester plant and
expansion of fatty acids plant from 45,000
tonnes per annum (“TPA”) to 150,000 TPA.
1998
New Britain Nominees Ltd was incorporated
by NBPOL as a vehicle for its employees,
outgrowers and traditional landowners to
acquire NBPOL’s shares and allowing them
to participate in NBPOL’s future growth and
prosperity.
NBPOL entered into agreement for the
formation of Guadalcanal Plains Palm Oil
Limited (“GPPOL”), a company incorporated
in the Solomon Islands with NBPOL holding
80% equity.
Kulim entered into a joint-venture with
TopPlant Laboratories Sdn Bhd, to own 60%
equity in Kulim TopPlant Sdn Bhd, for the
production of high-yielding oil palm clones
using tissue culture technology.
2005
Kulim purchased 52% stake in QSR Brands
Bhd (“QSR”), the operator of Pizza Hut and
the controlling shareholder of KFC Holdings
(Malaysia) Bhd (“KFCH”).
Expansion of NatOleo’s fatty acids production
capacity from 150,000 TPA to 380,000 TPA.
2006
Kulim completed a capital distribution-inspecie of its entire holding of JLand shares
in March, signalling the Group’s exit from the
property business.
Kulim divested all of the Group’s plantations
in Sumatra in March.
NBPOL Foundation was established to assist
communities in West New Britain, PNG in the
fields of health and education.
In June, Kulim completed the acquisition of
QSR when it gained control over the QSR
Board at an Extraordinary General Meeting
(“EGM”) of the company.
1999
2007
NBPOL was successfully admitted to Port
Moresby Stock Exchange, PNG.
Secondary listing of NBPOL on the LSE in
December for realisation of NBPOL’s true
earnings potential in the trading market.
2000
Kulim acquired the remaining 40% stake in
Selai Sdn Bhd.
Commissioning of NBPOL’s fourth mill,
Numundo Palm Oil Mill and construction of
Kumbango Palm Oil Refinery with a capacity
of 100,000 TPA.
Divestment of Kalimantan plantations
in August, marking the Group’s exit from
plantation operations in Indonesia.
2008 - 2011
SUSTAINABLE
GROWTH
39
2008
2010
Sindora became a 77%-owned subsidiary
of Kulim in May, adding plantation land
and bringing in a number of Intrapreneur
Venture (“IV”) companies into the Group.
In April, NBPOL acquired 80% stake in
CTP (PNG) Ltd (now known as Kula Palm
Oil Limited), bringing in additional 26,000
hectares of plantation land to the Group’s
landbank.
In October, NBPOL acquired 100% stake in
Ramu Agri-Industries Limited (“Ramu”), PNG,
further expanding the Group’s landbank to
124,833 hectares.
NBPOL became one of the first plantation
companies to receive Roundtable on
Sustainable Palm Oil (“RSPO”) certification in
September.
Construction commenced for NBPOL’s
200,000 TPA refinery plant in UK.
Expansion of QSR into Cambodia for KFC
restaurants.
2009
Official RSPO certification was accorded
to Kulim-owned plantations in Malaysia in
January.
Completion of equity swap in Nexsol (S) Pte
Ltd and Nexsol (M) Sdn Bhd between Kulim
and Peter Cremer (Singapore) GmBH in April.
Following the exercise, Nexsol (M) Sdn Bhd
became a 100% subsidiary of Kulim, while at
the same time Nexsol (S) Pte Ltd ceased to
be an associate of Kulim.
In May, NBPOL officially launched its refinery
in Liverpool.
NBPOL’s subsidiary, Ramu, was officially
accorded with RSPO certification in August.
In September, Kulim concluded the disposal
of NatOleo and its subsidiaries, marking
the Group’s exit from the oleochemicals
business.
2011
In January, QSR increased its shareholding
in KFCH to 50.25% and KFCH became a
subsidiary of QSR.
Kulim completed its capital restructuring
exercise, involving a share split, bonus shares
and free warrants in March.
Estate swap with Sime Darby Plantations Sdn
Bhd (“SDP”) in September, involving Sindora’s
Sungai Simpang Kiri Estate and SDP’s
Sungai Tawing Estate, to realise potential
rationalisation benefits of their respective
locations.
Kulim announced the acquisition of 6 parcels
of oil palm estates measuring approximately
13,687 hectares and 2 palm oil mills from
JCorp, for cash consideration of RM700
million.
Sindora and its subsidiary, E.A. Technique (M)
Sdn Bhd acquired 20% and 18% respectively,
of Orkim Sdn Bhd (“Orkim”), increasing its
tanker fleet, bringing along charter contracts
with major oil companies.
KFCH received the franchise rights to operate
KFC restaurants in Mumbai and Pune, India.
Sindora became a wholly-owned subsidiary
of Kulim and delisted from the official list of
Bursa Malaysia Securities Berhad effective 30
November.
40
GROUP’S SIGNIFICANT SUBSIDIARIES
AS AT 31 MARCH 2012
PLANTATION
100%
Kulim Plantations (Malaysia) Sdn Bhd
100%
Ulu Tiram Manufacturing
Company (Malaysia) Sdn Bhd
QSR Brands Bhd
57%
Pizza Hut Restaurants Sdn Bhd
100%
100%
100%
Mahamurni Plantations Sdn Bhd
100%
100%
100%
100%
Selai Sdn Bhd
EPA Management Sdn Bhd
94%
51%
100%
100%
100%
Multibrands QSR Holdings Pte Ltd
100%
Kampuchea Food Corporation Limited
51%
KFC Holdings (Malaysia) Berhad
Dami Australia Pty Ltd
New Britain Oils Limited
100%
Ayamas Food Corporation
Sdn Bhd
100%
Region Food Industries
Sdn Bhd
100%
Ayamas Integrated
Poultry Industry Sdn Bhd
100%
Integrated Poultry Industry
Sdn Bhd
100%
KFC India Holdings Sdn Bhd
100%
KFCH Education (M) Sdn Bhd
100%
KFC IC Assets Sdn Bhd
Ramu Agri-Industries Limited
Guadalcanal Plains Palm Oil Limited
80%
Kula Palm Oil Limited
55%
Tepak Marketing Sdn Bhd
Kulim TopPlant Sdn Bhd
Malaysia
Papua New Guinea
Orkim Sdn Bhd
Johor Shipyard &
Engineering Sdn Bhd
20%
Orkim Sdn Bhd
75%
Metro Parking (M) Sdn Bhd
75%
Pro Office Solutions Sdn Bhd
90%
GranuLab (M) Sdn Bhd
90%
MIT Insurance Brokers Sdn Bhd
75%
Epasa Shipping Agency Sdn Bhd
60%
Microwell Bio Solutions Sdn Bhd
20%
Tepak Marketing Sdn Bhd
Roaster’s Chicken Sdn Bhd
Kumpulan Bertam Plantations Berhad
80%
60%
31%
Pizza Hut Singapore
Pte Ltd
Sindora Bhd
E.A. Technique Sdn Bhd
51%
PHD Delivery Sdn Bhd
55%
100%
100%
Others
41
Under Kulim (Malaysia) Berhad
80%
75%
100%
JTP Trading Sdn Bhd
JTP Montel Sdn Bhd
Under EPA Management Sdn Bhd
75%
Extreme Edge Sdn Bhd
95%
Pinnacle Platform Sdn Bhd
Under KFC Holdings (Malaysia) Bhd
100%
Rasamas Taman Universiti
Sdn Bhd
89%
Rasamas Tebrau Sdn Bhd
89%
The Secret of Secret Garden
Sdn Bhd
95%
AKLI Resources Sdn Bhd
Ayamas Food Corporation Sdn Bhd
100%
75%
Renown Value Sdn Bhd
90%
75%
100%
Kulim Nursery Sdn Bhd
Palma Bumimas Sdn Bhd
100%
78%
90%
75%
90%
100%
75%
Roaster’s Chicken Sdn Bhd
Kulim Livestock Sdn Bhd
90%
Ayamas Farms & Hatchery
Sdn Bhd
85%
Ayamas Feedmill Sdn Bhd
75%
Semangat Juara Sdn Bhd
90%
Southern Poultry Farming
Sdn Bhd
85%
Synergy Poultry Farming
Sdn Bhd
90%
Ventures Poultry Farming
Sdn Bhd
Exquisite Livestock Sdn Bhd
Superior Harbour Sdn Bhd
Special Appearance Sdn Bhd
Edaran Badang Sdn Bhd
Perfect Synergy Trading
Sdn Bhd
Optimum Status Sdn Bhd
Kulim Civilworks Sdn Bhd
100%
KCW Hardware Sdn Bhd
100%
KCW Electrical Sdn Bhd
100%
KCW Kulim Marine Services
Sdn Bhd
100%
KCW Roadworks Sdn Bhd
The full list of companies under Kulim Group is set out in Notes 16 to the Financial Statements.
42
CORPORATE INFORMATION
BOARD OF DIRECTORS
Chairman/
Non-Independent Non-Executive Director
Managing Director
AHAMAD MOHAMAD
Executive Director
WONG SENG LEE
ZULKIFLI IBRAHIM
DATUK AHMAD ZAKI ZAHID
DATIN PADUKA SITI SA’DIAH SH BAKIR
ROZAN MOHD SA’AT
WAN MOHD FIRDAUS WAN MOHD FUAAD
Independent Non-Executive Director
TAN SRI DATO’ SERI ARSHAD AYUB
KUA HWEE SIM
DATUK HARON SIRAJ
DR. RADZUAN A. RAHMAN
LEUNG KOK KEONG
NATASHA KAMALUDDIN
AUDIT COMMITTEE
REGISTRAR
Chairman
KUA HWEE SIM
PRO CORPORATE MANAGEMENT
SERVICES SDN BHD
Suite 12B, Level 12, Menara Ansar
65, Jalan Trus
80000 Johor Bahru
Johor Darul Takzim
Tel : +607-226 7692 / 226 7476
Fax : +607-222 3044 / 222 3022
Email : nursheila@jcorp.com.my
NOMINATION COMMITTEE
Chairman
KUA HWEE SIM
REMUNERATION COMMITTEE
Chairman
PRINCIPAL BANKERS
CIMB Bank Berhad
OCBC Bank (M) Berhad
RHB Bank Berhad
Malayan Banking Berhad
HSBC Bank Malaysia Berhad
Standard Chartered Bank Malaysia
Asian Finance Bank Berhad
The Bank of Nova Scotia Berhad
SECRETARIES
IDHAM JIHADI ABU BAKAR
(MAICSA 7007381)
AUDITORS
Ernst & Young
NURALIZA A. RAHMAN
(LS 0008565)
WEBSITE
www.kulim.com.my
REGISTERED OFFICE
65, Jalan Trus
80000 Johor Bahru
Johor Darul Takzim
Tel : +607-226 7692 / 226 7476
Fax : +607-222 3044 / 222 3022
STOCK EXCHANGE LISTING
LISTED ENTITIES WITHIN
THE GROUP
STOCK EXCHANGE
LISTED SINCE
STOCK CODE
14 November 1975
2003
1 April 2004
9415
11 November 1988
3492
Main Market – London Stock Exchange
17 December 2007
NBPO
Port Moresby Stock Exchange
19 December 1999
NBO
QSR Brands Bhd
Main Market of
Bursa Malaysia Securities Berhad
KFC Holdings (Malaysia) Bhd
44
BOARD OF DIRECTORS
1
2
3
4
5
Chairman/Non-Independent Non-Executive Director
AHAMAD MOHAMAD
Managing Director
WONG SENG LEE
Executive Director
ZULKIFLI IBRAHIM
Executive Director
Executive Director
6
7
8
9
10
ROZAN MOHD SA’AT
KUA HWEE SIM
11
12
13
14
45
DATUK HARON SIRAJ
LEUNG KOK KEONG
NATASHA KAMALUDDIN
7
11
12
2
4
1
3
13
9
8
14
6
10
5
BOARD OF DIRECTORS
46
(continued)
AHAMAD MOHAMAD
Chairman/Non-Independent Non-Executive Director
Managing Director
Aged 48, is a Non-Independent Non-Executive Director and the Chairman
of Kulim (Malaysia) Berhad. He was appointed to the Board of Kulim as
Director on 1 January 2008 and appointed as Chairman on 12 January
2011. He graduated with a Bachelor of Commerce majoring in Accountancy
from the University of Wollongong, New South Wales, Australia in 1987.
Aged 58, is the Managing Director of Kulim (Malaysia) Berhad and
was appointed to the Board on 24 January 1991. He graduated
with a Bachelor of Economics (Honours) degree in 1976 from the
University of Malaya. He joined JCorp in June 1979 as a Company
Secretary for various companies within the JCorp Group.
He embarked his career as an Audit Assistant at Messrs K.E. Chan &
Associates in May 1988, later joined an international accounting firm, Messrs
PricewaterhouseCoopers (formerly known as Messrs Coopers & Lybrand) in
1989. In December 1992, he left the firm and joined Perbadanan Kemajuan
Ekonomi Negeri Johor (currently known as Johor Corporation (“JCorp”))
as a Deputy Manager in the Corporate Finance Department and later
promoted to General Manager in 1999.
He was involved in many of JCorp’s projects, among others are
the Johor Specialist Hospital, prefabricated housing project and
the Kotaraya Complex in Johor Bahru. He is presently a member
of the Board of Directors of KPJ Healthcare Berhad, New Britain
Palm Oil Limited (Papua New Guinea) and the Deputy Chairman
of QSR Brands Bhd and KFC Holdings (Malaysia) Bhd. He is also
the Chairman and Director of several other companies within the
JCorp Group.
He is the President and Chief Executive of JCorp with effect from 1 December
2010. He had served as the Acting President and Chief Executive of JCorp
from 29 July 2010 to 30 November 2010. Prior to that, he had served as
the Chief Financial Officer and Chief Operating Officer of JCorp beginning
1 August 2006, before his appointment as the Senior Vice President,
Corporate Services & Finance of JCorp beginning 1 January 2010. During
his tenure as the Johor Corporation’s Chief Operating Officer, as well as the
Senior Vice President, Corporate Services & Finance, Johor Corporation had
received Excellence Award For Financial Management Accountability Index
with 4-star ratings from the National Audit Department for 4 consecutive
years from 2007 – 2010.
He was appointed to the Board of Damansara Realty Berhad (“DBhd”) on
11 December 1995 before assuming the position as its Executive Director
on 16 August 1999. He was later appointed as its Deputy Chairman on
4 October 2006, then re-designated as DBhd’s Managing Director on 1
January 2010. He resigned as the Managing Director of DBhd with effect
from 12 January 2011 and was later appointed as the Chairman of DBhd
with effect from the same date.
He sits as the Chairman of Damansara REIT Managers Sdn Bhd, the
manager of Al-Aqar KPJ REIT beginning 12 January 2011. He is also the
Chairman of KPJ Healthcare Berhad, and a Director of QSR Brands Bhd
and KFC Holdings (Malaysia) Bhd, which are JCorp’s Group of Companies
listed on the Main Market of Bursa Malaysia Securities Berhad. He is also
a Director of Waqaf An-Nur Corporation Berhad, an Islamic endowment
institution that spearheads JCorp’s Corporate Responsibility programmes.
He also sits as Chairman and/or Director of several other companies
within JCorp Group.
Other than as disclosed, he does not have any family relationship with any
director and/or major shareholder of Kulim. He has no personal interest in
any business arrangement involving Kulim. He has not been convicted for
any offences. He attended all eight (8) Board of Directors’ Meetings of the
Company in the financial year ended 31 December 2011.
He is also active as the President of the Johor Corporation Football
Club (“Johor FC”) and Director of Waqaf An-Nur Corporation
Berhad, an Islamic endowment institution that spearheads JCorp
Group’s Corporate Responsibility programmes, including the
unique Corporate Waqaf Concept initiated by JCorp.
Other than as disclosed, he does not have any family relationship
with any director and/or major shareholder of Kulim. He has no
personal interest in any business arrangement involving Kulim
and has not been convicted for any offences. He attended all
eight (8) Board of Directors’ Meetings of the Company in the
financial year ended 31 December 2011.
47
WONG SENG LEE
ZULKIFLI IBRAHIM
Executive Director
Executive Director
Aged 61, is an Executive Director of Kulim (Malaysia) Berhad. He was
appointed to the Board of Kulim on 8 January 1996. He is currently
the Vice President of Marketing and Corporate Affairs.
Aged 54, was the Chief Operating Officer of Kulim (Malaysia) Berhad
since 3 November 2003 and was re-designated as an Executive
Director when he was appointed to the Board on 1 July 2011.
He qualified as a Certified Accountant in 1974 and is a Fellow of the
Association of Chartered Certified Accountants. In 1974, he joined an
international audit firm in Singapore and left to join EPA Management
Sdn Bhd as an Accountant in July 1979. He was previously the
Financial Controller for Kulim Group.
He is a Fellow of the Association of Chartered Certified Accountants,
United Kingdom and a member of the Malaysian Institute of
Accountants since 1992.
He is presently a member of the Board of Directors of several other
companies within the Kulim Group.
personal interest in any business arrangement involving Kulim and
has not been convicted for any offences. He attended all eight (8)
Board of Directors’ Meetings of the Company in the financial year
ended 31 December 2011.
After serving various companies in the private sector since his
graduation in 1983, he joined JCorp Group in 1990 as the Financial
Controller of Sindora Berhad. In 1996, he was appointed the Managing
Director of Antara Steel Mills Sdn Bhd until 2000 before joining PJB
Pacific Capital Group in 2001 as the Chief Operating Officer. He joined
Kulim as the Chief Operating Officer in 2003. He is also the Chairman
and Director of several other companies within the JCorp Group.
has not been convicted for any offences. Since his appointment date,
he attended five (5) Board of Directors’ Meetings of the Company in
the financial year ended 31 December 2011.
BOARD OF DIRECTORS
48
(continued)
Executive Director
Aged 41, was appointed to the Board of Kulim (Malaysia) Berhad as
an Executive Director on 8 November 2011.
He holds a Bachelor of Laws, University of Bristol, England in 1994.
He was the Executive Director, Malaysian Resources Corporation
Berhad from May 2009 to October 2011 and was an Independent
Director, Malaysian Resources Corporation Berhad from January 2005
to April 2009.
He was a Senior Executive Officer at the Issues and Investment
Division of Securities Commission of Malaysia from November 1994
to July 1998. Thereupon, from August 1998 to February 2000, he
worked as a Senior Consultant at Booz Allen & Hamilton (Kuala
Lumpur and Singapore).
He assumed the role of Special Assistant to YB Dato’ Seri Hishamuddin
Tun Hussein, Minister of Youth & Sports, Malaysia from March 2000 –
June 2001. In July 2001, he joined the Deputy Prime Minister’s office
as the Special Officer to YAB Tun Abdullah Hj Ahmad Badawi and was
promoted to Special Officer to YAB Tun Abdullah Hj Ahmad Badawi
and Head of Policy Unit, Prime Minister’s Office from November 2003
to April 2009.
He is also the Managing Director of Damansara Realty Berhad
and the Managing Director of Damansara Assets Sdn Bhd. Besides
that, he is also a Director of several other companies within the
JCorp Group.
he attended two (2) Board of Directors’ Meetings of the Company in
Aged 59, was appointed to the Board of Kulim on 1 January 2005.
She is currently a Non-Independent Non-Executive Director of Kulim
(Malaysia) Berhad.
Datin Paduka is the Managing Director of KPJ Healthcare Berhad
(“KPJ”) since 1 March 1993. She graduated with a Bachelor of
Economics from University of Malaya in 1974 and holds an MBA from
Henley Management College, University Reading, London.
Her career with JCorp commenced in 1974 and she was directly
involved with JCorp’s Healthcare Division since 1978. Datin Paduka was
appointed as the Chief Executive of Kumpulan Perubatan (Johor) Sdn
Bhd (“KPJSB”) from 1989 until the listing of KPJ in November 1994.
Datin Paduka is the Chairman of various hospitals and companies
in the KPJ Group, as well as MIT Insurance Brokers Sdn Bhd. She is a
Non-Independent Non-Executive Director of KFC Holdings (Malaysia)
Bhd, QSR Brands Bhd and Damansara REIT Managers Sdn Bhd. Datin
Paduka is also a Director of Waqaf An-Nur Corporation Bhd, a nongovernmental organisation dedicated to the provision of healthcare
services to the less fortunate.
Datin Paduka is an Independent Non-Executive Director of Bursa
Malaysia, elected since 2004.
Committed to promoting excellence in healthcare, Datin Paduka is
the President of the Malaysian Society for Quality in Health (“MSQH”),
elected since its inception in 1997 to date.
She is a member of the Malaysia Productivity Corporation (“MPC”)
Consultative Panel on Healthcare since 2001 and a member of the
National Patient Safety Council, Ministry of Health since 2003. In 2009,
she was appointed as a member of the Malaysian Healthcare Travel
Council, Ministry of Health. She was a Board member of MATRADE
from 1999 to 2010.
In 2010, Datin Paduka was named the ‘CEO of the Year 2009’ by
the New Straits Times Press and the American Express. In 2011,
Datin Paduka achieved 3 more awards, namely the ‘Asia Leading
Woman CEO of The Year’ at the Women in Leadership Forum Asia,
the ‘Masterclass Woman CEO of The Year’ by the Global Leadership
Awards and the ‘BrandLaureate Transformational Corporate Leader
Brand iCon Leadership Awards 2011’ from The Asia Pacific Brands
Foundation.
Other than as disclosed, she does not have any family relationship
with any director and/or major shareholder of Kulim. She has no
has not been convicted for any offences. She attended all eight (8)
49
ROZAN MOHD SA’AT
Aged 52, is currently a Non-Independent Non-Executive Director of
Kulim (Malaysia) Berhad. He was appointed to the Board of Kulim on
1 January 2008. He is the Chief Executive of Hospitality Division of
JCorp and the Managing Director of Sindora Berhad.
He holds a Bachelor of Economics (Honours) majoring in Statistics
from Universiti Kebangsaan Malaysia. He started his career in 1983
as an Administrative Officer in Planning & Research Department of
JCorp before being seconded as an Operations Manager in Sergam
Berhad, a subsidiary of JCorp in 1986.
From 1987 to 1988, he served in the Corporate Communications
Department, JCorp as an Administrative Officer. From 1988 to 1993,
he was appointed as the Executive Director of several subsidiaries in
JCorp Group. In 1994, he was appointed as the General Manager of
JCorp’s Tourism Division before assuming the post as Chief Executive
of the same Division on 15 June 1996, a post which he held until his
appointment as the General Manager, Business Development, JCorp,
beginning January 1999.
Prior to his appointment as the Managing Director of Sindora Berhad,
he served as the Senior General Manager, Business Development of
JCorp from 2000 until August 2002. He is also a Director of Waqaf
An-Nur Corporation Berhad, an Islamic endowment institution that
spearheads JCorp Group’s Corporate Responsibility programmes,
including the unique Corporate Waqaf Concept initiated by JCorp.
a Non-Independent Non-Executive Director on 9 November 2011.
He is also currently a Non-Independent Non-Executive Director of
Damansara Realty Berhad.
He holds a Bachelor of Law (Honours) degree from the University of
Nottingham. He is currently the Special Officer to the Menteri Besar
of Johor.
He is the founder of Young Corporate Malaysians (“YCM”), a business
club for young Malaysian professionals and founder of the Institute
for Democracy and Economic Affairs (“IDEAS”), a think tank promoting
free market values.
He is also a Director of Damansara Assets Sdn Bhd.
he attended one (1) Board of Directors’ Meeting of the Company in
BOARD OF DIRECTORS
50
(continued)
KUA HWEE SIM
He is currently an Independent Non-Executive Director of Kulim
(Malaysia) Berhad. He is the Chairman of the Audit Committee and
also appointed as a member of the Nomination and Remuneration
Committee of Kulim.
Tan Sri graduated with a Diploma in Agriculture in 1954 from
Serdang Agriculture College, Selangor and with a Bachelor of Science
(Honours) in Economics and Statistics in 1958 from University College
of Wales, Aberystwyth in the United Kingdom. He graduated with
Post Graduate Diploma in Business Administration from IMEDE, now
IMD Lausanne, Switzerland.
He had a distinguished career in the Malaysian Civil Service. Among
the senior positions he held were First Director, Mara Institute of
Technology (1965 –1975), Deputy Governor of Bank Negara Malaysia
(1975 – 1977), Deputy Director-General in the Economic Planning
Unit of the Prime Minister’s Department (1977 –1978) and SecretaryGeneral in the Ministry of Primary Industries (1978), Ministry of
Agriculture (1979 – 1981) and Ministry of Land and Regional
Development (1981 – 1983). Currently, he serves as President of the
Malaysian Rubber Products Manufacturers Association (“MRPMA”). He
is also the Pro Chancellor of UiTM and KPJ International University
College and Chairman of University of Malaya Board. He also holds
directorship in Malayan Flour Mills Berhad, LBI Capital Berhad, Top
Glove Corporation Berhad, PFM Capital Holdings Sdn Bhd, Land Rover
(M) Sdn Bhd, Bistari Johor Berhad and Zalaraz Sdn Bhd.
Other than as disclosed, he has no family relationship with any
Director and/or substantial shareholder of Kulim. He has no personal
interest in any business arrangement involving Kulim and has not
been convicted for any offences. He attended all eight (8) Board of
Directors’ Meetings of the Company in the financial year ended 31
December 2011.
She is currently an Independent Non-Executive Director of Kulim
(Malaysia) Berhad. She is also a member of the Audit Committee.
She is a Fellow of the Association of Chartered Certified Accountants
(UK) and a Registered Accountant of Malaysia and Singapore. She has
more than 35 years of corporate and financial experience in several
industries within Malaysia and overseas. She is currently a Director of
QSR Brands Bhd and KFC Holdings (Malaysia) Bhd which are JCorp’s
subsidiaries listed on the Main Market of the Bursa Malaysia Securities
Berhad. She is a member of Audit Committee of all listed companies
mentioned. As a professional accountant, she also provides financial
training for companies within Malaysia.
has not been convicted for any offences. She attended all eight (8)
51
DATUK HARON SIRAJ
Aged 68 was appointed to the Board of Kulim (Malaysia) Berhad on
9 January 2006 as an Independent Non-Executive Director.
Aged 68, was appointed to the Board of Kulim (Malaysia) Berhad on 1
November 2006 as an Independent Non-Executive Director.
He graduated with a Bachelor in Economics (Honours) degree in
1968 from the University of Manchester, United Kingdom and Master
of Development Economics from Williams College, United States of
America in 1975.
He graduated with a Bachelor in Agricultural Science (Honours)
degree from the University of Malaya in 1969. Subsequently, he
obtained his Master and PhD in Resource Economics from Cornell
University, New York in 1971 and 1974 respectively.
He had a distinguished career in the Malaysian Civil Service. Among
the senior positions he had held were Assistant Controller of Ministry
of Commerce and Industry (1969 – 1971), Principal Assistant Secretary,
Ministry of Primary Industries (1972 – 1974), Minister Counselor
(Economic Affairs) at the Permanent Mission of Malaysia in Geneva,
Switzerland (1980 – 1986), Director of Industrial Development at
Ministry of International Trade and Industry (1986 – 1987), Director
of International Trade at Ministry of International Trade and
Industry (1987 – 1990), Deputy Secretary-General (Trade) Ministry of
International Trade and Industry (1990 – 1992), Ambassador, Permanent
Representative of Malaysia to United Nations and other International
Organisations and Specialised Agencies in Geneva, Switzerland (1992
– 1996), Secretary-General Ministry of Primary Industries (1996 – 2000)
and as the Chief Executive Officer of Malaysian Palm Oil Promotion
Council since 2001 until he retired in January 2006.
Dr. Radzuan has an outstanding career, both as an academician and
corporate practitioner. Amongst the notable distinguished positions
held were as Associate Professor and the Dean of the Resource
and Agribusiness Faculty, Universiti Pertanian Malaysia (now known
as Universiti Putra Malaysia) (1969 – 1980) , Regional Director, Sime
Darby Plantations for Melaka, Negeri Sembilan and Johor Regions
(1980 – 1983), Director, Development Division, Sime Darby Plantations
(1983 – 1984), Director, Corporate Planning, Golden Hope Plantations
Berhad (1984 – 1992) and Group Director – Plantations, Golden Hope
Plantations Berhad (1993 – 1999). He had also served as the Managing
Director for Austral Enterprises Berhad and Island & Peninsular Berhad
(1999 – 2004) as well as Tradewinds Plantation Berhad (2005 – 2006).
He also holds directorships in Scomi Group Berhad, Jerneh Asia
Berhad, HSBC Amanah Takaful Sdn Bhd, Apex Communications Group
Sdn Bhd and MM Vitaoils Sdn Bhd.
Currently he holds directorships in Idaman Unggul Berhad and Inch
Kenneth Kajang Rubber Pte Ltd. Additionally, he sits on the Board
of Malaysian Biotechnology Corporation Sdn Bhd, Marditec Sdn Bhd,
Kenanga Cergas Sdn Bhd, MAEPS Management Sdn Bhd and Green
Capital Sdn Bhd.
BOARD OF DIRECTORS
52
(continued)
LEUNG KOK KEONG
NATASHA KAMALUDDIN
an Independent Non-Executive Director on 9 November 2011. He
obtained his Bachelor Degree in Accounting, Curtin University of
Technology, Australia in December 1989 and is a Certified Practising
Accountant and Chartered Accountant. He is also a member of CPA
Australia and Malaysian Institute of Accountants.
Trained as an investment banker, he has significant experience in
corporate finance and business development as well as management.
He was the founding member and former Executive Director of
Newfields Advisors Sdn Bhd, a boutique financial and corporate
advisory firm from August 2001 - August 2006. He was the Chief
Executive Officer, Platinum Energy Group from September 2006 February 2008.
His wide and vast experience spanned from his earlier years as
an Investment & Corporate Planning Manager, Hong Leong Credit
Berhad from 1994 to 2001 and was an Audit Senior, Messrs. Coopers
& Lybrand Kuala Lumpur since 1990 – 1994.
He is currently an Independent Non-Executive Director of Damansara
Realty Berhad, a company within the JCorp Group. In addition, he is
also an Independent Non-Executive Director of Tebrau Teguh Berhad
and an Executive Director of Asia Bioenergy Technologies Berhad.
he attended two (2) Board of Directors’ Meetings of the Company in
an Independent Non-Executive Director on 9 November 2011.
She obtained her Masters and Bachelor in Economics (Honours) from
the University of Cambridge, United Kingdom in 1995.
She is currently the Managing Partner of Ethos & Co., a Malaysian
boutique management consulting firm where she has been part of
the partnership team since June 2004. She is also currently a Partner
and Director in Ethos Capital. Prior to Ethos, She was employed with
Accenture from July 1995 to August 2003.
Amongst her personal achievements are helping to establish several
high impact organisations such as the Performance Management
and Delivery Unit (“PEMANDU”), Ekuiti Nasional Berhad (“EKUINAS”),
Malaysian Biotechnology Corporation and Northern Corridor
Implementation Authority. She was involved in the National Key
Results Area (“NKRA”) and National Key Economic Area (“NKEA”)
programmes with PEMANDU under the leadership of Datuk Idris
Jala. She has also led strategy development, transformation and M&A
initiatives with large Malaysian companies, including those in the
plantations sector.
has not been convicted for any offences. Since her appointment date,
she attended two (2) Board of Directors’ Meetings of the Company in
53
MANAGEMENT TEAM
9
8
6
5
4
3
2
7
1
MANAGEMENT TEAM
1
54
(continued)
AHAMAD MOHAMAD
4
Aged 58, has been the Managing Director
since 1993. He holds a Bachelor of
Economics (Honours) from University of
Malaya. He joined JCorp in June 1976 as a
Company Secretary for various companies
within JCorp Group. He was involved in
many of JCorp’s landmark projects including
the Johor Specialist Hospital, prefabricated
housing project and the Kotaraya Complex
in Johor Bahru. He is also presently the
Deputy Chairman of QSR Brands Bhd and
KFC Holdings (Malaysia) Bhd, and a member
of the Board of Directors for Kulim (Malaysia)
Berhad, New Britain Palm Oil Limited (Papua
New Guinea) as well as several other
companies within JCorp and Kulim Group.
ZULKIFLI IBRAHIM
Chief Operating Officer/
Senior Vice President
Aged 54, was appointed to the Board on 1
July 2011. He has been the Chief Operating
Officer since 3 November 2003. He is
a Fellow of the Association of Chartered
Certified Accountants, United Kingdom and
a member of the Malaysian Institute of
Accountants since 1992. He joined JCorp
Group in 1990 as the Financial Controller of
Sindora Berhad. In 1996, he was appointed
the Managing Director of Antara Steel Mills
Sdn Bhd until 2000 before joining PJB Pacific
Capital Group in 2001 as the Chief Operating
Officer. He also sits on the Board of several
other companies within Kulim Group.
Aged 41, he was appointed to the Board
on 8 November 2011 as Executive Director.
He is currently the Managing Director of
Damansara Realty Berhad. He holds a
Bachelor of Laws from the University of Bristol,
England. Prior to his current position, he has
held various notable positions in both private
and public sector including Special Officer to
YAB Tun Abdullah Ahmad Badawi and Head
of Policy Unit, Prime Minister’s Office from
November 2003 to April 2009. He also sits on
the Board of several other companies within
JCorp Group.
5
WONG SENG LEE
Vice President
Marketing and Corporate Affairs
Aged 61, has been the Executive Director
of Kulim (Malaysia) Berhad since 8 January
1996. He qualified as a Certified Accountant
in 1974 and is a Fellow of the Association
of Chartered Certified Accountants, United
Kingdom. He is also a member of Malaysian
Institute of Accountants and Institute of
Certified Public Accountant of Singapore.
He joined EPA Management Sdn Bhd as an
Accountant in 1979 and was the Financial
Controller for Kulim (Malaysia) Berhad until
1994. He also sits on the Board of several
7
AZLI MOHAMED
Vice President
Finance
Aged 44, appointed as Chief Financial Officer
of Kulim (Malaysia) Berhad on 1 June 2011 and
re-designated as Vice President of Finance in
2012. He is a Member of the Association
of Chartered Certified Accountants, United
Kingdom and also a member of the
Malaysian Institute of Accountants. He was
with Messrs. PricewaterhouseCoopers from
1992 prior to joining KPJ Healthcare Berhad
in 2001 until 2008. He then served JCorp as
the General Manager of Finance Division
until he assumed the current position. He
also sits on the Board of other companies
within JCorp and Kulim Group.
IR. IZHAR MAHMOOD
Vice President
Plantation Operations
Aged 57, was appointed as Vice President of
Plantation Operations in 2008. Prior to this,
he has been the Director of Engineering
Department, EPA Management Sdn Bhd
since 10 May 2002. He holds a First Grade
Steam Engineer’s Certificate and has been
a member of the Board Engineer Malaysia
(“BEM”) since 1988. He holds a Bachelor in
Engineering (Agriculture) from Universiti
Pertanian Malaysia (now known as Universiti
Putra Malaysia). He is also one of the
industry’s panel advisors at 2 local universities
in Malaysia on bioprocess engineering. He
joined the Company on 1 July 1990 as a Mill
Manager. He also sits on the Board of several
8
NASHARUDDIN SHUKOR
Vice President
Foods and Intrapreneur Ventures
Age 47, was appointed as Vice President
of Foods and Intrapreneur Ventures on 1
February 2012. He holds Master of Business
Administration (“MBA”) and Bachelor of
Business Administration (Economics) from
Sam Houston State University, USA. Prior
to this, he has been the General Manager
of Usahawan Bistari Ayamas Sdn Bhd, KFC
Marketing Sdn Bhd and Ayamas Integrated
Poultry Industry Sdn Bhd from April 2009
to January 2012. He was the Intrapreneur
at JTP Trading Sdn Bhd from July 2009 to
March 2009. He joined Johor Corporation on
2 May 1989 as Administrative Executive. He
also sits on the Board of several companies
within Kulim Group.
SATIRA OMAR
Vice President
Risk and System Management
Aged 45, was appointed as Vice President,
Risk and System Management of Kulim in
2012. She graduated with a Bachelor of
Science majoring in Communication from
the University of Southern Illinois, United
States of America in 1992 and holds a Master
of Business Administration from Henley
Business School, University of Reading,
United Kingdom. She joined JCorp Group in
1993 as an Executive before assuming her
current position in Kulim in 2012. She also
sits on the Board of several other companies
within Kulim Group.
9
6
3
Vice President
Property and Business Development
Managing Director
2
UMI KALTHOM SAMSU
Chairman
Sustainability and Quality Council
Aged 59, was appointed as the Chairman
of the Group’s Sustainability and Quality
Council in January 2009. Prior to this, she has
been the General Manager of Purchasing
and Contract Department, EPA Management
Sdn Bhd since 1997. She graduated with a
Diploma in Marketing in 1973 from Institute
of Marketing London / Institut Teknologi
MARA (now known as Universiti Teknologi
MARA) and began her career with JCorp in
September 1973 as an Assistant Marketing
Officer. She joined Johor Estates Agency
as an Assistant Marketing Officer in March
1976. She also sits on the Board of several
55
ORGANISATION CHART
BOARD OF
DIRECTORS
AHAMAD MOHAMAD
MANAGING DIRECTOR
PLANTATION
INSPECTORATE
INTERNAL AUDIT
ZULKIFLI IBRAHIM
CHIEF OPERATING OFFICER/
SENIOR VICE PRESIDENT
WONG SENG LEE
IR. IZHAR MAHMOOD
SATIRA OMAR
EXECUTIVE DIRECTOR/
VICE PRESIDENT
MARKETING AND
CORPORATE AFFAIRS
DIRECTOR/
VICE PRESIDENT
PLANTATION OPERATION
VICE PRESIDENT
RISK AND SYSTEM MANAGEMENT
AZLI MOHAMED
NASHARUDDIN SHUKOR
EXECUTIVE DIRECTOR/
VICE PRESIDENT
PROPERTY AND BUSINESS
DEVELOPMENT
CHIEF FINANCIAL OFFICER/
VICE PRESIDENT
FINANCE
VICE PRESIDENT
FOODS AND INTRAPRENEUR
VENTURES
SECTION 3: PERFORMANCE
HIGHLIGHTS AND
STATISTICS
58
GROUP 5-YEAR FINANCIAL STATISTICS
61
GROUP QUARTERLY PERFORMANCE 2011
62
GROUP STATEMENT OF VALUE ADDED
63
5-YEAR PLANTATION STATISTICS:
•
GROUP
•
MALAYSIA
•
PAPUA NEW GUINEA
•
SOLOMON ISLANDS
67
5-YEAR FOODS AND RESTAURANTS STATISTICS
68
HUMAN CAPITAL STATISTICS
69
SHAREHOLDING STATISTICS
71
WARRANTHOLDING STATISTICS
73
SHARE PRICE PERFORMANCE AND VOLUME
TRADED 2011
58
2011
2010
2009
2008
2007
7,041,771
5,488,939
4,702,399
2,449,970
1,646,650
46%
48%
6%
0%
38%
55%
5%
2%
34%
59%
5%
2%
71%
22%
6%
1%
71%
28%
0%
1%
1,445,081
861,275
615,701
637,273
520,969
Plantation
Others
78%
20%
3%
(1%)
78%
32%
2%
(12%)
59%
39%
3%
(1%)
89%
8%
3%
0%
91%
9%
0%
0%
Unallocated expenses
(8,393)
(10,483)
(12,281)
(9,929)
(5,698)
1,436,688
12,591
(91,475)
6,992
1,364,796
(356,930)
850,792
6,370
(81,440)
2,174
777,896
(233,681)
603,420
12,332
(68,028)
4,010
551,734
(177,451)
627,344
16,759
(57,263)
61,154
647,994
(137,169)
515,271
6,281
(57,170)
43,098
507,480
(111,715)
1,007,866
–
1,007,866
544,215
151,611
695,826
374,283
(22,372)
351,911
510,825
15,728
526,553
395,765
119,309
515,074
565,013
442,853
1,007,866
385,592
310,234
695,826
145,837
206,074
351,911
351,228
175,325
526,553
426,823
88,251
515,074
STATEMENT OF COMPREHENSIVE INCOME
HIGHLIGHTS (RM'000)
REVENUE
Segment %:
Plantation
Others
PROFIT FROM OPERATIONS
(BEFORE UNALLOCATED EXPENSES)
Segment %:
PROFIT FROM OPERATIONS
Interest income
Finance costs
Share of net results of associates
PROFIT BEFORE TAX
Income tax expense
PROFIT AFTER TAX FROM
– Continuing operations
– Discontinued operations
NET PROFIT FOR THE YEAR
Attributable to:
Owners of the Company
NET PROFIT FOR THE YEAR
PAT (RM Million) /CPO Price (USD/tonne)
GROUP 5-YEAR PROFIT VS AVERAGE CPO PRICE
1,200
1,125
1,008
949
1,000
901
780
800
600
683
515
696
527
352
400
200
0
2007
2008
2009
PAT (RM Million)
2010
2011
CPO Price (USD/tonne)
59
2011
2010
2009
2008
2007
Other non-current assets
7,852,213
6,254,289
5,365,042
4,832,569
3,665,454
Intangible assets
1,097,799
1,046,895
891,691
320,906
288,159
8,950,012
7,301,184
6,256,733
5,153,475
3,953,613
1,925,524
1,492,362
1,412,098
1,021,008
946,390
644,702
452,146
405,227
445,476
648,307
2,570,226
1,944,508
1,817,325
1,466,484
1,594,697
Other current liabilities
935,471
1,056,630
844,355
500,129
313,870
Loans and borrowings
571,843
995,410
547,747
566,229
624,642
STATEMENT OF FINANCIAL POSITION
HIGHLIGHTS (RM’000)
ASSETS EMPLOYED
Total Non-Current Assets
Other current assets
Cash and bank balances
Total Current Assets
Total Current Liabilities
1,507,314
2,052,040
1,392,102
1,066,358
938,512
10,012,924
7,193,652
6,681,956
5,553,601
4,609,798
315,509
159,336
159,336
154,227
148,545
Reserves
1,540,087
1,433,182
1,491,041
1,479,650
1,500,756
Retained profits
2,436,500
1,972,850
1,720,988
1,615,436
1,300,978
4,292,096
3,565,368
3,371,365
3,249,313
2,950,279
2,628,603
1,977,374
1,699,037
1,020,621
759,739
Long term borrowings
2,049,101
931,020
1,157,484
899,444
666,547
FINANCED BY:
Share capital
Shareholders' equity
1,043,124
719,890
454,070
384,223
233,233
10,012,924
7,193,652
6,681,956
5,553,601
4,609,798
Average capital employed
8,603,288
6,937,804
6,117,779
5,081,700
4,312,280
Average shareholders' equity
3,928,732
3,468,367
3,310,339
3,099,796
2,691,872
Other long term liabilities
RM Million
GROUP 5-YEAR REVENUE VS AVERAGE CAPITAL EMPLOYED
9,000
8,603
6,938
7,042
6,118
6,000
5,082
4,312
3,000
5,489
4,702
2,450
1,647
0
2007
2008
2009
Revenue
2010
2011
Average Capital Employed
60
(continued)
2011
2010
2009
2008
2007
Net cash flows from operating activities
1,441,145
804,778
641,664
706,541
471,148
Net cash flows from investing activities
(1,473,307)
(1,077,473)
(632,855)
(617,793)
79,787
Net cash flows from financing activities
180,358
316,116
(58,464)
(324,781)
(26,536)
Net change in cash and cash equivalents
148,196
43,421
(49,655)
(236,033)
524,399
STATEMENT OF CASH FLOWS HIGHLIGHTS (RM'000)
KEY FINANCIAL INDICATORS:
PROFITABILITY AND RETURNS
Operating profit margin
20.40%
15.50%
12.83%
25.61%
31.29%
PBT margin
19.38%
14.17%
11.73%
26.45%
30.82%
Profit after tax and non-controlling interests margin
8.02%
7.02%
3.10%
14.34%
25.92%
14.38%
11.12%
4.41%
11.33%
15.86%
6.57%
5.56%
2.38%
6.91%
9.90%
3.48
11.41
10.79
10.75
10.05
– Gross
0.38
0.35
0.34
0.34
0.35
– Net
0.29
0.27
0.26
0.24
0.17
Interest cover (times)
15.92
10.55
9.11
12.32
9.88
Current ratio (times)
1.71
0.95
1.31
1.38
1.70
– basic
45.90
30.86*
47.22
117.04
150.91
– diluted
Return on average shareholders' equity
Return on average capital employed
Net assets per share (RM)
SOLVENCY AND LIQUIDITY
Gearing ratio (times)
FINANCIAL MARKET
EPS (sen)
45.90
30.86*
47.22
114.96
144.66
Gross dividend per share (sen)
5.00
50.00
17.50
15.00
15.00
Gross dividend rate (%)
20%
100%
35%
30%
30%
Gross dividend yield (%)
1.45%
5.83%
2.73%
2.09%
2.20%
10.93%
30.38%
28.11%
9.77%
7.53%
Average price-to-earnings ratio (times)
7.53
6.94
13.57
6.13
4.52
Average price-to-book ratio (times)
0.99
0.75
0.59
0.67
0.68
Net dividend payout rate (%)
* Adjusted to reflect the effect of share split and issuance of bonus shares.
61
GROUP QUARTERLY PERFORMANCE 2011
2011
Q1
Q2
Q3
Q4
FINANCIAL PERFORMANCE (RM’000)
REVENUE
1,657,480
1,802,388
1,780,209
1,801,700
Plantations
46%
48%
48%
44%
47%
46%
46%
51%
6%
6%
6%
5%
Others
1%
0%
0%
0%
OPERATING RESULTS
396,845
373,952
345,932
321,076
Plantations
82%
75%
73%
84%
17%
18%
18%
26%
3%
2%
5%
3%
Others
(2%)
5%
4%
(13%)
1,487
1,795
2,149
1,561
Share of net results in associates
Interest income
Finance costs
PROFIT BEFORE TAX
BASIC EARNINGS PER SHARE (SEN)
2,933
3,850
2,433
2,248
(20,050)
(22,969)
(20,858)
(27,455)
381,215
356,628
329,656
297,430
10.12
11.70
13.97
8.51
115,615
165,765
184,427
170,954
OPERATIONAL RESULTS
FFB Production (tonnes)
– Malaysia
– PNG and SI
473,818
459,038
399,570
406,201
589,433
624,803
583,997
577,155
CPO Production (tonnes)
– Malaysia
– PNG and SI
34,844
51,217
51,647
47,958
152,061
145,752
123,902
129,942
186,905
196,969
175,549
177,900
62
GROUP STATEMENT OF VALUE ADDED
2011
2010
RM'000
7,041,771
RM'000
5,488,939
(4,475,946)
(3,602,453)
2,565,825
1,886,486
Other income
321,290
185,327
Finance costs
(91,475)
(81,440)
6,992
2,174
Revenue
Purchase of goods and services
Value added by the Group
Share of net results of associates
Discontinued operation
Value added available for distribution
–
151,611
2,802,632
2,144,158
1,012,142
879,441
356,930
233,681
DISTRIBUTION
To employees
Staff costs
To the Government
Taxation
To providers of capital
Dividends to shareholders
61,728
134,700
442,853
310,234
425,694
335,210
To re-invest in the Group
Depreciation and amortisation
Retained profits
503,285
250,892
2,802,632
2,144,158
No. of employees at year end
61,293
50,835
Value added per employee (RM)
41,862
37,110
Wealth created per employee (RM)
45,725
42,179
1,234,555
312,349
Value added per share (RM)
2.08
6.04
Wealth created per share (RM)
2.27
6.86
No. of shares at year end ('000 units)
VALUE ADDED DISTRIBUTION
27%
33%
Employees
36%
2011
Government
2010
Providers of capital
Re-investment
21%
18%
13%
11%
41%
63
5-YEAR PLANTATION STATISTICS
GROUP
2011
2010
2009
2008
2007
2,375,388
1,985,619
1,643,810
1,460,600
1,426,430
OIL PALM
Production (tonnes)
Fresh Fruit Bunches (FFB)
Crude Palm Oil
737,323
607,653
501,587
431,149
387,531
Palm Kernel
185,009
148,413
124,311
106,988
97,730
3,340,307
2,790,553
2,305,671
1,989,682
1,818,411
FFB yield (tonnes per mature hectare)
24.36
21.66
23.97
23.76
25.45
OER (%)
22.07
21.78
21.75
21.67
21.31
KER (%)
5.54
5.32
5.39
5.38
5.37
101,303
100,185
68,583
62,750
56,057
17,352
12,039
15,289
19,894
12,960
118,655
112,224
83,872
82,644
69,017
7,720
8,231
8,199
8,193
–
FFB processed
Yield and Extraction Rates
AREA STATEMENT (HECTARES)
Oil palm
– mature
– immature area
Sugar
Other crops (excluding inter-row planted fruits)
Planted area
Pastures
Reserve land, building sites etc
Titled area
910
900
846
944
111
8,630
9,131
9,045
9,137
111
127,285
121,355
92,917
91,781
69,128
9,282
9,518
9,729
11,014
–
36,453
34,459
22,177
21,755
13,778
173,020
165,332
124,823
124,550
82,906
Yield (tonnes) and Extraction Rate (%)
GROUP FFB YIELD AND PALM PRODUCT EXTRACTION RATE (%)
30
25.45
27.14
27.05
26.68
23.76
27.61
27.10
24.36
23.97
21.66
20
10
0
2007
2008
2009
2010
FFB Yield (tonnes per mature hectare)
2011
PPER (%)
64
MALAYSIA
2011
2010
2009
2008
2007
554,156
461,016
461,834
444,109
390,707
OIL PALM
Production (tonnes)
FFB produced - Processed by own mills
FFB produced - Sold to others
Total FFB produced
82,605
90,210
142,151
159,935
131,766
636,761
551,226
603,985
604,044
522,473
Purchased FFB
365,151
345,281
372,437
296,135
170,329
Total FFB processed
919,307
806,297
834,271
740,244
561,036
Crude Palm Oil
185,666
163,233
166,059
141,634
105,216
53,678
47,758
49,950
42,102
29,256
21.89
19.01
21.22
22.70
22.65
OER (%)
20.20
20.24
19.90
19.13
18.75
KER (%)
5.84
5.92
5.99
5.69
5.21
Crude Palm Oil (locally delivered)
3,193
2,604
2,167
2,530
1,774
Palm Kernel (ex-mill)
2,300
1,666
1,052
1,545
1,180
Palm Kernel
Average Selling Price (RM per tonne)
RUBBER*
Production (kgs)
–
33,398
626,760
360,463
70,746
Yield per mature hectare (kgs)
–
362
1,250
719
766
Average selling prices (sen per kg)
–
1,032
591
806
758
32,865
7,458
28,997
5,416
28,317
6,649
27,941
7,320
22,525
6,254
40,323
34,413
34,966
35,261
28,779
498
498
501
501
99
Oil palm
– mature
– immature
OTHER CROPS:
Rubber
Sentang
Pineapple
Fruits (inter-row planting with oil palm)
Planted area
Titled area
* Rubber area was leased out w.e.f. 1 April 2010.
25
25
28
28
12
128
118
58
–
–
546
425
324
466
393
40,974
35,054
35,553
35,790
28,890
2,916
2,396
2,516
2,006
2,422
43,890
37,450
38,069
37,796
31,312
65
PAPUA NEW GUINEA
2011
2010
2009
2008
2007
1,608,330
1,313,876
932,568
765,801
760,065
OIL PALM
Production (tonnes)
FFB produced
Purchased FFB
668,155
538,041
419,456
379,498
378,027
FFB processed
2,276,485
1,851,917
1,352,024
1,145,299
1,138,092
Crude Palm Oil
520,065
415,801
310,405
267,534
257,338
Palm Kernel
122,999
93,123
67,279
58,747
62,180
Refined Palm Oil
59,741
66,434
68,798
67,326
73,412
Palm Olein
27,120
34,418
34,413
14,679
27,104
Palm Stearin
16,398
15,448
11,537
13,501
11,540
Crude Palm Kernel Oil
36,283
31,039
27,625
23,219
25,571
11.78
8.35
4.51
15.09
3.54
25.49
23.60
26.53
25.36
26.00
OER (%)
22.85
22.42
22.96
23.36
22.61
KER (%)
5.40
5.08
4.98
5.13
5.46
2,359
2,090
1,721
2,181
1,878
Oil palm seeds (million sold)
Average Selling Prices (Kina per tonne)
Crude Palm Oil
(fob)
Refined Palm Oil
(cif)
-
1,968
2,444
2,896
2,778
Palm Olein
(cif)
2,980
2,472
2,127
2,440
2,958
Palm Stearin
(cif)
2,851
2,473
2,355
2,971
2,780
(fob)
3,896
3,094
2,105
3,297
2,909
Seeds
(Kina per seed)
1.77
1.99
2.10
1.97
1.57
63,091
65,306
35,154
30,196
29,604
8,924
6,191
7,392
10,826
4,553
72,015
71,497
42,546
41,022
34,157
7,720
8,231
8,199
8,193
-
Oil palm
– mature
– immature
Sugar
Other crops
Planted area
Pastures
Titled area
259
259
259
415
-
79,994
79,987
51,004
49,630
34,157
9,282
9,518
9,729
11,014
-
32,277
30,800
18,444
18,533
10,557
121,553
120,305
79,177
79,177
44,714
66
SOLOMON ISLANDS
2011
2010
2009
2008
2007
130,297
120,517
107,257
90,755
71,794
OIL PALM
Production (tonnes)
FFB produced
Purchased FFB
14,218
11,822
12,119
13,384
6,138
Processed FFB
144,515
132,339
119,376
104,139
77,932
Crude Palm Oil
31,592
28,619
25,123
21,981
17,152
Palm Kernel
8,332
7,532
7,082
6,139
4,567
3,537
3,206
3,098
2,744
–
24.37
21.97
20.98
19.67
18.63
OER (%)
21.86
21.63
21.05
21.11
22.01
KER (%)
5.77
5.69
5.93
5.90
5.86
Average Selling Prices (Kina per tonne fob)
Crude Palm Oil
2,359
2,090
1,746
2,850
2,014
Palm Kernel Oil
3,896
3,094
1,970
3,789
–
5,347
5,882
5,112
4,613
3,928
970
432
1,248
1,748
2,153
Oil palm
– mature
– immature area
Planted area
6,317
6,314
6,360
6,361
6,081
1,260
1,263
1,217
1,216
799
Titled area
7,577
7,577
7,577
7,577
6,880
67
5-YEAR FOODS AND RESTAURANTS STATISTICS
QSR BRANDS BHD GROUP
2011
2010
2009
2008
2007
3,349.91
3,035.83
2,760.29
532.75
466.38
283.90
277.36
241.93
49.99
47.60
Financial (RM Million)
Revenue
Operating profit
Profit before tax (PBT)
269.93
266.86
230.26
97.74
80.19
Profit after tax (PAT)
182.40
189.76
158.39
83.74
67.02
Shareholders' equity
948.99
852.37
687.14
633.68
476.52
2,728.19
2,410.10
2,092.79
903.10
801.77
PBT Margin (%)
8%
9%
8%
18%
17%
PAT Margin (%)
5%
6%
6%
16%
14%
19%
22%
23%
13%
14%
210
220
208
187
168
55
49
50
45
40
265
269
258
232
208
42
–
–
–
–
42
–
–
–
–
539
515
475
436
403
80
77
77
73
69
Total assets
Return on shareholders' equity (%)
No. of Pizza Hut Outlets
Malaysia
Singapore
No. of PHD Outlets
Malaysia
No. of KFC Outlets
Malaysia
Singapore
Brunei
12
9
9
8
7
Cambodia
10
10
7
2
–
India
13
7
–
–
–
654
618
568
519
479
25
39
40
34
22
No. of RasaMas Outlets
Malaysia
Brunei
No. of Kedai Ayamas Outlets
TOTAL
2
3
3
2
-
27
42
43
36
22
75
49
35
25
20
1,063
978
904
812
729
68
HUMAN CAPITAL STATISTICS
AS AT 31 DECEMBER 2011
BY DIVISION
Malaysia
Papua New
Guinea
Singapore
Solomon
Islands
Others*
Total
DIVISION
Plantations and Support
5,206
-
14,257
1,784
-
21,247
32,563
3,884
-
-
1,192
37,639
1,636
66
-
-
705
2,407
39,405
3,950
14,257
1,784
1,897
61,293
Intrapreneur and Other Services
BY CATEGORY
Malaysia
Singapore
Papua New
Guinea
Solomon
Islands
Others*
Total
CATEGORY
Managerial and Professional
549
65
59
14
50
737
Executives and Assistant Managers
1,042
71
221
16
64
1,414
Office and Field Staff
6,632
506
1,927
110
699
9,874
General Workers - Field Work/Guard
31,182
3,308
12,050
1,644
1,084
49,268
39,405
3,950
14,257
1,784
1,897
61,293
* The Philippines, Hong Kong, Cambodia, Brunei and India.
BY CATEGORY
Plantations
and Support
Papua
New Guinea
Foods and
Restaurants
Solomon
Islands
Intrapreneur
and Other Services
59
221
1,927
65
71
506
Singapore
Others
Papua
New Guinea
50
64
699
1,084
Singapore
3,308
6,632
549
1,042
1,192
705
1,784
3,884
66
1,636
5,206
Malaysia
Malaysia
14
16
110
1,644
12,050
No. of employees
14,257
No. of employees
32,563
31,182
BY DIVISION
Solomon
Islands
Others
Managerial and Professional
Executives and Assistant Managers
Office and Field Staff
General Workers - Field Work/Guard
69
AS AT 4 MAY 2012
Authorised Share Capital
Issued & Fully Paid-Up Capital
Class of Shares
: RM500,000,000.00
: RM315,512,888.50 less RM6,870,550 Treasury Shares = RM308,642,338.50
: Ordinary Share of RM0.25 each
VOTING RIGHT OF SHAREHOLDERS
Every member of the Company present in person or by proxy shall have one vote on a show of hand and in the case of a poll shall have
one vote for every share of which he/she is the holder.
BREAK DOWN OF SHAREHOLDING
Size of Shareholding
No. of
Shareholders
%
No. of
Shares
%
163
2.22
6,574
-
Less than 100
100 – 1000
1,133
15.44
898,838
0.07
1,001 – 10,000
3,768
51.36
17,799,798
1.44
10,001 – 100,000
1,840
25.08
54,118,438
4.39
100,001 to less than 5% of Issued Capital
5% and above of Issued Capital
TOTAL
430
5.86
424,450,046
34.38
3
0.04
737,295,660
59.72
100.00 1,234,569,354
100.00
7,337
TOP THIRTY SECURITIES ACCOUNT HOLDERS
(Without aggregating the securities from different securities accounts belonging to the same depositor)
Name
No. of
Shares
%
1
Maybank Noms (T) Sdn Bhd - A/C Johor Corporation (51401100634A)
484,000,000
39.20
2
Johor Corporation
185,795,260
15.05
3
HSBC Noms (A) Sdn Bhd - A/C NTGS LDN for Skagen Kon-Tiki Verdipapirfond
67,500,400
5.47
4
Citigroup Noms (T) Sdn Bhd - A/C Employees Provident Fund Board
52,068,200
4.22
5
Waqaf An-Nur Corporation Berhad
49,391,304
4.00
6
Johor Corporation
22,478,400
1.82
7
Citigroup Noms (T) Sdn Bhd - A/C Employees Provident Fund Board (Nomura)
11,220,000
0.91
8
Citigroup Noms (A) Sdn Bhd - A/C CBNY for Dimensional Emerging Markets Value Fund
9,703,300
0.79
9
Citigroup Noms (T) Sdn Bhd - A/C ING Insurance Berhad (Inv-IL PAR)
9,551,100
0.77
10
AmanahRaya Trustees Berhad - A/C Amanah Saham Wawasan 2020
9,429,820
0.76
11
HSBC Noms (A) Sdn Bhd - A/C Exempt An for The Bank of New York Mellon (Mellon Acct)
7,626,900
0.62
12
HSBC Noms (A) Sdn Bhd - A/C Exempt An for JPMorgan Chase Bank, National Association
(Norges BK Lend)
7,385,700
0.60
13
Johor Corporation
7,336,800
0.59
14
Tabung Amanah Warisan Negeri Johor
6,423,200
0.52
15
HSBC Noms (A) Sdn Bhd - A/C HSBC-FS for Value Partners “A” Fund
6,160,800
0.50
16
AmanahRaya Trustees Berhad - A/C Public Islamic Select Treasures Fund
5,505,000
0.45
17
Malaysia Noms (T) Sendirian Berhad - A/C Great Eastern Life Assurance (Malaysia) Berhad (LSF)
4,982,600
0.40
18
Zalaraz Sdn Bhd
4,800,800
0.39
70
(continued)
AS AT 4 MAY 2012
Name
No. of
Shares
%
19
OSK Noms (T) Sdn Bhd - A/C Jedcon Engineering Survey Sdn Bhd
4,700,600
0.38
20
Cartaban Noms (A) Sdn Bhd - A/C SSBT Fund J734 for SPDR S And P Emerging Market’s Small Cap ETF
4,648,800
0.38
21
HSBC Noms (A) Sdn Bhd - A/C Exempt An for JPMorgan Chase Bank, National Association (U.S.A)
4,361,200
0.35
22
Malaysia Noms (T) Sendirian Berhad - A/C Great Eastern Life Assurance (Malaysia) Berhad (LGF)
4,278,700
0.35
23
Malaysia Noms (T) Sendirian Berhad - A/C Great Eastern Life Assurance (Malaysia) Berhad (LPF)
4,220,000
0.34
24
HSBC Noms (A) Sdn Bhd - A/C Exempt An for JPMorgan Chase Bank, National Association (Australia)
3,649,500
0.30
25
Malaysia Noms (T) Sendirian Berhad - A/C Great Eastern Life Assurance (Malaysia) Berhad (DR)
3,605,400
0.29
26
Citigroup Noms (T) Sdn Bhd - A/C Employees Provident Fund Board (CIMB PRIN)
3,049,400
0.25
27
Mak Seng Fook
2,734,400
0.22
28
Maybank Noms (T) Sdn Bhd - A/C Etiqa Takaful Berhad (Family PRF EQ)
2,636,900
0.21
29
HSBC Noms (A) Sdn Bhd - A/C BNY Brussels for Wisdomtree Emerging Markets Smallcap Dividend Fund
2,527,839
0.20
30
Cartaban Noms (A) Sdn Bhd - A/C State Street Lux Fund 9T47 for State Street Global Advisors Luxembourg
SICAV-SSGA Enhanced Emerging Markets Equity Fund
2,330,300
0.19
SUBSTANTIAL SHAREHOLDERS
Direct
Name
No. of
Shares
Indirect
%
No. of
Shares
%
1
484,000,000
39.20
221,969,060
17.98
2
Johor Corporation - 3 a/cs
215,610,460
17.46
490,358,600
39.72
3
HSBC Noms (A) Sdn Bhd - A/C NTGS LDN for Skagen Kon-Tiki
Verdipapirfond
67,500,400
5.47
–
–
No. of
Shareholders
%
No. of
Shares
%
ANALYSIS OF SHAREHOLDERS
Name
Malaysian – Bumiputra
– Others
Foreigners
TOTAL
770
10.50
835,682,272
67.69
5,632
76.76
195,972,206
15.87
935
12.74
202,914,876
16.44
7,337
100.00
1,234,569,354
100.00
71
AS AT 4 MAY 2012
BREAK DOWN OF WARRANTHOLDING
Break down of Warrantholding
No. of
Warrantholders
Less than 100
No. of
Warrants
%
%
443
8.83
13,709
0.01
100 – 1000
2,085
41.56
1,224,165
0.78
1,001 – 10,000
1,929
38.45
7,240,232
4.64
485
9.67
15,419,407
9.87
71
1.41
38,883,774
24.90
4
0.08
93,378,230
59.80
5,017
100.00
156,159,517
100.00
10,001 – 100,000
100,001 to less than 5% of Issued Capital
5% and above of Issued Capital
TOTAL
TOP THIRTY SECURITIES ACCOUNT HOLDERS
(Without aggregating the securities from different securities accounts belonging to the same depositor)
Name
No. of
Warrants
%
1
60,500,000
38.74
2
Johor Corporation
14,717,980
9.42
3
OSK Noms (T) Sdn Berhad - A/C Jedcon Engineering Survey Sdn Bhd
9,722,700
6.23
4
HSBC Noms (A) Sdn Bhd - A/C NTGS LDN for Skagen Kon-Tiki Verdipapirfond
8,437,550
5.40
5
Waqaf An-Nur Corporation Berhad
6,173,913
3.95
6
Voon Chong Kian
5,860,000
3.75
7
Citigroup Noms (T) Sdn Bhd - A/C Employees Provident Fund Board (Nomura)
3,700,000
2.37
8
Johor Corporation
2,809,800
1.80
9
PUJB Capital Sdn. Bhd.
1,315,600
0.84
10
Inter-Pacific Equity Noms (A) Sdn Bhd - A/C Mak Seng Fook
1,248,200
0.80
11
HLG Nom (T) Sdn Bhd - A/C Koon Yew Yin (M)
1,043,900
0.67
12
Yeo Hock Kim
1,000,000
0.64
13
Alliancegroup Noms (T) Sdn Bhd - A/C Ong Siew Eng @ Ong Chai (8040800)
919,000
0.59
14
Johor Corporation
917,100
0.59
15
Lee Keng Hong
600,000
0.38
16
Mak Seng Fook
457,500
0.29
17
Toh Cheok
450,000
0.29
18
HSBC Noms (A) Sdn Bhd - A/C Exempt An for JPMorgan Chase Bank, National Association (Australia)
385,350
0.25
19
Maybank Noms (T) Sdn Bhd - A/C Etiqa Takaful Berhad (Family PRF EQ)
384,700
0.25
20
Zalaraz Sdn Bhd
350,000
0.22
21
TA Noms (T) Sdn Bhd - A/C Koon Yew Yin
344,587
0.22
22
RHB Capital Noms (T) Sdn Bhd - A/C Ho Swee Ming (CEB)
340,000
0.22
23
Loh Swee Chong
336,000
0.22
24
Ostrich Enterprises Sdn Bhd
323,500
0.21
72
(continued)
AS AT 4 MAY 2012
No. of
Warrants
Name
%
25
HLG Nom (A) Sdn Bhd - A/C Exempt An for UOB Kay Hian Pte Ltd (A/C Clients)
322,010
0.21
26
Mak Suet Chee
322,000
0.21
27
Yeu Chian Kim
310,000
0.20
28
CimSec Noms (T) Sdn Bhd - A/C Koh Chong Hap (Penang-CL)
300,000
0.19
29
ECML Noms (T) Sdn Bhd - A/C Yu Kuan Chon (001)
300,000
0.19
30
Ng Eng Ewi
300,000
0.19
SUBSTANTIAL WARRANTHOLDERS
Direct
No. of
Warrants
Name
Indirect
%
No. of
Warrants
%
1
Mayban Noms (T) Sdn Bhd - A/C Johor Corporation (51401100634A)
60,500,000
38.74
28,248,892
18.09
2
Johor Corporation - 3 a/cs
18,444,880
11.81
70,304,012
45.02
3
OSK Noms (T) Sdn Berhad - A/C for Jedcon Engineering Survey Sdn Bhd
9,722,700
6.23
79,026,192
50.60
4
HSBC Noms (A) Sdn Bhd - A/C NTGS LDN for Skagen Kon-Tiki
Verdipapirfond
8,437,550
5.40
–
–
ANALYSIS OF WARRANTHOLDERS
No. of
Warrantholders
Name
Malaysian – Bumiputra
– Others
Foreigners
TOTAL
%
No. of
Warrants
461
9.19
102,955,022
65.93
3,879
77.32
36,292,705
23.24
677
13.49
16,911,790
10.83
5,017
100.00
156,159,517
100.00
%
73
SHARE PRICE PERFOMANCE AND
VOLUME TRADED 2011
VOLUME
TRADED
CLOSING SHARE PRICE (RM)
MONTH
HIGHEST
AVERAGE
LOWEST
('000)
JANUARY
13.70
13.27
12.76
83,084
FEBRUARY*
15.88
12.21
3.46
355,326
MARCH
3.45
3.33
3.17
763,769
APRIL
3.41
3.31
3.20
382,247
MAY
3.68
3.29
3.20
332,355
JUNE
3.68
3.58
3.52
242,530
JULY
3.75
3.56
3.49
252,604
AUGUST
3.88
3.73
3.57
605,519
SEPTEMBER
3.74
3.56
3.25
258,316
OCTOBER
3.60
3.35
3.11
199,020
NOVEMBER
3.69
3.60
3.47
293,820
DECEMBER
4.22
3.87
3.66
468,534
20
800,000
700,000
15
600,000
500,000
10
400,000
300,000
5
200,000
100,000
0
0
Jan
Feb*
Highest
Mar
Apr
May
Jun
Average
* Completion of share split and issuance of bonus shares in February 2011.
Jul
Aug
Lowest
Sep
Oct
Nov
Dec
Volume Traded
Price (RM)
4,237,124
Volume Traded (’000)
TOTAL
SECTION 4: SEGMENT REVIEW
76
PLANTATION
100
108
R
WE STRONGLY SUBSCRIBE TO AND UPHOLD THE THREE
PILLARS OF RESPONSIBLE BUSINESS OPERATIONS – PEOPLE,
PLANET AND PROFIT
CORPORATE RESPONSIBILITY IS THE CORNERSTONE OF OUR BUSINESS PHILOSOPHY AS WE BALANCE
OUR ECONOMIC ASPIRATIONS WITH THE WELL-BEING OF OUR PEOPLE, COMMUNITY AND NATURAL
ENVIRONMENT. WE ARE PROUD OF OUR SUSTAINABILITY POLICY, BEING AN EMBODIMENT OF OUR
COMMITMENT TO BE RESPONSIBLE.
76
SEGMENT REVIEW
S
PLANTATION
INDUSTRY ENVIRONMENT
From the global perspective the major oil palm growing regions in South East Asia
had a very good cropping year in 2011, contributing to an unprecedented increase
in global palm oil production of 9% to some 50.13 million tonnes. The hectarage
expansion in Indonesia and other regions coupled with a jump in productivity as palm
trees benefited from biological yield upswings contributed to the large increase.
77
Despite this massive uplift in production, world demand remained robust. Food
demand increased by 4% with much of the growth coming from China, India and other
emerging economies while growth from matured economies was almost flat. The use
of vegetable oils in the industrial segment increased at a faster pace of 8.4% as their
usage for biodiesel production increased in countries like USA,Argentina,Brazil,Thailand
and Indonesia. Growth would have been higher but for the consumption slowdown
observed in the European Union owing to unstable macroeconomic conditions.
78
SEGMENT REVIEW
PLANTATION (continued)
MALAYSIA
The Malaysian oil palm industry turned in
a stellar performance in 2011 achieving
record high prices for palm oil products
and registering growth in crude palm oil
production and export volumes. The average
price of palm oil for the year breached the
RM3,000 mark to register RM3,219 per tonne,
while the total export revenue earned for
palm products reached a record high of
RM80.4 billion, an increase of 34.5% against
the RM59.8 billion achieved in 2010.
“THE PLANTED AREA WITH
OIL PALM IN MALAYSIA IN
2011 REACHED 5 MILLION
HECTARES, AN INCREASE OF
3.0% AGAINST 4.85 MILLION
HECTARES RECORDED THE
PREVIOUS YEAR. “
AVERAGE CPO PRICE
2011 IN MALAYSIA
19.2
RM3,219
%
to
per tonne
from RM2,701 per tonne
In Malaysia, the average CPO price
recorded for the year 2011 was the highest
annual ever reaching RM3,219 per tonne,
an increase of RM518 or 19.2% against
RM2,701 per tonne in the previous year.
During the first quarter of the year CPO
prices traded firmer at RM3,659 per tonne
supported by positive sentiments related
to supply tightness of vegetable oils and
low domestic palm oil stocks level in the
period. Subsequently, during the second
quarter bullish market sentiments for palm
oil were supported by a firm Brent crude oil
price coupled with the continuing tightness
in world vegetable oils supply, especially for
palm and soyabean oils.
Despite worries over the prolonged Eurozone sovereign debt crisis during the
second half of the year weakening the
world vegetable oils market, CPO prices
were still stable, averaging RM3,027 per
tonne, troughing temporarily in October
at RM2,838 per tonne. Nearer to home,
Indonesian refiners offered discounts
benefiting from a cut in processed palm
oil export taxes and a surge in supply that
lifted margins to realise a cost advantage
of at least USD100 per tonne for refined
palm oil.
Total exports of oil palm products, consisting
of palm oil, palm kernel oil, palm kernel
cake, oleochemicals, biodiesel and finished
products increased by 5.3% or 1.21 million
tonnes to 24.27 million tonnes in 2011
from 23.06 million tonnes recorded in 2010.
China maintained its position as the largest
palm oil export destination for the tenth
consecutive year, with off-take totalling 3.98
million tonnes or 22.1% of total palm oil
exports, followed by the European Union,
Pakistan, India, USA, Egypt and Japan. These
7 markets combined accounted for 11.78
million tonnes or 65.4% of total Malaysian
palm oil exports in 2011.
The planted area with oil palm in Malaysia in
2011 reached 5 million hectares, an increase
of 3.0% against 4.85 million hectares
recorded the previous year. This was mainly
due to an increase in the planted area in
Sarawak, up 11.0% or by 102,169 hectares.
Sabah still ranks first as the state with
the largest holdings of oil palm with 1.43
million hectares or 28.6% of the total oil
palm planted area in Malaysia, followed by
Sarawak with 1.02 million hectares or 20.4%.
CPO production in 2011 increased by 11.3%
to reach a record high of 18.91 million
tonnes. Sarawak’s CPO production increased
by 23.7% to 2.7 million tonnes while Sabah
and Peninsular Malaysia increased by 9.9%
and 9.2% to 5.84 million tonnes and 10.37
million tonnes respectively. The increase in
production was mainly due to the recovery in
the FFB yield after the 2 year down trend of
declining yields in 2009 and 2010. Improved
weather conditions as well as more hectarage
coming into peak production contributed to
the increased production.
79
REVENUE
54.5
RM3.26 B
%
to
from RM2.11 billion
OPERATING PROFIT
68.9
RM1.13 B
%
to
PAPUA NEW GUINEA AND
SOLOMON ISLANDS
In terms of GDP growth, construction of
PNG’s Liquefied Natural Gas (“LNG”) project
and high Government spending supported
growth in the non-mineral sector while
favourable commodity prices supported
growth in the agricultural sector with oil
palm and coffee in particular performing
well. The Solomon Islands economy
benefited from high log prices. Gold
production is quickly picking up speed and
will increasingly become more important.
CPO prices at the start of 2011 traded at
levels around USD1,200 per tonne, peaked
at USD1,335 per tonne and found a
temporarily low at USD960 per tonne. As at
the year end, NBPOL had made forward sales
of CPO of approximately 144,750 tonnes of
its 2012 production at an average price
of USD1,057 per tonne. As at 15 February
2012, the forward sales of NBPOL Group
were approximately 220,000 tonnes of 2012
CPO production at a slightly higher average
price of USD1,078 per tonne.
FINANCIAL RESULTS
The Plantation Division recorded a significant
leap in revenue of 54.5% to RM3.26 billion
from RM2.11 billion in 2010 due to the
increase in oil yield and higher prices. The
Group made further progress with the
integration of Kula Palm Oil Limited (“KPOL”)
estates acquired at the end of April 2010.
The impact of this acquisition is reflected in
the full year 2011 results.
The Malaysian plantation operation
achieved substantially better CPO and PK
price averages at RM3,193 and RM2,300 per
tonne respectively compared to RM2,604
and RM1,666 in 2010. Similarly the average
CPO selling price achieved in PNG and SI
during the year climbed to USD1,108 per
tonne, an increase of 30% against USD850
per tonne in 2010.
In Malaysia, there was a general increase
in operating costs as a result of higher
labour and fertiliser costs as compared to
the previous year. However, as a result of
increase in FFB production, our Malaysia
operation managed to maintain a level
unit cost of production of approximately
RM1,790 per tonne CPO (2010: RM1,775 per
tonne CPO), before kernel credits.
In line with the higher production and
better prices, supported by fairly stable
production costs, operating profit from the
Plantation Division rose sharply by 68.9%
to RM1.13 billion from RM668.92 million
in 2010.
In PNG and SI, NBPOL enjoyed a very solid
performance in 2011 with revenues of
USD780.1 million, an increase of 69% over
2010, stemming from increased fruit and oil
production, record sales volumes, and higher
oil prices. Total CPO production rose to
551,657 tonnes in 2011, an increase of 24%
over 2010, whilst palm kernel production
increased to 131,331 tonnes, compared to
100,655 tonnes in 2010. We have continued
using time chartered vessels with larger
loading capacities throughout 2011 to
cater for the increased oil production and
are working with the local port authorities
at our various locations to optimise the
movements of our shipments through
these ports.
Profit before tax increased 110% to a record
USD275.5 million. These results include
a one-off net gain of USD8.4 million on
disposal of NBPOL’s 50% joint venture
interest in PT Dami Mas Sejahtera.
80
SEGMENT REVIEW
ESTATES PERFORMANCE
2011
2010
Variance
636.76
551.23
15.5%
1,608.33
1,313.88
22.4%
130.30
120.52
8.1%
Group Plantation Highlights
FFB Production (‘000 tonnes)
– Malaysia
– PNG
– SI
GROUP’S FFB
PRODUCTION
%
19.6
2.38
to
million tonnes
from 1.99 million tonnes
FBB Yield (tonnes/ha)
– Malaysia
21.89
19.01
15.1%
– PNG
25.49
23.60
8.0%
– SI
24.37
21.97
10.9%
Industry - Peninsular Malaysia
19.24
17.91
7.4%
– Malaysia
185.67
163.23
13.7%
– PNG
520.07
415.80
25.1%
31.59
28.62
10.4%
CPO Production (‘000 tonnes)
– SI
OER (%)
– Malaysia
20.20
20.24
(0.2%)
– PNG
22.85
22.42
1.9%
– SI
21.86
21.63
1.1%
Industry - Peninsular Malaysia
20.08
19.91
0.9%
The Group recorded a marked increase in FFB
production of 19.6% mainly due to better
rainfall and the benefit of a relatively more
stable workforce compared to the labour
conditions prevailing in 2010. The Group
remains committed towards achieving its
productivity target of raising the fruit yields
to 30 tonnes per hectare and palm product
extraction rates to 30%.
The plantation operation in Malaysia will
require longer time to reach the Vision “30:30”
target following the recent acquisitions of
estates from Johor Corporation that have
older palms due for replanting. Additionally,
replanting with clonal culture materials in a
modest scale enable the Group to evaluate
its growth, tolerance to pest and disease and
adverse fluctuations in the climatic conditions.
Nevertheless, we can expect the Group to
reap better yields in the years ahead.
And on the other side of the Vision ratio, we
have seen that Good Agricultural Practices
(“GAP”) coupled with efficient milling
technology and Good Manufacturing
Practices (“GMP”), such as better system
and process control will drive the Group
towards its 30% palm products yields
target. Indeed, recently some mills under
NBPOL have been achieving a yield of over
31%. The key to achieving the overall Vision
“30:30” target is consistency, and that is the
focus in terms of raising productivity to the
next level.
Total Group’s FFB and CPO production in
2011 was 2.38 million tonnes and 737,323
tonnes, an increase of 19.6% and 21.3%
respectively over 2010. The increase was
mainly contributed by the PNG and SI
estates with the added benefit of a full-year
contribution in 2011, versus eight months’
contribution in 2010, from the Kula Palm
Oil Limited (previously CTP (PNG) Limited)
(“KPOL”) acquisition.
The Malaysian estates produced 27% of
total Group FFB (2010: 28%); PNG estates
produced 68% (2010: 66%), whilst the SI
estates’ contribution shrunk slightly to
5% (2010: 6%). The Group’s planted area
of oil palm increased to 118,655 hectares
as compared to 112,224 hectares in 2010.
The acquisition of some 6,000 hectares of
oil palm estates from Johor Corporation
completed on 30 December 2011 is
reflected in the increase in the total oil palm
hectarage. The geographical distribution of
planted oil palm hectarage was: 34% in
Malaysia, 61% in PNG and 5% in the SI.
The Malaysian estates produced a total
of 636,761 tonnes of FFB in 2011, 15.5%
higher than the 551,226 tonnes in 2010. The
yield per hectare in 2011 increased to 21.89
tonnes from 19.01 tonnes in the preceding
year. This performance was superior to the
average yields achieved by the industry as
a whole in Johor and Peninsular Malaysia
this year which were 19.75 tonnes and
19.24 tonnes respectively. The average FFB
yield for the whole country (inclusive of
Peninsular Malaysia, Sabah and Sarawak)
increased to 19.69 tonnes per hectare from
18.03 tonnes in 2010.
The Malaysian estates’ performance were
limited first by floods occurring in January
and February and then again in December
2011 and secondly by the tight labour
situation. The flood affected 12 out of
18 estates covering approximately 3,915
81
hectares leading to crop loss both during
the post and pre-harvesting period at the
fields submerged by flood water. The tight
labour situation in Malaysia especially in the
plantation industry has not improved much
from the previous year. The situation is
further aggravated by the steep competition
among plantation industry players and also
from unrelated industries for the limited
supply of foreign workers. In 2011, 2,163
new foreign workers were recruited, 808
foreign workers were repatriated and 310
absconded.
In order to improve and sustain the FFB
yield, a continuous effort has been made
to ensure that GAP and GMP are adopted
in all stages of plantation operations
from plant breeding, nursery preparation,
and field planting, through to estate and
mill processing. In Malaysia, the introduction
of Structured Block Supervision (“SBS”)
on harvesting, manuring, weeding and
other field routines has further improved
the efficienc y and effec tiveness of
plantation operations.
During the year, revisions of the MAPA/NUPW
collective agreements for harvesters and
field workers saw their wage rates increase
by some 8% and 10%, respectively. Kulim
and other Malaysian plantations also agreed
to implement the Government’s recently
introduced Special Gratuitous Payment (“SGP”)
for eligible workers and staff in the estates
and mills that supplement their income with
a further RM200 a month. The payment, to
encourage attendance, productivity and
reduce crop loss, increases FFB production
cost by some RM17 per tonne.
The Group has taken proactive measures
to enhance its mechanisation programmes
to reduce dependency on labour especially
with regard to FFB har vesting and
evacuations. These steps have included
expanding the internally-developed Kulim
Crane Free System to assist in FFB loading
and evacuation, application of a mist blower
for manuring, a rotoslasher, and, the latest
addition on mechanisation, expanding
the usage of motorised harvesting poles
known as Cantas in the estates for FFB
harvesting of palms below the height of 5
meters. Cantas have proved to be a success,
improving harvesters’ productivity by 80%.
Mechanisation has been expanded in 2011.
Weather conditions across PNG and SI were
favourable for crop growth during 2011,
starting in the first quarter with steady and
welcome rainfall, but well below normal
monsoon levels. This meant that harvesting
and crop recovery operations were not
negatively impacted by the weather and
the overall palm product extraction rate for
2011 was 28.21%, an increase from the 2010
result of 27.50%.
FFB production from the PNG and SI estates
increased to approximately 1.74 million
tonnes with a further 0.68 million tonnes
purchased from over 15,600 outgrower
blocks. The purchased crop represents
28.2% of NBPOL’s total.
In PNG and SI, NBPOL has 78,332 hectares
planted with oil palm of which 68,438
are under harvest with the balance being
immature oil palms that were planted over
the last 3 years. Yield of FFB per hectare over
the area under harvest was 25.4 tonnes per
hectare (2010: 23.7 tonnes per hectare). The
yields of FFB in West New Britain were 28.6
tonnes per hectare, a creditable increase from
the 2010 levels of 26.1 tonnes and likewise,
yields for Higaturu, Milne Bay and Poliamba
were 23.9 tonnes per hectare, a solid gain
from the 2010 levels of 22.7 tonnes. Yields
at Ramu Agri-Industries Ltd (“Ramu”) were
14.4 tonnes per hectare, reflective of the
very young age profile for those estates
and at Guadalcanal Plains Palm Oil Limited
(“GPPOL”), yields were 24.4 tonnes per
hectare (2010: 22.0 tonnes per hectare).
82
SEGMENT REVIEW
the Malaysian estates’ average palm
age decreased slightly to 12.40 years in
December 2011 from 12.90 years in 2010.
The 6,000 hectares newly acquired has an
average age of 8.85 years as almost one
third (27%) is immature, while another 44%
is categorised under young prime.
REPLANTING
To sustain higher production, the Group is
committed to improving the average age
profile of its palms. Scheduled replanting
strategies continued during the year with
palms aged older than 25 from the date of
field planting in Malaysia, and older than 22
years in PNG and SI, being felled and the
areas replanted with the latest high yielding
palm varieties.
In PNG and SI, NBPOL continued to expand
their palm oil production base with the
addition of 1,582 hectares of new plantings
in West New Britain and Ramu. Replanting
of 1,544 hectares was completed across
GPPOL, Higaturu, Milne Bay and Poliamba.
The replants for West New Britain were
placed on hold during 2010 and 2011 due
to the new acquisitions but are due to
recommence in 2012.
In Malaysia 868.29 hectares were replanted
in 2011 against 1,042.89 hectares scheduled.
The wet weather in the last quarter of
the year affected some of the planting
work, which is in progress now as we
report, and is expected to be completed
by early 2012. By the end of 2011, taking
into consideration 6,000 hectares of oil
palm acquired from Johor Corporation,
OIL PALM AREA STATEMENT
OIL PALM PLANTED AREA
Titled area (ha)
Malaysia
PNG
SI
Total
Mature (ha)
Immature (ha)
Average palm age
Total (ha)
Total (%)
(years)
43,890
32,865
7,458
40,323
34%
12.40
121,553
63,091
8,924
72,015
61%
11.18
7,577
5,347
970
6,317
5%
12.79
173, 020
101,303
17,352
118,655
100%
11.69
PALM AGE PROFILE BY COUNTRY AS AT 31 DECEMBER 2011
5%
12%
13%
13%
15%
21%
13%
15%
Malaysia
40,323ha
PNG
72,015ha
28%
SI
27%
6,317ha
13%
35%
42%
32%
1 – 3 years
4 – 8 years
16%
9 – 18 years
19 – 23 years
>23 years
83
MILLS PERFORMANCE
The total CPO produced by the Group
reached 737,323 tonnes (2010: 607,653
tonnes) an increase of 21.3% whilst total
PK produced was 185,009 tonnes (2010:
148,413 tonnes) an increase of 24.7%. Total
FFB processed by the Group climbed to
3,340,307 tonnes (2010: 2,790,553 tonnes) a
rise of 19.7%. The increase in palm products
produced (CPO and PK) was mainly due to
the full-year contribution from KPOL estates
in 2011, versus an eight-month contribution
in 2010. OER improved to 22.07% compared
to 21.78% in 2010 and KER to 5.54% in 2011
from 5.32% last year.
In Malaysia, total CPO production was 185,666
tonnes in 2011 which was higher by 13.7%
than the 163,233 tonnes in the prior year. PK
production was 53,678 tonnes, an increase
of 12.4% from the 47,758 tonnes in 2010. In
terms of oil yield, the Malaysian plantations
recorded an increase from 5.63 tonnes CPO
per hectare in 2010 to 6.38 tonnes in 2011. For
the Malaysian operation, although both OER
and KER recorded a slight dip, respectively
from 20.24% in 2010 to 20.20% in 2011 and
from 5.92% in 2010 to 5.84%, we are still
ahead of the industry average (Peninsular
Malaysia) of 20.08% and 5.45%.
The Group’s Malaysian mills’ extraction rates
were affected mainly by wet weather in
early 2011 and higher purchases of variable
quality third party crops that increased
from 345,281 tonnes in 2010 to 365,151
tonnes in 2011. On the other hand, third
party crops enabled the Group’s mills to
operate at a higher capacity and benefit
from marginal costing advantage as well
as accruing additional volumes of palm
produce, both CPO and PK.
The average OER and KER targeted for the
Group’s Malaysian mills in 2012, inclusive of
the soon-to-be acquired palm oil mill from
JCorp, is 20.75% and 5.83%, respectively.
To achieve this, we will be upgrading and
rehabilitating the Malaysian mills to improve
milling efficiency, reliability and safety while
optimising on manpower and cutting
costs. The upgrade of the clarification and
kernel plant at Tereh Palm Oil Mill (“POM”)
is underway with the refurbishments of
Sedenak POM and Sindora POM to follow.
Supported by the full year’s contribution of
fruits from the newly acquired KPOL estates
at Higaturu, Milne Bay and Poliamba, the
PNG and SI mills registered a record year for
oil production of 591,477 tonnes of crude
oil (crude palm oil and palm kernel oil),
representing a 23.5% increase over 2010.
84
SEGMENT REVIEW
Commissioning of the 12 th oil mill at
Waraston, in West New Britain, PNG
commenced in December 2011. This was
after considerable delays in the early part
of the year when the lead contractor was
unable to secure work permits for its staff.
The new mill increases the total processing
capacity in West New Britain from 260 to
320 tonnes of fruit per hour and will allow
greater flexibility to both manage fruits in
a more timely fashion as well as schedule
much needed repairs and maintenance to
the other existing mills which came under
considerable pressure during 2011.
In the Solomon Islands, the mill upgrade at
Tetere from 25 to 45 tonnes per hour was
completed with further work on the kernel
mill ongoing. At Ramu, work commenced at
the Gusap POM during the year to increase
the capacity from 30 to 45 tonnes per hour.
Across the new acquisitions, considerable
progress has been made during the year
in upgrading and refurbishing several mills
with the objective of not only increasing
processing capacity, but improving milling
efficiency and reliability.
Unlike NBPOL’s existing facilities, the oil
mills at Higaturu (apart from the Sangara
POM), Milne Bay and Poliamba, have no
capacity to crush palm kernels and therefore
have traditionally sold and exported palm
kernels to Malaysia. To maximise the value
of palm kernels, work on building palm
kernel crushing facilities and associated
kernel oil storage tanks started during 2011
with commissioning of the new facilities
expected during the second half of 2012.
This will have immediate savings on
shipping costs whilst also increasing the
sales value of the palm kernels by selling
palm kernel oil and palm kernel expeller.
Kulim’s first methane capture plant in
Malaysia at Sedenak POM is due for
completion before the end of 2012. The
Clean Development Mechanism (“CDM”)
project utilising biogas from the mill’s POME
will mitigate greenhouse gas emissions and
generate power for our own downstream
plants, adding another potential revenue
stream. We are working on similar projects
for the other Group mills.
At the same time, NBPOL’s first methane
capture plants in West New Britain are also
nearing completion. This is a major step
forward for NBPOL as it begins to utilise
the potent greenhouse gas as an energy
source and reduce its carbon footprint.
Commissioning of the plants is expected
in the first half of 2012. The power will be
utilised to supply the housing estates and
refinery as well as supplying the local grid
in support of rural electrification through
an agreement with PNG Power. NBPOL
is embarking on the construction of a
further 3 CDM projects in West New Britain,
Higaturu and Milne Bay.
food and personal care markets. For NBOL,
2011 has really been about building on
the initial successes and steadily gaining
bulk oil market share within the UK while
simultaneously executing expansion plans
into packed products.
NBOL will also be producing its first packed
products for sale into the UK bakery and
foodservice sectors in the first quarter of
2012. This will give NBOL the largest range
of fully traceable sustainable products in
the market.
SUGAR PRODUCTION
In Liverpool, New Britain Oils Limited (“NBOL”)
refinery operation marked a significant
milestone when in 2010 it began supplying
directly to manufacturers in the European
Marketed under the brand “Ramu Sugar”,
sugar sales were 32% lower in 2011 where
28,404 tonnes of sugar were sold in PNG,
85
due to the cane production shortfall in 2010.
During the year Ramu faced the challenge
of meeting demand and had to import over
4,000 tonnes to meet the shortfall. Despite
the industry enjoying protection in the form
of a tariff of 35% for all imported sugar,
several consumers against the backdrop
of reduced supply, imported sugar directly
which impacted negatively on the year’s
sales. World sugar prices remained robust
during 2011, further reducing the threat
of competition from imported sugar. One
of the most important limiting factors to
increased sugar consumption in PNG is
overcoming logistical challenges. Ramu has
gone some way to addressing this with a
bulk depot and distribution office in Mt.
Hagen, the largest centre in the Highlands.
During the year the sugar operation
harvested some 397,328 tonnes of cane from
7,311 hectares. This was an improvement
on 2010 when 375,822 tonnes of cane was
harvested. Improved planting techniques
incorporating a legume fallow period has
reduced weed competition, this as well as
increasing the area replanted every year
will go some way to increasing yields. The
sugar factory with a capacity of processing
500,000 tonnes of cane was therefore under
little pressure. Overall sugar recovery from
cane processing improved in 2011 to 81.4%
from 79.3% in 2010. Further improvements
in cane delivery from the field, maintenance
and milling planned for 2012 are expected
to support sugar recovery.
BEEF PRODUCTION
NBPOL remains the largest producer of
beef in PNG, however beef production will
continue to play only a minor role in the
overall investment strategy. This does not
mean that the beef operations will not
receive investment or that beef production
cannot be significantly improved to provide
a valuable resource to supplement the
earning capacity of NBPOL, especially in
areas where cattle and oil palms can be
intercropped, or in areas where oil palms
are unsuited as a sole commercial crop. The
herd size showed some growth with 20,000
cattle managed in 2 separate locations. The
herd produced some 1,284,000 kilograms of
beef for the PNG market generating revenue
of K14.9 million.
The herd at Ramu has approximately 16,500
heads of cattle. The feedlot has a capacity
to finish up to 1,000 head 120 days prior to
slaughter. Good efficiencies and standards
in the abattoir combined with the improved
weights have yielded much improved
quality in the final product. Additional
investment in stock yards and machinery
for both silage production and pasture
improvement are all contributing to better
efficiencies. The herd at West New Britain
has approximately 3,500 heads of cattle.
The total number of animals processed fell
short of budget by 9% affected by shipping
schedules and lower numbers through the
feedlot. However, due to strong weight
gains in the feedlot, increased selling
prices and a larger proportion of high
value sales of butchered products into the
local community, revenues were in line
with budget.
86
SEGMENT REVIEW
RESEARCH AND DEVELOPMENT
The main attraction of palm oil is its
low production cost and high yield
per hectare and the goal of the whole
industry is to make sure that we maintain
our lead in these areas.
Harnessing technology and science,
our Research and Development (“R&D”)
initiative applies new techniques to
build the Group’s competitiveness in the
market and create greater value providing
agronomic and laboratory services and
carrying out innovative research. R&D
personnel are involved in advisory
services, seed production, plant breeding,
and feasibility studies on land suitability.
R&D goals include yield optimisation,
reducing palm immaturity period and
agro by-products utilisation.
Due to our geographically-diverse
operations, the Group’s R&D services
are provided separately by the Kulim
Agro-Tech Centre based in Kota Tinggi,
Johor for its Malaysian operation, and by
NBPOL’s Dami Oil Palm Research Station
(“OPRS”) based in West New Britain
Province, Papua New Guinea for PNG and
SI operations.
PRECISION AGRICULTURE AND
ANALYTICAL SERVICES
All the Group’s estates in Malaysia have
been mapped and digitised capturing
agronomic and management data
using the Kulim Agrotech Information
Systems (“KATIS”) which is an integrated
system comprising of a Global
Positioning System (“GPS”), Geography
Information System (“GIS”) and Oil Palm
Monitoring Programme. The data offers
a quick overview of the estate’s current
performance and enables managers
to identify under-performing areas
that require close attention. Precision
agriculture management aims for
specific mitigation to specific areas and
significantly enhances effective fertiliser
usage, reduces fertiliser inputs and boosts
yields through the higher yield attainable.
Applying the right amount of inputs in
the right place and at the right time
benefits the trees, soils and groundwater,
and thus the entire crop cycle. The aim
of precision agriculture is to vary the
allocation of production inputs on a fieldby-field or palm-by-palm basis so that
each field within the plantation reaches
the maximum economic yield. The
system increases the accuracy of the area
computation, analyses yield gap, planting
material selection, nutrient management,
natural resource management and other
agronomic parameters. Consequently,
precision agriculture has become a
cornerstone of sustainable agriculture.
87
Kulim has a policy of sharing scientific
research findings with the research
community. Our agronomists and scientists
attend and present papers on oil palm
breeding, palm nutrition, oil palm byproducts and new technologies at national
and international forums in the interest of
disseminating knowledge for the benefit
of the industry as a whole. The latest
impressive test results gathered from low
cost aerial photo-mapping using unmanned
model auto-pilot aircraft were presented at
the 2011 International Palm Oil Congress
held in Kuala Lumpur. Aerial photographs
enable cross checking and updating of
estate census data to reflect true status.
The information obtained enables accurate
palm inventory, palm health checks and
surveillance of field conditions including
roads, water body, slope stability and
other parameters. This data enhances
the efficiency of field management by
facilitating assessment of the current land
condition for better yield forecasting.
We firmly advocate the development of
agri-science and technology to improve
crop and oil yields to meet increasing
demands. The Ulu Tiram Central Laboratory
(“UTCL”) analytical service provides technical
support for the Group’s plantations and
mills. The laboratory offers soil, foliar and
nutrient analyses, agronomic and fertiliser
recommendations for high crop productivity,
and quality and effluent testing for the
palm oil mills, using leading-edge testing
equipment such as the Atomic Absorption
Spectrophotometer, Flame Photometer,
UV-spectrophotometer and Buchi Auto
distillation to ensure reliable and accurate
analytical results. Accredited under MS ISO/
IEC 17025 SAMM (Skim Akreditasi Makmal
Malaysia) since 2007, the laboratory’s
competency is also recognised globally and
supported by the ILAC – MRA (International
Laboratory Accreditation Cooperation
– Mutual Recognition Agreement), an
international co-operation of laboratory
inspection accreditation bodies.
AGRONOMY
The Agronomy department’s oil palm
management database in Malaysia now
holds information collated over the past
17 years. Programmes based on the data
are used to determine the performance
of different fields across the locations,
providing analysis and recommendations
on best practices, determining sites for new
agronomy trials, and to generate information
for optimising planting schedules. The
section’s responsibilities have escalated from
providing technical advice and services to
the plantations to full involvement with
research and development. Interpreted
data is made available to estates in
order to enhance the monitoring of field
performance, benchmarking individual
estates against the leaders.
Agronomic ser vices based on Best
Management Practices (“BMP”) are provided
to all Group estates in order to apply
optimum inputs to achieve maximum
yield and production in a sustainable
manner. The service covers precision and
site specific management proposals to
ensure maximum sustainable yield through
determining the yield gap between fields
to elucidate fertiliser response through the
provision of nutrient management and soil
characterisation and conservation strategies,
all aimed at improving soil management.
In line with RSPO targets that single out soil
fertility as a principle criterion for achieving
sustainability, long-term fertiliser studies are
aimed at increasing the efficiency of specific
nutrient application as well as evaluating
herbicides that are less toxic and more
environmentally friendly. Improving soil
health is one of the ways to ensure vigorous
palm growth thus preparing the trees
for unexpected pest and disease threats.
Emphasis is given to the integration of
inorganic and organic fertilisers to promote
efficient energy usage and sustainable high
palm oil yields especially in the current
economic climate where the prices of
inorganic fertilisers have been steadily
rising. Efficacy trials on weedicides continue
88
SEGMENT REVIEW
in order to provide estates with information
on the most cost-effective chemical for
weed control. Application of biocompost,
an organic fertiliser currently produced by
the Group’s mills has enabled efficient byproduct utilisation covering larger planting
areas. A study carried out by R&D indicates
biocompost acts as a soil ameliorant and its
application results in better soil health thus
producing further and faster root growth.
Integrated Pest Management (“IPM”), the use
of holistic and compatible methods of pest
and disease control, has long been practised
and refined by research, experience and onthe-ground breakthroughs. A balanced IPM
approach removes the overdependence on
pesticides, making the control process more
biosustainable. The typical pests within an
oil palm estate include rats, bagworms,
nettle caterpillars and rhinoceros Oryctes
beetles. These pests are controlled using
direct biocontrol agents such as viruses and
fungi to infect the pests, such as Cordyceps
militaris to manage the population of the
nettle caterpillar. Predatory animals and
insects such as barn owls that feed on rats
are fostered to control pest populations.
While barn owls and snakes keep a check
on the rodent populations, predatory
insects, parasitoids and entomopathogenic
fungi eliminate defoliating insects. Beneficial
plants are cultivated to provide shelter
and supplementary food such as nectar in
encouraging the population of predators
and parasites. Insecticides are only resorted
to in outbreak situation where natural
enemy predation is no longer sufficient
to manage the pest population. Once the
situation is within control, natural controls
are reactivated.
The practical and environmentally sound
technique of zero-burning replanting
has been adopted and implemented
by the Group. This is the best option to
the previous practice of burning and is
suitable for converting other crops into
palm cultivation or for replanting. Using
the zero-burning replanting technique, old
and uneconomical stands of oil palm are
shredded and left to decompose in situ. This
technique also allows all plant tissues to
be recycled, enhancing soil organic matter,
helping to restore and improve soil fertility.
The biomass of the palm residue through
decomposition recycles nutrients into the
soil and reduces the input of inorganic
fertilisers. The return of organic matter
also improves the physical and chemical
properties of the soil. Besides being nonpolluting, zero-burning also contributes
positively towards efforts in minimising
global warming. Felling and clearing is
no longer dependent on the vagaries of
weather. In the past, wet weather often
delayed burning and thus replanting. Such
delays are now avoided. In the absence
of burning, the cost of land clearing is
substantially cheaper. Zero-burning is nonpolluting, contributes positively towards
minimising global warming, and complies
with environmental legislation.
PLANT BREEDING
B y s e l e c t i n g p l a n t s w i t h d e s i ra b l e
characteristics, the Plant Breeding unit
develops new varieties that are higheryielding, resistant to pests and diseases,
drought-resistant or regionally adapted
to different environments and growing
conditions. High yielding oil palms are the
bedrock of the Group’s “30:30” strategy and
the most influential driver of profitability,
other than commodity prices. During the
year a set of progeny testing involving 150
89
crosses were completed that tested elite
duras from Dami, ex-OPGL, Kulim-Nigerian
and Kulim duras with AVROS pisiferas from
the Malaysian Palm Oil Board (“MPOB’),
Kulim, Dami. The objectives of this trial
were to find new sources of better duras
and pisiferas for future planting materials
and select ortets for clonal propagation.
The seeds will be germinated in 2012 for
2013 field planting in Sungai Papan Estate.
Using Connected Design (Incomplete North
Carolina Mating Design II) in the crossings,
selection of elite dura and pisifera parental
palms will be more meaningful as the
General Combining Ability (“GCA”) and
Specific Combining Ability (“SCA”) can be
estimated instead of the ordinary North
Carolina Mating I (“NCMI”) which can
estimate only the GCA of the pisiferas while
the duras performance is based on the
mean value.
A total of 100 MPOB Ganoderma tolerant
DxP materials planted in a Ganoderma
hot spot area in one of our managedestates in 2009 were in bearing. Further
negotiations with MPOB progressed to
progeny test some duras and teneras/
pisiferas of Zaire, Cameroon and Nigerian
populations and self-pollination of the dura
and tenera parental palms for future genetic
improvement. The crossing programmes are
expected to be completed by end of 2012.
Screening of tolerant materials through
inoculation technique on the three-month
old seedlings using rubber wood block will
be carried out in February 2013.
A Single Seed Descend (“SSD”) programme
involving 7 ex-OPGL and 15 Dami duras
was completed. The materials are in big
polybags and will be field planted in 2012.
This programme is an alternative path to
shorten the period of creating an inbred
line in a 5-year cycle instead of 10-year
cycle using a standard selfing programme.
The plant breeding and seed production
operations based at Dami in West New Britain
supply planting material that is both high
yielding and suited to its environment aiming
to deliver oil yields in excess of 9 tonnes per
hectare on a consistent basis under New
Britain’s growing conditions. Improvement in
the oil yield of each subsequent generation
of palms over the last 3 decades showed
that the average yield of CPO in progeny
testing trials has increased from 6.1 tonnes
per hectare to over 9.0 tonnes per hectare.
In addition the palms are maturing faster
and are in full harvest at 24 months after
field planting.
Through rigorous and wide scale field trials
that cover an extensive range of genetic
materials, the plant breeding team has been
able to identify a number of high yielding
parental crossing combinations, producing
elite progenies that have the characteristics
of early yields, high bunch numbers, high
total oil yields of CPO and palm kernel oil,
large fruits and good oil extraction rates.
This material is used across the estates
for NBPOL’s replanting and new planting
programme.
In 2011 NBPOL also focused on elite parent
palm conservation through cloning, since
some of its most valuable palms are now
reaching the end of their useful lives.
Although NBPOL will continue to clone
these parent palms in 2012, it also plans to
sample more elite crosses, which have the
potential of producing CPO yields in excess
of 10 tonnes per hectare per year.
SEED PRODUCTION
In Malaysia, a total of 1.80 million commercial
DxP seeds were produced and 0.86 million
germinated seeds were sold by the Group’s
Malaysian Plant Breeding unit in 2011. In
PNG and SI, seed sales reached 11.8 million,
a 42% increase from the sales achieved
in 2010. Of those sales, 8.1 million were
to customers overseas and 3.7 million for
internal use and within PNG. The high and
stable palm oil prices combined with the
ongoing economic recovery supported sales,
which were actively pursued by the Dami Oil
Palm Research team. NBPOL’s international
customer base includes companies from
Indonesia, Thailand, Philippines, Honduras,
Cameroon and Sri Lanka. The Dami seed
90
SEGMENT REVIEW
by using genetic relationship studies to
determine desirable oil palm breeding
partners. Palms can be cloned both for
increasing the number of elite breeding
trees and for improving the quality of
new oil producing feedstock. Advances
in molecular biology have transformed
biotechnology in recent years. Whereas in
the past, crop improvement depended on
selective breeding within species, tissue
culture, through which plants can be cloned
from a single cell, has sped up the process
of making new varieties available. It allows
rapid multiplication of uniform planting
materials with desired characteristics. This
enables improvement of planting materials
using existing individuals which have all or
most of the desired qualities such as good
oil yield and composition, slow vertical
growth and disease resistance.
The research, development, production and
supply of high quality oil palm plantlets
through a tissue culturing process for
Malaysia-based operations continued
through the year at Kulim TopPlant Sdn
Bhd (“Kulim TopPlant”) in REM Estate.
Commissioned in July 2007, Kulim TopPlant
was awarded BioNexus Status by the
Malaysia BiotechCorp in 2008, a status that
carries significant tax incentives. During the
reporting period, the production of clonal
ramets at Kulim TopPlant went on smoothly;
over 40,000 units were delivered to estates
within the Group in 2011. With more
trained laboratory technicians and higher
plant culture inventories, tissue culture
production in the year ahead is expected to
double. Some orders from estates outside
the Group have been received for 2012.
production unit successfully maintained its ISO 9001:2008 Quality Management System
certification giving further independent assurance and confidence to the customers of
Dami’s reputation as a producer of high grade oil palm planting material. The sales forecast
for 2012 remains buoyant with budgeted sales of 12 million seeds for the year.
BIOTECHNOLOGY
Research and development in this field being explored by the Group focuses upon genetic
improvement through modern molecular techniques using tissue culture methodology
to clone elite trees. The research also seeks to hasten traditional breeding programmes
The Group is also constructing a new
dedicated R&D establishment to house
genome research. This investment for
the future is being taken because of the
many advantages to work independently
on genome research in our own facilities,
among others, a more accurate result when
the legitimacy of the off-spring can be
confirmed through DNA finger printing;
research methodology and progress can be
secured and remained confidential before
being published.
91
Over the past 3 years, the biotechnology
team at Dami Research Station has
developed and tested a new high efficiency
palm reproduction technology. During
2011, further gains were made as the tissue
culture protocols were refined, enabling us
to carry out tissue culture processes only 16
weeks after sampling the palms, which is a
substantial reduction in time compared to
the 50 to 100 weeks taken with traditional
tissue culture protocols.
As part of the process of moving from
laboratory to field, cloned palms were
assessed in the Dami nursery for any
abnormality and exhibited encouraging
results. From the initial sampling of elite
material, Dami has exceeded the goal of
having at least 5 clones for large-scale
production technology. The first of these
clones has been moved from the laboratory
into the nursery and production will
accelerate as embryos from tissue culture
begin to accumulate.
HUMAN CAPITAL
The Group considers human capital planning
a critical business process because of its
transformational impact to the business
and the way it delivers that value. Some
of the most important strategic decisionmaking we make is in the selection, training
and promotion of human capital because
of the deep implications on corporate
strategy. Financial resources are insufficient
without people to drive the strategy toward
success.
The future of our organisation depends on
developing a people strategy that enables
every employee to remain competitive in
a global economy. The Group’s ongoing
‘People Excellence’ campaign is about
developing people to excel, to be the best,
and do their best for customers.
As at the end of 2011, our plantations
operations employed 21,247 personnel,
representing a 12% increase over the
previous year. The increase was mainly
attributable to the expansion of business at
NBPOL in PNG and SI. The composition by
countries was: Malaysia at 5,206 (25%), PNG
at 14,257 (67%) and SI at 1,784 (8%).
Learning programmes are a critical tool
in the transformation of employees and
their development. To this aim, the Group
endeavours to employ the best talent and
continuously hones skills. Formal courses,
seminars, and workshops, both internal
and external, were held during the year.
The scope of training modules ranged
from corporate culture familiarisation
to awareness, productivity, effective
communication, sustainability and executive
and leadership development.
Formal training programmes directly
related towards enhancing our operational
management capability were emphasised.
In 2011, 10 employees were registered for
an Executive Diploma programme with
their final assessment and results expected
in April 2012. Another employee was
placed in an Executive Master in Business
Administration programme in collaboration
with Johor Corporation and UTM-SPACE. The
pre-retirement programme was continued
during the year to ensure upcoming
prospective retirees over the next 2 years
are well prepared financially, physically and
mentally after they leave the Company’s
employment. During the year, our Malaysian
operations invested RM1.3 million or 4.45%
of payroll towards training and recorded
an average training man-day of 4.13 per
employee, which exceeded our target of 3
man-days.
Following on from last year’s Organisational
Climate Sur vey, in 2011, the Group
conducted a Salary Survey to review and
revise scales for current competitiveness
in the market. The new emphasis on
performance appraisal and merit pay is to
maximise our people resources to make our
business even more successful by boosting
employees’ productivity. The performance
appraisal system is communicated to all
employees via a series of road shows to
underscore the value the Group places on
high performance in the organisation. The
92
SEGMENT REVIEW
evaluation of each person’s performance
objectively, fairly and systematically is
an integral part of our Per formance
Management System (“PMS”) which aims
to measure the individual employee’s
performance against critical targets, in
particular Key Performance Indicators
(“KPIs”). Sustainability-related dimensions
such as Safety and Health, participation in
social and recreational activities as well as
in Non-Governmental Organisations, were
maintained in the assessment, reflecting the
Group’s commitment to embrace the ethos
of corporate responsibility.
Discussions between the organisation,
relevant Government officials, staff and
workers’ union officials and Hospital
Assistants Association representatives,
enable the exchange of information and
the maintenance of good rapport among
the parties. Besides that, regular ongoing
consultations resolve any differences,
grievances and disputes. It has been a core
principle of the Company to responsibly
manage the whole workforce with full
adherence to the Code of Conduct for
Industrial Harmony and at the same time
respect each other obligations.
The Group’s Malaysian operations are
dependent on foreign labour, especially
migrant workers from Indonesia. We
welcome the move by the Malaysian and
Indonesian Governments to regularise and
protect the rights of each nation’s citizen.
This is in line with the Group’s practice of
working with bona fide labour suppliers
to ensure the legality of its manpower and
eliminate making any distinction based
upon an employee’s race and origin.
The establishment of a performancemanagement based organisational culture
involves a coaching environment and
conscious attempt at continuous dialogue
between management and staff to achieve
a balance between driving for results
and listening to feedback. The annual
Peers and Reverse Feedback (“PARFEED”)
appraisal system is achieving its objective
of complementing the usual top-down
appraisal approach and provides a better-
rounded assessment of an individual
employee’s performance revealing areas
for further improvement. Questions were
expanded to assess leadership qualities
and management style. The resulting
feedback guides employees to further
improve performance in the areas of
teamwork, communication, leadership and
organisational values.
The Group’s Malaysian operation had
in December 2011, organised a retreat
programme for the Senior Management
members at Selesa Beach Resort, Port Dickson.
During the programme, 10 groups were
formed to look at the various material issues
within the operation. Areas covered, among
others, inclusive of plantation operations,
internal control and human resource
management. An interactive dialogue session
with the Managing Director was held to share
all the identified stumbling blocks and also to
address current business development. Task
forces are being formed to address each issue
and generate creative solutions in enhancing
the organisation performance.
93
Pedoman , the Group’s annual gathering
of employees, is a forum for the open
and transparent exchange of ideas, plans
and opinions. The motivational theme
for Pedoman 2011 was ’Membina dan
Membela’. Every year at this popular event,
the management team provides updates
on the Group’s performance, extols the
highlights of the preceding year, identifies
the challenges we face, and tables a road
map to reach our vision. The gathering again
presented an opportunity for employees
from all levels to hold an open dialogue
with the management team as well as raise
questions and offer suggestions. Educational
certificates were presented, awards given
for quality and operational achievements,
and service milestones celebrated.
The Ethics Declaration form embedded in
the organisation is an important instrument
to promote a positive working culture by
encouraging employees to whistle-blow and
alert the management about any ethical
wrong-doings that might occur below the
compliance radar. In 2011, all employees
provided their valuable feedback and
appropriate action was taken to address
issues raised. The Asset Declaration exercise
was extended to all executives who were
also requested to individually declare
income, assets and liabilities to eliminate the
risk of corruption and conflict of interest.
To protect our security, eliminate risk to the
health, welfare and safety of the staff, and
to increase productivity in the workplace, it
is the Group’s policy that the use of illegal
drugs and alcohol not be tolerated in the
workplace. Every employee is responsible for
complying with this policy and the Group
promotes a drug-free workplace programme
requiring all employees to adhere to the
required policies. The prohibition includes
policies and procedures, objectives, and
guidelines concerning the nature, frequency,
and type of drug testing to be instituted,
including random testing, voluntary testing,
and testing as part of, or as a follow-up to,
counselling or rehabilitation. An inspection
programme to vet all internal grocery shops
in the operating units for illegal medication
and alcohol has also proven to work as a
first-line deterrence initiative.
94
SEGMENT REVIEW
TOTAL QUALITY MANAGEMENT
The Group’s Total Quality Management
(“ TQM”) looks at the overall quality
measures used including managing quality
design and development, quality control
and maintenance, quality improvement, and
quality assurance. We recognise that a good
quality management system is effective
when we can quantify the results that will
then help set the Company’s goals for the
future and ensure that every department is
working toward the same result.
Various Islamic-based activities are promoted
throughout the organisation to promote
religious precepts amongst employees and
their families. The Qurban programme is a
highlight of each year when we witness the
charitable spirit of our staff sharing their
blessings. In 2011, 319 employees in the
Malaysian operations pooled resources and
distributed meat to less fortunate families
in the operating units and surrounding
communities, a noble way indeed for
employees to contribute towards realising the
organisation’s corporate social responsibility
to society. This year we pay tribute to the
highest level of participation since the
implementation of the programme in 2006.
The Group has a human resource outreach
and external public relations strategy, to
publicise our success and attract the best
and brightest talent to further our goal of
building a winning organisation, that includes
road shows to school leavers and university
graduates. The promotional schedule this
year included visits to institutions of higher
learning and our participation in career and
educational fairs and exhibitions where the
Group expounded to prospective recruits on
the adventure and passion of the plantation
business and the direction the Group is
taking to maintain its leadership position.
We remain committed to the continuous
improvement of the service and product
quality of the operating units through
maintenance of the current standards
certifications. The Roundtable on Sustainable
Palm Oil (“RSPO”) certification, a global,
multi-stakeholder initiative on sustainable
palm oil, held by the Group’s plantation
operations in Malaysia, PNG (except KPOL)
and SI is a seal of approval that our palm
oil is produced in a sustainable manner
and volumes are traceable. In 2011, NBPOL
has successfully completed an audit for
RSPO certification for Poliamba Limited
in New Ireland, PNG. In 2012 we hope to
have undergone audits at the remaining 2
sites of KPOL at Milne Bay and Higaturu as
part of the Group’s commitment to have
all units and supply chains traceable and
certified as fully sustainable by the end of
2012, delivering production assurance and
product knowledge of carbon values to
customers who value such supply sources.
95
4 of the Group’s operating units in Malaysia; Sedenak Palm Oil Mill (“POM”), Sindora POM, Tereh POM and Tereh Selatan Estate successfully
underwent the reassessment of their Quality System, that entailed the re-certification of the ISO 9001 accreditation. ISO 9001:2008 is the
internationally recognised standard for the quality management of businesses. It applies to the processes that create and control the
products and services an organisation supplies and prescribes systematic control of activities to ensure that the needs and expectations of
customers are met. It is designed and intended to apply to virtually any product or service, made by any process anywhere in the world.
OUR ACCREDITATIONS
CERTIFICATIONS
Receiving Company/
Operating Units
RSPO
ISO 9001:2008
ISO 14001:2004
All Malaysian, PNG and
SI estates and mills
(except KPOL)
Malaysian operations –
Sedenak POM, Sindora
POM, Tereh POM and
All PNG operations and
for Malaysian operations
– Sedenak Estate, Sindora
Estate and Sindora POM
Customers, consumers and shareholders
are increasingly concerned over the
environmental impact of the activities,
products and services they consume.
They expect companies to comply with
environmental standards and demonstrate
their commitment to reducing their
environmental impact in daily operations.
The ISO 14001:2004 environmental
management standard helps us minimise
the impact of our operations on the
environment (air, water, land, community
and natural resources), and comply with
applicable laws and regulations. Sedenak
Estate, Sindora Estate and Sindora POM
successfully underwent the surveillance of
their ISO 14001:2004 certification during
the year under review.
ISO/IEC 17025 is the main standard used
by testing and calibration laboratories
issued by the International Organisation
for Standardisation. It applies directly to
those organisations that produce testing
IEC 17025
Ulu Tiram Central
Laboratory (UTCL)
and calibration results. Our Ulu Tiram laboratory uses ISO/IEC 17025 to implement a
quality system aimed at improving their ability to consistently produce valid results. The
standard places great emphasis on the responsibilities of senior management, with explicit
requirements for continual improvement of the management system itself, and particularly,
communication with the customer. In January 2011, to meet increasing demand from
internal and external customers, Ulu Tiram Central Laboratory (“UTCL”) added accreditation
96
SEGMENT REVIEW
The key areas addressed by OHSAS 18001
are planning for hazard identification, risk
assessment and risk control, the OHSAS
management programme, structure and
responsibility, training, awareness and
competence, consultation and communication,
operational control, emergency preparedness
and response and performance measuring,
monitoring and improvement. The Group’s
adoption of OHSAS 18001 embeds a formal
procedure to reduce the risks associated with
health and safety in the working environment
for employees, customers and the general
public, reducing and preventing accidents
and accident-related loss of lives, time and
resources.
for their foliar testing service. Foliar chemical
analysis identifies deficiencies of nitrogen,
phosphorus, potassium, magnesium and
calcium and other metals in samples. The
report will indicate the normal and deficient
levels of these elements and recommend
a prescription for a remedial fertiliser
application.
A series of refresher training courses
on Understanding, Documenting and
Implementation of ISO 9001:2008 and ISO
14001 were conducted for 45 personnel
from the respective certified operating units.
An integrated audit training on ISO 9001
and 14001 was conducted in June 2011 and
a session of ISO/IEC 17025 audit training also
conducted for laboratory operators.
73 personnel make up our TQM Internal
Audit team in Malaysia. The team functions as
Group Internal Auditors for ISO certification
with 17 members trained as Lead Auditors
for both ISO 9001 and ISO 14001. The awards
received by the various operating units in
2011, and in prior years, are a testament
to the Group’s ongoing journey towards
quality management excellence. With such
dedication, the Group is confident that each
certified unit will continue to excel, perform
and conform to international standards.
The internationally recognised assessment
specification Occupational Health and
Safety Assessment Series (“OHSAS”) 18001
guidelines are implemented as part of
the Group’s risk management strategy to
address changing legislation and protect
our workforce. OHSAS promotes a safe and
healthy working environment by providing
a framework that allows the organisation to
consistently identify and control health and
safety risks, reduce the potential for accidents,
aid legislative compliance and improve overall
performance. OHSAS 18001 is designed to be
compatible with ISO 9001 and 14001 and
helps the organisation meet health and safety
obligations in an efficient manner.
To involve employees in productivity and
efficiency improvement activities, a teambased environment has been developed
in which they can participate actively
in improving their process, product, or
service performance. One such employee
participation programme is the Quality
Control Circle (“QCC”) directed towards
improvements in the workplace focusing on
areas such as cost, safety and productivity.
Other complementing initiatives such as
Innovative and Creative Circles (“ICC”) and
the Japanese 5S System are also an integral
part of enhancing operations.
97
Management makes every effort to help
employees provide suggestions for the
betterment of job processes and to harness
the power of in-house creative ideas.
PROSPECTS AND PLANS
2012 continues to present mixed offerings.
Concerns on Eurozone remains. However,
in emerging markets, risk perceptions have
eased since the beginning of 2012 and
capital flows resumed into emerging Asia,
Latin America and South Africa economies.
Higher crude petroleum oil prices are a
risk to global growth and the impact of an
oil supply shock in the Middle East could
be large if supplies were not increased
elsewhere.
Looking at the outlook for the global
vegetable oil market in general and palm oil
in particular, the signs on the horizon look
constructive, as demand for palm oil is sure
to remain robust over the coming months
because of tightening soya oil availability.
The world’s stocks of vegetable oil at the
end of 2011 remained virtually unchanged
which suggests that despite the expected
bumper palm oil production the global
appetite for vegetable oil remains strong.
Global production of the 8 major vegetable
oils for 2012 is forecast at 152.4 million
tonnes, up 3.9% over the previous year.
Palm oil production growth is expected to
slow down as a result of an expected drop
in yields due to biological stress following
periods of record production.
The Group organises annually its internal ICC/
QCC competition and regularly participates in
those organised at its holding company level
by JCorp and by the Malaysian Productivity
Corporation (“MPC”) at both regional and
national levels. Hari Mekar, the Company
level quality convention, was successfully
organised on 15 and 16 November 2011
drawing participation from 5 ICC groups and
47 presentations from CEMPAKA.
T h e C E M PA K A S u g g e s t i o n S c h e m e
provides the mechanism for employees to
channel their suggestions and ideas for
improvements. Annual awards tied to the
level of participation help publicise the
scheme which has also been strengthened
by incentives. To maintain an adaptable and
responsive organisation we have developed
a culture that actively solicits input and
recommendations from every level of staff.
An important factor could be the intensifying
competition between Malaysia and Indonesia
to capture market share. Indonesia looks set
to wrest a larger market share next year
because of the new Indonesian tax structure.
Over the first half of the year CPO is most likely
to trade at an average of around RM3,100 a
tonne with a RM200 movement on either
side. Prices are expected to weaken as we
move towards the second half. While higher
crude oil prices and weather aberrations can
disturb the outlook and push prices higher, a
major commodity sell-off or concerns about
global economic growth prospects could
pull prices down.
98
SEGMENT REVIEW
We expect a positive impact from the
acquisition of plantation assets from JCorp,
by way of higher volumes of FFB, CPO and
PK in 2012. So far, we have completed the
acquisition of 2 estates from JCorp and
have started accruing production and
earnings from these estates since January
2012. The remaining 6 operating units to
be acquired, comprising 4 estates and 2
POMs, are expected to reach completion
by mid-2012.
Including the impact of these acquisitions,
crop production from the Group’s Malaysian
operation is expected to increase by 20% to
25% in 2012. The estimated yield for 2012
is set at 22.95 tonnes per mature hectare
with an estimated cost of production of
RM216 per tonne of FFB or RM4,522 per
hectare. OER and KER, inclusive of the
new acquisition areas, are targeted at
20.75% and 5.83% respectively, whilst the
estimated milling cost is RM41 per tonne
FFB processed.
The labour supply next year should be
adequate with an ample quota secured
from the Government to bring in foreign
workers, especially harvesters. The continued
attention to improving our workers’ income
and living environment, by providing better
housing amenities and local community
activities, encourages foreign labour to work
harder and stay longer with the Group.
2 estates, Sindora and Sg. Tawing, are
currently using biofertiliser supplied by
Microwell Bio Solutions Sdn Bhd, a Group
company, for manuring of some 4,000
hectares. Sindora Estate commenced
application in May 2010 whilst Sg. Tawing
Estate in 2011. Its usage is expected to
increase yields. A cost-benefit assessment on
the trial will be reviewed before extending
the application of biofertilisers to other
Group estates.
NBPOL has commissioned its 12th palm oil
mill in West New Britain, adding an annual
processing capacity of over 300,000 tonnes
of FFB, giving NBPOL increased capacity and
flexibility to mill the rising West New Britain
crops and it also increased processing
capacity in the SI from 30 to 45 tonnes of
fruit per hour.
Our RSPO certification process continues
and in 2011 we successfully completed
an audit at Poliamba. NBPOL is targeting
having the remaining sites at Milne Bay and
99
Higaturu audited under RSPO as part of its
commitment to have all units and supply
chains certified as fully sustainable and
traceable by the end of 2012.
NBPOL has also released its first Carbon
Footprint report. The reporting and mitigation
of Carbon Dioxide and other greenhouse
gas emissions can now be quantified and
this is an excellent way for companies down
the supply chain to see how “sustainable”
palm oil differs from other sources.
NBPOL is also expected to commission 2
methane capture plants in West New Britain
in the coming months which will substantially
reduce its carbon footprint as well as deliver
renewable energy for its operations and the
wider community.
To tap another stream of income for the
Group in the coming years, we are embarking
upon downstream processing, turning the
mills’ by-products such as biomass, POME and
biogas into high value-added end products
that can generate additional revenue. The
master plan for the multiphase integrated
downstream process plants aims at
generating additional revenues and meeting
corporate social responsibilities while at
the same time improving compliance to
statutory requirements and maintaining
the sustainability of the palm oil industry,
especially relevant to our overseas clients.
The long term goal is to balance between
the “wants and needs” in the Group’s effort
to strive for sustainability by creating value
through embracing opportunities and
managing risks derived from economic,
environmental and social demands.
Underlining the importance of research in
producing high quality planting material,
the Group will construct a new purposebuilt R&D complex in Malaysia, scheduled
to be ready by 2013. The new establishment
will house the dedicated genome research.
Along with other major players such as
Sime Darby Plantation, Felda and Applied
Agricultural Resources, the goal of the
research is to develop biotechnological
tools to support and complement our
crop improvement and agronomic research
programme, which encompasses oil palm
breeding, tissue culture, pests and diseases,
and agronomy.
100
SEGMENT REVIEW
S
FOODS AND
RESTAURANTS
INDUSTRY ENVIRONMENT
2011 proved to be another resoundingly successful year for the Foods and Restaurants Division,
despite international economic turbulence. QSR Brands Bhd (“QSR”) and its subsidiaries
continued their programmes of restaurant expansion and image enhancement, always
reaching out to new markets and strengthening the loyalty of existing customers. Innovative
menu items were a feature throughout the year, giving people even more reason to stop by
and try something different.
101
Meanwhile, developing and retaining a skilled workforce remained a key priority, and
QSR invested heavily in a broad range of training for its personnel. The KFCH International
College also expanded further during the year, now spanning 2 campuses, and is
positioned to provide the Foods and Restaurants organisation with excellent candidates for
managerial roles.
102
SEGMENT REVIEW
FOODS AND RESTAURANTS (continued)
RESULTS
REVENUE
10.3
RM3.35 B
%
to
from RM3.04 billion
PROFIT BEFORE TAX
%
1.1
RM269.9 M
to
QSR Group registered revenue of RM3.35
billion for 2011, representing an increase
of 10.3% over RM3.04 billion in the
corresponding period in 2010. Profit before
tax increased marginally by 1.1% to RM269.9
million against RM266.9 million in the
previous year.
The combined sales of the Pizza Hut chains
in Malaysia and Singapore grew by 7.9% to
RM638.2 million, lifting their profit before tax
by 18.3% to RM69.7 million. KFC Holdings
(Malaysia) Bhd (“KFCH”) achieved revenue of
RM2.80 billion representing growth of 11.1%
over RM2.52 billion in 2010. However, profit
before tax declined marginally by 2.8% to
RM215.5 million from RM221.8 million in
2010. Specifically, the Group invested some
RM104.2 million during the year in vital
supply chain facilities, while its operations
in KFC India and KFCH International College
incurred initial start-up cost as they build the
critical mass.
As at December 2011, the total number
of outlets operating under QSR’s brands Pizza Hut, KFC, Kedai Ayamas and RasaMas exceeded the 1,000 mark for the first time by
growing to 1,063 units from 978 in 2010.
OPERATIONS PERFORMANCE
PIZZA HUT
Malaysia and Singapore
Pizza Hut Malaysia’s sales jumped 7.4% to
RM441.9 million in 2011, thanks in part to
the growing number of outlets. The year’s
excellent performance reflected creative
new products, promotional offers which
exceeded their initial goals, joint marketing
campaigns with corporate partners, and an
increasing number of ways for customers to
order Pizza Hut’s meals.
10 promotions were launched during the
year, with new product releases tied to festive
seasons. January opened with the launch of
a new menu, while the Ring of Fortune Pizza
marked Chinese New Year. In the shape of
an old Chinese coin and topped with chargrilled chicken, capsicum and pineapple, this
offering promised auspicious beginnings.
The Ring of Fortune Pizza lived up to its
name, generating 24% of all sales during the
promotional period.
The Pizza Hut Delivery (“PHD”) service
commenced in 2011, offering its own
promotions, menu and ordering mechanisms
to busy customers. The separation of PHD
from the dine-in business allows staff to
focus on the needs and challenges unique to
the delivery sector. Customers can, of course,
order by telephone, but as of October 2011,
they could order online as well. Delivery is
free of charge, with a 30-minute delivery
guarantee. The online ordering service got
off to a promising start, accounting for 8%
of all delivery orders.
Pizza Hut Malaysia ended 2011 with 210 outlets,
including 12 new openings and 3 closures.
10 outlets underwent image enhancement
during the year, and Pizza Hut Kotaraya is
currently closed for a major upgrade that will
make it a flagship restaurant.
2011 brought QSR Group widespread
recognition. Yum! presented Pizza Hut
Malaysia with the Franchisee of the Year
Award in the dine-in category, the People’s
Choice Best Remodel Award, and the Best
Advertising Award. BrandLaureate voted Pizza
Hut the Best Brand in the Food & Beverage
Pizza category, and Readers’ Digest presented
us with their Trusted Brand Gold Award.
103
and increase transaction counts. The KDS
will be implemented in high sales volume
restaurants in early 2012. A Self-Order Kiosk
also succeeded in reducing queue time
during its trial run at Wisma KFC.
To keep the menu fresh, KFC introduced 8
new items during the year, each launched
with a promotional event. Offerings such
as the Fish Donut, Chicken Chop with
Mushroom Gravy, Quarter Chicken with
Black Pepper Sauce, Olé Pocketful, Tom Yum
Crunch, Double Zinger Burger and Krushers
with new flavours enticed customers craving
new tastes.
“YUM! PRESENTED PIZZA HUT MALAYSIA WITH THE
FRANCHISEE OF THE YEAR AWARD IN THE DINE-IN
CATEGORY, THE PEOPLE’S CHOICE BEST REMODEL AWARD,
AND THE BEST ADVERTISING AWARD.”
Net revenue achieved by Pizza Hut Singapore
climbed 9.1% to RM196.3 million, an increase
of RM16.4 million over 2010. This success
was driven by strategic menu enhancements
and attractive promotional campaigns.
Pizza Hut Singapore celebrated the Chinese
New Year festivities by launching a Prosperity
Pizza in the shape of a golden Chinese
coin topped with barbecued chicken and
pineapple. This proved to be a successful
start to the year’s special promotions. To
honour the 30th Anniversary of our presence
in Singapore, Pizza Hut rolled out a signature
Pan Pizza and also introduced a host of new
non-pizza menu items in April and May. The
menu change was deemed one of the most
successful campaigns of the year.
Staying true to the promise of hot pizza
delivery, the team introduced HOT Power
technology, a battery pack that charges the
heating elements in the pouch throughout
the delivery to keep food piping hot all the
way to the customer’s doorstep. A number
of specifically targeted deals also gave the
delivery segment a further boost.
In September, the Cheesy Bite Treats, a great
hit in 2010, returned for another limited time
offer. Varieties included chicken sausage and
three-cheese fillings, and nacho-flavoured
cheese or Texan chicken toppings. This
campaign contributed to our support for the
World Hunger Relief Programme, with Pizza
Hut donating RM2.40 for every Cheesy Bite
Treat purchased. The fund-raising drive was a
huge success, raising RM391,000, an increase
of 77% over 2010’s donation.
KFC
Malaysia, Singapore and Brunei
KFC Malaysia achieved revenue of RM1.66
billion last year, up 10.6% on the RM1.50
billion figure reported the year before. A
combined effort to provide exciting new
menu variations and attractive promotions
drew customers into its outlets.
Several projects were initiated during the
year to increase operational efficiency,
especially during peak hours. The Kitchen
Display System (“KDS”) has proven to reduce
queue length, improve operational efficiency
A large number of promotions implemented
throughout the year meant customers could
always find something new and exciting, and
several media channels were employed to
keep them informed of the latest events. The
year kicked off with a celebration to mark
the opening of KFC’s 500th restaurant, and
customers enjoyed the Celebration Combo
which came with a limited edition 24-karat
gold-inscribed Celebration Mug. Chinese
New Year followed soon after, and the new
Fish Donut made its debut. This was a very
successful limited time offer, and accounted
for about 10% of the total sales during the
promotional period.
KFC Malaysia operates a continuing
programme of image enhancement for its
outlets, and 18 restaurants were renovated
last year. The expansion schedule to the
network in 2011, added 24 new outlets and
retained market dominance.
KFC Singapore’s performance mirrored the
healthy economy in early 2011, achieving a
record high sales figure of RM409.1 million.
This represented a RM40.5 million, or 11.0%,
increase over 2010. The Chinese New Year
celebrations featured the KFC Fortune Feast, a
seasonal offering in a collectible bucket with
a gift of complementary cushion covers. The
Mandarin Orange Egg Tart – sold individually
and in colourful boxes of 6 – was an inspired
new variation on the classic Egg Tart.
104
SEGMENT REVIEW
was consistently in the public eye as the
Brunei team established a busy calendar of
product launches, activities and premiums.
Customers were lured by new offerings such
as the Fish Donut and Tom Yum Chicken, and
corporate marketing partners collaborated
on 10 various month-long promotions. Staff
members also attended 9 different in-house
training seminars throughout the year. 2
new in-line restaurants, 2 drive-throughs,
and image enhancements for the KFC
Berakas locations are all on KFC Brunei’s
agenda for 2012.
Cambodia and India
The new ‘So Good’ marketing slogan
made its debut in Singapore in February
2011, emphasising fresh ingredients and
superlative preparation techniques. A series
of special offers and a photography contest
drew Singaporeans into the ‘So Good’ spirit.
Product innovation was a strong draw in
2011. The Blueberry Pancake rejuvenated
the KFC breakfast menu. The Ultimate Box
launched in January, and the box meal
line expanded further in April to include
the Ultimate Roasta Box. Joining in the
excited anticipation of the premiere of the
‘Transformers 3 – Dark of the Moon’ movie,
KFC Singapore designed a new ‘big eat’ for
Transformer fans with hearty appetites. In
July, KFC Singapore introduced the Cheesy
Crunch, a fusion of chicken and 2 cheeses,
to popular acclaim.
KFC Brunei’s revenue of nearly RM20.5
million represented an impressive gain of
25% over 2010, while the addition of 3 more
restaurants brought the total to 12. KFC
KFC Cambodia once again exceeded its
previous performance, generating sales of
RM12.5 million in 2011, a 9.5% increase over
the RM11.4 revenue figure for 2010. KFC’s
operations in the country faced a number
of challenges in 2011, including increased
chicken prices, high electricity and fuel costs,
steep taxes on prepared food items, and
a shortage of skilled workers. Nonetheless,
the team devised a packed schedule of
promotions, celebrations, contests and
concerts to draw customers into KFC. ‘More
Value, More Variety, More Choice’ was the
year’s strategic message, and it proved a
successful one.
105
was an Official Partner in the 2011 ICC World
Cup. The staff donned special tournament
T-shirts, and customers took advantage of
the limited-time offer of meals served in a
cricket-themed Fan Bucket.
The launch of the ‘So Good’ campaign in
July 2011 resulted in doubled transactions.
The menu expanded to include 12 different
burgers, such as beef, fish and shrimp. The
introduction of the new Value Chicken
Burger selling at USD1 was the single most
popular item, driving up sales in all outlets,
especially in Siem Riep, where transactions
soared by 70%.
KFC sponsored a two-night concert to mark
the birthday celebration of the King of
Cambodia. The concert received tremendous
support from loyal fans, and KFC is on the
road to building the brand through music.
Live music in some outlets on Friday nights
continues to draw customers. The number of
KFC Cambodia outlets held steady at 10 last
year, which is still the highest count for any
restaurant chain in the Kingdom.
KFC India, with 13 outlets in Pune, Mumbai
and Aurangabad, registered RM19.8 million
in sales in 2011, its second year of operation.
This is a stunning increase on 2010 sales of
RM6.2 million. Promotions were successfully
tailored for the local market and capitalising
on the Indian passion for Cricket, KFC India
Always mindful of attracting the more than
40% of Indians who are vegetarian, KFC
launched 2 new meatless combos in August.
The Veg Rizo Meal is flavourful rice and spicy
gravy, served with 3 veg strips and a regular
Pepsi. The Veg Zing Kong Box contained
a spicy crunchy Veg Zinger, 3 veg strips,
regular fries, a regular Pepsi and a chocolate.
The September launch of the Fiery Grilled
featured a unique combination of KFC’s
signature spices grilled with the ‘steam roast’
technology in the combi oven. This offering,
specially aimed at young working adults,
accounted for 15% of total sales during the
launch period.
RASAMAS AND KEDAI AYAMAS
15 RasaMas outlets in Malaysia and Brunei
were closed in 2011 as part of a consolidation
initiative, resulting in lower sales of RM19
million, a 23% drop from 2010. RasaMas
pursued an energetic marketing schedule
using inventive tactics and varied media. A
new menu attracted customers in February,
and April saw a celebration of the brand’s
‘Typically Malaysian’ identity. The team
redesigned the website, and over 10,000
visitors had checked in by July.
106
SEGMENT REVIEW
Kedai Ayamas, meanwhile, achieved a 41%
leap in sales to RM77.7 million. The new Kedai
Ayamas (Sabah) brought in an additional
RM743,000. 26 new stores were opened in
2011, bringing the total to 75. Delivery service
from 40 outlets in the Klang Valley and e-pay
terminals in several branches now offer extra
convenience. Among the most successful
product launches in 2011 were the Percik,
Auspicious and Spicy Siam Roasters, and
corporate partners Digi and Bank Rakyat
helped Kedai Ayamas to promote them far
and wide.
KFCH INTERNATIONAL COLLEGE
The College’s enrollment currently stands at
over 800 students on campuses in Puchong
and Johor Bahru. It offers 9 diploma
programmes in a variety of hospitalityrelated disciplines, as well as Early Childhood
Education, Business Administration and
Information Technology.
During the year, the College achieved a
revenue of RM4.3 million from its diploma
programmes and a further RM325,675 from
short courses.
HALAL COMMITMENT
QSR and its subsidiaries guarantee full
halal compliance to customers in all
of their markets. Every aspect of the
food manufacturing processes, including
raw materials procurement, preparation,
packaging, storage and utensils follow strict
controls. QSR pays keen attention to any
products acquired from foreign suppliers,
requiring that they be halal certified within
the source country, and accepts only
certificates recognised by the Department
of Islamic Development Malaysia (“JAKIM”).
The Group’s internal Shariah and Halal
Department reports directly to the Shariah
Advisory Council. The Department’s members
foster increased awareness and understanding
of halal among all stakeholders. They devise a
wide range of activities to this end, including
halal awareness training for all staff, halal
audits of existing and prospective suppliers,
and media campaigns for open discussion of
halal beyond the boundaries of the Group.
The Shariah and Halal Department is the
front line for QSR’s steadfast commitment
to halal.
107
PROSPECTS
While celebrating 2011’s financial and
operational success, the Foods and
Restaurants Division is looking forward to
greater progress next year. Though the
global economic outlook still appears
uncertain in view of the lingering debt
crisis in Europe there are nascent signs of
recovery in the US economy judging by
the improving jobs market and corporate
earnings released thus far. The positive
data from US appears to outweigh the
concerns in Europe at this moment and
if sustainable will be pivotal to win back
investors’ and consumers’ confidence in the
global economy.
The Malaysian economy continued to be
sustained by public spending under the
Government’s Economic Transformation
Programme (“ETP”) as well as by private
capital spending. Coupled with incentives
announced during the 2012 Budget, it
is expected the domestic economy will
achieve a GDP growth of 5% in 2012.
The food sector is relatively resilient but
it faces inflationary cost pressures. QSR
expects profit margins to be tight and it
plans to generate earnings by continuing
to drive the topline aggressively through
new and repeat customer purchases. The
Foods and Restaurants Division will strive
to develop and introduce new winning
products, launch successful promotions that
provide value to consumers, invest in new
facilities and refurbish existing ones, and
improve customer service and experience.
QSR is also continuously seeking better
cost efficiencies and improving productivity
at all its business segments.
The economies of the other markets
where we operate such as Singapore,
Brunei and India appear resilient with
moderate GDP growth. The plan is to
continue growing in these markets
through sustained development
and refurbishment of stores besides
e xe c u t i n g o p e r a t i o n a l e xc e l l e n c e.
Cambodia’s economy remains weak
and the intention is to consolidate
our position and improve operations
by aligning menus and promotions in
response to market dynamics.
108
SEGMENT REVIEW
INTRAPRENEUR
VENTURES
INTRODUCTION
Despite challenging global financial conditions in 2011, the Malaysian economy
expanded with growth being underpinned by domestic demand as exports increased
at a more moderate pace. Federal Government development expenditure during
the year was mostly channelled into the transportation, and trade and industry
sectors. Crude oil prices rose worldwide because of political unrest and upheavals
in the Middle East sustaining upstream exploration and benefiting the Intrapreneur
Ventures (“IV”) Division’s shipping arm. Oil prices are likely to remain high and volatile
as long as concerns about supply disruptions continue.
109
The concept of an intrapreneurship scheme was first introduced to Kulim in 2005 as a
novel market-driven approach to develop entrepreneurial talent amongst the Group’s
employees. The recent acquisition of Sindora concluded in 2011 brought in an experienced
well-seasoned management team that further strengthened the Group’s involvement in IV.
The aim of the Division is to add diverse revenue streams by nurturing businesses that will
evolve into future growth engines for the Group. The strategy looking ahead is to provide
the seed funding, mentoring and operational support necessary to give each venture the
greatest chance for success.
110
SEGMENT REVIEW
INTRAPRENEUR VENTURES (continued)
OPERATIONAL REVIEWS AND
PROSPECTS OF SELECTED KEY
COMPANIES
E.A. TECHNIQUE (M) SDN BHD
Our involvement in the shipping business
through EA Technique (M) Sdn Bhd (“EA
Technique”) and Orkim Sdn Bhd (“Orkim”)
has seen the Group emerge as a key player
in the maritime sector and positioned as
the second biggest shipping company in
Malaysia in the clean petroleum product
tanker category.
Acquired in 2006, EA Technique has a paidup capital of RM44.04 million while Orkim,
which was acquired in 2009, has a paid-up
capital of RM37.60 million. Both companies
operate in niche markets providing longterm charter contracts for the transportation
of clean petroleum product and upstream
exploration support for oil majors. In
combination, the value of the contracts is
worth more than RM1.4 billion.
“THE COMMENDABLE
PERFORMANCE
THIS YEAR WAS
ATTRIBUTABLE MAINLY
TO THE GROWTH
OF THE SHIPPING
SEGMENT.”
REVENUE
%
35.5
RM396.62 M
to
OPERATING PROFIT
%
224.6
RM42.94 M
to
FINANCIAL PERFORMANCE
The Group’s IV Division recorded remarkable
improvements in both revenue and
operating profit. Revenue in 2011 increased
by 35.5% to RM396.62 million from
RM292.80 million in the previous financial
year. Operating profit more than double to
RM42.94 million from RM13.23 million.
The commendable performance this year
was attributable mainly to the growth of the
shipping segment. Revenue rose to RM169.94
million from RM87.15 million in 2010, flowing
from successful deliveries of 10 newly
constructed vessels. Operating profit soared
to RM37.47 million. All 10 newly constructed
vessels entered long-term charter contracts
with oil majors with staggered deliveries
beginning in 2010 through to mid-2011.
The full year contributions from these new
vessels will be wholly appreciated in 2012.
The IV portfolio’s other start-ups are in early
stage investing, building prototypes and
gathering feedback and data from their
customers to build sustainable businesses.
We will continue identifying promising startups for incubation and give them access
to the resources needed to grow, prosper,
improve earnings, add value, and maximise
returns to shareholders.
The Group also provides offshore support
vessels and manages third party vessels.
Currently, EA Technique provides 9 vessels
for offshore support services that included
2 fast crew boats, 4 mooring boats, 2
harbour tugs and a security boat, while
Orkim manages 2 vessels owned by a third
party for an oil major.
As at the end of 2011, the Group’s fleet of 28
owned vessels was comprised of 15 tankers,
6 mooring boats, 6 harbour tugs (of which 4
are under construction) and a security boat.
The total carrying capacity today of more
than 144,500 dwt marks an exponential
increase from the 8 vessels with a combined
14,500 dwt carrying capacity when Sindora
originally acquired EA Technique in late
2006. The biggest vessel owned by the
Group, the 40,000 dwt MT Nautica Muar is
temporarily operating uneconomically on a
spot charter basis pending the securing of
long-term charter contracts or a possible
disposal or trade-in.
The construction of the new tankers and
disposals of ageing vessels have resulted in
a much lower average age profile for the
fleet and enabled the Group to position
itself to seize opportunities in the shipping
market. The IV Division’s shipping arm is set
to expand its operations and emerge as
one of the major players in the Malaysian
maritime industry.
111
JOHOR SHIPYARD AND
ENGINEERING SDN BHD
The establishment of our own shipbuilding
and ship repair facility was critical to meet
the maintenance scheduling of the Group’s
fleet of 28 vessels in light of the difficulties
experienced in booking slipways for repairs.
The shipyard business has in fact the potential
to become the main business enterprise of
the Group considering that the high demand
for ship repairing facilities is currently being
met by a limited number of yards around
the region.
The shipyard project is currently handled
by EA Technique’s wholly-owned subsidiary,
Johor Shipyard and Engineering Sdn Bhd
(“JSE”). JSE successfully constructed its first
vessel the 5,500 dwt MT Nautica Johor
Bahru (“MTN JB”) in 2008 at a leased site
in Teluk Intan, Perak. With the experience
gathered from the construction of MTN JB,
JSE proceeded to build a larger vessel, the
10,000 dwt MTN Maharani, which entered
into service in the second quarter of
2011. This vessel holds the record as the
biggest double-hulled tanker built locally in
Malaysian history.
The successful voyages of MTN JB and
MTN Maharani were important testaments
to the expertise and ingenuity of the shipyard
in building small and medium-sized seagoing vessels.
JSE has identified a 10-acre site located at
Hutan Melintang, Bagan Dato, Perak for its
permanent shipyard base. Currently, JSE is
preparing basic facilities for the shipyard
that is expected to become fully operational
by the end of 2012. The shipyard will be
able to accommodate vessels of up to
10,000 dwt for construction or repair. To
diversify revenues, the yard will also involve
in steel fabrication for the offshore oil and
gas industry.
PRO OFFICE SOLUTIONS SDN BHD
2011 was a challenging year for Pro
Office Solutions Sdn Bhd (“Pro Office”).
In an extremely competitive business
environment major clients imposed
stringent requirements while expecting very
competitive rates. Despite the demanding
nature of the business, the company
was able to consistently meet or exceed
customers’ expectations and enhance
its reputation as one of the top service
providers in the country. This has led to a
high level of customer loyalty and attracted
other reputable clients.
Pro Office is a Business Process Outsourcing
(“BPO”) company that provides total
solutions in the Data and Document
Processing (“DDP”) industry. The company
is principally involved in the provision of
integrated outsourcing solutions in DDP
to telecommunication companies, financial
institutions, insurance companies and a
number of government-linked agencies.
DDP includes services that ranged from
data extraction, conversion, formatting of
documents to data printing and preparation
of printed documents for distribution
via post. Pro Office has also diversified
its services to include other value-added
services such as Mailroom Management,
Direct Marketing, Handmail/Admail and
Courier/Parcel Services.
Due to the challenging economic
environment, revenue declined 9.5% to
RM30.4 million, margins were squeezed
and profit declined to RM0.53 million, a
disappointing fall from the profit of RM2.9
million recorded in 2010.
During the year under review, the venture
continued to provide services to renowned
and reputable corporate and government
entities. This role call is a testament to our
clients’ confidence and satisfaction in the
superior services provided by Pro Office.
In line with the Group’s business exit strategy
under its Intrapreneur Venture concept and
in order to maximise returns and mitigate
risks, Pro Office has been identified as
a potential candidate company to be
restructured and harvested. Meanwhile, Pro
Office has taken steps to scale down its
operations to improve efficiency and will
relocate to more economical and cost
effective offices.
112
SEGMENT REVIEW
INTRAPRENEUR VENTURES (continued)
MICROWELL BIO SOLUTIONS SDN BHD
Sindora’s involvement in the biotech sector,
specifically in biofertilisers, is through the 60%
equity acquisition of Microwell Bio Solutions
Sdn Bhd (“Microwell”), concluded on 24 April
2010. Microwell is a biotechnology company
with soil remediation and conditioning,
crop protection and biofertiliser as its
main areas of expertise. The company is
involved in research and development
and commercialisation of combinatorial
technology of organic substances and
micro-organisms for biotechnology
products in agriculture, aquaculture and
the environment.
Micro-organisms in biofertilisers produce
organic nutrients which are extremely
efficient in enriching the soil and protecting
the palms from harmful diseases such as
Ganoderma, which is prevalent in oil palm
plantations throughout Malaysia. Biofertilisers
provide nitrogen and growth promoting
substances such as hormones, organic
acids and amino acids. The company has
successfully formulated its own biofertilisers
under the brand names GroAgro 1 – GroAgro
4, which are pending patent trademarks.
Trial runs on the biofertilisers have been
conducted for the past 2 years and the
results have been promising.
Microwell also provides technical advisory
and consultancy such as assistance in Good
Agriculture Practices, Good Manuring Practices,
Clean Development Management projects,
agro-biotechnology input formulation,
market feasibility of innovative biotechnology
products and organic farming.
In 2011, the company registered a pre-tax
profit of RM2.1 million on the back of revenue
of RM11.1 million, a substantial increase from
RM0.2 million pre-tax profit on RM4.9 million
sales registered respectively in 2010. The
company trades and imports biofertilisers
from a manufacturer in Indonesia that uses
Microwell’s own formulation.
The Intrapreneur-Manager is the researcher
who has the knowledge and know-how in
formulating and producing the biofertilisers.
The superiority of Microwell’s biofertiliser
is expected to allow the Kulim Group the
opportunity to substantially substitute
KULIM NURSERY SDN BHD
KNSB’s nurseries are strategically located
around Johor to cater for the Group’s
oil palm seedling offtake as well as for
smallholders and other oil palm plantations.
The nurseries have been certified with the
“Oil Palm Nursery Competency Certificate”
by the Malaysian Palm Oil Board (“MPOB”),
a quality assurance that acknowledges the
commitment by KNSB towards producing
high quality seeds. KNSB is also certified with
RSPO accreditation as well as ISO 14001.
Kulim Nursery Sdn Bhd (“KNSB”), comprising
the nursery, biocompost and landscaping
businesses, doubled its sales to RM10.2 million,
and registered a pre-tax profit of RM2.4
million which was 130% higher than in the
previous year. The nursery and biocompost
segments remain the stalwart businesses.
Landscaping projects are commissioned and
executed on a contract basis.
The company’s market for ornamental plants,
on the other hand, includes Government
agencies, housing developers and individuals.
The environmentally friendly biocompost
organic fertiliser, produced from oil palm
by-products, enriches the soil. KNSB’s plan
for 2012 will include controlling operating
costs, improving quality, expanding the
market and increasing sales.
chemical based fertilisers throughout its
oil palm estates. In addition to its solutions
to enhancing soil fertility and productivity,
Microwell has started collaborating with
several GLCs in researching and developing
solutions to rectify other agronomic
problems in order to widen its range of
products and services.
113
EXTREME EDGE SDN BHD
Extreme Edge Sdn Bhd (“EESB”) is committed
to becoming a premier information
technology solution integrator and business
performance enhancer, while recognising
that it faces some established competitors
in the ICT business landscape in Malaysia.
EESB was incorporated on 1 January 2010.
The Intrapreneur’s team consists of system
engineers, application consultants, system
analysts, application programmers and
technical support engineers.
EESB is a one-stop centre that provides
various solutions from hardware to
applications. The services include networking
and communications, backup, recovery, and
maintenance of hardware. The company
also offers website design, development,
hosting and management, advisory service
and project management.
Demonstrating determination and resilience,
EESB registered revenue of RM6.9 million,
a 97% increase over RM3.5 million in 2010.
EESB improved its revenues by securing new
contracts in both the private and Government
sectors and sharpening its competitiveness
through better operating efficiencies. Pretax profit was up by 27% to RM727,000.
EESB plans to achieve its vision by greater
specialisation of its products and services.
EDARAN BADANG SDN BHD
Edaran Badang Sdn Bhd (“EBSB”) is
principally involved in the manufacturing
and selling of a motorised three-wheeler
named the Mechanical Buffalo, designed
for the mechanised evacuation of FFB in
oil palm estates, sold under the trademark
of BADANG. EBSB also sells a motorised
crawler that can manoeuvre on soft peat
terrain. The successful penetration into
new markets, especially in Sabah, saw sales
improve to 371 units in 2011 compared to
201 units in the prior year.
In the year under review, EBSB registered
a creditable performance with an increase
of revenue by 64% to RM24.4 million from
RM15.0 million in 2010. The company
achieved a handsome pre-tax profit of
RM1.84 million compared to a loss of
RM0.18 million in previous year. Sales of
the Mechanical Buffalo and spare parts are
expected to increase in the coming year
with more demand coming from Sabah for
these versatile and labour saving agricultural
machines.
Machinery sales are increasingly being
supplemented by stable and recurring
income from the supply of agricultural
tools and equipment, Personnel Protective
Equipment (“PPE”), and machinery spare
parts for oil palm plantations. EBSB is set
to further expand its horizons in 2012
by supplying fertiliser and chemicals
and also offer palm oil mill maintenance
and fabrication works via its 2 subsidiary
companies, Perfect Synergy Trading Sdn
Bhd and Optimum Status Sdn Bhd.
SECTION 5: SUSTAINABILITY
116
122
128
136
PART I: KULIM’S SUSTAINABILITY IN CONTEXT
• POLICY FRAMEWORK
• POLICY, STRATEGY AND MANAGEMENT SYSTEM
• STAKEHOLDERS ENGAGEMENT
• COMMITMENTS AND TARGETS
PART II: ENVIRONMENTAL PERFORMANCE
• PROTECTING AND CONSERVING BIODIVERSITY
• WATER CONSERVATION
• ADDRESSING CLIMATE CHANGE ISSUES
PART III: SOCIAL PERFORMANCE
• LABOUR STANDARDS
• EMPLOYEES RETENTION
• OCCUPATIONAL HEALTH AND SAFETY
• EMPOWERING WOMEN
• COMMUNITY AND ECONOMIC CONTRIBUTIONS
PART IV: DOING OUR PART FOR THE PALM OIL SUPPLY CHAIN
E
OUR ETHICAL BUSINESS CONDUCTS ARE A CULMINATION OF
MANAGEMENT PRACTICES THAT ESPOUSE TRANSPARENCY AND
ACCOUNTABILITY
UNDERLYING OUR COMMITMENT TO EMBRACE THE TRUE SPIRIT OF CORPORATE RESPONSIBILITY IS
OUR PLEDGE TO UPHOLD THE HIGHEST STANDARDS OF ETHICS, INTEGRITY AND PROFESSIONALISM.
ETHICS IS OUR CORE VALUE AND EMBEDDED AT THE HEART OF OUR BUSINESS AS CLEARLY SET
OUT IN OUR ETHICS POLICY, TO GUIDE ALL OUR ACTIVITIES AND CONDUCTS.
116
Part I:
Kulim’s Sustainability in Context
POLICY FRAMEWORK
We integrate our business strategy with sustainability through a commitment to
People, Planet and Profit (“3Ps”). The 3Ps govern how we create sustainable value
for all our stakeholders. To meet our goals and deliver the sustainable returns
expected of us, we embrace a deep commitment towards building a fair, ethical
and responsible company. This sits at the heart of our sustainability approach
and structures our relationships with our stakeholders and the operating
environment.
117
CORPORATE
VISION AND MISSION
SUSTAINABILITY
POLICY
PEOPLE
PLANET
PROFIT
People Policy
Environmental Policy
Business Policy
Core Labour Standards
Malaysian Palm Oil Association
Environmental Charter
Ethics Policy
OSH Policy
Social Contributions
Workplace Drug Policy
Profits with Responsibility
HIV/AIDS Policy
Fraud Policy
Sexual Harassment Policy
Quality Policies for Estates and Mills
Grievance Procedure
Production Charter (30:30)
POLICY, STRATEGY AND
MANAGEMENT SYSTEM
POLICY
Kulim embraces the principles of sustainable
development and the Company’s goal is to
ensure that future generations will continue
to benefit from today’s actions.
Kulim defines sustainable development
as encompassing social responsibility,
r e s o u r c e s t e w a r d s h i p, a p p r o p r i a t e
environmental control and the capacity to
produce efficiently. The goal of sustainable
development will be achieved by balancing
the considerations for People, Planet and
Profit in all management decisions and
operations.
Kulim is acutely conscious of its varied
responsibilities in respect to People,
Planet and Profit. Kulim is committed to
continuous improvement of its performance.
The implementation of a Sustainable
Management System (“SMS”) will provide
the framework to realise these goals. The
SMS will be wholly based on the principles
and criteria set out by the RSPO.
Kulim will maintain a safe, healthy and
viable working environment and conduct
all operations in a manner consistent with
its SMS framework. Kulim will operate in
compliance with all applicable national and
international legislation and ensure that long
term economic viability does not compromise
its ethical and business policies.
Kulim is committed to investing in the
development as well as advancement of
its employees and will, through training
improve knowledge, skills and competency,
in order to enhance performance, processes
and career.
Kulim is committed to ensuring that land
management practices are consistent with
the long-term productivity of the resource,
so that the land remains suitable for
agricultural use.
Kulim will not undertake new developments
in areas of primary forest or on land
containing one or more High Conservation
Value (“HCV”). Land development undertaken
by the Company takes into account the
maintenance of biodiversity, protection of
cultural heritage and customary land use,
and the capability of the land to sustain the
proposed agricultural activities.
Kulim upholds the principles of free, prior
and informed consent and undertakes to
use this principle in all negotiations and
interactions with stakeholders.
Kulim will continue to be a responsible
c o r p o r a t e c i t i z e n , m a k i n g p o s i t i ve
contribution to the communities within
which it operates.
Kulim conduc ts its operations in a
transparent manner and complies with
all relevant legislation in the countries it
operates in.
By implementing the principles of the RSPO,
Kulim is adopting a planned approach to
achieve the balance between People, Planet
and Profit. Kulim believes that this approach
is the safest, most efficient and socially
and environmentally responsible way of
operating sustainably.
118
SUSTAINABILITY
Part I: Kulim’s Sustainability in Context (continued)
People
Profit
In order to ensure and establish a
sustainable social development in Kulim
that addresses social stability, security and
equality, various social considerations are
factored in, such as:
In order to remain competitive whilst
adhering to sustainable practices, corporate
efficiency through compliance efforts
will enable Kulim to deliver value to all
our stakeholders – shareholders, partners,
employees and the public.
•
Opportunities for education and
training;
•
Health and availability of medical
services;
•
Commitment to transparency;
•
Human rights and equal opportunities;
•
Compliance with applicable laws and
regulations; and
•
Crime and social disorder levels; and
•
Housing provisions and quality.
Our corporate philosophy enables us to
provide:
•
Commitment to long-term economic
and financial viability.
Planet
Strategy
In ensuring environmental sustainability,
various factors are assessed and deliberated.
Issues that need to be addressed and
highlighted include:
Sustainability is central to our business
strategy and stakeholders’ concerns are
key inputs in mapping out the corporate
strategy. We believe active stakeholder
engagement will highlight potential risks or
opportunities for our business.
Commitment to continuous
improvement in key areas of activity;
•
Infrastructure analysis to ensure
proper, sustainable procedures are
implemented;
•
Environmental responsibility and
conservation of natural resources and
biodiversity;
•
Life cycle analysis to quantify the use
of materials and energy as well as
environmental interaction of products
and processes;
•
Responsible development of new
plantings;
•
Research & Development (“R&D”) –
product design, process improvement
and recycling methods for greater
sustainability;
•
Use of appropriate best practices by
growers and millers; and
•
Responsible consideration of
employees and of individuals and
communities affected by plantations
(growers) and mills.
The top 3 material issues that are significant
to our stakeholders and our organisation are:
•
the use of chemicals such as paraquat,
herbicides and pesticides in our
estates;
•
the amount of water used for our
estates and mills; and
•
health and safety standards in the
workplace.
MATERIALITY MATRIX
RSPO premium
Ethnic diversity
High Stakeholder Concerns / Support Company Values
•
We prioritise our issues by developing
a “materiality matrix.” This approach
combines the findings from our stakeholder
engagements with our organisational
priorities. In 2008 our senior management
team developed the matrix based on
the prevailing stakeholders’ concerns,
complemented by other management
tools such as social impact assessments
and regulatory frameworks. We have since
updated the “materiality matrix” to reflect
current realities and concerns in this Annual
Report.
Environment rehabilitation
Biodiversity
Waste management
Worker unions
Chemicals
Water
Health and safety
Climate change
Foreign workers
Gender diversity
Agricultural productivity
Employee development
Talent attraction
Smallholder
Sand mining
Community and workers’ lives
Air pollution
Practices in the marketplace
Good Agricultural Practices
Business Risk / Opportunity
119
MANAGEMENT SYSTEMS
Certification – RSPO
Our overall sustainability management
system is guided by the Principle and
Criteria (“P&C”) developed by the multistakeholder initiative, the RSPO. The
standard’s international credibility and
commitment to stakeholder inclusion
makes the certification credible and robust,
though there are always opportunities for
improvement. We believe that this standard
represents the most responsible way to
grow oil palm.
The RSPO P&C provides a robust framework
to articulate issues fundamental to us. These
issues include stakeholder engagement and
value creation for the larger society.
We achieved the RSPO certification for all
our estates in January 2009 and were one
of the first palm oil companies to strive for
the RSPO certification globally. Our second
annual surveillance audit in March 2011
included the relatively new estate, Sungai
Tawing Estate. This new estate was acquired
by exchanging one of our small estates with
another plantation company in August 2009.
As part of a bigger supply chain that extends
to the end consumer, we are working
with our customers, mainly the refineries,
to implement the RSPO mechanism for
traceability – the Mass Balance and the
Green Palm Book and Claim system. As one
of the first few palm oil companies RSPO
certified globally, we continue to manage
our social and environmental risks in
accordance with the guidelines developed
by the RSPO. For us, the adaptation of RSPO
P&C is also connected to Islamic teachings
which focus on value creation, sustainable
use of biodiversity and engagement of
stakeholders.
In 2010, we consolidated the structure of our
Corporate Responsibility (“CR”) governance
through the launch of the Sustainability
and Quality Council (“SQC”). The role of
the SQC is to oversee our CR strategy and
activities on behalf of the Board.
The SQC has established a Company wide
data collection system for monitoring and
reporting against agreed matrix. The Council
also ensures that our day-to-day business
operations respond to the opportunities
and avoid the risks posed by sustainability
issues. To do this, the SQC challenges the
Management to assess and control risks while
developing programmes to capitalise on
opportunities. The SQC uses targets to monitor
the performance in achieving these tasks and
co-ordinates sustainability initiatives across
departments.
The SQC has prioritised employee engagement,
including HIV and sexual harassment awareness,
work-life balance and capacity building as
areas of priority. This is based on the belief
that employees at all levels form the backbone
of our Company and there is a need to embed
a sense of ownership amongst them.
Audits and Assessments
We take pride in our integrated management
and agricultural practices. The framework is
set in motion by systematic guidelines and
operating procedures. Our Internal Audit
Department oversees and reviews all processes
and procedures.
Our environmental performance is guided by
the ISO 14001 framework. All our Papua New
Guinea operations (except newly acquired
areas) and 1 of our mills and 2 of our estates in
Malaysia have been certified to this standard.
Under the ISO 14001 framework, mills and
estates are to implement environmental policies
with third party certification. The framework
was also used as a basis for implementing the
RSPO Principles and Criteria.
Our social impact assessments are framed
around the SA8000 standard – the leading
international standard on labour conditions. We
have also adopted the methodologies of the
Occupational Safety and Health Administration
(“OSHA”) to measure and manage our health
and safety performance as well as using the
human rights-based concept of Free, Prior and
Informed Consent (“FPIC”) in our dealings with
communities and land rights.
We c a r r y o u t o n g o i n g S o c i a l I m p a c t
Assessments (“SIA”) based on Principle 6 of
the RSPO Principles and Criteria as well as
SA8000 (established by Social Accountability
International). SIA incorporates interviews with
workers, dependents and local communities,
and forms the basis of improvement plans for
all areas identified as common complaints, or
areas which are considered high risk in terms
of impact or legal compliance.
120
SUSTAINABILITY
Part I: Kulim’s Sustainability in Context (continued)
International Standards
In addition to the RSPO P&C, we adhere to other frameworks which form the basis of the current sustainability management systems. These
frameworks include ISO14001 Environmental Standard and SA8000 Labour Standards. We are also looking at to embark on the International
Sustainability and Carbon Certification (“ISCC”).
On the environmental front, we have 1 mill and 2 estates which have attained the ISO 14001 certification. The ISO 14001 provides a
framework for a strategic approach to our environmental policy, plans and actions. As for biodiversity-related framework, while there is no
presence of High Conservation Values (“HCV”) in our estates, we have developed HCV management plans and toolkits with the help of our
partners, to manage biodiversity issues such as human-wildlife conflicts due to our proximity to national parks.
As for our social issues, our social impact assessments for the local communities adopt the SA8000 framework, a global social accountability
standard for decent working conditions. We have also adopted methodologies of the Occupational Safety and Health Administration
(“OSHA”) to measure and manage our health and safety performance. We embrace the concept of Free, Prior and Informed Consent (“FPIC”)
in our dealings with communities and land rights, which is based on the principle of human rights.
We have recently adopted the ISCC certification standards. The ISCC certification standard is for biomass and bioenergy and meets the
Renewable Energy Directive of the European Union. We plan to complete the ISCC certification by 2012 and start the sale of ISCC-certified
oil in January 2013.
STAKEHOLDERS ENGAGEMENT
Stakeholders engagement is crucial to sustainability and organisational success. Stakeholder engagement enhances accountability by
allowing an organisation to identify, understand and respond to sustainability issues – a valuable tool to better manage our risks and identify
opportunities. It is also an excellent avenue to tap into expertise and existing networks. Most importantly, it enables us to develop trust and
transparency in our relationship with the stakeholders.
STAKEHOLDER
GROUP
ISSUE
METHOD
Employees
a. Talent retention
b. Employee development
Ongoing dialogues, annual
surveys and workshops
Workers
a. Labour policy and workers’ lives Annual Social Impact
b. Occupational Health and Safety Assessments (“SIAs”)
Quarterly OSH committee
meeting
OUTCOME
Feedback from employee climate survey was
incorporated into our strategies for employee
retention and attraction.
Improved workers’ welfare and housing. Created a safe
working environment.
Non-Governmental a. Biodiversity loss
Organisations
b. Climate change
c. Environment rehabilitation
d. Good Agricultural Practices
Partnerships, annual multistakeholder forums and
ongoing joint projects
Investment
Community
Investor relations initiative, benefits
and drives
Ongoing meetings, road shows Incorporated sustainability issues into our investor
and conference calls
relations communications strategy.
Industry
Bodies
a.
b.
c.
d.
e.
f.
g.
Outgrowers
Commitment to certify 100% of the
crops processed by our mills.
Annual SIA, public meetings,
Pilot project with a controlled group of smallholders
workshops, individual meetings to implement outgrower certification.
Customers
a. Supply chain certification
b. Customer survey
Ongoing joint ventures and
meetings
Member of the Malaysian
Nature Society
Chemicals
Annual multi-stakeholder
Water usage
initiative – Roundtable on
Occupational Health and Safety Sustainable Palm Oil (“RSPO”)
Climate Change
Biodiversity loss
Community and workers’ lives
Good Agricultural Practices
a. Tree Pledge for Wild Asia Natural Corridor
Programme.
b. Established the Kulim Wildlife Defenders to
prevent poaching and at the same time providing
educational support for wildlife conservation.
c. Human/wildlife conflict management project with
Wildlife Conservation Society (“WCS”) Programme.
Kulim was one of the first growers to be certified by
RSPO globally.
Our Certified Sustainable Palm Oil (“CSPO”) is sold to
our buyers via the Mass Balance and Green Palm Book
and Claim Traceability Mechanisms.
121
COMMITMENTS AND TARGETS – MALAYSIA PLANTATIONS
TARGET
TARGET DATE
(YEAR-END)*
STATUS
People
Establish a gender committee to promote diversity and address genderrelated issues
2009
Achieved
Rollout of identity card programme to all foreign workers
2011
Revised
100% of external fruit to be certified
2011
2013 – revised
Reduce lost time accident rate to 10
Maintain 2009’s
performance
Achieved – 5.8
Reduce severity rate to 3.5
2009
Not achieved - 4
Zero fatalities
2009
Not achieved - 1
No breaches of excessive overtime
Maintain 2009’s
performance
Not achieved
Assist Johor Corporation-owned estates in achieving RSPO certification
2010
Achieved
Reduce herbicide usage by 10% (base year FY2009)
2020
Achieved – reduction by 30%
Reduce paraquat usage by 10% (base year FY2009)
2020
Achieved – reduction by 30%
Reduce water usage to 0.7 tonnes per tonne of FFB (base year FY2009)
2011
Not achieved – 0.94 tonnes
CDM projects launched for all 3 mills
2011
Launched at 1 mill
CO2 equivalents reduced by 90%
2011
Not achieved
No increase in peat development
2009
Achieved
No development in land containing one or more High Conservation Values
2009
Achieved
No penalties for environment-related incidents
2009
Achieved
Carbon footprint for the whole Group
2013
In progress
Achieve average FFB yield per hectare of 30 tonnes
2013
In progress
Achieve average combined palm product extraction rate of 30%
2013
In progress
ISCC certification
2013
In progress
Planet
Profit
* Where target is an ongoing commitment or has already been achieved, the date denotes next status reporting.
122
Part II:
Environmental Performance
PROTECTING AND CONSERVING BIODIVERSITY
In 2009, we commissioned detailed surveys to assess the state of the flora and
fauna present in and around our estates. Since our last report, the majority of
the IUCN Red-listed mammals are in a more precarious state, except for the
Southern Pig-tailed Macaque. We recognise our critical role to address this issue,
as our plantation operation in Johor borders an important national park, the
Endau-Rompin National Park in the southern part of Peninsular Malaysia. This is
factored into the strategy for our biodiversity initiatives.
123
Our broad approach is underlined by the precautionary principle for unplanted areas, complemented by High Conservation Value (“HCV”)
management tools. Our strategy for biodiversity is largely aimed at enhancing or improving biodiverse areas or mitigating the negative
impacts on biodiversity. We are strengthening our internal monitoring and control mechanisms, as well as working very closely with our
Non-Governmental Organisation (“NGO”) partners to provide the additional resources.
PRIMARY FOREST
Kulim Wildlife Defenders
to safeguard against
illegal poaching
Buffer zone to mitigate negative impacts from agricultural practices
OIL PALM
Enhance remaining
forest patches
within our estates
Initiatives to mitigate negative impacts
to the environment by our agricultural
practices, especially to minimise
human-animal conflict
UTILISING HCV TOOLS
In 2011, we commissioned a birds and
bats survey on major water bodies in
respective recommended estates by the
Rapid Biodiversity Assessment (“RBA”)
Report. The survey is mainly to identify
and understand the areas of high interest
for the seasonal East Asian – Australasian
Flyway migratory route as the area may
play an important role for these migratory
birds’ species that has implications to our
replanting planning and management. On
the other hand, bats in plantations are
normally potential pollinator agent and
biological insect controller, at the same its
existence is an indicator for forest health
around our plantation.
ENHANCING POTENTIAL
BIODIVERSE AREAS
Although our estates do not contain HCVs,
we have started a process of planting trees
to enhance the small areas of vegetation
within our estates. All remaining forested
areas within the estates are managed for
development into full-fledged HCV forests
or preparation for biological corridors. All
estates have to identify and demarcate their
buffer zone area with white and blue peg
stands, especially in the areas designated
for replanting. We have 61 hectares of
buffer zone and 44 hectares of jungle patch
in our estate.
MITIGATING IMPACTS
We have several initiatives to mitigate our
negative impacts on the environment,
especially in view of the updated IUCN
Red List, including working on managing
the human-wildlife conflict. All our estates
are required to provide a regular update
on the species found in and around the
estates, and track incidents of wildlife
encroachment, particularly elephants.
We have buffer zones around major water
bodies in or around the estates and the
national park. We conduct regular Rapid
Biodiversity Monitoring in these buffer zones.
All the estate managers have to update their
buffer zone mapping twice yearly.
124
SUSTAINABILITY
Part II: Environmental Performance (continued)
To minimise soil erosion, we re-aligned
our roads and constructed silt traps in
our drains. We made sure that there are
buffer zones around the major water bodies
and that replanting is done in stages, with
never more than one side exposed to the
replanting process at any given time.
Within the estates, we have a Conservation
Policy that prohibits hunting, fishing and
taking of fauna within the estate and
adjacent areas. According to our second
RSPO surveillance report by our auditor,
field inspections and interviews confirmed
that employees and contractors are aware
of our Conservation Policy.
STRENGTHENING MONITORING AND
CONTROL
Since 2009, we have had in place an
environmental unit within the Sustainability
and Quality Department to analyse wildlife
data and communicate with estates on
outcomes and results of our studies on
biodiversity.
We have programmes for ongoing training
as well. We conducted a programme in
2010 and 2011 entitled ‘Biodiversity for
Busy Managers’ to enhance the estate
managers’ understanding of conservation
and the importance of the biodiversity
improvement programme.
WORKING BEYOND OUR ESTATES
We understand that one company’s effort
at mitigation is not enough; we need to
push beyond our Company boundaries. As
neighbours to the Endau-Rompin National
Park, we work with Wildlife Conservation
Society (“WCS”) Johor, Malaysia to mitigate
human-wildlife conflicts, in particular,
elephants, for our recently acquired Sungai
Tawing Estate.
We work with WCS to protect the areas
with HCVs adjacent to our estates too.
Together with the Johor National Parks
Corporation, the Wildlife Department, the
Forestry Department and the police force,
the Johor Wildlife Conservation Project aims
to eliminate poaching through intervention
and enforcement, by protecting the
boundary of the forest reserves adjacent
to our estates. These forest reserves are
linked to the national parks. Selected
security guards are trained in techniques
for vehicle inspections and the use of GPS
(Global Positioning System) for recording
the locations of animal sightings and
poaching incidents during patrols. These
security guards are known as Kulim Wildlife
Defenders within the Company. Going
forward, we hope to register the Kulim
Wildlife Defenders as registered NGO.
We have also worked with Wild Asia on
the Natural Corridor Initiative. This initiative
aims to provide green corridors to link
natural habitats separated by humanmodified landscapes, thereby increasing
the functional space for wildlife.
Lastly, we reported on a possible project in
2009 to acquire a neighbouring (degraded)
forest area and provide a breeding site for
the Rhinoceros Hornbill, as well as restore
linkages with other forest patches within
the estate. However, we regret to note that
the area has already been acquired by other
estates and planted with crops.
125
WATER CONSERVATION
Our updated materiality matrix has shown
that water usage in the estates and mills
and the risk of water contamination by
chemicals continued to be the top issues
raised by our stakeholders. Clean water is
critical to our business. Most importantly,
it is fundamental to life on this planet. Our
stakeholders are concerned that this precious
resource faces significant challenges in
estates such as environmental degradation
and the impacts from climate change. We
need to manage the use of water from the
natural water bodies responsibly and to
prevent chemicals and soil particles from
contaminating the water sources.
We are glad to note that each of our mills
achieved significant reductions in water
usage. For example, our Sedenak Mill has
reduced average annual water usage from
1.02 tonnes per tonne FFB in 2010 to 0.94
tonnes per tonne FFB in 2011. The initiatives
to reduce water usage include restricting
the use of water for cleaning mill floors. As
the main source of water for the mills comes
from local rivers, the continued reduction in
water usage can reduce our reliance on
the local rivers. As for our estates, we do
not use much water due to the abundant
rainfall in this region, which provides water
for the trees. Only a small amount of water
is used to maintain our nurseries.
PREVENTING ERODED SOIL
PARTICLES FROM GETTING INTO THE
NATURAL WATERWAYS
There is still a risk of contamination in the
natural waterways due to soil erosion. As
part of our standard operating practice, we
use fast-growing leguminous cover crops to
prevent eroded soil particles from polluting
the water bodies, most importantly to
prevent the erosion of the valuable topsoil.
Moreover, we refrain from using synthetic
fertilisers to avoid pollution from heavy
metals. We utilise organic fertilisers such
as Empty Fruit Bunch (“EFB”) produced
after milling, whenever possible. Another
example of an organic fertiliser is the Palm
Oil Mill Effluent (“POME”) from our mills.
The effluent is first treated before being
recycled as fertiliser for our fields, in a
process known as land application. The
effluent for land application is measured
by the level of Biological Oxygen Demand
(“BOD”). The average BOD for our 3 mills
decreased from 292 ppm in 2009 to 261
ppm in 2011.
126
SUSTAINABILITY
Part II: Environmental Performance (continued)
USE OF HERBICIDE AND PARAQUAT
(Active ingredients in litre/hectare)
2.00
0.07
2.0
0.064
0.06
1.5
0.05
1.34
1.37
0.04
0.04
0.041
1.0
0.03
0.03
0.72
0.84
0.02
0.02
0.5
0.01
0
0.00
2007
2008
2009
Paraquat
2010
2011
Herbicide
BOD LEVELS (ppm)
500
485
400
292
300
298
262
261
200
100
0
2007
2008
2009
2010
2011
WATER USAGE PER TONNE FFB
(Tonnes Per Tonne FFB)*
2.0
1.79
1.5
1.07
1.0
1.02
0.92
0.94
0.5
0
2007
2008
2009
2010
2011
* Mills only. Figures do not cover irrigation
in estates and nurseries.
REDUCING USAGE OF CHEMICALS –
PESTICIDES AND HERBICIDES
Another source of potential waterway
contaminants is chemicals such as
pesticides and herbicides. We seek actively
to find biological alternatives for chemical
pesticides, whenever possible. The Integrated
Pest Management (“IPM”) techniques are
central to our operations, as IPM techniques
are responsible for managing the issues
of pests, diseases, weeds and invasive
introduced species and for minimising
the use of pesticides. The use of chemical
control is considered only as a last resort
when all biological methods fail.
For example, barn owls have been
introduced at each estate to control the rat
population. Paraquat is used in small doses
to treat young palms. We have reduced
our use of paraquat from 0.041 in 2009 to
0.030 in 2011 (active ingredients in litre per
hectare), in line with our 10% reduction
target, based on 2009 figures.
We ensure that those who handle, store,
use, spread or dispose of any chemical that
could pollute the water, soil or air are aware
of their responsibilities. We also collaborated
with the Malaysian Croplife and Public Health
Association and Department of Agriculture
(Malaysia), in an initiative known as ‘Empty
Pesticides Containers Recycling Programme’.
MINIMISING SOLID WASTE
All the solid waste output from our mills
is used in line with standard operating
procedure within the industry. The EFB are
used as biocompost for our estates. The
fibre and shell are used as biomass for our
mills. Burning the biomass generates a small
amount of boiler ash, which can be used
for reducing acidity in soil. We do generate
a small amount of hazardous waste that is
transported to designated public facilities by
an authorised agent.
127
ADDRESSING CLIMATE CHANGE ISSUES
We believe that climate change constitutes the most significant environmental threat
to livelihoods and the environment, and we believe that any sustainable business must
contribute to reducing greenhouse gas (“GHG”) emissions. We support the initiative by
the Malaysian Government to reduce GHG emissions by up to 40% by 2020, as well as the
recommendations of the RSPO GHG2 Working Group’s recommendations to incorporate
GHG emission reduction requirements into the RSPO Principles and Criteria.
We cannot tackle climate change alone, so we will work in partnership with peers and
stakeholders. We hope to learn from others and develop our own initiatives to provide
inspiration and guidance to our industry and beyond.
The following presents a system boundary of the GHG balance calculation and illustrates
the sources of emissions, based on the RSPO GHG calculator for oil palm products. The
RSPO GHG calculator is a harmonised framework that is compatible with international GHG
accounting methodologies such as IPCC and ISCC, which are the applicable standards for
the sustainable palm oil industry.
INTERNATIONAL SUSTAINABILITY
AND CARBON CERTIFICATION
We plan to work towards the publication
of a full carbon footprint of our operations
and will also be moving towards ISCC
certification. It is one of the certification
standards for biomass and bioenergy which
meets Europe’s Renewable Energy Directive.
We plan to complete the ISCC certification
by 2012 and start the sale of ISCC-certified
oil in January 2013.
CO2 EQUIVALENT PER TONNE FFB
(Tonnes)
0.2
0.19
0.18
0.16
Emissions due to land clearing (loss of stored
carbon in the biomass) – Emissions vary greatly,
depending on previous land use, but can
constitute 60-70% of all emissions. As we have no
plan for expansion or land conversion,
our operations do not have a significant
impact, although we do recognise that any carbon
footprint would take into account
the original land type.
INPUT
Emissions
avoided
by carbon
sequestration
in the palm
biomass.
Emissions
due to fuel
combustion.
Emissions avoided by excess
energy production - as
with the standard operating
practices in the industry, all
power generation in the mills
is based on biomass, (shell
and fibre) with only a small
volume of diesel used for
back-up generators.
OUTPUT
Allocation of
environmental
burden between
CPO and PK.
Emissions due to peatland
cultivation - these
represent a significant
source of GHG emissions.
We have a small portion of
peat within the cultivated
area – 1,380 hectares
(slightly over 1% of our
cultivated land). This land
was cultivated in 1999-2002
and the total area has
remained unchanged since.
We are mindful of the need
for a continued responsible
management of this area,
via effective water table
management – the best
way to prevent additional
GHG emissions.
Emissions due to harvesting
and collection of the fruits
(fuel combustion during
collection and transport of
fruits to mills).
Emissions due to POME treatment, including possible avoidance
through methane capture - capturing the methane gas that arises
from the mill effluent – a potent form of GHG – and to use the
captured gas as fuel to generate electricity. We are working on
methane capture projects to mitigate the production of methane
by about 90%. These projects are classified as a Clean Development
Mechanism (“CDM”) defined by the United Nations’ Kyoto Protocol.
We have launched CDM projects at one of our mills.
0.16
0.10
0.05
0
Emissions due to
the transport and
use of fertilisers.
0.16
0.15
2007
2008
2009
2010
2011
128
Part III:
Social Performance
LABOUR STANDARDS
Our fundamental guiding principle is that all employees – including workers
– must be treated equally, fairly and with respect. Our labour policy is based
on the International Labour Organisation (“ILO”) Declaration on Fundamental
Principles and Rights at Work, covering the core labour standards on the rights
to collective bargaining, the elimination of forced or compulsory labour, the
abolition of child labour as well as the elimination of discrimination in respect
of employment and occupation.
A highly motivated and productive workforce is critical to our business. While
our earlier work aimed at improving the welfare and housing of our workers, we
are now focusing on end-of-career training and contributing to fulfilling, active
and decent retirement for our workers.
129
We have 5,206 full-time employees in
Malaysia as at 31 December 2011, of which
4,443 (85.3%) are categorised as workers.
Our workers are predominantly from
Indonesia.
created vast discomfort. Other problems
included the lack of transport for workers
to get to their work site and the practice of
open burning of rubbish – a safety hazard.
We are currently working on measures to
mitigate these issues.
MONITORING AND CONTROL
We conduc t Internal Social Impac t
Assessments (“SIA”) based on the SA8000
Labour Standards to manage our social
performance. This is also done as part of
our commitment to the RSPO. The SIAs help
us to identify corrective actions in areas
where these standards were compromised.
Our updated SIAs in 2011 revealed workers’
concerns such as presence of dogs and
bats in the workers’ residential areas, which
WORKERS’ WAGE RATE
Although there is no legal minimum wage
in Malaysia, there are recommended rates
by the Malaysian Agricultural Producers
Association (“MAPA”) and the National
Union of Plantation Workers (“NUPW”). Our
workers receive above the current MAPA/
NUPW rate. Eligible workers are also entitled
to a special gratuitous payment of RM200
per month, as part of a voluntary code
recommended by the MAPA council.
WORKERS’ UNION
There is a local committee consisting of
union representatives elected by members
at each mill and estate. While 1,334
employees or 26% of our employees are
union members (as at 31 December 2011),
all workers including foreign workers,
are covered by a collective bargaining
agreement.
NON-DISCRIMINATION
We recognise value of diversity and the
benefits of a diverse workforce. We practise
non-discrimination towards women, ethnic
or religious minorities and foreign workers.
We have equal pay for equal work for all
field, office and management staff based on
predefined grades.
In addition, we have guidelines on HIV/
AIDS. Workers who have the disease are
guaranteed confidentiality and retained
in employment as long as they are
130
SUSTAINABILITY
Part III: Social Performance (continued)
healthy and able to perform. This policy
is institutionalised in our Sustainability
Handbook for employees and the Foreign
Workers Handbook for our workers. During
the induction of foreign workers, an
interpreter (usually a senior worker from
respective nationality) will explain the terms
to the workers.
OVERTIME
Overtime is a prioritised social issue and
was mentioned in our earlier Sustainability
Reports. During peak crop season, mill
workers tend to work long hours to ensure
the fruits are processed before the quality
deteriorates. To manage the number of
hours worked in the interests of the workers,
the departmental heads have to update
the mill manager weekly on overtime and
adhere to the Department of Labour’s
guidelines on monthly overtime limits.
We regret to note that our target for zero
excessive overtime is yet to be achieved. The
overtime cases are due to isolated individuals,
not the entire workforce. We are working
with the specific cases on this issue.
ADDRESSING THE ISSUE OF
FOREIGN WORKERS IN MALAYSIA
Our industry is highly dependent upon
labour, especially non-Malaysian workers.
As foreign workers comprise the majority
of our labour force, we provide induction
programmes to ensure that these workers
understand their rights, entitlements and
responsibilities. We provide all our workers
with an individual copy of the Foreign
Workers Handbook.
HOUSING
The earlier SIA identified issues regarding
the availability and quality of housing,
particularly for new workers. In response,
we are upgrading housing facilities and
constructing new houses. In general, there
are 4 workers in 2-bedroom 48m2 quarters
or 3-bedroom quarters.
Moving forward, we have a 5-year plan
that covers housing, which is particularly
focused on better sanitation, water and
electricity facilities.
In recent years, with the public spotlight
on Malaysia’s reliance on foreign labour,
the Malaysian Government has introduced
regulations to curtail the recruitment of
foreign workers. This has deep implications
to our industry in the longer term. The
labour shortage was particularly pronounced
during the first half of 2010, following the
introduction of new regulations.
ID CARDS FOR FOREIGN WORKERS
The first SIA in 2007 identified the
withholding of foreign workers’ passport as a
potential breach of the ILO’s conventions, as
it seemed that the Company is denying the
free movement of workers. The Government
has since come up with the 6P Programme,
which is a new programme by Ministry of
Home Affairs for all foreign workers working
in Malaysia and for all industries. This replaces
the iKAD scheme that was also mentioned
in our 2009 Sustainability Report. While the
iKAD scheme is an ID card specifically for
foreign workers, the new 6P scheme aims
to compile a comprehensive biometric
database, instead of having identification
documents to reduce incidents of fraud.
CHILDREN
As a fundamental principle, we do not
employ children or young people under 16.
Many of our workers of course reside with
their families, and hence there are children
living in and around our estates. They have
access to schools and do not work for us.
WORKERS BY COUNTRIES
(AS AT 31 DECEMBER 2011)
3%
24%
73%
Malaysian
Indonesian
Bangladeshi
131
EMPLOYEES RETENTION
A company without skilled management talent will not
be able to progress much further. According to a report
by the World Bank in April 2011, the Malaysian economy
faces an acute brain drain – the migration of talent across
borders – the skilled diaspora is now 3 times larger than
2 decades ago. This development has a significant impact
upon our future. In the longer term, we need to prepare
for a possible shortage in skilled management talent in the
oil palm plantation industry. A skilled managerial workforce
is crucial for our future growth. In 2011, we worked on
strengthening our talent management programmes and
instilling a performance-driven culture.
We have 5,206 full-time employees and workers in Malaysia
as at 31 December 2011, of which 14.7% are categorised as
employees, comprising of our staff and management. The
women make up about 30% of the employees.
EMPLOYEE POLICY AND GUIDELINES
Our fundamental guiding principle is that all employees must
be treated equally, fairly and with respect. Our labour policy
is based on the ILO Declaration on Fundamental Principles
and Rights at Work, covering the core labour standards such
as the elimination of discrimination in respect of employment
and occupation. These topics are covered in our Kulim
Sustainability Handbook. The handbook is distributed to all
our employees and is translated into standard operating
procedures, guidance documents and training throughout
our operations. It is also available on our corporate website.
132
SUSTAINABILITY
INCORPORATING FEEDBACK FROM
THE EMPLOYEE CLIMATE SURVEY
A total of 977 employees took part in the
Employee Climate Survey as compared
to 674 when it was first undertaken in
2005. The updated Climate Survey in 2010
indicated that the employees are generally
satisfied with the working conditions
and employment policies; 83.8% of the
participants responded positively.
On the other hand, the sur vey has
highlighted employees’ concern with
remuneration, especially relating to market
competitiveness and fairness of the current
salary scheme. In response, we have
conducted a salary benchmarking survey
to review the competitiveness of the salary
scheme. Going forward, we will focus on
strengthening our remuneration package
and offering employees other benefits.
EMPLOYEE DEVELOPMENT
Our employees are one of our key
stakeholders for engagement. In our
engagement workshop, one of the issues
highlighted was the lack of young people in
the plantation business and the problem of
retaining talent. We will need to prepare for
a possible shortage in skilled management
talent in the plantation industry when the
current batch of older employees retires. One
of the main ways to retain young people, or
commonly known as Gen Y, is to give them
room to develop their professional skills
and provide opportunities for feedback.
We have training and development
programmes for our Gen Y employees
a n d g e n e ra l l y fo r a l l l e ve l s. Th e s e
programmes are structured around formal
courses, seminars and workshops, which
are organised internally or by external
consultants. The Human Resource and
Administration Department is responsible
for coordinating the training, which
covers myriad subjects such as effective
communication, sustainability, productivity,
executive development and induction
programmes for new employees.
We spent about 5% of payroll cost on
training in 2011 as compared 4% in 2009,
and achieved an average training mandays of 4.13 per employee, which exceeded
our target of 3 man-days. In addition, 11
employees received formal qualifications
funded by Kulim, one of whom was on an
Executive Master of Business Administration
Programme – a programme collaborated
with Johor Corporation and UTM-SPACE.
DEVELOPING LEADERSHIP
We have a management trainee programme,
Strategic Enhanced Executive Development
System (“SEEDS”). The first batch of
management trainees in 2008 has a retention
rate of 77%, of which 20 participants are still
with the Company and are working in the
different operating units.
ANNUAL GATHERING OF
EMPLOYEES
We recognise the need to provide platforms
for employees at the estates, mills and head
office. The annual gathering of our employees,
Pedoman , addresses this need and also
provides a communication platform for the
Senior Management, giving an opportunity
to communicate performance highlights,
the goals, challenges and aspirations
for the future, as well as gather feedback
from employees.
MEASURING PERFORMANCE
We are constantly communicating our
performance appraisal system via road shows
within the Group’s operations.The Performance
Management System (“PMS”) aims to measure
individual employee’s performance against
critical targets, in particular Key Performance
Indicators (“KPIs”). The PMS include a peer
review appraisal system, while the KPIs also
include dimensions on sustainability such as
Health and Safety.
133
OCCUPATIONAL HEALTH AND
SAFETY
Occupational Health and Safety (“OHS”) is
one of the top priority impact areas for
the Company. Our external and internal
stakeholders want to be assured of a
workplace that is safe from work-related
accidents and illnesses. Given the tight
labour market for workers, a low accident
rate is critical for productivity. It is also, our
ethical and social responsibility to ensure
the wellbeing of our workers.
Each mill and estate has a designated
OHS Coordinator who is responsible for
organising safety training, meetings,
investigation and reporting of accidents
and incidents. These OHS Coordinators
report to the Corporate Office.
We have an OHS plan to improve the
safety of employees, which is also reviewed
periodically to reflect current realities
at work. The OHS plan is documented
and effectively communicated to all our
employees. We have a set of matrix to
measure the efficacy of our OHS plan.
LOST TIME ACCIDENT RATE
We are glad to note that our Lost Time
Accident (“LTA”) rate has consistently met
targets for the past 3 years. We aim to keep
the LTA rate under 10. Our LTA rates were
7.5 in 2009, 7.6 in 2010 and 5.8 in 2011.
ZERO ACCIDENT AND ZERO
FATALITY
We aim for zero accident and zero fatality.
Nevertheless, it was with great regret
that we report 4 work-related deaths in
the past 2 years. We have one fatality in
2011 and 3 in 2010, an increase from zero
fatality in 2009. All of us at Kulim offer
our condolences to the families of the
deceased. Decisive action has been taken
to avoid such occurrences in the future.
Safety measures include monitoring system
of safety targets, awareness training and
safety talks, awareness campaigns, dedicated
health and safety officers.
SEVERITY RATE
We managed to meet our target for severity
rate for 2010 but not for 2011. We have set
a targeted severity rate of 3.5. As with our
2009 report, the severity rates are due to
the same types of injuries that prevail in
our field. The major causes of injuries were
thorn pricks and cuts from palm fronds.
Workers often have to remain absent for
2-4 days before returning to work, due to
the risk of wound infection. In 2011, there
were 149 incidents of thorn pricks and 87
incidents of cuts from palm fronds. We are
working on a plan to solve the root cause
of this issue.
LOST TIME ACCIDENT RATE
12
9.7
10
7.8
We also have a HIV/AIDS policy for the
workers. We provide training to ensure that
our employees are aware of the policy.
There is a non-discrimination clause if there
are affected workers on our plantations. The
policy also guarantees the confidentiality of
the workers.
5.8
6
4
2
0
2007
2008
2009
2010
LTA rate
2011
Target
FATALITY RATE
4
3
3
2
1
1
1
1
0
0
2007
We have also expanded our scope of health
and safety measures to include occupational
illness. This means that we monitor for
the prevalence of any longer term health
issues arising from our operational activities,
especially the risk of lumbago for our
harvesters. We are making changes to our
earlier assumptions, with experimental
controls to find out the root cause. The main
problem may lie in the way that harvesters
lift the FFB. A FFB can weigh between 2530kg, which can be quite heavy for a worker,
especially for his back, on a prolonged
basis. Thus, we provided extra training on
lifting techniques. The number of reported
incidents was subsequently reduced by 47%
from 171 in 2010 to 91 in 2011.
7.6
8
BEYOND OHS
Issues beyond OHS in the workplace are
prioritised because these also have an
impact on productivity in the workplace.
For example, we operate a strict No Drugs
policy that is enforced through regular
and random drug testing. We conducted
periodic inspections on all internal grocery
shops in the operating units for illegal
medication and alcohol.
7.5
2008
2009
2010
Fatality rate
2011
Target
SEVERITY RATE
5
4.2
4
4
3.6
3.5
3.34
3
2
1
0
2007
2008
Severity rate
2009
2010
2011
Target
134
SUSTAINABILITY
WOMEN IN MANAGEMENT
17%
83%
Male %
Female %
WOMEN EMPLOYEES
EMPOWERING WOMEN
Our commitment to gender equality
is seeing positive results. Our Women
OnWards initiative goes from strength
to strength, increasing opportunities for
women at all levels. We are also supportive
of the recommendations adopted by the
Government and Bursa Malaysia that 30% of
decision-makers in PLCs should be female.
Composition of women employees within
our management group is now at 17%.
Recent Board changes included the addition
of a woman director, bringing female
representation up to 21%. We believe that
this diversity is creating a more balanced,
productive and attractive workplace for all
employees.
WOMEN ONWARDS (“WOW”)
WOW was originally called Panel Aduan
Wanita or the Women’s Grievance Panel,
part of a larger strategy to reach out to all
levels of employees, in particular the field
workers. It is endorsed by the management
and the activities are fully funded by the
Company. In the early days, WOW conducted
awareness programmes of its existence and
how WOW can help the women.
Kulim recognised the celebration for
International Women’s Day annually.
WOW organised the Kulim International
Women’s Day (“KIWD”) programme in March
2010 and June 2011. The celebration in
2010 was themed Memperkasa Hak-hak
Wanita (Empowering Women) and had
motivational and spiritual enhancement
programmes conducted at all operating
units. The celebration in 2011 was based on
the theme of Wanita & Ekonomi (Women &
Economy). As at the time of writing, WOW
is planning for its third KIWD, slated to be
held in June 2012. This year the theme will
be based on healthy and active lifestyles.
WOW also aims to develop and equip the
ladies with entrepreneurship skills, particularly
among the female employees, with free
trainings that can provide additional income,
such as sewing, handcrafting and baking.
SEXUAL HARASSMENT
Our efforts in reaching out to the women
in the Company and getting them to report
cases on sexual harassment are proving to
be successful. The women in the Company
are now more aware of their rights and are
more open to reporting cases on sexual
harassment.
We have no reported incidents of sexual
harassment in 2010 and 2 incidents in 2011,
As for the 2 incidents in 2011, the employee
found to be at fault was terminated for 1
case, while the other case was dropped
because there was not enough evidence to
prove guilt.
30%
70%
Male %
Female %
Regardless of the low numbers of reports,
we will continue to refine our outreach
programme to encourage more women to
speak up and to seek advice, if applicable.
RETURN TO WORK AND MATERNITY
LEAVE
All our female employees are entitled to 60
consecutive days of paid maternity leave, in
accordance to the Malaysian Government
regulations. The number of female employees
who took maternity leave was 17 in 2011.
All employees returned to work after their
maternity leave ended and remain employed
with the Company 12 months after their
return to work. We are proud of the 100%
retention rate.
135
COMMUNITY AND ECONOMIC CONTRIBUTIONS
We recognise that our presence among the local communities
impacts the social environment surrounding our operations, and
not just the economics. Our business has strong dependencies
on the surrounding communities for continuity and growth.
We adopt a management approach that has a holistic
understanding of the net impact of our presence. We conduct
annual SIA to measure our overall impact and review the Social
Action Plan based on these SIAs. We try to create a positive
impact with an active community investment programme that
combines cash contributions, in-kind donations and employee
volunteering activities.
COMMUNICATING WITH LOCAL COMMUNITIES
We have an open approach to communication with the local
communities. Local communities can contact the estate or
the mill manager directly if they wish to address any issues
regarding our operations. The communication process is
complemented by annual SIAs, which are conducted by our
internal and external auditors.
MEASURING OUR COMMUNITY INVESTMENTS
The key themes of our community investments are community
sports, community health and infrastructure as well as children
and education. The community investment activities are
structured around a Company-wide programme as ‘We Care
We Share’. This programme was rolled out in January 2009 to
promote the spirit of volunteerism amongst our staff.
In 2011, we participated in the following community programmes:
APPROXIMATE
CONTRIBUTIONS
(RM’000)
INSTITUTION/
PROGRAMMES
PURPOSES
Johor FC
(Football Club)
National sports
sponsorship
Darul Hanan
Orphans and underprivileged
53
Tabung Tijarah
Ramadhan
A programme to help
the under-privileged
40
Bistari Young
Entrepreneur
Sponsorship for Tunas
Bistari Programme
150
5,330
136
Part IV:
Doing our part for the palm
oil supply chain
The bulk of our crop is sold to refineries, which in turn produce
food ingredients and cooking oils largely for domestic sales. There is
a growing pressure on the palm oil players to ensure an ethical and
sustainable supply chain that is fully traceable to the origins of the crop.
We are working on full certification of all the FFB processed by our mills, as
part of our commitment to RSPO. More than 35% of our FFB are purchased
from independent FFB traders, outgrowers and smallholders. Our strategy
is to map out the suppliers of external FFB to our mills, identify
partners who can help us increase awareness for RSPO certification and
most importantly, enhance understanding on practical implementation
in the estates.
137
The sale of palm oil for non-food use,
especially biofuel, has been largely reduced
in recent years. Our biofuel plant is currently
not in operation.
ENGAGING FFB TRADERS,
OUTGROWERS AND SMALLHOLDERS
According to the RSPO, smallholders
produce much of the world’s palm oil. In
the 2 major producing countries – Indonesia
and Malaysia – which account for over 80%
of the world’s production, smallholders
cultivate about 40% of the oil palm area in
these 2 countries.
Outgrowers and smallholders are therefore
key stakeholders for a fully traceable
sustainable supply chain, as they supply
most of the crops to the mills. As with most
mill owners, it is challenging to include
external FFB in the certification. We have
set a target initially to certify 100% of the
outgrowers’ FFB in our mills by 2011. We
are still working on this target, but we have
extended the timeline to 2013 instead.
The certification is challenging because of
the complexity in tracing the individual
outgrowers, given a substantial amount of
FFB processed in our mills are purchased
from independent FFB traders. In an initial
consultation with a sample group of
suppliers, comprising of outgrowers and
FFB traders, most of them were aware of
RSPO but did not have detailed knowledge
of the RSPO requirements.
We developed a work plan in 2010 to
conduct an awareness and training
programme for outgrowers and FFB traders.
Currently we are conducting a trial with a
controlled group of smallholders at Asam
Bubok Estate (“ABE”). We aim to include
ABE for coming surveillance due at the
end of this year. The Sustainability and
Quality Department (“SQD”) is responsible
for implementing the RSPO P&C with the
outgrowers and independent FFB traders.
We are also working with MPOB on the
Smallholder Certification Programme,
which started in February 2010. The first
smallholder engagement session was
attended by 68 smallholders and FFB traders
who supplied to the Sedenak Palm Oil Mill.
The first smallholder engagement session
for Sindora Palm Oil Mill was attended by 44
smallholders and FFB traders. The programme
aims to foster greater understanding of the
RSPO P&C for smallholders and to establish
a smallholder cooperative.
FFB PROCESSED BY OUR MILLS
2011
6%
30%
64%
Kulim estates’ FFB
FFB traders
Other outgrowers’ FFB
ESTABLISHING AN ETHICAL AND
SUSTAINABLE SUPPLY CHAIN
The RSPO has made significant progress in
sustainable sourcing since our last report.
Over the last 2 years, industry players have
worked hard to iron out issues on practical
implementation of the mechanisms
– testimony to the strength of a formal
multi-stakeholder initiative. For example,
some of the rules were changed to better
reflect commercial realities, rather than
from a technical and process engineering
perspective.
138
Kulim’s sustainable palm oil is sold to the
market via the Green Palm Book and Claim
and the Mass Balance mechanisms. The
Green Palm trading mechanism, a Book and
Claim system, allows our customers to buy
certificates for the volume of certified palm
oil required. The Book and Claim mechanism
is the most simplified method for a buyer
to obtain certified oil without the high
administrative costs and complex logistics.
On the other hand, the Mass Balance
mechanism allows certified palm oil to be
mixed with conventional palm oil, but the
entire process is monitored administratively.
This method is slightly more stringent and
complex than the Book and Claim system.
CONSUMING PALM OIL
Obesity among Malaysians is increasingly a
health concern due to changes in lifestyle
and diet. Obesity can lead to other chronic
diseases such as high blood pressure, heart
and kidney problems. Malaysian consumers
are also concerned about high fat intake
and the types of fat they consume, which
translates into choices on cooking oil types.
139
Palm oil is a basic and inexpensive ingredient
for cooking in Malaysia, where we sell most
of our palm oil. The vast majority of our
palm oil is used for edible consumption,
either as cooking oil or further processed
into other food ingredients.
The palm oil is rich in natural chemical
compounds important for health and
nutrition. It is a natural source of Carotenoids
(including pro-vitamin A), Vitamin D, E and
K, as well as supplying fatty acids and other
important fat-soluble micronutrients. No other
vegetable oil has as much Vitamin E as palm
oil and Vitamin E is a powerful anti-oxidant.
Often labelled as vegetable oil, palm oil
is actually a type of fruit oil, much like
coconut and olive oil. Many people mistake
palm oil for coconut oil. However, the 2
have distinct uses and compositions. It is
palm kernel oil that is similar to coconut oil
in terms of chemical composition, physical
characteristics and uses. Besides fatty acids
composition, palm oil also differs from
coconut oil with regard to its potential
impact on the heart, as palm oil contains
distinctly less saturated fat to coconut oil.
Moreover, palm oil in its solid state is
much better for health as compared to
other edible oils, as it does not have to
undergo a chemical composition known
as hydrogenation. Hydrogenation produces
trans-fat, along with saturated fatty acids
and modifies cis-fatty acids. Trans-fat has
been linked as a contributory factor to
breast and colon cancer, and heart disease.
SECTION 6: GOVERNANCE
STATEMENT
142 CORPORATE GOVERNANCE REPORT
153 INTERNAL CONTROL STATEMENT
160 AUDIT COMMITTEE REPORT
164 ADDITIONAL COMPLIANCE INFORMATION
165 ADDITIONAL DISCLOSURE
142
CORPORATE GOVERNANCE REPORT
INTRODUCTION
The Board of Directors of Kulim (Malaysia) Berhad subscribes to and supports the
Malaysian Code on Corporate Governance (Revised 2007) (“The Code”) as a minimum
basis for practices on corporate governance. The Board is pleased to report that it had
continued to practise good corporate governance throughout the financial year ended
31 December 2011. Pursuant to Paragraph 15.25 of the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad (“Listing Requirements”) and except for matters
specifically identified, the Board, to the best of their knowledge, confirms that the Group
has applied the Principles as set out in Part 1 and has complied with the Best Practices as
set out in Part 2 of The Code throughout the year under review.
The Board however, recognises that good corporate
governance practices should extend beyond mere
compliance. It should seek to attain the highest
standards of business ethics, accountability,
integrity and professionalism across all the Group’s
activities and conducts. In addition, the Board
considers strong governance as one of the key
strategy determinants in building a competitive
organisation, achieving its set corporate and
business objectives and ultimately in realising
investors’ confidence and shareholders’ value. Hence,
the Board is committed to continuously improve
the Group’s standards of corporate governance in
ensuring that all stakeholders’ interest is protected
and value enhanced.
The Board of Directors plays a key role in the
governance process through its review and
approval of the Group’s direction and strategy, its
monitoring of professional standards and business
performance, its review of the adequacy and
integrity of the Group’s internal control systems,
including the identification of principal risks and
ensuring the implementation of appropriate
systems to manage those risks, and the acceptance
of its underlying duty to ensure that the Company
and the Group meets its responsibilities to its
shareholders.
Kulim’s commitment to strong governance and
the continual enhancement of shareholders’ value
is evidenced by the following recognitions and
accreditations conferred on the Group in 2011:
•
Malaysia 1000 – Industry Excellence Award
under Plantation Sector 2010/2011 organised
by BASIS Holdings Sdn Bhd in collaboration
with BERNAMA and MATRADE.
•
The Edge Billion Ringgit Club Award 2011
under the following categories:1.
Best Performing Stock – Highest Returns
to Shareholders Over Three Years
(Plantation Sector)
2.
Highest Profit Growth Company –
Highest Growth in Profit Before Tax
Over Three Years (Plantation Sector)
•
National Annual Corporate Report Awards
(“NACRA”) 2011 – Industry Excellence Award
(Main Market) for Plantation and Mining
•
Industry Excellence (Plantations) and Scored
‘A’ in The Malaysian Corporate Governance
(“MCG”) Index 2011 organised by Minority
Shareholders Watchdog Group (“MSWG”)
•
Global Leadership Award 2011 (Plantation
Sector) – Ahamad Mohamad
Being amongst the earliest plantation companies
in the world to be certified as a sustainable palm
oil producer under RSPO serves as a testament
to the Group’s commitment towards enhancing
its governance standards. The Group took its
sustainable commitment to the next level when it
became the first within the plantation industry to
publish sustainability reporting. The Group produced
its inaugural Sustainability Report 2007/2008 in
October 2008, published separately for both its
Plantation operations in Malaysia and Papua New
Guinea. Subsequently, the bi-annual Sustainability
Report was published in June 2010. As at the time
of writing, Kulim is in the process of producing its
third Sustainability Report, emphasising the Group’s
143
commitment in subscribing to the RSPO
Principles and Criteria. The reports which
are benchmarked against the international
Global Reporting Initiative guidelines seek to
present transparent overview, performance
evaluation and the Group’s target towards
Sustainable Palm Oil practices. It also forms
the basis of additional communications
and engagement with Kulim’s broader
stakeholder groups. The Report is available
upon request and can also be downloaded
from the company website.
BOARD OF DIRECTORS
Size, Composition and Effectiveness of
Board
Kulim (Malaysia) Berhad is led by an effective
Board of Directors. The Board, as at the date
of this Statement, consists of:
•
4 Executive Directors
•
4 Non-Independent Non-Executive
Directors
•
6 Independent Non-Executive Directors
All six (6) of the Independent Non-Executive
Directors are independent as defined under
the Listing Requirements. The Independent
Non-Executive Directors are:
1.
Tan Sri Dato’ Seri Arshad Ayub
2.
Kua Hwee Sim
3.
Datuk Haron Siraj
4.
Dr. Radzuan A. Rahman
5.
Natasha Kamaluddin
6.
Leung Kok Keong
A statutory declaration is made to Bursa
Malaysia Securities Berhad (“Bursa Malaysia”)
by all Independent Non-Executive Directors
in their individual capacity to the effect that
they are independent in compliance with the
Listing Requirements.
The Board views that the number and
composition of the current Board members
is sufficient and well-balanced for the
Company to carry out its duties effectively,
whilst providing assurance that no individual
or small group of individuals can dominate
the Board’s decision making.
There is clear segregation of duties between
the Chairman and the Managing Director. The
Board is led by the Chairman, Kamaruzzaman
Abu Kassim whose principal responsibilities is
to ensure the effective running of the Board
and is independent of the management.
The current Chairman has never held the
post of Managing Director of the Company.
The post of Managing Director or the Chief
Executive Officer of the Group is held by
Ahamad Mohamad whose primary task is
to report, communicate and recommend
key strategic and operational matters and
proposals to the Board for decision making
purposes as well as to implement policies
and decisions approved by the Board. The
Non-Independent Non-Executive Directors
are from varied business and professional
backgrounds and bring with them a wealth of
experience that is brought to bear favourably
in board decisions and policy formulations.
Together, the Directors bring a wide range of
business and financial experience relevant to
the direction of the expanding Group.
The independence of each Independent NonExecutive Directors is safeguarded as none is
involved in the day-to-day management of
the Group and they do not engage in any
business dealings or other relationships with
the Group. The presence of 6 Independent
Non-Executive Directors, representing more
than a third of the total members with
necessary calibre, ensures that the Board
is well-balanced and could carry sufficient
weight on Board’s decisions. Although all
the Directors have equal responsibilities for
the Group’s operations, the role of these
Independent Non-Executive Directors is
particularly important in ensuring that all
business strategies proposed by the executive
management are fully and independently
discussed and assessed, and take into
account the long term interest, not only of
shareholders, but also employees, customers,
suppliers, and the many communities in
which the Group operates. The Board is
satisfied that the size and composition of
the Independent Non-Executive Directors has
fulfilled its requirement adequately.
The profiles of the Directors’ biographies
are set out in page 44 to 52 of the Annual
Report.
The Company has in place a Board Policy
Manual to assist the Board in discharging
its duties effectively. Among others, the
Board Policy Manual covers the following
important scopes:
•
Group Organisation
•
Board Organisation
•
Board Responsibilities
•
Board Procedures
•
Director Evaluation Guidelines and
Procedure
•
Managing Director Evaluation Guidelines
and Procedure.
The Position Description for the Chairman
and for the Managing Director is prescribed
in the Board Policy Manual. At the end of
each financial year the Board will set Key
Performance Indicators (“KPI”) that should be
achieved by the management for the next
financial year.
Principal Duties and Responsibilities
The Board assumes six principal stewardship’s
responsibilities:
1.
Reviewing and adopting a strategic
plan for the Company. The Board will
review and approve the annual budget
and strategic plan for the Group.
The Group’s strategic and business plan
for the period 2012-2016 were tabled,
discussed and approved by the Board
at its meeting on 22 March 2012.
Additionally, on an ongoing basis
as need arises, the Board will assess
whether projects, purchases and sale
of equity as well as other strategic
consideration being proposed at Board
meetings during the year are in line
with the objectives and broad outline
of the adopted strategic plans.
144
2.
O verseeing the conduc t of the
Company’s business to evaluate whether
the business is being properly managed.
At Board meetings, all operation matters
will be discussed and expert advice will
be sought if necessary.
The performances of the various
companies and operating units within
the Group represent the major element
of Board agenda. Where and when
available, data are compared against
national trends and performance of
similar companies.
The Group uses KPI system as the
primary driver and anchor to its
performance management system,
of which is continually refined and
enhanced to reflect the changing
business circumstances.
3.
Identifying principal risks and ensure the
implementation of appropriate systems
to manage these risks. The Group has
set up a Risk & Issues Management
Committee for this purpose to assist
the Board.
The R isk & Issues Management
Committee met 4 times in 2011 to
review the Group’s risks. Details on Risk
& Issues Management Committee are
on pages 153 to 154 of this Annual
Report.
4.
S u c ce s s i o n p l a n n i n g, i n c l u d i n g
appointing, training, fixing the
compensation of and where appropriate,
replacing senior management.
The Board responsibility in this aspect is
being closely supported by the Human
Resource Department. More importantly,
after several years of continuous efforts
in emphasising and communicating the
importance of succession planning, the
subject has now become an ongoing
agenda being reviewed at various highlevel management and operational
meetings of the Group.
5.
(continued)
are well-informed about the Group
affairs and developments. Information
on our shareholders’ communication
activities is on pages 151 to 152 of this
Annual Report.
6.
Reviewing the adequacy and the
integrity of the Company’s internal
controls and management information
systems, including compliance with
applicable laws, regulations, rules,
directives and guidelines.
The Board’s function as regard to
fulfilling the above responsibility is
supported and reinforced through the
various Committees established at both
the Board and managing agent’s level.
Aided by an independent function
of the Internal Audit Department, the
active functioning of these Committees
through their regular meetings and
discussions would provide a strong
check and balance as well as reasonable
assurance on the adequacy of the
Company’s internal controls. Details
on the Internal Audit functions are
further discussed in the Internal Control
Statement and Audit Committee Report
in this Annual Report.
Board Meetings and
Supply of Information
All Board meetings for the ensuing year are
scheduled by December in the year before
so as to allow Directors to plan ahead. Board
meetings are held at least 4 times a year.
Apart from the regular scheduled meetings,
additional meetings are convened as and
when necessary to deliberate and approve
ad-hoc, urgent and important issues.
Developing and implementing an
investor relations programme or
shareholder communications policy for
the Company.
The Chairman, assisted by the Company
Secretary takes responsibility in ensuring
that the directors receive all notices, agendas
and minutes of the previous meetings and
is supplied with pertinent information well
in advance of each meeting. The Managing
Director in consultation with the Chairman
would decide on the agenda and accordingly
structure and prioritise the respective matters
based on their relevance and importance
so as to enable quality and in-depth
discussion of the matters. All decisions and
conclusions of the Board meetings are to be
duly recorded and minutes are kept by the
Company Secretary.
Various strategies and approaches
are employed by the Group so as to
ensure that investors and shareholders
The Board recognises the importance
of providing timely, relevant and up-todate information in ensuring an effective
decision making process by the Board. In
this regard, the Board is provided with not
just quantitative information but also those
of qualitative nature that is pertinent and of
the quality necessary to allow the Board to
effectively deal with matters that are tabled
in the meeting. All Directors have unrestricted
access to all information within the Company
in furtherance of their duties. In addition, all
Directors have access to the advice of the
Company Secretary and where necessary, in
furtherance of their duties, take independent
professional advice at the Group’s expense.
In conjunction with the scheduled meetings
or on separate occasions, the Directors also
visit locations of operating units, sites of new
projects and other operation sites to allow
them to have better assessments of the
operational progress, status of development
and any important issues to be addressed
on new proposals. In between meetings, the
Managing Director meets regularly with the
Chairman and other Board members to keep
them abreast of current development. Circular
Resolutions are used for determination of
matters arising in between meetings.
In addition to matters relating to the six
principal stewardship’s responsibilities
discussed above, other specific topics tabled
for Board’s deliberation and decisions include:
•
updates of relevant factors within the
Group external business environment
such as economic development and
policies, customers and markets and
competitors;
•
current updates of key financial
and operational results as well as
performances of the Group, Company
and its subsidiaries;
•
strategic and corporate initiatives such
as approval of corporate plans and
budgets, acquisitions and disposal of
material assets and major investments;
•
changes to management and control
structure of the Group, including key
policies, procedures and authority
limits;
•
approval of any interim and special
dividend as well as the Company’s
dividend policy; and
•
approval of all circulars, resolutions and
corresponding documentation sent to
shareholders.
145
The Board met 8 times during the financial year 2011 and all Directors have complied with the minimum 50% attendance as required by Para 15.05
of the Listing Requirements. The members of the Board of Directors and their attendances at Board meetings in 2011 are set out below:
Special
BOD
12.1.2011
265th BOD
10.2.2011
266th BOD
23.6.2011
267th BOD
5.8.2011
Special
BOD
16.8.2011
Special
Special
BOD
BOD
268th BOD
4.11.2011 15.12.2011 22.12.2011
Kamaruzzaman Abu Kassim
✔
✔
✔
✔
✔
✔
✔
✔
100
Ahamad Mohamad
✔
✔
✔
✔
✔
✔
✔
✔
100
✔
✔
✔
✔
✔
✔
✔
✔
100
Kua Hwee Sim
✔
✔
✔
✔
✔
✔
✔
✔
100
Wong Seng Lee
✔
✔
✔
✔
✔
✔
✔
✔
100
Datin Paduka Siti Sa’diah Sh Bakir
✔
✔
✔
✔
✔
✔
✔
✔
100
Zulkifli Ibrahim
–
–
–
✔
✔
✔
✔
✔
100
Datuk Ahmad Zaki Zahid
–
–
–
–
–
–
✔
✔
100
Datuk Haron Siraj
✔
✔
✔
✔
✔
✔
✔
✔
100
✔
✔
✔
✔
✔
✔
✔
✔
100
Rozan Mohd Sa’at
✔
✔
✔
✔
✔
✔
✔
✔
100
Leung Kok Keong
–
–
–
–
–
–
✔
✔
100
Natasha Kamaluddin
–
–
–
–
–
–
✔
✔
100
Wan Mohd Firdaus Wan Mohd Fuaad
–
–
–
–
–
–
✔
✘
50
%
Notes:•
•
•
•
•
Zulkifli Ibrahim – appointed as Executive Director on 1.7.2011
Datuk Ahmad Zaki Zahid – appointed as Executive Director on 8.11.2011
Leung Kok Keong – appointed as Independent Non-Executive Director on 9.11.2011
Natasha Kamaluddin – appointed as Independent Non-Executive Director on 9.11.2011
Wan Mohd Firdaus Wan Mohd Fuaad – appointed as Non-Independent Non-Executive Director on 9.11.2011
The Directors, in the event that they have
interest in proposals considered by the Board,
will be required to make declaration to that
effect. The interested Directors will thereupon
abstain from deliberations and decisions of
the Board on the said proposals.
competency to effectively discharge his/
her role as a Director of the Company. The
NRC will then recommend their findings for
consideration and approval by the Board. The
power to appoint the director(s) nominated
is vested wholly on the Board.
Appointment and Re-election of
Directors
The Board is responsible to the shareholders.
All Directors appointed during the financial
year resign at the Annual General Meeting
(“AGM”) of the Company in the period of
appointment and are eligible for re-election.
In compliance with the Para 7.26(2) of the
Listing Requirements, all directors shall retire
once at least in every 3 years.
The number and composition of Board
membership are reviewed on a regular basis
appropriate to the prevailing size, nature
and complexity of the Group’s business
operations so as to ensure the relevance and
effectiveness of the Board. In the event of a
need to appoint new member(s) of the Board,
nominations will be tabled and deliberated in
the Company’s Nomination and Remuneration
Committee (“NRC”) meeting to assess the
qualified candidate with the required core
In accordance with Article 97 of the Company’s
Article of Association, Datin Paduka Siti Sa’diah
Sh Bakir and Datuk Haron Siraj retire by
rotation at the forthcoming AGM and being
eligible, offer themselves for re-election.
In accordance with Article 103 of the
Company’s Article of Association, Zulkifli
Ibrahim, Datuk Ahmad Zaki Zahid, Leung
Kok Keong, Natasha Kamaluddin and Wan
Mohd Firdaus Wan Mohd Fuaad, who were
appointed during the year, retire at the
forthcoming AGM and being eligible, offer
themselves for re-election.
Tan Sri Dato’ Seri Arshad Ayub being above
70 years of age retires in accordance with
Section 129(2) of the Companies Act 1965
and has offered himself for re-appointment
in accordance with Section 129(6) of the said
Act to hold office until the conclusion of the
next AGM of the Company.
146
(continued)
Directors’ Remuneration
The Board believes that the levels of remuneration offered by the Group are sufficient to attract Directors of calibre and with sufficient
experience and talents to contribute to the performance of the Group. Comparison with similar position within the industry and other major
public listed companies is made in order to arrive at a fair rate of remuneration. The details of the remuneration of each Director paid by the
Company during the year are as follows:
Basic Salary
Ahamad Mohamad
Kua Hwee Sim
Wong Seng Lee
Zulkifli Ibrahim
Datuk Haron Siraj
Rozan Mohd Sa’at
Leung Kok Keong
Natasha Kamaluddin
Jamaludin Md Ali (1)
(1)
Fees /
Allowances /
Other
emoluments
Bonuses
Benefit in-kind
Total
RM'000
–
593
–
–
309
–
360
120
–
–
–
–
–
–
–
RM'000
107
309
81
70
144
62
129
20
62
70
62
10
10
9
25
RM’000
–
395
–
–
206
–
210
–
–
–
–
–
–
–
–
RM’000
–
79
–
–
11
–
26
–
–
–
–
–
–
–
–
RM’000
107
1,376
81
70
670
62
725
140
62
70
62
10
10
9
25
1,382
1,170
811
116
3,479
Resigned on 1.7.2011
Board Performance Evaluation
The effectiveness of the Board is vital to
the success of the Group. For that reason,
a large portion of the Board Policy Manual
is devoted to explaining and outlining the
format and procedure for evaluating Board
Members performance. The availability of
the structured format for Board Members
evaluation assists the members in discharging
their duties effectively and efficiently.
The Board, through its Nomination Committee,
undertakes a rigorous evaluation each year
in order to assess how well the Board, its
committees, the directors and the Chairman
are performing. The evaluation covers the
Board’s composition, skills mix, experience,
communication, roles and responsibilities,
effectiveness as well as conduct. All directors
complete a questionnaire regarding the
Board and committees’ processes, their
effectiveness and where improvements may
be considered. The process also includes a
peer review in which directors assess their
fellow directors’ performance against set
criteria, including the skills they bring to the
Group and the contribution they make. The
Company Secretary reported the outcome
of the evaluation exercise to the Nomination
Committee and then to the Board for
review.
Following the performance evaluation
process for 2011, which was conducted in
February 2012, the directors have concluded
that the Board and its committees operate
effectively. Additionally, the Chairman has
concluded that each director continues to
make an effective contribution to the work
of the Board, is well prepared and informed
concerning items to be considered by the
Board, has a good understanding of the
Group’s business and has remained strongly
committed to their roles.
Directors’ Training
The Company complies with the
requirements set out in the amendments to
the Listing Requirements in that it regularly
assess the training needs of its directors
to ensure that they are equipped with the
requisite knowledge and competencies to
make effective contribution to the board’s
functioning. All Directors have successfully
completed the Mandatory Accreditation
Programme (“MAP”) prescribed by Bursa
Malaysia. The Continuous Education
Programme (“CEP”) was repealed by Bursa
Malaysia with effect from 1 January 2005
and Directors who were required to fulfil
this programme complied with the deadline
before due date. Nevertheless, Directors are
encouraged to continue attending various
training programmes that are relevant to the
discharge of their responsibilities.
147
Training programmes, seminars and briefings
attended by the Directors during the year
were, among others:
•
Mandatory Accreditation Programme
for Directors of Public Listed Companies
pursuant to Paragraph 15.09 of Bursa
Securities Listing Requirements
•
Johor Corporation Directors’ Conference
2011
•
Invest Malaysia 2011
•
Women In Leadership Forum Asia
•
MSWG & ICGN Dialogue Session
Apart from this requirement, all new
directors who are appointed from among
the Group’s senior executives must attend
an internally-administered directors’ course
and pass the examination set prior to being
eligible for appointment to the Board. All
new directors will be given comprehensive
briefing of the Group’s history, operations
and financial control systems in order to
provide them with first-hand knowledge
of the Group’s operations. In the light of
increasing complexities in global markets
as well as within the industry, in financial
reporting and in shareholders’ expectations,
training is an ongoing process in the effort
to help Directors stay abreast of relevant new
developments.
Directors’ Code of Ethics
nd
•
22 Palm & Lauric Oils Conference
•
Dialogue Session with Securities
Commission
•
International Conference on Language,
Culture & Literacy: Engaging Diversity in
Challenging Times
The Directors adhere to the Code of Ethics
which is contained in the Board Policy
Manual, the important aspects of which are
as follows:
•
Members must represent non conflicted
loyalty to the interests of the Group;
•
Members must avoid conflict of
interest with respect to their fiduciary
responsibility;
•
Members may not attempt to exercise
individual authority over the Group
except as explicitly set forth in Board
Policy; and
Members will respect the confidentiality
appropriate to issues of a sensitive
nature.
•
NAM Institute for the Empowerment of
Women
•
7th World Islamic Economic Forum
•
APHM Conference
•
Corporate Governance Program
– Assessing the Risk and Control
Environment
•
•
International Forum on Women in
Science and Technology
Fraud Risk and Whistle-Blowing
•
•
•
The New Corporate Governance
Blueprint and Regulatory Updates
Seminar 2011 organised by MICG &
Federation of Public Listed Companies
Berhad
Updates on FRS 2010/2011 - New
& Revised FRSs, Amendments,
Interpretations and the New Bursa
Listing Requirements
Budget 2012 Proposals & Recent
Development
The Group is strongly committed to an
environment of sound governance, sound
internal controls and a culture that will
safeguard shareholders’ investments,
stakeholders’ interests and the Group’s assets.
The safeguarding against loss by fraud or
negligence and establishing an environment
which effectively minimises fraud risk is a key
responsibility of management. All employees
have an obligation to support the effort.
The Group also upholds the principles of
integrity, respect and accountability which
includes the maintenance of a workplace that
is free from fraud. This involves embedding
fraud control into the organisation’s decision
making culture and practices.
As such, a Fraud Policy was established and
approved by the Board of Directors in 2007
to reflect the Group’s commitment to manage
control and promote ethical and honest
behaviour in the workplace. The policy is
intended to provide guidance to employees
on how to report and deal with fraud. It also
outlines the notification process, investigation
procedures and type of outcomes which are
likely to be considered.
The Group also ensures the sustenance
of a dynamic and robust corporate
climate focused on strong ethical values.
This emphasises active participation and
dialogues on a structured basis involving
key people at all levels, as well as ensuring
accessibility to information and transparency
on all executive action. The Group’s annual
employees’ gathering; Pedoman is one of
the platforms employed in allowing and
encouraging employees to engage in an
open dialogue with the senior management.
The Group has also long established a formal
avenue for all employees to report directly
to the Managing Director of any misconduct
or unethical behaviour conducted by
any employees of the Group through a
declaration in the Ethic Declaration Form.
Further to that, Kulim has established a
Grievance Policy and Procedure as well as
Women OnWards to ensure that throughout
the Group, there is a transparent process
for ensuring stakeholders’ grievances and
complaints are dealt with fairly, consistently
and promptly. The corporate climate is also
continuously nourished by value-centred
programmes for team-building and active
subscription to core values.
BOARD COMMITTEE
The Group has formed several committees
to facilitate the operations of the Group.
Each committee has written terms of
reference defining their scope, powers
and responsibilities. Apart from the Board
Committees, there are internal/management
committees established at Kulim Corporate
Office level and within the Group’s significant/
strategic subsidiaries which facilitate
the function of Board of Kulim as well as
their respective company. These internal/
management committees and their primary
functions are set out on pages 155 to 157 of
this Annual Report.
148
The list of Board committees includes:
1.
Audit Committee
Pursuant to paragraph 15.15 of the Listing
Requirements, the Audit Committee
Report for the financial year which sets
out the composition, terms of reference
and a summary of activities of the Audit
Committee, is contained on pages 160
to 163 of this Annual Report.
2.
Nomination and Remuneration
Committee
On 1 June 2011, the Board of Directors
of the Company established its
own Nomination and Remuneration
Committee (“NRC ”) in order to
exercise Best Practices of Corporate
Governance. The previous functions
and responsibilities of the NRC of the
Company was centralised and vested
with Johor Corporation (“JCorp”)
Group NRC in line with its Group wide
corporate practice.
The NRC is accountable to the Board of
the Company and not to the executive
management of the Company. Subject
to the Corporate Governance Principles,
the primary functions of the NRC are
to:
1.
Assess the necessary and desirable
competencies of Board members;
2.
Review Board succession plans;
3.
Evaluate the Board’s performance;
4.
Make recommendations to the
Board on the following:
Executive remuneration and
incentive policies;
ii.
Remuneration packages of
senior management;
iii.
The Company’s recruitment,
retention and termination
policies for senior
management;
iv.
Incentive Schemes;
v.
Superannuation
arrangements; and
vi.
The remuneration framework
for directors.
(continued)
In performing its duties, the NRC shall have
direct access to the resources of the Company
as it may reasonably require and shall seek to
maintain effective working relationships with
the management.
The compositions of the NRC of the Company
are as follows:
Nomination Committee
1.
Kamaruzzaman Abu Kassim – Chairman
2.
3.
Kua Hwee Sim
Remuneration Committee
1.
Kamaruzzaman Abu Kassim – Chairman
2.
3.
Membership
The Nomination Committee shall have
at least 3 members, all of whom shall
be non-executive directors with the
majority being independent directors.
The quorum for the Committee shall be
2 members, of which one should be an
independent director. The Nomination
Committee members and Chairperson
shall be appointed by the Board. The
appointment of a Committee member
terminates when the member ceases to
be a director, or as determined by the
Board.
In the event of equality of votes, the
Chairperson of the Committee shall have
a casting vote (except where 2 directors
form the quorum). In the absence of
the Chairperson of the Committee,
the members present shall elect one
member to chair the meeting.
Terms of Reference
The terms of reference of the NRC are as
follows:
The NRC is established primarily for:
A.
Nomination
Purpose
T h e N o m i n a t i o n C o m m i t t e e, a
Committee of the Board of Directors
(“Board”), is established primarily to:
1.
i.
Identify and recommend to
the Board, candidates for board
directorships of Kulim (Malaysia)
Berhad (“the Company”);
2.
R e c o m m e n d t o t h e B o a r d,
directors to fill the seats on Board
Committees;
3.
Evaluate the effectiveness of the
Board and Board Committees
(including its size and composition)
and contributions of each
individual director; and
4.
Ensure an appropriate framework
and plan for Board succession for
the Company.
The Nomination Committee shall have
no executive powers.
Meetings
The Committee shall meet at least
once a year. Additional meetings shall
be scheduled as considered necessary
by the Committee or Chairperson. The
Committee may establish procedures
from time to time to govern its
meetings, keeping of minutes and its
administration.
The Committee shall have access to
such information and advice, both
from within the Group and externally,
as it deems necessary or appropriate
in accordance with the procedures
determined by the Board and at the
cost of the Group. The Committee may
request other directors, members of
management, counsels, and consultants
as applicable to participate in Committee
meetings, as necessary, to carry out
the Committee’s responsibilities. Noncommittee directors and members of
management in attendance may be
required by the Chairperson to leave
the meetings of the Committee when
so requested.
149
The Secretary of the Committee shall be
appointed by the Committee from time
to time. Committee meeting agendas
shall be the responsibility of the
Committee Chairperson with input from
Committee members. The Chairperson
may also request management to
participate in this process. The agenda
for each meeting including supporting
information shall be circulated at least
seven days before each meeting to the
Committee members and all those who
are required to attend the meeting.
The Committee shall cause minutes to
be duly entered in the books provided
for the purpose of all resolutions
and proceedings of all meetings of
the Committee. Such minutes shall
be signed by the Chairperson of the
meeting at which the proceedings were
held or by the Chairperson of the next
succeeding meeting and if so signed,
shall be conclusive evidence without
any further proof of the facts thereon
stated. The minutes of the Committee
meeting shall be available to all Board
members.
1.
To determine the criteria for Board
membership, including qualities,
experience, skills, education and
other factors that will best qualify
a nominee to serve on the Board.
2.
To review annually and recommend
to the Board with regards to
the structure, size, balance and
composition of the Board and
Committees including the required
mix of skills and experiences,
core competencies which nonexecutive directors should bring
to the Board and other qualities to
function effectively and efficiently.
3.
•
The Chairperson of the Committee shall
be available to answer questions about
the Committee’s work at the AGM of
the Company.
To evaluate and recommend the
appointment of senior executive
positions, including that of the
Managing Director or Chief
Executive and their duties and
the continuation (or not) of their
service.
6.
To establish and implement process
for assessing the effectiveness
of the Board as a whole, the
Committee of the Board and for
assessing the contribution of each
director.
7.
To evaluate on an annual basis:
To consider, evaluate and propose
to the Board any new board
appointments, whether of executive
or non-executive position. In
making a recommendation to
the Board on the candidate for
directorship, the Committee shall
have regard to:
•
The Committee, through its Chairperson,
shall report to the Board at the next
Board of Directors’ meeting after each
Committee meeting. When presenting
any recommendation to the Board, the
Committee will provide such background
and supporting information as may
be necessary for the Board to make
an informed decision. The Committee
shall provide such information to the
Board as necessary to assist the Board
in making a disclosure in the Annual
Report in accordance with the Best
Practices of the Malaysian Code on
Corporate Governance Part 2 AAIX.
5.
Size, composition, mix of skills,
experience, competencies
and other qualities of the
existing Board, level of
commitment, resources and
time that the recommended
candidate can contribute to
the existing Board; and
Best Practices of the
Malaysian Code on Corporate
Governance Part 2 AAIII
which stipulates that nonexecutive directors should be
persons of calibre, credibility
and have necessary skill
and experience to bring an
independent judgement to
bear on issues considered
by the Board and that
independent non-executive
directors should make up
at least one-third of the
membership of the Board.
8.
4.
To propose to the Board the
responsibilities of non-executive
directors, including membership
and Chairperson of Board
Committees.
the effectiveness of each
director’s ability to contribute
to the effectiveness the
Board and the relevant Board
Committees and to provide
the necessary feedback to
the directors in respect of
their performances;
•
the effectiveness of the
Committees of the Board; and
•
the effectiveness of the
Board as a whole.
To recommend to the Board:
•
whether directors who are
retiring by rotation should be
put forward for re-election;
and
•
termination of membership
of individual directors in
accordance with policy, for
cause or other appropriate
reasons.
9.
To establish appropriate plans for
succession at Board level, and if
appropriate, at senior management
level.
10.
To provide for adequate training
and orientation of new directors
with respect to the business,
structure and management of the
Group as well as the expectations
of the Board with regards to their
contribution to the Board and
Company.
11.
To consider other matters as
referred to the Committee by the
Board.
Scope of Activities
The duties of the Nomination Committee
shall include the following:
•
150
B.
Remuneration
Purpose
The Remuneration Committee, a
Committee of the Board, is established
primarily to:
1.
Provide assistance to the Board
in determining the remuneration
of executive directors and, if
applicable, senior management
and in par ticular the Chief
Executive Officer where the
person is not a member of the
boards of directors. In fulfilling this
responsibility, the Committee is to
ensure that executive directors and
applicable senior management of
the Company:
•
2.
3.
are fairly rewarded for their
individual contributions to
overall performance;
•
that the compensation is
reasonable in light of the
Company’s objectives; and
•
that the compensation
is comparable to other
companies.
Establish the Managing Director/
Chief Executive Officer’s goals and
objectives;
Review the Managing Director/Chief
Executive Officer’s performance
against the goals and objectives
set.
Membership
The Remuneration Committee shall
consist entirely of non-executive
directors. It shall have at least 3 members
and the quorum for the Committee
shall be 2 members. Remuneration
Committee members and the
Chairperson shall be appointed by the
Board based on the recommendations
of the Nomination Committee. The
appointment of a committee member
terminates when the member ceases to
be a director, or as determined by the
Board.
(continued)
In the event of equality of votes, the
Chairperson of the Committee shall have
a casting vote (except where 2 directors
form the quorum). In the absence of
the Chairperson of the Committee,
the members present shall elect one
member to chair the meeting
The Committee members shall:
•
have a good k nowledge of
the Company and its executive
directors, and a full understanding
of shareholders’ concern; and
•
have a good understanding,
e n h a n c e d a s n e c e s s a r y by
appropriate training or access to
professional advice, on/of areas of
remuneration.
Meetings
The Committee shall meet at least
once a year. Additional meetings shall
be scheduled as considered necessary
by the Committee or Chairperson. The
Committee may establish procedures
from time to time to govern its
meetings, keeping of minutes and its
administration.
The Committee may consult the
Chairperson of the Board regarding
proposals relating to the remuneration of
executive directors. The Committee may
consult other non-executive directors in
its evaluation of the Managing Director/
Chief Executive Officer. The Committee
may request other directors and key
executives to participate in Committee
meetings, as necessary, to carry out the
Committee’s responsibilities.
The Committee shall have access to
such information and advice, both
from within the Group and externally,
as it deems necessary or appropriate
in accordance with the procedures
determined by the Board and at the
cost of the Company. The Committee
is authorised by the Board to obtain
external legal or other professional
advice, as well as information about
remuneration practices elsewhere. The
Committee may, if it thinks fit, secure
the attendance of external advisers
with relevant experience and expertise,
and shall have the discretion to decide
who else other than its own members,
shall attend its meetings. No director or
executive shall take part in decisions on
his/her own remuneration.
The Secretary of the Committee shall
be appointed by the Committee from
time to time. Committee meeting
agendas shall be the responsibility
of the Committee Chairperson with
input from Committee members. The
Chairperson may also ask management
to participate in this process.
The agenda for each meeting shall be
circulated at least 7 days before each
meeting to the Committee members
and all those who are required to
attend the meeting. Written materials
including information requested by
the Committee from management or
external consultants shall be received
together with the agenda for the
meetings.
The Committee shall cause minutes to
be duly entered in the books provided
for the purpose of all resolutions and
proceedings of all meetings of the
Committee. Such minutes shall be signed
by the Chairperson of the meeting at
which the proceedings were held or by
the Chairperson of the next succeeding
meeting and if so signed, shall be
conclusive evidence without any further
proof of the facts thereon stated. The
minutes of the Committee meeting shall
be available to all Board members.
The Committee, through its Chairperson,
shall report to the Board at the next
Board of Directors’ meeting after each
Committee meeting. When presenting
any recommendation to the Board, the
Committee will provide such background
and supporting information as may be
necessary for the Board to make an
informed decision. The Committee shall
provide such information to the Board as
necessary to assist the Board in making
a disclosure in the Annual Report in
accordance with the Principles of the
Malaysian Code on Corporate Governance
151
BIII and the Bursa Malaysia Listing
Requirements Appendix 9C Part A.
6.
The Chairperson of the Committee shall
the Company.
Scope of Activities
The duties of the Remuneration
Committee shall include the following:
1.
2.
To establish and recommend the
remuneration structure and policy
for executive directors and key
executives, if applicable, and to
review for changes to the policy,
as necessary.
To ensure that a strong link is
maintained between the level
of remuneration and individual
per formance against agreed
targets, the performance-related
elements of remuneration setting
forming a significant proportion
of the total remuneration package
of executive directors.
3.
To review and recommend the
entire individual remuneration
packages for each of the executive
directors and, as appropriate,
other senior executives, including:
the terms of employment or
contract of employment/service;
any benefit, pension or incentive
scheme entitlement; any other
bonuses, fees and expenses; and
any compensation payable on the
termination of the service contract
by the Company.
4.
To review with the Managing
Director/Chief Executive Director,
his/her goals and objectives and
to assess his/her performance
against these objectives as well
as contribution to the corporate
strategy.
5.
To review the per formance
standards for key executives to be
used in implementing the Group’s
compensation programmes where
appropriate.
7.
To consider and approve compensation
commitments/severance payments for
executive directors and key executives,
where appropriate, in the event of early
termination of the employment/service
contract.
Investor Relations Activities
2011
IR meetings
To consider other matters as referred to
the Committee by the Board.
Senior Management members involved in
Investor Relations activities are:
SHAREHOLDERS
No.
of times
6
Conference calls
2
Company visits
5
Roadshows
4
•
Ahamad Mohamad, Managing Director
•
Wong Seng Lee, Executive Director
•
Azli Mohamed, Chief Financial Officer
•
Md Faizal Abdullah, Senior Manager,
Corporate Affairs Department
Communication and Investor Relations
In line with the Group’s commitment to
observe the highest level of accountability
and transparency to its stakeholders, the
Group continually ensures that it maintains a
high level of disclosure and communication
with its shareholders and stakeholders
through various practicable and legitimate
channels. The Group is duty-bound to keep
the shareholders and investors informed
of any major developments and changes
affecting the Group.
Other than that, the Board believes that the
Company’s Annual Report also serves as
an important communication tool to the
shareholders, investors and all stakeholders
in general. As such, each year, the Company
strives to produce a value-added and
transparent reporting to its readers.
Annual General Meeting
Communications are primarily effected
through announcements via Bursa Malaysia
Link, meetings, briefings, press releases and
conference calls. In addition, the Group has
established its official website at www.kulim.
com.my which investors and shareholders can
access for information. The website had been
redesigned and enhanced further in 2008
and will be continuously improved to include
more relevant information to investors and
to better facilitate its navigation.
Meetings and briefings are held regularly
with shareholders, investors, research analysts,
bankers and the press to explain and expand
on Group’s latest performance results, current
developments and future directions. During
meetings, participants are encouraged to
pose any question to the Board members or
the senior management team of the Group
to seek any clarification or explanation on
any issues raised. Whilst these forms of
communications are important, the Group
takes full cognisance of its responsibilities to
not disclose any price-sensitive information.
The AGM is a vital platform for dialogue
and interaction with the shareholders of the
Company. The shareholders are given the
opportunity to vote on the regular businesses
of the meeting by show of hands. Each item
of special business included in the notice
of the meeting will be accompanied by
detailed explanations. Separate resolutions
are proposed for substantially different issues
at the meeting and the Chairman declares
the number of proxy votes received both for
and against each resolutions. The resolutions
passed at the meeting are released to Bursa
Malaysia in a timely manner.
Besides the usual agenda, the Board also
presents the progress and performance of the
Group at each AGM. Shareholders, including
the minority shareholders, are encouraged
to participate and raise questions during the
question and answer session with the Directors.
All Board members, senior management and
the external auditors are present to respond
to questions from the shareholders during
AGM. Where appropriate, the Chairman will
undertake to provide a written answer to any
significant question that cannot be readily
answered at the meeting.
152
Other than the Board Chairman and the
Managing Director, the shareholders or any
stakeholders may convey any concerns that
they may have to Tan Sri Dato’ Seri Arshad
Ayub, an Independent Non-Executive Director
and Chairman of the Audit Committee.
ACCOUNTABILITY AND AUDIT
Financial Reporting
In presenting the annual financial statement
and quarterly announcements to shareholders,
the Directors aim to present a balanced and
candid assessment of the Group’s position
and prospects. This also applies to other
price-sensitive public reports and reports to
regulators. Timely release of announcements
reflects the Board’s commitment to provide
up-to-date and transparent information on
the Group’s performance.
In the preparation of the financial statements,
the Directors will consider compliance with
all applicable Financial Reporting Standards,
provisions of the Companies Act 1965 and
relevant provision of laws and regulations
in Malaysia and the respective countries in
which the subsidiaries operate. The Board
is assisted by the Audit Committee who
reviews both annual financial statements
and the quarterly announcements to ensure
reports reflect a true and fair view of the
state of affairs of the Group and Company.
Statement of Directors’ Responsibility in
Preparing Audited Financial Statements
The Directors are required by Companies Act
1965 to prepare financial statements for each
financial year which have been made out in
accordance with the applicable approved
accounting standards and give a true and
fair view of the state of affairs of the Group
and the Company at the end of the financial
year and of the results and cash flows of the
Group and Company for the financial year.
(continued)
In preparing the financial statements, the
Directors have:
•
adopted suitable accounting policies
and applied them consistently;
•
made judgment and estimates that are
reasonable and prudent;
•
ensured that all applicable Financial
Reporting Standards in Malaysia have
been followed; and
•
prepared financial statements on the
going concern basis as the Directors
have a reasonable expectation, having
made enquiries that the Group and
Company have resources to continue in
operational existence for the foreseeable
future.
The Directors have responsibility for ensuring
that the Group and the Company keeps
accounting records which disclose with
reasonable accuracy the financial position
of the Group and the Company and which
enable them to ensure that the financial
statements comply with Companies Act 1965.
The Directors have overall responsibilities for
taking such steps as are reasonably open to
them to safeguard the assets of the Group
to prevent and detect fraud and other
irregularities.
Related Party Transactions
All related party transactions entered into
by the Group were made in the ordinary
course of business and on substantially
the same terms as those prevailing at the
time for comparable transactions with
other persons or charged on the basis of
equitable rates agreed between the parties.
All related party transactions are reviewed
by the internal auditors and a report on the
reviews conducted is submitted to the Audit
Committee for their monitoring.
Details of the transactions entered into by
the Group during the financial year ended 31
December 2011 are set out on pages 257 to
260 of this Annual Report.
Internal Control Statement
The Group’s Internal Control Statement is set
out on pages 153 to 159.
Relationship with the External Auditors
The Board through the Audit Committee has
maintained a formal procedure of carrying
out an independent review of all quarterly
reports, annual audited financial statements,
External Auditor’s audit plan, report, internal
control issues and procedures. The Committee
meets with the External Auditors without the
presence of the Executive Board and Senior
Management at least once a year. During
the year, 2 meetings have been conducted
without the presence of the management.
Representatives from the External Auditors
are also invited to attend every Annual
General Meeting.
The role of the Audit Committee in relation
to the External Auditors is described on
page 162.
This Statement is made in accordance
with the Resolution made in the Board of
Directors’ meeting held on 22 March 2012.
Chairman
153
INTERNAL CONTROL STATEMENT
INTRODUCTION
The Malaysian Code on Corporate Governance requires listed companies to maintain a
sound system of internal control to safeguard shareholders’ investment and the Group’s
assets. Para 15.26(b) of Main Market Listing Requirements requires Directors of listed
companies to include a statement in their annual reports on the state of their internal
control. Set out below is the Board’s Internal Control Statement, which has been prepared
in accordance with the Statement on Internal Control: Guidance for Directors of Public
Listed Companies (“the Guidance”).
The Board wishes to highlight that certain of
the Group’s subsidiaries which are listed on
Bursa Securities, namely QSR Brands Bhd and
KFC Holdings (Malaysia) Bhd are also subject to
similar disclosure requirements as the Group in
preparing this statement. Hence, a more detailed
disclosure of the state of internal controls of these
subsidiaries is available for references vide their
respective Internal Control Statements included in
their Annual Reports. Towards fulfilling the Group’s
oversight and monitoring responsibilities to ensure
the said subsidiaries fully comply with the relevant
requirements and legislations with regard to internal
controls implementation and disclosure, the Group
has adequate representation in the Board of these
listed subsidiaries through several common directors
and senior management members.
BOARD’S RESPONSIBILITIES
The Board of Directors recognises the importance
of sound internal control and risk management
practices to good corporate governance with
the objective of safeguarding the shareholders’
investment and the Company’s assets. The Board
affirms its overall responsibility for the Group’s
system of internal controls and for reviewing the
adequacy and integrity of those systems including
financial and operational controls, compliance
with relevant laws and regulations and risk
management.
The Group has in place an ongoing process
for managing the significant risks affecting the
achievement of its business objectives throughout
the period, which includes identifying, evaluating,
responding to and monitoring these risks. This
process is regularly reviewed by the Board, which
dedicates separate time for discussion of this
subject. The Group’s system of internal control is
designed to manage, rather than eliminate the risk
of failure to achieve business objectives. It must
be recognised that it can only provide reasonable
and not absolute assurance against misstatement
or loss. In addition, the management needs to
consider the expected cost and benefits to be
derived from the implementation of the internal
control system.
CONTROL FRAMEWORK AND
ENVIRONMENT
Key to the Group’s Internal Control and Risk
Management framework is its Control SelfAssessment (“CSA”) process. The process is a
recognised and flexible management tool for
acquiring information about business process
risks, while empowering the risk owners to
undertake responsibility and mitigate those risks.
Each business unit is required to document the
management and mitigating action plan for each
significant risk. Risk assessment and evaluation
form an integral part of the annual strategic cycle.
The Board, as part of the annual strategic review,
considers and approves the Group’s risk structure.
Risk Management
Having regard to the fact that managing risk
is an inherent part of the Group’s activities, risk
management and the ongoing improvement in
corresponding control structures remain a key
focus of management in building a successful and
sustainable business. For this endeavour, the Group
has established a Risk Management Committee in
December 2003. The Risk Management Committee
was renamed as Risk & Issues Management
Committee in 2011. The Committee is chaired by
the Executive Director/Vice President of the Group;
and represented by senior management members
from all functions of the Group. The Committee
met 4 times in 2011.
154
(continued)
Apart from complying with the governance requirement, this Committee, which is cross-functional in nature, was formed to assist the Board
of Directors in establishing and maintaining effective policies and guidelines to ensure proper management of risks to which the Group is
exposed and to take appropriate and timely action to manage such risks.
In Kulim, the structure of the Group promotes the active participation of executive management in all of the operational and strategic decisions
affecting their business units. This creates a strong culture of ownership and accountability. The risk management structure implemented in
Kulim Group is as follows:
BOARD OF DIRECTORS
Audit
Report
AUDIT COMMITTEE
EXTERNAL
AUDITORS
INTERNAL AUDIT
DEPARTMENT
RISK & ISSUES MANAGEMENT COMMITTEE
CORPORATE OFFICE & INTRAPRENEUR VENTURES
Audit
Financial Risk
Strategic Risk
Business Risk
Operational & Hazard Risk
Compliance & Systems Risk
Advisory and monitoring role
Group risks are being managed on an
integrated basis and its evaluation is
incorporated into the Group decision-making
process such as the strategic planning and
project feasibility studies. The management
of risks of the Group is facilitated by the use
of risk management software.
A risk management report is to be tabled for
Audit Committee and Board discussion once
every 6 months. The report identifies principal
risks affecting or likely to affect the Group and
ensures the implementation of appropriate
and adequate systems to manage the risk.
Notwithstanding the half-yearly reporting
requirement, the Audit Committee and Board
will be promptly updated with special risk
reports pertaining to any significant ad-hoc
risk issues that may arise from time to time
during the year.
& Issue Management Committee within
the respective companies to assess and
evaluate the risk management process of the
respective companies on a periodic basis.
During its meetings, all risks facing each
operation and department are discussed
in detail within the context of the business
objectives and strategy. Status of corrective
actions is tabled for comments by the relevant
staff. Various ideas and suggestions are tabled
for improvement of areas of concern.
In essence, the management of risk is treated
as an iterative process. The benefits arising
from the setting up of this committee creates
awareness among employees of different
departments to take cognisance of risk
on a Group-wide basis. This enhances the
Risk Ownership factor across the Group
significantly.
A separate risk management function also
exists within the Group’s significant listed
subsidiaries with the establishment of Risk
155
KEY INTERNAL CONTROL PROCESSES
The key elements of the Group’s system of internal control are stated below:
Internal Committees
There are internal committees established by EPA Management Sdn Bhd, the managing agent and also a wholly-owned subsidiary of Kulim
(Malaysia) Berhad, which facilitate the operations and thus the management of risks of the Group, particularly for plantation operations and
Intrapreneur businesses in Malaysia. These committees were established with formal terms of references clearly outlining their functions and
duties and are appropriately empowered to ensure effective management and supervision of the business operations.
MAIN COMMITTEE STRUCTURE
BOARD OF
DIRECTORS
AUDIT
COMMITTEE
MANAGEMENT
COMMITTEE
MCMBUDGET TENDER
& ADDITIONAL
FUND
EXCO
RISK & ISSUES
MANAGEMENT
APPRAISAL,
KPI & BONUS
Strategic Direction
Direction Monitoring & Risk Control
Strategic & Business Direction
Financial Operation & Business Risk
PLANTATION
OPERATION
PALM OIL
MARKETING
Performance Monitoring
156
(continued)
The full list of the Internal Committees are as follow:
NAME OF COMMITTEE
PRIMARY FUNCTION
Management Committee
To review and evaluate the performance progress including the key policy and strategy implementations
of the various divisions, subsidiaries and operating units of the Group. Where authorised, to formulate
and approve matters relating to Group policy, objectives and business strategy and projects, and to
evaluate and recommend for Board’s approval.
Executive Committee (“EXCO”)
To coordinate departmental roles and administrative matters in relation to the various divisional
operations and review, recommend and seek approval of the management on any related proposals.
Management Committee – Budget,
Tender and Additional Capital
& Revenue Expenditure (“MCMBudget, Tender & Additional Fund”)
To recommend to the Management Committee the awarding of contracts for purchases and projects
to suppliers/contractors in accordance with the Contract Administration Guidelines & Procedures
of the Company.
To review budgets and all requests pertaining to capital and revenue spending and to recommend
them for the ratification of the Management Committee.
Risk & Issues Management
Committee
To conduct risk identification, evaluation and review of risk treatment process on a periodic basis to
ensure the Group’s risk management effectiveness. Further details on the Committee are set out on
pages 153 to 154.
Plantation Operation Committee
To ensure that estates and mills owned by the Group are managed in accordance with requirements
and at the best possible standards.
Palm Oil Marketing Committee
To review and decide on the appropriate selling arrangement, quantity and prices of the Group palm
products.
Board of Survey
To review all requests pertaining to write-off/back of fixed assets, debtors, stocks and creditors and
recommend them for the ratification of the Management Committee.
To oversee and monitor the development, implementation, maintenance, compliance and effectiveness
of all matters relevant to sustainability and quality movement of the Group as well as ensuring
compliance with the Roundtable on Sustainable Palm Oil (“RSPO”) principles and criteria.
Appraisal, KPI and Bonus
Committee
To deliberate performance, KPIs, behavioural competencies and recommend appropriate increments,
promotions and merits for all executives and corporate office staff.
Training Committee
To formulate training plan in meeting the objective of enhancing knowledge, skill and competencies
of Kulim’s employees.
Plantation Budget Review
To ensure the Plantation Operation budget is prepared to achieve the objective of maximising the
long term profitability of oil palm plantation, and at the same time, maintaining its sustainability.
OSH Committee
To foster cooperation and consultation between management and workers in identifying, evaluating
and controlling hazards at workplaces.
157
Internal Committees for Intrapreneur Ventures
The Company has also established internal committees which act as the strategic direction monitoring agent and risk control to ensure the
effective management and supervision of the IVs.
NAME OF COMMITTEE
PRIMARY FUNCTION
IV Monitoring & Executive
Committee (“IV EXCO”)
To monitor progress and development of all the IV companies as well as strengthening the business
and management capabilities. Providing necessary business guidance and referral.
To evaluate viability of projects, proposals, funding, CAPEX or capital adequacy of the IV companies.
Credit Control Committee
To appraise the financial health, performance and compliance to FRS, Income Tax Act and internal
controls by the IVs.
Project Risk Evaluation Committee
To ensure that IVs/projects of the Group are being run, coordinated and managed at the best
possible standards to meet the Group’s requirements and to ensure the Group risk management
effectiveness.
Audit Review Committee
To monitor the Internal Control System and recommend improvement of the Internal Control System
and practices to achieve the company’s objectives.
To ensure that the company is in compliance with laws and regulations and the Code of Conduct and
Business Ethics and the company is being managed in line with the aspiration and the expectation
of Kulim.
Agreement Committee
To ensure that material agreements are forwarded for Committee discussion and/or approval. This is
to ensure and safeguard the company’s interest.
In addition, there are also internal committees set up at the level of respective significant subsidiaries to assist the respective subsidiaries’ Board
of Directors in discharging their duties.
Organisational Structure
The Board has established a formal
organisational structure for the Group with
delineated lines of authority, responsibility
and accountability. It has put in place suitably
qualified and experienced management
personnel to head the Group’s diverse
operating units into delivering results and
their performance are measured against the
Key Performance Indicators that are approved
by the Board.
Internal Audit
The Board recognises that the internal audit
function is an integral component of the
governance process. The Internal Audit
Department of EPA Management Sdn Bhd
being the Managing Agent operates within
the Audit Charter approved by the Audit
Committee and performs internal audits in
diverse areas and environment in the review
of any management, accounting, financial
and operational activities including internal
control within the organisation.
The Group’s Internal Audit has maintained
a quality assurance and improvement
programme and continuously monitors
its overall effectiveness. The assessment
of the programme conducted via a selfassessment with independent validation by
a qualified, independent external reviewer
demonstrates that the internal audit activities
are in conformance with the International
Standards for the Professional Practice of
Internal Auditing.
The Group’s listed subsidiaries in Malaysia
also have separate Internal Audit functions
within their organisations which carry out
the approved audit plan, risk evaluations,
and review the adequacy and effectiveness
of the internal control system. Similarly, the
Internal Auditors report directly to the Audit
Committee of these companies.
External Auditors
The External Auditors issue Management
Letter highlighting issues and weaknesses,
which came to their attention during the
conduct of their normal audit procedures.
The Group’s Internal Audit subsequently
performs follow-up reviews to determine the
extent to which the recommendations have
been implemented.
The External Auditors are appointed by the
Board to review this Statement on Internal
Control and to report thereon.
This Statement on Internal Control has been
reviewed by the External Auditors for the
inclusion in the annual report of Kulim
(Malaysia) Berhad for the year ended 31
December 2011. The External Auditors have
reported to the Board that nothing has come
to their attention that causes them to believe
that the statement is inconsistent with their
understanding of the process adopted by the
Board in reviewing the adequacy and integrity
of the system of the internal controls.
158
OTHER ELEMENTS
OF INTERNAL CONTROL
Apart from the committees and parties
mentioned in the Corporate Governance
Statement, the Audit Committee Report and
mentioned above, the other elements of the
Group’s Internal Controls are as follows:
Financial Authority Limit
The Financial Authority Limit defines revenue
and capital expenditure spending limits for
each level of management within the Group.
These limits cover authority for cheque
signatories, major capital and revenue
expenditure spending limits, works contract
procedures and approvals and mechanism
for budget approvals.
Budget Approval
Budgets are an important control mechanism
used by the Group to ensure an efficient
allocation of Group resources and that the
operational managers are sufficiently guided
in making business decisions. Budgets are
generated annually at each subsidiary and
operating unit.
For the plantation units, budgets will be
reviewed by the Regional Head followed by
their presentation to a Plantation Budget
Review Committee for further deliberation.
Significant subsidiaries will have their budgets
reviewed by their own budget committee.
All budgets will then be presented for
deliberation at the Management Committee
- Budget, Tender and Additional Capital &
Revenue Expenditure, and subsequently
will be tabled to MCM for approval and
endorsement. Finally the budgets will be
presented to the Board of Directors for final
review and approval.
Procurement
A centralised and coordinated procurement
function is established at each of the Group’s
key business divisions which enable the
Group to leverage on economies of scale
and ensures adherence to authority limits,
policies and procedures. Major contract and
supply works of both capital and revenue
nature exceeding the threshold defined in
the relevant contract procedure are required
to be tendered out.
(continued)
Eligible bidders for contract works will have
to attend a contract interview with the
Contract Interview Committee that is made
up of representatives of several departments
at the divisional head-quarter including
the acquiring unit’s Manager. The Contract
Interview Committee will then forward the
recommendations to the Management
Committee - Budget, Tender and Additional
Capital & Revenue Expenditure for further
review and approval.
financial policies and procedures. These
assist and guide employees on purchasing
and contract awards, preparing of financial
statements, observing the various internal
control policies and procedures, as well as
maintaining good management practices to
ensure cost efficiencies, integrity of financial
records and to safeguard the Group’s assets.
The Board believes that all the control
measures will significantly enhance the
internal control of the Group.
Plantation Operational Control
The major Policy and Procedure Manuals
include:
Through Plantation Operation Committee
Meetings, which are held once every 2
months, the progress of Group’s estates
and mills are monitored. During the
meetings, reports and matters including
monthly management reports, agronomists’
reports, planting advisors’ reports, internal
audit reports and manpower requirement
assessments are tabled for discussion. Any
major issues will be highlighted for corrective
actions to be taken.
The executives from the management office
visit the Groups’ estates/mills regularly.
Discussion is also frequently done via phone,
fax and e-mail. Regional Head and Regional
Controllers, planting advisors and agronomists
separately visit the operating units. A detailed
report on the state of affairs of the units is
produced after each visit. Security teams visit
the operating units on unscheduled basis to
review the integrity of the security system.
The visits also cover physical security on
inventories, post harvest crops and finished
products security up to point of delivery.
IVs Operational Control
Through the internal committee meeting,
the operational and financial performances
as well as progress of projects undertaken
by the respective IVs are monitored. The
reports on the financial performance of the
IVs are also submitted on monthly basis to
the Group. Any major issue highlighted will
be tabled to the Management Committee
Meeting.
Operating and Procedural Manuals
The Group has reference manuals covering
agricultural practices, purchasing and contract
procedures, financial operating system and
1.
Agricultural Manual
2.
Financial Procedure
3.
Executive and Staff Scheme of Service
4.
Standard Operation Procedure
5.
RSPO-MY NIWG 5
6.
Risk Framework
7.
Internal Audit Manual
Forward Sales Policy
The Group has in place a forward sales
policy for its palm oil and biodiesel products
which has been approved by the Board. For
Malaysian palm oil products, the Group adopts
the maximum of 6-month forward policy and
the maximum of 90% of the Group’s own
fruits, whereas Malaysian biodiesel products
are allowed to be sold forward up to the
maximum of 12 months ahead.
Regulatory Compliance
The Group adheres strictly to health, safety
and environmental regulations and is subject
to regular inspections by the relevant
government authorities.
For the Group’s Plantations division in Malaysia,
the Sustainability and Quality Department at
its management agent level is responsible
for ensuring that the plantation operations
are conducted within the constraints of
the applicable laws, regulations and quality
standards.
159
Fraud Policy
This policy was established to facilitate the
development of controls which will aid in the
detection and prevention of fraud against
Kulim. The policy details responsibility,
reporting and disclosure of fraud occurrences,
and investigations relating to fraud. The
policy applies to any fraud, or suspected
fraud, involving employees as well as vendors,
customers and partners who have a business
relationship with the Group. The Group has
also established a Grievance Policy and
Procedure as well as Women OnWards so as
to allow an employee or employees to bring
to the attention of management of Kulim any
dissatisfaction or feeling of injustice which
may exist in respect of the workplace. The
management will attempt to resolve the
grievance in a manner, which is acceptable to
the employee(s) concerned and the Group.
Code of Ethics
This code of ethics defines the standards
of conduct that are expected of employees
to help them make the right decision in
the course of performing their jobs. All
employees are required to adhere to the
Group’s code of ethics and to submit the
Ethics Declaration form annually. Employees
are also encouraged to engage in an open
dialogue with the senior management
through the Group’s annual employees’
gathering; Pedoman.
•
•
Key Performance Indicators (“KPIs”)
affecting key aspects of the certification
requirements are developed to
complement the economic indicators,
which are subject to regular monitoring
on their achievement progress;
•
RSPO trainings and briefings are
conducted regularly to ensure changes
and updates on the RSPO requirement
are communicated to all affected
employees;
•
operating in accordance with the
requirements of laws and regulations
in the areas of safety and health, Kulim
regularly collaborates with suppliers
and contractors towards ensuring both
parties’ responsibilities in complying
with the relevant legislations as well
as engages third party OSH auditing
expertise to conduct independent
verification on the Group’s compliance
status;
•
proper documentations and reference
systems are established such as the
Kulim Sustainability Handbook that sets
out all the relevant policies to guide
employees. All system’s documentations
are monitored and controlled through
the Document Annual Review and all
changes affecting the documents are
traced through the Document Change
Note System; and
•
on the social aspects, internal social
impact assessment guided by the
SA8000 Standard are conducted in all
Operating Units and affecting various
levels of stakeholders to identify
shortcomings, which are monitored
through the Social Register.
Maintaining Compliance to the
Roundtable on Sustainable Palm Oil
(“RSPO”) Certification Requirements
Sustainability is a core value to the Group.
Kulim has established its sustainability
credentials by attaining RSPO certification.
Safeguarding this reputation is critical to
the organisation and the Group has put in
place the control measures in the form of
appropriate policies, monitoring systems
and procedures so as to minimise, if not
prevent the risks of non-compliance to the
certification stringent requirements. Among
the key measures are:
site follow-up visits and inspections are
conducted on a periodic basis to review
the status of compliance, weaknesses
and gaps in the implementations of
various programmes, which is also in
line with the requirement of Principle 8
of RSPO on Continuous Improvement;
CONCLUSION
The Board is of the view that the system of
internal controls instituted throughout the
Group is sound and effective and provides
a level of confidence on which the Board
relies for assurance. In the year under review,
there is no significant control failure or
weakness that would result in any material
losses, contingencies or uncertainties that
would require separate disclosure in the
Annual Report. The Board will ensure that
the review of the internal control system
of the Group is carried out continuously to
ensure ongoing adequacy and effectiveness
of the system of internal controls and risk
management practices to meet the changing
and challenging operating environment.
The Board is therefore pleased to disclose that
the state of internal controls of the Group is
adequate, appropriate and effective and in
line with the Malaysian Code of Corporate
Governance and the Statement of Internal
Control – Guidance.
160
AUDIT COMMITTEE REPORT
COMPOSITION AND ATTENDANCE
For the financial year ended 31 December 2011, the Audit Committee comprised of three
Directors, all of whom are also members of the Board of Kulim (Malaysia) Berhad.
The composition of the Audit Committee was as follows:
1.
Chairman / Independent Non-Executive Director
2.
KUA HWEE SIM
Member / Independent Non-Executive Director
3.
Member / Independent Non-Executive Director
The attendance record of the members of the Audit Committee during the financial year 2011
was as follows:
Director
15.2.2011
23.5.2011
22.8.2011
17.11.2011
✔
✔
✔
✔
Kua Hwee Sim
✔
✔
✔
✔
✔
✔
✔
✔
161
TERMS OF REFERENCE
•
he must be a member of
one of the associations of
accountants specified in Part
II of the 1st Schedule in the
Accountants Act, 1967; or
6.
•
fulfils such other requirement
as prescribed or approved
by the Exchange.
Functions and Duties
Primary Purpose
The primary purposes of the Audit Committee
are:
1.
2.
3.
4.
5.
6.
To ensure openness, integrity and
accountability in the Group’s activities
so as to safeguard the rights and
interests of the shareholders;
To provide assistance to the Board in
fulfilling its fiduciary responsibilities
relating to corporate accounting and
reporting practices;
To improve the Group’s business
efficiency, the quality of accounting
and audit function and strengthening
of public’s confidence in the Group’s
reported results;
Th e Co m m i t t e e M e m b e r s s h a l l
collectively have:
i.
knowledge of the industries in
which the Group operates;
ii.
the ability to read and understand
fundamental financial statements,
including a company’s balance
sheet, income statement of
cash flow and key performance
indicators; and
To m a i n t a i n a d i r e c t l i n e o f
communication between the Board and
the External and Internal Auditors;
To create a climate of discipline and
control, this will reduce the opportunity
for fraud.
The members of the Committee shall
be appointed by the Board of Directors
of Kulim and shall consist of not less
than 3 members, all of whom must be
non-executive directors, with a majority
of them being independent directors. If
membership for any reason falls below
3 members, the Board of Directors shall,
within 3 months of that event, appoint
such number of new members as may
be required to fulfil the minimum
requirement.
2.
No alternate directors shall be appointed
to the Committee.
3.
At least 1 member of the Audit
Committee:
i.
must be a member of the
Malaysian Institute of Accountants
(“MIA”); or
ii.
if he is not a member of MIA,
he must have at least 3 years of
working experience and:
•
he must have passed the
examinations specified in
Part I of the 1st Schedule in
the Accountants Act, 1967; or
The Committee shall carry out the following
responsibilities:
Financial Statements
1.
Review and recommend acceptance or
otherwise of major accounting policies,
principles and practices.
2.
Review the Group’s quarterly results
and annual financial statements of
the Company and the Group before
submission to the Board. The review
should focus primarily on:
i.
any changes in or implementation
of major accounting policy
changes
ii.
major judgmental areas, significant
and unusual events
Authority
iii.
The Committee for the performance of
its duties shall in accordance to the same
procedures adopted by the Board and at the
cost of the Group:
significant adjustments resulting
from audit
iv.
the going concern assumptions
v.
compliance with accounting
standards
vi.
compliance with stock exchange
and legal requirements
To enhance the independence of the
external and internal audit functions;
and
Membership
1.
4.
To be able to engage independent
professional advisors or other advisors
and to secure attendance of outsiders
with relevant experience and expertise
if it considers this necessary.
iii.
1.
2.
3.
4.
5.
the ability to understand key
business and financial risks and
related controls and control
processes.
Have the authority to investigate any
activity within its Terms of Reference;
Have the resources which are required
to perform its duties;
Have full and unrestricted access to any
employee and information pertaining
to the Group. All documents of the
Group shall be made accessible to the
Committee;
Have direct communication channels
with the External Auditors and person(s)
carrying out the internal audit function
or activity for the Group;
Have the authority to direct the Internal
Audit Department (both corporate,
subsidiaries, associates, joint ventures,
where applicable) in its activities,
including approval of appointments of
senior executives and budget in these
functions; and
3.
Review with management and the
external auditors, the results of the audit,
including any difficulties encountered.
4.
Review, with the Group’s Counsel,
any legal matter that could have a
significant impact on the organisation’s
financial statements.
Internal Control
1.
Assess the quality and effectiveness
of the systems of internal control and
the efficiency of the Group’s operations,
particularly those relating to areas of
significant risks. To evaluate the process
the Group has in place a system for
assessing and continuously improving
internal controls.
AUDIT COMMITTEE REPORT
2.
Assess the internal processes for
determining and managing key risks
other than those that are dealt with by
other specific Board committees.
3.
Review the scope of Internal and External
Auditors’ review of internal control over
the Group.
4.
Review Internal Audit reports
(including those of the Group) and the
management’s response and ensure that
appropriate action is taken in respect
of these reports and the Committee’s
resolutions. Where actions are not
taken within adequate time frame by
management, the Committee will report
to the Board for its decision.
5.
Review External Auditors reports and the
management’s response and ensure that
appropriate action is taken in respect
of these reports and the Committee’s
resolutions.
162
(continued)
External Audit
1.
2.
3.
2.
Approve the Corporate Audit Charter and
charters of the Internal Audit functions
in the Group and ensure that the
Internal Audit functions are adequately
resourced and have appropriate
standing in the Group. This includes a
review of the organisational structure,
resource budgets and qualifications of
the internal audit functions.
Review the adequacy of the Internal
Audit plans and the scope of audits and
that the Internal Audit Department has
the necessary authority, competency
and resources to carry out its work.
3.
Approve the appointment of Head of
Internal Audit.
4.
Review appraisals or assessments
of members of the Internal Audit
functions.
5.
Inform itself of resignations of Internal
Audit staff members and provide the
resigning staff member an opportunity
to submit his/her reasons for resigning.
6.
Direct any special investigations to be
carried out by the Internal Audit.
Review External Audit plans and scope
of work before the audit commences.
Discuss problems and reservations
arising out of external audits, including
assistance given by the employees and
any matters the auditors may wish to
discuss, in the absence of Management
or Executive Directors where necessary.
Nominate the External Auditors together
with such other functions as may be
agreed to by the Committee and the
Board, and recommend for approval of
the Board the external audit fees, and
consider any questions of resignation
or dismissal, experience, resources and
capability.
3.
1.
Review the effectiveness of the system
for monitoring compliance with laws
and regulations and the results of the
management’s investigation and followup of any instances of non-compliance.
2.
Review the findings of any examinations
by regulatory authorities.
3.
Obtain regular updates from the
management and Group’s legal counsel
regarding compliance matters.
4.
5.
Review any related party transactions
and conflict of interest situation that may
arise within the Company or the Group
including any transaction, procedure or
course of conduct that raises questions
of the management integrity.
1.
Meetings of the Committee shall be
held not less than 4 times during the
financial year of the Company.
2.
Upon the request of any member of the
Committee, the Head of Internal Audit
or the External Auditor, the Chairman of
the Committee shall convene a special
meeting of the Committee to consider
any matter brought up by them.
3.
The quorum for the meeting of the
Committee shall be 2 members and
the majority of the members present
shall be independent directors. In the
absence of the Chairman, the members
present shall elect a chairman for the
meeting from amongst the members
present.
4.
The meetings of the Committee shall be
governed by the provisions contained
in the Memorandum and Articles
of Association of the Company for
regulating the meetings and proceedings
of Directors unless otherwise provided
in this Terms of Reference.
5.
The Non-Executive Directors of the
Board who are not members of the
Committee may also attend the meeting
of the Committee, but they shall not
have any voting rights.
6.
The meetings of the Committee shall
normally be attended by the Head of
Internal Audit and the Management of
the Company shall be represented by
the Managing Director and the Head of
Finance, or their nominated person(s),
at the invitation of the Committee
and shall excuse themselves from
the meeting when so directed by the
Committee.
7.
The Committee may request other
directors, members of management,
counsels, internal auditors (including
subsidiaries) and external auditors,
applicable to par ticipate in the
Committee meetings, as necessary
and when so invited, to carry out the
Committee’s responsibilities.
Where the Committee is of the view that
a matter reported by it to the Board has
not been satisfactorily resolved, resulting
in a breach to the Main Market Listing
Requirements, the Committee must
promptly report such matters to the
Bursa Malaysia.
Other Responsibilities
1.
Review and reassess, with the assistance
of the management, the External Auditors
and legal counsel, the adequacy of the
Terms of Reference of the Committee at
least annually.
2.
Confirm annually that all responsibilities
outlined in the Terms of Reference have
been carried out.
Perform other duties as directed by the
Board.
Meetings
Compliance
Internal Audit
1.
8.
9.
163
The Committee shall meet the External
Auditors, the internal auditors or both,
excluding the attendance of other
directors and employees, whenever
deemed necessary.
A Committee member shall excuse
himself/herself from the meeting
during discussions or deliberation
of any matter which gives rise to an
actual or perceived conflict of interest
situation for the member. Where this
cause insufficient directors to make up
a quorum, the Committee has the right
to appoint another director(s) which
meets the membership criteria.
10.
The Secretary of the Committee shall
be the Company Secretary or his/her
appointed nominee with the appropriate
qualifications and experience.
11.
The agenda for the Committee meeting
shall be the responsibility of the
Committee Chairman with input from
the Committee members. The Chairman
may also ask the management and
others to participate in this process.
12.
13.
14.
15.
The notice and agenda of each meeting
shall be circulated at least 7 working
days before each meeting to the
Committee members and all those who
are required to attend the meeting.
Written materials including information
requested by the Committee, from the
management, internal auditors and
external auditors shall be received
together with the agenda for the
meetings.
Reports of the Committee meeting shall
be tabled at the meeting of the Board
Directors of the Company.
The Committee, through its Chairman,
shall report to the Board after each
meeting.
1.
2.
Review of the External Auditors’ audit
observations, the audit report and
recommendations in respect of control
weaknesses noted in the course of
their audit;
3.
Review of the audited financial statements
for the financial year ended 31 December
2011 before recommending the same to
the Board of Directors for approval;
4.
Review of the Company’s compliance,
in particular the quarterly and yearend financial statements with the Main
Market Listing Requirements of Bursa
Malaysia and the applicable approved
accounting standard issued by the
Malaysian Accounting Standard Board;
5.
Review of the quarterly unaudited
financial results announcements before
recommending them for the Board of
Directors’ approval;
6.
Review of the Internal Audit activities
related to management and operations,
capacity, internal audit framework and
of the analytical process and reporting
procedures;
7.
8.
9.
The Chairman of the Committee shall
the Company.
Summary of Activities
During the period, the Audit Committee
carried out its duties and responsibilities in
accordance with its terms of reference:
The main activities undertaken by the Audit
Committee were as follows:
Review and approval of the annual
internal audit plan for the year
2011/2012;
10.
Internal Audit Function
The Group’s Internal Audit function is carried
out by the Internal Audit Department (“IAD”)
and led by a Certified Internal Auditor (“CIA”).
IAD is established separately at the Group
Corporate Office and its listed subsidiaries in
Malaysia, QSR Brands Bhd and KFC Holdings
(Malaysia) Bhd. The IAD reports directly to the
Audit Committee and is guided by its Internal
Audit Charter. The IAD assists the Board in
fulfilling its fiduciary responsibilities over the
areas of financial, operational, information
systems, investigations, risk management and
governance process in accordance with the
approved Risk Based Annual Audit Plan.
On quarterly basis, the IAD provides the Audit
Committee with independent and objective
reports on the state of internal control,
highlighting any areas for improvement
and updates on the extent to which the
recommendations have been implemented.
The management is responsible to ensure that
corrective actions on reported weaknesses as
recommended are taken within the required
time frame to ensure that all potential
weaknesses in system and risks under
reviewed area are mitigated or remain within
manageable levels.
Other IAD activities carried during the year
are summarised as below:
1.
Review of the audit reports presented by
the Internal Auditors and management’s
responses thereto and reviewing
management’s assurance that significant
finding are adequately addressed;
Conducted roadshows/workshops
with the estates/mill management
deliberating on audit related matters.
2.
Worked together with the estates and
mills in specific risk and control review
through Control Self Assessment (“CSA”)
programmes.
Review of related party transactions
entered into by the Group;
3.
Par ticipated in Corporate Social
Responsibility (“CSR”) programmes
organised by management.
4.
Performed internal self-assessment on
conformance with the International
Standards for the professional Practise
of Internal Auditor.
5.
Conducted special review based on
requests from the Audit Committee
and/or management.
Review of the extent of the Group’s
compliance with the relevant provisions
set out under the Malaysian Code on
Corporate Governance for the purpose
of preparing the Corporate Governance
Statement and Statement on Internal
Control pursuant to the Main Market
Listing Requirements; and
Review of the risk management
development presented by Head of
Risk and System Management.
The total cost incurred for the internal audit
function at the Group Corporate Office level
for the financial year ended 31 December
2011 was approximately RM793,000.
164
ADDITIONAL COMPLIANCE INFORMATION
The following information is provided in compliance with the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for the financial
year ended 31 December 2011:
Utilisation of Proceeds from Corporate
Proposals
There was no corporate proposal specifically
intended to raise funds undertaken during
the financial period ended 31 December 2011
which has resulted in the receipt of proceeds
for utilisation.
Share Buy-Backs
The Company had, on 20 June 2005, obtained the
shareholders’ approval to purchase its own shares
up to 10% of its issued and paid up share capital.
During the financial year, the Company has acquired
14,840,000 units of its own shares pursuant to
the renewed mandate for the share buy-back as
approved by the shareholders of the Company at
the 36th AGM held on 23 June 2011.
As at 31 December 2011, a total of 27,482,200
ordinary shares were held as treasury shares. The
details of the buy-backs are set out in page 30.
Options, Warrants or Convertible Securities
Exercised
In 2011, a total of 156,174,319 free warrants were
issued by the Company in conjunction with the
share split and bonus issue on 28 February 2011.
The warrants have an exercise period of 5 years
commencing 28 February 2011 and expiring on
27 February 2016.
As at 31 December 2011, 500 warrants have been
exercised and converted into new ordinary shares.
The Company has not issued any other convertible
securities in respect of the financial year ended
31 December 2011.
American Depository Receipt (“ADR”) of
Global Depository Receipt (“GDR”)
The Company has not sponsored any ADR or
GDR programme for the financial year ended
31 December 2011.
Sanctions and/or Penalties
There were no sanctions and/or penalties imposed
on the Company and its subsidiary companies,
directors or management arising from any
significant breach of rules/guidelines/legislations
by the relevant regulatory bodies during the
financial year.
Non-Audit Fees
During the financial year under review, non-audit
fees paid to the external auditors of the Group
amounted to RM1,831,000 (please refer to page
206 of the audited financial statements).
Variation in Results
There is no material variance between the results
for the financial year and the unaudited results
previously announced by the Group.
Profit Guarantee
The Company did not issue any profit forecast
or profit guarantee for the financial year ended
31 December 2011.
Material Contracts
Other than those disclosed in the financial
statements from page 257 to page 260, there
was no material contract including contracts
relating to any loans entered into by the Group
and its subsidiaries involving Directors and major
shareholders’ interest.
Revaluation Policy
The Group has not adopted a regular revaluation
policy on landed properties as disclosed in the
financial statements on page 192.
Recurrent Related Party Transactions of
Revenue or Trading Nature
At the AGM held on 23 June 2011, the Company
obtained a shareholders’ mandate to allow the
Group to enter into recurrent related party
transactions of revenue and/or trading nature from
the even date up to the next forthcoming AGM.
The list of significant recurrent related party
transactions entered into by the Group during
the financial year ended 31 December 2011 is
described on page 165 of the Annual Report.
165
ADDITIONAL DISCLOSURE
Pursuant to the Listing Requirements
RECURRENT RELATED PARTY TRANSACTIONS (“RRPT”) OF REVENUE AND/OR TRADING NATURE
Pursuant to the Shareholders’ Mandate, the aggregate value of the recurrent transactions
of revenue and/or trading nature conducted during the financial year ended 31 December
2011 between the Company and/or its subsidiary companies with related parties are
set out below:
Related Parties
Involved
with the
Company and/
or Subsidiary
Companies
1. Johor
Corporation
(“JCorp”)
Interested Director and/or
Major Shareholder
Ahamad Mohamad
Rozan Mohd Sa’at
Zulkifli Ibrahim
Nature of
Relationship
with Kulim
Group
Kulim is
a 57.18%
owned
subsidiary of
JCorp
Type of Transaction
Purchasing and sales commission on palm
products
Sdn Bhd (“JFSB”)
Ahamad Mohamad
Rozan Mohd Sa’at
Zulkifli Ibrahim
2,335,000
Provision of data and document processing,
bulk mailing and related services
107,000
Management of car parks, rental payment
for car park facilities and related services
510,000
Provision of insurance broking services on
business, assets and properties of JCorp
2. Johor Foods
Aggregate
Value of
Transaction
(RM)
JFSB is a
Sale of FFB
wholly-owned
subsidiary of Purchasing and sales commission on palm
products
JCorp
382,000
23,570,000
2,059,000
JCorp
3. Johor Land
Berhad (“JLand”)
Ahamad Mohamad
Rozan Mohd Sa’at
Zulkifli Ibrahim
JLand is
a 99.99%
owned
subsidiary of
JCorp
Purchase of FFB
4,777,000
JCorp
4. Pro Corporate
Management
Services Sdn
Bhd (“PCMS”)
Ahamad Mohamad
Rozan Mohd Sa’at
Zulkifli Ibrahim
Secretarial and share registry services
PCMS is a
wholly-owned
subsidiary of
JCorp Hotels
& Resorts Sdn
Bhd
1,266,000
JCorp
5. Damansara
Assets Sdn Bhd
(“DASB”)
Ahamad Mohamad
Rozan Mohd Sa’at
Zulkifli Ibrahim
JCorp
DASB is a
Rental commission
wholly-owned
subsidiary of
JCorp
617,000
SECTION 7: FINANCIAL
STATEMENTS
168 DIRECTORS’ REPORT
173 STATEMENT BY DIRECTORS
174 STATUTORY DECLARATION
175 INDEPENDENT AUDITORS' REPORT
177 STATEMENTS OF COMPREHENSIVE INCOME
179 STATEMENTS OF FINANCIAL POSITION
181 STATEMENTS OF CHANGES IN EQUITY
184 STATEMENTS OF CASH FLOWS
186 NOTES TO THE FINANCIAL STATEMENTS
278 SUPPLEMENTARY INFORMATION
168
DIRECTORS’ REPORT
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for
PRINCIPAL ACTIVITIES
The Company is principally engaged in oil palm plantation, investment holding and property investment in Malaysia whilst the principal
activities of the subsidiaries are as stated in Note 16 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year.
RESULTS
Profit net of tax
Profit attributable to :
Group
Company
RM’000
RM’000
1,007,866
129,084
565,013
442,853
129,084
–-
1,007,866
129,084
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial
statements.
DIVIDEND
The amounts of dividends paid by the Company since 31 December 2010 were as follows:
RM’000
In respect of the financial year ended 31 December 2010 as reported and taken up in the
directors’ report and financial statements of that year:
An interim dividend of 7.50 sen per share, less tax at 25%, totalling approximately RM17,570,000
(5.62 sen net per share) in respect of the financial year ended 31 December 2010, paid on 27 January 2011
17,570
A special dividend of 42.50 sen per share, less tax at 25%, totalling approximately RM99,560,000
(31.88 sen net per share) in respect of the financial year ended 31 December 2010, paid on 27 January 2011
99,560
117,130
An interim dividend of 5 sen per share tax exempt (single tier), totalling approximately RM61,728,000
(5 sen net per share) in respect of the financial year ended 31 December 2011, paid on 23 December 2011
Total dividends paid by the Company since 31 December 2010
61,728
178,858
169
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 Datuk Arshad Ayub
Ahamad Mohamad
Wong Seng Lee
Kua Hwee Sim
Datuk Haron Siraj
Dr Radzuan A. Rahman
Rozan Mohd Sa’at
Zulkifli Ibrahim
Natasha Kamaluddin
Leung Kok Keong
Jamaludin Md Ali
(Appointed on 1 July 2011)
(Appointed on 8 November
(Resigned on 1 July 2011)
2011)
2011)
2011)
2011)
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 9 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 he is a member, or with a company in which he has a substantial financial interest, except as disclosed in
Note 30 to the financial statements.
DIRECTORS’ INTERESTS
According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company
and its related corporations during the financial year were as follows:
Number of ordinary shares of RM0.25 each
As at
1.1.2011
Share
split*
Bonus
issue
Acquired
Disposed
As at
31.12.2011
410,950
229,600
112,800
69,500
410,950
229,600
112,800
69,500
821,900
459,200
225,600
139,000
45,000
-
(200,000)
-
1,643,800
963,400
251,200
278,000
200
200
400
8,000
-
8,800
1,200,200
1,200,200
2,400,400
-
-
4,800,800
Company
Direct interest
Ahamad Mohamad
Wong Seng Lee
Rozan Mohd Sa’at
Deemed interest
*
During the financial year, the Company undertook a share split involving the subdivision of every one (1) existing ordinary share of RM0.50
each into two (2) ordinary shares of RM0.25 each. Further details are disclosed in Note 26 to the financial statements.
DIRECTORS’ REPORT
170
(continued)
DIRECTORS’ INTERESTS (continued)
1.1.2011
Acquired
Disposed
31.12.2011
172,000
200,000
–
–
(172,000)
–
–
200,000
313,824
99,928
99,500
15,092
–
–
–
–
(313,824)
(99,928)
(99,500)
(15,092)
–
–
–
–
1,016,666
31,516
1,067
–
–
–
(1,016,666)
(31,516)
(1,067)
–
–
–
Direct interest
Ahamad Mohamad
9,600
320
–
–
–
–
9,600
320
Deemed interest
Ahamad Mohamad
3,200
–
–
3,200
In subsidiaries
KFC Holdings (Malaysia) Bhd.
Ahamad Mohamad
Sindora Berhad
Direct interest
Ahamad Mohamad
Rozan Mohd Sa’at
Deemed interest
Ahamad Mohamad #
Datin Paduka Siti Sa’diah Sh Bakir +
In related companies
Damansara Realty Berhad
1.1.2011
Acquired
Disposed
31.12.2011
Direct interest
Datuk Haron Siraj
150,000
4,000
1,000
–
–
–
–
(4,000)
–
150,000
–
1,000
Deemed interest
100,000
–
–
100,000
In subsidiaries
QSR Brands Bhd.
171
DIRECTORS’ INTERESTS (continued)
#
In accordance with Section 134(12)(c) of the Companies Act, 1965, the interests and deemed interests of the spouse of Ahamad Mohamad
in the shares of the subsidiaries (other than wholly-owned subsidiaries) shall be treated as the interests of Ahamad Mohamad also.
+
In accordance with Section 134(12)(c) of the Companies Act, 1965, the interests and deemed interests of a child of Datin Paduka Siti
Sa’diah Sh Bakir in the shares of the subsidiaries (other than wholly-owned subsidiaries) shall be treated as the interests of Datin Paduka
Siti Sa’diah Sh Bakir also.
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 Company increased its authorised share capital from RM200,000,000 comprising 400,000,000 shares of RM0.50
each to RM500,000,000 comprising 2,000,000,000 shares of RM0.25 each;
During the financial year, the Company also increased its issued and paid-up ordinary share capital from RM159,336,000 to RM315,509,000 by
way of:
(i)
Share split involving the subdivision of every one (1) existing ordinary share of RM0.50 each held in the Company into two (2) ordinary
shares of RM0.25 each (“sub-divided share(s)”) (Share Split); and
(ii)
Bonus issue of new sub-divided shares on the basis of one (1) bonus share for every one (1) sub-divided share held after the share split
(“Bonus Issue”).
The Share Split and Bonus Issue were completed on 28 February 2011.
The above new shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.
ISSUE OF FREE WARRANTS
During the financial year, the Company issued 156,174,319 free warrants on the basis of one (1) warrant for every eight (8) sub-divided shares
held after the Share Split and Bonus Issue. Each warrant entitles the holder to subscribe for one (1) new sub-divided share at the exercise price
of RM3.85 per share at any time during the exercise period. The warrants have an exercise period of five (5) years commencing 28 February
2011 and expiring on 27 February 2016.
TREASURY SHARES
During the financial year, the Company repurchased 14,840,000 of its issued ordinary shares from the open market at an average price of
RM3.40 per share. The total consideration paid for the repurchase including transaction costs was RM50,496,000. The shares repurchased are
being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.
At 31 December 2011, the Company held as treasury shares a total of 27,482,200 of its 1,262,037,000 issued ordinary shares. Such treasury shares
are held at a carrying amount of RM96,186,000 and further relevant details are disclosed in Note 27(h) to the financial statements.
DIRECTORS’ REPORT
172
(continued)
OTHER STATUTORY INFORMATION
(a)
(b)
Before the statements of comprehensive income and statements of financial position 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 allowance for doubtful
debts and satisfied themselves that all known bad debts had been written off and that adequate allowance 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.
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 allowance 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.
(e)
As 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
Details of significant events are disclosed in Note 33 to the financial statements.
SUBSEQUENT EVENT
Details of the subsequent event is disclosed in Note 34 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 30 March 2012
Ahamad Mohamad
173
STATEMENT BY DIRECTORS
PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
We, Kamaruzzaman Abu Kassim and Ahamad Mohamad, being two of the directors of Kulim (Malaysia) Berhad, do hereby state that, in the
opinion of the directors, the accompanying financial statements set out on pages 177 to 277 are drawn up in accordance with Financial
Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of
the Company as at 31 December 2011 and of their financial performance and cash flows for the year then ended.
The information set out in Note 40 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1,
Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 30 March 2012
Ahamad Mohamad
174
STATUTORY DECLARATION
PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
I, Azli bin Mohamed, being the officer primarily responsible for the financial management of Kulim (Malaysia) Berhad, do solemnly and sincerely
declare that the accompanying financial statements set out on pages 177 to 278 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 Azli bin Mohamed at Johor
)
Bahru in the State of Johor on 30 March 2012 )
)
)
Before me,
Azli bin Mohamed
175
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF
KULIM (MALAYSIA) BERHAD (INCORPORATED IN MALAYSIA)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Kulim (Malaysia) Berhad, which comprise the statements of financial position as at 31 December
2011 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of
cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory
notes, as set out on pages 177 to 277.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with
Financial Reporting Standards and the Companies Act 1965 in Malaysia, and for such internal control as the directors determine are necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies
Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2011 and
of their financial performance and cash flows for the year then ended.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries
of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b)
We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which
are indicated in Note 16 to the financial statements, being financial statements that have been included in the consolidated financial
statements.
(c)
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.
(d)
The auditors’ reports on the financial statements of the subsidiaries 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 Act.
176
INDEPENDENT AUDITORS’ REPORT
(continued)
TO THE MEMBERS OF
KULIM (MALAYSIA) BERHAD (INCORPORATED IN MALAYSIA)
OTHER MATTERS
The supplementary information set out in Note 40 to the financial statements on page 278 is disclosed to meet the requirement of Bursa
Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance
on Special Matter No. 1 Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia
Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and
the directive of Bursa Malaysia Securities Berhad.
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia
and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Ernst & Young
AF 0039
Chartered Accountants
Johor Bahru, Malaysia
Date: 30 March 2012
Abraham Verghese A/L T.V. Abraham
1664/10/12(J)
Chartered Accountant
177
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011
Group
Note
2011
RM’000
Company
2010
RM’000
2011
RM’000
2010
RM’000
Continuing operations
Revenue
Cost of sales
4
7,041,771
(3,491,726)
5,488,939
(2,730,194)
262,765
(89,916)
186,742
(76,310)
Gross profit
5
3,550,045
2,758,745
172,849
110,432
Other income
Distribution expenses
Administrative expenses
Other expenses
308,699
(1,738,085)
(632,185)
(51,786)
178,957
(1,537,502)
(484,046)
(65,362)
78,736
(2,358)
(26,854)
(58,710)
43,623
(865)
(21,122)
(115,255)
Profit from operating activities
1,436,688
850,792
163,663
16,813
Interest income
Finance costs
Share of net results in associates
6
7
12,591
(91,475)
6,992
6,370
(81,440)
2,174
8,379
(20,062)
–
6,414
(30,945)
–
Profit/(Loss) before tax
Income tax expense
8
10
1,364,796
(356,930)
777,896
(233,681)
151,980
(22,896)
(7,718)
(21,153)
1,007,866
544,215
129,084
(28,871)
–
–
(1,806)
153,417
–
–
–
240,149
1,007,866
695,826
129,084
211,278
Profit from continuing operations
Loss from discontinued operation, net of tax
Gain on disposal of discontinued operation
Profit for the year
11
11
Other comprehensive income, net of tax
Foreign currency translation differences for foreign operations
Transfer (from)/to:
– reserve
– retained profits
Cash flow hedges
Fair value changes on available-for-sale financial assets
486,229
3,052
–
–
(22,930)
22,930
120,801
(2,213)
(675)
675
(98,372)
56,294
–
–
–
(3,025)
–
–
–
54,526
Other comprehensive income for the year, net of tax
604,817
(39,026)
(3,025)
54,526
178
STATEMENTS OF COMPREHENSIVE INCOME
(continued)
Group
Note
Total comprehensive income for the year
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
1,612,683
656,800
126,059
265,804
565,013
442,853
385,592
310,234
129,084
–
211,278
–
1,007,866
695,826
129,084
211,278
871,728
740,955
340,522
316,278
126,059
–
265,804
–
1,612,683
656,800
126,059
265,804
45.90
–
18.73
12.13
45.90
30.86
45.90
–
18.73
12.13
45.90
30.86
Profit attributable to:
Profit for the year
Total comprehensive income attributable to:
Total comprehensive income for the year
Basic earnings per ordinary share (sen):
– from continuing operations
– from discontinued operations
12
Diluted earnings per ordinary share (sen):
– from continuing operations
– from discontinued operations
12
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
179
STATEMENTS OF FINANCIAL POSITION
Group
Note
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
7,667,603
98,296
1,097,799
–
24,334
52,479
–
9,501
5,876,948
97,863
1,046,895
–
56,610
214,061
917
7,890
1,072,403
94,602
–
1,316,634
–
5,778
–
4,208
1,072,039
94,503
–
1,220,685
–
175,312
–
3,613
8,950,012
7,301,184
2,493,625
2,566,152
145,517
700,690
590,645
16,885
25,125
452,146
95,204
1,892
308,550
234
3,822
79,664
139,613
1,905
269,795
34
3,420
74,826
Assets
Non-current assets
Property, plant and equipment
Investment properties
Intangible assets
Investments in subsidiaries
Investments in associates
Other investments
Deferred tax assets
Deferred farm expenditure
13
14
15
16
17
18
19
Current assets
Other investments
Inventories
Trade and other receivables
Prepayments
Current tax assets
18
20
21
22
97,369
934,732
808,357
65,532
6,502
644,702
Assets of disposal group classified as held for sale
11
2,557,194
13,032
1,931,008
13,500
489,366
–
489,593
–
2,570,226
1,944,508
489,366
489,593
11,520,238
9,245,692
2,982,991
3,055,745
797,120
2,104
135,946
571,843
301
–
677,291
149,476
112,089
995,410
644
117,130
207,676
–
–
–
–
–
76,988
–
–
100,000
–
117,130
1,507,314
2,052,040
207,676
294,118
1,062,912
(107,532)
281,690
195,475
Total assets
Equity and liabilities
Current liabilities
Trade and other payables
Derivative financial instruments
Employee benefits
Dividend payable
Net current assets/(liabilities)
25
24
23
29
180
STATEMENTS OF FINANCIAL POSITION
(continued)
Group
Note
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
2,049,101
–
1,040,424
2,700
931,020
25,201
691,776
2,913
273,171
–
83,655
–
273,171
–
83,803
–
3,092,225
1,650,910
356,826
356,974
Total liabilities
4,599,539
3,702,950
564,502
651,092
Net assets
6,920,699
5,542,742
2,418,489
2,404,653
315,509
1,540,087
2,436,500
159,336
1,433,182
1,972,850
315,509
1,035,201
1,067,779
159,336
1,182,764
1,062,553
4,292,096
2,628,603
3,565,368
1,977,374
2,418,489
–
2,404,653
–
Total equity
6,920,699
5,542,742
2,418,489
2,404,653
11,520,238
9,245,692
2,982,991
3,055,745
Non-current liabilities
Employee benefits
23
24
19
29
Equity attributable to owners of the Company
Share capital
Reserves
Retained profits
Total equity and liabilities
26
27
28
315,509
–
–
–
–
113,945
–
–
–
–
116,013
–
–
–
–
–
–
95,714
–
–
–
–
–
–
–
–
–
–
–
219,610
–
219,610
–
(22,581)
–
242,191
(123,896)
(748)
–
–
–
–
–
–
–
–
–
–
–
67,034
–
67,034
–
–
67,034
–
(67,782)
Hedge
reserve
RM’000
–
–
–
–
–
–
–
–
–
–
254
(313)
–
(313)
–
(313)
–
–
1,256 1,337,757
–
–
–
–
–
–
–
–
–
–
–
(54,361)
–
(54,361)
(54,361)
–
–
–
55,617 1,337,816
4,933
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,933
Other
reserve
RM’000
(96,186)
–
–
–
–
–
–
(50,496)
–
–
–
–
–
–
–
–
–
–
–
(45,690)
Retained
profits
RM’000
Noncontrolling
Total
interests
RM’000
RM’000
Total
equity
RM’000
–
–
–
(61,728)
–
(435)
–
–
(113,945)
–
–
639,758
565,013
74,745
51,815
22,930
–
–
–
–
–
(61,728)
(32,597)
(435)
(50,496)
–
–
2
254
871,728
565,013
306,715
(2,546)
36
67,034
242,191
604,817
(2,213)
–
120,801
486,229
(4,653)
(45,873)
15,032
–
(54,232)
–
–
–
–
–
–
(4,653)
(45,873)
15,032
(61,728)
(86,829)
(435)
(50,496)
–
–
2
254
740,955 1,612,683
442,853 1,007,866
298,102
333
(36)
53,767
244,038
(32,597) 2,436,500 4,292,096 2,628,603 6,920,699
–
–
–
–
(32,597)
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,972,850 3,565,368 1,977,374 5,542,742
Equity
Treasury transaction
shares
reserve
RM’000
RM’000
Distributable
181
At 31 December 2011
–
113,945
–
–
–
–
–
–
–
–
–
–
Warrant Translation
reserve
reserve
RM’000
RM’000
(156,173)
–
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
272,184
Share
premium
RM’000
–
159,336
Bonus issue
156,173
Issue of free warrants
–
Exercise of warrants
–
Reversal of deferred tax
–
Acquisition of non-controlling
interest in subsidiary
–
Acquisition of subsidiary
–
Treasury shares acquired
–
Increase in non-controlling
interest
–
–
Dividends to non-controlling
interests of subsidiaries
–
Share buy-back by
subsidiaries
–
Transactions with owners
Profit for the year
Total comprehensive
income for the year
Foreign exchange
translation differences
Transfer from reserves
to retained profit
Cash flow hedges
Fair value changes on
available-forsale financial assets
Total other comprehensive
income for the year
Group
Opening balance
at 1 January 2011
Share
capital
RM’000
Fair
value Revaluation
reserve
reserve
RM’000
RM’000
Non-distributable
Attributable to shareholders of the Company
STATEMENTS OF CHANGES IN EQUITY
–
–
–
–
272,184
–
–
–
–
–
–
159,336
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
272,184
–
–
159,336
Share
premium
RM’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(123,896)
–
–
–
–
–
–
(45,019)
–
(45,019)
–
–
–
(45,019)
–
(78,877)
Warrant Translation
reserve
reserve
RM’000
RM’000
(67,782)
–
–
–
–
–
–
(55,668)
–
(55,668)
–
–
(55,668)
–
(12,114)
–
Hedge
reserve
RM’000
–
–
–
–
–
–
(675)
–
(675)
–
(675)
–
–
–
55,617 1,337,816
–
–
–
–
–
–
55,617
–
55,617
55,617
–
–
–
–
– 1,338,491
Fair
value Revaluation
reserve
reserve
RM’000
RM’000
4,933
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,933
Other
reserve
RM’000
(45,690)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(45,690)
Retained
profits
RM’000
Noncontrolling
Total
interests
RM’000
RM’000
Total
equity
RM’000
–
340,522
385,592
(45,070)
55,617
–
(55,668)
(45,019)
(11,819)
–
–
–
–
–
–
–
–
(134,700) (134,700)
–
386,267
385,592
675
–
675
–
–
295
33,150
656,800
695,826
(39,026)
56,294
–
(98,372)
3,052
(23,581)
(5,176)
(14,994)
(5,176)
(14,994)
(5,009)
(5,009)
(34,150) (34,150)
– (134,700)
33,150
316,278
310,234
6,044
677
–
(42,704)
48,071
(11,762)
– 1,972,850 3,565,368 1,977,374 5,542,742
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,720,988 3,371,365 1,699,037 5,070,402
Equity
Treasury transaction
shares
reserve
RM’000
RM’000
Distributable
182
At 31 December 2010
Increase in non-controlling
interest
Arising from acquisition
of non-controlling interest
Disposal of a subsidiary
Dividends to non-controlling
interests of subsidiaries
Share buy-back by
subsidiaries
Transactions with owners
Profit for the year
Total comprehensive
income for the year
Foreign exchange
translation differences
Transfer from reserves
to retained profit
Cash flow hedges
Fair value changes on
available-for-sale
financial assets
Total other comprehensive
income for the year
Effect of adopting FRS 139
Opening balance
at 1 January 2010
Group
Share
capital
RM’000
Non-distributable
STATEMENTS OF CHANGES IN EQUITY (continued)
–
(156,173)
–
2
–
–
–
156,173
–
–
–
–
315,509
At 31 December 2011
113,944
–
–
113,944
–
–
–
–
–
–
–
–
–
–
–
Warrant
reserve
RM’000
897,579
–
–
–
–
–
–
–
–
897,579
–
–
–
–
897,579
Revaluation
reserve
RM’000
(313)
(54,839)
–
–
–
–
–
(54,839)
–
54,526
54,526
–
54,526
–
–
Fair
value
reserve
RM’000
4,165
–
–
–
–
–
–
–
–
4,165
–
–
–
–
4,165
Other reserve
RM’000
(96,187)
–
–
–
–
(50,497)
–
–
–
(45,690)
–
–
–
–
(45,690)
Treasury
shares
RM’000
1,067,779
180,898
–
(113,944)
–
–
(61,728)
51,814
129,084
1,062,553
211,278
(134,700)
–
211,278
985,975
Retained
profits
RM’000
Distributable
2,418,489
126,059
–
–
2
(50,497)
(61,728)
(3,025)
129,084
2,404,653
265,804
(134,700)
54,526
211,278
2,273,549
Total
RM’000
183
116,013
–
–
–
–
272,184
–
–
–
–
159,336
–
–
272,184
–
–
159,336
Share
premium
RM’000
Fair value changes on available-forsale financial assets, representing
total other comprehensive income
Profit for the year
Total comprehensive income
for the year
Bonus issue
Issue of free warrants
Exercise of warrants
Treasury shares acquired
At 31 December 2010
Fair value changes on available-forsale financial assets, representing
total other comprehensive income
Profit for the year
Total comprehensive income
for the year
At 1 January 2010
Company
Share
capital
RM’000
Non-distributable
184
STATEMENTS OF CASH FLOWS
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
1,364,796
–
777,896
1,476
151,980
–
(7,718)
240,149
1,500
–
4,811
(18,572)
103
–
–
46,440
(679)
68
–
455
–
(18,572)
–
–
1,801
–
–
–
5,540
–
2,526
–
–
–
4,045
104,400
767
9,372
–
415,555
7,717
(1,930)
3,461
10,482
78
321,189
–
(2,591)
–
–
–
10,636
8,051
(61,498)
–
–
–
11,127
–
(33,182)
–
(18,630)
8,395
–
(6,992)
(153,417)
(62)
4,347
(31,507)
(2,174)
–
(18,351)
(9)
(49)
–
(240,149)
(14,116)
(86)
(24,820)
–
91,475
–
(12,591)
86
(151,322)
81,440
7,004
(6,370)
270
669
20,062
–
(8,379)
–
–
30,945
–
(6,414)
–
53
939
–
1,144
223
547
844
6,214
821
939
–
145
–
547
–
74
–
Operating profit before changes in working capital
Changes in working capital:
Inventories
Payables
Receivables
1,702,386
1,068,972
85,410
66,656
(234,042)
(267,252)
321,823
(198,264)
40,091
44,351
14
130,689
(38,955)
(117)
20,803
(51,330)
Cash generated from operations
Employee benefits paid
Tax paid
Tax refunded
1,522,915
(642)
(82,091)
963
955,150
(213)
(150,159)
–
177,158
–
(22,952)
–
36,012
–
(6,099)
–
Net cash generated from operating activities
1,441,145
804,778
154,206
29,913
Operating activities
Profit/(Loss) before tax
– continuing operations
– discontinued operation
Adjustments for:
Additional impairment on:
– assets held for sale
– investment in subsidiaries
– property, plant and equipment
Fair value changes on other investments
Allowance for slow moving inventories
Allowances for impairment losses on receivables:
– third parties
– subsidiaries
Amortisation and depreciation of:
– deferred farm expenditure
– intangible assets
– prepaid lease payments
Change in fair value of investment properties
Dividend income
(Gain)/Loss on:
– disposal of other investments
– disposal of property, plant and equipment
– partial disposal of subsidiaries
Group share of net results in associates
Interest expense on:
Interest income
Provision for employee benefits
Unrealised foreign exchange (gain)/loss, net
Write off of:
– Deferred farm expenditure
– Inventories
– Property, plant and equipment
Write down of inventories
185
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
(16,681)
1,930
12,591
(1,611)
(629,676)
2,591
6,370
(5,436)
–
61,498
8,379
(1,534)
–
33,182
6,414
(2,036)
(104,648)
–
–
(214,761)
(1,592,643)
(8,431)
(8,150)
(5,009)
(5,980)
(195)
(227,072)
(726,053)
(14,310)
–
(96,516)
–
–
(203,207)
(11,161)
–
(8,150)
(14,644)
–
(75,258)
(105,944)
(10,317)
–
–
454,889
–
4,023
185
–
439,882
17,364
70,051
450,551
–
25
161
–
450,000
348
55,130
(1,473,307)
(1,077,473)
200,046
336,875
(178,858)
(25,920)
1,482,532
(869,224)
(100,091)
(40,996)
(14,994)
797,232
(272,555)
(47,769)
(178,858)
–
–
–
(100,000)
(40,996)
–
–
(205,000)
(48,592)
107
(75,092)
38,365
14
–
(5,176)
–
(11,182)
2
(50,496)
–
16
–
–
–
(16)
(91,475)
–
(81,440)
(7,004)
(20,062)
–
(30,945)
–
Net cash flows generated from/(used in) financing activities
180,358
316,116
(349,398)
(325,549)
Net increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 1 January
148,196
2,088
406,434
43,421
(2,370)
365,383
4,854
–
74,460
41,239
(57)
33,278
Cash and cash equivalents at 31 December (Note 22)
556,718
406,434
79,314
74,460
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
Dividends received
Interest received
Payment of deferred farm expenditure
Purchase of:
– equity interest in:
– subsidiaries
– associates
– other investments
– other investments
– intangible assets
– investment properties
Proceeds from:
– disposal of other investment
– disposal of a subsidiary
– disposal of property, plant and equipment
– partial disposal of subsidiaries
Net cash flows (used in)/generated from investing activities
Cash flows from financing activities
Dividends paid to:
– shareholders of the Company
– minority shareholders of subsidiaries
Proceeds from term loans
Repayment of term loans
Repayment of short-term borrowings
Proceeds from the issue of shares
– Warrants
Purchase of treasury shares by subsidiary
Issue of shares to minority shareholders of subsidiaries
Withdrawal/(Addition) of fixed deposits pledged
Interest paid
– continuing
– discontinued
186
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2011
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 Berhad. The addresses of the principal place of business and registered office of the Company are as follows:
Principal place of business
Ulu Tiram Estate
81800 Ulu Tiram
Johor
Registered office
65 Jalan Trus, 80000 Johor Bahru, Johor.
The Company’s ultimate holding corporation is Johor Corporation (“JCorp”), a body corporate established under the Johor Corporation
Enactment (No. 4, of 1968) (As amended by Enactment No.5, 1995).
The principal activities of the Company consist of oil palm plantation, investment holding and property investment in Malaysia. The
principal activities of the subsidiaries are described in Note 16 to the financial statements. There have been no significant changes in the
nature of the principal activities during the financial year.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards
and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new
and revised FRS which are mandatory for financial periods beginning on or after 1 January 2011 as described fully in Note 2.2.
The financial statements have been prepared on the historical basis, except as disclosed in the accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except
when otherwise indicated.
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2011, the Group and the Company adopted the following new and amended FRS and IC Interpretations:
FRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 March 2010
Amendments to FRS 132: Classification of Rights Issues
FRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 July 2010
FRS 1: First-time Adoption of Financial Reporting Standards
FRS 3: Business Combinations (Revised)
Amendments to FRS 2: Share-based Payment
Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued Operations
Amendments to FRS 127: Consolidated and Separate Financial Statements
Amendments to FRS 138: Intangible Assets
IC Interpretation 12: Service Concession Arrangements
IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation
IC Interpretation 17: Distributions of Non-cash Assets to Owners
Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives
2.
187
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Changes in accounting policies (continued)
FRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2011
Amendments to FRS 1: First-time Adoption of Financial Reporting Standards
– Additional Exemptions for First-time Adopters
Amendments to FRS 2: Group Cash-settled Share Based Payment
Improvements to FRSs issued in 2010
IC Interpretation 4: Determining whether an Arrangement contains a Lease
IC Interpretation 18: Transfers of Assets from Customers
The adoption of the above new and amended standards and interpretations did not have any effect on the financial performance
or position of the Group and the Company except for those discussed below:
FRS 127 Consolidated and Separate Financial Statements (revised)
–
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity
transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise to a gain or loss.
–
Losses incurred by a subsidiary are allocated to the non-controlling interest even if the losses exceed the non-controlling
interest in the subsidiary’s equity, and
–
When control over a subsidiary is lost, any interest retained is measured at fair value with the corresponding gain or loss
recognised in profit or loss.
According to its transitional provisions, the revised FRS 127 has been applied prospectively, and does not impact the Group’s
consolidated financial statements in respect of transactions with non-controlling interest, attribution of losses to non-controlling
interest, and disposal of subsidiaries before 1 January 2011. The changes will affect future transactions with non-controlling interest.
The effects of the adoption of revised FRS 127 on the Group’s consolidated financial statements, relating to the acquisition of the
remaining equity interest of 24% in Sindora Berhad from its non-controlling interest during the financial year were as follows:
Group
2011
RM’000
Group
2010
RM’000
2011
RM’000
2011
RM’000
Consolidated statement of financial position
Decrease in intangible asset – goodwill
Decrease in reserves – equity transaction reserves
32,597
32,597
188
(continued)
31 DECEMBER 2011
2.
2.3 Standards issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but are not yet effective:
2011
RM’000
2010
RM’000
Effective for annual periods
beginning on or after
Description
IC Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments
Amendments to IC Interpretation 14: Prepayments of a Minimum Funding Requirement
FRS 124: Related Party Disclosures
Amendments to FRS 1: Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
Amendments to FRS 7: Transfers of Financial Assets
Amendments to FRS 112: Deferred Tax: Recovery of Underlying Assets
Amendments to FRS 101: Presentation of Items of Other Comprehensive Income
FRS 9: Financial Instruments
FRS 10: Consolidated Financial Statements
FRS 11: Joint Arrangements
FRS 12: Disclosure of Interests in Other Entities
FRS 13: Fair Value Measurement
FRS 119: Employee Benefits
FRS 127: Separate Financial Statements
FRS 128: Investment in Associate and Joint Venture
IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine
1
1
1
1
1
1
1
1
1
1
1
1
1
1 July
1 July
January
January
January
January
1 July
January
January
January
January
January
January
January
January
January
2011
2011
2012
2012
2012
2012
2012
2013
2013
2013
2013
2013
2013
2013
2013
2013
Except as disclosed below, the directors do not expect any material impact on the financial statements in the period of initial
application:
Amendments to FRS 112: Deferred Tax: Recovery of Underlying Assets
The amendments clarified the determination of deferred tax on investment property measured at fair value. The amendment
introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in FRS
140 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the
requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in FRS 116 to be always
measured on a sale basis of that asset.
Amendments to FRS 101: Presentation of Items of Other Comprehensive Income
The amendments to FRS 101 change the grouping of items presented in Other Comprehensive Income. Items that could be
reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be
presented separately from items that will never be reclassified. The amendment affects presentation only and has no impact on the
Group’s financial position or performance.
FRS 9: Financial Instruments
FRS 9 reflects the first phase of work on the replacement of FRS 139 and applies to classification and measurement of financial
assets and financial liabilities as defined in FRS 139. The adoption of this first phase of FRS 9 will have an effect on the classification
and measurement of the Group’s financial assets but will potentially have no impact on classification and measurements of financial
liabilities. The Group is in the process of making an assessment of the impact of adoption of FRS 9.
2.
189
2.3 Standards issued but not yet effective (continued)
FRS 10: Consolidated Financial Statements
FRS 10 replaces the portion of FRS 127 Consolidated and Separate Financial Statements that addresses the accounting for
consolidated financial statements. FRS 10 establishes a single control model that applies to all entities including special purpose
entities. The changes introduced by FRS 10 will require management to exercise significant judgement to determine which entities
are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in FRS 127.
FRS 12: Disclosure of Interests in Other Entities
FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A
number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position
or performance.
FRS 13: Fair Value Measurement
FRS 13 establishes a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity
is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or
permitted. The Group is currently assessing the impact of adoption of FRS 13.
FRS 127: Separate Financial Statements
As a consequence of the new FRS 10 and FRS 12, FRS 127 is limited to accounting for subsidiaries, jointly controlled entities and
associates in separate financial statements.
Malaysian Financial Reporting Standards (MFRS Framework)
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the
Malaysian Financial Reporting Standards (MFRS Framework).
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January
2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements
for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ’Transitioning Entities’).
Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently,
adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after
1 January 2013.
The Group falls within the scope definition of Transitioning Entities and has opted to defer adoption of the new MFRS Framework.
Accordingly, the Group will be required to prepare financial statements using the MFRS Framework in its first MFRS financial
statements for the year ending 31 December 2013. In presenting its first MFRS financial statements, the Group will be required
to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the
adjustments required on transition will be made, retrospectively, against opening retained profits.
The Group has not completed its assessment of the financial effects of the differences between Financial Reporting Standards and
accounting standards under the MFRS Framework. Accordingly, the financial performance and financial position as disclosed in these
financial statements for the year ended 31 December 2011 could be different if prepared under the MFRS Framework.
190
(continued)
31 DECEMBER 2011
2.
2.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting
date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared
for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar
circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are
eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are
recognised as expenses in the periods in which the costs are incurred and the services are received.
In business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the
acquisition date and any corresponding gain or loss is recognised in profit or loss.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised
on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree net identifiable
assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling
interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the
net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill in the statement of financial position. The
accounting policy for goodwill is set out in Note 2.9(a). In instances where the latter amount exceeds the former, the excess is
recognised as a gain on bargain purchase in profit or loss on the acquisition date.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to
be consolidated until the date that such control ceases.
2.5 Transactions with non-controlling interest
Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and
is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement
of financial position, separately from equity attributable to owners of the Company.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as
equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling
interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to
owners of the parent.
2.
191
2.6 Foreign currency
(a)
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.
(b)
Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries
and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the
transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange
ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are
translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign
currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date
are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s
net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under
foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or
loss of the Group on disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss
for the period except for the differences arising on the translation of non-monetary items in respect of which gains and
losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised
directly in equity.
(c)
Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and
income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on
the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount
recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to
that particular foreign operation is recognised in the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations 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 reporting date.
192
(continued)
31 DECEMBER 2011
2.
2.7 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is
recognised as an asset if, and only if, 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.
Freehold and leasehold plantation lands of the Group have not been revalued since they were last revalued in 1997. The directors
have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded. As permitted under the
transitional provisions of IAS 16 (Revised) Property, Plant and Equipment, these assets continue to be stated at their 1997 valuation
less accumulated depreciation.
All expenditure relating to the development of oil palm field (immature field) is classified under estate development expenditure. This
cost will be amortised over the useful life when the field reaches maturity. The maturity date for estate development expenditure is
the point in time when such new planting areas achieve yields of at least 8.60 tonnes of fresh fruit bunches per hectare per annum
or 48 months from the date of initial planting, whichever is earlier. Estate overhead expenditure is apportioned to profit or loss and
estate development expenditure on the basis of proportion of mature to immature areas.
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group
recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection
is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over
the estimated useful lives of the assets, as follows:
Leasehold land
Leasehold improvements and renovations
Estate development expenditure
Buildings
Other assets, comprising:
– Vessels, plant and machinery
– Restaurants and office equipment
– Furniture and fittings
– Motor vehicles
33 – 904 years
10 years
17 – 22 years from year of maturity
4 – 50 years
3 – 25
5 – 15
2 – 15
3–5
years
years
years
years
Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate
that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if
appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is
derecognised.
2.
193
2.8 Investment properties
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment
properties are measured at fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference
to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an
appropriate recognised professional qualification and recent experience in the location and category of the properties being valued.
Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which
they arise.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of
an investment property is recognised in profit or loss in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to
owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer
from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for
property, plant and equipment set out in Note 2.7 up to the date of change in use.
2.9 Intangible assets
(a)
Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment
losses.
For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cashgenerating units that are expected to benefit from the synergies of the combination.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an
indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit,
including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of
the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment
losses recognised for goodwill are not reversed in subsequent periods.
(b)
Other intangible assets
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business
combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost
less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are
reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives
is recognised in profit or loss.
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently
if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating
unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed
annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
194
(continued)
31 DECEMBER 2011
2.
2.10 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists,
or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset 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.
Impairment losses are recognised in profit or loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in
the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the
carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would
have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit
or loss. Impairment loss on goodwill is not reversed in a subsequent period.
2.11 Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits
from its activities.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
2.12 Associates
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity
accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence
over the associate.
The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in
associates is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets
of the associates. Goodwill relating to associates is included in the carrying amount of the investment. 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 for the period in which the investment is acquired.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss
on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence
that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference
between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.
The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments
are made to bring the accounting policies in line with those of the Group.
In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses. On disposal of
such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
2.
195
2.13 Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a
party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value
through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition, and the categories
include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale
financial assets.
(a)
Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated
as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or
financial assets acquired principally for the purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains
or losses (other than those relating to derivatives which qualify for hedge accounting, as explained in Note 2.30) arising
from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through
profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend
income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses
or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held
primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes
are presented as current or non-current based on the settlement date.
(b)
Loans and receivabless
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and
receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through
the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the
reporting date which are classified as non-current.
(c)
Held-to-maturity investments
Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has
the positive intention and ability to hold the investment to maturity.
Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest
method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired,
and through the amortisation process.
Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the
reporting date which are classified as current.
196
(continued)
31 DECEMBER 2011
2.
2.13 Financial assets
(d)
Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the
three preceding categories.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair
value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange
gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit
or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit
or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective
interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or
loss when the Group and the Company’s right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months
after the reporting date.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition
of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any
cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally
established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are
recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.
2.14 Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset
is impaired.
(a)
Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group
and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and
default or significant delay in payments.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The
impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced through the use of an allowance account. When the asset becomes
uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that
the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised
in profit or loss.
(b) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates,
probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at
cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such
impairment losses are not reversed in subsequent periods.
2.
197
2.14 Impairment of financial assets (continued)
(c)
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the
disappearance of an active trading market are considerations to determine whether there is objective evidence that investment
securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal
payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is
transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase
in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.
2.15 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are
readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of
the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.
2.16 Inventories
Inventories are measured at the lower of cost and net realisable value. Cost is determined using the weighted average cost method
other than inventories relating to the Group’s quick service restaurant business segment. These inventories, comprising raw materials,
groceries, poultry and consumables, equipment and spares and finished goods, are determined on the first-in, first out method.
The cost of agricultural produce is based on the weighted average method and includes the cost of direct materials and an appropriate
proportion of estate revenue expenditure, manufacturing costs and overhead costs based on normal operating capacity.
Agricultural produce consist mainly of palm oil products and sugar stocks. Inventories of palm oil products comprises processed and
refined palm oil products in tanks awaiting shipment at the end of the reporting period. The cost of palm oil produce includes direct
materials and labour and an appropriate proportion of overheads relating to the milling and refining process. Cost of sugar stocks
include all direct expenses and an appropriate proportion of manufacturing overheads based on normal operating capacity.
The cost of materials, consumables and livestocks is based on the weighted average method and includes expenditure incurred in
acquiring the inventories and bringing them to their existing location and condition.
In the case of nursery seed stocks and manufactured finished goods, cost includes direct materials and labour and an appropriate
share of fixed and variable overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the
estimated costs necessary to make the sale.
2.17 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can
be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an
outflow of economic resources will be required to settle the obligation, the provision is reversed. If 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. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
198
(continued)
31 DECEMBER 2011
2.
2.18 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a
financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group
and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either
financial liabilities at fair value through profit or loss or other financial liabilities.
(a)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the
hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any
resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.
The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.
(b)
Other financial liabilities
The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently
measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at
amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through
the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is recognised in profit or loss.
2.19 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payment when due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial
recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor
fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse
the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle
the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.
2.
199
2.20 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction
or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended
use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets
are substantially completed for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and
other costs that the Group and the Company incurred in connection with the borrowing of funds.
2.21 Employee benefits
(a)
Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The
Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution
pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which
the related service is performed.
(b)
Defined benefit plans
The Group’s net obligation in respect of defined benefit retirement plans is calculated separately for each plan by estimating
the amount of future benefit that employees have earned in return for their service in the current and prior periods; that
benefit is discounted to determine the present value. Any unrecognised past service costs and the fair value of any plan assets
are deducted. The discount rate is the yield at the reporting period on 7 year high quality corporate bonds that have maturity
dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits
are expected to be paid. The calculation is performed by a qualified actuary conducted every 2 years with the last actuarial
report dated 13 January 2012 using the projected unit credit method. When the calculation results in a benefit to the Group,
the recognised asset is limited to the net total of any unrecognised past service costs and the present value of any future
refunds from the plan or reductions in future contributions to the plan.
In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that
apply to any plan in the Group. An economic benefit is available to the Group if it is realisable during the life of the plan, or
any settlement of the plan liabilities.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is
recognised in the profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent
that the benefits vest immediately, the expense is recognised immediately in profit or loss.
The Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all
expenses related to defined benefit plans in personnel expenses in profit or loss.
The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or
settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets, change in
the present value of defined benefit obligation and any related actuarial gains and losses and past service cost that had not
previously been recognised.
200
(continued)
31 DECEMBER 2011
2.
2.22 Leases
(a)
As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased
item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the
minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the
periods in which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful
life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The
aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term
on a straight-line basis.
(b)
As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating
leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out
in Note 2.24(e).
2.23 Discontinued operation
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 or is part of a single coordinated major line of business or geographical area of operations. A component is deemed
to be held for sale if its carrying amounts will be recovered principally through a sale transaction rather than through continuing
use.
Upon classification as held for sale, non-current assets and disposal groups are not depreciated and are measured at the lower of
carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.
2.
201
2.24 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of consideration received or receivable. The following specific recognition
criteria must also be met before revenue is recognised:
(a)
Sale of palm-based products
Sale revenue represents revenues earned from sales of the Group’s products, net of trade allowance and duties and taxes
paid. Revenue is recognised when there has been a passing of the title and risk to the customer, and:
(b)
•
The produce is in a form suitable for delivery and sale and no further processing is required;
•
The quantity and quality of the product can be determined with reasonable accuracy;
•
The product has been despatched to the customer and is no longer under the physical control of the Group; and
•
The selling price can be determined with reasonable accuracy.
Sale of restaurant food and beverages
Sales revenue represents retail sales at the Group’s restaurants and is recognised at the point of sales. The Group presents
sales revenue net of sales tax.
(c)
Freight and time charter hire income
Freight income is recognised when the goods are delivered and services rendered and accepted by customers. The results
of ships employed and voyages chartered and that of other services rendered are recognised when goods are delivered and
services rendered.
(d)
Services
Revenue from parking management, bulk mailing and printing and plantation management services, are recognised as and
when the services are rendered.
(e)
Rental income
Rental income from investment properties is recognised in the profit or loss on a straight-line basis over the term of the
lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.
(f)
Dividend income
Dividend income is recognised when the right to receive payment is established.
202
(continued)
31 DECEMBER 2011
2.
2.25 Income taxes
(a)
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by
the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss,
either in other comprehensive income or directly in equity.
(b)
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, where the deferred tax liability arises from the initial
recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses can be utilised where the deferred tax asset relating to the
deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred
tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
2.26 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are
independently managed by the respective segment managers responsible for the performance of the respective segments under
their charge. The segment managers report to the Group Managing Director who regularly reviews the segment results in order
to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments
are shown in Note 38, including the factors used to identify the reportable segments and the measurement basis of segment
information.
2.
203
2.27 Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting
all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are
classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
2.28 Treasury shares
When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid
is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity.
No gain or loss is recognised in profit or loss on the purchase, sale, issue 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.
2.29 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group.
2.30 Hedge accounting
The Group uses derivatives to manage its exposure to commodity price risk (specifically fluctuations in palm oil prices). The Group
applies hedge accounting for certain hedging relationships which qualify for hedge accounting.
For the purpose of hedge accounting, hedging relationship are classified as cash flow hedges. Cash flow hedging is applied when the
Group hedges exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group
wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the
entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash
flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or
cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial
reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
204
(continued)
31 DECEMBER 2011
2.
2.30 Hedge accounting (continued)
(a)
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised directly in other comprehensive income into
cash flow hedge reserve, while any ineffective portion is recognised immediately in profit or loss as other operating expenses.
Amounts recognised in other comprehensive income previously are reclassified from equity to profit or loss when the hedged
transaction affects profit or loss, such as when the hedged interest income or interest expense is recognised or when a forecast
sale occurs. Where the hedged item is a non-financial asset or a non-financial liability, the amounts recognised previously in
other comprehensive income are removed and included in the initial carrying amount of the non-financial asset or liability.
If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised
in other comprehensive income is reclassified from equity to profit or loss. If the hedging instrument expires or is sold,
terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or
loss previously recognised in other comprehensive income remain in equity until the forecast transaction or firm commitment
affects profit or loss.
The Group uses forward commodity contracts for its exposure to volatility in the commodity prices. Refer to Note 24 for more
details.
(b)
Derivatives that are not designated or do not qualify for hedge accounting
Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting
are directly recognised in profit or loss.
3.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However,
uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying
amount of the asset or liability affected in the future.
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most
significant effect on the amounts recognised in the financial statements:
(a)
Impairment of goodwill, brandname and franchise rights
Goodwill, brands and other indefinite life intangibles are tested for impairment annually and at other times when such indicators
exist. This requires an estimation of the value in use of the cash-generating units to which goodwill and brands are allocated.
When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cashgenerating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of
the carrying value, the key assumptions applied in the impairment assessment of goodwill, brands and franchise rights are given in
Note 15.
(b)
Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine
whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant
financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical
loss experience for assets with similar credit risk characteristics. The carrying amount and details of the Group’s receivables at the
reporting date are disclosed in Note 21.
4.
205
REVENUE
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
3,072,306
–
3,349,914
163,411
21,226
8,304
8,533
57,656
1,942,091
22,908
3,035,827
163,739
15,285
4,988
6,066
11,032
186,696
–
–
–
–
–
6,368
3
140,146
–
–
–
–
299
5,524
4
169,935
115,665
6,488
30,416
27,787
8,200
1,930
87,153
111,888
8,962
33,625
35,232
7,587
2,556
–
–
–
–
–
8,200
61,498
–
–
–
–
–
7,587
33,182
7,041,771
5,488,939
262,765
186,742
–
881,511
–
–
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
1,401,767
(4,108)
1,942,725
88,424
2,533
7,608
2,799
19,061
871,008
(8,904)
1,769,268
71,551
(1,608)
4,870
(1,162)
(3,592)
106,038
–
–
–
–
1,626
–
–
71,965
–
–
–
198
1,574
–
–
54,039
17,530
1,476
4,818
5,756
3,687
1,930
22,168
18,161
1,822
7,862
1,232
3,513
2,556
–
–
–
–
–
3,687
61,498
–
–
–
–
–
3,513
33,182
3,550,045
2,758,745
172,849
110,432
–
3,256
–
–
Sales of goods:
Palm-based products
Biodiesel
Restaurant food and beverages
Sugar
Livestocks and meats
Rubber-based manufactured products
Banana products
Others
Intrapreneur ventures:
Freight time-charter hire and related services
Parking collection and related services
Sales of wood-based products
Bulk mailing and printing services
Plantation management services and sales of related goods
Rental income from investment properties
Dividend income
Discontinued operations
Oleochemical products
5.
GROSS PROFIT
Group
Company
Sales of goods:
Palm-based products
Biodiesel
Restaurant food and beverages
Sugar
Rubber-based products
Banana products
Livestocks and meats
Others
Intrapreneur ventures:
Freight time-charter hire and related services
Parking collection and related services
Sales of wood-based products
Plantation management services
Rental income from investment properties
Dividend income
Discontinued operations
Oleochemical products
206
(continued)
31 DECEMBER 2011
6.
INTEREST INCOME
Group
Interest income on:
Deposits with licensed banks
Amount due from ultimate holding corporation
Amount due from subsidiaries
Others
7.
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
10,561
2,022
–
8
3,447
2,911
–
12
3,564
2,022
2,772
21
1,110
2,911
2,381
12
12,591
6,370
8,379
6,414
FINANCE COSTS
Group
Interest expense on:
Bank overdraft
Loans
Other borrowings
Amount due to subsidiaries
8.
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
110
88,770
2,595
–
80
78,881
2,479
–
26
16,924
–
3,112
60
25,179
2,479
3,227
91,475
81,440
20,062
30,945
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
103
68
–
–
5,585
–
–
1,830
3,412
–
–
–
–
–
4,045
104,400
9,372
–
415,555
767
10,482
78
321,189
3,461
–
–
10,636
–
–
–
11,127
–
781
2,992
–
3,202
90
4
–
85
259
1,572
222
1,208
–
405
–
443
12
194
–
–
PROFIT/(LOSS) BEFORE TAX
Group
Profit/(loss) before tax is arrived at after charging:
Allowance for slow moving inventories
Allowance for impairment losses on:
– Trade receivables
– Other receivables
– Amount due from subsidiaries
Amortisation and depreciation of:
– Intangible assets
– Prepaid lease payments
Auditors’ remuneration:
– Statutory audit
– Ernst & Young
– Other auditors
– Other services
– Ernst & Young
– Other auditors
Fees paid/payable to ultimate holding corporation
for services of directors
Company
8.
207
PROFIT/(LOSS) BEFORE TAX (continued)
Group
Fees paid/payable to a related company for services
of directors
Fair value loss on investment properties
Impairment loss on:
– Investments in subsidiaries
– Assets held for sale
Loss on disposal of property, plant and equipment
Net foreign exchange loss:
– Realised
– Unrealised
Technology transfer fee payable to corporate
shareholder of a subsidiary
Write down of inventories
Write off of:
– Inventories
Provision for employee benefits
Rental of plant and machinery
Rental of land and building paid to:
– Ultimate holding corporation
– Others
Staff costs (excluding key management personnel):
– Salaries, wages, allowances and bonuses
– Defined contribution plan
– Other employee benefits
and after crediting:
Franchise fee income
Dividend income from:
– Unquoted shares in Malaysia
– Shares quoted in Malaysia
– Shares quoted outside Malaysia
– Subsidiaries (unquoted shares in Malaysia)
Gain on:
– Disposal of subsidiary
– Disposal of property, plant and equipment
– Disposal of other investments
– Partial disposal of subsidiaries
Management fee received
Net foreign exchange gain:
– Realised
– Unrealised
Rental income
Reversal of allowance for impairment losses:
– Trade receivables
Fair value changes on other investments
Guaranteed return on car park concession
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
–
7,717
5
–
–
8,051
–
–
–
4,811
1,500
8,409
–
46,440
–
4,503
455
–
–
–
1,801
–
–
–
–
41
200
719
–
–
–
53
200
223
200
821
–
–
–
–
939
1,144
–
86
–
547
6,214
844
270
490
939
145
–
–
–
547
74
–
–
–
629
278,203
629
256,872
629
–
629
–
783,301
58,467
170,374
661,418
52,780
165,243
21,790
680
–
18,826
669
–
297
282
–
–
491
1,439
–
–
2,456
135
–
–
491
26,823
34,184
–
2,456
30,186
–
540
–
14
18,630
–
–
153,417
156
62
31,507
282
–
9
18,351
49
–
240,149
86
14,116
24,820
–
466
151,363
2,815
3,803
50
2,497
466
–
1,215
–
–
880
45
18,572
2,953
2,716
679
2,952
–
18,572
–
–
–
–
208
(continued)
31 DECEMBER 2011
9.
DIRECTORS’ REMUNERATION
The details of remuneration receivable by directors of the Group and the Company during the year are as follows:
Group
Executive Directors
– Fees
– Salaries, allowances and bonuses
– Estimated money value of benefits-in-kind
– Other emoluments
Non-executive Directors
– Fees
– Salaries, allowances and bonuses
– Estimated money value of benefits-in-kind
Independent non-executive Directors
– Fees
Total directors’ remuneration
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
652
2,652
182
396
138
290
2,253
281
312
120
200
2,193
116
342
85
150
1,261
90
208
131
4,020
3,256
2,936
1,840
639
526
54
71
268
701
557
115
79
94
195
–
–
–
45
250
–
–
–
32
1,558
1,546
240
282
468
132
446
96
215
88
200
46
600
542
303
246
6,178
5,344
3,479
2,368
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
134,035
143,071
(18,216)
96,671
80,589
(5,686)
25,305
–
(2,758)
14,288
–
7,176
258,890
171,574
22,547
21,464
80,297
17,743
63,440
(1,333)
321
28
(671)
360
98,040
62,107
349
(311)
356,930
233,681
22,896
21,153
10. INCOME TAX EXPENSE
Group
Statement of comprehensive income
Current income tax
– Malaysian income tax
– Foreign tax
– (Over)/Underprovided in prior years
Deferred tax (Note 19):
– Origination and reversal of temporary differences
– Under/(Over)provided in prior years
Income tax expense recognised in profit or loss
Company
209
10. INCOME TAX EXPENSE (continued)
A reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory income tax rate to income tax expense
at the effective income tax rate of the Group and the Company is as follows:
Group
Profit/(loss) before tax
Taxation at Malaysian statutory
tax rate of 25% (2010: 25%)
Different tax rates in other countries
Effect of non-deductible expenses
Effect of income exempt from tax
Utilisation of previously unrecognised deferred tax assets
Deferred tax assets not recognised
(Over)/Underprovision of income tax in prior years
Under/(Over)provision of deferred tax in prior years
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
1,364,796
777,896
151,980
(7,718)
341,199
39,442
49,400
(79,960)
(580)
7,902
(18,216)
17,743
194,474
23,337
15,558
(7,779)
–
15,110
(5,686)
(1,333)
37,995
–
14,488
(26,857)
–
–
(2,758)
28
(1,930)
–
23,842
(8,295)
–
–
7,176
360
356,930
233,681
22,896
21,153
11. DISCONTINUED OPERATION AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE
Group
2011
RM’000
2010
RM’000
Assets held for sale comprise:
Investment in associate
Less: Allowance for impairment
13,500
(1,500)
13,500
–
12,000
1,032
13,500
–
13,032
13,500
The investment in associate relates to the proposed disposal of MM Vitaoils Sdn. Bhd, an associate of Sindora Berhad. The Group has
received to date an amount of RM1,850,000 as partial payment from the buyer. The negotiation with the buyer on the completion of the
sale is still in progress.
Discontinued operation and disposal group classified as held for sale in the previous financial year
During the previous financial year, the Group disposed of its interests in certain subsidiaries – Natural Oleochemicals Sdn. Bhd. and its
subsidiaries (“NOSB Group”), which was previously reported in the oleochemical segment. This decision is consistent with the Group’s
strategy to focus on its core plantation operations in Malaysia, Papua New Guinea and the Solomon Islands where the Group has extensive
experience and strong presence.
The results of NOSB Group were presented separately on the statement of comprehensive income for the year ended 31 December 2010
as “Loss from discontinued operation, net of tax”. The disposal was completed on 30 September 2010.
210
(continued)
31 DECEMBER 2011
11. DISCONTINUED OPERATION AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (continued)
The disposal had the following effects on the financial position of the Group as at 31 December 2010:
2010
RM’000
Prepaid lease payments
Deferred tax assets
Inventories
Receivables
Derivatives
Cash and cash equivalents
Taxation
293,709
5,680
3,242
107,155
215,907
19,438
10,118
(1,621)
(67,490)
(270,202)
(719)
Net assets of NOSB Group
315,217
(34,150)
Net assets of NOSB Group attributable to the Group
Incidental costs
Total disposal proceeds
281,067
15,516
(450,000)
Gain on disposal to the Group
(153,417)
Cash inflow arising on disposal:
Cash consideration
Cash and cash equivalents of NOSB Group disposed
450,000
(10,118)
Net cash inflow on disposal
439,882
Statement of comprehensive income disclosures
The results attributable to NOSB Group were as follows:
1 Jan 2010 to 30 Sep 2010
Group
RM’000
Company
RM’000
Revenue
Expenses
881,511
(873,031)
–
–
Profit from operations
Finance costs
Gain on disposal of discontinued operation
Taxation
8,480
(7,004)
153,417
(3,282)
–
–
240,149
–
Gain from discontinued operation, net of tax
151,611
240,149
211
11. DISCONTINUED OPERATION AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (continued)
Statement of cash flow disclosures
The cash flow attributable to NOSB Group were as follows:
1 Jan 2010
to 30 Sep 2010
Group
RM’000
Operating
Investing
Financing
(38,265)
328
(38,252)
Net cash outflows
(76,189)
12. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the Company by the
weighted average number of ordinary shares outstanding during the financial year.
The following reflect the profit and share data used in the computation of basic earnings per share for the years ended 31 December:
Group
Profit for the year attributable to shareholders
2011
RM’000
2010
RM’000
565,013
–
233,981
151,611
565,013
385,592
Group
Weighted average number of ordinary shares
2011
’000
2010
’000
1,230,853
1,249,396
Group
Basic earnings per share
2011
Sen
2010
Sen
45.90
–
18.73
12.13
45.90
30.86
The comparative amount for earnings per share has been adjusted to take into effect the results of the share split and bonus issue as
disclosed in Note 26.
Diluted earnings per share is equal to the basic earnings per share as there are no dilutive effects from the potential exercise of the
share warrants.
212
(continued)
31 DECEMBER 2011
12. EARNINGS PER SHARE (continued)
Group
Weighted average number of ordinary shares at 1 January/31 December
2011
RM’000
2010
RM’000
1,230,853
1,249,396
Group
Diluted earnings per share:
2011
RM’000
2010
RM’000
45.90
–
18.73
12.13
45.90
30.86
13. PROPERTY, PLANT AND EQUIPMENT
Freehold
land
RM’000
Long term
leasehold
land
RM’000
Leasehold
improvement
and
renovation
RM’000
Estate
development
expenditure
RM’000
Buildings
RM’000
Other
assets
RM’000
Capital
work in
progress
RM’000
Total
RM’000
Group
Cost
At 1 January 2010
Acquisition of subsidiaries
Additions
Disposals
Write off
Transfer from assets held
for sale
Reclassification
Exchange differences
1,472,928
–
–
16,568
(768)
(1,833)
487,852
–
(9,379)
3,357
–
–
310,180
178
–
89,912
(18,106)
–
1,009,549
464,499
–
108,255
(7,357)
(2,987)
1,040,177
147,727
(107,846)
23,197
(9,662)
(2,769)
2,209,421
163,461
(327,840)
182,439
(34,874)
(9,397)
396,331
21,147
(87)
305,570
–
–
6,926,438
797,012
(445,152)
729,298
(70,767)
(16,986)
–
–
–
–
–
–
–
–
(2,706)
–
–
(57,807)
–
75,501
(38,163)
389
303,706
(61,628)
–
(379,207)
(39,695)
389
–
(199,999)
At 31 December 2010/
1 January 2011
1,486,895
481,830
379,458
1,514,152
1,128,162
2,425,677
304,059
7,720,233
At 1 January 2011
Additions
Disposals
Write off
Reclassification
1,486,895
–
26,571
(692)
–
(271)
–
481,830
–
209,951
(695)
–
271
–
379,458
–
103,869
(20,349)
–
(3,778)
2,444
1,514,152
–
512,543
–
–
–
121,878
1,128,162
–
43,331
(258)
(1,152)
75,493
169,446
2,425,677
171,285
374,572
(33,943)
(5,942)
151,529
122,639
304,059
–
329,435
–
–
(223,244)
60,253
7,720,233
171,285
1,600,272
(55,937)
(7,094)
–
476,660
At 31 December 2011
1,512,503
691,357
461,644
2,148,573
1,415,022
3,205,817
470,503
9,905,419
213
13. PROPERTY, PLANT AND EQUIPMENT (continued)
Freehold
land
RM’000
Long term
leasehold
land
RM’000
Leasehold
improvement
and
renovation
RM’000
Estate
development
expenditure
RM’000
Buildings
RM’000
Other
assets
RM’000
Capital
work in
progress
RM’000
Total
RM’000
Group
Accumulated depreciation
At 1 January 2010
Charge for the year
Disposals
Write off
Transfer from assets held
for sale
Reclassification
–
–
–
–
–
–
38,678
–
(1,210)
355
–
–
128,005
64
–
34,035
(14,687)
–
243,479
–
–
44,421
–
(2,987)
217,296
311
(19,455)
21,816
(3,632)
(1,649)
1,004,978
1,231
(130,778)
220,562
(30,737)
(6,136)
–
–
–
–
–
–
1,632,436
1,606
(151,443)
321,189
(49,056)
(10,772)
–
–
–
–
357
–
–
–
(1,487)
–
–
(10,097)
–
(303)
(9,166)
290
(54)
(32,783)
–
–
–
290
–
(53,533)
1 January 2011
–
38,180
145,930
274,816
205,218
1,026,573
–
1,690,717
At 1 January 2011
Charge for the year
Disposals
Write off
Reclassification
–
–
–
–
–
–
–
38,180
–
4,329
(695)
–
981
–
145,930
–
40,429
(16,804)
–
(732)
1,726
274,816
–
48,715
–
–
–
3,393
205,218
–
35,290
(13)
(773)
(265)
2,289
1,026,573
4,065
286,792
(25,993)
(5,177)
16
12,147
–
–
–
–
–
–
–
1,690,717
4,065
415,555
(43,505)
(5,950)
–
19,555
At 31 December 2011
–
42,795
170,549
326,924
241,746
1,298,423
–
2,080,437
At 1 January 2010
Impairment loss for the year
58,733
2,560
–
540
1,276
–
12,177
–
22,931
7,936
10,308
35,404
703
–
106,128
46,440
At 31 December 2010
61,293
–
540
–
1,276
–
12,177
–
30,867
–
45,712
4,574
703
237
152,568
4,811
At 31 December 2011
61,293
540
1,276
12,177
30,867
50,286
940
157,379
At 31 December 2010
1,425,602
443,110
232,252
1,227,159
892,077
1,353,392
303,356
5,876,948
At 31 December 2011
1,451,210
648,022
289,819
1,809,472
1,142,409
1,857,108
469,563
7,667,603
Accumulated impairment
losses
Net carrying amount:
214
(continued)
31 DECEMBER 2011
Freehold
land
RM’000
Long term
leasehold
land
RM’000
Estate
development
expenditure
RM’000
At 1 January 2010
Additions
Disposals
Write off
Transfer
774,737
–
–
–
–
207,768
–
–
–
–
127,976
5,168
–
(2,325)
–
48,113
174
(22)
(631)
760
30,450
1,301
(2,375)
(1,142)
–
698
3,674
–
–
(760)
1,189,742
10,317
(2,397)
(4,098)
–
At 31 December 2010/1 January 2011
Additions
Disposals
Write off
Reclassification
774,737
–
–
–
–
207,768
–
–
–
–
130,819
6,105
–
–
–
48,394
11
–
(163)
2,574
28,234
1,651
(66)
(1,236)
–
3,612
3,394
–
(108)
(2,574)
1,193,564
11,161
(66)
(1,507)
–
At 31 December 2011
774,737
207,768
136,924
50,816
28,583
4,324
1,203,152
At 1 January 2010
Charge for the year
Disposals
Write off
–
–
–
–
9,691
1,218
–
–
56,907
5,812
–
(2,325)
26,992
1,846
(9)
(597)
22,967
2,251
(2,126)
(1,102)
–
–
–
–
116,557
11,127
(2,135)
(4,024)
At 31 December 2010/1 January 2011
Charge for the year
Disposals
Write off
–
–
–
–
10,909
1,218
–
–
60,394
5,875
–
–
28,232
1,570
–
(131)
21,990
1,973
(50)
(1,231)
–
–
–
–
121,525
10,636
(50)
(1,362)
At 31 December 2011
–
12,127
66,269
29,671
22,682
–
130,749
At 31 December 2010
774,737
196,859
70,425
20,162
6,244
3,612
1,072,039
At 31 December 2011
774,737
195,641
70,655
21,145
5,901
4,324
1,072,403
Buildings
RM’000
Other
assets
RM’000
Capital
work in
progress
RM’000
Total
RM’000
Company
Cost
Net carrying amount:
215
Other assets can be further analysed as follows:
Vessels,
plant and
machinery
RM’000
Restaurant
and office
equipment
RM’000
Furniture
and
fittings
RM’000
Motor
vehicles
RM’000
Total
RM’000
At 1 January 2010
Additions
Disposals
Write off
Transfer to assets held for sale
Reclassification
1,550,546
161,107
(318,243)
48,282
(4,619)
(6,599)
220
303,999
(58,743)
529,226
2,018
–
119,712
(24,183)
–
–
–
(2,652)
48,058
218
(9,597)
4,436
(251)
(365)
169
(293)
(59)
81,591
118
–
10,009
(5,821)
(2,433)
–
–
(174)
2,209,421
163,461
(327,840)
182,439
(34,874)
(9,397)
389
303,706
(61,628)
At 31 December 2010
1,675,950
624,121
42,316
83,290
2,425,677
At 1 January 2011
Additions
Disposals
Write off
Reclassification
1,675,950
169,579
168,922
(1,077)
(2,947)
151,295
120,922
624,121
12
149,889
(20,737)
–
234
1,679
42,316
459
40,644
(1,165)
(396)
–
–
83,290
1,235
15,117
(10,964)
(2,599)
–
38
2,425,677
171,285
374,572
(33,943)
(5,942)
151,529
122,639
At 31 December 2011
2,282,644
755,198
81,858
86,117
3,205,817
At 1 January 2010
Charge for the year
Disposals
Write off
Transfer to assets held for sale
Reclassification
696,192
8
(124,506)
149,320
(5,393)
(3,714)
192
1
(31,332)
220,646
1,123
–
56,589
(19,866)
–
–
–
(1,313)
31,652
–
(6,272)
5,526
(335)
(344)
98
(97)
(44)
56,488
100
–
9,127
(5,143)
(2,078)
–
42
(94)
1,004,978
1,231
(130,778)
220,562
(30,737)
(6,136)
290
(54)
(32,783)
At 31 December 2010
680,768
257,179
30,184
58,442
1,026,573
At 1 January 2011
Charge for the year
Disposals
Write off
Reclassification
680,768
3,166
208,372
(248)
(2,217)
–
10,862
257,179
3
65,320
(14,947)
–
16
1,236
30,184
184
4,669
(1,117)
(394)
–
–
58,442
712
8,431
(9,681)
(2,566)
–
49
1,026,573
4,065
286,792
(25,993)
(5,177)
16
12,147
At 31 December 2011
900,703
308,807
33,526
55,387
1,298,423
Group
Cost
216
(continued)
31 DECEMBER 2011
Vessels,
plant and
machinery
RM’000
Restaurant
and office
equipment
RM’000
Furniture
and
fittings
RM’000
Motor
vehicles
RM’000
Total
RM’000
At 1 January 2010
9,031
35,404
1,267
–
–
–
10
–
10,308
35,404
At 31 December 2010
44,435
1,267
–
10
45,712
At 1 January 2011
44,435
4,574
1,267
–
–
–
10
–
45,712
4,574
At 31 December 2011
49,009
1,267
–
10
50,286
At 31 December 2010
950,747
365,675
12,132
24,838
1,353,392
At 31 December 2011
1,332,932
445,124
48,332
30,720
1,857,108
Plant
and
machinery
RM’000
Furniture
and
fittings
RM’000
Motor
vehicles
RM’000
Total
RM’000
At 1 January 2010
Additions
Disposals
Write off
14,597
211
(1,855)
(445)
7,033
315
(61)
(164)
8,820
775
(459)
(533)
30,450
1,301
(2,375)
(1,142)
At 31 December 2010
12,508
7,123
8,603
28,234
At 1 January 2011
Additions
Disposals
Write off
12,508
325
(33)
(281)
7,123
438
(33)
(250)
8,603
888
–
(705)
28,234
1,651
(66)
(1,236)
At 31 December 2011
12,519
7,278
8,786
28,583
Group
Accumulated impairment losses
Carrying amount
Company
Cost
217
Plant
and
machinery
RM’000
Furniture
and
fittings
RM’000
Motor
vehicles
RM’000
Total
RM’000
At 1 January 2010
Charge for the year
Disposals
Write off
11,837
606
(1,664)
(441)
5,034
623
(59)
(163)
6,096
1,022
(403)
(498)
22,967
2,251
(2,126)
(1,102)
At 31 December 2010
10,338
5,435
6,217
21,990
At 1 January 2011
Charge for the year
Disposals
Write off
10,338
527
(32)
(276)
5,435
616
(18)
(250)
6,217
830
–
(705)
21,990
1,973
(50)
(1,231)
At 31 December 2011
10,557
5,783
6,342
22,682
At 31 December 2010
2,170
1,688
2,386
6,244
At 31 December 2011
1,962
1,495
2,444
5,901
Company
Carrying amount
Assets held under finance lease
During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of about RM1,600,272,000
(2010: RM729,298,000) and RM11,161,000 (2010: RM10,317,000) respectively, of which RM7,629,000 (2010: RM3,245,000) and Nil (2010: Nil)
of the Group and of the Company respectively, were acquired by means of finance lease.
Included in property, plant and equipment of the Group are assets acquired under lease arrangements at net book value of RM7,629,000
(2010: RM5,643,000). The leased assets consist of equipments and motor vehicles which secure lease obligations (Note 23).
Assets pledged as security for borrowings
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
500,792
126,470
633,329
857,989
1,094,076
591,798
200,516
550,915
643,351
773,011
44,953
126,470
1,251
–
–
88,903
157,138
30,460
–
–
3,212,656
2,759,591
172,674
276,501
Carrying amount of assets pledged as security for borrowings:
–
–
–
–
–
freehold lands
long term leasehold lands
estate development expenditure
buildings
other property, plant and equipment
218
(continued)
31 DECEMBER 2011
Acquisition of oil palm plantations from ultimate holding corporation
On 16 August 2011, the Company made an announcement to Bursa Malaysia in relation to the proposed acquisition through its wholly
owned subsidiary, Mahamurni Plantations Sdn. Bhd, of six estates (together with all buildings and mills erected thereon) owned by the
ultimate holding corporation, Johor Corporation for a cash consideration of RM700 million. As at 31 December 2011, the Group has fully
acquired Sungai Papan Estate and part of Siang Estate. The net carrying amount of the acquired estates amounted to RM374,900,000. The
balance of RM325,100,000 attributable to the other unacquired estates will be acquired in the financial year ending 31 December 2012.
As at the reporting date, the title to the acquired estates is in the midst of being transferred to the Group.
Impairment loss
During the current financial year, the Group recognised impairment losses of RM4,811,000. This was mainly in respect of its bio-diesel
plant and machinery.
During the previous financial year, the Group recognised impairment losses of RM11,036,000 in respect of certain assets associated with
the Group’s foods and restaurants business segment and RM35,404,000 in respect of the Group’s bio-diesel plant and machinery.
14. INVESTMENT PROPERTIES
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
At 1 January
Additions from subsequent expenditure
Acquired during the year
Net loss from fair value adjustments recognised in
profit or loss (Note 8)
97,863
5,248
2,902
97,863
–
–
94,503
5,248
2,902
94,503
–
–
(7,717)
–
(8,051)
–
At 31 December
98,296
97,863
94,602
94,503
Investment properties comprise a number of commercial properties that are leased to third parties. Subsequent renewals are negotiated
with the lessee and no contingent rents are charged.
The fair values of investment properties of the Group and of the Company are determined using the investment and comparison
method.
Security
At 31 December 2011, investment properties of the Group and of the Company with carrying amounts of RM93,570,000
(2010: RM97,863,000) and RM90,000,000 (2010: RM94,503,000) respectively are charged to licensed banks for term loan facilities granted
to the Group.
219
15. INTANGIBLE ASSETS
Brands
RM’000
Franchise
rights
RM’000
Goodwill
RM’000
Concession
rights
RM’000
Franchise
fees
RM’000
Supplier
relationship
RM’000
Others
RM’000
Total
RM’000
At 1 January 2010
Additions
Write off
Exchange difference
86,452
–
–
–
–
720,452
–
5,400
–
–
36,172
11,075
330
–
–
14,198
–
–
–
–
69,866
–
8,019
(3,110)
–
–
145,072
–
–
(4,771)
700
–
561
–
–
927,840
156,147
14,310
(3,110)
(4,771)
1 January 2011
Reclassification
Additions
Write off
Exchange difference
86,452
–
–
–
–
–
725,852
–
–
–
–
–
47,577
12,940
–
633
–
–
14,198
–
–
–
–
–
74,775
–
–
7,798
(75)
–
140,301
–
–
–
–
37,134
1,261
465
2,062
–
–
–
1,090,416
13,405
2,062
8,431
(75)
37,134
At 31 December 2011
86,452
725,852
61,150
14,198
82,498
177,435
3,788
1,151,373
At 1 January 2010
Amortisation for the year
Write off
–
–
–
–
–
–
2,704
–
–
2,000
1,000
–
31,270
9,412
(3,110)
–
–
–
175
70
–
36,149
10,482
(3,110)
1 January 2011
Reclassification
Amortisation for the year
Write off
–
–
–
–
–
–
–
–
2,704
–
76
–
3,000
–
1,000
–
37,572
–
7,814
(75)
–
–
–
–
245
756
482
–
43,521
756
9,372
(75)
At 31 December 2011
–
–
2,780
4,000
45,311
–
1,483
53,574
At 31 December 2010
86,452
725,852
44,873
11,198
37,203
140,301
1,016
1,046,895
At 31 December 2011
86,452
725,852
58,370
10,198
37,187
177,435
2,305
1,097,799
Group
Cost
Accumulated amortisation
and impairment
Net carrying amount
220
(continued)
31 DECEMBER 2011
15. INTANGIBLE ASSETS
Brands and franchise rights
The Group’s brands and franchise rights were acquired through business combinations. Brands relate to the Group’s Integrated Poultry and
Ancillary segments whereas franchise rights relate to the Group’s Restaurant segment.
Concession rights
The concession rights arose from a 15 year Concession Agreement with the ultimate holding corporation for a subsidiary to manage,
operate and maintain a multi-storey car park together with other parking facilities at Persada Johor International Convention Centre. The
Group anticipates that the cost will be recovered through future income derived from the car park operations. The income is guaranteed
by the ultimate holding corporation pursuant to the Concession Agreement. The Concession Agreement has a remaining amortisation
period of 5.8 years (2010: 6.8 years).
Franchise fees
Franchise fees consists of the initial franchise fee paid for the set up of new restaurants and renewal franchise fees which are paid upon
the expiry of the initial franchise period. Franchise fees are amortised on a straight-line basis over a period of 10 years.
Supplier relationship
The supplier relationship arose from the acquisition of palm oil plantations in Papua New Guinea and reflect the net present value of
the future income stream from purchasing of fresh fruit bunches produced by neighbouring smallholders. These assets have an indefinite
useful life and are tested annually for impairment.
Amortisation expense
The amortisation of concession rights and franchise fees are included in the “Administrative expenses” line item in the statements of
comprehensive income.
Restaurants
Integrated poultry
Ancillary
Bulk-mailing and printing
services
Parking operator
Shipping and forwarding
agent
Provision of sea
transportation and
related services
Insurance broker
Agricultural fertilizer
trading and
biotechnology
research and
development
Palm oil milling
Others
Group
–
75,595
10,857
–
–
–
–
–
–
–
–
86,452
–
–
–
–
–
–
–
–
86,452
2010
RM’000
–
75,595
10,857
2011
RM’000
Brandname
725,852
–
–
–
–
–
–
–
–
725,852
–
–
2011
RM’000
725,852
–
–
–
–
–
–
–
–
725,852
–
–
2010
RM’000
Franchise rights
58,370
3,584
–
389
5,660
1,642
3,336
1,931
2,347
25,091
10,783
3,607
2011
RM’000
44,873
2,587
–
389
5,660
1,642
1,333
1,931
2,347
15,129
10,278
3,577
2010
RM’000
Goodwill
177,435
–
177,435
–
–
–
–
–
–
–
–
–
2011
RM’000
140,301
–
140,301
–
–
–
–
–
–
–
–
–
2010
RM’000
Supplier
relationship
49,690
–
–
2,305
–
–
–
–
10,198
–
37,187
–
2011
RM’000
49,417
–
–
1,016
–
–
–
–
11,198
–
37,203
–
2010
RM’000
Intangible assets
with finite useful lives
3,584
177,435
2,694
5,660
1,642
3,336
1,931
12,545
750,943
123,565
14,464
2011
RM’000
2,587
140,301
1,405
5,660
1,642
1,333
1,931
13,545
740,981
123,076
14,434
2010
RM’000
1,046,895
Total
1,097,799
For the purpose of impairment testing, intangible assets with indefinite useful lives have been allocated to the following cash-generating units (“CGU”).
Impairment testing of intangible assets with indefinite useful lives
15. INTANGIBLE ASSETS (continued)
221
222
(continued)
31 DECEMBER 2011
15. INTANGIBLE ASSETS (continued)
Key assumptions used in value-in-use calculations
The recoverable amount of the CGUs have been determined based on value-in-use calculations using cash flow projections based on
financial budgets approved by management.
The key assumptions on which management has based its cash flow projections are as follows:
Restaurants, integrated poultry and ancillary segments
•
Cash flows were projected based on financial budgets approved by management covering a ten year period.
•
The growth rate used to extrapolate the cash flows of the Restaurants, Integrated Poultry and Ancillary segments beyond the 10
year period is 4% (2010: 4%) which does not exceed the average historical growth rate over the long term for the industry or the
estimated GDP growth rate of the country.
•
There will be no material changes in the structure and principal activities of the CGUs.
•
Raw material price inflation – there will not be any significant increase in the prices and supply of raw materials, wages and other
related costs, resulting from industrial disputes, adverse changes in economic conditions or other unusual factors.
•
There will be no material changes in the present legislation or regulations, rates and bases of duties, levies and other taxes affecting
the CGU’s activities.
•
A pre-tax discount rate of 9.65% was applied in determining the recoverable amounts of the CGUs. The discount rate was estimated
based on the weighted average cost of capital of the respective CGUs.
•
There will be no significant changes in the prevailing existing financing facilities and interest rates.
•
There will be no significant fluctuations in the foreign exchange rates.
Other segments
•
Cash flows were projected based on actual operating results covering a five year period.
•
Revenue was projected to grow at approximately 5% – 25% per annum.
•
Budgeted gross profit margins were projected at between of 4% – 44% per annum.
•
A pre-tax discount rate of 10% was applied in determining the recoverable amount of theCGU. The discount rate was estimated
based on the CGU’s existing rates of borrowing.
The values assigned to the key assumptions represent management’s assessment of future trends in the industry.
223
16. INVESTMENT IN SUBSIDIARIES
Company
2011
RM’000
2010
RM’000
At cost:
Unquoted shares in Malaysia
Less: Impairment losses
576,921
(21,705)
371,966
(21,250)
Quoted shares in Malaysia
Quoted shares outside Malaysia
555,216
545,028
216,390
350,716
653,579
216,390
1,316,634
1,220,685
1,087,065
2,559,965
985,775
3,111,398
Market value:
Quoted shares in Malaysia
Quoted shares outside Malaysia
The investments in quoted shares in subsidiaries are pledged to the bank for borrowings as further disclosed in Note 23 to the
financial statements.
Details of the subsidiaries are as follows:
Effective ownership interest
Country of
incorporation
2011
%
2010
%
Principal activities
Mahamurni Plantations Sdn. Bhd.
Malaysia
100
100
Oil palm plantation
Selai Sdn. Bhd.
Malaysia
100
100
Oil palm plantation
Ulu Tiram Manufacturing Company
(Malaysia) Sdn. Bhd.
Malaysia
100
100
Oil palm plantation
Kumpulan Bertam Plantations Berhad
Malaysia
94.49
94.49
Oil palm plantation
EPA Management Sdn. Bhd.
Malaysia
100
100
Investment holding, provision of
management services and consultancy,
and mechanical equipment assembler
Skellerup Industries (Malaysia) Sdn. Bhd.
Malaysia
100
100
Manufacturer of rubber-based products
Kulim Topplant Sdn. Bhd.
Malaysia
60
60
Production of oil palm clones
JTP Trading Sdn. Bhd.
Malaysia
80
80
Trading/distribution of tropical fruits
Kulim Energy Sdn. Bhd.
Malaysia
100
100
Investment holding
Pristine Bay Sdn. Bhd.
Malaysia
51
51
Investment holding
Kulim Plantations (Malaysia) Sdn. Bhd.
Malaysia
100
100
Oil palm plantation
Papua New
Guinea
50.68
50.68
Oil palm plantation
+# QSR Brands Bhd.
Malaysia
53.92
56.02
Investment holding
Sindora Berhad
Malaysia
100
76.29
Investment holding, operations of oil palm
million and rubber estates
Name of subsidiaries
Held by the Company:
+@ New Britain Palm Oil Limited
224
(continued)
31 DECEMBER 2011
16. INVESTMENT IN SUBSIDIARIES (continued)
Country of
incorporation
2011
%
2010
%
Cita Tani Sdn. Bhd.
Malaysia
90
90
Cultivation of sugar cane and other
agriculture produce
Renown Value Sdn. Bhd.
Malaysia
75
90
Cultivation of pineapples and other
agricultural produce
Kulim Nursery Sdn. Bhd.
Malaysia
90
90
Oil palm nursery and other related services
The Secret of Secret Garden Sdn. Bhd.
Malaysia
100
100
Marketing of personal care products
Held by the Company: (continued)
Held through Mahamurni Plantations Sdn. Bhd.:
Pembangunan Mahamurni Sdn. Bhd.
Malaysia
100
100
Investment holding
United Malayan Agricultural Corporation
Berhad
Malaysia
100
100
Oil palm plantation
Held through Ulu Tiram Manufacturing Company (Malaysia) Sdn. Bhd.:
EPA Futures Sdn. Bhd.
Malaysia
100
100
Dormant
Akli Resources Sdn. Bhd.
Malaysia
95
95
Provider of in-house and external training
programmes
Edaran Badang Sdn. Bhd.
Malaysia
75
75
Dealer in agricultural machinery and parts
Kulim Civilworks Sdn. Bhd.
Malaysia
75
75
Facilities maintenance, project and
construction works
Panquest Ventures Limited
British Virgin
Island
100
100
Dormant
Kulim Livestocks Sdn. Bhd.
Malaysia
90
90
Breeding and sale of cattle
Special Appearance Sdn. Bhd.
Malaysia
90
90
Production house and event management
Superior Harbour Sdn. Bhd.
Malaysia
78
78
Aquaculture
Extreme Edge Sdn. Bhd.
Malaysia
90
100
Computer equipment supplier and services
Pinnacle Platform Sdn. Bhd.
Malaysia
100
100
Software maintenance and supplier
Palma Bumimas Sdn. Bhd.
Malaysia
100
100
Dormant
+PT Kulim Agro Persada
Indonesia
100
100
Management services
Malaysia
90
90
Commercial cattle farming
Perfect Synergy Trading Sdn. Bhd.
Malaysia
100
100
Fertilizer supplier
Optimum Status Sdn. Bhd.
Malaysia
100
100
Mill maintenance
Held through EPA Management Sdn. Bhd.:
Held through Kulim Livestocks Sdn. Bhd.
Exquisite Livestock Sdn. Bhd.
Held through Edaran Badang Sdn. Bhd.:
225
16. INVESTMENT IN SUBSIDIARIES
(continued)
Country of
incorporation
2011
%
2010
%
KCW Hardware Sdn. Bhd.
Malaysia
100
100
Hardware supplier
KCW Kulim Marine Services Sdn. Bhd.
Malaysia
100
100
Port services
KCW Electrical Sdn. Bhd.
Malaysia
100
100
Electrical installation services
Held through Kulim Civilworks Sdn. Bhd.:
Held through Skellerup Industries (Malaysia) Sdn. Bhd.:
Skellerup Foam Products (Malaysia) Sdn. Bhd.
Malaysia
100
100
Dormant
Skellerup Latex Products (M) Sdn. Bhd.
Malaysia
100
100
Dormant
SIM Manufacturing Sdn. Bhd.
Malaysia
90
90
Investment holding and manufacturers
and dealers in rubber and rubber
products of all kinds
Malaysia
51
51
Dormant
Malaysia
67.5
67.5
Trading and distribution of tropical fruits
Australia
50.68
50.68
Research and production of oil palm
seeds
+New Britain Nominees Limited
Papua New
Guinea
50.68
50.68
Operate as legal entity for New Britain
Palm Oil Limited Share Ownership Plan
+Guadalcanal Plains Oil Limited
Solomon
Islands
40.54
40.54
Operate as legal entity for New Britain
Palm Oil
+New Britain Plantation Services Pte. Limited
Singapore
50.68
50.68
Sale of germinated oil palm seeds
+Ramu Agri-Industries Limited
Papua New
Guinea
50.68
50.68
Oil palm, cultivation of sugar cane and
other agriculture produce
+Dumpu Limited
Papua New
Guinea
50.68
50.68
Landholding
United
Kingdom
50.68
50.68
Refinery
+Kula Palm Oil Limited
Papua New
Guinea
40.54
40.54
Oil palm cultivation and processing
+Plantation Contracting Services Limited
Papua New
Guinea
50.68
50.68
Contractual earthworks and roadworks
projects
+Poliamba Limited
Papua New
Guinea
32.94
32.94
Oil palm cultivation
Held through Kulim Energy Sdn. Bhd.:
Nexsol (Malaysia) Sdn. Bhd.
Held through JTP Trading Sdn. Bhd.:
JTP Montel Sdn. Bhd.
Held through New Britain Palm Oil Limited:
+Dami Australia Pty. Limited
+New Britain Oils Limited
226
(continued)
31 DECEMBER 2011
Country of
incorporation
2011
%
2010
%
+Pizza Hut Holdings (Malaysia) Sdn. Bhd.
Malaysia
53.92
56.02
Investment holding
+QSR Ventures Sdn. Bhd.
Malaysia
53.92
56.02
Investment holding
+# KFC Holdings (Malaysia) Bhd. (“KFCH”)
Malaysia
27.55
28.35
Investment holding
Cambodia
29.66
30.81
Restaurants
+Efinite Value Sdn. Bhd.
Malaysia
53.92
56.02
Customer service call centre
+Pizza Hut Delco Sdn. Bhd.
Malaysia
53.92
56.02
Dormant
+SBC Coffee Holdings Sdn. Bhd.
Malaysia
53.92
56.02
Dormant
+Sterling Distinction Sdn. Bhd.
Malaysia
53.92
56.02
Dormant
+Yayasan Amal Bistari Sdn. Bhd.
Malaysia
35.48
36.64
Dormant
+Pizza Hut Restaurants Sdn. Bhd.
Malaysia
53.92
56.02
Restaurants
+PH Property Holdings Sdn. Bhd.
Malaysia
53.92
56.02
Dormant
Singapore
53.92
56.02
Investment holding
Labuan
53.92
–
Captive insurer
Cambodia
53.92
–
Dormant
+PHD Delivery Sdn. Bhd.
Malaysia
53.92
56.02
Dormant
+Cilik Bistari Sdn. Bhd.
Malaysia
27.55
28.35
Sale of board games
+Gratings Solar Sdn. Bhd.
Malaysia
27.55
28.35
Trading of solar equipment
+Integrated Poultry Industry Sdn. Bhd.
Malaysia
27.55
28.35
Poultry processing plant
+KFC Events Sdn. Bhd.
Malaysia
27.55
28.35
Sales of food product vouchers
+KFC India Holdings Sdn. Bhd.
Malaysia
27.55
28.35
Investment holding
+Pizza Hut Singapore Pte. Ltd.
Singapore
53.92
56.02
Restaurants
+Pizza (Kampuchea) Private Limited
Cambodia
29.66
30.81
Restaurants
+Ayamas Food Corporation Sdn. Bhd.
Malaysia
27.55
28.35
Poultry processing and investment holding
+Ayamas Integrated Poultry Industry Sdn. Bhd.
Malaysia
27.55
28.35
Breeder, broiler farms, hatchery, feedmill and
investment holding
+KFC Manufacturing Sdn. Bhd.
Malaysia
27.55
28.35
Bakery, trading in consumables and
investment holding
+KFC Restaurants Holdings Sdn. Bhd.
Malaysia
27.55
28.35
Investment holding
+KFCH Education (M) Sdn. Bhd,
Malaysia
27.55
28.35
College/learning institute
Held through QSR Brands Bhd.:
+Kampuchea Food Corporation
+Multibrand QSR Holdings Pte. Ltd.
+QSR Captive Insurance Limited
+Integrated Poultry Industry (Kampuchea)
Private Limited
Held through KFCH:
(formerly known as Paramount Holdings
(M) Sdn. Bhd.)
227
Country of
incorporation
2011
%
2010
%
Malaysia
27.55
28.35
Property holding
+Region Food Industries Sdn. Bhd.
Malaysia
27.55
28.35
Sauce manufacturing plant
+Roaster’s Chicken Sdn. Bhd.
Malaysia
27.55
28.35
Investment holding
+WP Properties Holdings Sdn. Bhd.
Malaysia
27.55
28.35
Investment holding
+Ayamas Shoppe Sdn. Bhd.
Malaysia
27.55
28.35
Poultry retail, convenience food store
chain and investment holding
+Ayamazz Sdn. Bhd.
Malaysia
27.55
28.35
Push-cart selling food and refreshment
+Kentucky Fried Chicken (Malaysia) Sdn. Bhd.
Malaysia
27.55
28.35
Restaurants
+KFC (East Malaysia) Sdn. Bhd.
Malaysia
27.55
28.35
Investment holding
+KFC (Peninsular Malaysia) Sdn. Bhd.
Malaysia
27.55
28.35
Restaurants, commissary and investment
holding
+KFC (Sarawak) Sdn. Bhd.
Malaysia
27.55
28.35
Restaurants
+KFC Marketing Sdn. Bhd.
Malaysia
27.55
28.35
Sales and marketing of food products
+Ladang Ternakan Putihekar (N.S.) Sdn. Bhd.
Malaysia
27.55
28.35
Breeder farm
+MH Integrated Farm Berhad
Malaysia
27.55
28.35
Property holding
+Pintas Tiara Sdn. Bhd.
Malaysia
27.55
28.35
Property holding
+Rasamas Holdings Sdn. Bhd.
Malaysia
27.55
28.35
Restaurants
+Rasamas Bangi Sdn. Bhd.
Malaysia
27.55
28.35
Restaurants
+SPM Restaurants Sdn. Bhd.
Malaysia
27.55
28.35
Meals on wheels and property holding
+Usahawan Bistari Ayamas Sdn. Bhd.
Malaysia
27.55
28.35
Operation of “Sudut Ayamas”
+Ayamas Farms & Hatchery Sdn. Bhd.
Malaysia
24.80
25.55
Broiler farm
+KFC (Sabah) Sdn. Bhd.
Malaysia
27.55
28.35
Restaurants
+Rasamas BC Sdn. Bhd.
Malaysia
27.55
28.35
Restaurants
+Rasamas Bukti Tinggi Sdn. Bhd.
Malaysia
24.80
25.55
Restaurants
+Rasamas Butterworth Sdn. Bhd.
Malaysia
24.80
25.55
Restaurants
+Rasamas Kota Bharu Sdn. Bhd.
Malaysia
24.80
25.55
Restaurants
+Rasamas Melaka Sdn. Bhd.
Malaysia
24.80
25.55
Restaurants
+Rasamas Nilai Sdn. Bhd.
Malaysia
24.80
25.55
Restaurants
+Rasamas Subang Sdn. Bhd.
Malaysia
24.80
25.55
Restaurants
+Rasamas Wangsa Maju Sdn. Bhd.
Malaysia
24.80
25.55
Restaurants
+Rasamas Tebrau Sdn. Bhd.
Malaysia
24.59
25.32
Restaurants
Held through KFCH: (continued)
+KFCIC Assets Sdn. Bhd.
(formerly known as Paramount Management Sdn.
Bhd.)
228
(continued)
31 DECEMBER 2011
Country of
incorporation
2011
%
2010
%
+Rasamas Terminal Larkin Sdn. Bhd.
Malaysia
24.59
25.32
Restaurants
+Rasamas Taman Universiti Sdn. Bhd.
Malaysia
24.53
25.27
Restaurants
+Ayamas Feedmill Sdn. Bhd.
Malaysia
23.40
24.09
Broiler farm
+Semangat Juara Sdn. Bhd.
Malaysia
20.65
21.29
Broiler farm
+Tepak Marketing Sdn. Bhd.
Malaysia
15.15
15.57
Contract packing
Singapore
27.55
28.35
Restaurants
India
27.55
28.35
Restaurants
Mauritius
27.55
28.35
Restaurants
+Mumbai Chicken Pvt. Ltd.
India
27.55
28.35
Restaurants
+Pune Chicken Restaurants Pvt. Ltd.
India
27.55
28.35
Restaurants
+WQSR Holdings (S) Pte. Ltd.
Singapore
27.55
28.35
Investment holding
+KFC (B) Sdn. Bhd.
Brunei
Darussalam
12.67
13.00
Restaurants
+Rasamas Sdn. Bhd.
Brunei
Darussalam
12.67
13.00
Restaurants
+Asbury’s (Malaysia) Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Ayamas Contract Farming Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Ayamas Franchise Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Ayamas Marketing (M) Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Ayamas Selatan Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Bakers’ Street Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Cemerlang Sinergi Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Chippendales (M) Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Efinite Revenue Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Rangeview Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Rasamas Batu Caves Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Rasamas Endah Parade Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Rasamas Larkin Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Rasamas Mergong Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Restoran Keluarga Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Restoran Sabang Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Seattle’s Best Coffee Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Kentucky Fried Chicken Management
Pte. Ltd.
+Kernel Foods Pvt. Ltd.
+Mauritius Food Corporation Pvt. Ltd.
229
Country of
incorporation
2011
%
2010
%
+Signature Chef Dining Serviecs Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Signature Chef Foodservices & Catering
Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Wangsa Progresi Sdn. Bhd.
Malaysia
27.55
28.35
Dormant
+Hiei Food Industries Sdn. Bhd.
Malaysia
22.32
22.97
Dormant
+Yes Gelato Sdn. Bhd.
Malaysia
22.05
22.69
Dormant
+Ayamas Food Corporation (S) Pte. Ltd.
Singapore
27.55
28.35
Dormant
+Ayamas Shoppe (S) Pte. Ltd.
Singapore
27.55
28.35
Dormant
+Helix Investments Limited
Hong Kong
27.55
28.35
Dormant
+Ayamas Shoppe (Brunei) Sdn. Bhd.
Brunei
Darussalam
12.67
13.00
Dormant
+Southern Poultry Farming Sdn. Bhd
Malaysia
24.80
–
Broiler farm
+Ventures Poultry Farm Sdn. Bhd
Malaysia
24.80
–
Broiler farm
+Synergy Poultry Farming Sdn. Bhd
Malaysia
23.35
–
Broiler farm
+Ayamas Shoppe Sabah Sdn. Bhd
Malaysia
17.90
–
Convenience food store
+Agrotech Farm Solutions Sdn. Bhd
Malaysia
27.55
–
Dormant
Sindora Wood Products Sdn. Bhd.
Malaysia
100.00
76.29
Property letting
Sindora Timber Products Sdn. Bhd.
Malaysia
100.00
76.29
Dormant
Sindora Trading Sdn. Bhd.
Malaysia
100.00
76.29
Dormant
Sindora Development Sdn. Bhd.
Malaysia
100.00
76.29
Dormant
Sindora Timber Sdn. Bhd.
Malaysia
90.00
68.66
Timber logging, processing and sale of
sawn timber, timber doors, laminated
timber scantling and trading of wood
products
Granulab (M) Sdn. Bhd.
Malaysia
90.00
68.66
Trading of GranuMas, a granular synthetic
bone graft
Pro Office Solutions Sdn. Bhd.
Malaysia
90.00
68.66
Epasa Shipping Agency Sdn. Bhd.
Malaysia
75.00
57.22
Shipping and forwarding agent
E.A. Technique (M) Sdn. Bhd.
Malaysia
51.00
38.91
Provision of sea transportation and
related services
Metro Parking (M) Sdn. Bhd.
Malaysia
75.00
57.22
Parking operations and the provision of
related consultancy services
Microwell Sdn. Bhd.
Malaysia
60.00
45.77
Trading of agricultural fertilizers, water
treatment, biotechnology research and
development
MIT Insurance Brokers Sdn. Bhd.
Malaysia
90.00
68.66
Insurance broking and consultancy
Orkim Sdn. Bhd.
Malaysia
35.86
–
Provision of sea transportation and
related services
Held through Sindora Berhad:
230
(continued)
31 DECEMBER 2011
Country of
incorporation
2011
%
2010
%
+ Metro Parking (S) Pte. Ltd.
Singapore
52.50
40.05
Parking operator and consultancy services
+ Metro Parking (B) Sdn. Bhd.
Brunei
Darussalam
75.00
68.66
Metro Equipment Systems (M) Sdn. Bhd.
Malaysia
75.00
52.26
Trading in parking and other related
equipments
Metro Parking (Sabah) Sdn. Bhd.
Malaysia
75.00
57.22
Parking operator and other transport
related services
Smart Parking Management Sdn. Bhd.
Malaysia
75.00
42.91
Parking operator and trading in related
equipments
Hong Kong
41.25
31.47
Parking operator and other transport
related services
India
75.00
57.22
General Access Sdn. Bhd.
Malaysia
78.98
61.79
Field clearing, earthwork, road construction
and resurfacing
Tiram Fresh Sdn. Bhd.
Malaysia
90.00
61.79
Cultivation and trading of mushroom and
related products
Jejak Juara Sdn. Bhd.
Malaysia
81.00
61.79
Manufacturers and dealers in rubber
products
Malaysia
51.00
38.91
Shipbuilding, fabrication of steel structures,
engineering services and consultancy
Malaysia
60.00
45.77
Trading of biochemical fertilizer
Held through Metro Parking (M) Sdn. Bhd.:
+Metro Parking (HK) Limited
+Metro Parking Services (India) Private
Limited
Held through Sindora Timber Sdn. Bhd.:
Held through E.A. Technique (M) Sdn. Bhd.:
Johor Shipyard & Engineering Sdn. Bhd.
Held through Microwell Sdn. Bhd.:
Julang Sempurna Sdn. Bhd.
+
Audited by firms other than Ernst & Young
@
Listed on Port Moresby Stock Exchange (“POMSOX”) and London Stock Exchange
#
Listed on the Main Board of Bursa Malaysia Securities Berhad
231
Acquisition of additional interest in subsidiaries in 2011
During the financial year, the Group and Company acquired an additional 22,076,182 ordinary shares in Sindora Berhad (“Sindora”)
representing 23.71% of the issued and paid-up share capital of Sindora for a total purchase consideration of RM70,598,000. Following the
acquisition, Sindora became a wholly owned subsidiary of the Group.
Acquisition of subsidiaries in 2011
(i)
On 1 November 2010, the Group via its subsidiary, KFCH announced that it had via its wholly-owned subsidiary, Ayamas Food
Corporation Sdn. Bhd., entered into Sale and Purchase of Shares Agreements for the acquisition of:
a.
90.0% of the issued and paid up share capital of Southern Poultry Farming Sdn. Bhd.;
b.
84.8% of the issued and paid up share capital of Synergy Poultry Farming Sdn. Bhd.;
c.
90.0% of the issued and paid up share capital of Ventures Poultry Farm Sdn. Bhd.; and
d.
100% of the issued and paid-up share capital of Agrotech Farm Solutions Sdn. Bhd.
for a total cash consideration of RM1,111,951. These acquisitions were completed on 14 January 2011 and did not have any significant
impact on the financial position of the Group.
(ii)
On 11 March 2011, KFCH announced that it had via its wholly-owned subsidiary, Ayamas Shoppe Sdn. Bhd., incorporated a company,
i.e. Ayamas Shoppe (Sabah) Sdn. Bhd. pursuant to the Joint Venture Agreement dated 27 October 2010 with Rastamas Trading Sdn.
Bhd. for the purpose of operating Kedai Ayamas businesses in Sabah.
(iii)
During the year, the Group through its subsidiary, E.A. Technique Sdn. Bhd. acquired an additional 380,000 ordinary shares in Orkim
Sdn. Bhd. (“Orkim”) representing 1.1% of the issued and paid up share capital of Orkim Sdn. Bhd. for a total purchase consideration
of RM866,000. Following the acquisition of the additional interest, Orkim became a subsidiary of the Group. The acquisition of Orkim
had the following effect on the Group’s assets and liabilities on the acquisition date:
Recognised
values on
acquisition
RM’000
Goodwill
Investment in associates
Deferred tax assets
Receivables
Current tax assets
Non-controlling interest
Borrowings
Payables
167,202
518
14,877
24
13,118
6,181
93
(19,186)
(128,043)
(6,444)
(349)
Net identifiable assets
Less: Non-controlling interest on acquisition
47,991
(30,781)
Group’s share of net assets
Goodwill on acquisition
17,210
12,589
Consideration paid, satisfied in cash
Cash and cash equivalents acquired
29,799
(13,118)
Net cash outflow
16,681
232
(continued)
31 DECEMBER 2011
Acquisition of additional interest in subsidiaries in 2011 (continued)
Acquisition of subsidiaries in 2011 (continued)
Book values at the date of these acquisitions were determined based on the applicable FRSs immediately before these acquisitions. The
book value at the date of acquisition of identifiable assets and liabilities recognised on acquisition approximates their fair values. From
the date of acquisition, Orkim has contributed RM12,784,000 to the Group’s profit net of tax. The effect of net profits contributed by the
other acquired companies are not material in relation to the consolidated net profit for the year.
Disposal of interest in subsidiary in 2011
On 2 August 2011, KFCH announced that it had through KFC Marketing Sdn. Bhd. entered into a Sale and Purchase of Shares incorporating
Shareholders’ Agreement with Ayamazz Sdn. Bhd. and Mohamed Hashim bin Mohd Kamil (“Intrapreneur”).
The agreement enables the Intrapreneur to subscribe/purchase ordinary shares representing up to 25% equity interest in Ayamazz Sdn.
Bhd. arising from the implementation of the Group’s Intrapreneur Scheme.
During the year, the Group disposed off 10% of its interest in Ayamazz Sdn. Bhd. for a cash consideration of RM50,000.
Acquisition of subsidiaries in 2010
Acquisition of Kula Palm Oil Limited (CTP (PNG) Limited)
On April 2010, the Group, via its 50.66% controlled subsidiary New Britain Palm Oil Limited (NBPOL), successfully concluded the acquisition
of Kula Palm Oil Limited (“Kula”) by acquiring 80% of the issued share capital of Kula.
The acquisition had the following effect on the Group’s assets and liabilities on acquisition date:
Inventories
Intangible assets
Borrowings
Net identifiable assets
Book value
at date of
acquisition
RM’000
Fair
value
adjustments
RM’000
Recognised
values on
acquisition
RM’000
1,694
66,170
70,515
293,848
–
(2,804)
(192,070)
(163,366)
–
–
14,677
481,977
145,072
–
–
(72,493)
1,694
66,170
85,192
775,825
145,072
(2,804)
(192,070)
(235,859)
73,987
569,233
643,220
Less: Minority interest on acquisition
(128,643)
Total purchase consideration
Settlement of intercompany payable
514,577
91,071
Total settlement in cash
Less: Cash and cash equivalents
605,648
(1,694)
Total cash outflow on acquisition
603,954
233
Effect of acquisition
The acquisition of Kula had the following effect on the Group’s operating results, assets and liabilities as at 31 December 2010:
8 months ended
31.12.2010
RM’000
Statement of comprehensive income
Revenue
Operating costs
368,200
(271,279)
Operating profit
Finance costs
96,921
–
Profit before tax
Income tax expense
96,921
(47,194)
Profit for the year
Less: Minority interests
49,727
(29,566)
Increase in the Group’s net profit at the end of the financial year
20,161
Statement of financial position
Current assets
Current liabilities
Minority interest
738,743
76,461
(39,575)
(246,759)
(173,950)
Net assets acquired/Group’s share of net assets
Intangible assets on acquisition
354,920
140,301
Increase in the Group’s net assets
495,221
234
(continued)
31 DECEMBER 2011
Acquisition of Plantation Contracting Services Limited (“PCSL”)
On June 2010, the Group, via its 50.66% controlled subsidiary NBPOL, successfully concluded the acquisition of PCSL by acquiring the remaining
50% of the share capital of PCSL, a company incorporated in Papua New Guinea and in which NBPOL previously held a 50% interest.
The acquisiton had the following effect on the Group’s assets and liabilities on acquisition date:
Book value
at date of
acquisition
RM’000
Fair
value
adjustments
RM’000
Recognised
values on
acquisition
RM’000
Borrowings
77
121
11,831
(12,735)
(9,422)
–
3,175
3,333
–
–
77
3,296
15,164
(12,735)
(9,422)
Net identifiable assets and liabilities
(10,128)
6,508
(3,620)
Impairment charge
6,177
Total purchase consideration
2,557
(77)
Total cash outflow on acquisition
2,480
The acquisition did not have any significant effect on the Group’s profit net of tax.
Acquisition of subsidiaries by QSR Brands Bhd. (“QSR”)
(i)
During the year, QSR acquired an additional 800,000 ordinary shares in KFC Holdings (Malaysia) Bhd. (“KFCH”) representing 0.39%
of the issued and paid-up share capital of KFCH for a total purchase consideration of RM8,786,563. Following the acquisition, QSR’s
shareholdings in KFCH increased from 50.25% to 50.64%.
(ii)
On 18 September 2009, KFCH announced that it had entered into a Share Sale Agreement for the acquisition of the entire equity
interest in Paramount Management Sdn. Bhd. and Paramount Holdings (M) Sdn. Bhd., comprising 500,000 ordinary shares each and
the entire equity interest in Gratings Solar Sdn. Bhd. comprising 200,000 ordinary shares, at a total cash consideration of RM6.5
million. The acquisition was completed on 29 January 2010.
(iii)
On 13 April 2010, QSR announced that it had, vide its subsidiary, Kumpuchea Food Corporation Co. Limited, established a wholly
owned subsidiary, Pizza (Kampuchea) Private Limited.
(iv)
On 9 July 2010, QSR announced that it had, vide its wholly-owned subsidiary, Pizza Hut Restaurant Sdn. Bhd., acquired the entire
issued and paid-up share capital of PHD Delivery Sdn. Bhd. (formerly known as Pizza Hut Delivery Sdn. Bhd.) comprising two (2)
ordinary shares of RM1 each for a total cash consideration of RM2.
(v)
On 16 July 2010, QSR and KFCH announced that they had jointly established a non-government and non-profitable company i.e
Yayasan Amal Bistari Sdn. Bhd. for the primary purposes of regulating and driving all Corporate Responsibility endeavours and
programmes.
235
(vi)
On 4 October 2010, KFCH announced that it had acquired the entire issued and paid-up share capital of Cemerlang Sinergi Sdn.
Bhd. and Efinite Revenue Sdn. Bhd. comprising 2 ordinary shares of RM1 each at a total cash consideration of RM2, for each of the
companies.
(vii) On 4 October 2010, QSR announced that it had acquired the entire issued and paid-up share capital of Efinite Value Sdn. Bhd.
comprising 2 ordinary shares of RM1 each at a total cash consideration of RM2.
(viii) On 27 October 2010, KFCH via its wholly-owned subsidiary, Ayamas Shoppe Sdn. Bhd., acquired the entire issued and paid-up share
capital of Ayamas Shoppe (S) Pte. Ltd. comprising 2 ordinary shares of SGD1 each for a total cash consideration of SGD2.
(ix)
On 18 November 2010, KFCH announced that it had via its subsidiary, KFC (B) Sdn. Bhd., incorporated a subsidiary in Brunei, i.e.
Ayamas Shoppe (Brunei) Sdn. Bhd.
(x)
On 13 December 2010, KFCH announced that it had via its subsidiary, Pune Chicken Restaurant Private Limited, entered into a Share
Subscription and Share Purchase Agreement for the acquisition of the entire interest in Kernel Foods Private Limited for a cash
consideration of Rs.12,000,000 (Rupees Twelve Lacs only) amounting to approximately RM84,000.
The above acquisitions by QSR in the previous financial year had the following combined effects on the Group’s assets and liabilities on
acquisition date:
Recognised
values on
acquisition
RM’000
Inventories
Minority interests
4,005
109
549
(385)
(1,023)
(31)
(597)
(39)
3,290
Intangible assets arising from acquisition
Goodwill arising from acquisition
5,878
5,400
6,636
17,914
385
Net cash outflow
18,299
Book values at the date of acquisition were determined based on applicable FRSs immediately before the acquisition. The book values at
the date of acquisition of identifiable assets and liabilities generally approximate their fair values. The effect of net profits and net assets
contributed by the acquired companies are not material in relation to the consolidated net profit for the year and net assets of the Group
at the reporting date.
236
(continued)
31 DECEMBER 2011
Acquisition of subsidiaries by Sindora Berhad
During the previous financial year, the Group acquired Microwell Sdn. Bhd. (“Microwell”) and MIT Insurance Brokers Sdn. Bhd. (“MIT”) for a
cash consideration of RM5,966,000. The acquisitions had the following effect on the Group’s assets and liabilities on acquisition date.
Recognised
values on
acquisition
RM’000
Microwell
RM’000
MIT
RM’000
27
210
130
441
746
(270)
190
–
–
3,579
277
(3,593)
217
210
130
4,020
1,023
(3,863)
Goodwill on acquisition
1,284
2,587
453
1,642
1,737
4,229
3,871
2,095
5,966
(1,023)
Intangible assets
Inventories
Receivables, deposit and prepayments
Payables and accruals
Net cash outflow
4,943
The goodwill recognised on the acquisitions are mainly attributable to the skills and technical talent of the acquired business’s work force
and the synergies expected to be achieved from integrating these new subsidiaries into the Group. The acquisitions did not have any
significant effect on the Group’s profit net of tax.
Acquisition of Exquisite Livestock Sdn. Bhd., Extreme Edge Sdn. Bhd.,
Pinnacle Platform Sdn. Bhd., Perfect Synergy Trading Sdn. Bhd., Optimum Status Sdn. Bhd.,
KCW Hardware Sdn. Bhd., KCW Kulim Marine Services Sdn. Bhd. and KCW Electrical Sdn. Bhd.
During the previous financial year, the Group acquired 8 new companies, Exquisite Livestock Sdn. Bhd., Extreme Edge Sdn. Bhd., Pinnacle
Platform Sdn. Bhd., Perfect Synergy Trading Sdn. Bhd., Optimum Status Sdn. Bhd., KCW Hardware Sdn. Bhd., KCW Kulim Marine Services
Sdn. Bhd., and KCW Electrical Sdn. Bhd., for a total cash consideration of RM1,308,000. The acquisition did not have any significant effect
on the Group’s profit net of tax.
Disposal of subsidiaries in 2010
(i)
Disposal of equity interest in Natural Oleochemicals Sdn. Bhd. and its subsidiaries
In September 2010, the Group disposed its entire equity interest in Natural Oleochemicals Sdn. Bhd., and its subsidiaries. Further
details are disclosed in Note 11 to the financial statements.
(ii)
Partial disposal of Sindora Berhad
In June 2010, the Company disposed off 0.20% of its equity shareholding in Sindora Berhad for a total consideration of RM289,018
resulting in a loss on partial disposal to the Group and the Company of RM283,744 and RM52,749 respectively. The Group recognised
an increase in minority interest of about RM572,690. The Group’s equity interest in Sindora Berhad fell to 76.30%.
On July 2010, the Company disposed off 0.01% of its equity shareholding in Sindora Berhad for a total consideration of RM19,067
resulting in a loss on partial disposal to the Group and the Company of RM16,624 and RM2,169 respectively. The Group recognised
an increase in minority interest of about RM35,690. The Group’s equity interest in Sindora Berhad fell to 76.29%.
237
Disposal of subsidiaries in 2010 (continued)
(iii)
Partial disposal of QSR Brands Bhd.
During the year, the Company disposed off 3.51% of its equity shareholding in QSR Brands Berhad for a total consideration of
RM69,620,000 resulting in a gain on partial disposal to the Group and the Company of RM31,808,000 and RM24,837,000 respectively.
The Group recognised an increase in minority interest of about RM32,052,000. The Group’s equity interest in QSR Brands Berhad fell
to 56.31%.
(iv)
Partial disposal of JTP Trading Sdn. Bhd.
During the year, the Company disposed off 10% of its equity interest in JTP Trading Sdn. Bhd. for a consideration of RM88,200
resulting in a loss on partial disposal to the Group of RM1,000 and gain to the Company of RM6,776. The Group recognised an
increase in minority interest of RM89,200.
(v)
Partial disposal of Renown Value Sdn. Bhd.
During the year, the Company disposed off 15% of its equity interest in Renown Value Sdn. Bhd. This disposal did not have any
significant effect on the Group and Company’s profit net of tax.
17. INVESTMENTS IN ASSOCIATES
Group
Unquoted shares, at cost:
– outside Malaysia
– in Malaysia
Share of post-acquisition reserves:
– in Malaysia
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
–
16,622
23,686
30,384
–
–
–
–
7,712
2,540
–
–
24,334
56,610
–
–
238
(continued)
31 DECEMBER 2011
17. INVESTMENTS IN ASSOCIATES (continued)
Details of the significant associates are as follows:
Country of
incorporation
2011
%
2010
%
Malaysia
–
35.29
Shipping and forwarding
Orkim Discovery Sdn. Bhd.
Malaysia
14.32
–
Ship owning company
Orkim Reliance Sdn. Bhd.
Malaysia
14.32
–
Ship owning company
Orkim Challenger Sdn. Bhd.
Malaysia
14.32
–
Ship owning company
Indonesia
–
50.00
Name of associate
Held through Sindora Berhad
Orkim Sdn. Bhd.
Held through Orkim Sdn. Bhd
Held through New Britain Palm Oil Limited
PT Damitama Mas Sejahtera
Production of seed materials
Orkim Sdn. Bhd. became a subsidiary during the financial year, whilst PT Damitama Mas Sejahtera was disposed off during the
financial year.
The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group,
is as follows:
Net
revenues
(100%)
RM’000
Total
profit
(100%)
RM’000
Total
assets
(100%)
RM’000
Total
liabilities
(100%)
RM’000
14,965
14,965
13,999
5,509
5,822
5,995
4,286
4,345
6,543
50,436
50,132
50,484
16,068
30,238
10,237
3,703
16,789
203,954
3,366
136,985
Group
2011
Orkim Challenger Sdn. Bhd.
Orkim Discovery Sdn. Bhd
Orkim Reliance Sdn. Bhd
2010
PT Damitama Mas Sejahtera
Orkim Sdn. Bhd.
239
18. OTHER INVESTMENTS
Subordinated
bond in
Malaysia
Unquoted
RM’000
Fund
investment
RM’000
Total
RM’000
Unquoted
RM’000
Quoted
RM’000
Warrants
in Malaysia
Quoted
RM’000
52,479
10,787
41,692
–
–
–
33,384
63,985
–
–
2,777
–
–
63,985
–
–
30,607
–
97,369
–
2,777
63,985
–
30,607
149,848
10,787
44,469
63,985
–
30,607
10,787
139,061
10,787
–
–
44,469
–
63,985
–
–
–
30,607
149,848
10,787
44,469
63,985
–
30,607
47,423
166,638
12,514
–
30,909
–
–
166,638
4,000
–
–
–
214,061
12,514
30,909
166,638
4,000
–
139,613
5,904
–
–
2,691
5,665
–
–
–
–
136,922
239
145,517
–
8,356
–
–
137,161
359,578
12,514
39,265
166,638
4,000
137,161
16,514
343,064
12,514
–
–
39,265
–
166,638
4,000
–
–
137,161
359,578
12,514
39,265
166,638
4,000
137,161
Shares in Malaysia
Group
2011
Non-current
Current
Held for trading
Representing items:
At cost/amortised cost
At fair value
2010
Non-current
Held for trading
Current
Held for trading
Representing items:
At fair value
240
(continued)
31 DECEMBER 2011
18. OTHER INVESTMENTS (continued)
Total
RM’000
Unquoted
RM’000
Quoted
RM’000
Warrants
in Malaysia
Quoted
RM’000
5,778
–
3,842
–
1,936
–
–
–
–
–
5,778
3,842
1,936
–
–
31,219
63,985
–
–
1,200
–
–
63,985
30,019
–
95,204
–
1,200
63,985
30,019
100,982
3,842
3,136
63,985
30,019
3,842
97,140
3,842
–
–
3,136
–
63,985
–
30,019
100,982
3,842
3,136
63,985
30,019
8,674
166,638
6,242
–
2,432
–
–
166,638
–
–
175,312
6,242
2,432
166,638
–
139,613
–
2,691
–
136,922
314,925
6,242
5,123
166,638
136,922
6,242
308,683
6,242
–
–
5,123
–
166,638
–
136,922
314,925
6,242
5,123
166,638
136,922
Shares in Malaysia
Fund
investment
RM’000
Company
2011
Non-current
Held for trading
Current
Held for trading
Representing items:
At fair value
2010
Non-current
Held for trading
Current
Representing items:
At fair value
241
19. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets/(liabilities) as at 31 December relates to the following:
Property,
plant and
equipment
RM’000
Tax losses
carried
forward
RM’000
Unutilised
investment
and reinvestment
allowances
RM’000
(699,188)
–
(113,935)
–
(190,237)
18,175
–
12,672
–
3,244
–
–
5,029
–
–
52,400
–
–
(59,304)
6,736
(1,003,360)
34,091
5,029
At 1 January 2010
Acquisition in business combination
Recognised in profit or loss
Recognised in other comprehensive income
Translation exchange difference
(499,564)
(74,734)
(189,475)
–
38,674
25,911
35,699
(161,156)
149,099
–
(5,467)
–
At 31 December 2010
(699,188)
18,175
Hedge
reserve
RM’000
Fair value
gains on
financial
instruments
RM’000
Others
RM’000
Total
RM’000
(17,668)
–
4,625
497
–
(44,578)
24
(6,431)
–
(12,485)
(690,859)
24
(98,040)
(58,807)
(192,742)
(168)
(12,546)
(63,470)
(1,040,424)
26,946
–
–
–
–
(26,946)
10,243
–
–
45,594
(3,437)
–
–
–
–
(17,668)
–
–
(7,236)
–
(21,731)
–
(15,025)
(586)
(433,912)
(235,890)
(62,107)
27,926
14,745
(1,621)
–
52,400
(17,668)
(44,578)
(690,859)
Group
At 1 January 2011
Acquisition in business combination
Translation exchange difference
At 31 December 2011
Property,
plant and
equipment
RM’000
Fair value
gains on
financial
instruments
RM’000
Others
RM’000
At 1 January 2010
(66,530)
70
–
–
–
(17,658)
74
241
–
(66,456)
311
(17,658)
At 31 December 2010
(66,460)
(227)
–
(17,658)
–
497
315
(122)
–
(83,803)
(349)
497
At 31 December 2011
(66,687)
(17,161)
193
(83,655)
Total
RM’000
Company
242
(continued)
31 DECEMBER 2011
19. DEFERRED TAX ASSETS AND LIABILITIES (continued
At the reporting date, deferred tax assets have not been recognised in respect of the following items:
Group
Unutilised tax losses
Unabsorbed capital allowances
Unabsorbed reinvestment allowances
2011
RM’000
2010
RM’000
59,133
67,899
–
48,672
30,532
15,127
127,032
94,331
The availability of the above tax losses and allowances for offsetting against future taxable profits of the respective subsidiaries in Malaysia
are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and other guidelines issued
by the tax authority.
20. INVENTORIES
Group
At cost:
Agricultural produce
Finished goods
Materials and consumables
Livestocks
Work-in-progress
At net realisable value:
Finished goods
Agricultural produce
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
637,511
88,651
168,758
39,680
132
431,184
77,575
172,346
14,685
232
–
–
1,892
–
–
–
–
1,905
–
–
934,732
696,022
1,892
1,905
–
–
2,423
2,245
–
–
–
–
934,732
700,690
1,892
1,905
243
21. TRADE AND OTHER RECEIVABLES
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
522,777
–
53,510
5,461
371,293
–
47,882
8,411
847
25,050
49,841
1,993
244
12,586
49,287
1,916
581,748
427,586
77,731
64,033
(6,855)
(4,432)
(5,212)
(1,650)
–
(1,650)
–
(1,650)
(11,287)
(6,862)
(1,650)
(1,650)
570,461
420,724
76,081
62,383
Current
Trade receivables
Third parties
Subsidiaries
Ultimate holding corporation
Related companies
Less: Allowance for impairment losses
Third parties
Related companies
Trade receivables, net
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
151,796
–
90,409
76,795
–
100,718
11,981
331,998
1,634
10,558
308,875
1,123
242,205
177,513
345,613
320,556
(4,254)
(55)
–
(7,537)
(55)
–
(4,057)
–
(109,087)
(4,057)
–
(109,087)
(4,309)
(7,592)
(113,144)
(113,144)
237,896
169,921
232,469
207,412
808,357
590,645
308,550
269,795
Current
Other receivables
Third parties
Subsidiaries
Deposits
Less: Allowance for impairment losses
Third parties
Deposits
Subsidiaries
Total trade and other receivables
244
(continued)
31 DECEMBER 2011
21. TRADE AND OTHER RECEIVABLES (continued)
(a)
Trade receivables
Third party trade receivables are non-interest bearing and payment terms range from payment in advance to 90 days (2010:
payment in advance to 90 days). They are recognised at their original invoice amounts which represent their fair values on initial
recognition.
Ageing analysis of trade receivables
The ageing analysis of the Group’s and the Company’s trade receivables is as follows:
Group
Neither past due nor impaired
1 to 30 days past due not impaired
More than 121 days past due not impaired
Impaired
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
394,698
284,828
48
181
90,225
19,893
9,343
3,428
52,874
56,547
33,711
81
6,000
39,557
10,781
4,029
4,791
2,335
54,097
29,987
6,539
21,159
1,274
3,243
175,763
11,287
135,896
6,862
76,033
1,650
62,202
1,650
581,748
427,586
77,731
64,033
Receivables that are neither past due nor impaired
Receivables that are neither past due nor impaired are mainly regular customers that have been transacting with the Group. None
of these balances have been renegotiated during the financial year.
Receivables that are past due but not impaired
The Group and Company have trade receivables amounting to RM175,763,000 (2010: RM135,896,000) and RM76,033,000 (2010:
RM62,202,000) respectively that are past due at the reporting date but not impaired. These balances are not secured.
245
(a)
Trade receivables (continued)
Receivables that are impaired
The Group’s and the Company’s trade receivables that are impaired at the reporting date and the movement of the allowance
accounts used to record the impairment are as follows:
Group
2011
RM’000
Trade receivables – nominal amounts
Less: Allowance for impairment
Company
2010
RM’000
2011
RM’000
2010
RM’000
11,287
(11,287)
6,862
(6,862)
1,650
(1,650)
1,650
(1,650)
–
–
–
–
At 1 January
Charge for the year
Reversal of impairment losses
Written off
6,862
5,585
(45)
(1,115)
9,055
1,830
(2,716)
(1,307)
1,650
–
–
–
1,650
–
–
–
At 31 December
11,287
6,862
1,650
1,650
Movement in allowance accounts:
Trade receivables that are determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties
and have defaulted on repayments. These receivables are not secured by any collateral or credit enhancements.
(b)
Amount due from subsidiaries (trade and non-trade)
These amounts are unsecured, non-interest bearing and repayable on demand except for an amount of RM37,039,000 (2010:
RM47,124,000) which bears interest of 5.13% to 6.50% (2010: 4.35% to 6.50%) per annum.
(c)
Amount due from ultimate holding corporation and related companies (trade and non-trade)
These amounts are unsecured, non-interest bearing and repayable on demand except for an amount of RM43,098,000 (2010:
RM42,504,000) which bears interest of 5.13% to 5.14% (2010: 4.35% to 4.43%) per annum.
246
(continued)
31 DECEMBER 2011
(d)
Other receivables that are impaired
The Group’s and the Company’s other receivables that are impaired at the reporting date and the movement of the allowance
accounts used to record the impairment are as follows:
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
At 1 January
Charge for the year
Reversal of impairment losses
Written off
7,592
–
–
(3,283)
4,180
3,412
–
–
113,144
–
–
–
4,708
108,436
–
–
At 31 December
4,309
7,592
113,144
113,144
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
561,726
82,976
309,602
142,544
9,272
70,392
24,908
49,918
644,702
452,146
79,664
74,826
Movement in allowance accounts:
22. CASH AND BANK BALANCES
Group
Deposits placed with licensed banks
Company
Included in deposits placed with licensed banks of the Group and of the Company are amounts of RM61,865,000 (2010: RM12,791,000)
and RM350,000 (2010: RM366,000) of the Group and of the Company, respectively, pledged for bank facilities granted to the Group and
the Company.
For the purposes of the statements of cash flows, cash and cash equivalents comprise the following at the reporting date:
Group
Deposits with licensed banks
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
499,861
144,841
309,602
142,544
9,272
70,392
24,908
49,918
644,702
452,146
79,664
74,826
Less:
Deposits pledged
Bank overdrafts (Note 23)
(61,865)
(26,119)
(12,791)
(32,921)
(350)
–
(366)
–
556,718
406,434
79,314
74,460
247
23. LOANS AND BORROWINGS
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
2,614
17,080
30,000
135,522
2,507
23,021
–
826,780
–
–
–
–
–
–
–
100,000
185,216
852,308
–
100,000
150
9,039
35,431
163,747
178,260
34
9,900
9,412
21,200
102,556
–
–
–
–
–
–
–
–
–
–
386,627
143,102
–
–
571,843
995,410
–
100,000
1,872
1,627,283
4,076
814,690
–
273,171
–
273,171
1,629,155
818,766
273,171
273,171
362
419,584
128
112,126
–
–
–
–
419,946
112,254
–
–
Non-current loans and borrowings
2,049,101
931,020
273,171
273,171
Total loans and borrowings
2,620,944
1,926,430
273,171
373,171
Current
Secured:
Obligations under finance leases
Revolving credit
Term loans
Unsecured:
Bankers’ acceptances
Revolving credit
Term loans
Current loans and borrowings
Non-current
Secured:
Term loans
Unsecured:
Term loans
248
(continued)
31 DECEMBER 2011
23. LOANS AND BORROWINGS (continued)
Details of the Group’s and Company’s term loans are as follows:
Year of
maturity
Carrying
amount
RM’000
2012
Under 1
year
RM’000
2013
1–2
years
RM’000
2014 – 2016
2–5
years
RM’000
>2016
Over 5
years
RM’000
2013
2016
2016
2014
2012
2014
2016
2013
2013
2018
2021
2020
2016
2014
2013
2014
2013
2020
2020
2020
2017
2014
2015
2015
2015
2015
2012
2013
2012
2016
2018
2016
2016
2016
2018
2020
2020
2020
2020
2022
2022
2020
2021
2018
2013
2015
5,000
5,952
5,951
4,520
7,984
4,855
18,349
683
904
2,293
76,330
42,479
273,171
2,979
9,094
45,000
677
59,034
47,279
44,314
183,000
4,500
39,900
31,779
4,116
11,792
2,464
10,080
119,692
735,217
46,400
23,200
6,435
5,265
275,000
12,800
12,800
9,600
6,200
39,284
39,770
36,571
37,945
8,757
785
448
4,000
1,228
1,228
1,957
7,984
1,886
5,463
341
452
296
8,253
4,471
–
1,192
7,275
–
369
–
–
6,952
6,863
2,000
11,400
2,701
1,241
3,544
2,464
5,847
119,692
81,675
–
–
–
–
–
1,544
1,544
1,544
1,447
4,027
4,027
4,100
4,100
–
562
112
1,000
1,228
1,228
1,957
–
1,886
5,177
341
452
336
8,253
4,471
30,000
1,192
1,819
–
308
8,360
8,737
8,737
9,150
2,000
11,400
5,402
1,181
3,372
–
4,233
–
77,296
580
5,800
644
527
–
2,059
2,059
2,059
1,930
8,055
8,054
8,200
8,200
2,877
223
148
–
3,496
3,495
606
–
1,083
7,709
–
–
1,167
24,753
13,414
243,171
596
–
45,000
–
25,080
26,211
26,211
135,878
500
17,100
23,675
1,694
4,876
–
–
–
576,245
13,340
17,400
5,792
4,739
165,000
6,177
6,177
5,997
2,823
12,082
12,081
12,300
12,300
2,879
–
188
–
–
–
–
–
–
–
–
–
494
35,071
20,122
–
–
–
–
–
25,594
12,331
2,414
31,110
–
–
–
–
–
–
–
–
–
32,480
–
–
–
110,000
3,020
3,020
–
–
15,120
15,608
11,971
13,345
3,001
–
–
2,360,649
313,783
250,931
1,461,234
334,702
Group
2011
Term loan:
2
5
6
7
8
9
10
11
12
14
17
18
19
20
23
24
25
27
28
29
30
31
32
33
37
38
39
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
249
Year of
maturity
Carrying
amount
RM’000
2012
Under 1
year
RM’000
2013
1–2
years
RM’000
2014 – 2016
2–5
years
RM’000
>2016
Over 5
years
RM’000
2016
2013
2011
2011
2016
2016
2014
2012
2014
2016
2013
2011
2011
2018
2018
2011
2021
2015
2016
2014
2011
2011
2013
2014
2013
2011
2020
2020
2020
2017
2013
2015
2015
2031
2031
2022
2015
2015
2011
2011
2011
2011
2016
28,309
9,000
100,000
8,000
6,749
6,748
6,181
16,007
6,258
22,719
2,651
10
40,000
1,868
662
1,475
65,250
35,355
273,171
4,049
10,000
10,000
18,187
45,000
1,046
154
58,293
52,821
50,309
183,000
5,000
33,000
18,510
483
272
212
4,795
13,686
1,153
33,936
617,020
55,212
9,601
1,814
4,000
100,000
8,000
787
787
1,659
10,516
1,402
–
1,099
10
40,000
208
84
1,475
2,292
2,653
–
1,157
10,000
10,000
7,275
–
369
154
4,352
–
–
–
2,000
6,188
–
14
7
13
960
2,740
1,153
33,936
617,020
55,212
–
6,170
5,000
–
–
843
843
1,753
5,491
1,651
–
1,100
–
–
213
83
–
6,525
10,607
–
1,157
–
–
7,275
–
369
–
4,655
–
–
6,863
2,000
8,250
2,622
15
8
14
960
2,740
–
–
–
–
–
14,068
–
–
–
2,907
2,907
2,769
–
3,205
–
452
–
–
747
259
–
28,627
22,095
185,000
1,735
–
–
3,637
45,000
308
–
16,000
–
–
38,887
1,000
18,562
15,888
49
26
48
2,875
8,206
–
–
–
–
4,782
6,257
–
–
–
2,212
2,211
–
–
–
22,719
–
–
–
700
236
–
27,806
–
88,171
–
–
–
–
–
–
–
33,286
52,821
50,309
137,250
–
–
–
405
231
137
–
–
–
–
–
–
4,819
1,856,152
929,336
77,207
420,039
429,570
Group
2010
Term loan:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
250
(continued)
31 DECEMBER 2011
Year of
maturity
Carrying
amount
RM’000
2012
Under 1
year
RM’000
2013
1–2
years
RM’000
2014 – 2016
2–5
years
RM’000
>2016
Over 5
years
RM’000
2016
273,171
–
–
185,000
88,171
273,171
–
–
185,000
88,171
100,000
273,171
100,000
–
–
–
–
185,000
–
88,171
373,171
100,000
–
185,000
88,171
Company
2011
Term loan:
19
2010
Term loan:
3
19
2011
2016
Securities
The term loans are secured by the following:
(a)
Charges over certain property, plant and equipment of the Group and Company as disclosed in Note 13 to the financial
statements;
(b)
Charges over certain investment properties of the Group and Company as disclosed in Note 14 to the financial statements;
(c)
Charges over the quoted shares in subsidiaries as disclosed in Note 16 to the financial statements;
(d)
Charges over certain fixed deposits of the Group and Company as disclosed in Note 22 to the financial statements; and
(e)
Corporate guarantee from the Company as disclosed in Note 36(a) to the financial statements.
Significant covenants
In connection with the significant term loan facilities, the Group and the Company have agreed on the following significant covenants
with the lenders:
(i)
The consolidated shareholders’ funds of the Group to be at least RM2.5 billion and such consolidated shareholders’ funds excluding
its asset revaluation reserve to be at least RM1.0 billion;
(ii)
The ratio of the consolidated total borrowings to the consolidated shareholders’ funds at all times to be below 0.8 times;
(iii)
The ratio of the earnings before interest, tax, depreciation and amortisation (EBITDA) to interest expense of the Group to be at least
1.5 times;
(iv)
The Company will continue to maintain at least 50.1% of the issued and paid-up capital of QSR; and
(v)
The Company will procure and ensure that each of its subsidiary companies does not and/or will not enter into any agreements
which impose restrictions on each of the subsidiary companies ability to make or pay dividend or other forms of distributions to the
shareholders.
251
Group
Weighted average effective interest rates at the end of
reporting period:
– Term loans
Company
2011
%
2010
%
2011
%
2010
%
3.89
4.77
5.23
4.84
24. DERIVATIVE FINANCIAL INSTRUMENTS
Group
National amount
Group
Carrying amount
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
313,516
–
204,096
33,224
2,104
–
149,476
25,201
313,516
237,320
2,104
174,677
Cash flow hedges
Commodity forward contracts
– current liabilities
– non-current liabilities
The Group, via its subsidiary, NBPOL has entered into commodity forward contracts to hedge its exposure to movements in palm oil prices.
These forward contracts have been designated as a hedge of highly probable forecast sales of crude palm oil and related products. It is
not the Group’s policy to engage in speculative hedging activities.
There were no highly probable transactions for which hedge accounting had previously been used, which is no longer expected to occur.
As all hedge transactions are highly effective, all gains and losses relating to their remeasurement to fair value are recognised in the hedge
reserve within equity and subsequently brought to account in the profit or loss in the same period as the physical sales transaction occurs
to which the hedges relate.
The cash flow hedges of the highly probable forecast sales of crude palm oil and related products were assessed to be highly effective
and as at 31 December 2011, a net gain of RM120,801,000 (2010: net loss of RM98,372,000), including the related deferred tax liability of
RM51,772,000 (2010: deferred tax asset of RM42,159,000) was included in other comprehensive income in respect of these contracts.
The losses retained in equity at the reporting date are expected to mature and affect the profit or loss as follows:
Group
Within 12 months
After 12 months
2011
RM’000
2010
RM’000
1,471
–
104,634
17,641
1,471
122,275
252
(continued)
31 DECEMBER 2011
25. TRADE AND OTHER PAYABLES
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
363,951
4,072
–
14,940
252,966
19,446
–
11,488
4,754
–
98,558
747
5,865
–
–
350
382,963
283,900
104,059
6,215
414,157
–
393,391
–
6,302
97,315
7,367
63,406
414,157
393,391
103,617
70,773
797,120
677,291
207,676
76,988
Current
Trade
Third parties
Subsidiaries
Related companies
Non-trade
Third parties
Subsidiaries
Total trade and other payables
(a)
Third parties
Trade and other payables due to third parties are generally unsecured and non-interest bearing. Credit terms range from payment
in advance to 90 days (2010: payment in advance to 90 days).
(b)
Amounts due to ultimate holding corporation and related companies
These amounts which arose mainly from normal trade transactions are unsecured, non-interest bearing and subject to normal trade
terms.
(c)
Amounts due to subsidiaries
These amounts which arose mainly from advances and payments on behalf are unsecured, non-interest bearing and repayable on
demand except for an amount of RM42,517,000 (2010: RM23,300,000) which is subject to interest at rates ranging from 2.76% to
3.36% (2010: 2.74% to 3.05%) per annum.
253
26. SHARE CAPITAL
Number of ordinary shares
Amount
2011
‘000
2010
‘000
2011
RM’000
2010
RM’000
At 1 January
Effect of share split
Created during the year
400,000
400,000
1,200,000
400,000
–
–
200,000
–
–
200,000
–
–
At 31 December
2,000,000
400,000
200,000
200,000
318,670
318,670
624,697
318,670
–
–
159,336
–
156,173
159,336
–
–
1,262,037
318,670
315,509
159,336
Authorised
Issued and fully paid
At 1 January
Effect of share split
Bonus issue
At 31 December
(a)
Share capital
The holders of the ordinary shares are entitled to receive dividends, as declared from time to time and are entitled to one vote per
share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
(b)
Share split and bonus issue
During the financial year, the Company increased its authorised share capital from RM200,000,000 comprising 400,000,000 shares of
RM0.50 each to RM500,000,000 comprising 2,000,000,000 shares of RM0.25 each;
During the financial year, the Company also increased its issued and paid-up ordinary share capital from RM159,336,000 to
RM315,509,000 by way of:
(i)
Share split involving the subdivision of every one (1) existing ordinary share of RM0.50 each held in the Company into two (2)
ordinary shares of RM0.25 each (“sub-divided share(s)”) (Share Split); and
(ii)
Bonus issue of new sub-divided shares on the basis of one (1) bonus share for every one (1) sub-divided share held after the
share split (“Bonus Issue”).
The Share Split and Bonus Issue were completed on 28 February 2011.
The above new shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of
the Company.
254
(continued)
31 DECEMBER 2011
27. OTHER RESERVES
Group
Note
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
116,013
95,714
(748)
1,256
1,337,757
4,933
113,945
(96,186)
(32,597)
272,184
(123,896)
(67,782)
55,617
1,337,816
4,933
–
(45,690)
–
116,013
–
–
(313)
897,579
4,165
113,944
(96,187)
–
272,184
–
–
54,526
897,579
4,165
–
(45,690)
–
1,540,087
1,433,182
1,035,201
1,182,764
Reserves
Non-distributable
Share premium reserve
Translation reserve
Hedge reserve
Fair value reserve
Revaluation reserve
Other reserve
Warrant reserve
Treasury shares
Equity transaction reserve
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
The movements of each category of the reserves during the financial year are disclosed in the statements of changes in equity.
The nature and purpose of each category of reserves are as follows:
(a)
Share premium reserve
This reserve comprises the premium paid on subscription of shares in the Company over and above the par value of the shares.
(b)
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign
operations where functional currencies are different from that of the Group’s presentation currency.
(c)
Hedge reserve
The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges related to
hedged transactions that have not yet occurred.
(d)
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments
are derecognised or impaired.
(e)
Revaluation reserve
The revaluation reserve relates to the revaluation of the Group’s freehold and leasehold lands in Malaysia on 31 December 1997.
(f)
Other reserve
Other reserves consist mainly of reserves arising from the scheme of reconstruction, amalgamation and liquidation of a former
subsidiary in 1975.
255
27. OTHER RESERVES (continued)
(g)
Warrant reserve
A total of 156,174,319 free warrants were issued by the Company in conjunction with the share split and bonus issue on 28 February
2011. Each warrant entitles the holder to subscribe for one (1) new sub-divided share at the exercise price of RM3.85 per share at any
time during the exercise period. The warrants have an exercise period of five (5) years commencing 28 February 2011 and expiring
on 27 February 2016.
As at the reporting date, 500 warrants have been exercised and the number of outstanding warrants was 156,173,819.
(h)
Treasury shares
Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the acquisition costs
of treasury shares net of the proceeds received on their subsequent sale or issuance. Rights on treasury shares are suspended until
those shares are reissued.
The Company acquired 14,840,000 (2010: Nil) shares in the Company through purchases on Bursa Malaysia Securities Berhad during
the financial year. The total amount paid to acquire the shares was RM50,496,000 (2010: Nil) and this was presented as a component
within shareholders’ equity.
The Directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the
repurchase plan can be applied in the best interests of the Company and its shareholders. The repurchase transactions were financed
by internally generated funds. The shares repurchased are being held as treasury shares.
At 31 December 2011, the Company held 27,482,000 of its own shares of RM0.25 each (2010: 6,321,000 shares of RM0.50 each). The
number of outstanding ordinary shares of RM0.25 each in issue after the set-off is 1,234,555,000 (2010: 312,348,639 ordinary shares of
RM0.50 each).
(i)
Equity transaction reserve
The equity transaction reserve comprises the differences between the share of non-controlling interests in subsidiaries acquired/
disposed and the consideration paid/received.
28. RETAINED EARNINGS
During the financial year, the Company has elected for the irrevocable option to disregard its 108 balance. As such, the entire retained
earnings of the Company as at 31 December 2011 may be distributed as dividends under the single tier system.
256
(continued)
31 DECEMBER 2011
29. EMPLOYEE BENEFITS
Certain subsidiaries operate an unfunded, defined Retirement Benefit Scheme (“the Scheme”) for its eligible employees. Under the
Scheme, eligible employees are entitled to retirement benefits calculated by reference to their length of service and earnings. Provision
for retirement benefits is calculated based on the pre-determined rate of basic salaries and length of service.
The following tables summarise the components of net benefit expense recognised in profit or loss and the amounts recognised in the
statement of financial position for the Scheme.
Net benefit expense
Group
2011
RM’000
Current service costs
Interest cost on benefit obligation
Past service cost
Net benefit expense
2010
RM’000
126
155
(195)
138
164
(32)
86
270
The net benefit expense has been included in administrative expenses.
Benefit liabilities
Group
Defined benefit obligation
– Current
– Non-current
2011
RM’000
2010
RM’000
301
2,700
644
2,913
3,001
3,557
Changes in present value of defined benefit obligations are as follows:
Group
2011
RM’000
2010
RM’000
At 1 January
Current service costs and interest
Benefits paid
3,557
86
(642)
3,500
270
(213)
At 31 December
3,001
3,557
The principal actuarial assumptions used in determining the retirement benefit obligations at the end of the reporting period (expressed
as weighted averages) are as follows:
Group
Discount rates
Future salary increases
2011
%
2010
%
5.1
4.0
5.6
4.0
257
30. RELATED PARTY TRANSACTIONS
(a)
Sale and purchase of goods and services
For the purposes of the financial statements, parties are considered to be related to the Group if the Group has the ability, directly
or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice
versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be
individuals or other entities.
All entities within the Johor Corporation Group are considered related companies / parties.
In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions
between the Group and related parties took place at terms agreed between the parties during the financial year:
Transaction value for the year
ended 31 December
2011
RM’000
2010
RM’000
Group
Johor Corporation
– Agency fees received
– Sales of oil palm fresh fruit bunches
– Purchase and sales commission received
– Planting advisory and agronomy fees received
– Computer charges received
– Inspection fees received
– Training, seminar and course fees received
– Sales of goods
– Construction work and maintenance fees received
– Event management fees received
– Rental income
– Sales of oil palm seedling and bio compost fertilizer
– Rental payable
334
531
2,335
173
97
30
60
2,909
608
122
159
871
(629)
404
23,412
3,074
174
108
60
83
2,174
125
146
–
–
(629)
392
23,570
2,059
95
69
30
35
836
657
1,738
373
31,060
1,657
100
63
30
50
642
–
–
Other related companies
Johor Foods Sdn. Bhd.
– Inspection fees received
– Sales of goods
258
(continued)
31 DECEMBER 2011
30. RELATED PARTY TRANSACTIONS (continued)
(a)
Sale and purchase of goods and services (continued)
ended 31 December
2011
RM’000
2010
RM’000
139
529
60
27
17
1,004
61
61
131
401
58
17
18
830
–
–
207
774
85
39
19
1,812
61
72
199
560
86
36
29
985
–
–
60
171
(1,266)
(249)
–
(10)
(617)
1,045
(10)
(469)
(4,777)
367
(3,323)
353
(5,330)
(3,910)
–
89
83
167
Group
Other related companies (continued)
Kumpulan Penambang Sdn. Bhd.
– Sales of goods
Johor Franchise Development Sdn. Bhd.
– Sales of goods
Pro Biz Solution Sdn. Bhd.
– Rental income
Pro Corporate Management Services Sdn. Bhd.
– Secretarial and share registration fees paid
Damansara Assets Sdn. Bhd.
– Management fees and services payable
– Rental commission payable
Johor Land Berhad
– Purchase of oil palm fresh fruit bunches
– Management fees received
Kelab Bolasepak Perbadanan Johor
– Donation paid
Tanjung Langsat Port Sdn. Bhd.
– Event management and booth rental received
259
(a)
Sale and purchase of goods and services (continued)
ended 31 December
2011
RM’000
2010
RM’000
–
164
68
200
15,706
2,356
353
9,364
2,272
124
531
–
23,412
353
(5,330)
(3,910)
21,052
14,386
(10)
(617)
(10)
(469)
34,184
–
–
201
60
171
Group
Other related companies (continued)
IPPJ Sdn. Bhd.
– Event management and booth rental received
Pacific Rim Plantation Services Pte Limited
– Sales and marketing agency commission
– Project management services
– Interest and other charges
Company
Johor Corporation
– Management fees received
Kelab Bolasepak Perbadanan Johor
– Donation
Johor Foods Sdn. Bhd.
Damansara Assets Sdn. Bhd.
– Management fees and services payable
– Rental commission payable
Subsidiaries
– Dividend income
– Agriculture consultancy services charged
Pro Biz Solution Sdn. Bhd.
– Rental income
260
(continued)
31 DECEMBER 2011
(b)
Compensation of key management personnel
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling
the activities of the Group either directly or indirectly. The key management personnel includes all the Directors of the Group, and
certain members of senior management of the Group.
The compensation of directors of the Group are disclosed in Note 9 to the financial statements. The compensation of other members
of senior management considered as key management personnel (excluding directors) are as follows:
Group
Salaries, allowance and bonuses
Defined contribution plan
Other employee benefits
2011
RM’000
2010
RM’000
1,877
236
103
2,334
351
98
2,216
2,783
31. COMMITMENTS
(a)
Capital commitments
Committed capital expenditure as at the reporting date is as follows:
Group
Authorised capital expenditure in respect of property,
plant and equipment not provided for in the
financial statements at the end of the year:
– Contracted for
– Not contracted for
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
388,461
351,934
101,785
348,109
3,873
1,176
606
85
740,395
449,894
5,049
691
261
31. COMMITMENTS (continued)
(b)
Operating lease commitments – as lessee
The Group’s food and restaurants business segment has entered into non-cancellable operating lease agreements for the use of land
and buildings. These leases have an average tenure of 15 years with no renewal or purchase options included in the contracts of the
leases. Certain contracts also include escalation clauses or contingent rental arrangements computed based on sales achieved while
others include fixed rentals for an average of 3 years. There are no restrictions placed upon the Group by entering into these leases.
The Group’s major plantation subsidiary, NBPOL, has entered into non-cancellable operating lease agreements for the use of mini
estate land, for terms of 20 or 40 years, and state-owned land for terms of 99 years. These leases are renewable.
Future minimum rentals payable under non-cancellable operating leases at the reporting date are as follows:
Group
Not later than one year
Later than 1 year but not later than 5 years
Later than 5 years
(c)
2011
RM’000
2010
RM’000
139,105
166,614
104,613
156,388
190,959
102,190
410,332
449,537
Finance lease commitments
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as
follows:
Group
2011
RM’000
2010
RM’000
3,031
2,462
2,979
4,726
Total minimum lease payments
Less: Amounts representing finance charges
5,493
(495)
7,705
(960)
Present value of minimum lease payments
4,998
6,745
2,764
2,234
2,541
4,204
Present value of minimum lease payments
Less: Amount due within 12 months
4,998
(2,764)
6,745
(2,541)
Amount due after 12 months
2,234
4,204
Minimum lease payments
Present value of payments
262
(continued)
31 DECEMBER 2011
32. CONTINGENCIES
At the reporting date, the Group, via NBPOL, had contingent liabilities in respect of legal claims in the ordinary course of business pertaining
to land disputes, employee issues and GST disputes. NBPOL has disclaimed all liability in these cases and is vigorously defending these
actions. It is not practical to estimate the potential effect of these claims but legal advice indicates that any liability that may arise in the
unlikely event these claims are successful will not be significant.
33. SIGNIFICANT EVENTS
(i)
(ii)
During the financial year, the Company announced the completion and approval of the following proposals:
(a)
11 February 2011: Increase in authorised share capital of the Company from RM200,000,000 comprising 400,000,000 shares of
RM0.50 each to RM500,000,000 comprising 2,000,000,000 subdivided shares of RM0.25 each (“proposed increase in authorised
share capital”);
(b)
17 February 2011: Share split involving the sub-division of every one (1) existing ordinary share of RM0.50 each held in the
Company or (“share(s)”) into two (2) ordinary shares of RM0.25 each (“sub-divided share(s)”) (“proposed share split”);
(c)
17 February 2011: Bonus issue of new sub-divided shares (“bonus share(s)”) on the basis of one (1) bonus share for every one
(1) sub-divided share held after the proposed share split (“proposed bonus issue”); and
(d)
24 February 2011: Issue of free warrants in the Company (“warrant(s)”) on the basis of one (1) warrant for every eight (8) subdivided shares held after the proposed share split and the proposed bonus issue (“proposed free warrants issue”).
The Company had on 16 August 2011 announced the proposed acquisition of plantation assets from its ultimate holding corporation,
Johor Corporation (“JCorp”) by Mahamurni Plantations Sdn. Bhd. (“MPSB”), a wholly-owned subsidiary of Kulim, of six (6) estates
(together with all buildings and mills (including their plant and machineries erected thereon)), all located in the state of Johor with
a total land area measuring approximately 13,687 hectares for a total cash consideration of RM700 million.
Of the above proposed acquisition, the following was completed as at year end:
(i)
The SPA between MPSB and JCorp for the acquisition of the oil palm plantation land (together with all buildings erected
thereon together with assets, equipments, appliances, and plant and machineries located within the oil palm plantation)
known as “Sungai Papan Estate” for a total cash consideration of RM183,300,000 and SPA between MPSB and JCorp Hotels and
Resorts Sdn. Bhd. (“JHRSB”) (formerly known as Kumpulan Penambang (J) Sdn. Bhd), a wholly-owned subsidiary of JCorp, for
the acquisition of the oil palm plantation land (together with all buildings erected thereon together with assets, equipments,
appliances, and plant and machineries located within the oil palm land) known as “Part of Siang Estate” for a total cash
consideration of RM191,600,000. Payments were effected on 31st December 2011.
The proposed acquisitions that are yet to be completed as at year end are as follows:
(i)
a SPA between MPSB and JCorp for the proposed acquisition of the land currently planted with oil palm cultivation (together
with all buildings and the palm oil mill (“Pasir Panjang Mill”) erected thereon (together with assets, equipments, appliances, and
plant and machineries located within the land and Pasir Panjang Mill)) known as “Part of Pasir Panjang Estate” for a total cash
consideration of RM71,783,000; and
(ii)
a SPA between MPSB and Johor Foods Sdn. Bhd. (“JFSB”), a wholly-owned subsidiary of JCorp, for the proposed acquisition of
the land currently planted with oil palm cultivation (together with all buildings and the palm oil mill (“Palong Mill”) erected
thereon (together with assets, equipments appliances, and plant and machineries located within the land and Palong Mill))
known as “Mungka, Kemedak and Palong Estate” for a total cash consideration of RM253,317,000.
263
33. SIGNIFICANT EVENTS (continued)
Kulim (Malaysia) Berhad (continued)
(iii)
On 5 December 2011, the Company announced that Sindora Berhad had successfully become a wholly-owned subsidiary on even
date under the conditional take-over offer to acquire all the remaining ordinary shares of RM1.00 each in Sindora Berhad not already
owned by the Company for a cash offer price of RM3.10 per share.
Pursuant to the above, the entire issued and paid-up share capital of Sindora Berhad was removed from the Official List of Bursa
Malaysia Securities Berhad.
QSR Brands Berhad (“QSR”)
(i)
On 19 September 2011, the Group via its subsidiary, QSR, announced the re-organisation of its group structure resulting in QSR
acquiring the following wholly-owned subsidiaries from its other subsidiaries:
Target companies
Pizza Hut Restaurants Sdn. Bhd.
PH Property Holdings Sdn. Bhd.
Multibrand QSR Holdings Pte. Ltd.
Vendor
Cost
RM’000
Pizza Hut Holdings (Malaysia) Sdn. Bhd.
44,134
–*
10,000
54,134
*
(ii)
represents RM2
On 19 September 2011, KFCH announced the re-organisation of its group structure resulting in KFCH acquiring the following
subsidiaries from its other subsidiaries:
Target companies
KFC (Sarawak) Sdn. Bhd.
KFC (Sabah) Sdn. Bhd.
KFC (Peninsular Malaysia) Sdn. Bhd.
Kentucky Fried Chicken (Malaysia) Sdn. Bhd.
Asbury’s (Malaysia) Sdn. Bhd.
WQSR Holdings (S) Pte. Ltd.
KFC (East Malaysia) Sdn. Bhd.
Ayamas Shoppe Sdn. Bhd.
Rasamas Holdings Sdn. Bhd.
Vendor
Cost
RM’000
KFC Restaurants Holdings Sdn. Bhd.
Ayamas Food Corporation Sdn. Bhd.
Ayamas Food Corporation Sdn. Bhd.
2,198
4,363
9,250
2,406
1,145
10,000
6,038
1,829
3,000
40,229
264
(continued)
31 DECEMBER 2011
33. SIGNIFICANT EVENTS (continued)
QSR Brands Berhad (“QSR”) (continued)
(iii)
On 14 December 2011, QSR announced that it had received a letter of offer from Massive Equity Sdn. Bhd. (“MESB”) dated 14
December 2011, stating MESB’s intention to acquire substantially all businesses and undertakings of QSR, including substantially all
the assets and liabilities of QSR, at an aggregate cash consideration equivalent to:
(a)
RM6.80 per ordinary share of RM1.00 each held in QSR (“QSR Share”) multiplied by the total outstanding QSR shares (less
treasury shares, if any) at a date to be determined later; and
(b)
RM3.79 per warrant of QSR (“QSR Warrant”) multiplied by the total outstanding number of QSR Warrants in issue at a date to
be determined later.
(hereinafter referred to as the “QSR Offer”)
MESB had also on even date made an offer to acquire the entire businesses and undertakings of KFC Holdings (Malaysia) Bhd.
(“KFCH”), including all of the assets and liabilities of KFCH (“KFCH Offer”). The KFCH Offer and the QSR Offer are inter-conditional.
The boards of directors of QSR and KFCH had on 21 December 2011 announced that they (save for the interested directors under
the QSR Offer and KFCH Offer) had accepted the QSR Offer and KFCH Offer respectively, subject to the execution of the relevant
sale and purchase agreement.
The QSR Offer and KFCH Offer are in the midst of being implemented for the approval of the relevant shareholders and warrant
holders. Full details will be announced in due course.
New Britain Palm Oil Limited (“NBPOL”)
(i)
On 31 March 2011, NBPOL entered into a Facility Agreement with a consortium of local and foreign banks for a USD240 million
five (5) year facility, the proceeds of which will be used to repay the USD200 million twelve (12) month facility taken out for the
acquisition of Kula (due for repayment on 15 April 2011), and the balance for various capital projects and working capital. The
following securities have been provided against this facility:
•
Registered equitable mortgage over all the assets and undertakings of the NBPOL group except for 2 (two) subsidiaries, Ramu
Agri Industries Limited and New Britain Oils Limited; and
•
Registered mortgage leasehold over all state leases and sub leases greater than 500 hectares comprising all available land and
buildings owned by NBPOL.
The Facility comprises a USD120 million Tranche 1 and a USD120 million Tranche 2. The principal amount outstanding under Tranche
1 shall be repaid in 18 quarterly instalments of USD6.3 million commencing 6 months from the first drawdown and a final installment
of USD6.6 million. The principal amount outstanding under Tranche 2 shall be repaid at maturity.
265
34. SUBSEQUENT EVENT
The Company had on 10 January 2012 announced, in reference to the announcement on 9 January 2012 by NBPOL, a 50.68% owned
subsidiary of the Company, that NBPOL is seeking authority from its shareholders to disapply pre-emption rights for a potential new issue
of shares of up to a maximum of five percent of the current issued share capital of NBPOL. The purpose of the potential new issue of
shares is to acquire the non-controlling interest in certain subsidiaries of NBPOL.
The issuance of the new shares by NBPOL, if so approved by the shareholders of NBPOL, will dilute the Company’s shareholding in NBPOL
from 50.68% to 48.26%, thus potentially rendering NBPOL an associate of the Company.
The resolution seeking approval from the shareholders of NBPOL to disapply their pre-emption rights for the potential issue of new
shares up to a maximum of five percent of the current issued share capital of NBPOL was approved by the shareholders of NBPOL on
30 January 2012.
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key
financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the
management team. The audit committee provides independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except
for the use as hedging instruments where appropriate and cost-efficient. The Group applies cash flow hedge accounting on those hedging
relationships that qualify for hedge accounting.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the
objectives, policies and processes for the management of these risks.
(a)
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations.
The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets
(including investments, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing
exclusively with high credit rating counterparties.
The Group seeks to invest cash assets safely and profitably. The Group has no significant concentration of credit risk and it is not the
Group’s policy to hedge its credit risk. The Group has in place, for significant operating subsidiaries, policies to ensure that sales of
products and services are made to customers with an appropriate credit history and sets limits on the amount of credit exposure to
any one customer. For significant subsidiaries, there were no instances of credit limits being materially exceeded during the reporting
periods and management does not expect any material losses from non-performance by counterparties.
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:
•
The carrying amount of each class of financial assets recognised in the statements of financial position;
•
Guarantees given by the Group and Company to banks in favor of the ultimate holding corporation and various related
companies amounting to RM3,940,000 (2010: RM14,469,000).
•
Corporate guarantees provided by the Company to banks for credit facilities granted to subsidiaries. The amount outstanding
on such facilities was RM428,246,350 (2010: RM28,900,000) as at the reporting date.
266
(continued)
31 DECEMBER 2011
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(a)
Credit risk (continued)
Financial guarantees have not been recognised in the financial statements as the directors are of the opinion that the fair value on
initial recognition was not material and that it is not probable that a future sacrifice of economic benefits will be required.
Credit risk concentration profile
Other than the amounts due from the subsidiaries to the Company, the Group and the Company is not exposed to any significant
concentration of credit risk in the form of receivables due from a single debtor or from groups of debtors.
Financial assets that are neither past due nor impaired
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 21. Deposits with banks
and other financial institutions and investments are placed with or entered into with reputable financial institutions or companies
with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 21.
(b)
Liquidity risk
Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage
of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of financial assets and liabilities.
The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of
stand-by credit facilities.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group and the Company’s liabilities at the reporting date based on
contractual undiscounted repayment obligations.
On demand
or within one
year
RM’000
One to five
years
RM’000
Over five
years
RM’000
Total
RM’000
797,120
595,595
–
2,156,848
–
374,212
797,120
3,126,655
(392,048)
78,618
–
–
–
–
(392,048)
78,618
1,079,285
2,156,848
374,212
3,610,345
207,676
–
–
296,057
–
–
207,676
296,057
Total undiscounted financial liabilities
207,676
296,057
–
503,733
At 31 December 2011
Group
Financial liabilities:
Forward commodity contracts settled gross
– Gross payments
– Gross receipts
Total undiscounted financial liabilities
Company
Financial liabilities:
Financial guarantees have not been included in the above maturity analysis as no default has occurred.
267
(c)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will
fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. Borrowings issued
at variable rates expose the Group to cash flow interest rate risk whereas those issued at fixed rates expose the Group to fair value
interest rate risk.The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.
Sensitivity analysis for interest rate risk
At the reporting date, a change of 50 basis points (“bp”) in interest rates would have increased/(decreased) post-tax profit or loss by
the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Group
50 bp increase in interest rates
50 bp decrease in interest rates
(d)
Company
2011
RM’000
2010
RM’000
2011
RM’000
(13,105)
13,105
(5,210)
5,210
(1,366)
1,366
2010
RM’000
(1,025)
1,025
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates.
The Group operates internationally and is exposed to foreign currency risk on sales, purchases and borrowings that are denominated
in a currency other than the respective functional currencies of the Group entities. The foreign currencies in which these transactions
are denominated are principally United States Dollars (“USD”) and Papua New Guinea (“PNG”) Kina.
It is not the Group’s policy to hedge its transactional foreign currency risk exposure.
The Group also has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. It
is not the Group’s policy to hedge foreign currency translation risk. The Group maintains bank accounts denominated in foreign
currencies, primarily in USD, as a natural hedge against foreign currency risk.
268
(continued)
31 DECEMBER 2011
(d)
Foreign currency risk (continued)
The Group’s exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period was:
Group
Denominated in
USD
RM’000
PNG Kina
RM’000
As at 31 December 2011
Trade receivables
Trade payables
347,176
(56,271)
(999,945)
(2,104)
–
–
–
–
Net exposure in the statement of financial position
(711,144)
–
Trade receivables
Trade payables
215,445
(9,407)
(754,639)
(174,677)
59,974
(93,108)
(137,099)
–
Net exposure in the statement of financial position
(723,278)
(170,233)
As at 31 December 2010
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s profit net of tax and other comprehensive income net of tax (“OCI”)
to a reasonably possible change in the USD and PNG Kina exchange rates against the respective functional currencies of the Group
entities, with all other variables held constant.
Other comprehensive
income net of tax
Profit net of tax
USD / PNG Kina
– strengthen 5% (2010: 5%)
– weaken 5% (2010: 5%)
2011
RM’000
2010
RM’000
2011
RM’000
(160,483)
160,483
(93,000)
93,000
318
(318)
2010
RM’000
6,200
(6,200)
269
(e)
Market price risk
Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of
changes in market prices (other than interest or exchange rates).
The Group is exposed to equity price risk arising from its investment in quoted equity instruments which are mainly listed on
Bursa Malaysia.
The management monitors the equity investments on a portfolio basis. Material investments within the portfolio are managed on an
individual basis and all buy and sell decisions are approved by the Risk Management Committee of the Group.
Sensitivity analysis for market price risk
At the reporting date, a 5% (2010: 5%) strengthening in the FTSE Bursa Malaysia KLCI would have increased the Group’s pre-tax
profit by RM3,199,000 (2010: RM1,524,000) and its other comprehensive income by RM2,224,000 (2010: RM23,260,000). A 5%
weakening in the FTSE Bursa Malaysia KLCI would have an equal but opposite effect on the Group’s pre-tax profit and other
comprehensive income.
(f)
Commodity price risk
The Group derives a significant proportion of its revenues from the sale of palm oil products. The Group uses derivative financial
instruments (forward sales and purchases of Malaysian palm oil) to guarantee a minimum price for the sale of its own palm oil and
to close out positions previously taken out. Cash flow hedge accounting is applied on such derivatives.
At the reporting date, a 10% fluctuation on palm oil prices would have the following effect on the Group’s hedge reserve
within equity:
(Decrease)/Increase
10% increase in palm oil prices
10% decrease in palm oil prices
2011
RM’000
2010
RM’000
(15,889)
15,889
(12,027)
12,027
270
(continued)
31 DECEMBER 2011
(g)
Fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair values
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable
approximations of fair values:
Note
21
23
25
The carrying amounts of these financial assets and liabilities are reasonable approximations of fair values, either due to their shortterm nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.
The fair values of borrowings are estimated by discounting expected future cash flows at the market incremental lending rate for
similar types of lending, borrowing or leasing arrangements at the reporting date.
Quoted equity instruments
Fair value is determined directly by reference to their published market bid price at the reporting date.
Derivatives
Fair values of forward commodity contracts are calculated by reference to forward rates quoted at the reporting date for contracts
with similar maturity profiles.
Financial guarantees
The Company provides financial guarantees to banks for credit facilities granted to certain subsidiaries. The fair value of such
guarantees is not expected to be material as the probability of the subsidiaries defaulting is remote.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
•
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
•
Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either
directly or indirectly.
•
Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable
market data.
271
(g)
Fair value (continued)
As at 31 December 2011, the Group held the following financial instruments carried at fair value in the statement of
financial position:
Level 1
RM’000
Level 2
RM’000
Level 3
RM’000
Total
RM’000
44,469
63,985
–
–
–
30,607
–
–
–
44,469
63,985
30,607
108,454
30,607
–
139,061
–
2,104
–
2,104
39,265
166,638
–
–
–
137,161
–
–
–
39,265
166,638
137,161
205,903
137,161
–
343,064
–
174,677
–
174,677
3,136
63,985
–
–
–
30,019
–
–
–
3,136
63,985
30,019
67,121
30,019
–
97,140
5,123
166,638
–
–
–
136,922
–
–
–
5,123
166,638
136,922
171,761
136,922
–
308,683
Group
At 31 December 2011
Financial assets measured at fair value
Quoted shares
Quoted warrants
Fund investments
Financial liabilities measured at fair value
At 31 December 2010
Quoted shares
Quoted warrants
Fund investments
Financial liabilities measured at fair value
Company
At 31 December 2011
Quoted shares
Quoted warrants
Fund investments
At 31 December 2010
Quoted shares
Quoted warrants
Fund investments
272
(continued)
31 DECEMBER 2011
36.
FINANCIAL INSTRUMENTS
The financial instruments of the Group and the Company as at 31 December are categorised into the following classes:
Note
2011
RM’000
2010
RM’000
21
22
808,357
644,702
590,645
452,146
1,453,059
1,042,791
18
63,985
172,542
18
18
75,076
10,787
174,522
12,514
85,863
187,036
797,120
2,620,944
677,291
1,926,430
3,418,064
2,603,721
24
2,104
174,677
21
22
308,550
79,664
269,795
74,826
388,214
344,621
18
63,985
166,638
18
18
33,155
3,842
142,045
6,242
36,997
148,287
207,676
273,171
76,988
373,171
480,847
450,159
Group
(a)
Loans and receivables
(b)
Financial assets at fair value through profit or loss – held for trading
Other investments
(c)
Other investments (at fair value)
Other investments (at cost less impairment)
(d)
Financial liabilities measured at amortised cost
(e)
25
23
Derivative liabilities designated as hedging instruments
Company
(a)
Loans and receivables
(b)
Financial assets at fair value through profit or loss – held for trading
Other investments
(c) Available-for-sale financial assets
Other investments (at fair value)
Other investments (at cost less impairment)
(d)
Financial liabilities measured at amortised cost
Borrowings
25
23
273
37. CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that it maintains a strong capital base and healthy capital ratios
in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new
shares. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2011 and 31
December 2010.
A subsidiary of the Group which is involved in insurance broking and consultancy is required by Bank Negara Malaysia to maintain a
minimum shareholders’ fund of RM600,000 at any point in time. This externally imposed capital requirement has been complied with
by the abovementioned subsidiary for the financial years ended 31 December 2011 and 2010.
Bursa Malaysia Practice Note No. 17/2005 imposes a requirement on the Company to maintain a consolidated shareholders’ equity equal
to or not less than the 25 percent of the issued and paid up capital (excluding treasury shares) and such shareholders’ equity is to be
not less than RM40 million. The Company has complied with this requirement.
The Group monitors capital using the debt-to-equity ratio. The Group’s policy, which is unchanged from 2010, is to maintain the debtto-equity ratio at the lower bound of the band between 0.5:1 and 0.8:1. The debt-to-equity ratios at 31 December 2011 and at 31
December 2010 were as follows:
Group
2011
RM’000
2010
RM’000
Total borrowings (Note 23)
Less: Cash and bank balances (Note 22)
2,620,944
(644,702)
1,926,430
(452,146)
Net debt
1,976,242
1,474,284
Total equity
6,920,699
5,542,742
0.29
0.27
Debt-to-equity ratios
38. SEGMENT INFORMATION
For management purposes, the Group is organised into strategic business units based on their products and services, and has five
reportable segments. The strategic business units offer different products and services, and are managed separately because they require
different technology and marketing strategies. The Group Managing Director (Group MD) reviews internal management reports for each
of the strategic business units on a monthly basis. The operations of each of the Group’s reportable segments are summarised below:
•
Plantation operations
– Oil palm planting, crude palm oil processing and plantation management services and
consultancy
•
Manufacturing products
– Manufacture and sale of oleochemical, biodiesel and rubber products
•
Food and service restaurants – Pizza Hut, Ayamas and Kentucky Fried Chicken outlets
•
Intrapreneur ventures
– Sea transportation, parking management, sales of wood based products and bulk mailing and
printing
•
Property investment
– Rental of office building
Performance is measured based on segment profit before tax and interest as included in the internal management reports that are
reviewed by the Group MD. Management believes that segment profits are the most relevant measure by which it can assess the results
of the segments against those of other entities operating in the same industries
Other operations of the Group mainly comprise investment holding and intrapreneur ventures which are not of sufficient size to be
reported separately.
Segment liabilities
635,120
2,024,830
654,525
4,665,389
–
893,217
–
236,602
410,933
3,405,097
–
–
–
177,435
163,398
88,277
–
–
2,950
(33,307)
2,442,799
7,721
(22,071)
821,485
–
–
–
–
–
–
–
–
–
–
–
–
4,490
6
5,316
–
–
–
(972)
–
177
–
(112)
8,304
Rubber
based
products
RM’000
Manufacturing
125,769
205
35,565
–
–
4,811
(8,864)
–
2,748
–
(652)
–
Biodiesel
RM’000
1,034,260
393,088
2,686,468
–
888,972
–
282,916
7,814
135,764
984
(13,972)
3,349,914
Food and
restaurants
RM’000
439,520
137,624
533,306
–
28,698
–
42,944
1,146
22,632
(1,019)
(22,003)
396,618
Intrapreneur
ventures
RM’000
–
–
94,602
–
–
–
(4,364)
–
–
–
–
8,200
Property
investment
RM’000
335,550
3,891
42,016
24,334
2,694
–
3,602
412
2,559
1,955
642
14,451
Other
operations
RM’000
–
–
52,479
–
–
–
(8,393)
–
–
–
–
–
C
B
A
Adjustments
and
eliminations Notes
RM’000
4,599,539
1,600,272
11,520,238
24,334
1,097,799
4,811
1,436,688
9,372
415,555
12,591
(91,475)
7,041,771
Consolidated
RM’000
Assets
Investments in
associates
Intangible assets
Additions to
non-current
assets
Segment assets
Results
Interest income
Finance costs
Depreciation of
property, plant and
equipment
Amortisation of
intangible assets
Impairment of
non-financial
assets
Segment profit/(loss)
Segment revenue
31 December 2011
Malaysia
RM’000
Papua New
Guinea &
Solomon Oleochemicals
Islands (Discontinued)
RM’000
RM’000
Plantation
38. SEGMENT INFORMATION (continued)
274
31 DECEMBER 2011
(continued)
626,094
1,702,335
312,973
3,141,165
–
456,305
–
212,613
48,362
2,815,523
–
–
–
140,301
121,362
51,400
–
–
482
29,302
1,532,526
4,041
32,347
575,131
–
–
–
–
–
–
8,479
–
–
–
7,004
881,511
3,743
354
5,654
–
–
–
(2,858)
–
114
3
75
4,988
Rubber
based
products
RM’000
Manufacturing
125,401
4,015
44,713
–
–
35,404
(63,347)
–
4,421
–
1,521
22,908
Biodiesel
RM’000
845,920
260,545
2,353,332
–
878,491
11,036
277,355
9,412
117,560
–
10,496
3,035,827
Food and
restaurants
RM’000
391,092
98,028
482,998
–
26,698
–
13,233
1,070
24,181
56
8,998
292,799
Intrapreneur
ventures
RM’000
–
–
94,503
–
–
–
3,513
–
–
–
–
7,587
Property
investment
RM’000
8,365
5,021
93,743
56,610
1,405
–
(35,539)
–
2,151
1,788
(1,299)
17,173
Other
operations
RM’000
–
–
214,061
–
–
–
(18,962)
–
–
–
(7,004)
(881,511)
C
B
A
Adjustments
and
eliminations Notes
RM’000
3,702,950
729,298
9,245,692
56,610
1,046,895
46,440
850,792
10,482
321,189
6,370
81,440
5,488,939
Consolidated
RM’000
275
Segment liabilities
Investments in
associates
Intangible assets
Additions to
non-current
assets
Segment assets
Assets
Interest income
Finance costs
Depreciation of
property, plant
and equipment
Amortisation of
intangible assets
Impairment of
non-financial
assets
Results
Segment revenue
31 December 2010
Malaysia
RM’000
Papua New
Guinea &
Solomon Oleochemicals
Islands (Discontinued)
RM’000
RM’000
Plantation
276
(continued)
31 DECEMBER 2011
The intrapreneur venture business segment can be further analysed as follows:
Sea
transportation
RM’000
Parking
managements
RM’000
Wood
based
product
RM’000
Bulk
mailing and
printing
RM’000
Others
RM’000
Total
intrapreneur
venture
RM’000
169,935
115,665
6,488
30,416
74,114
396,618
–
(20,467)
–
(791)
–
(82)
–
(271)
(1,019)
(392)
(1,019)
(22,003)
14,062
–
37,469
3,314
1,146
3,234
236
–
280
809
–
991
4,211
–
970
22,632
1,146
42,944
Intangible assets
Additions to non-current assets
Segment assets
8,996
92,291
404,011
12,545
5,660
47,468
–
–
4,662
1,931
354
15,027
5,226
39,319
62,138
28,698
137,624
533,306
Segment liabilities
300,422
44,402
23,872
4,643
66,181
439,520
87,153
111,888
8,962
33,625
51,171
292,799
241
7,305
315
992
–
80
–
283
(500)
338
56
8,998
18,122
–
12,283
4,432
1,070
3,072
228
–
893
809
–
3,134
590
–
(6,149)
24,181
1,070
13,233
Intangible assets
Additions to non-current assets
Segment assets
6,993
83,707
384,116
13,545
9,634
54,028
–
364
6,457
1,931
1,440
18,873
4,229
2,883
19,524
26,698
98,028
482,998
Segment liabilities
273,776
37,344
25,650
7,099
47,223
391,092
31 December 2011
Segment revenue
Results
Interest income
Finance costs
Depreciation of property,
plant and equipment
Amortisation of intangible assets
Segment profit
Assets
31 December 2010
Segment revenue
Results
Interest income
Finance costs
Depreciation of property,
plant and equipment
Amortisation of intangible assets
Assets
277
Notes
Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements
A
The amounts relating to the discontinued operation (i.e. oleochemical segment) have been excluded to arrive at the amounts
shown in the consolidated statement of comprehensive income as they are presented separately in the statement of
comprehensive income within one line item, “Gain from discontinued operation, net of tax”.
B
The following items are added to / (deducted from) segment profit to arrive at “Profit before tax from continuing operations”
presented in the consolidated statement of comprehensive income:
Share of results of associates
Interest income
Finance costs
C
2011
RM’000
2010
RM’000
6,992
12,591
(91,475)
2,174
6,370
(81,440)
(71,892)
(72,896)
This amount comprises of other items which cannot be allocated to any operating segment.
Geographical information
Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:
Revenue
Malaysia
Papua New Guinea
Europe (mainly United Kingdom and Netherlands)
Others
Non-current assets
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
4,677,679
276,953
2,074,140
12,999
4,051,986
242,479
1,185,754
8,720
5,592,816
2,931,097
413,413
12,686
4,927,178
2,103,656
261,931
8,419
7,041,771
5,488,939
8,950,012
7,301,184
Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial
position:
Investment properties
Intangible assets
Investments in associates
Other investments
Deferred tax assets
Deferred farm expenditure
2011
RM’000
2010
RM’000
7,667,603
98,296
1,097,799
24,334
52,479
–
9,501
5,876,948
97,863
1,046,895
56,610
214,061
917
7,890
8,950,012
7,301,184
39. COMPARATIVES AND AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE
(a)
(b)
The comparatives were audited by a firm of chartered accountants other than Ernst & Young.
The financial statements for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the
directors on 30 March 2012.
278
(continued)
31 DECEMBER 2011
40. SUPPLEMENTARY INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS AND LOSSES
On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed entities pursuant to Paragraph 2.06
and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the
unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses.
On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.
The breakdown of the retained earnings of the Group and of the Company as at 31 December 2010, into realised and unrealised profits,
pursuant to the directive, is as follows:
Group
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
4,244,855
(681,525)
2,420,389
(636,451)
1,119,132
(51,353)
1,135,982
(73,429)
3,563,330
1,783,938
1,067,779
1,062,553
7,712
5,569
–
–
Add: Consolidated adjustments
3,571,042
(1,134,542)
1,789,507
183,343
1,067,779
–
1,062,553
–
Total retained earnings
2,436,500
1,972,850
1,067,779
1,062,553
Total retained earnings of the Company and its subsidiaries:
– realised
– unrealised
Total share of retained earnings associates:
– realised
The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised and
Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by
Malaysian Institute of Accountants on 20 December 2010.
SECTION 8: OTHER
CORPORATE
INFORMATION
280 LOCATIONS OF THE GROUP’S PALM OILS
DIVISION OPERATIONS
282 PROPERTIES OF THE GROUP
•
MALAYSIA
•
PAPUA NEW GUINEA
•
SOLOMON ISLANDS
297 NOTICE OF ANNUAL GENERAL MEETING
301 STATEMENT ACCOMPANYING NOTICE OF
ANNUAL GENERAL MEETING
PROXY FORM
MALAYSIA
LOCATIONS OF THE GROUP’S
PALM OILS DIVISION OPERATIONS
280
281
ESTATES AND MILLS:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Bukit Layang Estate
Basir Ismail Estate
REM Estate
Ulu Tiram Estate
Sedenak Estate and Mill
Kuala Kabung Estate
Rengam Estate
Sindora Estate and Mill
Enggang Estate
Mutiara Estate
12.
13.
14.
15.
16.
17.
18.
19.
20.
Tereh Utara Estate and Tereh Mill
Sungai Tawing Estate
Selai Estate
Sungai Sembrong Estate
Labis Bahru Estate
Sepang Loi Estate
UMAC Estate
Sungai Papan Estate
Siang Estate
282
PROPERTIES OF THE GROUP IN MALAYSIA
Tenure
Hectares
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
KULIM (MALAYSIA) BERHAD
Labis Bahru Estate
K B 517
85009 Segamat, Johor
Freehold
2,109
Oil palm and rubber
estate
43,950
1997*
Mutiara Estate
P O Box 21
Kahang New Village
86700 Kahang, Johor
Leasehold expiring
20.06.2085
26.09.2085
04.11.2074
1,619
324
607
Oil palm estate
30,122
1997*
Basir Ismail Estate
K B 502
81909 Kota Tinggi, Johor
Freehold
2,875
Oil palm estate
432,330
1997*
REM Estate
K B 501
Freehold
Leasehold expiring 15.04.2093
(Building age: 13 years)
2,571
5
Oil palm estate
Staff training centre
330,515
1997*
Sg. Sembrong Estate
P O Box 21
Kahang New Village
86700 Kahang, Johor
Leasehold expiring
05.05.2074
25.11.2082
13.10.2102
607
607
29
Oil palm estate
14,846
1997*
Ulu Tiram Estate
K B 710
80990 Johor Bahru, Johor
Freehold
502
Oil palm estate
93,491
1997*
Kuala Kabung Estate
No 70, Jalan Ria 3
Taman Ria, Bukit Batu
81020 Kulai, Johor
1,705
Oil palm estate
10,315
1997*
Vacant land
17,458
1997*
21-storey Intelligent
office building
comprising 3-level
Basement Carpark,
5-level Podium and
16-level Tower
99,751
1998+
Mukim of Plentong, Johor
Lot 1581
Lot 2222
Lot 2223
Lot 2226
Lot 2227
Menara Ansar
65, Jalan Trus
80000 Johor Bahru
Freehold
Freehold
Freehold
Freehold
Freehold
5
8
66
4
5
–
13,648
1,072,778
KULIM PLANTATIONS (MALAYSIA) SDN BHD
K B 537
86009 Kluang, Johor
Freehold
1,929
869
Oil palm estate
45,086
1997*
Tereh Utara Estate
K B 536
86009 Kluang, Johor
Freehold
834
1,560
607
Oil palm estate
44,716
1997*
5,799
89,802
283
Tenure
Hectares
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
MAHAMURNI PLANTATIONS SDN BHD
Rengam Estate
K B 104
86300 Rengam, Johor
Freehold
2,439
Oil palm and rubber
estate
165,553
1997*
Sedenak Estate
K B 726
Freehold
2,861
Oil palm estate
188,433
1997*
UMAC Estate
P O Box 64
86007 Segamat, Johor
Leasehold expiring on:
17.03.2070
29.08.2071
11.12.2071
28.11.2072
25.02.2074
Oil palm estate
17,348
1997*
Siang Estate
K B 515
Leasehold expiring on
23.01.2087
3,414
Oil palm estate
103,077
2011
Sg. Papan Estate
P O Box 15
Bandar Penawar
22.09.2090
3,026
Oil palm estate
94,945
2011
228
237
324
346
481
13,356
569,356
ULU TIRAM MANUFACTURING COMPANY (MALAYSIA) SDN BHD
Bukit Layang Estate
K B 502
Freehold
398
Oil palm estate
398
52,383
1997*
52,383
SELAI SDN BHD
Enggang Estate
K B 503
86009 Kluang, Johor
Freehold
356
Oil palm estate
25,872
1997*
Selai Estate
K B 529
86009 Kluang, Johor
Freehold
3,179
Oil palm estate
23,618
1997*
3,535
49,490
KUMPULAN BERTAM PLANTATIONS BERHAD
Sepang Loi Estate
K B 520
85009 Segamat
Freehold
1,016
1,016
Oil palm estate
9,644
9,644
2003
284
PROPERTIES OF THE GROUP IN MALAYSIA (continued)
Tenure
Hectares
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
SINDORA BERHAD
Sindora Estate
K B 539
86009 Kluang, Johor
Leasehold expiring
24.01.2086
3,919
Oil palm estate
54,682
1987
Sg. Tawing Estate
K B 531
86009 Kluang, Johor
Leasehold expiring
27.06.2079
2,219
Oil palm estate
33,463
2009
Total – Plantation
+
*
6,138
88,145
43,890
1,931,598
This property was acquired during the year as indicated and is stated at cost less accumulated depreciation and impairment losses.
These properties were revalued in 1997. The accounting policy on revaluation is disclosed in Note 2.7 to the Financial Statements.
285
Tenure
Area
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
13,043
2010
9,684
2010
QSR BRANDS BHD
AGRICULTURAL PROPERTIES
SELANGOR
Geran 24766 Lot 1462
Mukim Beranang
Daerah Hulu Langat
Freehold
63
acres
Breeder farm
HS (D) 20746, PT153
Bandar Baru Salak Tinggi
District of Sepang
Leasehold expiring
25.01.2105
32
acres
Breeding farm and
hatchery
22,727
KEDAH
Geran 34780, Lot 1908
Mukim Sidam Kiri
Daerah Kuala Muda, Kedah
Freehold
47
acres
Breeding farm and
hatchery
15,249
2011
15,249
NEGERI SEMBILAN
Geran 22067 Lot 3468
Mukim Linggi
Daerah Port Dickson
Freehold
55
acres
Breeder farm
5,222
2010
Geran 6348 PT 2149
Mukim Lenggeng
Daerah Seremban
Freehold
20
acres
Breeder farm
2,939
2010
Lot 559 Mukim Gemencheh
Daerah Tampin
Freehold
30,557
sq. ft.
Breeder farm
4,805
2010
HS (D) 5977-5980, PT 924-927
Mukim Titian Bintangor
Daerah Rembau
Freehold
Vacant land for
future expansion
1,362
2010
20
acres
14,328
MELAKA
Lots 1375-1397, 1689 and 1706
Mukim Ayer Pa’abas
Daerah Alor Gajah
Freehold
151
acres
Breeder farm
PM 1026 Lot 2294
Mukim Machap
Daerah Alor Gajah
Leasehold expiring
27.05.2038
6
acres
Contract broiler
farming
9,760
2010
203
2010
9,963
JOHOR
Mukim of Mersing
District of Johor
Freehold
855
acres
Vacant land and
oil palm estate
44,000
2010
Part of Lot land held under
PTD 9374, HSD 14897
Mukim Bukit Batu
Daerah Kulai Jaya, Johor
Leasehold
16.08.2081
(Building age: 1 year)
400
acres
Broiler farms
33,007
2011
77,007
286
Tenure
Sq. Ft.
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
368
2010
QSR BRANDS BHD
COMMERCIAL PROPERTIES
PERLIS
9 Persiaran Putra Timur Satu
02000 Kuala Perlis
Leasehold expiring
25.09.2092
2,660
Double-storey intermediate
shophouse for storage and
accommodation
368
KEDAH
Lot No. 269 Pekan Dindong
07000 Kuah
Langkawi
Freehold
3,260
3-storey intermediate
shopoffice for warehouse,
commissary and staff hostel
443
2010
45 Arked Pokok Asam
Langkawi Mall
07000 Kuah
Langkawi
Freehold
4,077
Double-storey corner
shophouse for restaurant
648
2010
46 & 47 Lengkok Cempaka 1
Persiaran Cempaka
08000 Amanjaya
Freehold
7,220
3-storey corner and
intermediate shopoffices for
restaurant and hostel
475
2010
No. 5 Bangunan Joota Brothers
Jalan Sungai Korok, 06000 Jitra
Freehold
1,240
2-storey shopoffice for
restaurant
495
2011
2,061
PULAU PINANG
Unit No. G-104
Megamall Pinang
2828 Jalan Baru
Bandar Perai Jaya
13600 Seberang Perai Tengah
Leasehold expiring
04.07.2094
2,762
Ground floor of a shopping
complex for restaurant
1,401
2010
1-10G Eden Parade
Jalan Sungai Emas
11100 Batu Ferringi
Freehold
1,409
Ground and mezzanine floors
of a shopping complex for
restaurant
450
2010
34 Jalan Mahsuri
11950 Bandar Bayan Baru
Leasehold expiring
15.05.2090
7,176
Double-storey shophouse for
restaurant
2,656
2010
3A-G-18 Blok 3A
Kompleks Bukit Jambul
Jalan Rumbia
11900 Pulau Pinang
Freehold
2,972
2,431
2010
Unit No. G-103
Megamall Pinang
2828 Jalan Baru
Bandar Perai Jaya
13600 Seberang Perai Tengah
Leasehold expiring
04.07.2094
3,342
1,683
2010
Parcel No. S-C1-05
Pusat Bandar Nibong Tebal
14300 Pulau Pinang
Freehold
2,798
247
2010
287
Tenure
Sq. Ft.
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
QSR BRANDS BHD
COMMERCIAL PROPERTIES (continued)
PULAU PINANG (continued)
1-5G, 1-6G & 1-9G
Eden Parade
Jalan Sungai Emas
11100 Batu Ferringhi
Freehold
4,397
3 adjoining ground and
mezzanine floors of a
shopping complex for
restaurant
1,512
2010
GF-12A Queensbay Mall
100 Persiaran Bayan Indah
11900 Bayan Lepas
Pulau Pinang
Freehold
5,870
6,848
2010
Geran No. 23532
Lot 599 Seksyen 5
Bandar Georgetown
No. 10-A Jalan Masjid Negeri
11600 Daerah Timor Laut
Pulau Pinang
Freehold
30,453
Plot of land with a colonial
heritage bungalow
9,600
2010
26,828
PERAK
79 Jalan Dato’ Lau Pak Khuan
Ipoh Garden
31400 Ipoh
Freehold
4,980
589
2010
65 Jalan Dato’ Onn Jaafar
30300 Ipoh
Freehold
19,375
6-storey commercial
building for restaurant and
staff hostel
1,750
2010
158 Jalan Idris
31900 Kampar
Freehold
7,542
589
2010
PTD 217643
Jalan Kuala Kangsar
Daerah Hulu Kinta
Klebang, Ipoh
Freehold
6,717
2010
43,561
3½-storey shopoffice
for restaurant
Vacant land for restaurants
9,645
SELANGOR
20-4 & 22-4 Jalan 14/22
The Right Angle
46100 Petaling Jaya
Leasehold expiring
16.12.2086
3,080
3rd floor of 2 adjoining units
of a 4-storey shophouse
730
2010
18A Ground Floor
Jalan SS6/3 Kelana Jaya
47301 Petaling Jaya
Freehold
1,490
Ground floor of a 5-storey
shophouse for retail outlet
801
2010
60 & 62 Jalan PJS 11/28A
Bandar Sunway
46150 Petaling Jaya
Leasehold expiring
11.03.2095 & 28.12.2092
15,237
2 units of 4-storey shopoffice
for restaurant, office and
hostel
4,719
2010
9 Jalan Taiping
41400 Klang
Freehold
12,202
4½-storey corner shophouse
for restaurant and staff hostel
1,963
2010
288
Tenure
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
Sq. Ft.
Description
4-storey shophouse for
restaurant
4,667
2010
17,088
95,788
Vacant land for restaurant
7,902
2010
639
2010
QSR BRANDS BHD
SELANGOR (continued)
18 & 20 Jalan Sulaiman
43000 Kajang
Freehold
Lot PT 12209
Mukim Damansara
Daerah Petaling
Leasehold expiring
01.11.2092
2105 Jalan 3/1
Bandar Baru Sungai Buloh
47000 Sungai Buloh
Leasehold expiring
13.03.2087
2,423
restaurant
Lot C1-091
Kompleks Galaxy Ampang
Jalan Dagang 5
Taman Dagang
68000 Ampang
Leasehold expiring
20.10.2084
4,108
Concourse level of
shopping centre for restaurant
1,466
2010
Lot PT 5665
Pekan Puchong Perdana
Daerah Petaling
Leasehold expiring
28.05.2108
5,000
3,959
2010
Blok B, Jalan Prima 5/5
Persiaran Prima Utama
Taman Puchong Prima
47100 Puchong
Freehold
5,968
4-storey shopoffice
4,181
2010
31,027
W.P. KUALA LUMPUR
Lot 14083
Jalan Kuchai Lama
58200 Kuala Lumpur
Leasehold expiring
08.02.2064
8,052
Single-storey building for
restaurant
6,660
2010
437 Jalan Ipoh
51200 Kuala Lumpur
Freehold
13,294
5-storey corner lot commercial
building for restaurant and
staff training
3,969
2010
140 Jalan Raja Laut
50350 Kuala Lumpur
Freehold
6,437
shophouse for restaurant and
staff hostel
2,488
2010
Lot PT 16805
Jalan Prima 1
Metro Prima
Off Jalan Kepong
52100 Kuala Lumpur
Leasehold expiring
28.04.2096
11,000
Double-storey building for
restaurants
10,933
2010
Lot PT 6878
Jalan 8/27A Wangsa Maju
53300 Kuala Lumpur
Leasehold expiring
19.04.2083
11,768
Single-storey building for
restaurants
12,738
2010
No. 23 & 24 Jalan 54
Desa Jaya Kepong
52100 Kepong
Leasehold expiring
08.03.2081
13,587
2 adjoining units of 4-storey
3,619
2010
40,407
289
Tenure
Sq. Ft.
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
812
2010
2,136
2010
498
2010
QSR BRANDS BHD
NEGERI SEMBILAN
26 Jalan Dato’ Sheikh Ahmad
70000 Seremban
Freehold
3,000
Double-storey corner
shophouse for retail outlet
and staff hostel
20 & 21 Jalan Dato’ Sheikh Ahmad
70000 Seremban
Freehold
7,812
2 adjoining units of
restaurant and hostel
24 & 26 Jalan Bunga Raya 7
Pusat Perniagaan Senawang
Taman Tasik Jaya
70400 Senawang
Freehold
5,456
2 units of a double-storey
1 Jalan Mahajaya
Kawasan Penambakan Laut
Bandar Port Dickson
71009 Negeri Sembilan
Leasehold expiring
31.01.2085
9,164
3-storey corner shophouse
for restaurant and staff
hostel
1,126
2010
Lot Nos PT 8241 to 8249 & 8262
Mukim Rantau
Daerah Seremban
Freehold
119,946
Vacant land (for shoplot
and commercial complex)
3,400
2010
PT 12172, Jalan BBN 1/1F
Putra Point
Bandar Baru Nilai
71800 Nilai
Freehold
423
2010
Lot 3363 Mukim Rasah
District of Seremban
Negeri Sembilan
Freehold
2,343
2011
5,386
restaurant
43,906
Vacant commercial land
10,738
MELAKA
9 Jalan PPM 9
Plaza Pandan Malim
75250 Melaka
Leasehold expiring
09.06.2095
5,818
and staff hostel
555 Plaza Melaka
Jalan Hang Tuah
75300 Melaka
Freehold
9,990
PM 222, Lot No. 4260
Mukim Bukit Katil
Daerah Melaka Tengah
Leasehold expiring
14.09.2077
No. 37 Jalan BBP1
Taman Batu Berendam Putra
75350 Batu Berendam, Melaka
Leasehold expiring
28.06.2108
621
2010
4½-storey corner
shophouse with mezzanine
floor for restaurant
1,182
2010
42,851
Vacant land for restaurants
3,123
2010
1,389
Ground floor of a 2-storey
shopoffice for restaurant
381
2011
5,307
290
PROPERTIES OF THE GROUP IN MALAYSIA
Tenure
Sq. Ft.
(continued)
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
QSR BRANDS BHD
JOHOR
86 Jalan Dedap 4
Taman Johor Jaya
81100 Johor Bahru
Freehold
1,540
restaurant
544
2010
11 Jalan Sri Perkasa 2/1
Taman Tampoi Utama
81200 Johor Bahru
Leasehold expiring
13.04.2094
4,620
3-storey intermediate shophouse
for restaurant and staff hostel
371
2010
1 & 1-1 Jalan Niaga
Pusat Perniagaan Jalan Mawai
81900 Kota Tinggi
Leasehold expiring
14.05.2085
2,926
Corner unit of double-storey
869
2010
HS(D) 367670 PTD 104984
Damansara Aliff 2
Mukim Tebrau
Johor Bahru
Freehold
75,229
4,100
2010
Lot 590 & Lot 591
PTD 171459, Tmn Perling
Mukim Pulai
81200 Johor
Freehold
45,000
8,400
2010
No. 1 & 1A Jalan Resam 13
Taman Bukit Tiram
Freehold
6,987
853
2010
No. 3, 3A & 3B
Jalan Resam 13
Taman Bukit Tiram
Freehold
4,620
3-storey intermediate shophouse
528
2010
No. 43 Jalan Sejambak 14
Taman Bukit Dahlia
81700 Pasir Gudang, Johor
Leasehold expiring
30.06.2103
3,080
509
2011
No. 2 Jalan Bandar 1
Pusat Bandar Baru Ayer Hitam
86100 Ayer Hitam, Johor
Leasehold expiring
16.07.2101
5,280
3-storey shopoffice for restaurant
669
2011
No. 1 Jalan Bandar 1
Pusat Bandar Baru Ayer Hitam
86100 Ayer Hitam, Johor
Leasehold expiring
16.07.2101
9,936
3-storey shopoffice for restaurant
1,279
2011
Part of PTD 84134
Bandar Dato’ Onn
Johor Bahru
Freehold
2
acres
5,904
2011
Part of C9
Taman Damansara Aliff
Tampoi, Johor Bahru
Freehold
Single-storey building for KFC and
Pizza Hut restaurants
6,171
2011
41,295
30,197
TERENGGANU
10 Persiaran Melor
Kijal Beach Resort
24100 Kijal
Leasehold expiring
25.11.2101
3,300
406
2010
406
PAHANG
Retail 1 & 2 Ground Floor
Bangunan Baru UMNO Pekan
26600 Pekan
Leasehold expiring
29.08.2106
2,878
2 contiguous parcels of ground
floor retail lots within a 6-storey
commercial complex
1,146
1,146
2010
291
Tenure
Sq. Ft.
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
1,345
2010
QSR BRANDS BHD
SABAH
Lot 25 Block 3
Bornion Centre
Jalan Kolam
88300 Kota Kinabalu
Leasehold expiring
15.05.2915
5,710
for restaurant and hostel
1,345
SINGAPORE
18 Yung Ho Road
Singapore 618591
Leasehold expiring
16.12.2036
2,912
Purpose-built single-storey
building for restaurant
5,294
2010
5,294
BRUNEI
EDR BD 44812 Lot 51759
Kampong Sengkurong
Mukim Sengkurong, Brunei
Freehold
0.494
acres
1,122
2011
1,122
INDUSTRIAL PROPERTIES
PULAU PINANG
2718 Jalan Seladang Alma
14000 Bukit Mertajam
Freehold
(Buidling age: 23 years)
47,376
Single-storey factory with
double-storey office block
for processing plant
3,744
2010
29 & 31 Lorong IKS
Juru 3, IKS Juru
14100 Simpang Ampat
Seberang Perai Selatan
Freehold
(Buidling age: 15 years)
5,960
2 adjoining units of a
1½-storey semi-detached
factories for commissary
and warehouse
1,359
2010
Lot 1136, Mukim 602
Seberang Perai Tengah
Pulau Pinang
Freehold
8.231
acres
Vacant land for processing
plant
8,909
2011
14,012
SELANGOR
Lot 7 Jalan 51A/223
46675 Petaling Jaya
Leasehold expiring
27.04.2065
10,883
Single-storey building with
a double-storey office block
2,551
2010
Lot 5 Jalan 51A/223
46675 Petaling Jaya
Leasehold expiring
18.11.2067
27,930
Single-storey detached
factory with 4-storey office
block
7,256
2010
Lot 20153
Jalan Pelabuhan Utara
42000 Pelabuhan Klang
Leasehold expiring
17.12.2086
124,031
Land and factory buildings
for primary processing and
further processing plants
39,511
2010
17, 19 & 21
Jalan Pemaju U1/15
Seksyen U1
HICOM-Glenmarie Industrial Park
40150 Shah Alam
Freehold
169,200
Industrial complex
39,062
2010
292
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
Tenure
Sq. Ft.
Description
Lot 166
Jalan Pemaju U1/15
Seksyen U1
HICOM-Glenmarie Industrial Park
40150 Shah Alam
Freehold
205,603
Vacant land for future
expansion of industrial
complex
21,600
2010
1, 3 & 6 Lorong Gerudi 1
Off Jalan Pelabuhan Utara
47000 Pelabuhan Klang
Leasehold expiring
15.03.2087
312,594
Single and double-storey
warehouse buildings and
4-storey office building
71,929
2010
QSR BRANDS BHD
INDUSTRIAL PROPERTIES (continued)
SELANGOR (continued)
181,909
KEDAH
Mukim of Sungai Petani/
Sungai Pasir
District of Kedah
Freehold
45,900
square
metres
Vacant industrial/residential
land, residential and
commercial properties
13,124
2010
13,124
JOHOR
PLO 398
Kilang Siapbina PKENJ
Jalan Perak
Kawasan Perindustrian Pasir Gudang
81770 Pasir Gudang
Leasehold expiring
18.04.2050
24,057
Land and factory buildings
for contract manufacturing
and warehouse
2,149
2010
2,149
SABAH
Lot 43A Karamunsing Warehouse
88000 Kota Kinabalu
Leasehold expiring
22.01.2901
Lot 5 Lorong Tembaga Tiga
Kawasan MIEL KKIP Selatan
Kota Kinabalu Industrial Park Menggatal
88450 Kota Kinabalu
Leasehold expiring
29.05.2101
11,832
18,287
3-storey corner warehouse
and office
2,103
2010
1½-storey semi-detached
warehouse
1,469
2010
3,572
293
Tenure
Sq. Ft.
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
2,978
2010
QSR BRANDS BHD
RESIDENTIAL PROPERTIES
W.P. KUALA LUMPUR
90 Pinggir Zaaba
Taman Tun Dr Ismail
60000 Kuala Lumpur
Freehold
5,388
Double-storey detached
house
2,978
NEGERI SEMBILAN
Unit Nos 1D, 1E, 1F, 1G & 2D
Marina Bay Admiral Cove
71000 Port Dickson
Leasehold expiring
27.07.2094
3,251
5 units of condominium for
staff training and recreation
953
2010
953
PAHANG
Unit No. 3556 Block B
Awana Golf & Country Resort
69000 Genting Highlands
Freehold
1,399
Condominium for staff
training and recreation
318
2010
Unit No. A7-22 (P)
Amber Court Villa D’Genting Resort
Freehold
2,386
299
2010
Unit No. B1-22 (P)
Freehold
2,429
304
2010
Unit No. B1-16 Level 16
Freehold
1,214
141
2010
1,062
TOTAL – FOODS AND RESTAURANTS
524,924
294
Tenure
Hectares/
’000
Sq. Ft.
Description
Net Book
Value @
31.12.2011
RM’000
Year of
Acquisition/
Revaluation
SINDORA BERHAD
60 years lease expiring on
24.11.2059
2.56/
Industrial land and building
120
2000
30.01.2041
/2,344
Industrial land and building
for office and factory
6,880
1983
30.01.2041
/5
Factory building
41
1986
No. 1, Jalan Temenggong 10
Bandar Tenggara
81000 Kulai, Johor
18.04.2085
/6
1 unit of double-storey
bungalow (staff residence)
53
1987
No. 6, 6A, 6B, 37, 37A, 37B, 41, 41A,
41B
Jalan Perang, Taman Pelangi
Freehold
/8
4 units of 3-storey
shophouses
3,360
1982
No. 17, Jalan Resam
Green Plains, Taman Bukit Tiram
81800 Ulu Tiram, Johor
Leasehold
0.5699/
583
1990
Sindora Timber Complex
Lot 1384 Industrial Area Phase 1
Bandar Tenggara
81000 Kulai, Johor
1 unit of double-storey
bungalow (staff residence)
11,037
PRO OFFICE SOLUTIONS SDN BHD
Wisma Pro Office
No. 6, Jalan SBC 6
Taman Sri Batu Caves
68100 Batu Caves, Selangor
Freehold
/22.8
Office building
4,256
2005
4,256
E.A. TECHNIQUE (M) SDN BHD
Setiawangsa Business Suites
Unit C-3A-3A
No. 2, Jalan Setiawangsa II
Taman Setiawangsa
54200 Kuala Lumpur
Freehold
/6.402
Office building
1,535
1,535
TOTAL – INTRAPRENEUR VENTURES
16,828
2006
295
PROPERTIES OF THE GROUP IN PAPUA NEW GUINEA
Mature
Hectares
31.12.2011
Net Book
Value @
31.12.2011
K’000
Year of
Acquisition
Bebere
1,958
5,656
1968-1990, 2005
Kumbango
2,323
6,781
1972-1985, 2005
1,320
8,501
1979-1985, 2005
907
1,989
1969-2000, 2005
6,508
22,927
Numundo
1,617
3,487
1996-2001, 2005
Haella
2,941
8,864
1999-2001, 2005
2,562
3,602
1998-2000
687
3,465
1980-1988
7,807
19,418
2,614
16,604
1986-2000
1,350
5,338
1996-1999
2,590
18,150
1995-1999
Tenure
Description
NEW BRITAIN PALM OIL LIMITED
MOSA GROUP
Togulo
Freehold
Mature Oil Palm and
Development Costs
Dami and Waisisi
NUMUNDO GROUP
Garu
Freehold
Mature Oil Palm and
Development Costs
Navarai
KAPIURA GROUP
Kautu
Freehold
Kaurausu
Freehold
Bilomi
Freehold
Malilimi
Freehold
1,974
11,810
1983-1998
Moroa
Leasehold
807
2,305
2003
Rigula
Leasehold
2,520
15,260
2005
11,855
69,467
204
1,156
Mature Oil Palm and
Development Costs
TALASEA GROUP
Lotogam
Natupi
Volupai
Leasehold
Mature Oil Palm and
Development Costs
Gororu
Lolokoru
2002
163
746
2003
1,060
7,050
2004-2005
66
2,504
2008
2,033
23,255
2005
3,526
34,711
2,058
6,903
2003
1,773
10,122
2004-2005
3,831
17,025
33,527
163,548
KULU-DAGI GROUP
Dalaivu
Sapuri
Leasehold
Total – New Britain Palm Oil Limited
Mature Oil Palm and
Development Costs
296
PROPERTIES OF THE GROUP IN PAPUA NEW GUINEA (continued)
Mature
Hectares
31.12.2011
Net Book
Value @
31.12.2011
K’000
Year of
Acquisition
3,687
18,177
2008
2,477
12,212
2008
6,164
30,389
8,237
21,640
2010
9,844
39,633
2010
5,319
4,621
2010
Total – Kula Palm Oil Limited
23,400
65,894
GRAND TOTAL – PAPUA NEW GUINEA
63,091
259,831
Tenure
Description
RAMU AGRI-INDUSTRIES LIMITED
Gusap
Leasehold
Dumpu
Leasehold
Mature Oil Palm and
Development Costs
Total – Ramu Agri-Industries Limited
KULA PALM OIL LIMITED
Higaturu
Leasehold
Milne Bay
Leasehold
Poliamba
Leasehold
Mature Oil Palm and
Development Costs
PROPERTIES OF THE GROUP IN THE SOLOMON ISLANDS
Mature
Hectares
31.12.2011
Net Book
Value @
31.12.2011
K’000
1,413
3,662
2004
1,538
5,588
2004
Mbalisuna
2,396
10,696
2004
GRAND TOTAL – SOLOMON ISLANDS
5,347
19,946
Tenure
Description
Year of
Acquisition
GUADALCANAL PLAINS PALM OIL LIMITED
Tetere
Ngalimbiu
Leasehold
Mature Oil Palm and
Development Costs
297
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Thirty Seventh (37 th) Annual General Meeting of Kulim
(Malaysia) Berhad will be held at Lecture Hall 1 & 2, Level 1, KFCH International College, Johor Bahru
Campus, No. 1, Jalan Dato’ Onn 1, Bandar Dato’ Onn, Johor Bahru, Johor, Malaysia on Tuesday, 26 June 2012
at 12:00 noon, for the following purposes:
ORDINARY BUSINESS
1.
To receive and adopt the Directors’ and Auditors’ Reports and Audited Financial Statements in respect of the year
2.
To re-elect the following Directors who retire in accordance with the Company’s Articles of Association:
3.
Resolution 1
(i)
Resolution 2
(ii)
Datuk Haron Siraj
Resolution 3
(iii)
Zulkifli Ibrahim
Resolution 4
(iv)
Resolution 5
(v)
Leung Kok Keong
Resolution 6
(vi)
Natasha Kamaluddin
Resolution 7
(vii) Wan Mohd Firdaus Wan Mohd Fuaad
Resolution 8
To consider, and if thought fit, to pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965
(“Act”);
Resolution 9
“THAT Tan Sri Dato’ Seri Arshad Ayub, who is over the age of seventy (70) years, be hereby re-appointed as Director
of the Company to hold office until the next Annual General Meeting (“AGM”) of the Company.”
4.
To approve the payment of Directors’ fees in respect of the financial year ended 31 December 2011.
Resolution 10
5.
To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their
remuneration.
Resolution 11
6.
SPECIAL BUSINESS
To consider and, if thought fit, to pass the following resolutions:
6.1
Ordinary Resolution
Authority to Allot and Issue Shares Pursuant to Section 132D of the Act
“THAT pursuant to Section 132D of the Act, full authority be and is hereby given to the Directors to issue
shares of the Company from time to time 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
pursuant to this resolution does not exceed ten percent (10%) of the issued share capital of the Company and
that such authority shall continue in force until the conclusion of the next AGM of the Company, and that the
Directors be and is hereby empowered to obtain the approval of the Bursa Malaysia Securities Berhad (“Bursa
Securities”) for the listing and quotation for the new shares so issued.” (See Explanatory Note 1 on Special
Business below)
Resolution 12
298
NOTICE OF ANNUAL GENERAL MEETING (continued)
6.2
Ordinary Resolution
Proposed Renewal of Shareholders’ Mandate to Enable the Company to Purchase up to 10% of its Issued and
Paid-up Share Capital (“Proposed Renewal of Share Buy-Back Authority”)
“THAT subject to the Act, rules, regulations and orders made pursuant to the Act, provisions of the
Company’s Memorandum and Articles of Association and the Listing Requirements of Bursa Securities (“Listing
Requirements”) and any other relevant authority, the Company be and is hereby authorised to purchase and/
or hold such amount of ordinary shares of RM0.25 each in the Company’s issued and paid-up share capital
through Bursa Securities upon such terms and conditions as the Directors may deem fit in the interest of the
Company provided that:(a)
the aggregate number of shares so purchased and/or held pursuant to this ordinary resolution
(“Purchased Shares”) does not exceed ten percent (10%) of the total issued and paid-up share capital
of the Company at any one time; and
(b)
the maximum amount of funds to be allocated for the Purchased Shares shall not exceed the
aggregate of the retained profits and/or share premium of the Company;
AND THAT the Directors be and are hereby authorised to decide at their discretion either to retain the
Purchased Shares as treasury shares (as defined in Section 67A of the Act) and/or to cancel the Purchased
Shares and/or to retain the Purchased Shares as treasury shares for distribution as share dividends to the
shareholders of the Company and/or be resold through Bursa Securities in accordance with the relevant rules
of Bursa Securities and/or cancelled subsequently and/or to retain part of the Purchased Shares as treasury
shares and/or cancel the remainder and to deal with the Purchased Shares in such other manner as may be
permitted by the Act, rules, regulations, guidelines, requirements and/or orders of Bursa Securities and any other
relevant authorities for the time being in force;
AND THAT the Directors be and are hereby empowered to do all acts and things (including the opening
and maintaining of a central depositories account(s) under the Securities Industry (Central Depositories) Act,
1991 and to take such steps and to enter into and execute all commitments, transactions, deeds, agreements,
arrangements, undertakings, indemnities, transfers, assignments, and/or guarantees as they may deem fit,
necessary, expedient and/or appropriate in the best interest of the Company in order to implement, finalise
and give full effect to the Proposed Renewal of the Share Buy-Back Authority with full powers to assent to any
conditions, modifications, variations (if any) as may be imposed by the relevant authorities;
AND FURTHER THAT the authority conferred by this ordinary resolution shall be effective immediately upon
passing of this ordinary resolution and shall continue in force until the conclusion of the next AGM of the
Company or the expiry of the period within which the next AGM of the Company is required by law to be
held (whichever is earlier), unless earlier revoked or varied by ordinary resolution of the shareholders of the
Company in general meeting, but shall not prejudice the completion of purchase(s) by the Company before
that aforesaid expiry date and in any event in accordance with provisions of the Listing Requirements and
other relevant authorities.” (See Explanatory Note 2 on Special Business below)
Resolution 13
6.3
299
Ordinary Resolution
Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions (“RRPT”) of a
Revenue and/or Trading Nature and New Mandate for Additional RRPT of a Revenue and/or Trading Nature
(“Proposed Shareholders’ Mandate for RRPT”)
Resolution 14
“THAT authority be and is hereby given in line with Paragraph 10.09 of the Listing Requirements, for the
Company, its subsidiaries or any of them to enter into any of the transactions falling within the types of the
RRPT, particulars of which are set out in the Circular to Shareholders dated 1 June 2012 (“the Circular”), with
the Related Parties as described in the Circular, provided that such transactions are of revenue and/or trading
nature, which are necessary for the day-to-day operations of the Company and/or its subsidiaries, within the
ordinary course of business of the Company and/or its subsidiaries, made on an arm’s length basis and on
normal commercial terms which those generally available to the public and are not detrimental to the minority
shareholders of the Company;
AND THAT such authority shall commence immediately upon the passing of this ordinary resolution until:(a)
the conclusion of the next AGM of the Company following the general meeting at which the ordinary
resolution for the Proposed Shareholders’ Mandate for RRPT is passed, at which time it shall lapse, unless
the authority is renewed by a resolution passed at the next AGM; or
(b)
the expiration of the period within which the next AGM after the date it is required by law to be held; or
(c)
revoked or varied by ordinary resolution passed by the shareholders of the Company at a general
meeting of the Company,
whichever occurs first;
AND FURTHER THAT the Directors of the Company be authorised to complete and do all such acts and things
(including executing all such documents as may be required) as they may consider expedient or necessary or give
effect to the Proposed Shareholders’ Mandate for RRPT.” (See Explanatory Note 3 on Special Business below)
6.4
Special Resolution
Proposed Amendments to the Company’s Articles of Association
“THAT the Articles of Association of the Company be and are hereby amended in the manner as set out in
Section 4.1 of the Circular to Shareholders dated 1 June 2012;
AND THAT the Directors of the Company be and are hereby authorised to give effect to the said amendments,
alteration, modification and deletion to the Articles of Association of the Company as may be required by
any relevant authorities as they deem fit, necessary or expedient in order to give full effect to the Proposed
Amendments to the Company’s Articles of Association.” (See Explanatory Note 4 on Special Business below)
7.
To transact any other business of which due notice shall have been given.
BY ORDER OF THE BOARD
IDHAM JIHADI ABU BAKAR. ACIS (MAICSA 7007381)
NURALIZA A. RAHMAN (LS 0008565)
Company Secretaries
Johor Bahru, Johor
1 June 2012
Resolution 15
NOTICE OF ANNUAL GENERAL MEETING (continued)
NOTES:
Proxy
1.
A member of the Company entitled to be present and vote at the Annual General Meeting may appoint a proxy
or proxies to be present and vote instead of him. A proxy may but need not be a member of the Company.
2.
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly
authorised in writing or if the appointor is a corporation, under its common seal or signed by its attorney or by
an officer on behalf of the corporation.
3.
Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central
Depositories) Act, 1991, he may appoint at least one (1) proxy in respect of each securities account he holds
with ordinary shares of the Company standing to the credit of the said securities account.
4.
The instrument appointing a proxy, together with the power of attorney (if any) under which it is signed or a
certified copy thereof, shall be deposited at the registered office of the Company at Suite 12B, Level 12, Menara
Ansar, 65 Jalan Trus, 80000 Johor Bahru, Johor at least forty-eight (48) hours before the time appointed for
holding the meeting or adjourned meeting at which the person named in such instrument proposes to vote;
otherwise the person so named shall not be entitled to vote in respect thereof.
Explanatory Notes on Special Business:
1.
Ordinary Resolution 12 – Proposed renewal of the authority for Directors to issue shares
The proposed Ordinary Resolution 12 is proposed for the purpose of granting a renewed general mandate
for issuance of shares by the Company under Section 132D of the Act. The Ordinary Resolution 12, if passed,
will give the Directors of the Company authority to issue ordinary shares in the Company at any time in their
absolute discretion without convening a General Meeting. The authorisation, unless revoked or varied by the
Company at a General Meeting, will expire at the conclusion of the next AGM of the Company.
The Company had, at the 36th AGM held on 23 June 2011, obtained its shareholders’ approval for the general
mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 (“the Act”). The Company
did not issue any new shares pursuant to this mandate obtained as at the date of this notice. The Ordinary
Resolution 12 proposed under item 6.1 of the Agenda is a renewal of the general mandate for issuance of shares
by the Company under Section 132D of the Act. At this juncture, there is no decision to issue new shares. If there
should be a decision to issue new shares after the general mandate is obtained, an announcement will be made
by the Company in respect of the purpose and utilisation of proceeds arising from such issue.
The general mandate if granted will provide flexibility to the Company for any possible fund raising activities,
including but not limited to further placing of shares, for the purpose of funding future investment project(s),
working capital and/or acquisition(s).
2.
Ordinary Resolution 13 – Proposed Renewal of the Share Buy-Back Authority
Ordinary Resolution 13, if passed, will enable the Company to utilise any of its surplus financial resources to
purchase its own shares through Bursa Securities up to 10% of the issued and paid-up capital of the Company.
This authority will, unless revoked or varied at a General Meeting, expire at the conclusion of the next AGM of
the Company.
Further information on the Proposed Renewal of the Share Buy-Back Authority are set out in the Circular to
Shareholders of the Company dated 1 June 2012, which is dispatched together with the Company’s Annual
Report for the year ended 2011.
3.
Ordinary Resolution 14 – Proposed Shareholders’ Mandate for RRPT
The proposed Ordinary Resolution 14 if passed is primarily to authorise the Company and/or its unlisted
subsidiaries to enter arrangements or transactions with Related Parties, particulars of which are set out in
Section 3.2, 3.3 and 3.4 of the Circular to Shareholders dated 1 June 2012, which is dispatched together with
the Company’s Annual Report for the year ended 2011, which are necessary for the day-to-day operations of
the Group and are based on normal commercial terms that are not more favourable to the Related Parties than
those generally made available to the public.
4.
Special Resolution – Proposed Amendments to the Company’s Articles of Association
The proposed Special Resolution/Resolution 15, if passed, will give authority to the Directors to amend the
Company’s Articles of Association in order to be in line with the new Listing Requirements of Bursa Malaysia
Securities Berhad, prevailing statutory and regulatory requirements, and to update the Articles of Association of
the Company. Further explanatory notes on Resolution 15 are set out in the Circular to Shareholders dated 1
June 2012, which is dispatched together with the Company’s Annual Report for the year ended 2011.
300
301
STATEMENT ACCOMPANYING
PURSUANT TO PARAGRAPH 8.28(2) OF THE LISTING REQUIREMENT OF THE BURSA MALAYSIA
1.
Directors who are standing for re-election at the 37th Annual General Meeting are as follows:
(i)
(ii)
Datuk Haron Siraj
(iii)
Zulkifli Ibrahim
(iv)
(v)
Leung Kok Keong
(vi)
Natasha Kamaluddin
(vii) Wan Mohd Firdaus Wan Mohd Fuaad
Particulars of Directors seeking re-election at the Annual General Meeting are set out in the Directors’ Profile appearing in pages 44 to 52
of the Annual Report.
2.
The 36th Annual General Meeting of the Company was held at Bilik Permata 3, Level B2, The Puteri Pacific Hotel Johor Bahru, Jalan Abdullah
Ibrahim, 80000 Johor Bahru, Johor, Malaysia on Thursday, 23 June 2011 at 12:00 noon.
3.
A total of eight (8) Board meetings were held during the financial year ended 31 December 2011. Details of attendance of Directors at
Board meetings held during the financial year ended 31 December 2011 are as follows:
Special
BOD
12.1.2011
265th BOD
10.2.2011
266th BOD
23.6.2011
267th BOD
5.8.2011
Special
BOD
16.8.2011
Special
BOD
4.11.2011
✔
✔
✔
✔
✔
✔
✔
✔
Ahamad Mohamad
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
Kua Hwee Sim
✔
✔
✔
✔
✔
✔
✔
✔
Wong Seng Lee
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
Zulkifli Ibrahim
–
–
–
✔
✔
✔
✔
✔
–
–
–
–
–
–
✔
✔
Datuk Haron Siraj
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
Rozan Mohd Sa’at
✔
✔
✔
✔
✔
✔
✔
✔
Leung Kok Keong
–
–
–
–
–
–
✔
✔
Natasha Kamaluddin
–
–
–
–
–
–
✔
✔
–
–
–
–
–
–
✔
✘
Notes:
(i)
Zulkifli Ibrahim – appointed on 1.7.2011
(ii)
Datuk Ahmad Zaki Zahid – appointed on 8.11.2011
(iii)
Leung Kok Keong – appointed on 9.11.2011
(iv)
Natasha Kamaluddin – appointed on 9.11.2011
(v)
Wan Mohd Firdaus Wan Mohd Fuaad – appointed on 9.11.2011
Special
BOD
268th BOD
15.12.2011 22.12.2011
302
STATEMENT ACCOMPANYING
Meeting
Date of
Board Meeting
Time
(continued)
Venue
Special BOD
12 January 2011
2:30 pm
Bilik Sekijang 403, Level 4, Persada Johor International Convention Centre, Jalan
Abdullah Ibrahim, Johor Bahru
BOD 265th
10 February 2011
9:30 am
BOD 266th
23 June 2011
9:30 am
Berlian Room, Level B2, The Puteri Pacific Hotel, Jalan Abdullah Ibrahim, Johor Bahru
BOD 267th
5 August 2011
9:30 am
Office of Kulim (Malaysia) Berhad, Ulu Tiram Estate, Ulu Tiram, Johor
Special BOD
16 August 2011
1:00 pm
Meeting Room, Level 11, Menara JCorp, No. 249 Jalan Tun Razak, Kuala Lumpur
Special BOD
4 November 2011
11:00 am
Meeting Room, Level 11, Menara JCorp, No. 249 Jalan Tun Razak, Kuala Lumpur
Special BOD
15 December 2011
2:30 pm
Meeting Room, Level 17, Wisma KFC, No. 17 Jalan Sultan Ismail, Kuala Lumpur
BOD 268th
22 December 2011
9:30 am
FORM OF PROXY
No. of ordinary shares
CDS account no.
I/We *
(Full name and NRIC No. / Company No. in block letters)
of
(Full address in block letters)
being a member(s) of KULIM (MALAYSIA) BERHAD hereby appoint
(Full name in block letters)
of
or failing him/her
(Full name in block letters)
of
or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us* on my/our* behalf at the 37th Annual General Meeting of the
Company to be held at Lecture Hall 1 & 2, Level 1, KFCH International College, Johor Bahru Campus, No. 1, Jalan Dato’ Onn 1, Bandar Dato’ Onn, Johor
Bahru, Johor, Malaysia on Tuesday, 26 June 2012 at 12:00 noon and at any adjournment thereof in respect of my/our holdings of shares in the manner
indicated below:
Resolution
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Description
For
Against
To adopt the Directors’ and Auditors’ Reports and Audited Financial Statements 2011
To re-elect Director – Datin Paduka Siti Sa’diah Sh Bakir
To re-elect Director – Datuk Haron Siraj
To re-elect Director – Zulkifli Ibrahim
To re-elect Director – Datuk Ahmad Zaki Zahid
To re-elect Director – Leung Kok Keong
To re-elect Director – Natasha Kamaluddin
To re-elect Director – Wan Mohd Firdaus Wan Mohd Fuaad
To re-appoint Director - Tan Sri Dato’ Seri Arshad Ayub
To approve payment of Directors’ fees
To re-appoint Messrs Ernst & Young as auditors
Authority to allot and issue shares
Proposed Renewal of Share Buy-Back
Proposed Shareholders’ Mandate for RRPT
Proposed Amendments of Company’s Articles of Association
Any other business
(Please indicate with a (√) in the appropriate box whether you wish your vote to be cast for or against the resolution. In the absence of specific direction, your
proxy will vote or abstain as he/she thinks fit. However, if more than one proxy is appointed, please specify in the table below the number of shares represented
by each proxy, failing which the appointment shall be invalid)
Proportion of
shares held
Name of proxy 1:
NOTE:
1. A member of the Company entitled to be present and vote at the Annual General Meeting may appoint
a proxy or proxies to be present and vote instead of him. A proxy may but need not be a member of the
Company.
Name of proxy 2:
Total number
of shares held
2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly
authorised in writing or if the appointor is a corporation, under its common seal or signed by its attorney or
by an officer on behalf of the corporation.
3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central
Depositories) Act, 1991, he may appoint at least one (1) proxy in respect of each securities account he holds
with ordinary shares of the Company standing to the credit of the said securities account.
Signature(s)/Common Seal of Shareholder(s)
Dated this
day of
2012
4. The instrument appointing a proxy, together with the power of attorney (if any) under which it is signed
or a certified copy thereof, shall be deposited at the registered office of the Company at Suite 12B, Level
12, Menara Ansar, 65 Jalan Trus, 80000 Johor Bahru, Johor at least forty-eight (48) hours before the time
appointed for holding the meeting or adjourned meeting at which the person named in such instrument
proposes to vote; otherwise the person so named shall not be entitled to vote in respect thereof.
STAMP
The Secretary
KULIM (MALAYSIA) BERHAD
Suite 12B, Level 12
Menara Ansar
65 Jalan Trus
80000 Johor Bahru
Johor, Malaysia

Kulim Bursa.indb - Bursa Malaysia Stock

Transcription

Similar documents

Innovating New Directions - Konsultant Proses Sdn Bhd

cORPORAtE PROfIlE - Bursa Malaysia Stock

WRITER: BAKRi BAhAROM

Agricultural Science Lecture Series

Tun Dr. Mahathir Mohamad Biography

as PDF file

PJJ Sem II 12-13. BERSEMUKA 1 24-02

Perdana Leader Fellowship booklet

annual report - TH Heavy Engineering Berhad

Part 2 - Greenpeace UK