Audit Committee. The Secretary shall be Company Secretary of the Company.

Transcription

1 Audit Committee Chairman Tuan Haji Hithayathullah bin Abdul Gaffoor (Independent Non-executive Director) iv) The Secretary shall be Company Secretary of the Company. Authority Members Lam Yik Meng (Independent Non-executive Director) Sambasivam Ramanujam (Managing Director) Terms of Reference Composition i) The Audit Committee shall be appointed by the Directors from among their number (pursuant to a resolution of the Board of Directors) and shall be composed of not fewer than three members of whom a majority shall not be: a) Executive Directors of the Company or any related corporation; b) A spouse, parent, sister, son or adopted son or daughter or adopted daughter of an Executive Director of the Company or of any relate corporation; or c) Any person having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgement in carrying out the duties of the Audit Commitee. ii) The members of the Audit Committee shall elect a Chairman from among their number who is not an Executive Director or Employee of the Company or any related corporation. The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. The Committee is authorised by the Board to obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. DUTIES AND FUNCTIONS The duties of the Committee shall be; a) to consider the appointment of the external auditors, the audit fee, and any questions of resignation or dismissal. b) to discuss with external auditors before the audit commences the nature and scope of the audit and to ensure co-ordination where more than one audit firm is involved. c) to review with the management and the external auditors the quarterly results. preliminary financial statements and annual financial statements before their submission to the Board, focusing particularly on: any changes in accounting policies and practices major judgemental areas significant adjustments resulting from the audit iii) If a member of the Audit Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced below three, the Board of Directors shall within three months of that event, appoint such number of new members as may be required to make up the minimum number of three members. the going concern assumption compliance with accounting standards as well as other regulatory requirements compliance with stock exchange and legal requirement 12

2 d) to arrange for periodic reports from management, the external auditors, and the internal auditors to assess the impact of significant regulatory changes, and accounting or reporting developments proposed by accounting and other bodies or any significant matters that may have a bearing on the annual examination. e) to discuss problems and reservations arising from the interim and final audit, and any matters the auditors may wish to discuss (in the absence of management where necessary). f) to review the internal audit programme, consider the major findings of internal audits and managements response, and ensure co-ordination between the internal and external auditors. g) to keep under review the effectiveness of internal control systems and, in particular. review the external auditor s management letter and management s response. h) to review audit reports. i) to direct and where appropriate supervise any special projects or investigation considered necessary. Directors. iii) The quorum of each Meeting shall be made up of at least two (2) of the Committee members. Report by Audit Committee The Audit Committee met five times during the year. In these meetings, the Committee carried out its duties in accordance with its terms of reference. Currently, the Group does not have an internal audit function. However, to discharge its duties, the Committee worked closely with the external auditors. The recommendations from the external auditors are considered by the Committee for implementation. The Committee is currently looking for a suitable candidate to head the internal audit function and are currently reviewing various applicants. It is envisaged that the appointment will commence by next year. The auditors remuneration for the financial year has been disclosed in Note 5 to the financial statements. No amount of non audit fees has been paid to the external auditors for the financial year 30 June j) to prepare periodic reports to the Board of Directors summarising the work performed in fulfilling the Committee s primary responsibilities. HJ HITHAYATHULLAH BIN ABDUL GAFFOOR Chairman Audit Committee k) to perform other related duties as directed by the Board. MEETING i) The Committee shall meet at least twice a year or such meetings as the Chairman shall decide in order to fulfill its duties. The Secretary of the Committee shall be responsible for drawing up the agenda and circulating to the Committee prior to each meeting. ii) The Secretary will also be responsible for keeping the minutes of the Meetings of the Committee, and circulating them to Committee members and to other members of the Board of 13

3 Corporate Governance Statement The Code Your Board of Directors of welcome the Malaysian Code of Corporate Governance issued by the Finance Committee on Corporate Governance in March The Code sets out the principles and best practices on structures and processes that companies may use in their operation towards achieving the optimal governance framework. Adoption The Board is committed in ensuring that the highest standards of corporate governance are practised throughout the Group as a fundamental part in discharging its responsibilities to protect and enhance shareholder value and the financial performance of the Group. To this end, the Board fully supports the recommendations of the code. Steps are currently being taken to evaluate the status of the Group s Corporate governance procedures and to implement the Code s best practices. BOARD OF DIRECTORS Board The Board has overall responsibility on the strategic direction for the Group. The Board assumes the task of over seeing the investments of in its subsidiaries. The Board currently comprises eight (8) members of whom three (3) are independent directors. Meetings The Board of Directors meet once every quarter or at more frequent interval as at when there is a need. For the year ended 30 June 2001, the Board of Directors of met 5 times. Supply of Information For the Board meetings, the Directors are given the Board papers prior to the meetings so as to ensure that the Board members have ample time to obtain further clarifications and explanations, where necessary, and to be briefed properly before and during the meetings. The Directors have access to the advice and services of the Company Secretary. Board Members The members of the Board of Directors are as follows:- Dato N. Sadasivan - Chairman (w.e.f. 3 December 2001) Sambasivam Ramanujam - Managing Director Alegesam Thangiah - Deputy Managing Director Pubala Raj Gopal Krishnan - Executive Director Dato Dr Hj Sallehuddin bin Kassim - Director Hj Hithayathullah bin Abdul Gaffoor - Director Selvakumar Krishna - Director Lam Yik Meng - Director The presence of the non-executives directors is essential in order to safeguard the interest of other parties, such as minority shareholders, employees, creditors and others. 14

4 Re-election In accordance with the Company s Articles of Association, all Directors who are appointed by the Board are subject to elections by shareholders at the first opportunity after the appointment. The Articles also provide that at least one-third of the remaining Directors be subject to re-election by rotation during the Company s Annual General Meeting Directors Remuneration The Directors remuneration is determined so as to ensure that the packages payable to executive and nonexecutive directors are on a competitive scale with other organizations within the same industry. Appointment to the Board The Board has formed a Nomination and Remuneration Committee comprising two independent directors to oversee all new appointments of directors and to fix the remuneration packages of both the executive and non-executive directors. The members of the Nomination and Remuneration Committee are:- Lam Yik Meng Hj Hithayathullah bin Abdul Gaffoor - Chairman - Member ACCOUNTABILITY ABILITY AND AUDIT Audit Committee The Audit Committee of the Board comprise two Non-Executive Directors of the Board with Tuan Haji Hithayathullah bin Gaffoor as Chairman. The Audit Committee met five times in the period. A majority of the Committee members attended all meetings. Financial Reporting In presenting the annual financial statements and quarterly announcement to shareholders, the Directors aim to present a balanced and understandable assessment of the Group s position and prospects. The Statement by Directors pursuant to section 169 of the Companies Act, 1965 is set out on page 56 of this annual report. Internal Control The Directors acknowledge their responsibilities for the Group s system of internal controls covering not only financial controls but also operational and compliance controls as well as risk management. The internal control system involves each business and key management from each business, including the Board, and is designed to meet the Group s particular needs and to manage the risks to which it is exposed. This system, by its nature, can only provide reasonable but not absolute assurance against misstatement or loss. The Audit Committee is currently Reviewing various candidates to Head the internal audit funtion. However to discharge its duties, the Committee works closely with the external auditors. Relationship with the Auditors The role of the Audit Committee in relation to the external auditors is stated on page 10 and

5 Corporate Governance Statement i) BOARD OF DIRECTORS ATTENDANCE RECORD The Board of Directors met five (5) times during the financial year Name of Directors Attendance of Board Meetings held 29-Aug Oct Nov Feb May-01 Date of appointment Date of resignation Demised Datuk Pathmanaban Kunjamboo Sambasivam Ramanujam N/A Alegesam Thangiah N/A Pubala Raj Gopal Krishnan N/A Datuk Dr. Sallehuddin bin Kassim N/A Haji Hithayathullah bin Abdul Gaffoor N/A Selvakumar Krishna N/A Lam Yik Meng N/A N/A N/A N/A N/A N/A Dato N. Sadasivan N/A N/A N/A N/A N/A N/A - Present - Absent with apologies N/A - Not Applicable ii) AUDIT COMMITTEE ATTENDANCE RECORD The Audit Committee met five (5) times during the financial year 29-Aug Oct Nov Feb may-01 Haji Hithayathullah bin Abdul Gaffoor Sambasivam Ramanujam Selvakumar Krishna Lam Yik Meng N/A N/A N/A N/A N/A Resigned on Appointed on Present - Absent with apologies N/A - Not Applicable iii) DIRECTORS REMUNERATION Breakdown of directors remuneration for the year ended 30th June, 2001 by category and in successive bands of RM 50,000 are shown below :- Remuneration (RM) Total Executive Directors Non-executive Directors Fees (RM) Nil Nil Nil Salaries (RM) Nil Allowances (RM) Nil (No. of Directors) 0 to RM 50,000 3 Nil 3 RM 50,001 to RM 100,000 1 Nil 1 RM 100,001 to RM 150, Nil RM 150,001 to RM 200, Nil Total

6 Statutory Financial Statements 30 June 2001 Directors report Income Statements 21 Balance Sheets Consolidated Statement of Changes in Equity 24 Company Statement of Changes in Equity 25 Cash Flow Statements Summary of Significant accounting policies Notes to the Financial Statements Statement by Directors 56 Statutory declaration 56 Report of the Auditors

7 Directors Report The Directors of have pleasure in submitting their report together with the audited financial statements of the Group and the Company for the financial year ended 30 June PRINCIPAL ACTIVITIES The principal activities of the Company consist of oil palm and rubber production on plantations situated in Malaysia, investment holding and property development. The principal activities of the subsidiary and associated companies are set out in Note 33 on the financial statements. There have been no significant changes in these principal activities during the financial year. FINANCIAL RESULTS Group RM Company RM Profit after taxation for the financial year 649,740 1,689,502 Minority interests (1,028) - Net profit attributable to shareholders 648,712 1,689,502 DIVIDENDS The amount of dividends paid or declared by the Company since 30 June 2000 is as follows: In respect of the financial year ended 30 June 2000 as shown in the Directors report of that financial year: RM Final dividend of 2 sen gross per share, less Malaysian income tax at 28%, paid on 27 February ,040 The Directors now recommend the payment of the first and final dividend of 2 sen gross per share less Malaysian income tax at 28% in respect of the financial year ended 30 June RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year, are shown in the financial statements. 18

8 Directors Report (continued) DIRECTORS The Directors who have held office during the period since the date of the last report are: Datuk K. Pathmanaban Kunjamboo (deceased on ) Sambasivam Ramanujam Alegesam Thangiah Pubala Raj Gopal Krishnan Datuk Dr. Sallehuddin bin Kassim Haji Hithayathullah bin Abdul Gaffoor Selvakumar Krishna Lam Yik Meng (appointed on ) In accordance with the Company s Articles of Association, Datuk Dr. Sallehuddin bin Kassim retires at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election. Mr Lam Yik Meng who was appointed to the Board on 21 August 2001 retires at the forthcoming Annual General Meeting and, being eligible, offers himself for election. In accordance with Paragraph 7.28(2) of Chapter 7 of the Listing Requirements of Kuala Lumpur Stock Exchange, Mr. Sambasivam Ramanujam and Mr. Alegesam Thangiah retire at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-election. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to 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 the benefits disclosed as Directors remuneration in Note 5 on the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. DIRECTORS INTERESTS IN SHARES Interest of Directors in office at the end of the financial year in shares in the Company were as follows: Number of ordinary shares of RM1 each At At Acquired Disposed Shareholdings in the name of a Director: Selvakumar Krishna 1, ,000 19

9 Directors Report (continued) Shareholdings in which Directors are deemed to have interest Number of ordinary shares of RM1 each At At Acquired Disposed Sambasivam Ramanujam 10,803, ,803,958 Alegesam Thangiah 10,803, ,803,958 Interests of Directors in office at the end of the financial year in shares in the holding and ultimate holding companies were as follows: Number of ordinary shares of RM1 each At At Acquired Disposed Holding company - Nyala Kancil (M) Sdn Bhd Sambasivam Ramanujam Alegesam Thangiah Number of ordinary shares of RM1 each At At Acquired Disposed Ultimate holding company - Genjara Intelek Sdn Bhd Sambasivam Ramanujam Alegesam Tangiah No other Director in office at the end of the financial year held any shares in or debentures of the Company and its related corporations. ULTIMATE HOLDING COMPANY The Directors regard Genjara Intelek Sdn Bhd, a company incorporated in Malaysia, as the ultimate holding company. 20

10 Directors Report (continued) SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE Significant events subsequent to the balance sheet date are disclosed in Note 36 to the financial statements. STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS Before the income statements and balance sheets were made out, the Directors took reasonable steps: (a) to ascertain that 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 (b) to ensure that any current assets, other than debts which were unlikely to realise in the ordinary course of business, their value as shown in the accounting records of the Group and the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) which would render the amounts written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; or (b) which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; or (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate. 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, in the opinion of the Directors, will or may substantially affect the ability of the Group and the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) any charge on the assets of the Group and the Company which has arisen since the end of the financial year which secures the liability of any other person; or (b) any contingent liability of the Group and the Company which has arisen since the end of the financial year. 21

11 Directors Report (continued) OTHER STATUTORY INFORMATION At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. In the opinion of the Directors, (a) the results of the Group s and the Company s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and (b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the Company for the financial year in which this report is made. AUDITORS Our auditors, Evatt & Co., retire at the forthcoming annual general meeting and have expressed their willingness to continue in office. In accordance with a resolution of the Board of Directors dated 19 November SAMBASIVAM RAMANUJAM DIRECTOR ALEGESAM THANGIAH DIRECTOR Kuala Lumpur 19 November

12 Income Statements For The Financial Year Ended 30 June 2001 Group Company Note RM RM RM RM TURNOVER 2 11,735,083 8,113,252 10,720,454 7,783,056 COST OF SALES 3 (3,600,697) (1,580,780) (1,502,330) (1,580,780) GROSS PROFIT 8,134,386 6,532,472 9,218,124 6,202,276 PROFIT ON SALE OF INVESTMENT SECURITIES 4-713, ,967 OTHER OPERATING INCOME 2,236,513 1,537,049 1,533,769 1,537,049 ADMINISTRATIVE EXPENSES (2,959,030) (3,061,772) (2,260,631) (1,713,597) PROFIT FROM OPERATIONS 5 7,411,869 5,721,716 8,491,262 6,739,695 FINANCE COST 6 (5,646,947) (3,916,589) (5,707,560) (4,613,966) SHARE OF PROFIT OF: - Joint venture 161, , , ,838 - Associated companies 33, , PROFIT BEFORE TAXATION 1,960,287 2,157,668 2,945,322 2,351,567 TAXATION 7 (1,310,547) (776,935) (1,255,820) (763,586) PROFIT AFTER TAXATION 649,740 1,380,733 1,689,502 1,587,981 MINORITY INTERESTS (1,028) (35,054) - - NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 648,712 1,345,679 1,689,502 1,587,981 EARNINGS PER SHARE (SEN) The accounting policies on pages 28 to 33 and the notes on pages 34 to 55 form an integral part of these financial statements. 23

13 Balance Sheets As At 30 June 2001 Group Company Note RM RM RM RM PROPERTY, PLANT AND EQUIPMENT 10 87,612,199 89,019,229 70,773,727 70,889,938 SUBSIDIARY COMPANIES ,750,433 24,183,627 ASSOCIATED COMPANIES 12 1,640,127 1,619,067 1,500,301 1,500,301 INVESTMENT SECURITIES , , , ,673 INVESTMENT PROPERTIES 14 7,116,120 7,116, DEVELOPMENT EXPENDITURE 15 8,429,053 6,972, LONG TERM RECEIVABLES 16 52,062,032 16,267,481 18,969,298 16,267,481 INTEREST IN JOINT VENTURE 17 42,951,214 36,723,656 42,951,214 36,723,656 GOODWILL ON CONSOLIDATION 18 1,247,646 1,316, CURRENT ASSETS Stores and supplies 45,526 18,648 31,822 18,648 Trade debtors 912, ,209 88, ,211 Other debtors, deposits and prepayments 20 1,316,826 22,750,162 54,828 22,352,901 Amount due from associated company 12 2,115-2,115 - Fixed deposits 21 2,450 2,353 2,450 2,353 Cash and bank balances 160, , ,611 96,473 2,439,645 23,303, ,564 22,606,586 24

14 Balance Sheets As At 30 June 2001 (Continued) CURRENT LIABILITIES Group Company Note RM RM RM RM Trade creditors 234, , , ,437 Other creditors and accruals 22 11,008,575 5,368,339 8,091,027 3,191,665 Amount due to subsidiary company ,114, ,253 Amounts due to directors , , , ,434 Amount due to ultimate holding company - 1, Amount due to holding company 7,203-7,203 - Short term borrowings 25 47,931,257 29,744,330 39,118,196 28,396,196 Hire purchase creditors 29 56,596 56,600 49,000 49,000 Current tax liabilities 3,743,745 2,737,387 3,692,203 2,727,887 Proposed dividends 635, , , ,040 63,785,716 38,984,637 57,020,325 35,785,912 NET CURRENT LIABILITIES (61,346,071) (15,681,322) (56,708,761) (13,179,326) 140,615, ,256, ,139, ,289,350 Financed by: SHARE CAPITAL 26 44,100,000 44,100,000 44,100,000 44,100,000 CAPITAL RESERVE 27 65,787,090 65,787,090 65,708,236 65,708,236 RESERVE ON CONSOLIDATION 2,458,599 3,078, RETAINED EARNINGS 13,605,065 13,591,393 14,927,909 13,873,447 SHAREHOLDERS FUNDS 125,950, ,556, ,736, ,681,683 MINORITY INTERESTS 85,305 84, DEFERRED TAXATION 28 96,000 83,000 96,000 83,000 LONG TERM LIABILITIES - Term loans 29 14,335,881 17,332,411 8,173,000 13,345,000 - Hire purchase creditors , , , , ,615, ,256, ,139, ,289,350 The accounting policies on pages 28 to 33 and the notes on pages 34 to 55 form an integral part of these financial statements. 25

15 Consolidated Statement Of Changes In Equity For The Financial Year Ended 30 June 2001 Non-distributable Distributable Share Capital Reserve on Retained Note capital reserve consolidation earnings Total RM RM RM RM RM At 1 July ,100,000 65,787,090 3,078,101 13,591, ,556,584 Net profit attributable to shareholders , ,712 Amortisation - - (619,502) - (619,502) Dividends for the financial year (635,040) (635,040) At 30 June ,100,000 65,787,090 2,458,599 13,605, ,950,754 At 1 July ,100,000 65,787,090-12,880, ,767,844 Net profit attributable to shareholders ,345,679 1,345,679 Reserve on consolidation arising from acquisition of subsidiary ,078,101-3,078,101 Dividends for the financial year (635,040) (635,040) At 30 June ,100,000 65,787,090 3,078,101 13,591, ,556,584 The accounting policies on pages 28 to 33 and the notes on pages 34 to 55 form an integral part of these financial statements. 26

16 Company Statement Of Changes In Equity For The Financial Year Ended 30 June 2001 Non- distributable Distributable Share Capital Retained Note capital reserve earnings Total RM RM RM RM At 1 July ,100,000 65,708,236 13,873, ,681,683 Net profit attributable to shareholders - - 1,689,502 1,689,502 Dividends for the financial year (635,040) (635,040) At 30 June ,100,000 65,708,236 14,927, ,736,145 At 1 July ,100,000 65,708,236 12,920, ,728,742 Net profit attributable to shareholders - - 1,587,981 1,587,981 Dividends for the financial year (635,040) (635,040) At 30 June ,100,000 65,708,236 13,873, ,681,683 The accounting policies on pages 28 to 33 and the notes on pages 34 to 55 form an integral part of these financial statements. 27

17 Cash Flow Statements For The Financial Year Ended 30 June 2001 CASH FLOWS FROM OPERATING ACTIVITIES Group Company Note RM RM RM RM Profit before taxation 1,960,287 2,157,668 2,945,322 2,351,567 Adjustments for: Preliminary expenses written off 308 5, Depreciation 1,428, , , ,724 Share of profits of associated companies (33,745) (126,703) - - Interest expense 5,646,947 3,916,589 5,707,560 4,613,966 Interest income (8,263,561) (4,318,095) (8,734,172) (5,017,640) Dividend income (31,387) (63,228) (31,387) (123,228) Gain on sale of investments - (483,967) - (483,967) Gain on disposal of property, plant and equipment (90,100) (22,813) - (22,813) Goodwill amortised 68,364 51, Reserve on consolidation amortised (619,502) Share of profit from joint venture (161,620) (225,838) (161,620) (225,838) (Writeback)/provision for diminution in value of investments - (230,000) - (230,000) Operating profit/(loss) before working capital changes (95,646) 874,955 (121,834) 1,052,771 Movement in working capital: Stores and supplies (26,878) (13,195) (13,174) (13,195) Debtors (14,865,850) 13,266,784 19,643,727 13,779,023 Creditors 5,602,059 1,871,062 4,864, ,988 Intercompany balances 3,623 2,203,530 (25,885,685) (15,840,021) Due from joint venture (6,065,938) (3,660,406) (6,065,938) (3,660,406) Development expenditure (871,030) (6,273,386) - - Cash (utilised in)/generated from operations (16,319,660) 8,269,344 (7,578,044) (4,181,840) Taxation paid (274,146) (244,820) (274,146) (244,820) Net cash (utilised in)/generated from operating activities (16,593,806) 8,024,524 (7,852,190) (4,426,660) 28

18 Cash Flow Statements For The Financial Year Ended 30 June 2001 (Continued) CASH FLOWS FROM INVESTING ACTIVITIES Group Company Note RM RM RM RM Purchase of property, plant and equipment (46,233) (449,765) (36,252) (345,332) Net cash outflow from acquisition of subsidiary 19 - (17,240,753) - - Purchase of investments in subsidiary companies (5,632,323) Proceeds from disposal of property, plant and equipment 115, , ,279 Proceeds from sale of investments - 945, ,809 Interest received 8,263,561 4,318,095 8,734,172 5,017,640 Dividends received from associated company - 60,000-60,000 Dividends received from other investments 27,029 63,228 27,029 63,228 Net cash generated from/ (utilised in) investing activities 8,359,357 (12,083,223) 8,724, ,301 CASH FLOWS FROM FINANCING ACTIVITIES Term loan drawn down 15,190,398 5,784,198 5,550,000 5,784,198 Term loan paid - (102,463) - (102,463) Hire purchase instalments paid (52,516) (35,024) (44,924) (16,333) Interest paid (6,232,039) (4,616,134) (5,707,560) (4,613,966) Dividends paid (635,040) (635,040) (635,040) (635,040) Net cash generated from/ (utilised in) financing activities 8,270, ,537 (837,524) 416,396 Net (decrease)/increase in cash and cash equivalents 36,354 (3,663,162) 35,235 3,687,963 Cash and cash equivalents at beginning of financial year 126,295 3,789,457 98,826 3,786,789 Cash and cash equivalents at end of financial year , , ,061 98,826 The accounting policies on pages 28 to 33 and the notes on pages 34 to 55 form an integral part of these financial statements. 29

19 Summary Of Significant Accounting Policies The following are the significant accounting policies of the Group and the Company which, unless otherwise stated, are used consistently in dealing with items which are considered material in relation to the financial statements. A BASIS OF PREPARATION The financial statements of the Group and the Company have been prepared under the historical cost convention, as modified by the revaluation of plantation land. The financial statements comply with the applicable approved Accounting Standards in Malaysia and the provisions of the Companies Act, Comparative figures have been adjusted or extended to conform with changes in presentation due to the requirements of the 9 new MASB Standards (MASB 8 to MASB 16) that are applicable for the financial year. There are no changes in accounting policy that affect net profit attributable to shareholders as a result of the adoption of the new standards in these financial statements as the Group was already following the recognition and measurement principles in those standards. As at 30 June 2001, the Group and Company had net current liabilities of RM61,346,071 and RM56,708,761 respectively. Also as explained in Note 29, the Company obtained an initial extention up to 31 October 2001 and a subsequent extention up to 31 January 2002 for the settlement of 2 term loans (Note 29-Term loans 2 and 3) which were due for repayment during the financial year, The continuation of the Group and Company as a going concern is dependent on continuing financial support from shareholders, creditors and bankers. At the date of these financial statements, the Company is in the process of finalising the terms of new banking facilities with a banker (Note 36). The success of obtaining the new banking facilities is dependent on the company meeting all relevant requirements of the banker. The Directors are confident that the new banking facilities will be obtained. Accordingly, the Directors have prepared the financial statements on a going concern basis. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to amounts and classification of liabilities that may be necessary if the Group and Company are unable to continue as a going concern. B BASIS OF CONSOLIDATION The consolidated financial statements include the financial statements of the Company and its subsidiary companies made up to the end of the financial year. The subsidiary companies are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. Subsidiary companies are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiary companies acquired or disposed off during the financial year are included from the date of acquisition up to the date of disposal. Minority interest is measured at the minorities share of the post acquisitions fair values of the identifiable assets and liabilities of the acquiree. Separate disclosures is made for minority interest. All significant intercompany transactions are eliminated on consolidation. Unrealised losses are also eliminated unless cost cannot be recovered. The Group s share of results of associated companies are included in the consolidated income statements and the Group s share of post-acquisition retained profits and reserves are added to the cost of investment in the consolidated balance sheet. 30

20 Summary Of Significant Accounting Policies (continued) C GOODWILL OR RESERVE ARISING ON CONSOLIDATION Goodwill or reserve (negative goodwill) arising on consolidation represents the excess or deficit of the purchase price of subsidiary over the Group s share of the fair value of their separable net assets at the date of acquisition. Goodwill or reserve arising on consolidation is reported in the balance sheet as an intangible asset or reserve on consolidation respectively and is amortised using the straight line method up to a maximum of 20 years. D SUBSIDIARY AND ASSOCIATED COMPANIES Investment in subsidiary and associated companies are stated at cost less provisions for permanent diminution in value. Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. Investments in associated companies are accounted for in the consolidated financial statements by the equity method of accounting. Associated companies are companies in which the Group exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the associated companies but is not control over those policies. Equity accounting involves recognising in the income statement the Group s share of the results of associated companies for the period. The Group s investments in associated companies are carried in the balance sheet at an amount that reflects its share of the net assets of the associated companies and includes goodwill on acquisition. Unrealised surpluses and deficits on transactions between group companies and associated companies have been eliminated to the extent of the Group s interest in the associated companies. Where necessary, in applyingthe equity method, adjustments have been made to the financial statements of associated companies to ensure consistency of accounting policies with the Group. E DEPRECIATION Property, plant and equipment are stated at cost or valuation less accumulated depreciation. No depreciation is provided on freehold plantation land. Other property, plant and equipment are depreciated over their estimated useful lives calculated on the reducing balance method. The principal annual rates of depreciation used for this purpose are as follows:- Buildings 2% - 20% Plant and machinery 10% - 15% Motor vehicles, tractors and trailers 20% Furniture and office equipment 10-15% Electrical installations 20% The directors have applied the transitional provisions of Malaysian Accounting Standard Board - Standard No Property, Plant and Equipment which allows the freehold plantations to be stated at their 1998 valuation. Accordingly, the valuation has not been updated. 31

21 Summary Of Significant Accounting Policies (continued) E DEPRECIATION (CONTINUED) Surpluses arising on revaluation are credited to revaluation reserve. Any deficit arising from revaluations is charged against the revaluation reserve to the extent of a previous surplus held in the revaluations reserve for the same asset. In all other cases, a decrease in carrying amounts is charged to income statement. Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the profit/(loss) from operations. On disposal of revalued assets, amounts in revaluation reserve relating to these assets are transferred to retained earnings. F REPLANTING EXPENDITURE Replanting expenditure is the total cost incurred in land clearing to the point of harvesting and is charged to the income statements in the financial year in which the expenditure is incurred. G REFUNDS OF REPLANTING CESS Refunds of replanting cess are included on the receipts basis. H INVESTMENTS AND INCOME FROM INVESTMENTS Investments are stated at cost unless there has been, in the view of the Directors, a permanent diminution in value in which case provision is made for the diminution. Dividends from investments are included in the income statements at the date the dividends are received. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statements. I STORES AND SUPPLIES Stores and supplies are valued at the lower of cost and net realisable value, cost being determined on the first-in, first-out basis. 32

22 Summary Of Significant Accounting Policies (continued) J CONSTRUCTION CONTRACTS The profit on a property development is recognised as soon as it can be estimated reliably. The Group uses the percentage of completion method to determine the appropriate amount to be recognised in the given financial year. The percentage of completion is measured by the proportion of costs incurred to date in relation to the total estimated costs of the property development. Losses are recognised as soon as the loss is foreseen. The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings up to the financial year end. Where the sum of the costs incurred and recognised profit/loss exceeds the progress billings, the balance is also shown as Amounts due from customers on contracts. Conversely, where progress billings exceed the sum of the costs incurred and recognised profit/loss, the balance is shown as Amounts due to customers on contracts. K DEFERRED TAXATION Deferred taxation is provided using the liability method on all material timing differences between taxable and accounting profits except where it is thought reasonably probable that the tax effects of such timing differences will continue in the foreseeable future. The tax effect of timing differences that result in a debit balance, or a debit to the deferred tax balance is not carried forward unless there is a reasonable expectation of its realisation. L FOREIGN CURRENCY TRANSLATION The Group s foreign entity are those operations that are not an integral part of the operation of the Company. Income statement of foreign entity is translated into Ringgit Malaysia at average exchange rates for the period and the balance sheets are translated at exchange rates ruling at the balance sheet date. Material exchange differences arising from the retranslation of the net investment in foreign entities are taken to currency translation differences and included in the shareholders equity. On disposal of the foreign entity, such translation differences are recognised in the income statement as part of the gain or loss on disposal. Transactions in foreign currencies are translated into Ringgit Malaysia at exchange rates ruling at the transaction dates. Monetary assets and liabilities in foreign currencies at balance sheet date are translated into Ringgit Malaysia at rates ruling at that date. All exchange differences are included in the income statements. The monetary asset and liabilities are translated at the following rates: RM RM 1 United States Dollar (1USD) Indian Rupees

23 Summary Of Significant Accounting Policies (continued) M INTEREST IN JOINT VENTURE Interest in Joint Venture operations comprises the Company s share of the net assets and net income that it earns. N CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash on hand, bank balances and fixed deposits. O REVENUE RECOGNITION Sales are recognised upon delivery of products and customer acceptance, if any, or performance of services, net of sales tax and discounts and after eliminating sales within the Group. Sales relating to property development are accounted for under the percentage of completion method. Other revenues earned are recognised on the following bases: Interest income - on an accrual basis Dividend income - on receipt basis P TRADE AND OTHER DEBTORS Trade and other receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the financial year end. Bad debts are written-off during the financial year in which they are identified. Q DEVELOPMENT EXPENDITURE The development expenditure comprises all cost including interest expenses, incurred prior to the commencement of construction and is stated at cost unless there has been in the view of the Directors a permanent diminution in value in which case provision is made for the diminution. The cost is transferred to construction contracts upon commencement of construction activities. 34

24 Summary Of Significant Accounting Policies (continued) R INVESTMENT PROPERTIES Investment properties, principally comprising office buildings, are held for long term rental yields and are not occupied by the Group. Investment properties are treated as long term investments and carried at market value. Investment properties are not subject to depreciation. Investment properties are revalued once in every three years by independent professional valuers based on their open market value with additional valuations in the intervening years where market conditions indicate that the carrying values on the revalued assets are materially different from the market value. Increases in their carrying amount are credited to revaluation reserve. Decreases that offset previous increases of the same asset are charged against revaluation reserve, all other decreases are charged to the income statement. On disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement, any amount in revaluation reserve relating to that investment property is transferred to retained earnings. S LEASES Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments at the date of inception. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the income statement over the lease period. Property, plant and equipment acquired under finance lease contracts is depreciated over their useful life. 35

25 Notes On The Financial Statements - 30 June 2001 (Continued) 1 GENERAL INFORMATION The principal activities of the Company consist of oil palm and rubber production on plantations situated in Malaysia, investment holding and property development. The principal activities of the subsidiary and associated companies are set out in Note 33 on the financial statements. There have been no significant changes in the principal activities during the financial year. The Company is a limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of the Kuala Lumpur Stock Exchange. The average number of employees in the Group and Company during the financial year were 146 (2000:107) and 115 (2000: 76) respectively. 2 TURNOVER The turnover of Group and Company are analysed as follows: Group Company RM RM RM RM Plantation activities 1,954,895 2,642,188 1,954,895 2,642,188 Interest income 8,263,561 4,318,095 8,734,172 5,017,640 Dividend income 31,387 63,228 31, ,228 Software development 1,235,009 1,089, Manufacturing 141, Investment property income 108, ,735,083 8,113,252 10,720,454 7,783,056 3 COST OF SALES The cost of sales of the Group and Company are analysed as follows: Group Company RM RM RM RM Plantation operation cost 1,502,330 1,580,780 1,502,330 1,580,780 Software consultancy fee 584, Manufacturing cost 1,513, ,600,697 1,580,780 1,502,330 1,580,780 36

26 Notes On The Financial Statements - 30 June 2001 (Continued) 4 PROFIT ON SALE OF INVESTMENT SECURITES Group Company RM RM RM RM Profit from sale of investment securities - 483, ,967 Writeback/(provision) for diminution in value of investments - 230, , , ,967 5 PROFIT FROM OPERATIONS Profit from operations is arrived at after charging/(crediting): Group Company RM RM RM RM Depreciation of property, plant and equipment 1,428, , , ,724 Directors remuneration - fees other emoluments 478, , , ,040 Auditors remuneration - current year 81,788 55,000 60,000 45,000 - prior year 70,570-70,570 - Replanting expenditure 104,209 14, ,209 14,217 Staff cost 798,139 1,031, , ,396 Rental of land and buildings 244, , ,775 84,139 Preliminary expenses written off 308 5, Unrealised loss/(gain) on foreign exchange (5,123) 47, (149) Interest income (8,263,561) (4,318,095) (8,734,172) (5,017,640) Management fee income (1,500,000) - (1,500,000) (1,500,000) Goodwill amortised 68,364 51, Reserve on consolidation realised (619,502) Dividend income from investment (gross) - Quoted in Malaysia (31,387) (63,228) (31,387) (63,228) - Quoted outside Malaysia Unquoted - associated company (60,000) Gain on disposal of property, plant and equipment (90,100) (22,813) - (22,813) 37

27 Notes On The Financial Statements - 30 June 2001 (Continued) 6 FINANCE COSTS Group Company RM RM RM RM Interest expense on - Term loans 6,125,218 4,607,840 5,692,860 4,607,840 - Bank overdraft 87, Hire purchase 19,294 8,294 14,700 6,126 6,232,039 4,616,134 5,707,560 4,613,966 Less: Amount capitalised (585,092) (699,545) - - 5,646,947 3,916,589 5,707,560 4,613,966 7 TAXATION In Malaysia: - current taxation - current year 1,284, ,086 1,242, ,586 - deferred taxation (Note 28) 13,000-13, associated companies 12,685 3, ,310, ,935 1,255, ,586 The effective tax rate of the Group and Company for the financial year was higher than the statutory rate due to certain items not allowed for tax purposes. The effective tax rate of the Group is higher than the statutory rate due to losses incurred by certain subsidiaries. There are sufficient Malaysian (Section 108) tax credits available to frank approximately RM6,874,000 (2000: RM6,853,000) of the retained profits of the Company if paid out as dividends. Had the Company paid out the entire retained earnings as dividends, the additional tax payable will be approximately RM2,250,000 (2000: RM1,996,000). 8 DIVIDENDS Group and Company RM RM Proposed final: 2 sen gross per share less Malaysian income tax at 28%, based on the share capital of 44,100,000 ordinary shares of RM1 each (2000: 2 sen gross per share less Malaysian income tax at 28%) 635, ,040 There are no restrictions on the declaration of dividends. 9 EARNINGS PER SHARE The earnings per share is calculated by dividing the net profit attributable to shareholders by the 44,100,000 ordinary shares (2000: 44,100,000 ordinary shares) in issue during the financial year. 38

28 Notes On The Financial Statements - 30 June 2001 (Continued) 10 PROPERTY, PLANT AND EQUIPMENT Motor vehicles, Furniture Freehold Freehold Plant and tractors, and office Electrical plantations land Buildings machinery and trailers equipment installations Total RM RM RM RM RM RM RM RM Group Cost/Valuation At Cost 10,893,373 7,740,591 1,716,230 11,357,817 1,638, ,827 50,908 34,059,142 - Valuation 59,106, ,106,627 Additions ,280 17,000-10,953-46,233 Disposals/written-off - - (29,100) (76,379) (180,000) (14,105) - (299,584) At ,000,000 7,740,591 1,705,410 11,298,438 1,458, ,675 50,908 92,912,418 Accumulated depreciation At ,099 2,026,356 1,074, ,696 44,451 4,146,540 Charge for the year ,953 1,121, ,853 63,546 1,291 1,428,363 Disposals/written-off - - (29,100) (76,379) (155,100) (14,105) - (274,684) At ,952 3,071,697 1,117, ,137 45,742 5,300,219 Net book value At ,000,000 7,740, ,458 8,226, , ,538 5,166 87,612,199 39

29 Notes On The Financial Statements - 30 June 2001 (Continued) 10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Motor vehicles, Furniture Freehold Freehold Plant and tractors, and office Electrical plantations land Buildings machinery and trailers equipment installations Total RM RM RM RM RM RM RM RM Group Cost/Valuation At Cost 10,893, , , , ,793 50,908 13,058,991 - Valuation 59,106, ,106,627 Acquisition of subsidiary - 7,740, ,667 11,154, , ,717-20,544,956 Additions ,600 14, , , ,765 Disposals/written-off (26,867) (212,703) - (239,570) At ,000,000 7,740,591 1,716,230 11,357,817 1,638, ,827 50,908 93,165,769 Accumulated depreciation At , , ,305 97,543 42,837 1,484,822 Acquisition of subsidiary ,258 1,847, ,939 39,278-2,489,296 Charge for the year ,930 5, ,491 67,299 1, ,643 Disposals/written-off (1,797) (40,424) - (42,221) At ,099 2,026,356 1,074, ,696 44,451 4,146,540 Net book value At ,000,000 7,740, ,131 9,331, , ,131 6,457 89,019,229 40

30 Notes On The Financial Statements - 30 June 2001 (Continued) 10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Motor vehicles, Furniture Freehold Plant and tractors, and office Electrical plantations Buildings machinery and trailers equipment installations Total RM RM RM RM RM RM RM Company Cost/Valuation At Cost 10,893, , , , ,358 50,908 13,364,224 - Valuation 59,106, ,106,627 Additions - 18,280 17, ,252 Disposals/written-off - (29,100) (76,379) (55,500) (10,626) - (171,605) At ,000, , , , ,704 50,908 72,335,498 Accumulated depreciation At , , , ,706 44,451 1,580,913 Charge for the year - 27,600 6,272 78,058 39,242 1, ,463 Disposals/written-off - (29,100) (76,379) (55,500) (10,626) - (171,605) At , , , ,322 45,742 1,561,771 Net book value At ,000, ,402 35, , ,382 5,166 70,773,727 41