C O N T E N T S. Notice Of Annual General Meeting 5. Statement On Corporate Governance Corporate Social Responsibility 19

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2 C O N T E N T S Page Notice Of Annual General Meeting 2-4 Statement Accompanying Notice Of Annual General Meeting 5 Corporate Information 6 Directors' Profile 7-8 Report On Audit Committee 9-12 Statement On Corporate Governance Corporate Social Responsibility 19 Statement On Internal Control Statement On Directors' Responsibility In Relation To The Financial Statements 23 Chairman's Statement Directors' Report Statement by Directors 34 Statutory Declaration 34 Independent Auditors' Report 35 Income Statements 36 Balance Sheets 37 Consolidated Statement Of Changes In Equity Company Statement Of Changes In Equity 40 Cash Flow Statements Notes To The Financial Statements Plantation Statistics 88 Analysis Of Shareholdings Statement Of Directors' Interest In The Company And Related Corporations 91 Particulars Of Group Properties Form of Proxy Enclosed

3 N O T I C E O F A N N U A L G E N E R A L M E E T I N G NOTICE IS HEREBY GIVEN that the Thirty-Ninth (39th) Annual General Meeting of KECK SENG (MALAYSIA) BERHAD (Co. No D) will be held at the Conference Room of Tanjong Puteri Golf Resort Bhd, Pasir Gudang, Johor Darul Ta zim on Friday, 19 June 2009 at a.m. for the following purposes: AGENDA ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31 December 2008 and the Reports of the Directors and Auditors thereon 2. (a) To re-appoint the Directors over the age of 70, pursuant to Section 129(6) of the Companies Act, 1965: (i) Y.A.M. Tunku Osman Ahmad (ii) Michael Vitus Wong Kuan Lee (Resolution 1) (Resolution 2) (b) (c) To re-elect the Directors retiring in accordance with Article 78 of the Articles of Association of the Company: (i) Ho Kian Cheong (ii) Ng Yew Keng To re-elect Mr Chan Lui Ming Ivan, a Director retiring in accordance with Article 84 of the Articles of Association of the Company (Resolution 3) (Resolution 4) (Resolution 5) 3. To approve the payment of Directors' Fees. 4. To declare a final dividend of 6% tax exempt in respect of the financial year ended 31 December To re-appoint Messrs Ernst & Young as Auditors of the Company for the financial year ending 31 December 2009 and to authorise the Directors to fix their remuneration (Resolution 6) (Resolution 7) (Resolution 8) SPECIAL BUSINESS To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions: 6. ORDINARY RESOLUTION AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 That pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to allot and issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may deem fit provided that the aggregate number of shares so issued does not exceed 10% of the issued capital of the Company for the time being and such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. (Resolution 9) 7. ORDINARY RESOLUTION PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR PROPOSED SHARE BUY-BACK That, subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from time to time), the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Malaysia ) and the Company s articles of association and the approvals of any relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of RM1.00 each in the Company ( Proposed Share Buy-Back ) as may be determined by the Board from time to time on Bursa Malaysia provided that the aggregate number of shares purchased and held as treasury shares pursuant to this resolution does not exceed 24,139,325 ordinary shares of RM1.00 each representing approximately ten per centum (10.0%) of the total issued and paid-up share capital of the Company as at 30 April 2009 and an amount not exceeding the total retained profits and share premium account amounting to RM799,029,000 and RM6,952,000 respectively based on the latest audited accounts of the Company as at 31 December 2008, be allocated by the Company for the Proposed Share Buy-Back AND THAT the ordinary shares of the Company to be purchased are proposed to be cancelled and/or retained as treasury shares and/or distributed as dividends and/or resold on Bursa Malaysia and/or subsequently cancelled AND THAT the Board be and is hereby empowered generally to do all acts and things to give effect to the Proposed Share Buy-Back AND FURTHER THAT such authority shall commence immediately upon passing of this (Resolution 10)

4 N O T I C E O F A N N U A L G E N E R A L M E E T I N G ( C o n t ' d ) ordinary resolution until the conclusion of the first annual general meeting of the Company following the general meeting at which such resolution was passed at which time it will lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either conditionally or subject to conditions; or at the expiration of the period within which the next annual general meeting after that date is required by law to be held; or revoked or varied by ordinary resolution passed by shareholders in general meeting; whichever occurs first, but not so as to prejudice the completion of purchase of own shares by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the guidelines issued by Bursa Malaysia or any other relevant authorities. 8. ORDINARY RESOLUTION PROPOSED SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE That, subject always to the Listing Requirements of Bursa Malaysia, the Company shall be mandated to enter into the category of recurrent transactions of a revenue or trading nature as specified in Part B Section 2.2 of the Circular dated 28 May 2009 and with Keck Seng Singapore Pte Ltd as specified in Part B Section 2.1 of the said Circular subject further to the following:- (i) (ii) the recurrent related party transactions are in the ordinary course of business and are on terms not more favourable than those generally available to the public and are made on an arm s length basis and on normal commercial terms and are not detrimental to the shareholders; and disclosure is made in the annual report of the recurrent related party transactions conducted pursuant to the shareholders mandate during the financial year in the manner required under the Listing Requirements of Bursa Malaysia and as set out in Part B Section 2.2 of the Circular dated 28 May 2009; (iii) that the shareholders mandate shall continue in force until:- a) the date of the next annual general meeting of the Company at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; (Resolution 11) b) the expiration of the period within which the next annual general meeting after that date is required to be held pursuant to section 143(1) of the Companies Act 1965 (but shall not extend to such extension as may be allowed pursuant to section 143(2) of the Companies Act 1965; or c) revoked or varied by resolution passed by the shareholders on general meeting; whichever is the earlier; and (iv) the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution. 9. To transact any other business for which due notice shall have been given in accordance with the Articles of Association of the Company and the Companies Act, 1965 BY ORDER OF THE BOARD WOO MIN FONG Company Secretary Johor Bahru 28 May 2009

5 N O T I C E O F A N N U A L G E N E R A L M E E T I N G ( C o n t ' d ) Notes : 1. A member entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy may but need not be a member of the Company. 2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. 3. Where a member is an authorized nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 4. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorised. 5. The Proxy Form must be deposited with the Company Secretary at the Registered Office, Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, Johor Bahru, Johor Darul Ta zim not less than 48 hours before the time set for the Meeting. Explanatory Notes on Special Business: Resolution 9 Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, Under the Companies Act, 1965, the Directors would have to call a general meeting to approve the issue of new shares even though the number of shares involved is less than 10% of the issued share capital of the Company for the time being. In order to avoid any delay and costs involved in convening a general meeting, it is thus considered appropriate to seek shareholders approval for Directors to issue shares in the Company up to an aggregate number not exceeding 10% of the issued capital of the Company for the time being. Resolution 10 Proposed Renewal of Shareholders Mandate for Proposed Share Buy-Back The Ordinary Resolution No 10 proposed in Agenda 7 above, if passed, will renew the mandate for the Company to buy back its own shares. The mandate shall continue to be in force until the date of the next Annual General Meeting of the Company unless earlier revoked or varied by ordinary resolution of the Company in a general meeting and is subject to annual renewal. Further information on this resolution is set out in Part A of the Circular to Shareholders dated 28 May 2009, which is sent out together with the Annual Report 2008 of the Company. Resolution 11 Proposed Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature The Ordinary Resolution No 11 proposed in Agenda 8 above, if passed, will renew the mandate for the Company to enter into the categories of recurrent transactions of a revenue or trading nature with the related party as specified in Part B Section 2.2 of the Circular to Shareholders dated 28 May 2009, which is sent out together with the Company s Annual Report The mandate shall continue to be in force until the date of the next Annual General Meeting of the Company unless earlier revoked or varied by ordinary resolution of the Company in a general meeting and is subject to annual renewal. Closure of Books To determine shareholders entitlement to the dividend payment, if approved at the forthcoming 39th Annual General Meeting of the Company, the Share transfer books and Register of Members will be closed on 25 June 2009 to 26 June The dividend if approved will be paid on 20 July 2009 to shareholders whose names appear in the Register of Members and Record of Depositors at the close of business on 24 June A depositor shall qualify for entitlement only in respect of: (a) shares transferred into the depositor s securities account before 4.00pm on 24 June 2009 in respect of transfers; (b) shares deposited into the depositor s securities account before 12.30pm on 22 June 2009 in respect of shares which are exempted from mandatory deposit; (c) shares bought on Bursa Malaysia on a cum entitlement basis according to the rules of Bursa Malaysia.

6 S T A T E M E N T A C C O M P A N Y I N G N O T I C E O F A N N U A L G E N E R A L M E E T I N G Name of Directors standing for re-appointment/re-election: 1. Y.A.M. Tunku Osman Ahmad (Non-Executive Director) 2. Michael Vitus Wong Kuan Lee (Independent Non-Executive Director) 3. Ho Kian Cheong (Non-Executive Director) 4. Ng Yew Keng (Non-Executive Director) 5. Chan Lui Ming Ivan (Executive Director) Details of attendance of Directors at the Board of Directors' Meetings held during the financial year: Name of Directors No. of Board Meetings attended in the financial year Ho Kian Guan 6 out of 6 Dato Ho Kian Hock 6 out of 6 Ho Kian Cheong 6 out of 6 Lee Hwee Leng 6 out of 6 Ng Yew Keng 6 out of 6 Tunku Osman Ahmad 6 out of 6 Michael Vitus Wong Kuan Lee 6 out of 6 Tengku Yunus Kamaruddin 6 out of 6 Maj-Gen (R) Dato Muhammad Bin Yunus 6 out of 6 Chan Lui Ming Ivan Appointed on 28 April 2009 The place, date and hour of the 39th Annual General Meeting: Date Time Place Friday, 19 June :00 am The Conference Room of Tanjong Puteri Golf Resort Bhd, Pasir Gudang, Johor Darul Ta zim. Securities holdings in the Company and its subsidiaries by the directors standing for re-appointment and re-election (Please refer to the Statement of Directors Interests in the Company and related corporation on page 91.) Profile of Directors standing for re-appointment and re-election. (Please refer to the section on Directors Profiles on pages 7 to 8.)

7 C O R P O R A T E I N F O R M A T I O N BOARD OF DIRECTORS Ho Kian Guan (Executive Chairman) Dato Ho Kian Hock (Managing Director) Ho Kian Cheong (Non-Executive Director) Lee Hwee Leng (Executive Director) Tunku Osman Ahmad (Non-Executive Director) Ng Yew Keng (Non-Executive Director) Michael Vitus Wong Kuan Lee (Independent Non-Executive Director) Tengku Yunus Kamaruddin (Independent Non-Executive Director) Maj-Gen (R) Dato' Muhammad Bin Yunus (Independent Non-Executive Director) Chan Lui Ming Ivan (Executive Director and Alternate Director to Ho Kian Cheong) COMPANY SECRETARY Woo Min Fong, ACIS REGISTERED OFFICE Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, Johor Bahru, Johor Darul Ta zim Tel: (07) Fax: (07) SHARE REGISTRAR Chua, Woo & Company Sdn Bhd (Co. No U) Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, Johor Bahru, Johor Darul Ta zim Tel: (07) Fax: (07) AUDITORS Messrs. Ernst & Young Chartered Accountants PRINCIPAL BANKERS Malayan Banking Berhad J. P. Morgan Chase Bank Berhad OCBC Bank (Malaysia) Berhad LISTING Main Board of Bursa Malaysia Securities Berhad

8 D I R E C T O R S P R O F I L E HO KIAN GUAN Ho Kian Guan, Singaporean, aged 63, is the Executive Chairman of the Company. He was appointed to the Board on 15 September Graduated in Business Administration and Commerce, Mr Ho has contributed his vast experience in successfully steering the Group for the past 30 over years. He is also a director of Tanjong Puteri Golf Resort Berhad and Lim & Lim Plantations Berhad, both of which are subsidiaries of the Company. He is a brother of Dato Ho Kian Hock, Managing Director of the Company and Ho Kian Cheong, Non-Executive Director of the Company, both of whom are also substantial shareholders of the Company and uncle of Chan Lui Ming Ivan, who is the Executive Director of the Company and the alternate director to Ho Kian Cheong. He is deemed interested in recurrent related party transactions, of which a Shareholders Mandate has been obtained in the AGM held on 13 June Details pertaining to these transactions are disclosed on Note 31(a) of the Notes to the Financial Statements. He has had no convictions for any offences within the past 10 years. DATO HO KIAN HOCK Dato Ho Kian Hock, Singaporean, aged 61, is the Managing Director of the Company. He was appointed to the Board on 8 June 1971 and has been the Managing Director since 11 June He is also a member of the Remuneration Committee. He obtained his Bachelor of Science and Engineering (1st Class Honours) Degree from the University of New South Wales, Australia and has 30 over years of working experience in corporate planning and management. He is also a director of Tanjong Puteri Golf Resort Berhad and Lim & Lim Plantations Berhad, both of which are subsidiaries of the Company. He is a brother of Ho Kian Guan, Executive Chairman of the Company and Ho Kian Cheong, Non-Executive Director of the Company, both of whom are also substantial shareholders of the Company and uncle of Chan Lui Ming Ivan, who is the Executive Director of the Company and the alternate director to Ho Kian Cheong. He is deemed interested in recurrent related party transactions, of which a Shareholders Mandate has been obtained in the AGM held on 13 June Details pertaining to these transactions are disclosed on Note 31(a) of the Notes to the Financial Statements. He has had no convictions for any offences within the past 10 years. HO KIAN CHEONG Ho Kian Cheong, Singaporean, aged 59, is a Non-Executive Director. He was appointed to the Board on 21 September Graduated from University of Singapore with a Bachelor of Science Degree, Mr Ho has 30 over years of working experience in the management of private and public companies. He is a brother of Ho Kian Guan, Executive Chairman of the Company and Dato Ho Kian Hock, Managing Director of the Company, both of whom are also substantial shareholders of the Company and uncle of Chan Lui Ming Ivan, who is the Executive Director of the Company and his alternate director. He is deemed interested in recurrent related party transactions, of which a Shareholders Mandate has been obtained in the AGM held on 13 June Details pertaining to these transactions are disclosed on Note 31(a) of the Notes to the Financial Statements. He has had no convictions for any offences within the past 10 years. LEE HWEE LENG Lee Hwee Leng, Malaysian, aged 57, is an Executive Director of the Company. She was appointed to the Board on 29 April Graduated from Ngee Ann College in Singapore with a Diploma in Business Studies, Ms Lee has 30 over years of working experience in corporate administration and financial management. She is also a director of Tanjong Puteri Golf Resort Berhad and Lim & Lim Plantations Berhad, both are subsidiaries of the Company. She does not have any family relationship with any director and/or substantial shareholder of the Company, nor any personal interest in any business arrangement involving the Company. She has had no convictions for any offences within the past 10 years. NG YEW KENG Ng Yew Keng, Singaporean, aged 61, is a Non-Executive Director of the Company. He was appointed to the Board on 22 March He graduated from Ngee Ann Polytechnic in Singapore with a Diploma in Commerce and has 30 over years of working experience in corporate administration and financial management. He does not have any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years. TUNKU OSMAN AHMAD Tunku Osman Ahmad, aged 76, a Malaysian, is a Non-Executive Director of the Company. He was appointed to the Board on 22 September He is also the Chairman of the Nomination Committee. After obtaining diploma in Agricultural Engineering, Tunku served with the Johor Civil Service for 16 years from 1957 to 1973 in various capacities including that of State Treasurer. He then ventured into the private sector with wide ranging business interest including logging & sawmilling, palm oil refining, property development, plantations, manufacturing and banking. His business acumen is honed by over 30 years of experience in various capacities both in the public and private sectors.

9 D I R E C T O R S P R O F I L E ( C o n t ' d ) He currently sits on the Boards of Mamee-Double Decker (M) Berhad, Alpha Industries Berhad and Binaik Equity Bhd. He is also currently the President of the Johor Wood Industries Association and the Chairman of Malaysian Timber Council. He was the past President of various major real estate associations in Malaysia and the Asian region, amongst which are F.I.A.B.C.I. Malaysia Chapter, an International Estate Federation with its Headquarters in Paris, M.O.H.S. (Malaysian Organisation For Human Settlements) and A.A.P.H. (Asean Association For Planning And Housing), REHDA (Real Estate And Housing Developers Association of Malaysia) and also the Patron of REHDA, Johor Branch. He does not have any family relationship with any director and/or substantial shareholder of the Company, nor any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years. MICHAEL VITUS WONG KUAN LEE Michael Vitus Wong Kuan Lee, Malaysian, aged 71, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 22 April He is also Chairman of the Audit Committee, Chairman of the Remuneration Committee and a member of the Nomination Committee. Mr Wong holds a Law Degree from the University of Singapore. He joined Messrs Shook Lin & Bok, a legal firm, in 1964 and resigned in 1991 as its Chief Executive Partner but remains as a consultant. He previously served as a Senator in the Malaysian Parliament and as a director of the Malaysian Central Bank. Mr Wong is also a director of Malaysia Deposit Insurance Corporation and icapital.biz Berhad. He does not have any family relationship with any director and/or substantial shareholder of the Company or any personal interest in any business arrangement involving the Company. He has no convictions for any offences. TENGKU YUNUS KAMARUDDIN Tengku Yunus Kamaruddin, Malaysian, aged 68, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 27 August He is also a member of the Audit Committee, the Remuneration Committee and the Nomination Committee. He is a Fellow of the Institute of Chartered Accountants of England and Wales and graduated with a Bachelor of Arts (Honours) degree in Economics from the University of Wales, United Kingdom. He is also a member of the Malaysian Association of Certified Public Accountants and the Malaysian Institute of Accountants. Before his retirement in early 1996, he was an audit partner of one of the leading international accounting firms since He was appointed by Bank Negara Malaysia to the board of Bank Bumiputra Malaysia Berhad and its subsidiaries, namely Bumiputra Merchant Bankers Berhad and BBMB Kewangan Berhad from 1985 to He currently sits on the Board of Aluminium Company of Malaysia Berhad. He does not have any family relationship with any director and/or substantial shareholder of the Company. He has had no convictions for any offences within the past 10 years. MAJ-GEN (R) DATO MUHAMMAD BIN YUNUS Maj-Gen (R) Dato Muhammad Bin Yunus, Malaysian, aged 63, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 8 September He is also a member of the Audit Committee and the Nomination Committee. He obtained MA (International Relations) from University of Kent at Canterbury, United Kingdom. Before his retirement, he was an Army Officer for 37 years. He does not have any family relationship with any director and/or substantial shareholder of the Company. He has had no convictions for any offences within the past 10 years. CHAN LUI MING IVAN Chan Lui Ming Ivan, Singaporean, aged 39, is the Executive Director of the Company (appointed on 28 April 2009) and also the Alternate Director to Ho Kian Cheong. He was (appointed as alternate director on 8 January 1997). He is a graduate from the National University of Singapore with a Bachelor of Business Administration (Honours) Degree. He has over 10 years of working experience in management with the Company s various overseas projects. He is the nephew of Ho Kian Guan, Dato Ho Kian Hock and Ho Kian Cheong, all of whom are also Executive Directors / Non-Executive Director and substantial shareholders of the Company. He is deemed interested in recurrent related party transactions, of which a Shareholders Mandate has been obtained in the AGM held on 13 June Details pertaining to these transactions are disclosed on Note 31(a) of the Notes to the Financial Statements. He has had no convictions for any offences within the past 10 years.

10 R E P O R T O N A U D I T C O M M I T T E E REPORT ON THE ACTIVITIES OF THE AUDIT COMMITTEE FOR THE CURRENT FINANCIAL YEAR PURSUANT TO PARAGRAPH OF THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD MEMBERSHIP AND MEETINGS A total of five (5) meetings were held during the financial year ended 31 December All members of the Committee attended the meetings. As at 31 December 2008, the membership status of each of the members was as follows: Name Mr. Michael Vitus Wong Kuan Lee YM Tengku Yunus Kamaruddin Maj-Gen (R) Dato Muhammad Bin Yunus Membership status Chairman Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director All members of the Committee have a working familiarity with basic finance and accounting practices, and one of its members, Tengku Yunus Kamaruddin is a member of the Malaysian Institute of Accountants. TERMS OF REFERENCE FOR THE AUDIT COMMITTEE Composition The Audit Committee shall be appointed by the Board from among their members and shall consist of not less than three (3) members. All the audit committee members must be non-executive directors with a majority of them being independent directors. At least one of the members of the Committee: (i) must be a member of the Malaysian Institute of Accountants (MIA); or (ii) if he is not a member of the MIA, he must have at least 3 years working experience and: (aa) he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or (bb) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or (iii) he must fulfill such other requirements as prescribed or approved by the Exchange. Alternate directors shall not be eligible for appointment as a member of the Committee. The members of the Committee shall elect a Chairman from among their number who shall be an Independent Director. The terms of office and performance of each of the members of the Committee shall be reviewed at least once every three (3) years. Quorum The quorum for a meeting shall be two (2) members, and if only two (2) members present both of them must be Independent Directors. If the number of members present for the meeting is more than two (2), the majority of members present must be Independent Directors. In the absence of the Chairman of the Committee, members present shall elect a Chairman for the meeting from amongst the Independent Directors. Attendance at Meeting Other Board members, employees, and/or representatives of the External and Internal Auditors may attend any particular meeting, at the Audit Committee s invitation.

11 R E P O R T O N A U D I T C O M M I T T E E ( C o n t ' d ) Frequency of Meetings Meetings shall be held not less than four (4) times a year and as and when required during each financial year. The external auditors may request a meeting if they deem necessary. A committee member shall be deemed to be present at a meeting of the Committee if he participates by instantaneous telecommunication device and all members of the Committee participating in the meeting of the Committee are able to hear each other and recognize each other s voice, and for this purpose, participation constitutes prima facie proof of recognition. For the purposes of recording attendance, the Chairman or Secretary of the Committee shall mark on the attendance sheet that the committee member was present and participating by instantaneous telecommunication device. A committee member may not leave the meeting by disconnecting his instantaneous telecommunication device unless he has previously obtained the express consent of the Chairman of the meeting and a committee member will be conclusively presumed to have been present and to have formed part of the quorum at all times during the committee meeting by instantaneous telecommunication device unless he has previously obtained the express consent of the Chairman of the committee meeting to leave the meeting. Minutes of the proceedings at a committee meeting by instantaneous telecommunication device will be sufficient evidence of such proceedings and of the observance of all necessary formalities if certified as correct minutes by the Chairman of the committee meeting. Instantaneous telecommunication device means any telecommunication conferencing device with or without visual capacity. Authority The Committee shall, in accordance with a procedure to be determined by the Board and at the cost of the Company:- 1. Have authority to investigate any matters of the Company and its subsidiaries, within its terms of reference, where it deems necessary, investigate any matter referred to it or that it has come across in respect of a transaction that raises questions of management integrity, possible conflict of interest, or abuse by a significant or controlling shareholder; 2. Have resources which are required to perform its duties; 3. Have full and unrestricted access to any information pertaining to the Company; 4. (i) have direct communication channels with the external auditors; (ii) have direct authority over the internal audit function of which is independent from management and operations; 5. Be able to obtain and seek outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary; and 6. Be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company. Duties and Responsibilities The duties and responsibilities of the Committee shall be: 1. (i) To consider and recommend the appointment of the external auditors, the audit fee, and any questions of resignation or dismissal, and inquire into the staffing and competence of the external auditors in performing their work and assistance given by the Company s officers to the external auditors. (ii) Where the external auditors are removed from office or give notice to the Company of their desire to resign as external auditors, the Committee shall ensure that the Company immediately notify Bursa Malaysia Securities Bhd ( the Exchange ) and forward to the Exchange a copy of any written representations or written explanations of the resignation made by the external auditors at the same time as copies of such representations or explanations are submitted to the Registrar of Companies pursuant to section 172A of the Companies Act (i) To discuss with the external auditors before the audit commences the nature, scope and any significant problems that may be foreseen in the audit, ensure adequate tests to verify the accounts and procedures of the Company and ensure co-ordination where more than one audit firm is involved; and (ii) To ensure and confirm that the management has placed no restriction on the scope of the audit. 10

12 R E P O R T O N A U D I T C O M M I T T E E ( C o n t ' d ) 3. To review the quarterly and year end financial statements of the Group and the Company, focusing particularly on:- any changes in or implementation of major accounting policies and practice; major judgmental areas; significant adjustments resulting from the audit; the going concern assumptions; compliance with applicable approved accounting standards and other legal and regulatory requirements; assess the quality and effectiveness of the Group s accounting and internal control system and the efficiency of the Group s operations; the adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group; any significant transactions which are not a normal part of the Group s business. 4. To discuss problems and reservations arising from the interim and final audits, and any matters the auditor may wish to discuss (in the absence of the management where necessary). 5. To review the external auditors management letter and management s response; 6. For the internal audit function, to:- Review the adequacy of the competency of the internal audit function including the scope and resources and ensuring that the internal auditors have the necessary authority to carry out their work; review internal audit programme and results of the internal audit process or investigations and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function; to ensure co-ordination between the external and internal audits; review any appraisal or assessment of the performance of members of the internal audit function; approve any appointment or termination of senior staff member of the internal audit function and to provide the opportunity for resigning staff member to submit his reasons for resigning. 7. To approve the remit of the internal audit function. 8. To review related party transactions and conflict of interest situation that may arise within the Group including any transaction, procedure or course that raises questions of management integrity and to ensure that the Directors report such transactions annually to shareholders via the annual report. 9. To consider in respect of the recurrent related party transactions of a revenue and trading nature which are the subject of a shareholder s mandate, prescribe guidelines and review procedures to ascertain that such transactions are in compliance with the terms of the shareholders mandate. 10. To have explicit authority to investigate certain matters, the resources which need to do so e.g. professional advice and full access to information. 11. To promptly report to Bursa Malaysia Securities Berhad ( Bursa ) on matters reported by it to the Board that have not been satisfactorily resolved resulting in a breach of the Listing Requirements of Bursa; and 12. To consider other topics, as defined by the Board from time to time. Reporting Procedures The Company Secretary shall be the Secretary of the Committee at all meetings and shall be entrusted to record all proceedings and minutes of the Committees meetings, which shall be kept and circulated to all members of the Committee and of the Board. The Chairman of the Committee shall report on each meeting to the Board. Detailed audit reports by the Internal Auditors and the respective Management respond are circulated to members of the Committee before each Meeting. A resolution in writing signed or approved by a majority of the Committee and who are sufficient to form a quorum shall be as valid and effectual as if it had been passed at a Meeting of the Committee duly called and constituted. 11

13 R E P O R T O N A U D I T C O M M I T T E E ( C o n t ' d ) INTERNAL AUDIT FUNCTION The Audit Committee is supported by an independent and adequately resourced internal audit function. The Committee is aware of the fact that an independent and adequately resourced internal audit function is essential to assist in obtaining the assurance it requires regarding the effectiveness of the system of internal controls. The main role of the internal audit function is to review the effectiveness of the system of internal controls and this is performed with impartiality, proficiency and due professional care. ACTIVITIES DURING THE YEAR During the financial year, the Audit Committee discharged its duties and responsibilities in accordance with its terms of reference. The main activities undertaken by the Audit Committee were as follows: Reviewed with external auditors the audit plan and scope of work for the year. Reviewed with the external auditors the results of their audit, the audit report and internal control recommendations in respect of control weaknesses noted in the course of their audit. Reviewed the suitability of the external auditors for recommendation to the Board for reappointment and the audit fee thereof. Reviewed the audited financial statements before recommending them for the Board of Directors approval. Reviewed the quarterly unaudited financial results announcements before recommending them for the Board of Directors approval. Reviewed the Company s compliance, in particular the quarterly and year end financial statements with the Listing Requirement of the Bursa Malaysia and the applicable Financial Reporting Standards issued by the Malaysian Accounting Standards Board. Reviewed the Internal Audit Department s resource requirements, programmes and plans for the financial year and the annual assessment of the Internal Audit Department s performance. Reviewed the audit reports presented by the Internal Audit Department on findings and recommendations and management s responses thereto and ensured that material findings were adequately addressed by management. Reviewed and assessed the risk management activities of the Group. Reviewed the draft Circular to Shareholders in relation to the following exercise and recommended for Board s approval: - Proposed Renewal of Shareholders Mandate for Proposed Shares Buy-Back by the Company; and - Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature Reviewed 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 Bursa Malaysia Listing Requirements. Met with the external auditors twice without the presence of Management. 12

14 S T A T E M E N T O N C O R P O R A T E G O V E R N A N C E STATEMENT OF CORPORATE GOVERNANCE PURSUANT TO PARAGRAPH OF THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD The Group s policy is to achieve best practice in its standards of business integrity in all its activities around the world. This includes a commitment to follow the highest standards of corporate governance throughout the Group. The Principles and Best Practices of the Malaysian Code on Corporate Governance ( the Code ) published in October 2000, were incorporated into the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Malaysia ). The principles of the Code are divided into four Sections: Section 1: Directors Section 2: Directors Remuneration Section 3: Shareholders Section 4: Accountability and Audit In preparing this statement, the Board has considered the manner in which it has applied the Principles of the Code and the extent to which it has complied with the Best Practices of the Code and to enhance shareholders value and the financial performance of the Group. SECTION 1: DIRECTORS Composition of the Board The Board has 10 members of which 6 members are non-executive directors and of whom 3 are independent non-executive. This is in line with the Listing Requirements of Bursa Malaysia which requires at least one-third (1/3) of the Board members to be Independent Non-Executive Directors. Other than the Executive Chairman and the Managing Director, the shareholders may convey any concerns that they may have to the Senior Independent Non-Executive Director, Mr. Michael Vitus Wong Kuan Lee. No individual or group of individuals dominates the Board s decision making and the number of directors reflects fairly the investment of the shareholders. Ho Kian Guan is the Executive Chairman of the Board while Dato Ho Kian Hock is the Managing Director. There is clear division of responsibility between these two roles to ensure a balance of power and authority. The Company considers that its complement of non-executive directors provides an effective Board with a mixed industry-specific knowledge and broad business and commercial experience. This balance enables the Board to provide clear and effective leadership to the Group and to the Company and to bring informed and independent judgment to many aspects of the Group and the Company s strategy and performance so as to ensure that the Group maintains the highest standards of conduct and integrity. The biographical details of the Board members are set out on pages 7 to 8. More than one-third of the Board comprises non-executive directors since the Company recognizes the contribution of non-executive directors as equal Board members to the development of the Group and the Company s strategy, the importance of representing the interests of public shareholders and providing a balanced and independent view to the Board. All non-executive directors are independent of management and free from any relationship, which could interfere with their independent judgment. Board Responsibilities The Board has always recognized the need for good corporate governance to build and enhance long-term shareholders value. An indication of the Board s commitment is reflected in the conduct of regular Board meetings by the Company and the incorporation of various processes and systems. The Board retains full and effective control of the Group. This includes responsibility for determining the Group s overall strategic direction, development and control. Key matters, such as approval of annual and quarterly results, acquisitions and disposals, as well as material agreements, major capital expenditures, budgets, long term plans and succession planning for top management are reserved for the Board. The presence of independent non-executive directors in the Board provides objectivity and they are of the calibre necessary to carry sufficient weight in Board decisions. Although all the directors have an equal responsibility for the Group s operations, the role of the independent non-executive directors is particularly important in ensuring that the strategies proposed by the executive management are fully discussed and examined, and take account of the long term interests, not only of the shareholders, but also employees, customers, suppliers and the many communities in which the Group conducts business. 13

15 S T A T E M E N T O N C O R P O R A T E G O V E R N A N C E ( C o n t d ) The Board has also delegated certain responsibilities to other Board committees, which operate within clearly defined terms of reference. Standing committees of the Board include the Audit Committee (please refer to Report on Audit Committee set out in pages 9 to 12 of the Annual Report), the Nomination Committee and the Remuneration Committee. Board Meetings The Board meets at least 5 times a year and has a formal schedule of matters reserved to it. Additional meetings are held as and when required. The Board also meets at the end of every quarter of the financial year, whereat the Group s financial statements and results are deliberated and considered. The Board and its committees are supplied with full and timely information to enable them to discharge their responsibilities. During these meetings, the Board also appraises new investment and business proposals, reviews the management or performance of the business of operating units, or existing investment and any other strategic issues that affect or may affect the Group s business. During the financial year ended December 31, 2008, 6 Board Meetings were held. Details of the attendance of the Directors at the Board Meetings are disclosed in the Statement Accompanying Notice of Annual General Meeting set out in page 5. Directors Training All Directors have attended the Mandatory Accreditation Programme as required by Bursa Malaysia Securities Berhad ( Bursa Malaysia ) on all directors of listed companies. All Directors have also attended the Continuing Education Programme ( CEP ). During the financial year under review, all the directors had attended the following training programmes arranged by the company and conducted by external consultants. Malaysian Code of Corporate Governance (Revised 2007) - Its implications on the Board Committees and the Board as a whole Updating of new Financial Reporting Standards (FRS) - FRS 7 - Financial Instruments Disclosures - FRS 8 - Operating Segments Supply of Information The Board has unrestricted access to timely and accurate information, necessary in the furtherance of their duties, which is not only quantitative but also other information deemed suitable. All directors are furnished with the Board papers prior to the Board meeting. These are issued in sufficient time to enable the directors to obtain further explanations, where necessary, in order to be briefed properly before the meeting. The Board papers encompass all aspects of the matters being considered enabling the Board to look at both the quantitative and qualitative factors so that informed decisions are made. In furtherance of their duties, the Board has access to seek independent professional advice at the Company s expense. During the year the Company sought such advice for its proposed corporate exercise. Appointment and Re-election of Directors The Board has a Nomination Committee comprising 3 independent non-executive directors and 1 non-executive director. This Committee is empowered to bring to the Board recommendations as to the appointment of any new executive or non-executive director, provided that the Chairman of the Nomination Committee, in developing such recommendations, consults all directors and reflects that consultation in any recommendation of the Nomination Committee brought forward to the Board. Chairman: Members: Y.A.M. Tunku Osman Ahmad (Non-Executive Director) Mr. Michael Vitus Wong Kuan Lee (Independent Non-Executive Director) Maj-Gen (R) Dato Muhammad Bin Yunus (Independent Non-Executive Director) YM Tengku Yunus Kamaruddin (Independent Non-Executive Director) 14

16 S T A T E M E N T O N C O R P O R A T E G O V E R N A N C E ( C o n t d ) The Nomination Committee will also ensure that the Board has an appropriate balance of expertise and ability. The Committee s other duties and responsibilities are as follows: To recommend to the Board, directors to fill the seats on Board committees. To annually review and assess the performance of non-executive directors on annual basis; based on the skills, experience and core competencies save and except where such review and assessment is in respect of any member or members of the Committee. To annually assess the effectiveness of the Board as a whole, the committees of the Board and contribution of each individual director to the effective decision making of the Board, save and except where the assessment of performance is in respect of any member or members of the Committee. The directors have direct access to the advice and the services of the Company Secretary who is responsible for ensuring that all appointments are properly made and all necessary information is obtained from directors, both for the Company s own records and for the purposes of meeting the requirements of the Companies Act 1965, Listing Requirements of Bursa Malaysia and other regulatory requirements. On appointment, the directors will be briefed about the Group s business. This will be supplemented by proposed visits to key locations and meetings with other key senior executives. Throughout their period in office, they will be updated on the Group s business, the competitive and regulatory environments in which it operates and other changes, by written briefings and meetings. Directors will also be advised on appointment of their legal and other obligations as a director of a listed company. They will be reminded of their obligations each year and will be encouraged to attend training courses at the Company s expense. In accordance with the Company s Articles of Association, all directors who are appointed by the Board are subject to election by shareholders at the first opportunity after their appointment. The Articles also provide that at least one-third (1/3) of the Board including the Managing Director is subject to re-election at regular intervals and at least once every three years. Director(s) over seventy (70) years of age are required to submit themselves for reappointment annually in accordance with Section 129(6) of the Companies Act, SECTION 2: DIRECTORS REMUNERATION Remuneration Policy and Procedure The Remuneration Committee comprises 2 independent non-executive directors and 1 executive director. Chairman: Members: Mr. Michael Vitus Wong Kuan Lee (Independent Non-Executive Director) YM Tengku Yunus Kamaruddin (Independent Non-Executive Director) Dato Ho Kian Hock (Executive Director) The Committees role is to assist and support the Board s responsibility in respect of remuneration of directors of the Company in all its forms. The Committee s duties and responsibilities are as follows: To recommend to the Board the remuneration package of executive directors in all its forms, drawing from outside advice, if necessary. To recommend to the Board the remuneration packages of non-executive directors which shall be a decision of the Board as a whole, save and except where the remuneration is in respect of any member or members of this Committee. 15

17 S T A T E M E N T O N C O R P O R A T E G O V E R N A N C E ( C o n t d ) Directors Remuneration The details of the total remuneration for the directors of the Company during the financial year are as follows: Basic Other Salary Fees Bonus Benefits Total Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Executive 1, , ,524 3,305 Non-Executive Grand total 1, , ,901 3,682 The number of directors whose remuneration fall into the respective bands are as follows: Range Of Remuneration Executive Non-Executive RM1 to RM50, RM50,001 to RM100, RM100,001 to RM150, RM150,001 to RM200, RM200,001 to RM250, RM250,001 and above 3 0 SECTION 3: SHAREHOLDERS Dialogue Between the Company and Investors The Group recognizes the need to inform shareholders and investors of all major developments of the Group on a timely basis. In this aspect, the Managing Director is committed to addressing any investor s/analyst s clarifications. Presentations based on permissible disclosures are made to explain the Group s performance and major development programmes. Price-sensitive information about the Group is, however, not disclosed in these exchanges until after the prescribed announcement to the Bursa Malaysia has been made. In addition, the annual and quarterly reports, together with the Company s earnings announcements, share price information, and other extensive information about the Company are available on Annual General Meeting The Annual General Meeting is the principal forum for dialogue with shareholders. Notice of the Annual General Meeting and annual reports are sent out to shareholders at least 21 days before the date of the meeting. Besides the usual agenda for the Annual General Meeting, the Board presents the progress and performance of the business as contained in the annual report and provides opportunities for shareholders to raise questions pertaining to the business activities of the Group. All directors are available to provide responses to questions from the shareholders during these meetings. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. For re-election of directors, the Board ensures that full information is disclosed through the notice of meetings regarding directors who are retiring and who are willing to serve if re-elected. Items of special business included in the notice of the meeting will be accompanied by an explanatory statement to facilitate full understanding and evaluation of the issues involved. 16

18 S T A T E M E N T O N C O R P O R A T E G O V E R N A N C E ( C o n t d ) SECTION 4: ACCOUNTABILITY AND AUDIT Financial Reporting For financial reporting through quarterly reports to Bursa Malaysia and the annual report to shareholders, the directors have a responsibility to present a fair assessment of the Group s position and prospects. The Audit Committee assists the Board in scrutinizing information for disclosure to ensure accuracy, adequacy and completeness. The Statement by Directors pursuant to Section 169 of the Companies Act 1965 is set out on page 34 of the annual report. Internal Control Information on the Group s internal control is presented in the Statement on Internal Control laid out on pages 20 to 22 of the Annual Report. Relationship with Auditors The role of the Audit Committee in relation to the external auditors is outlined in the Report on Audit Committee set out on pages 9 to 12. The Company has always maintained a close and transparent relationship with its external auditors in seeking professional advice and ensuring compliance with the approved accounting standards in Malaysia. Statement of Compliance with the Best Practices of the Code The Company is committed to achieving high standards of corporate governance throughout the Group and to the highest level of integrity and ethical standards in all its business dealings. The Board considers that it has complied throughout the financial year with the Best Practices as set out in the Code. This Statement is made in accordance with the resolution of the Board of Directors dated 25 February OTHER COMPLIANCE INFORMATION Utilisation of Proceeds No proceeds were raised by the Company from any corporate proposal during the financial year. Share Buy-Backs Details of the Company s Share Buy-Back exercises for the financial year under review are: Monthly No. of shares Purchase price per share Average *Total breakdown purchased and cost per consideration retained as share paid Treasury Shares (RM) (RM) (RM) (RM) Lowest Highest March , ,918 June , ,978 Nov , ,507 30, ,403 During the financial year ended 31 December 2008, all the shares purchased by the Company were retained as Treasury Shares. As at 31 December 2008, a total of 1,944,400 ordinary shares were held as Treasury Shares. None of the Treasury Shares were resold or cancelled during the financial year. *Note: Inclusive of brokerage and other charges. 17

19 S T A T E M E N T O N C O R P O R A T E G O V E R N A N C E ( C o n t d ) Exercise of Options, Warrants or Convertible Securities There were no options, warrants or convertible securities being exercised during the financial year. American Depository Receipt ( ADR ) or Global Depository Receipt ( GDR ) Programme The Company did not sponsor any ADR or GDR programme during the year. Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the regulatory bodies. Non-audit fees The non-audit fees for services provided by the external auditors to the Group and the Company for the financial year are disclosed in Note 5 of the Financial Statements on pages 54 to 55 of this Annual Report. Variation in results There were no variances of more than 10% for the audited results of the Group from the unaudited results as announced on 25 February Profit Guarantee There was no profit guarantee given by the Company during the financial year under review. Statement on Revaluation Policy The Group s revaluation policy on landed property is set out in Note 2.2(d) to the Financial Statements on page 45 of this Annual Report. Material Contracts There were no material contracts of the Company and its subsidiaries involving directors and major shareholders interests. Recurrent Related Party Transactions of a Revenue or Trading Nature Details of the recurrent related party transactions of a revenue or trading nature are disclosed on page 79 to 80 of this Annual Report. Internal Audit Function The internal audit department was established in March 2001 and performing the internal audit function in-house. Prior to that date, internal audit function was outsourced. The internal audit department is staffed by a team of professionally qualified accountants. The cost incurred for internal audit function in respect of the financial year ended 31 December 2008 was RM344,111 18

20 C O R P O R A T E S O C I A L R E S P O N S I B I L I T Y Bursa Malaysia Securities Berhad has set a Corporate Social Responsibility (CSR) framework for all Malaysian listed companies to assist the practice of CSR. In the framework, CSR is defined as open and transparent business practices that are based on ethical values and respect for employees, communities and the environment. It is designed to deliver sustainable value to society at large, all stakeholders and as well as to shareholders. The Group is committed to its Corporate Social Responsibility (CSR) activities towards the community, environment, workplace and marketplace which include the following:- Support of local community projects, donations to school building funds and religious projects. Organize fund raising events and distribute the proceeds to school children and sick children of hospitals for the less fortunate in the hope to improve their quality of life. Construction of low and low medium cost houses and fulfilling the housing needs of the general population. Organize social activities for the employees and their family to get together; blood donation campaign and motivate employees to support community charitable deeds. Hiring of fresh graduates for the available job vacancies and providing training and job opportunities to young school leavers as initiatives to help the government in reducing unemployment. In our green environment project, the Group has successfully developed systems to convert waste from palm oil mill into renewable energy for refinery use. They comprise Anaerobic Digester Tank and palm bio-mass processing and utilization systems. The former captures biogas generated from mill effluent and use to run absorption chiller and boilers to respectively produce process chilled water and steam for the refinery; the palm bio-mass is burnt in up-graded boiler plant to generate more steam and power, also for refinery use. Besides energy cost saving, the systems have resulted in the significant reduction in the use of fossil fuels and TNB power supply and contributed to environment conservation. Going forward, the Group is committed to pursuing and undertaking more initiatives in accordance with the CSR Framework, leading to the achievement of the sustainable values for the society, environment and stakeholders. 19

21 S T A T E M E N T O N I N T E R N A L C O N T R O L STATEMENT ON INTERNAL CONTROL PURSUANT TO PARAGRAPH (b) OF THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD INTRODUCTION The Malaysian Code on Corporate Governance ( Code ) requires listed companies to maintain a sound system of internal controls to safeguard shareholders investments and the Group s assets. Paragraph 15.27(b) of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Malaysia ) has made it mandatory for directors of listed companies to include a statement in their Annual Reports on the state of their internal controls. The External Auditors reviews the Statement on Internal Control pursuant to Paragraph of the Bursa Malaysia s Listing Requirements and in accordance with Recommended Practice Guides 5, Guidance for Auditors on the Review of Directors Statement on Internal Control and reports the results thereof to the Board annually. The Bursa Malaysia s Statement on Internal Control: Guidance for Directors of Public Listed Companies provides guidance for compliance with these requirements. Set out below is the Board s Internal Control Statement, which has been prepared in accordance with the Guidance. THE BOARD S COMMITMENT It is the Board s view that the Group s objectives, its internal organization and the environment in which it operates continuously evolve; and as a result, the risks it faces also change. A sound system of internal control therefore depends on a thorough and regular evaluation of the nature and extent of the risks to which the Group is exposed. The Board further believes that the Group s system of internal control, financial and otherwise should provide reasonable assurance regarding the achievement of the Group s objectives in: effective and efficiency of operations reliability and transparency of financial information compliance with laws and regulations safeguarding of the Group s assets The Board affirms that it is ultimately their responsibility for maintaining a sound system of internal control to safeguard shareholders investment and assets of the Group and for reviewing the adequacy and integrity of the system. However, it recognizes that reviewing the Group s system of internal control is a concerted and continuing process, designed to manage rather than eliminate the risk of failure to achieve business objectives. Accordingly, the Board is also of the view that the Group s system of internal control can only provide reasonable but not absolute assurance against material loss. The Board believes that internal control is a mean to an end and not an end, in itself. It is effected by employees at every level; not wholly by policies, which can sometimes place inadvertent importance on the form rather than the substance of the policies and their implementation. It is the Board s view that in order to achieve a sound system of internal control; it is first necessary to provide an environment that is conducive to this objective. It means that the Board, Management and all levels of employees are aware of the Group s business objectives, the risks that could potentially impede the Group in achieving these objectives, and the policies and control strategies that are required to manage these risks. The Board does not review the internal control system of its associated companies, as the Board does not have direct control over their operations. Notwithstanding that, the Group s interests are served through representation on the boards of the respective associated companies and receipts and review of management accounts and inquiries thereon. These representations also provide the Board with information for timely decision-making on the continuity of the Group s investments based on the performance of the associated companies. 20

22 S T A T E M E N T O N I N T E R N A L C O N T R O L ( C o n t d ) RESPONSIBILITY OF THE BOARD In discharging its responsibilities, the Board recognizes that risk management in the Group, is a logical and systematic method of identifying, analyzing, assessing, treating and monitoring the Group s risks is a continuous and ongoing process should be an integral part of the Group s management practices enables the Group to not only minimize losses but maximize opportunities The Code has made risk management a responsibility of the Board and in dealing with its responsibility; the Board recognizes that effective risk management is an integral part of good business management practice. The Board acknowledges that all areas of the Group s business activities involve some degree of risk and is committed to ensure that the Group has an effective risk management framework which allows Management to manage risks within a defined risk parameters and risk standards. Risk management is an inexorable component in the Group s decision-making process. It involves an interactive process consisting of steps undertaken in sequence and enables continual improvement in the overall decision-making. It is applied at different stages and in varying degrees of the Group s operations, activity, project, product or process. It involves identifying, analyzing, evaluating, monitoring and communicating the significant risks associated in such a way that enables threats from materializing into losses, if any to be minimized, and opportunities, realized or maximized. Risk management is a Group-wide process, multi faceted in dimension and best achieved by multi disciplinary teams at various levels. It must be proactive, evolving process, considering the Group s objectives, internal organization and its operating environment are continuously evolving, and as a result, the risks it faces is continually changing. RISK MANAGEMENT FRAMEWORK Risk management practices have been inherent in the way management has conducted its business. The Group s practices, values and culture have a profound effect on management s conduct. The Board has always regarded risk management as an integral part of this conduct. The Group has in place an ongoing process of identifying, evaluating, managing and reporting on the significant risks that may affect the achievement of its business objectives. Risk Management Committees have also been established to assist the Managing Director to: review policies, procedures and guidelines related to risk management in line with market changes over time. review position and exposure to ensure compliance with Group policy and recommend corrective actions. address issues arising from business lines and recommend solutions to management. advise management on risk limits. During the financial year, risk management reports have been tabled for the Audit Committee and Board discussion. The reports identified risks affecting or likely to affect the Group and ensured the implementation of appropriate actions and adequate systems to manage the risks. KEY INTERNAL CONTROL PROCESS Apart from the above, the other key elements of the Group s internal control system are described below: a clear defined delegation of responsibilities and authorities within the Group s operations; adequate internal control procedures; regular internal audit visits which monitor compliance with procedures and assess the integrity of financial information; regular information is provided to the Board, covering financial performance and key business indicators; monthly monitoring of results by the Management; regular visits to operating units by the Managing Director and Senior Management; and maintain an experienced human capital function to oversee the Group s operations 21

23 S T A T E M E N T O N I N T E R N A L C O N T R O L ( C o n t d ) CONCLUSION The Board believes that the Group s system of internal control provides a reasonable but not absolute assurance that weaknesses and deficiencies are identified on a timely basis and dealt with appropriately. The Board remains committed towards operating a sound system of internal control and therefore recognizes that the system must continuously evolve to support the type of business and size of operations of the Group. As such the Board will, when necessary, put in place appropriate action plans to further enhance the Group s system of internal control. This Statement is made in accordance with the resolution of the Board of Director dated 25 February

24 S T A T E M E N T O N D I R E C T O R S R E S P O N S I B I L I T Y I N R E L A T I O N T O T H E F I N A N C I A L S T A T E M E N T S STATEMENT OF DIRECTORS RESPONSIBILITY IN RELATION TO THE PREPARATION OF AUDITED FINANCIAL STATEMENTS PURSUANT TO PARAGRAPH (a) OF THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD The Directors are responsible to ensure that the Group s annual audited financial statements for the financial year are drawn up in accordance with the requirements of the applicable Financial Reporting Standards issued by the Malaysian Accounting Standards Board, the provisions of the Companies Act, 1965 and the Listing Requirements of Bursa Malaysia Securities Berhad so as to give a true and fair view of the Group s state of affairs as at 31 December 2008 and of the results and cash flows of the Group for the financial year. This statement is signed by the Executive Chairman, Ho Kian Guan and the Managing Director, Dato Ho Kian Hock for and on behalf of the Board and is set out on page 34 of this Annual Report. In preparing the above financial statements, the Directors have: adopted suitable accounting policies and then applied them consistently; made judgments and estimates that are reasonable and prudent; ensured all the requirements of the applicable Financial Reporting Standards issued by the Malaysian Accounting Standards Board have been followed, subject to any material departures disclosed and explained in the financial statements, prepared the financial statements on an ongoing basis; and taken reasonable steps to ensure that the Company maintains proper accounting and other records as required by the Act and disclosed with reasonable accuracy the financial position of the Group and the Company. The Group s quarterly, half yearly and annual results which are released to shareholders; within the stipulated time frame reinforce the Board s commitment to provide a true and fair view of the Group s operations. The Directors have general responsibilities for taking such steps that are available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities and material misstatements. However, such system can only provide reasonable assurance and not absolute assurance against material misstatements, frauds and losses. 23

25 C H A I R M A N S S T A T E M E N T 24

26 C H A I R M A N S S T A T E M E N T On behalf of the Board of Directors of Keck Seng (Malaysia) Berhad, I am pleased to present the annual report for the year ended 31 December Year 2008 In Review 2008 was a challenging year for the Group in the wake of the global credit crisis. For 2008, the Group s pre tax profit declined 17% to RM102 million compared with 2007 s pre tax profit of RM123 million. This was despite an increase in the Group s Revenue to RM1.38 billion compared with the previous year s Revenue of RM1.11 billion. Our ability to sustain profitability during the year is due to efforts of our dedicated workforce and a cautious management approach. The Group s earnings per share declined from 37.4 sen in 2007 to 25.8 sen in In the light of the Group s financial performance, the Board will be recommending a final tax exempt dividend of 6 sen per share for approval during the upcoming Annual General Meeting. Plantations and Manufacturing Division Despite the recent downward spiral in commodity prices, 2008 as a whole was a good year for the oil palm industry. This was due to record high palm product prices achieved in the first half of the year, which helped to offset the down turn in the second half. The Palm Oil Mill and Refinery operations benefited from high mineral crude oil prices in the first half of the year, as this encouraged demand for bio-diesel and caused tightness in the vegetable oil markets. Property Division Due to high material and construction cost at the beginning of 2008, the Property Division scaled down its development activities. This was fortunate because sales in the later part of 2008 slowed down significantly in tandem with the global economic meltdown. In the 4th Quarter, we wrote down the value of our unsold housing inventory in line with prudent accounting practice. The occupancies and rental rates at the Group s office building Menara Keck Seng in Kuala Lumpur held up well despite the onset of the economic crisis. At Regency Tower, the oversupply of residential apartments in KL adversely affected its performance during the year. Hotels and Resort Division In 2008, the performance of our two Canadian Hotels, namely, Doubletree Toronto Airport and Four Points by Sheraton in Gatineau/Ottawa was satisfactory. However, our Doubletree Alana Waikiki Hotel in Honolulu was negatively affected by the bankruptcy of Aloha Airlines and the significant decline in tourism to the Hawaiian Islands. The Group s golf resort in Johor increased its marketing efforts to promote its F&B and golfing facilities to Corporates located at the nearby Pasir Gudang and Tanjong Langsat industrial parks. However, the ongoing price competition from local and regional golf resorts made it a challenging year for the club. Outlook for the Year is going to be an extremely difficult year with lower palm prices and global demand. We do not anticipate palm product prices reaching 2008 s prices. On the property front, sales in the first quarter of 2009 slowed tremendously and this trend is expected to continue through the rest of the year. In line with buyer s preferences under the current economic circumstances, the Property Division will focus on the development of more affordable housing. With leases expiring at our office and residential buildings in Kuala Lumpur over the course of this year, we expect some tenants to downsize or move out. We plan to adopt a flexible policy to retain existing tenants. We are also taking this downturn to renovate Regency Tower to position ourselves to compete when the market improves, and expect market stability at the earliest in

27 C H A I R M A N S S T A T E M E N T ( C o n t d ) The profitability of the Group s North America Hotels, will depend on the speed and magnitude of the US economic recovery. As of this writing, this is far from certain although it is hoped the effects of the various stimulus packages and bailout plans by the US government will be seen in the later part of 2009 or During this recession, we have implemented extremely tight cost controls at all the hotels. We will be flexible in our product offerings, and will maximize brand productions from the Hilton and Starwood reservation systems. Finally, with regards to Corporate Social Responsibility activities, we will continue to support local community projects, construct low cost homes and further develop our waste and energy recycling projects to maintain a greener, cleaner environment. Appreciation and Acknowledgement On behalf of the Board, I would like to express my sincere gratitude to the management and our dedicated employees. I would also like to thank my fellow directors for their wisdom and guidance in providing leadership to our Group. Thank you. Chairman 28 April

28 27 LAPORAN TAHUNAN 2008 ANNUAL REPORT

29 本人謹代表激成 ( 馬來西亞 ) 有限公司董事會欣然呈報本集團二零零八財政年度之公司年度報告 2008 年公司業務回顧在全球信貸危機的籠罩下,2008 年對本集團是充滿挑戰的一年 儘管本集團二零零八年度總收益為 億令吉, 與去年之 億令吉比較, 有所增長 但集團於二零零八年之除稅前盈利為 1.02 億令吉, 與二零零七年之盈利 1.23 億令吉比較, 下降 17 % 這一年之盈利得以維持, 是有賴於全體員工的努力及公司謹慎的管理模式 二零零八年集團每股盈利相比去年之 37.4 分下降至 25.8 分 鑑於集團本年度之業績, 董事會在即將召開的股東年會上建議批准本年度每股 6 分免稅的末期股息 種植及製造業儘管近期的產品價格下降, 油棕業於二零零八年之表現仍然理想 上半年的棕油產品價格創新高, 彌補了下半年低價 棕油提煉業務受益於上半年高原棕油價格, 因這刺激生物柴油的需求及引致菜油市場供應量收縮 物業發展鑑於 2008 年初的原料及建築成本高漲, 物業部門減縮其建築規模 由於全球經濟衰退,2008 年底的銷售明顯放緩 於第四季度, 我們根據審慎的會計原則將未售物業的價值作適當減值 吉隆坡之 Menara Keck Seng 辦公樓的入住率及租值在經濟危機下仍保持良好水平 過去一年, 由於吉隆坡住宅樓房供應量過多而影響 Regency Tower 的業績表現 酒店度假村業務 2008 年, 集團於加拿大的兩間酒店,Doubletree Toronto Airport 及 Four Points by Sheraton in Gatineau/Ottawa 表現保持盈泰 而位於夏威夷的 Doubletree Alana Waikiki Hotel 則由於 Aloha 航空公司倒閉及夏威夷的旅遊業明顯下滑而影響業績 集團位於柔佛州之哥爾夫球度假村, 致力向位於 Pasir Gudang 及 Tanjong Langsat 工業區附近之企業積極推廣餐飲食業務及哥爾夫球配套 然而, 因受到本地及鄰近區域之劇烈及不斷的價格競爭, 度假村處於備受考験的一年 前景及展望在棕油價格及全球需求下跌的情況下,2009 年將為艱巨的時刻 我們不能期望棕油價格會回復 2008 年的水平 物業發展方面,2009 年第一季度的銷售大幅放緩, 此趨勢將延續至本年底 隨著目前的經濟環境, 為迎合買家的興趣, 物業部門將致力發展買家較易負擔的物業 在吉隆坡的寫字樓及位宅物業, 我們預期部份於本年租約期滿的租戶將減少租用面積或遷出 我們將採用靈活的手法挽留現有的租戶, 並利用此經濟低潮重修 Regency Tower 以待市場環境改善時增強競爭力 預期市場將於 2010 年漸趨穏定 集團於北美洲酒店之盈利, 將因應美國經濟復甦之速度及力度 直至目前, 美國政府實施的一系列刺激經濟方案及緊急援助計劃需至 2009 年底或 2010 年始見成效, 至今為期尚遠 在此期間, 我們將盡力控制酒店的營運成本, 同時亦靈活地推銷產品, 在 Hilton 及 Starwood 的訂房系統上加大利用品牌效應 最後, 集團關注社會責任, 將繼續支持本地的社區項目, 建築廉價房屋及進一步推動能源節省及發展環保項目以保持清新綠化的環境 致謝本人謹代表董事會, 值此機會向集團管理層及各位員工的貢獻致以衷心感謝 本人同時感謝董事會成員所給予的寶貴建議及指導, 為領導集團所做出的努力 謝謝! 主席二零零九年四月二十八日 28

30 F I N A N C I A L S T A T E M E N T S 29

31 D I R E C T O R S R E P O R T The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company consist of the cultivation of oil palm, processing and marketing of refined palm oil products, property development, property investment and share investment holding. The principal activities of the subsidiaries are described in Note 15 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. RESULTS Group RM 000 Company RM 000 Profit for the year 68,860 61,196 Attributable to: Equity holders of the Company 61,888 61,196 Minority interests 6,972-68,860 61,196 There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS The amount of dividends paid or declared by the Company since 31 December 2007 were as follows: RM 000 In respect of the financial year ended 31 December 2007 as reported in the directors report of that year: Final ordinary dividend of 8% tax exempt on 239,469,000 ordinary shares, declared on 13 June 2008 and paid on 18 July ,157 In respect of the financial year ended 31 December 2008 First interim ordinary dividend of 4.5% less 26% taxation on 239,459,000 ordinary shares, declared on 28 August 2008 and paid on 18 November ,974 27,131 At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December 2008, of 6% tax exempt on 239,449,000 ordinary shares, amounting to a total dividend payable of RM14,367,000 (6 sen net per ordinary share) will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December

32 D I R E C T O R S R E P O R T ( C o n t d ) 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 : Ho Kian Guan Dato Ho Kian Hock Tunku Osman Ahmad Maj-Gen (R) Dato Muhammad bin Yunus Michael Vitus Wong Kuan Lee Ho Kian Cheong Ng Yew Keng Lee Hwee Leng Tengku Yunus Kamaruddin Chan Lui Ming Ivan (alternate to Ho Kian Cheong; also appointed as director on 28 April 2009) 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 7 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 31 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 RM1 each The Company Acquired Sold Ho Kian Guan - direct interest 16,052, ,000-16,193,692 - indirect interest 50,331,868 7,914,848-58,246,716 Dato Ho Kian Hock - direct interest 16,319, ,900-16,598,725 - indirect interest 50,331,868 7,914,848-58,246,716 Ho Kian Cheong - direct interest 16,441, ,441,624 - indirect interest 12,000, ,000,000 Lee Hwee Leng - direct interest 59, ,062 Tunku Osman Ahmad - direct interest 1,030, ,030,000 - indirect interest 178, ,094 Ng Yew Keng - indirect interest 12,638, ,638,776 Chan Lui Ming Ivan - direct interest 7,942,848 - (7,874,848) 68,000 - indirect interest 8,512, ,000-8,622,956 31

33 D I R E C T O R S R E P O R T ( C o n t d ) Number of Ordinary Shares of RM1 each Acquired Sold Subsidiary - Lim & Lim Plantations Berhad Direct Interest Ho Kian Guan 5, ,000 Tunku Osman Ahmad 1,000 - (1,000) - Dato Ho Kian Hock 4,500 1,000-5,500 Lee Hwee Leng 2, ,000 Subsidiary - Lusaka Holdings Sdn. Bhd. Direct Interest Tunku Osman Ahmad 1,500,000 - (1,500,000) - Ho Kian Guan, Dato Ho Kian Hock, Ho Kian Cheong, Tunku Osman Ahmad and Chan Lui Ming Ivan by virtue of their interests in shares of the Company are also deemed interested in shares of all the Company s subsidiaries to the extent the Company has an interest. The other directors in office at the end of the financial year had no interest in shares in the Company or its related corporations during the financial year. TREASURY SHARES During the financial year, the Company repurchased 30,000 of its issued ordinary shares from the open market at an average price of RM3.95 per share. The total consideration paid for the repurchase including transaction costs was RM118,403. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, As at 31 December 2008, the Company held as treasury shares a total of 1,944,000 of its 241,393,000 issued ordinary shares. Such treasury shares are held at a carrying amount of RM3,213,644 and further relevant details are disclosed in Note 26 to the financial statements. OTHER STATUTORY INFORMATION (a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps : (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Company misleading. (c) (d) At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. 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. 32

34 D I R E C T O R S R E P O R T ( C o n t d ) (e) As at the date of this report, there does not exist : (i) (ii) 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 any contingent liability of the Group or of the Company which has arisen since the end of the financial year. (f) In the opinion of the directors : (i) (ii) 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 its obligations when they fall due; and 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. AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 28 April HO KIAN GUAN DATO HO KIAN HOCK 33

35 S T A T E M E N T B Y D I R E C T O R S P U R S U A N T T O S E C T I O N ( 1 5 ) O F T H E C O M P A N I E S A C T, We, Ho Kian Guan and Dato Ho Kian Hock, being two of the directors of Keck Seng (Malaysia) Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 36 to 87 are drawn up in accordance with the provisions of Companies Act, 1965 and applicable Financial Reporting Standards 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 2008 and of the results and the cash flows of the Group and of the Company for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors dated 28 April HO KIAN GUAN DATO HO KIAN HOCK S T A T U T O R Y D E C L A R A T I O N P U R S U A N T T O S E C T I O N ( 1 6 ) O F T H E C O M P A N I E S A C T, I, Gan Kim Buan, being the officer primarily responsible for the financial management of Keck Seng (Malaysia) Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 36 to 87 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, Subscribed and solemnly declared by ) the abovenamed GAN KIM BUAN at ) Johor Bahru in the State of Johor ) Darul Ta zim on 28 April ) GAN KIM BUAN Before me, No. J126 ANG YICK CHOI AMN, PPA, PIS Commissioner for Oaths Johor Bahru 34

36 Report on the financial statements We have audited the financial statements of Keck Seng (Malaysia) Berhad, which comprise the balance sheets as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements 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 36 to 87. Directors responsibility for the financial statements The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. 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 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 Company s preparation and fair presentation of the financial statements 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 Company 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 INDEPENDENT AUDITORS' REPORT THE TO THE MEMBERS OF KECK SENG (MALAYSIA) BERHAD (Incorporated in Malaysia) 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 2008 and of their financial performance and cash flows of the Group and of the Company 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) (b) (C) (D) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act. We have considered the accounts and the auditors report of the subsidiaries of which we have not acted as auditors, as indicated in Note 15 to the financial statements. We are satisfied that the accounts of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors reports on the accounts of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act. Other matters 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: 28 April WUN MOW SANG 1821/12/10(J) Chartered Accountant

37 I N C O M E S T A T E M E N T S FOR THE YEAR ENDED 31 DECEMBER 2008 Group Company Note RM 000 RM 000 RM 000 RM 000 Restated Revenue 3 1,380,692 1,117,708 1,213,843 1,019,502 Cost of sales 4 (1,155,140) (917,755) (1,087,569) (839,764) Gross profit 225, , , ,738 Other income 28,651 36,512 21,392 13,525 Distribution cost (36,369) (29,354) (28,968) (21,945) Administrative expenses (59,570) (53,682) (18,039) (16,895) Other expenses (53,591) (25,927) (19,605) (5,353) Operating profit 5 104, ,502 81, ,070 Finance costs 8 (2,825) (4,444) (722) (527) Share of profit/(loss) of associates 180 (2) - - Profit before tax 102, ,056 80, ,543 Income tax expense 9 (33,168) (31,678) (19,136) (40,221) Profit for the year 68,860 91,378 61, ,322 Attributable to: Equity holders of the Company 61,888 89,650 61, ,322 Minority interests 6,972 1, Earnings per share attributable to equity holders of the Company (sen): ,860 91,378 61, ,322 The accompanying notes form an integral part of the financial statements. 36

38 B A L A N C E S H E E T S AS AT 31 DECEMBER 2008 Group Company Note RM 000 RM 000 RM 000 RM 000 Restated ASSETS Non-current assets Property, plant and equipment , ,399 50,345 48,405 Investment properties , ,019 15,635 15,845 Prepaid land lease payments 14 14,599 14, Investments in subsidiaries ,175 37,118 Investments in associates 16 1, Other investments , ,435 88,589 39,084 Intangible asset Land held for property development , , , , , , , ,348 Current assets Property development costs 19 73, ,347 73, ,347 Inventories , ,938 97, ,388 Trade and other receivables 21 88, , , ,599 Tax refundable Cash and bank balances , , ,166 46, , , , ,217 TOTAL ASSETS 1,394,952 1,393,566 1,023, ,565 EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital , , , ,393 Other reserves 26 42,485 37,474 3,738 3,857 Retained profits , , , ,827 1,117,664 1,077, , ,077 Minority interests 117, , Total equity 1,235,129 1,186, , ,077 Non-current liabilities Borrowings 23 9,891 12, Deferred tax liabilities 28 8,090 14,077 3,249 9,763 17,981 26,560 3,249 9,763 Current liabilities Borrowings 23 41,380 47,660 15,674 7,025 Trade and other payables 24 87, , , ,264 Tax payable 13,425 20,746 6,971 1, , , , ,725 Total Liabilities 159, , , ,488 TOTAL EQUITY AND LIABILITIES 1,394,952 1,393,566 1,023, ,565 The accompanying notes form an integral part of the financial statements. 37

39 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y FOR THE YEAR ENDED 31 DECEMBER 2008 < Attributable to equity holders of the Company > < Non-Distributable > < Distributable > Share Share Treasury Revaluation Translation Capital Retained Minority Total capital premium shares reserve reserve reserve profits Total Interests Equity Note (Note 25) (Note 26) (Note 26) (Note 26) (Note 26) (Note 27) RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January 2007 As previously stated 241,393 6,952 (2,907) 10,615 28,390 2, ,316 1,026, ,531 1,129,378 Effects of adopting FRS (a) ,981 - (5,981) At 1 January 2007 (restated) 241,393 6,952 (2,907) 10,615 34,371 2, ,335 1,026, ,531 1,129,378 Foreign exchange differences, representing net gain not recognised in the income statement (14,105) - - (14,105) 4,251 (9,854) Reversal of deferred taxation arising from waiver of real property gains tax Profit for the year ,650 89,650 1,728 91,378 Total recognised income and expense for the year (14,105) - 89,650 76,193 5,987 82,180 Purchase of treasury shares - - (188) (188) - (188) Conversion of golf membership to shares in subsidiary Dividends (24,956) (24,956) - (24,956) At 31 December ,393 6,952 (3,095) 11,263 20,266 2, ,029 1,077, ,628 1,186,524 The accompanying notes form an integral part of the financial statements. 38

40 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y ( C o n t d ) FOR THE YEAR ENDED 31 DECEMBER 2008 < Attributable to equity holders of the Company > < Non-Distributable > < Distributable > Share Share Treasury Revaluation Translation Capital Retained Minority Total capital premium shares reserve reserve reserve profits Total Interests Equity Note (Note 25) (Note 26) (Note 26) (Note 26) (Note 26) (Note 27) RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January 2008 As previously stated 241,393 6,952 (3,095) 11,263 19,509 2, ,786 1,077, ,628 1,186,524 Effects of adopting FRS (a) (757) At 1 January 2008 (restated) 241,393 6,952 (3,095) 11,263 20,266 2, ,029 1,077, ,628 1,186,524 Foreign exchange differences, representing net gain not recognised in the income statement , ,130 (4,982) 148 Acquisition of additional shares in an existing subsidiary company ,727 6,727 Profit for the year ,888 61,888 6,972 68,860 Total recognised income and expense for the year ,130-61,888 67,018 8,717 75,735 Purchase of treasury shares - - (119) (119) - (119) Conversion of golf membership to shares in subsidiary Dividends (27,131) (27,131) - (27,131) At 31 December ,393 6,952 (3,214) 11,263 25,396 2, ,786 1,117, ,465 1,235,129 The accompanying notes form an integral part of the financial statements. 39

41 C O M P A N Y S T A T E M E N T O F C H A N G E S I N E Q U I T Y FOR THE YEAR ENDED 31 DECEMBER 2008 < Non-Distributable > Distributable Share Share Treasury Retained capital premium shares profits Total Note (Note 25) (Note 26) (Note 27) RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January ,393 6,952 (2,907) 502, ,899 Profit for the year, representing total income and expense for the year , ,322 Purchase of treasury shares - - (188) - (188) Dividends (24,956) (24,956) At 31 December ,393 6,952 (3,095) 585, ,077 Profit for the year, representing total income and expense for the year ,196 61,196 Purchase of treasury shares - - (119) - (119) Dividends (27,131) (27,131) At 31 December ,393 6,952 (3,214) 619, ,023 The accompanying notes form an integral part of the financial statements. 40

42 C A S H F L O W S T A T E M E N T S FOR THE YEAR ENDED 31 DECEMBER 2008 CASH FLOWS FROM OPERATING ACTIVITIES Group Company RM 000 RM 000 RM 000 RM 000 Restated Profit before tax 102, ,056 80, ,543 Adjustments for : Gain on disposal of property, plant and equipment (315) (269) (31) (47) Loss on disposal of investment properties Gain on disposal of investments in quoted shares - (5,749) - (232) Depreciation of property, plant and equipment 19,396 18,414 5,151 4,672 Depreciation of investment properties 4,417 4, Property, plant and equipment written off Bad debts written off Interest expense 2,825 4, Provision for doubtful debts Inventories written down 13,779-9,754 - Inventories written off 3, Provision for slow moving inventories written back (5) (5) - - Impairment losses on investment in shares and golf club membership 19,154-9,219 - Impairment loss/(write back) on investment properties 20 (10) 20 (10) Investment properties written off Dividend income (20,087) (23,587) (16,068) (102,328) Net unrealised foreign exchange loss/(gain) 1,316 (5,045) 3,813 (1,694) Interest income (6,270) (8,123) (2,837) (3,876) Impairment of property development Goodwill on acquisition written off 6, Share of results in associates (180) Amortisation of patents Amortisation of prepaid land lease payments Patent written off Operating profit before working capital changes 148, ,898 91,370 45,744 Receivables 19,658 (52,813) 51,278 (96,997) Inventories 56,290 (38,328) 62,302 (38,865) Payables (21,096) 16,431 (4,292) 4,445 Development expenditure 36,601 (18,462) 36,601 (19,957) Cash generated from/(used in) operations 239,703 14, ,259 (105,630) Interest paid (3,041) (4,664) (722) (527) Income tax paid (44,022) (19,574) (17,659) (10,278) Net cash generated from/(used in) operating activities 192,640 (9,512) 218,878 (116,435) 41

43 C A S H F L O W S T A T E M E N T S ( C o n t d ) FOR THE YEAR ENDED 31 DECEMBER 2008 CASH FLOWS FROM INVESTING ACTIVITIES Group Company RM 000 RM 000 RM 000 RM 000 Restated Purchase of property, plant and equipment (17,618) (11,171) (7,109) (1,969) Purchase of investment properties (573) (133) - - Purchase of prepaid land lease (375) Proceeds from disposal of investment properties Proceeds from disposal of property, plant and equipment Proceeds from disposal of investments - 12, Payments to associates - (1) - (1) Purchase of other investments (58,735) (44,575) (58,116) (19,599) Acquisition of additional shares in an existing subsidiary company (57) - (57) - Dividend received 17,948 19,746 13,613 75,942 Interest received 6,289 8,122 2,837 3,876 Additions to intangible assets 8 (218) - - Net cash (used in)/generated from investing activities (52,622) (15,253) (48,784) 58,697 CASH FLOWS FROM FINANCING ACTIVITIES Treasury shares purchased (119) (188) (119) (188) Dividends paid (27,131) (24,956) (27,131) (24,956) Repayment of term loans (12,293) (20,272) - - Net cash used in financing activities (39,543) (45,416) (27,250) (25,144) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 100,475 (70,181) 142,844 (82,882) EFFECTS OF EXCHANGE RATE CHANGES 1, (210) (92) CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR 189, ,345 39, ,832 CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR (NOTE 22) 291, , ,492 39,858 The accompanying notes form an integral part of the financial statements. 42

44 1. CORPORATE INFORMATION N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 31 DECEMBER 2008 The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of the Bursa Malaysia Securities Berhad. The registered office of the Company is located at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, Johor Bahru, Johor Darul Ta zim. The principal activities of the Company consist of the cultivation of oil palm, processing and marketing of refined palm oil products, property development, property investment and share investment holding. The principal activities of the subsidiaries are described in Note 15. There have been no significant changes in the nature of the principal activities during the financial year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 28 April SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of preparation The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia. The financial statements of the Group and the Company have also been prepared on a historical basis except for estates included within property, plant and equipment that have been measured at their fair values. 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 Summary of Significant Accounting Policies (a) Subsidiaries and Basis of Consolidation (i) Subsidiaries Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. In the Company s separate financial statements, investments in subsidiaries 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. (ii) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company. 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. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances. Acquisition of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition. 43

45 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Any excess of the cost of the acquisition over the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold. Any excess of the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss. Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities share of fair value of the subsidiaries identifiable assets and liabilities at the acquisition date and the minorities share of changes in the subsidiaries equity since then. (b) Associates Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting based on the audited or management financial statements of the associates. Under the equity method, the investment in associate is carried in the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group s share of net assets of the associate. The Group s share of net profit or loss of the associate is recognised in the consolidated profit or loss. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group s net investment in the associate. The 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. Uniform accounting policies are adopted for like transactions and events in similar circumstances. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group s share of the net fair value of the associate s identifable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group s share of the associate s profit or loss in the period in which the investment is acquired. When the Group s share of losses in an associate equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group s net investment in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. 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 amount is included in the profit or loss. (c) Patents Patents and intellectual property are recognised as intangible assets if it is probable that the future economic benefits that are attributable to such assets will flow to the enterprise and the costs of such assets can be measured reliably. Patents and intellectual property are stated at cost less accumulated amortisation and impairment losses. Amortisation is charged to the income statement based on a straight line basis over a period of fifteen (15) years from the date of successful registration. 44

46 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (d) Property, plant and equipment and depreciation All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repair and maintenance are charged to the income statement during the financial period in which they are incurred. Subsequent to recognition, property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses. Freehold estates have unlimited useful life and therefore is not depreciated. Development work-in-progress are also not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates : Golf course over 86 years Building and structures 2-10% Plant and machinery 5-20% Vehicles, furniture and equipment 5-20% Freehold estates are stated at valuation less impairment losses. The freehold estates of the Company have not been revalued since their last revaluation in The directors have not adopted a policy of regular revaluations of such assets. As permitted under the transitional provisions of International Accounting Standards (IAS) No. 16 (Revised) on Property, Plant and Equipment adopted by the Malaysian Accounting Standards Board, these properties continue to be stated at their 1980 valuation less accumulated depreciation and impairment losses, if any. Government grant received by a subsidiary for the purchase of the necessary plant and equipment are credited to the related capital expenditure and recognised as income on a systematic basis over the useful life of the asset. The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss and the unutilised portion of the revaluation surplus on that item is taken directly to retained earnings. (e) Investment properties Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and any accumulated impairment losses. Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of other investment property is provided for on a straight-line basis to write-off the cost of each asset to its residual value over the estimated useful life, at the following annual rates: Building 2-4% Plant and machinery 10% Furniture and equipment 10% 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 gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise. 45

47 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (f) Land held for property development and property development costs (i) Land held for property development Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses. Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. (ii) Property development costs Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred. Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately. Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value. The excess of revenue recognised in the income statement over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in the income statement is classified as progress billings within trade payables. (g) Impairment of non-financial assets The carrying amounts of assets, other than property development costs, inventories, deferred tax assets and non-current assets (or disposal groups) held for sale, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated to determine the amount of impairment loss. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s CGU s, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. An asset s recoverable amount is the higher of an asset s or CGU s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. 46

48 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 An impairment loss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset. (h) Inventories Inventories are stated at the lower of cost (determined on the weighted average basis) and net realisable value. Cost of refined oil products, crude palm oil and palm kernel includes raw materials, direct labour and appropriate proportions of manufacturing overheads based on normal operating capacity. The cost of unsold properties (completed houses) comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs. Cost of spare parts, chemicals, food, beverage and utensils comprise cost of purchase. 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. (i) Financial instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are recognised directly in equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. (i) Cash and cash equivalents For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank, deposit at call and short term highly liquid investments which have an insignificant risk of changes in value, net of outstanding bank overdrafts. (ii) Other non-current investments Non-current investments other than investments in subsidiaries, associates and investment properties are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in profit or loss. (iii) Derivative financial instruments Derivative financial instruments are not recognised in the financial statements. (iv) Receivables Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date. (v) Payables Payables are stated at the fair value of the consideration to be paid in the future for goods and services received. (vi) Interest bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. 47

49 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (vii) Equity instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. The consideration paid, including attributable transaction costs on repurchased ordinary shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in profit or loss on the sale, re-issuance or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity. (j) Leases (i) Classification A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. A lease that does not transfer substantially all the risks and rewards is classified as operating lease. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases with the exception for land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease. (ii) Operating leases - the Group as lessee Operating leases payments are recognised as an expense on a straight-line basis over the term of the relevant lease. 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. In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The upfront payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term. (iii) Operating leases - the Group as lessor Assets leased out under operating leases are presented on the balance sheets according to the nature of the assets. Rental income from operating leases received over the lease term is recognised on a straight-line basis. (k) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 48

50 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (l) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill or the amount of any excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the cost of the combination. (m) Provisions Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost. (n) Employee benefits (i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (ii) Defined contribution plans As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ( EPF ). Some of the Group s foreign subsidiaries make contributions to their respective countries statutory pension schemes. Such contributions are recognised as an expense in the income statement as incurred. (o) Foreign currencies (i) Functional and presentation currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company s functional currency. 49

51 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (ii) Foreign currency transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Company s net investment in foreign operation are recognised in profit or loss in the Company s financial statements or the individual financial statements of the foreign operation, as appropriate. 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. (iii) Foreign operations The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows: - Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet date; - Income and expenses for each income statement are translated at average exchange rates for the year which approximates the exchange rates at the dates of the transactions; and - All resulting exchange differences are taken to the foreign currency translation reserve within equity. (p) Revenue recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. (i) Sale of properties Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2.2(f). (ii) Sale of goods Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the transfer of significant risks and rewards of ownership to the buyer. (iii) Revenue from hotel operations Revenue from rental of hotel rooms, sale of food and beverage and other related income are recognised on an accrual basis. (iv) Revenue from services Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed. 50

52 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (v) Dividend income Dividend income is recognised when the Group s right to receive payment is established. (vi) Interest income Interest is recognised on an accrual basis using the effective interest method. (q) Government grants Government grants are recognised initially at their fair value in the balance sheet as deferred income when there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Grants that compensate the Group for expenses incurred are recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Grants that compensate the Group for the cost of an asset are credited to the related capital expenditure and recognised as income on a systematic basis over the useful life of the asset. (r) Replanting expenditure Replanting expenditure consists of expenses incurred from the point of clearing to the point of harvesting and is charged to the income statement in the year that it is incurred. 2.3 Changes in accounting policies and effects arising from adoption of new and revised FRSs The accounting policies have been consistently applied by the Group and are consistent with those used in the previous financial year, except for the adoption of the following new, revised FRSs, amendments to FRS and Interpretations which are mandatory for financial period beginning on or after 1 January 2008 as discussed below : FRS 107 Cash Flow Statements FRS 111 Construction Contracts FRS 112 Income Taxes FRS 118 Revenue FRS 120 Accounting for Government Grants and Disclosures of Government Assistance Amendments to FRS 121 The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation Amendments to FRS 134 Interim Financial Reporting Amendments to FRS 137 Provision, Contingent Liabilities and Contingent Assets IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IC Interpretation 2 Members Shares in Co-operative Entities and Similar Instruments IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment IC Interpretation 7 Applying the Restatement Approach under FRS Financial Reporting in Hyperinflationary Economies IC Interpretation 8 Scope of FRS 2 The revised FRS, amendment to FRS and Interpretations above do not have any significant impact on the financial statements of the Group and Company except for the adoption of Amendment to FRS 121 : The effects of changes in foreign exchange rates - net investment in a foreign operation as discussed below : 51

53 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (a) Amendment to FRS 121 : The effects of changes in foreign exchange rates - Net investment in a foreign operation Group Prior to 1 January 2008, exchange differences arising on a monetary item that forms part of the Group s net investment in a foreign operation are recognised in equity in the consolidated financial statements only when that monetary item is denominated either in the functional currency of the reporting entity or the foreign operation. If the monetary item is denominated in a currency other than the functional currency of the reporting entity or the foreign operation, the exchange differences are recognised in profit or loss. Under the Amendment to FRS 121, such exchange differences should always be recognised in equity in the consolidated financial statements and should not be dependent on the currency of the monetary item. This change in accounting policy has been accounted for retrospectively and as disclosed below, certain comparatives have been restated as below : Previously Increase/ stated (Decrease) Restated RM 000 RM 000 RM 000 At 1 January 2007 Other reserves 45,138 5,981 51,119 Retained profits 740,316 (5,981) 734,335 At 31 December 2007 Other reserves 36, ,474 Retained profits 799,786 (757) 799,029 For the year ended 31 December 2007 Other income 31,288 5,224 36,512 Operating profit 122,278 5, ,502 Profit before tax 117,832 5, ,056 Profit for the year 86,154 5,224 91,378 Earnings per share attributable to equity holders of the Company (sen) Standards and Interpretations Issued but Not Yet Effective At the date of authorisation of these financial statements, the following new FRS and Interpretations were issued but not yet effective and have not been applied by the Group and the Company : Effective for financial periods beginning on or after FRS, Amendments to FRS and Interpretations FRS 4 : Insurance Contracts 1 January 2010 FRS 7 : Financial Instruments: Disclosures 1 January 2010 FRS 8 : Operating Segments 1 July 2009 FRS 139 : Financial Instruments : Recognition and Measurement 1 January 2010 IC Interpretation 9 : Reassessment of Embedded Derivatives 1 January 2010 IC Interpretation 10 : Interim Financial Reporting and Impairment 1 January 2010 The new FRS and Interpretations above are expected to have no significant impact on the financial statements of the Group and the Company upon their initial application except for the changes in disclosures arising from the adoption of FRS 8. The Group and the Company are exempted from disclosing the possible impact, if any, to the financial statements upon the initial application of FRS 7 and FRS

54 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER Changes in estimates The revised FRS 116: Property, Plant and Equipment requires the review of the residual value and remaining useful life of an item of property, plant and equipment at least at each financial year end. The Group and the Company reviewed the residual values and remaining useful life of its property, plant and equipment and found that no revisions to the residual values and remaining useful life of its property, plant and equipment were necessary. 2.6 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below. (a) Property development The Group recognises property development revenue and expenses in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property costs. Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists. (b) Income taxes Judgement is involved in determining the Group s provision for income taxes as there are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. 53

55 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER REVENUE Group Company RM 000 RM 000 RM 000 RM 000 Oil palm produce 1,062, ,995 1,086, ,425 Housing development and property income 131, , , ,749 Dividend income 20,088 23,587 16, ,328 Management and operation of golf club 16,213 14, Operation of hotel and conference centre 150, , ,380,692 1,117,708 1,213,843 1,019, COST OF SALES Group Company RM 000 RM 000 RM 000 RM 000 Property development costs 79,390 79,293 79,147 77,370 Cost of inventories sold 974, ,159 1,008, ,394 Cost of services rendered 100, , ,155, ,755 1,087, , OPERATING PROFIT The following amounts have been included in arriving at operating profit: Group Company RM 000 RM 000 RM 000 RM 000 Restated Staff costs (Note 6) 80,928 85,065 20,955 20,585 Non-executive directors remuneration (Note 7) Auditors remuneration: Statutory audits - Current year Under provision in prior years Other services Direct operating expenses of investment properties: - revenue generating during the year 5,946 5, non-revenue generating during the year Depreciation of property, plant and equipment (Note 12) 19,396 18,414 5,151 4,672 Depreciation of investment properties (Note 13) 4,417 4, Property, plant and equipment written off

56 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Group Company RM 000 RM 000 RM 000 RM 000 Restated Amortisation of prepaid land lease payments (Note 14) Investment properties written off Bad debts written off Interest expense 2,825 4, Provision for doubtful debts Provision for slow moving inventories written-back (5) (5) - - Inventories written off 3, Write-down of inventories 13,779-9,754 - Impairment of property development Impairment losses on investment in shares and golf club membership 19,154-9,219 - Impairment loss/(write back) on investment properties (Note 13) 20 (10) 20 (10) Commission paid to a related company in which certain directors have an interest 9,958 7,917 9,958 7,917 Replanting expenses Rental expenses Patent written off (Note 18) Amortisation of patent (Note 18) Gross dividends from quoted investments : - Malaysian corporations (7,929) (4,929) (7,180) (3,977) - Foreign corporations (11,435) (18,296) (6,571) (13,614) Gross dividends from unquoted investments - Malaysian corporations (723) (362) (723) (362) - Associates - - (78) (78) - Subsidiaries - - (1,516) (84,297) Rental received (22,463) (21,303) (1,969) (2,288) Management fee received from subsidiaries - - (144) (144) Gain on disposal of investments in quoted shares - (5,749) - (232) Loss/(Gain) on foreign exchange - realised 5,565 5,704 5,513 7,047 - unrealised 1, ,813 (1,694) Interest income (6,270) (8,123) (2,837) (3,876) Gain on disposal of property, plant and equipment (315) (269) (31) (47) Loss on disposal of investment property Goodwill on acquisition written off 6, STAFF COSTS Included in staff costs of the Group and of the Company are executive directors remuneration amounting to RM3,226,000 (2007 : RM3,026,000) and RM2,456,000 (2007 : RM2,294,000) respectively as further disclosed in Note 7. 55

57 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER DIRECTORS REMUNERATION Group Company RM 000 RM 000 RM 000 RM 000 Directors of the Company Executive: Salaries 1,787 1,680 1,405 1,315 Fees Bonus 1, Defined contribution plan Other benefits ,524 3,305 2,891 2,703 Non-Executive : Fees Salaries Other directors of subsidiaries Executive: Salaries Bonus Defined contribution plan Other benefits Non-Executive : Fees ,191 3,922 3,191 3,003 Analysis excluding other benefits: Total executive directors remuneration excluding other benefits (Note 6) 3,226 3,026 2,456 2,294 Total non-executive directors remuneration excluding other benefits (Note 5) Total directors remuneration excluding other benefits 3,608 3,407 2,756 2,594 56

58 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed below: Number of Directors Executive directors: RM200,001 - RM250, RM250,001 - RM500, RM500,001 - RM1,000, Above RM1,000, Non-Executive directors: Below RM50, RM50,001 - RM100, FINANCE COSTS The finance costs is in respect of interest expenses relating to financing activities. 9. INCOME TAX EXPENSE Group Company RM 000 RM 000 RM 000 RM 000 Income tax : - Malaysian income tax 31,913 20,087 25,501 36,151 - Foreign tax 8,074 11, ,450 39,987 31,138 25,618 38,601 (Over)/underprovision in prior years : - Malaysian income tax (551) (96) 32 (60) - Foreign tax (538) (94) 32 (60) Deferred tax (Note 28) : Relating to origination and reversal of temporary differences (6,207) (685) (4,988) 509 Relating to changes in tax rates 195 (588) 189 (424) (Over)/Underprovision in prior years (269) 1,907 (1,715) 1,595 (6,281) 634 (6,514) 1,680 33,168 31,678 19,136 40,221 Domestic current income tax is calculated at the statutory tax rate of 26% (2007 : 27%) of the estimated assessable profit for the year. The domestic tax rate will be reduced to 25% from the current year s rate of 26%, effective year of assessment Taxation for other jurisdiction is calculated at the rates prevailing in the respective jurisdictions. A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense of the Group and of the Company is as follows : 57

59 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER RM 000 RM 000 Restated Group Profit before taxation 102, ,056 Taxation at Malaysian statutory tax rate of 26% (2007 : 27%) 26,527 33,225 Different tax rates in other countries 2, Effect of income subject to tax rate of 20% (61) (71) Effect of changes in tax rates on opening balance of deferred tax 9 (540) Deferred tax recognised at different tax rates 186 (48) Income not subject to tax (5,969) (6,080) Expenses not deductible for tax purposes 8,811 3,007 Utilisation of previously unrecognised tax losses and unabsorbed capital allowances (11) (95) Deferred tax assets not recognised during the year 3, Tax effect on consolidation eliminating entries (131) (176) Utilisation of current year s reinvestment allowances (1,028) - Reversal arising from waiver of real property gains tax - (350) Overprovision of income tax expense in prior years (538) (94) (Over)/Underprovision of deferred tax in prior years (269) 1,907 Tax expense for the year 33,168 31,678 Company Profit before taxation 80, ,543 Taxation at Malaysian statutory tax rate of 26% (2007 : 27%) 20,886 40,107 Income not subject to tax (2,617) (824) Expenses not deductible for tax purposes 3,578 1,431 Different tax rates in other countries (189) (1,254) Effect of changes in tax rates on opening balance of deferred tax 189 (358) Deferred tax recognised at different tax rates - (66) Utilisation of current year s reinvestment allowances (1,028) - Reversal arising from waiver of real property gains tax - (350) Under/(Over)provision of income tax expense in prior years 32 (60) (Over)/Underprovision of deferred tax in prior years (1,715) 1,595 Tax expense for the year 19,136 40,221 The Company has tax credits and tax exempt accounts to frank the payment of dividends out of its total distributable reserves under the following Acts subject to agreement with the Inland Revenue Board : (i) Tax exempt account under Section 26 of the Investment Incentives Act, 1968 relating to investment tax credit of approximately RM3,699,000 (2007 : RM3,699,000). (ii) Tax exempt account arising out of tax exempt dividends received of approximately RM4,886,000 (2007 : RM4,886,000). (iii) (iv) Tax exempt account under Section 37 of the Promotion of Investments Act, 1986 relating to abatement of adjusted income for export of approximately RM5,366,000 (2007 : RM5,366,000). Tax exempt account under Section 133A of the Income Tax Act, 1967 relating to reinvestment allowances of approximately RM32,944,000 (2007 : RM28,988,000). 58

60 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (v) Tax exempt account under Section 12 of the Income Tax (Amendment) Act, 1999 of RM16,491,000 (2007 : RM35,649,000). (vi) Tax exempt account under Income Tax (Exemption)(No. 48) Order 1997 of approximately RM26,000 (2007 : RM26,000). 10. BASIC EARNINGS PER SHARE Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company. Group RM 000 RM 000 Restated Profit for the year (RM 000) 61,888 89,650 Weighted average number of ordinary shares in issue ( 000) 239, ,504 Basic earnings per share (sen) No diluted earnings per share have been presented as there were no dilutive potential ordinary shares outstanding as at 31 December DIVIDENDS Dividends recognised < Dividend in respect of year > in year RM 000 RM 000 RM 000 RM 000 RM 000 Recognised during the year: Final dividend for 2006: 7.5% tax exempt, on 239,509,000 ordinary shares (7.5 sen per ordinary share) ,963-17,963 First interim dividend for 2007 : 4% less 27% taxation, on 239,499,000 ordinary shares (2.92 sen per ordinary share) - 6, ,993 Final dividend for 2007: 8% tax exempt, on 239,469,000 ordinary shares (8 sen per ordinary share) - 19,157-19,157 - First interim dividend for 2008 : 4.5% less 26% taxation, on 239,459,000 ordinary shares (3.33 sen per ordinary share) 7, ,974-59

61 Proposed for approval at AGM (not recognised as at 31 December): N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Dividends recognised < Dividend in respect of year > in year RM 000 RM 000 RM 000 RM 000 RM 000 Final dividend for 2008: 6% tax exempt, on 239,449,000 ordinary shares (6 sen per ordinary share) 14, ,341 26,150 17,963 27,131 24,956 At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December 2008, of 6% tax exempt on 239,449,000 ordinary shares, amounting to a total dividend payable of RM14,367,000 (6 sen net per ordinary share) will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December

62 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER PROPERTY, PLANT AND EQUIPMENT Estates, Vehicles, golf course, furniture land and Plant and and Work-inbuildings machinery equipment progress Total Group RM 000 RM 000 RM 000 RM 000 RM 000 Cost/Valuation At 1 January 2008: At cost 329, ,838 89,524 3, ,900 At valuation 23, ,946 Government grant - (7,414) - - (7,414) 353, ,424 89,524 3, ,432 Additions 4,511 6,913 5, ,618 Transfers 1, (1,357) (804) - Write offs (71) (355) (210) - (636) Disposals (236) (40) (1,233) - (1,509) Exchange differences (14,279) - (7,007) (40) (21,326) At 31 December , ,561 85,227 3, ,579 Representing: At cost 320, ,975 85,227 3, ,047 At valuation 23, ,946 Government grant - (7,414) - - (7,414) Accumulated depreciation 344, ,561 85,227 3, ,579 At 1 January 2008: Accumulated depreciation At cost 75,579 67,236 68, ,386 At valuation Government grant - (2,353) - - (2,353) 75,579 64,883 68, ,033 Recognised in income statement (Note 5) 8,195 4,821 6,380-19,396 Charge for the year 8,195 5,315 6,380-19,890 Government grant - (494) - - (494) Write offs (25) (354) (195) - (574) Disposals (113) (39) (1,189) - (1,341) Exchange differences (5,070) - (5,982) - (11,052) At 31 December ,566 69,311 67, ,462 Representing: At cost 78,566 72,158 67, ,309 At valuation Government grant - (2,847) - - (2,847) Net carrying amount 78,566 69,311 67, ,462 At 31 December 2008 At cost 242,014 42,817 17,642 3, ,738 At valuation 23, ,946 Government grant - (4,567) - - (4,567) 265,960 38,250 17,642 3, ,117 61

63 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Estates, Vehicles, golf course, furniture land and Plant and and Work-inbuildings machinery equipment progress Total Group RM 000 RM 000 RM 000 RM 000 RM 000 Cost/Valuation At 1 January 2007 At cost 319, ,415 82,115 5, ,947 At valuation 23, ,946 Government grant - (7,414) - - (7,414) 343,735 96,001 82,115 5, ,479 Additions 2,412 1,278 5,678 1,803 11,171 Transfers 613 3,610 (175) (4,048) - Write offs (70) (465) (371) - (906) Disposals (76) - (1,574) - (1,650) Exchange differences 6,445-3, ,338 At 31 December , ,424 89,524 3, ,432 Representing: At cost 329, ,838 89,524 3, ,900 At valuation 23, ,946 Government grant - (7,414) - - (7,414) Accumulated depreciation 353, ,424 89,524 3, ,432 At 1 January 2007: Accumulated depreciation At cost 64,960 62,753 60, ,615 At valuation Government grant - (1,858) - - (1,858) 64,960 60,895 60, ,757 Recognised in income statement (Note 5) 8,164 4,407 5,843-18,414 Charge for the year 8,164 4,902 5,843-18,909 Government grant - (495) - - (495) Write offs (25) (419) (327) - (771) Disposals (48) - (1,429) - (1,477) Exchange differences 2,528-3,582-6,110 At 31 December ,579 64,883 68, ,033 Representing: At cost 75,579 67,236 68, ,386 At valuation Government grant - (2,353) - - (2,353) Net carrying amount 75,579 64,883 68, ,033 At 31 December 2007 At cost 253,534 40,602 20,953 3, ,514 At valuation 23, ,946 Government grant - (5,061) - - (5,061) 277,480 35,541 20,953 3, ,399 62

64 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Estates, Vehicles, golf course, furniture land and Plant and and Work-inbuildings machinery equipment progress Total Company RM 000 RM 000 RM 000 RM 000 RM 000 Cost/Valuation At 1 January 2008: 20,370 86,533 10,711 1, ,235 Additions 28 6, ,109 Transfers (619) - Write offs (9) (105) (75) - (189) Disposals - (1) (337) - (338) At 31 December ,389 93,594 10,778 1, ,817 Representing: At cost 11,309 93,594 10,778 1, ,737 At valuation 9, ,080 Accumulated depreciation 20,389 93,594 10,778 1, ,817 At 1 January 2008: 5,399 57,947 7,484-70,830 Charge for the year (Note 5) 113 3,984 1,054-5,151 Write offs (8) (104) (69) - (181) Disposals - - (328) - (328) At 31 December ,504 61,827 8,141-75,472 Net carrying amount At 31 December 2008 At cost 5,805 31,767 2,637 1,056 41,265 At valuation 9, ,080 14,885 31,767 2,637 1,056 50,345 63

65 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Estates, Vehicles, golf course, furniture land and Plant and and Work-inbuildings machinery equipment progress Total Company RM 000 RM 000 RM 000 RM 000 RM 000 Cost/Valuation At 1 January ,388 86,260 10,007 1, ,169 Additions , ,969 Write offs (18) (310) (195) - (523) Disposals - - (380) - (380) At 31 December ,370 86,533 10,711 1, ,235 Representing: At cost 11,290 86,533 10,711 1, ,155 At valuation 9, ,080 20,370 86,533 10,711 1, ,235 Accumulated depreciation At 1 January ,297 54,704 6,973-66,974 Charge for the year (Note 5) 113 3,513 1,046-4,672 Write offs (11) (270) (156) - (437) Disposals - - (379) - (379) At 31 December ,399 57,947 7,484-70,830 Net carrying amount At 31 December 2007 At cost 5,891 28,586 3,227 1,621 39,325 At valuation 9, ,080 14,971 28,586 3,227 1,621 48,405 (i) The details of the estates, golf course, land and buildings are as follows: Cost/ Accumulated Net book Depreciation Valuation depreciation value charge Group RM 000 RM 000 RM 000 RM At valuation - Freehold estates 23,946-23,946 - At cost - Freehold estates 3,183-3,183 - Golf course 78,076 11,691 66, Freehold land and buildings 239,321 66, ,446 7, ,580 78, ,014 8,195 Total 344,526 78, ,960 8,195 64

66 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Cost/ Accumulated Net book Depreciation Valuation depreciation value charge Group RM 000 RM 000 RM 000 RM At valuation - Freehold estates 23,946-23,946 - At cost - Freehold estates 3,199-3,199 - Golf course 78,076 10,799 67, Freehold land and buildings 247,838 64, ,058 7, ,113 75, ,534 8,164 Total 353,059 75, ,480 8,164 Company 2008 At valuation - Freehold estates 9,080-9,080 - At cost - Freehold estates 3,018-3,018 - Freehold land and buildings 8,291 5,504 2, ,309 5,504 5, Total 20,389 5,504 14, At valuation - Freehold estates 9,080-9,080 - At cost - Freehold estates 3,018-3,018 - Freehold land and buildings 8,272 5,399 2, ,290 5,399 5, Total 20,370 5,399 14, (i) (ii) (iii) The freehold estates were revalued on an existing use basis or open market value by independent professional valuers in At 31 December 2008, had the revalued freehold land of the Group and the Company been carried under the cost model, the carrying amount would have been RM3,904,000 (2007 : RM3,904,000) and RM2,167,000 (2007 : RM2,167,000) respectively. The property, plant and equipment of the Group with net carrying amount of RM77,102,000 (2007 : RM92,149,000) are pledged to banks for bank borrowings as referred to in Note 23. Included in property, plant and equipment of the Group and the Company are fully depreciated assets which are still in use costing RM36,215,000 (2007 : RM32,771,000) and RM4,811,000 (2007 : RM5,066,000) respectively. 65

67 13. INVESTMENT PROPERTIES Furniture Land and Plant and and buildings machinery equipment Total Group RM 000 RM 000 RM 000 RM 000 Cost At 1 January ,541 33,667 3, ,802 Additions Disposal (216) (22) - (238) Write offs - - (8) (8) Exchange differences At 31 December ,800 33,761 4, ,594 Accumulated Depreciation At 1 January ,683 22,640 1,460 50,783 Charge for the year (Note 5) 2,197 1, ,417 Impairment losses (Note 5) Disposal (125) (4) - (129) Write offs - - (2) (2) Exchange differences At 31 December ,021 24,533 1,781 55,335 Net carrying amount N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 At 31 December ,779 9,228 2, ,259 At 1 January ,569 33,641 3, ,697 Additions Disposal (5) - - (5) Exchange differences (23) - - (23) At 31 December ,541 33,667 3, ,802 Accumulated depreciation At 1 January ,513 20,753 1,182 46,448 Charge for the year (Note 5) 2,193 1, ,358 Impairment losses written back (Note 5) (10) - - (10) Disposal (3) - - (3) Exchange differences (10) - - (10) At 31 December ,683 22,640 1,460 50,783 Net carrying amount At 31 December ,858 11,027 2, ,019 66

68 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Company RM 000 RM 000 Golf course, land and buildings Cost At 1 January 22,163 22,168 Disposals (216) (5) At 31 December 21,947 22,163 Accumulated depreciation At 1 January 6,318 6,230 Charge for the year (Note 5) Disposals (125) (3) Impairment losses/(write back) (Note 5) 20 (10) At 31 December 6,312 6,318 Net carrying amount At 31 December 15,635 15,845 The fair value of investments properties as at 31 December 2008 for the Group and Company is approximately RM303,360,000 (2007 : RM311,454,000) and RM44,637,000 (2007 : RM48,950,000) respectively. 14. PREPAID LAND LEASE PAYMENTS Group RM 000 RM 000 At 1 January 14,467 14,704 Additions Amortisation for the year (Note 5) (243) (237) At 31 December 14,599 14,467 The long term leasehold estates are stated at valuation determined on the existing use basis which was carried out by independent professional valuers in At 1 January 2007, the unamortised amount of leasehold estates which were last revalued in 1980 are retained as the surrogate carrying amount of prepaid land lease payments as allowed by the transitional provisions of FRS INVESTMENT IN SUBSIDIARIES Company RM 000 RM 000 Unquoted shares, at cost 42,070 42,013 Less: Accumulated impairment losses (4,895) (4,895) 67 37,175 37,118

69 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Details of the subsidiaries are as follows : Country of Proportion of Name of subsidiaries Incorporation Principal Activities Ownership Interest % % Johore (Masai) Plantations Malaysia Oil palm estate and Sdn. Bhd. investment holding Kota Tinggi Oil Palm Malaysia Oil palm estate and Plantations Sdn. Bhd. investment holding Lian Huap Oil Palm Plantations Malaysia Oil palm estate and Sdn. Bhd. investment holding Sin Lian Oil Palm Plantations Malaysia Oil palm estate and Sdn. Bhd. investment holding Banang Bersama Segamat Malaysia Housing development Sdn. Bhd. and investment holding HKH Holdings Sdn. Bhd.* Malaysia Property investment Ragamo Sdn. Bhd. Malaysia Processing of palm kernel products and investment holding Lim & Lim Plantations Berhad Malaysia Oil palm estate and investment holding Supervitamins Sdn. Bhd. Malaysia Manufacturing and trading of nutraceutical and healthcare materials Tanjong Puteri Golf Resort Berhad Malaysia Operation of golf club Keck Seng Investments Pte. Ltd.* Singapore Investment holding Brosna Limited* Hong Kong Investment holding Promas Ltd.* Hong Kong Investment holding KSA Enterprises Ltd.* Canada Investment holding Newford Pte. Ltd.* Singapore Real property development Tanjong Puteri Developments Malaysia Property development Sdn. Bhd. Keck Seng International Singapore Trading in palm oil Private Limited* Lusaka Holdings Sdn. Bhd. Malaysia Property investment Siris Management Sdn. Bhd. Malaysia Providing administration, management and maintenance services for flats, apartments and landed properties KSF Enterprises Sdn. Bhd. Malaysia Investment holding 50+1** 50+1** KSD Enterprises Ltd. * Canada Operation of hotel 50+1** 50+1** KSG Enterprises Ltd.* United States Operation of hotel * Audited by firms of auditors other than Ernst & Young ** The equity interests of the Company is 50% plus one share. 68

70 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER INVESTMENTS IN ASSOCIATES Group Company RM 000 RM 000 RM 000 RM 000 Unquoted shares, at cost Share of post-acquisition reserves Represented by : Share of net tangible assets 1, , Details of the associates are as follows : Country of Proportion of Name of associates Incorporation Principal Activities Ownership Interest % % Focal Development Sdn. Bhd. Malaysia Housing development Jauhar Development Sdn. Bhd. Malaysia Property development The summarised financial information of the associates are as follows: Group RM 000 RM 000 Share of the associates' balance sheet Current assets 1, Current liabilities (28) (42) Net assets 1, Share of the associates revenue and results Revenue - - Profit/(Loss) for the year 180 (2) 69

71 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER OTHER INVESTMENTS Group Company RM 000 RM 000 RM 000 RM 000 Unquoted shares, at cost : - in Malaysia Quoted shares, at cost : - in Malaysia 9,747 9,765 7,159 7,159 - outside Malaysia 236, ,730 90,084 31, , ,495 97,243 39,127 Less: Accumulated impairment losses (19,244) (198) (8,792) (181) 226, ,297 88,451 38, , ,435 88,589 39,084 Market value of quoted shares : - in Malaysia 89, ,318 83, ,159 - outside Malaysia 271, , , , , , , ,070 Certain quoted investments outside Malaysia of the Group and of the Company amounting to RM7,726,000 (2007 : RM8,022,000) and RM525,000 (2007 : RM701,000) respectively are pledged to a financial institution for banking facility granted to a subsidiary as referred to in Note INTANGIBLE ASSET Group RM 000 RM 000 At cost: At 1 January Addition (8)* 218 Written off (Note 5) - (18) Amortisation of patent (Note 5) (33) (6) At 31 December * Discount granted by supplier for cost provided in prior year. 70

72 19. DEVELOPMENT PROPERTIES N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (a) Land held for properties development Freehold Leasehold Land Land Total Group RM 000 RM 000 RM At cost : At 1 January ,826 52, ,441 Additions Transfer to property development cost (124) - (124) As at 31 December ,252 52, , At cost : At 1 January ,092 52, ,707 Additions 1,000-1,000 Transfer to property development cost (266) - (266) As at 31 December ,826 52, ,441 Company 2008 At cost : At 1 January ,367 52, ,983 Additions Transfer to property development cost (124) - (124) As at 31 December ,793 52, , At cost : At 1 January ,721 52, ,337 Additions Transfer to property development cost (266) - (266) As at 31 December ,367 52, ,983 71

73 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (b) Property development costs Group Company RM 000 RM 000 RM 000 RM 000 At cost : As at 1 January : Freehold land 3,515 3,564 3,515 3,376 Leasehold land 2,900 2,900 2,900 2,900 Development costs 194, , , , , , , ,417 Cost incurred during the year : Development costs 19,373 77,297 19,373 76,506 Cost recognised in income statement : At 1 January (89,410) (43,381) (89,410) (43,381) Recognised during the year (41,437) (58,871) (41,437) (57,062) As at 31 December (130,847) (102,252) (130,847) (100,443) Transfer : From land held for property development To inventories (15,592) (399) (15,592) (399) (15,468) (133) (15,468) (133) Property development costs at 31 December 73, ,347 73, , INVENTORIES Group Company RM 000 RM 000 RM 000 RM 000 At cost : Refined oil products 26,216 72,571 25,925 66,326 Crude palm oil, crude palm kernel oil and palm kernel 12,006 32,629 12,222 32,770 Spare parts and chemicals 3,982 3,203 3,142 2,791 Completed houses 45,721 47,031 44,997 46,116 Food, beverage and utensils 1,889 2, , ,553 86, ,003 Net realisable value : Refined oil products 3, Completed houses 11,046 21,385 11,046 21,385 15,030 21,385 11,046 21, , ,938 97, ,388 72

74 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER TRADE AND OTHER RECEIVABLES Group Company RM 000 RM 000 RM 000 RM 000 Trade receivables 80,817 93,921 73,890 84,583 Less : Provision for doubtful debts (771) (396) (596) - 80,046 93,525 73,294 84,583 Accrued billing in respect of property development costs - 13,120-13,120 80, ,645 73,294 97,703 Other receivables Due from subsidiaries , ,461 Sundry deposits 1,866 2, ,208 Prepayments 1,954 2, Sundry receivables 4,272 6,529 2,766 3,995 8,092 11, , ,896 88, , , ,599 Included in the trade receivables of the Group and the Company is an amount of RM10,352,000 (2007 : RM17,824,000) due from Keck Seng (S) Pte. Ltd., a company in which directors, namely Ho Kian Guan, Dato Ho Kian Hock and Chan Lui Ming Ivan, have interest. The Group s normal trade credit term ranges from 14 to 60 days other than certain subsidiaries which adopted cash term basis. Other credit terms are assessed and approved on a case-by-case basis. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors. The amounts due from subsidiaries are unsecured, interest free and have no fixed terms of repayment. Further details on related party transactions are disclosed in Note 31. Other information on financial risks of other receivables are disclosed in Note CASH AND CASH EQUIVALENTS Group Company RM 000 RM 000 RM 000 RM 000 Cash on hand and at banks 41,193 40,690 25,166 16,358 Money market 123,520 43,475 80,833 2,016 Deposits with: licensed banks 119,348 37,467 85,056 8,501 other financial institutions 23,338 75,316 7,111 20,008 Cash and bank balances 307, , ,166 46,883 Less : Bank overdrafts (Note 23) (15,674) (7,025) (15,674) (7,025) Cash and cash equivalents 291, , ,492 39,858 73

75 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Included in cash and bank balances is an amount of RM19,328,422 (2007 : RM16,678,348) for the Group and RM18,890,399 (2007 : RM12,377,002) for the Company held pursuant to Section 7(A) of the Housing Developers (Control and Licensing) Act 1966, and therefore restricted from use in other operations. Other information on financial risks of cash and cash equivalents are disclosed in Note BORROWINGS Group Company RM 000 RM 000 RM 000 RM 000 Short term borrowings Secured : Term loan Non-revolving demand loans 18,093 24, Note payable 6,603 15, ,369 40, Unsecured: Bank overdrafts 15,674 7,025 15,674 7,025 Demand loan ,011 7,107 15,674 7,025 41,380 47,660 15,674 7,025 Long term borrowings Term loan - Secured 9,891 12, Total borrowings Bank overdrafts (Note 22) 15,674 7,025 15,674 7,025 Demand loan Term loans 10,564 13, Non-revolving demand loans 18,093 24, Note payable 6,603 15, ,271 60,143 15,674 7,025 Term loan obtained by a subsidiary maturing on February 2010 is secured by legal charges over all the subsidiary s property, plant and equipment amounting to RM77,102,000 (2007 : RM92,149,000) and other assets of RM18,250,000 (2007 : RM22,228,000). The non-revolving demand loans are secured by a debenture for the amount of RM51,417,000 (2007 : RM60,750,000), representing a first fixed charge over all properties amounting to RM77,102,000 (2007 : RM92,149,000) and a floating charge over all other assets of RM18,250,000 (2007 : RM22,228,000) of a subsidiary. Note payable is secured by certain quoted investments outside Malaysia of the Group and of the Company amounting to RM7,726,000 (2007 : RM8,022,000) and RM525,000 (2007 : RM701,000) respectively. Other information on financial risks of borrowings are disclosed in Note

76 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER TRADE AND OTHER PAYABLES Group Company RM 000 RM 000 RM 000 RM 000 Trade payables Trade payables 24,896 48,778 21,247 45,450 Due to subsidiaries ,740 18,142 Progress billings in respect of property development costs ,386 48,976 46,478 63,761 Other payables Due to subsidiaries ,340 54,999 Due to associates Accruals 17,673 17,378 6,732 5,152 Membership account 3,695 3, Sundry payables 28,178 31,625 7,400 7,885 Sundry deposits 11,864 9,921 4,168 4,226 61,651 63,100 85,881 72,503 87, , , ,264 Trade payables are non-interest bearing and the normal trade credit terms granted to the Group ranges from 30 to 45 days. Amounts due to subsidiaries and associates are unsecured, interest free and have no fixed terms of repayment. Included in sundry payables of the Group is an amount of RM15,711,000 (2007 : RM18,563,000) due to Keck Seng Investments (Hong Kong) Limited and Goodlane-Companhia De Fomenpo Predial Limitada, companies in which directors, namely Ho Kian Guan, Dato Ho Kian Hock and Ho Kian Cheong, have interest. Membership account of the Group represents receipts from existing golf licensees which are eligible for conversion to shares of a subsidiary, Tanjong Puteri Golf Resort Berhad, upon the finalisation of the relevant documentation. Further details on related party transactions are disclosed in Note 31. Other information on financial risks of other payables are disclosed in Note SHARE CAPITAL Number of Ordinary Shares of RM1 Each Amount RM 000 RM 000 RM 000 RM 000 Authorised At 1 January/31 December 1,000,000 1,000,000 1,000,000 1,000,000 Issued and fully paid At 1 January/31 December 241, , , ,393 Of the total 241,393,000 (2007 : 241,393,000) issued and fully paid ordinary shares, 1,944,000 (2007 : 1,914,000) are held as treasury shares by the Company. 75

77 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER RESERVES The nature and purpose of each category of reserves are as follows : Non-distributable reserves (a) (b) (c) Revaluation Reserve This reserve includes the cumulative net change in fair value of freehold estates and leasehold estates. Translation Reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries. Treasury Shares This amount relates to the purchase cost of treasury shares. The shareholders of the Company, by an ordinary resolution passed in an annual general meeting held on 13 June 2008, renewed their approval for the Company s plan to repurchase its own shares. The directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. During the financial year, the Company repurchased 30,000 (2007 : 40,000) of its issued ordinary shares from the open market at an average price of RM3.95 (2007 : RM4.72) per share including transaction costs. The total consideration paid for the repurchase including transaction cost was RM118,403 (2007 : RM188,731). The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with the requirement of Section 67A of the Companies Act Distributable reserve (d) Capital Reserve This amount represents gains on sale of investments transferred from retained profits. 27. RETAINED PROFITS Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders ( single tier system ). However, there is a transitional period of 6 years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked in as at 31 December 2007 in accordance with Section 39 of the Finance Act The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2008 and 2007 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act As at 31 December 2008, the Company has sufficient tax exempt balances and 108 balance of the Income Tax Act, 1967 to pay franked dividends amounting to RM427,607,000 (2007 : RM431,808,000) out of its retained earnings. If the balance of the retained earnings of RM192,285,000 (2007 : RM154,019,000) were to be distributed as dividends, the Company may distribute such dividends under the single tier system. 76

78 28. DEFERRED TAXATION N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Group Company RM 000 RM 000 RM 000 RM 000 At 1 January 14,077 14,355 9,763 8,083 Recognised in income statement (Note 9) (6,281) 634 (6,514) 1,680 Recognised in equity - (656) - - Exchange differences 294 (256) - - At 31 December 8,090 14,077 3,249 9,763 Presented after appropriate offsetting as follows : Deferred tax assets (7,773) (3,664) (4,997) - Deferred tax liabilities 15,863 17,741 8,246 9,763 8,090 14,077 3,249 9,763 The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows : Deferred Tax Liabilities of the Group: Revaluation of freehold and Accelerated leasehold capital land and allowances buildings Others Total RM 000 RM 000 RM 000 RM 000 At 1 January ,497 5,316 1,928 17,741 Recognised in income statement 90 (81) (1,926) (1,917) Recognised in equity Exchange differences At 31 December ,626 5, ,863 At 1 January ,265 6, ,331 Recognised in income statement (685) (649) 1, Recognised in equity - (656) - (656) Exchange differences (83) - - (83) At 31 December ,497 5,316 1,928 17,741 77

79 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Deferred tax assets of the Group: Unused Unutilised Tax Capital Losses Allowances Others Total RM'000 RM'000 RM'000 RM'000 At 1 January ,857 1, ,664 Recognised in income statement (133) (1,373) 5,871 4,365 Exchange differences (256) - - (256) At 31 December ,468-6,305 7,773 At 1 January , ,029 3,976 Recognised in income statement (649) 759 (595) (485) Exchange differences At 31 December ,857 1, ,664 Deferred tax liabilities/(assets) of the Company: Accelerated Revaluation of capital freehold land allowances and buildings Others Total RM 000 RM 000 RM 000 RM 000 At 1 January ,258 2,584 1,921 9,763 Recognised in income statement 440 (36) (6,918) (6,514) At 31 December ,698 2,548 (4,997) 3,249 At 1 January ,431 3,078 (426) 8,083 Recognised in income statement (173) (494) 2,347 1,680 At 31 December ,258 2,584 1,921 9,763 As at 31 December 2008, deferred tax assets of approximately RM35,805,000 (2007 : RM21,428,000) arising principally from the unabsorbed tax losses and capital allowances have not been recognised as it is not probable that the subsidiaries concerned will have sufficient future taxable profits available to utilise and realise the unabsorbed tax losses and capital allowances carried forward. 29. CONTINGENT LIABILITIES (UNSECURED) Company RM 000 RM 000 Unsecured corporate guarantees given by the Company to financial institutions in respect of facilities granted to subsidiaries 6,603 15,238 78

80 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER COMMITMENTS Group Company RM 000 RM 000 RM 000 RM 000 (a) Capital expenditures : Approved and contracted for - property, plant and equipment 1,381 6,925-2,119 - intangible assets ,788 7, ,784 Approved but not contracted for - property, plant and equipment - 2, (b) Future minimum rentals payable : Within one year Within two to five years 569 1, ,131 1, (c) Future minimum rentals receivable : Within one year 3,162 3,090 1,561 1,545 Within two to five years 3,670 2,772 4,405 4,774 After five years 2,033 2,184 7,463 8,248 8,865 8,046 13,429 14,567 (d) Management and franchise license agreement (i) KSG Enterprises Ltd (KSG) has an agreement with DT Management Inc. and Doubletree Hotel Systems, Inc., both of which wholly owned subsidiaries of Hilton Hotels Corporation, in relation to the management of KSG s hotel operations, and use of the brand name of Doubletree at fees mutually agreed by both parties. (ii) KSD Enterprises Ltd. (KSD) has a franchise license agreement with Doubletree Hotel Systems, Inc. which allows the hotel to use the brand name of Doubletree at a fee mutually agreed by both parties. (iii) KSD Enterprise Ltd. (KSD) has a franchise license agreement with Clocktower Hotel Limited Partnership, which allows for participation in the reservations service used by Sheraton and its affiliated companies in Canada, for a term of ten years expiring in May RELATED PARTY DISCLOSURES (a) Significant related party balances and transactions Significant related party transactions undertaken by the Company during the financial year were as follows : Company RM 000 RM 000 Subsidiaries: Purchases 47,514 41,866 Sales 32,885 28,324 Rental income Gross dividends 1,516 84,297 79

81 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Significant transactions with other related parties undertaken during the financial year were as follows : Group and Company RM 000 RM 000 Sales to Keck Seng (S) Pte. Ltd., a company in which directors namely, Ho Kian Guan, Dato Ho Kian Hock, and Chan Lui Ming Ivan, have interest 285, ,570 Commission on sales and purchases paid to Keck Seng (S) Pte. Ltd., a company in which directors namely, Ho Kian Guan, Dato Ho Kian Hock and Chan Lui Ming Ivan, have interest 9,958 7,917 The directors of the Company are of the opinion that the above transactions have been entered into in the normal course of business and have been established on terms and conditions that were mutually agreed upon. The related party balances which arose from the related party transactions and remained outstanding at the financial year end are disclosed in the balance sheet and Notes 21 and 24. (b) Compensation of Key management personnel The remuneration of directors and other members of key management during the year was as follows: Group Company RM 000 RM 000 RM 000 RM 000 Short-term employee benefits 5,807 5,526 4,506 4,184 Defined contribution plan Included in the total key management personnel are : 6,440 6,141 5,059 4,722 Directors remuneration (Note 7) 3,524 3,305 2,891 2, FINANCIAL INSTRUMENTS (a) (b) Financial risk management objectives and policies The Group s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group s policy is not to engage in speculative transactions. Interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.the Group had no substantial long-term interest-bearing assets as at 31 December The investment in financial assets are mainly short term in nature and have been mostly placed in fixed deposits, marketable securities or occasionally, in short term commercial papers which yield better returns than cash at bank. The Group s primary interest rate risk relates to interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rates risk. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes. 80

82 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 The following tables set out the carrying amounts, the weighted average effective interest rates (WAEIR) as at the balance sheet date and the remaining maturities of the Group s and the Company s financial instruments that are exposed to interest rate risk : Within WAEIR Year Years Years Years Total Note % RM 000 RM 000 RM 000 RM 000 RM 000 At 31 December 2008 Group FIXED RATE Deposits with: licensed banks , ,348 money market , ,520 other financial institutions , ,338 FLOATING RATE Bank overdrafts , ,674 Demand loan Non-revolving demand loans , ,093 Note payable , ,603 Term loans ,218-10,564 Company FIXED RATE Deposits with : licensed banks , ,056 money market , ,833 other financial institutions , ,111 FLOATING RATE Bank overdrafts , ,674 81

83 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 At 31 December 2007 Group Within WAEIR Year Years Years Years Total Note % RM 000 RM 000 RM 000 RM 000 RM 000 FIXED RATE Deposits with: licensed banks , ,467 money market , ,475 other financial institutions , ,316 FLOATING RATE Bank overdrafts , ,025 Demand loan Non-revolving demand loans , ,519 Note payable , ,238 Term loans ,891 13,279 Company FIXED RATE Deposits with : licensed banks , ,501 money market , ,016 other financial institutions , ,008 FLOATING RATE Bank overdrafts , ,025 Interest on financial instruments subject to floating interest rates is contractually repriced at intervals determined by the financial institutions. Interest on financial instruments at fixed rates are fixed until the maturity of the instrument. The other financial instruments of the Group and the Company that are not included in the above tables are not subject to interest rate risks. (c) Foreign exchange risk The Group operates internationally and is exposed to various currencies, mainly United States Dollar, Canadian Dollar, Euro, Singapore Dollar and Australian Dollar. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable purchases and sales give rise to foreign exchange exposures. The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. Material foreign currency transaction exposures are hedged, mainly with derivative financial instruments such as forward foreign exchange contracts. 82

84 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 The net unhedged financial assets and financial liabilities of the Group companies that are not denominated in their functional currencies are as follows: Net ffinancial assets/(liabilities) held in non- functional currency Functional United Currency of Singapore Canadian States Australian British Group EURO Dollar Dollar Dollar Dollar Pound Total Companies RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 31 December 2008 Ringgit Malaysia - 1,509-27, ,083 Singapore Dollar , ,344 Hong Kong Dollar ,882 At 31 December , , ,309 Ringgit Malaysia - 10,607-27, ,255 Singapore Dollar , ,088 Hong Kong Dollar ,374-24,061 2,157 43,855-10,870 17,374 42,736 24,061 2,157 97,198 As at balance sheet date, the Group has entered into forward foreign exchange contracts with the following notional amounts. All forward contract entered into are due within one year : Amount Average to be contractual Equivalent Currency received rate to USD 000 RM RM 000 At 31 December 2008: Trade receivables USD 7, ,900 At 31 December 2007: Trade receivables USD 7, ,125 (d) Liquidity risk The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from the financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness. (e) Credit risk Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored by limiting the Group s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via Group management reporting procedures. 83

85 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments. (f) Fair values The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments: (i) Cash and cash equivalents, trade and other receivables/payables and short term borrowings The carrying amounts approximate fair values due to the relatively short term maturity of these financial instruments. (ii) Derivative financial instruments The fair value of the forward foreign currency contracts is the amount that would be payable or receivable on termination of the outstanding position arising and is determined by reference to the difference between the contracted rate and forward exchange rate as at the balance sheet date applied to contracts of similar quantum and maturity profiles. The net unrecognised (loss)/profit on forward foreign exchange contracts for the Group and the Company in 2008 and 2007 is (RM1,166,000) and RM282,000 respectively. (iii) Quoted shares The fair values (market value) of the quoted shares (Note 17) is determined by reference to stock exchange quoted market bid prices at the close of the business on the balance sheet date. (iv) It is not practical to estimate the fair value of the Group s non-current unquoted shares due to the absence of market prices and excessive costs required to be incurred. (v) It is not practical to estimate the fair value of amount due to/from subsidiaries due to lack of fixed repayment terms and without incurring excessive costs. (vi) It is not practical to estimate the fair value of contingent liabilities due to the uncertainties of timing, costs and eventual outcome. 33. COMPARATIVES The presentation and classification of items in the current year financial statements have been consistent with the previous financial year except that certain comparative amounts have been reclassified to conform with current year s presentation. 34. SEGMENT INFORMATION (a) Business Segments: The Group is organised on a worldwide basis into four major business segments : (i) Manufacturing - processing and marketing of refined palm oil products; (ii) Hotels and resorts - operations of hotels and golf resort; (iii) Property - property development and investment; and (iv) Plantation - cultivation of oil palm. Other business segments comprise mainly of share investment holding. The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties. 84

86 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Property Hotel and Development Share 2008 Manufacturing Resort & Investment Plantations Investment Eliminations Consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 REVENUE AND EXPENSES Revenue External sales 1,062, , ,797-20,088-1,380,692 Inter-segment sales 58, ,394 1,595 (100,189) - Total revenue 1,120, , ,759 39,394 21,683 (100,189) 1,380,692 Results Segment results 27,431 19,670 32,439 19,517 (3,622) (1,272) 94,163 Foreign exchange gain 4,240 Finance costs (2,825) Interest income 6,270 Share of profit of associates 180 Profit before tax 102,028 Income tax expense (33,168) Profit for the year 68,860 ASSETS AND LIABILITIES Segment assets 190, , , , ,750 (5,128) 1,393,373 Investment in equity method of associates 1,044 Unallocated assets 535 Consolidated total assets 1,394,952 Segment liabilities 39,720 69,839 23,871 1, , ,309 Unallocated liabilities 21,514 Consolidated total liabilities 159,823 OTHER INFORMATION Capital expenditure 9,873 6, ,191 Depreciation 9,810 9,178 4, ,813 Amortisation Impairment losses recognised in profit or loss - - 1,092-18,546-19,638 Other significant non-cash expenses: Inventory written down 4,025-9, ,779 Inventory written off 3, ,896 Goodwill on acquisition written off ,784-6,784 85

87 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 Property Hotel and Development Share 2007 Manufacturing Resort & Investment Plantations Investment Eliminations Consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 REVENUE AND EXPENSES Revenue External sales 788, , ,348-23,587-1,117,708 Inter-segment sales 52, ,192 84,376 (169,107) - Total revenue 841, , ,283 31, ,963 (169,107) 1,117,708 Results Segment results 13,340 23,877 35,220 17, ,686 (80,636) 122,941 Foreign exchange loss (3,562) Finance costs (4,444) Interest income 8,123 Share of loss of associates (2) Profit before tax 123,056 Income tax expense (31,678) Profit for the year 91,378 ASSETS AND LIABILITIES Segment assets 222, , , , ,395 (6,407) 1,392,173 Investment in equity method of associates 922 Unallocated assets 471 Consolidated total assets 1,393,566 Segment liabilities 45,325 93,859 31,757 1, ,219 Unallocated liabilities 34,823 Consolidated total liabilities 207,042 OTHER INFORMATION Capital expenditure 5,166 4, , ,304 Depreciation 9,306 8,699 4, ,772 Amortisation Impairment losses on investment properties written back - - (10) (10) Other significant non-cash expense: Gain on disposal of investments in quoted shares (5,749) - (5,749) 86

88 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( C o n t d ) 31 DECEMBER 2008 (b) Geographical Segments: The Group s four major business segments are operated in 5 principal geographical areas of the world. In Malaysia, its home country, the areas of operation are principally manufacturing, plantation, property development and investment, golf resort and share investment. Areas of operation in other countries are as follows: Singapore - investment holding and trading of palm oil Hong Kong - investment holding Canada - operation of hotels United States of America - management and operation of hotel United States Malaysia Singapore Hong Kong Canada of America Consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Gross revenue 1,225, ,253 1, ,824 3,672 97,524 96,622 52,772 61,256 1,380,692 1,117,708 Segment assets 1,044, ,762 34,231 30, , ,147 93, ,261 89, ,591 1,393,373 1,392,173 Capital expenditure 9,493 5, ,698 2,637 3,000 3,204 18,191 11,304 87

89 P L A N T A T I O N S T A T I S T I C S OIL PALM Tonnes of FFB (own production only - MT) 72,154 62,918 65,577 64,553 62,393 Production - RBD palm oil (MT) 5,694 12,916 15,176 14,657 24,735 - RBD palm olein (MT) 151, , , , ,250 - RBD palm stearin (MT) 33,131 28,510 26,914 35,475 36,387 - RBD palm kernel oil (MT) 66,292 63,460 67,484 58,766 70,744 - RBD palm kernel fractionated products (MT) 56,423 64,994 61,810 63,301 36,844 - Crude palm stearin (MT) 51,457 29,548 29,283 32,810 34,902 - Crude palm olein (MT) 161, , , , ,259 - Palm FAD (MT) 9,600 8,296 8,518 8,368 10,438 - Palm kernel FAD (MT) 2,540 2,937 3,002 2,915 2,393 - Crude palm oil (MT) 46,245 45,435 47,557 40,834 42,485 - Palm kernel (MT) 15,921 16,320 17,153 14,558 15,345 Immature hectareage Harvested hectareage 3,473 3,237 3,189 3,254 3,334 Harvested area as % of planted area 95% 89% 87% 87% 87% Average yield in MT per harvested hectareage Gross selling price - RM per tonne RBD palm oil 3,169 2,170 1,613 1,466 1,723 RM per tonne RBD palm olein 3,450 2,633 1,666 1,623 1,907 RM per tonne RBD palm stearin 3,076 2,331 1,627 1,573 1,807 RM per tonne RBD palm kernel oil 4,004 2,852 2,068 2,451 2,543 RM per tonne RBD palm kernel olein 3,809 2,704 1,894 2,197 2,391 RM per tonne RBD palm kernel stearin 4,953 3,965 3,189 3,523 3,078 RM per tonne fatty acid 1,978 1,861 1,281 1,182 1,340 RM per tonne palm kernel fatty acid 2,794 1,826 1,515 1,498 1,549 RM per tonne crude palm stearin 0 0 1,460 1,288 1,320 RM per tonne crude palm olein 3,564 2,421 1,662 1,564 1,799 RM per tonne crude palm kernel stearin RM per tonne crude palm kernel olein 3,165 2,323 1,968 2,031 0 RM per tonne kernel (ex mill) 1,544 1, ,020 1,074 AREA PLANTED (HECTARE) 3,646 3,656 3,679 3,752 3,839 Oil palm area as % of total planted area 100% 100% 100% 100% 100% 88

90 A N A L Y S I S O F S H A R E H O L D I N G S STATEMENT OF SHAREHOLDINGS ACCORDING TO THE RECORD OF DEPOSITORS AS AT 30 April 2009 CLASS OF SHARES : Ordinary Shares of RM1.00 Each SHARE CAPITAL : Authorised : RM1,000,000, : Issued & Fully Paid Up : RM241,393, (out of which 1,944,400 ordinary shares of RM1.00 each are held as Treasury Shares) VOTING RIGHTS : One (1) vote per ordinary share NUMBER OF HOLDERS : 8,195 A. DISTRIBUTION OF SHAREHOLDINGS No. of Holders Holdings Total Holdings Percentage (%) 123 Less than 100 3, , to 1,000 1,868, ,631 1,001 to 10,000 19,208, ,212 10,001 to 100,000 33,284, ,001 to less than 5% of issued shares 75,952, % and above of issued shares 109,130, Total: 8, ,448, B. LIST OF 30 LARGEST SECURITIES ACCOUNT HOLDERS No. Name No. of shares held Percentage % 1 HO YEOW KOON AND SONS PRIVATE LIMITED 35,758, CITIGROUP NOMINEES (ASING) SDN BHD Exempt An for Merrill Lynch Pierce Fenner & Smith 16,533, HO CHENG HO KIAN HOCK 16,277, HO ENG HO KIAN CHEONG 15,772, UOBM NOMINEES (ASING) SDN BHD United Overseas Bank Nominees (Pte) Ltd for Ng How Ann & Sons Pte Ltd 12,638, PLENTONG QUARRY (M) SDN BHD 12,150, HO CHIN CHIN 8,405, CITIGROUP NOMINEES (ASING) SDN BHD UBS AG Hong Kong for Ocean Inc 7,874, HO SEE SEE 7,833, HDM NOMINEES (ASING) SDN BHD DBS Vickers Secs (S) Pte Ltd for Vuitton Assets Ltd 3,000, HDM NOMINEES (ASING) SDN BHD DBS Vickers Secs (S) Pte Ltd for Liteace Management Ltd 3,000, HDM NOMINEES (ASING) SDN BHD DBS Vickers Secs (S) Pte Ltd for Skytrax Ventures Ltd 3,000, HDM NOMINEES (ASING) SDN BHD DBS Vickers Secs (S) Pte Ltd for Laser Ace Ventures Ltd 3,000, LOO GEOK ENG 1,767, HDM NOMINEES (TEMPATAN) SDN BHD UOB Kay Hian Pte Ltd For South West Holdings Sdn Bhd 1,718, CITIGROUP NOMINEES (ASING) SDN BHD CBNY for DFA Emerging Markets Fund 1,663, CITIGROUP NOMINEES (ASING) SDN BHD Exempt AN for OCBC Securities Private Limited 1,612, CRESCENDO OVERSEAS CORPORATION SDN BHD 1,477,

91 A N A L Y S I S O F S H A R E H O L D I N G S ( C o n t d ) No. Name No. of shares held Percentage % 19 TM ASIA LIFE MALAYSIA BHD As beneficial owner (PF) 1,163, KUOK FOUNDATION BERHAD 1,083, TUNKU OSMAN AHMAD 1,030, HDM NOMINEES (ASING) SDN BHD Exempt an for UOB Kay Hian (Hong Kong) Ltd 881, CITIGROUP NOMINEES (ASING) SDN BHD Exempt An for OCBC Securities Private Limited 766, LOO GEOK ENG 700, CHINCHOO INVESTMENT SDN BHD 695, KEY DEVELOPMENT SDN BHD 682, HDM NOMINEES (ASING) SDN BHD DBS Vickers Secs (S) Pte Ltd for Ho Eng Ho Kian Cheong 669, TAN KIEN LENG 638, FIRMSTEAD REALTY SDN BHD 556, CITIGROUP NOMINEES (ASING) SDN BHD CBNY for DFA Emerging Markets Small Cap Series 552, Total 162,902, C. LIST OF SUBSTANTIAL SHAREHOLDERS Direct Interest Deemed Interest No. of Shares (%) No. of Shares (%) Ho Yeow Koon & Sons Pte Ltd 35,758, ,613, Dato Ho Kian Hock 16,598, ,246, Ho Kian Guan 16,193, ,246, Ho Kian Cheong 16,441, ,000, Ng How Ann & Sons Pte Ltd 12,638, Ng Yew Hwee 12,638, Ng Yew Keng 12,638, Plentong Quarry (M) Sdn Bhd 12,150, Notes: 1 By virtue of its interest in Plentong Quarry (M) Sdn Bhd, Firmstead Realty Sdn Bhd and South West Holdings Sdn Bhd. 2 By virtue of his interest in Ho Yeow Koon & Sons Pte Ltd, Plentong Quarry (M) Sdn Bhd, Firmstead Realty Sdn Bhd, South West Holdings Sdn Bhd and Ocean Inc. 3 By virtue of his interest in Laser Ace Ventures Ltd (BVI), Liteace Management Ltd (BVI), Vuitton Assets Ltd (BVI) and Skytrax Ventures Ltd. 4 By virtue of his interest in Ng How Ann & Sons Pte Ltd. 90

92 A. LIST OF DIRECTORS' SHAREHOLDINGS IN THE COMPANY Direct Interest Deemed Interest Name of Directors No. of Shares (%) No. of Shares (%) 1. Dato Ho Kian Hock 16,598, ,246, Ho Kian Guan 16,193, ,246, Ho Kian Cheong 16,441, ,000, Lee Hwee Leng 59, Ng Yew Keng 12,638, Y.A.M. Tunku Osman Ahmad 1,030, , Michael Vitus Wong Kuan Lee 8. Tengku Yunus Kamaruddin 9. Maj-Gen (R) Dato Muhammad Bin Yunus 10. Chan Lui Ming Ivan 68, ,622, Notes: S T A T E M E N T O F D I R E C T O R S I N T E R E S T I N T H E C O M P A N Y A N D R E L A T E D C O R P O R A T I O N S A S A T 3 0 A p r i l By virtue of his interest in Ho Yeow Koon & Sons Pte Ltd, Plentong Quarry (M) Sdn Bhd, Firmstead Realty Sdn Bhd, South West Holdings Sdn Bhd and Ocean Inc. 2 By virtue of his interest in Laser Ace Venture Ltd (BVI), Liteace Management Ltd (BVI), Vuitton Assets Ltd (BVI) and Skytrax Ventures Ltd. 3 By virtue of his interest in Ng How Ann & Sons Pte Ltd 4 By virtue of his interest in Ozzdong Sdn Bhd 5 Deemed interest in shares held directly by his mother, Ho Chin Chin. B. LIST OF DIRECTORS' SHAREHOLDINGS IN SUBSIDIARY OF THE COMPANY LIM & LIM PLANTATIONS BERHAD Direct Interest Deemed Interest Name of Directors No. of Shares (%) No. of Shares (%) 1. Ho Kian Guan 5, Dato Ho Kian Hock 5, Lee Hwee Leng 2, By virtue of their interests in the shares of the Company, all of the directors except Maj-Gen (R) Dato Muhammad Bin Yunus, Tengku Yunus Kamaruddin, Michael Vitus Wong Kuan Lee, are deemed to be interested in the shares of all subsidiaries of the Company to the extent the Company has an interest. 91

93 P A R T I C U L A R S O F G R O U P P R O P E R T I E S LAND FOR AGRICULTURE AND HOUSING DEVELOPMENT Estate/ Location Tenure Area Description Approximate Net Book Date Of Last Housing Project Age Of Value Revaluation(#) Building RM'000 /Date Of (Years) Acquisition Tanjong Puteri 35 km north-east of Johor Bahru. Freehold 208 hec 54 holes golf course, 97, # Golf Resort Adjacent to Pasir Gudang (Land area) clubs and other recreational Industrial Estate. facilities. Bandar Baru 27 km Pontian Road immediately Freehold/ 2,928,078 sq metres Development of residential & 85, # Kangkar Pulai after Kangkar Pulai Village. Leasehold (Saleable area) commercial units including area planted with oil palm. The 99 years lease expires in Tanjong Puteri 35 km north-east of Johor Bahru. Freehold 3,801,074 sq metres Development of residential & 15, # Resorts Adjacent to Pasir Gudang (Saleable area) commercial units including area Industrial Estate. planted with oil palm. Taman Daya 13 km north-east of Johor Bahru. Freehold 455,541 sq metres Development of residential & 4, # (near Kampong Baru, (Saleable area) commercial units. Kangkar Tebrau) Bukit Chantek, 10 km east of Ulu Tiram Freehold/ 2,451 hec Oil palm estate including , / # Tong Hing & Tanjong and 30 km from Johor Bahru. Leasehold (Planted area) hectares of industrial land with Langsat Estate 3 industrial buildings erected on it. The 99 years lease expires in Lim & Lim 10 km east of Ulu Tiram and Freehold 820 hec Oil palm estate. 15, # (Kong Kong) 31 km from Johor Bahru. (Planted area) BUILDING Building Type Location Tenure Area Description Approximate Net Book Date Of Last Age Of Value Revaluation(#) Building RM'000 /Date Of (Years) Acquisition Hotel 1956, Ala Moana, Boulevard, Freehold 18,525 sq metres 18 Storey Doubletree Alana 37 75, Honolulu, Hawaii, 96815, USA. (Buildup area) Waikiki Hotel (317 Rooms) with an adjoining 7 storey office building occupying a total land area of 3,315 sq metres. Office Space Menara Keck Seng, Freehold 24,538 sq metres Office space for rental , Jalan Bukit Bintang, (Floor area) Kuala Lumpur. Hotel 655 Dixon Road, Toronto, Freehold 52,954 sq metres 12 Storey Doubletree International 44 50, Ontario Canada, M9W 113. (Buildup area) Plaza Hotel (433 Rooms) occupying a land area of 28,328 sq metres. Condominium No. 8, Jalan Ceylon, Freehold 20,178 sq metres 23 Storey building known as 18 55, Block Kuala Lumpur. (Floor area) Regency Tower (76 units luxury apartments) with an annexed 3-storey car park (108 bays) and other facilities. Hotel 35 Rue Laurier, Gatineau, Freehold 13,777 sq metres 9 Storey Four Points Hotel 24 19, Quebec, Canada, J8X 4E9. (Buildup area) (201 Rooms) occupying a land area of 7,122 sq metres. Office Space Peninsula Plaza, 21st Floor, Leasehold 798 sq metres Office space for rental. The , No. 111, North Bridge Road, (Floor area) years lease expires in Singapore Double-Storey Tanjong Puteri Golf Resort, Freehold 47,061 sq metres 34-units for recreation. 12 5, Villa Pasir Gudang, Johor. (Land area) 92

94 F O R M O F P R O X Y I/We (I.C. No. ) of (or attorney of the said ) a Member/Members of KECK SENG (MALAYSIA) BERHAD (Co. No D) hereby appoint (I. C. No. ) of or failing him (I.C. No. ) of as my/our proxy to vote for me/us on my/our behalf at the Thirty-Ninth (39th) Annual General Meeting of the Company to be held at the Conference Room of Tanjong Puteri Golf Resort Bhd, Pasir Gudang, Johor Darul Ta zim on Friday, 19 June 2009 at 11:00 a.m. and at any adjournment thereof. No. RESOLUTION FOR AGAINST 1 Re-appointment of Director - Y.A.M. Tunku Osman Ahmad 2 Re-appointment of Director - Michael Vitus Wong Kuan Lee 3 Re-election of Director Ho Kian Cheong 4 Re-election of Director Ng Yew Keng 5 Re-election of Director Chan Lui Ming Ivan 6 Approval of Directors Fees 7 Declaration of Final Dividend of 6% tax exempt 8 Re-appointment of Ernst & Young as Auditors Special Business 9 Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, Proposed Renewal of Shareholders' Mandate for Proposed Share Buy-Back 11 Proposed Shareholders' Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature Signed this day of Signature of Member(s) Number of shares held Notes: 1. A member entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy may but need not be a member of the Company. 2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. 3. Where a member is an authorized nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 4. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorised. 5. The Proxy Form must be deposited with the Company Secretary at the Registered Office, Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, Johor Bahru, Johor Darul Ta zim not less than 48 hours before the time set for the Meeting. 93

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