(5507-H) ANNUAL REPORT 2006

Transcription

1 (5507-H) ANNUAL REPORT 2006 LAND & GENERAL BERHAD (5507-H) Level 5, Block D, Sri Damansara Business Park, Persiaran Industri, Bandar Sri Damansara, Kuala Lumpur. Tel : Fax : Homepage : lgb@land-general.com

2 02 Corporate Information 03 Five-Year Performance Highlights 04 Corporate Diary 07 Directors Profile 10 Chairman s Statement 12 Managing Director s Review of Operations 15 Corporate Governance Statement CONTENTS 18 Additional Compliance Information 19 Audit Committee Report 22 Statement of Internal Control 26 Financial Statements 82 Analysis of Shareholdings 84 List of Properties 85 Notice of Annual General Meeting 86 Statement Accompanying Notice of 43 rd Annual General Meeting Proxy Form

3 2 CORPORATE INFORMATION DIRECTORS Datuk Oh Chong Peng Chairman G. Krishnan Managing Director General (Rtd) Tan Sri Borhan Hj Ahmad Dato Engr. Dr A. Bakar Jaafar Rita A/P Benoy Bushon Mohamad Lotfy Mohamad Noh SECRETARY Lim Fong Een (MAICSA ) ASSISTANT SECRETARY Hayati Aman Hashim (MIA 20107, MICPA 3067) EXECUTIVE COMMITTEE Datuk Oh Chong Peng (Chairman) G. Krishnan AUDIT COMMITTEE General (Rtd) Tan Sri Borhan Hj Ahmad (Chairman) Datuk Oh Chong Peng Dato Engr. Dr A. Bakar Jaafar NOMINATIONS COMMITTEE Datuk Oh Chong Peng (Chairman) General (Rtd) Tan Sri Borhan Hj Ahmad REMUNERATION COMMITTEE Dato Engr. Dr A. Bakar Jaafar (Chairman) General (Rtd) Tan Sri Borhan Hj Ahmad REGISTERED OFFICE Level 5, Block D Sri Damansara Business Park Persiaran Industri Bandar Sri Damansara Kuala Lumpur Tel : /8200 Fax : CORPORATE OFFICE Level 5, Block D Sri Damansara Business Park Persiaran Industri Bandar Sri Damansara Kuala Lumpur Tel : /8200 Fax : lgb@land-general.com Website : AUDITORS Ernst & Young Chartered Accountants LISTING (ORDINARY SHARES) Bursa Malaysia Securities Berhad SHARE REGISTRARS Symphony Share Registrars Sdn Bhd Level 26 Menara Multi-Purpose Capital Square No. 8 Jalan Munshi Abdullah Kuala Lumpur Tel : Fax : /2531

4 FIVE-YEAR PERFORMANCE HIGHLIGHTS * 2006 RM 000 RM 000 RM 000 RM 000 RM 000 Turnover Profit/(Loss) Before Taxation Taxation Minority Interests Net Profit/(Loss) Attributable To Shareholders Weighted Average Number Of Shares ( 000) Earnings/(Loss) Per Share (Sen) Shareholders Fund Issued and Paid Up Share Capital ( 000) Net Assets Per Share Attributable To Ordinary Equity Holders Of The Parent (Sen) 270, , , , ,493 (236,893) 36,184 16,163 (134,973) 96,370 (17,273) (14,690) (7,800) 5,502 (27,184) (754) 5,526 (1,659) (2,371) (49) (254,920) 27,020 6,704 (131,842) 69, , , , , ,634 (47.5) (22.6) ,677 ** 198,069 ** 279,372 ** 115,011 ** 174, , , , , , ** 36.8 ** 47.9 ** 19.3 ** 29.2 * Financial period 15 months ended 31 March 2005 ** The comparative amounts have been restated to incorporate prior year adjustments affected in 2006.

5 4 CORPORATE DIARY 2005/ May Announcement in relation to the proposed disposal by Sri Damansara Sdn Bhd, a wholly-owned subsidiary of the Company, of 2 parcels of freehold land measuring approximately 21.5 acres held under H.S. (D) PT No and H.S. (D) PT No 34082, Mukim Sungai Buloh, Daerah Petaling, Negeri Selangor to Indo Aman Bina Sdn Bhd for a total cash consideration of RM79,657, June Announcement in relation to the proposed disposal by Landgen Property Management Sdn Bhd, a wholly-owned subsidiary of the Company, of a lease in respect of a piece of land held under PN 9399 Lot 70, Seksyen 59 Bandar Kuala Lumpur to Auto Parking Inc Sdn Bhd for a total cash consideration of RM7.4 million 23 June Obtained approval from the Securities Commission in respect of the proposed disposals of the World Trade Centre, Melbourne and World Trade Centre Melbourne Pty Ltd 29 June Extraordinary General Meeting where the approval of the shareholders of the Company was obtained in relation to the disposals of the World Trade Centre, Melbourne and World Trade Centre Melbourne Pty Ltd 19 July Listing and quotation of additional 2,682,000 new ordinary shares of RM1 each of the Company to certain contractors and consultants of Lembah Beringin Sdn Bhd ( LBSB ) and Bandar Sungai Buaya Sdn Bhd ( BSB ), both wholly owned subsidiaries of the Company, as settlement amounts due by LBSB and BSB to the said contractors and consultants 20 July Announcement in relation to the proposed disposal by Sri Damansara Sdn Bhd, a wholly-owned subsidiary of the Company, of 8 parcels of freehold land measuring approximately 26.5 acres held under H.S. (D) PT No to H.S. (D) PT No 34079, Mukim Sungai Buloh, Daerah Petaling, Negeri Selangor to Indo Aman Bina Sdn Bhd for a total cash consideration of RM109,887, July Completion of the disposals of the World Trade Centre, Melbourne and World Trade Centre Melbourne Pty Ltd by Lang Australia Pty Ltd, a wholly-owned subsidiary of the Company 15 September Resignation of Encik Md Tarmuzi Md Salleh as director of the Company 28 September 42 nd Annual General Meeting Retirement of Vice Admiral (Rtd) Dato Seri Ahmad Ramli Hj Mohd Nor as director at the 42 nd Annual General Meeting of the Company 1 October Resignation of Dato Seri Dr Salleh Mohd Nor as director of the Company Appointment of Encik Mohamad Lotfy Mohamad Noh, a nominee of the Employees Provident Fund Board which is a major shareholder of the Company, as director of the Company 11 November Receivers & Managers were appointed in respect of all the assets and undertakings of Lembah Beringin Sdn Bhd, a wholly-owned subsidiary of the Company, pursuant to the powers contained in the Debentures dated 5 April 1995 and 25 October December Change of Registered Office of the Company to Level 5, Block D, Sri Damansara Business Park, Persiaran Industri, Bandar Sri Damansara, Kuala Lumpur 10 December Family Day at the Wet World Water Park, Shah Alam

6 CORPORATE DIARY 2005/2006 (cont d) (cont d) 14 December Announcement in relation to the proposed disposal by Syarikat Trimal Sdn Bhd, a wholly-owned subsidiary of the Company, of a parcel of vacant freehold land situated in Daerah Kuala Lumpur, Negeri Wilayah Persekutuan to Profit View Sdn Bhd for a total cash consideration of RM28 million 21 December Announcement in relation to the proposed disposal by Sri Damansara Sdn Bhd, a wholly-owned subsidiary of the Company, of a parcel of vacant freehold land situated in Bandar Sri Damansara, Daerah Petaling, Negeri Selangor to Greater Heights Development Sdn Bhd for a total cash consideration of RM24,498, December Winding-up petition served at the High Court on Lembah Beringin Sdn Bhd (Receivers & Managers Appointed), a wholly-owned subsidiary of the Company January Extraordinary General Meeting where the approval of the shareholders of the Company was obtained in relation to the disposal by Sri Damansara Sdn Bhd, a wholly-owned subsidiary of the Company, of 10 parcels of freehold land situated in Mukim Sungai Buloh, Daerah Petaling, Negeri Selangor to Indo Aman Bina Sdn Bhd for an aggregate cash consideration of RM189,545,570 1 March Completion of the disposal of the 10 parcels of freehold land situated in Mukim Sungai Buloh, Daerah Petaling, Negeri Selangor by Sri Damansara Sdn Bhd, a wholly-owned subsidiary of the Company 17 March The High Court granted the winding up order on Lembah Beringin Sdn Bhd (Receivers & Managers Appointed)(In Liquidation) 12 June Completion of the disposal of a lease in respect of a piece of land held under PN 9399 Lot 70, Seksyen 59 Bandar Kuala Lumpur by Landgen Property Management Sdn Bhd, a wholly-owned subsidiary of the Company 22 September 43 rd Annual General Meeting

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8 DIRECTORS PROFILE 7 Datuk Oh Chong Peng Chairman Independent Non-Executive Director Datuk Oh Chong Peng, a Malaysian aged 62, was appointed a non-executive Director of Land & General on 18 October 1999 and was appointed as Chairman in He undertook his accountancy training in London and qualified as a Chartered Accountant in He is a Fellow of the Institute of Chartered Accountants, England and Wales. Datuk Oh joined Coopers & Lybrand in London in 1969 and in Malaysia in He was a partner of Coopers & Lybrand Malaysia from 1974 until his retirement in Datuk Oh is currently also the Chairman of Malaysian Plantations Berhad (2006). He is also a Non-Executive Director of Star Publications (Malaysia) Berhad (1987), British American Tobacco (Malaysia) Berhad (1998), IJM Corporation Berhad (2002) and IJM Plantations Berhad (2003). He is a Government appointed member of the Labuan Offshore Financial Services Authority (LOFSA) (1996) and the Malaysian Accounting Standard Board (MASB) (2003). He is also a Trustee of the Huaren Education Foundation (1993) and UTAR Education Foundation (2002). His past appointments include being a Government appointed Member of the Kuala Lumpur Stock Exchange ( ); a Council Member ( ) and a past President ( ) of the Malaysian Institute of Certified Public Accountants (MICPA); a Director of the Rashid Hussain Berhad group of companies ( ); Renong Berhad ( ); Powertek Berhad ( ); and Nanyang Press Holdings Berhad ( ). G. Krishnan Managing Director Non-Independent Executive Director G. Krishnan, a Malaysian aged 66, was appointed Managing Director of Land & General on 1 September Prior to that, Mr Krishnan served as Executive Director of Antah Holdings Berhad ( Antah ) from April 1990 until his retirement from Antah on 31 October He commenced his career at ICI Malaysia Sdn Bhd ( ICI ) in 1963 and was appointed Director of ICI as well as that of Chemical Company of Malaysia Berhad in His last position at the ICI of Companies was as Managing Director of ICI Fertilizers Malaysia Sdn Bhd and ICI Industrial Chemicals Malaysia Sdn Bhd and Executive Director of Chemical Company of Malaysia Berhad. Mr Krishnan is a graduate of the Advanced Management Programme, Harvard Business School and also a Fellow of CPA Australia (FCPA) and has been its member since He is also a Council Member of the Malaysian branch of CPA Australia. Currently, a member of the Malaysia Australia Business Council, Mr. Krishnan was one of its founding council members. In addition, he is a Council member of the Federation of Malaysian Manufacturers (FMM) where he is Chairman of the Ethical Business Practice Committee. Mr. Krishnan is also the current President of the Malaysian International Chamber of Commerce and Industry (MICCI). (a) Details of any board committee to which he belongs: (a) Details of any board committee to which he belongs: (b) 1. Executive Committee (Chairman) 2. Audit Committee 3. Nominations Committee (Chairman) Any securities holdings in Land & General and its subsidiaries: (b) Executive Committee Any securities holdings in Land & General and its subsidiaries: None (c) None Any family relationship with any director and/or majority shareholder of Land & General: (c) Any family relationship with any director and/or majority shareholder of Land & General: None None (d) Any conflict of interest that he has with Land & General: (d) Any conflict of interest that he has with Land & General: None (e) None List of convictions for offences within the past 10 years other than traffic offences: (e) List of convictions for offences within the past 10 years other than traffic offences: None None

9 8 DIRECTORS PROFILE (cont d) General (Rtd) Tan Sri Borhan Hj Ahmad Independent Non-Executive Director General (Rtd) Tan Sri Borhan Hj Ahmad, a Malaysian aged 66, was appointed a Director of Land & General on 27 March He gained experience with various government authorities throughout his 37 years of service with the Government. He is also the Chairman of Perbadanan Hal Ehwal Bekas Angkatan Tentera, Baiduri Auto Sdn Bhd, Baiduri Auto Care Sdn Bhd, Fattuah group of companies and Kristal Security Sdn Bhd. He is currently the Deputy President of Persekutuan Tinju Amatur Malaysia. Dato Engr. Dr A. Bakar Jaafar Independent Non-Executive Director Dato Engr. Dr A. Bakar Jaafar, a Malaysian aged 56, was appointed a Director of Land & General on 18 October He is a Professional Engineer, and holds a Bachelor of Engineering (Hons) degree in Mechanical Engineering from the University of Newcastle, Australia, a Master of Environmental Science degree from Miami University, and a Doctorate in Marine Geography from the University of Hawaii@Manoa. He served in the Malaysian Civil Service for over 22 years in various positions including being Director-General of the Department of Environment from 1990 to He continues to serve the Malaysian Government as Elected-Member to the Commission on the Limits of Continental Shelf, UN HQ, New York ( )( ), an Adjunct Senior Fellow of the Maritime Institute of Malaysia, and as Advisor to the National Technical Committee on Continental Shelf. (a) Details of any board committee to which he belongs: (a) Details of any board committee to which he belongs: (b) (c) (d) (e) 1. Audit Committee (Chairman) 2. Nominations Committee 3. Remuneration Committee Any securities holdings in Land & General and its subsidiaries: None Any family relationship with any director and/or majority shareholder of Land & General: None Any conflict of interest that he has with Land & General: None List of convictions for offences within the past 10 years other than traffic offences: None (b) (c) (d) (e) 1. Audit Committee 2. Remuneration Committee (Chairman) Any securities holdings in Land & General and its subsidiaries: Direct interest - 110,000 ordinary shares in Land & General Any family relationship with any director and/or majority shareholder of Land & General: None Any conflict of interest that he has with Land & General: None List of convictions for offences within the past 10 years other than traffic offences: None

10 DIRECTORS PROFILE (cont d) 9 Rita A/P Benoy Bushon Non-Independent Non-Executive Director Rita A/P Benoy Bushon, a Malaysian aged 45, was appointed a Director of Land & General on 14 March She holds a Master in Business Administration degree from Henley / Brunel University, West London and an honours degree in Economic Statistics, Universiti Kebangsaan Malaysia. She joined the Employees Provident Fund Board ( EPF ) in 1984 and served in several departments in EPF prior to her appointment as General Manager of the Private Equity Division. Currently, she is also a Board member of the Badan Pengawas Pemegang Saham Minoriti Berhad, KFC Holdings (Malaysia) Berhad and Silverbird International Sdn Bhd. Mohamad Lotfy Mohamad Noh Non-Independent Non-Executive Director Mohamad Lotfy Mohamad Noh, a Malaysian aged 46, was appointed a Director of Land & General on 1 October He holds an Advanced Diploma in Business from the Universiti Teknologi MARA and a Diploma in Marketing (UK). Currently, he is the General Manager of the Property Investment Division, EPF. Prior to that, he has 15 years of experience in the property development industry having served three public listed property companies and has also worked for about 5 years in a couple of financial institutions. Encik Lotfy is also a Board member of Malaysian Resources Corporation Berhad. (a) Details of any board committee to which she belongs: (a) Details of any board committee to which he belongs: None None (b) Any securities holdings in Land & General and its subsidiaries: (b) Any securities holdings in Land & General and its subsidiaries: None None (c) Any family relationship with any director and/or majority shareholder of Land & General: (c) Any family relationship with any director and/or majority shareholder of Land & General: As Nominee Director representing EPF, a major shareholder of Land & General As Nominee Director representing EPF, a major shareholder of Land & General (d) Any conflict of interest that she has with Land & General: (d) Any conflict of interest that he has with Land & General: None None (e) List of convictions for offences within the past 10 years other than traffic offences: (e) List of convictions for offences within the past 10 years other than traffic offences: None None

11 10 CHAIRMAN S STATEMENT On behalf of the Board of Directors of Land & General Berhad ( L&G ), I am pleased to present the Annual Report and the Audited Financial Statements of the for the financial year ended 31 March As you read this report, you will note that the overall operating environment for the remains challenging while it continues to press ahead with efforts to consolidate and return to the path of steady growth. A MIXED YEAR There were several notable developments during the year under review, some of which represented progress towards restoring the financial health of the. Others were however significant setbacks. On the positive side, pursuant to the s Asset Disposal Programme under the Composite Debt Restructuring Scheme, Sri Damansara Sdn Bhd, a wholly-owned subsidiary of L&G, successfully completed the disposal of various parcels of land for a total cash consideration of RM189.5 million. As mentioned in the previous Annual Report, whollyowned subsidiary Lang Australia Pty Ltd completed the sale of the World Trade Centre, Melbourne, in July Other disposal transactions which were undertaken during the financial year were either completed after the current financial year end or are being finalised, the proceeds from which will further hasten reduction of the s debts. The result of all these disposals is that the had at 31 March 2006 a cash balance of RM317.4 million. Unfortunately, under the repayment scheme pursuant to the Debt Restructuring Agreement with the creditor banks, the has to earmark almost all this cash for repaying the banks on scheduled dates. On the negative side, Lembah Beringin Sdn Bhd ( LBSB ) (previously a wholly-owned subsidiary of L&G) suffered a severe set back. Firstly, a creditor bank holding a debenture placed LBSB under receivership on 11 November 2005 and secondly, another creditor bank obtained a High Court order on 17 March 2006 to wind-up LBSB. Consequently, your Board had no option but to deconsolidate LBSB and to make worst case scenario provisions against our carrying value of LBSB of approximately RM52.0 million. Provisions were also seriously reviewed and potential loss of approximately RM11.1 million was provided for in respect of securitized land at wholly-owned subsidiary, Clarity Crest Sdn Bhd, which had pledged its property against bank loans extended to LBSB many years ago. It is the Board s fervent hope that the court-appointed liquidator of LBSB will act expeditiously to look after the interests of all affected parties. It has been an uphill struggle for Bandar Sungai Buaya Sdn Bhd ( BSB ), a wholly-owned subsidiary of L&G, throughout the financial year as one of the creditor banks is still attempting(for the eighth time) to auction off a huge parcel of BSB s land. Consequently, the Board has made further substantial provision for impairment on BSB s land bank. Another negative aspect was that in the course of performing a review of the s assets and liabilities arising from the disposal and liquidation of various subsidiaries over the past few years, management found errors arising from the consolidation adjustments made in respect of the financial statements for prior years. The review showed that a substantial portion of the net consolidation adjustment errors of RM57.6 million related to balances dating back to 31 December These consolidation errors have resulted in prior year adjustments to the opening balances of shareholders equity and balance sheet captions of the current and comparative financial years. However, these errors do not affect the results of the current and comparative financial years. TURNAROUND Amidst all the pluses and minuses, the posted an audited profit before tax of RM96.4 million on a turnover of RM283.5 million for the 12 months to 31 March This represents a sharp improvement from a loss of RM135.0 million on a turnover of RM165.8 million recorded for the 15-months period previously.

12 CHAIRMAN S STATEMENT (cont d) 11 PROSPECTS Going forward, a robust 6% growth forecast for the Malaysian economy in 2006, coupled with the Ninth Malaysia Plan s thrust for affordable housing, augur well for the property sector. However, short-term investment sentiment among home buyers may be affected by expectations of further increases in interest rate, as well as the rising cost of living as a result of increases in petrol prices and electricity tariffs. L&G will continue to carefully carry out strategies for property development in the Bandar Sri Damansara area and in Australia and at the same time continue the Asset Disposal Programme to maximise returns to shareholders. APPRECIATION During the financial year, Vice Admiral (Rtd) Dato Seri Ahmad Ramli Hj Mohd Nor, Dato Seri Dr Salleh Mohd Nor and Encik Md Tarmuzi Md Salleh left the Board and I take this opportunity to thank them for their services to the and wish them all success in their future undertakings. On behalf of the Board, I would also like to welcome Encik Mohamad Lotfy Mohamad Noh, a nominee of the Employees Provident Fund, who came on Board in October My appreciation also goes to fellow Board members, the management and staff of L&G for their unstinting dedication, support and loyalty to the Company. Lastly, to all our stakeholders, particularly our valued shareholders, customers, business associates and relevant approving authorities, the Board thanks you for your patience, understanding and commitment to the Company in highly difficult circumstances. Datuk Oh Chong Peng Chairman August 2006

13 12 MANAGING DIRECTOR S REVIEW OF OPERATIONS OVERVIEW The financial year ended 31 March 2006 was marked by a number of initiatives and despite certain setbacks, Land & General Berhad ( L&G ) can take heart from a number of positive developments, especially in relation to efforts to reduce the s debts. At the corporate level, the Company performed up to expectations with continued success achieved in respect of the Asset Disposal Programme. All repayments under the Composite Debt Restructuring Scheme ( CDRS ) were made in a timely fashion. OVERVIEW OF GROUP RESULTS Profit/(Loss) Turnover Before Tax RM 000 RM 000 RM 000 RM 000 Property Division 278, , ,521 (151,053) Investment Division Timber 3,158 (1,545) Education 4,878 39, ,132 Others (60,934) 8, , ,773 97,522 (133,980) s share in associated companies & jointly controlled entities (1,152) (993) 96,370 (134,973) The CDRS debt was reduced by approximately RM68.7 million, or 19.1%, from RM358.9 million as at 31 March 2005 to RM290.2 million as at 31 March During the year under review, the was able to raise substantial cash for the repayment of the CDRS debt through the disposals of the World Trade Centre, Melbourne ( WTC ) and land parcels by wholly-owned subsidiaries, Lang Australia Pty Ltd and Sri Damansara Sdn Bhd ( SDSB ), respectively. Pursuant to the CDRS, all net sale proceeds from asset disposals by the under the Asset Disposal Programme are deposited in an escrow account until such time the scheduled repayments of the CDRS debt are due. The bulk of the sale proceed arising from the disposal of the WTC was utilized for the settlement of the mortgage of the WTC and the balance was used for the partial repayment of the CDRS debt. The has successfully disposed of several parcels of land in Bandar Sri Damansara for cash. Mainly executed and completed under the Asset Disposal Programme pursuant to the CDRS, they include 10 parcels of SDSB land measuring an aggregate total of about 48 acres which were sold for a total cash consideration of RM189.5 million and netted a gain of approximately RM83.8 million for the. Subsequent to the current financial year end, wholly-owned subsidiary, Landgen Property Management Sdn Bhd, completed the sale of a lease in respect of a parcel of land for a total cash consideration of RM7.4 million in June The has also undertaken two other disposal transactions during the current financial year and these transactions are expected to be completed by December KEY CONCERNS As the makes concerted efforts to ensure that key subsidiaries continue to perform while alleviating the problems faced by others and concurrently endeavours to meet debt repayments, bank lenders are pursuing legal actions and continuing with the process of auctioning off securitized land of certain subsidiaries. The has spared no effort in pursuing rehabilitation of Bandar Sungai Buaya Sdn Bhd ( BSB ), a wholly-owned subsidiary of L&G but negotiations with various interested parties have yet to produce any positive results.

14 MANAGING DIRECTOR S REVIEW OF OPERATIONS (cont d) 13 FINANCIALS For the financial year under review, the achieved a profit before tax of RM96.4 million, compared to a loss of RM135.0 million previously. A big slice of the profit is attributed to the gain arising from the disposal transactions completed during the current financial year. PROPERTY DIVISION Operations wise, Bandar Sri Damansara is pivotal, and further development of the township and other opportunities will continue to be actively pursued. Apart from the disposal of land parcels, we chalked up reasonably good sales in bungalow lots and the remaining Paradesa Tropika condo units. The bungalow lots - known as D sara Villas - were officially launched on 17 February 2006, and has achieved commendable response. With strategic marketing efforts, the Paradesa Tropika received positive response from the public and todate only a few units remain unsold. OVERVIEW OF PROPERTY DIVISION Last year, we brought to your attention the difficult situation faced by Lembah Beringin Sdn Bhd ( LBSB ) and BSB. Your Board regrets to inform you that the High Court had on 17 March 2006 granted an order to wind up LBSB. This was in response to a winding-up petition served on 29 December RM 000 RM 000 Turnover 278, ,784 Profit/(loss) before exceptional items 100,158 (71,547) Exceptional items: Gain on sale of PPE 85,616 Asset impairment (16,844) (69,722) Provision for forseeable loss on disposal of securitised land (11,087) Write down of development properties (322) (9,784) Profit/(Loss) before taxation 157,521 (151,053) Prior to that, on 11 November 2005, Receivers and Managers had been appointed by a bank lender in respect of all the assets and undertakings of LBSB pursuant to two debentures dated 5 April 1995 and 25 October There have been no new projects at Bandar Sungai Buaya and the activities are limited to on-going site maintenance and upkeep. BSB is also currently facing a serious cash flow problem and without fresh capital injection, no development can be expected. However, Management will continue to seek ways to revive the development. EDUCATION DIVISION Contribution from the Education Division, through Sekolah Sri Bestari, though continuing to perform satisfactorily, has been substantially reduced as a result of the divestment of the higher education arm in RELOCATION OF OFFICE OVERVIEW OF EDUCATION DIVISION RM 000 RM 000 Turnover 4,878 39,831 Profit Before Taxation ,132 In December 2005, L&G and its local subsidiaries relocated their offices to L&G s own office building. The registered address of L&G is therefore changed to Level 5, Block D, Sri Damansara Business Park, Persiaran Industri, Bandar Sri Damansara, Kuala Lumpur.

15 14 MANAGING DIRECTOR S REVIEW OF OPERATIONS (cont d) OUTLOOK Looking ahead, the Property Division - centred on Bandar Sri Damansara - will remain the mainstay of the s operations. The will further consolidate its operations to focus on the core activity of property development, both locally and overseas as and when opportunities arise. VALUED SUPPORT The Board and Management of the Company will strive to build on the momentum gained, and I take this opportunity to thank our customers, business partners, the authorities, all staff and, of course, the shareholders for their continued support. G. KRISHNAN Managing Director August 2006

16 CORPORATE GOVERNANCE STATEMENT 15 The Board of Land & General Berhad is fully committed to the principles and best practices of the Malaysian Code of Corporate Governance. The Board constantly strives to ensure that the highest standards of corporate governance are practised throughout the as a fundamental part of discharging its responsibilities to protect and enhance shareholder value and the financial performance of the Company. THE BOARD OF DIRECTORS The Board currently comprises six directors; five non-executive Directors and one executive Director. The Board s composition is well balanced with three independent non-executive Directors, two non-independent nonexecutive Directors and an executive Director. The Company is led and controlled by an experienced Board made up of professionals and entrepreneurs who have a diverse range of business, financial and technical skills and experience. This mix of skills and experience is essential for the successful attainment of the corporate plans and objectives of the. A brief profile of each Director is presented on pages 7 to 9 of this Annual Report. The roles of the non-executive Chairman and the Managing Director are clearly defined, with each carrying out his duties and responsibilities within the Company. The Chairman heads the Board and is responsible for ensuring the effectiveness of the Board. The Managing Director has overall executive responsibility for the day-to-day business operations and the implementation of the Board s decisions. In addition, Tan Sri Borhan is the Senior Independent Nonexecutive Director of the Company to whom concerns or queries regarding the can be directed. All the Directors have an equal responsibility for the s operations and corporate accountability. The independent non-executive Directors play a vital supporting role by contributing their knowledge and experience towards the development of the Company s objectives. They also provide a broader and independent view in the decision-making process. In the furtherance of their duties, all Directors have access to the advice and service of the Company Secretary, the internal auditors and, if so required, independent professional advisors, at the Company s expense. BOARD MEETINGS Board meetings are scheduled every quarter and additional meetings are convened as and when necessary. During the financial year ended 31 March 2006, a total of five Board meetings were held. The following is a record of attendance of the Board meetings by the Board of Directors: Directors No. of Meetings Attended Datuk Oh Chong Peng 5/5 G. Krishnan 5/5 General (Rtd) Tan Sri Borhan Hj Ahmad 5/5 Dato Engr. Dr A Bakar Jaafar 5/5 Rita A/P Benoy Bushon 5/5 Mohamad Lotfy Mohamad Noh* 2/2 Vice Admiral (Rtd) Dato Seri Ahmad Ramli Hj Mohd Nor** 2/3 Dato Seri Dr Salleh Mohd Nor** 3/3 Md Tarmuzi Md Salleh** 3/3 * appointed during the year ** retired/resigned during the year Board papers providing updates on operations, financial and corporate proposals and minutes of the Board Committees are circulated prior to each meeting. This is to give the Directors sufficient time to enable them to participate in the deliberations of the issues to be raised at the meetings and to make informed decisions.

17 16 CORPORATE GOVERNANCE STATEMENT (cont d) BOARD COMMITTEES To assist the Board in the discharge of its duties effectively, the Board has delegated certain functions to the following Committees, each operating within clearly defined terms of reference: i) Executive Committee The Executive Committee ( Exco ) comprises the Chairman and the Managing Director. The Exco deals with a wide range of matters involving inter alia corporate development proposals and major operational activities and issues before bringing such matters to the attention of the Board at the Board Meetings and/or, where appropriate, seeking approval from the Board as a whole. The Exco meetings are scheduled approximately once a month and, for the financial year ended 31 March 2006, the Exco met 7 times. ii) Audit Committee The Audit Committee, comprising wholly independent non-executive directors, is responsible for reviewing and monitoring the work of the s internal audit function as well as ensuring that an objective professional relationship is maintained with the external auditors. Further details of the Audit Committee are contained in the Audit Committee s Report in the next section of this Annual Report. iii) Remuneration Committee The Remuneration Committee, consisting exclusively of independent non-executive directors, is authorised to review, assess and recommend to the Board the remuneration of the executive and non-executive Directors in all forms, using other independent professional advice as necessary. The Remuneration Committee met once during the financial year under review. iv) Nominations Committee The Nominations Committee comprises entirely independent non-executive directors. The Nominations Committee is authorised to identify and recommend the appointment of new directors to the Board. However, decisions on the appointment of new directors are made by the Board of the Company. The Nominations Committee met twice during the financial year under review. RE-ELECTION OF DIRECTORS In accordance with the Articles of Association of the Company, all Directors who are appointed by the Board are subject to election by shareholders of the Company at the first Annual General Meeting after their appointment. The Articles also provide that one-third of all the remaining Directors be subject to re-election by rotation at each Annual General Meeting. DIRECTORS TRAINING All Directors of the Company have attended the Mandatory Accreditation Programme. Pursuant to the amendments to the Listing Requirements in relation to the Continuing Training Programme which came into effect on 1 January 2005, the Directors had decided that they shall continue to attend relevant training programmes conducted by external experts and in addition to this, internal management shall, from time to time, provide updates regarding any latest amendments pertaining to the listing requirements and statutory provisions or new regulations and accounting standards imposed by the relevant authorities. During the current financial year, the Directors have attended appropriate training programmes conducted by external experts as well as those by internal management to equip themselves with the knowledge to discharge their duties more effectively and to keep abreast of developments in the marketplace.

18 CORPORATE GOVERNANCE STATEMENT (cont d) 17 DIRECTORS REMUNERATION The executive director s remuneration comprises basic salary and allowances including other customary benefits made available to the. Any salary review takes into account market rates and the performance of the individual and the. The non-executive Directors remuneration comprises fees, which are linked to their expected roles and level of responsibilities. The Directors annual fees, which are determined by the Board as a whole, are approved by shareholders of the Company at each Annual General Meeting. The aggregate remuneration of the Directors of the Company categorised into appropriate components for the financial year ended 31 March 2006 is as follows: Benefits Directors Fees Salaries in kind Total RM RM RM RM Executive 590,000 32, ,000 Non-executive 321, ,000 The number of Directors of the Company whose total remuneration falls within the respective bands for the financial year ended 31 March 2006 is as follows: Number of Directors Non- Band Executive executive RM50,000 and below 6 RM50,001 to RM100,000 1 RM100,001 to RM150,000 1 RM600,001 to RM650,000 1 FINANCIAL REPORTING The Board aims to present a balanced and understandable assessment of the s financial position and prospects in all their reports to shareholders, investors and regulatory authorities. The assessment is achieved primarily through the quarterly financial results and by both the Chairman s Statement and Managing Director s Review of Operations in the Annual Report. The quarterly financial results are reviewed by the Audit Committee and approved by the Board before being released to the Bursa Malaysia. The Directors are also responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the, and for ensuring that the financial statements comply with the Companies Act, 1965 and applicable approved Accounting Standards in Malaysia. INTERNAL CONTROLS The Directors acknowledge their responsibility to maintain a sound system of internal controls covering not only financial controls but also operational and compliance controls as well as risk management. This system is designed to manage, rather than eliminate, the risk of failure to achieve the s corporate objectives, as well as to safeguard shareholders investments and the s assets. The Board seeks regular assurance on the continuity and effectiveness of the internal control system through independent review by the internal and external auditors. To enhance risk management, the Company set up a Risk Management Committee in April 2002, which completed formalising the Risk Management Policy and Framework for the by the end of Details of the role and function of the Risk Management Committee are disclosed in the Statement on Internal Control in the following section of this Annual Report.

19 18 CORPORATE GOVERNANCE STATEMENT (cont d) RELATIONSHIP WITH EXTERNAL AUDITORS The has established a transparent and professional relationship with the external auditors. The Audit Committee recommends the appointment of the external auditors and their remuneration. The appointment of the external auditors is subject to the approval of the shareholders at the general meeting of the Company whilst the Board determines their remuneration. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS The Board recognises the importance of timely dissemination of information to shareholders and investors to ensure that they are well informed of all major developments of the Company and the. Such information is communicated to shareholders and investors through various disclosures and announcements to the Bursa Malaysia, including the quarterly financial results, annual reports and where appropriate, circulars and press releases. The Annual General Meeting represents the principal forum for dialogue and interaction with shareholders. At the Annual General Meeting, the Board encourages and welcomes participation from shareholders to ask questions regarding the resolutions being proposed at the meeting and also other matters pertaining to the business activities of the. The Directors are present during these meetings to respond to questions raised by shareholders. Apart from the mandatory announcements through the Bursa Malaysia, the Company also provides the s corporate, financial and non-financial information at its website: STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS Directors are required by company law to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the and of the Company at the end of the financial year and of the results of the and of the Company of the financial year then ended. In preparing those financial statements for the year ended 31 March 2006, the Directors have: adopted suitable accounting policies and then applied them consistently; made judgements and estimates that are prudent and reasonable; ensured applicable accounting standards have been followed, subject to any material departures and explained in the financial statements; and prepared the financial statements on the going concern basis unless it is inappropriate to presume that the and the Company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the and of the Company and to enable them to ensure that the financial statements comply with the Companies Act, The Directors are also responsible for safeguarding the assets of the and of the Company and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities. ADDITIONAL COMPLIANCE INFORMATION Material Contracts There were no material contracts subsisting at the end of the financial year entered into since the end of the previous financial period by the Company and its subsidiaries which involve the interests of directors and major shareholders. Sanctions and/or Penalties Imposed There were no fines or sanctions imposed on the Company and its subsidiaries, directors or management by the relevant regulatory authorities. Non-audit Fee The amount of non-audit fee payable to the external auditors for the financial year ended 31 March 2006 has been reflected under Note 9 to the Financial Statements.

20 AUDIT COMMITTEE REPORT 19 The Audit Committee was established on 8 August 1991 to act as a Committee of the Board to fulfil its fiduciary responsibilities relating primarily to business ethics, policies and practices, and financial management and controls. MEMBERS AND MEETINGS The Audit Committee held five (5) meetings during the financial year ended 31 March The members of the Audit Committee and the record of their attendance are as follows: Directors/Members Position on the Board No. of Meetings Attended 1 General (Rtd) Tan Sri Borhan Hj Ahmad Chairman of Audit Committee, 5/5 Independent Non-Executive Director 2 Datuk Oh Chong Peng Independent Non-Executive Director 5/5 3 Dato Engr. Dr A. Bakar Jaafar Independent Non-Executive Director 5/5 4 Datuk Dr Salleh Mohd Nor (1) Independent Non-Executive Director 3/3 5 Vice Admiral (Rtd) Dato Seri Ahmad Ramli Hj Mohd Nor (2) Independent Non-Executive Director 2/3 Note : (1) Datuk Dr Salleh Mohd Nor resigned as Audit Committee Member w.e.f. 1 st October (2) Vice Admiral (Rtd) Dato Seri Ahmad Ramli Hj Mohd Nor retired as Audit Committee Member w.e.f. 28 th September To both Datuk Dr Salleh Mohd Nor and Vice Admiral (Rtd) Dato Seri Ahmad Ramli Hj Mohd Nor, who will no longer hold membership of the Audit Committee, and on behalf of the Board, I would like to record our sincere thanks and appreciation for their past contributions to the Committee. TERMS OF REFERENCE The terms of reference of the Audit Committee are as follows: Membership 1. The Audit Committee shall be appointed by the Board from amongst their number and shall consist of at least three members, with the majority being independent directors. 2. At least one member of the Committee shall be a member of the Malaysian Institute of Accountants or one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountants Act The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an Independent Non-Executive Director. 4. In the event of any vacancy in the Audit Committee, within three months of that event, the Board shall appoint new members to make up the minimum number of three members. 5. No alternate director shall be appointed as a member of the Audit Committee. 6. The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three years. Authority The Audit Committee is authorised by the Board: 1. To investigate any activity within its terms of reference; 2. To have the resources required to perform its duties; 3. To have full and unrestricted access to information about the Company and the ; 4. To have unrestricted access to both the internal and external auditors and to all employees of the ; and 5. To obtain external legal or other independent professional advice as necessary.

21 20 AUDIT COMMITTEE REPORT (cont d) TERMS OF REFERENCE (cont d) Functions The functions of the Audit Committee shall be: 1. To review with the external auditors: the audit plan their evaluation of the system of internal controls their audit reports, to ensure that their recommendations regarding management weaknesses are implemented the annual financial statements and recommend the adoption of the financial statements the audit fees 2. To review: the s internal control procedures, including organisational and operational controls the internal audit department s scope of work and functions the Annual Audit Plan the results of audit findings and other relevant reports the assistance given by the Company s officers to the internal auditors the regular management information and to ensure that audit recommendations regarding management weaknesses are effectively implemented any related party transactions that may arise within the Company and the the s quarterly financial results, in conjunction with the s announcement to the Bursa Malaysia Securities Berhad 3. To review and recommend the appointment of the external auditors. 4. To undertake such other functions as may be agreed to by the Audit Committee and the Board. Meetings 1. Meetings shall be held not less than four times a year. 2. The quorum for each meeting shall be two members present and a majority must be independent directors. 3. The Managing Director, the Head of Finance and Accounts, and the Head of Internal Audit shall normally attend the meetings. Other Board members and employees may attend the meetings upon the invitation of the Audit Committee. 4. At least once a year, the Audit Committee shall meet with the external auditors without any executive directors present. 5. The Company Secretary shall be the Secretary of the Audit Committee. Minutes of each meeting shall be kept and distributed to each member of the Audit Committee and of the Board. 6. The Chairman of the Audit Committee shall report on each meeting to the Board.

22 AUDIT COMMITTEE REPORT (cont d) 21 SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION AND THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR ENDED 31 MARCH 2006 Internal Audit Function The Company has an Internal Audit Department whose principal responsibility is to undertake regular and systematic reviews of the systems of internal controls, so as to provide reasonable assurance that such systems continue to operate effectively and efficiently. During the financial year, the following activities were carried out by the Internal Audit Department: 1. Reviewed and appraised the soundness, adequacy and application of accounting, financial and other controls, and promoted effective control in the Company and the ; 2. Ascertained the extent of compliance with established policies, procedures and statutory requirements; 3. Ascertained the extent to which the Company s and the s assets are accounted for and safeguarded from losses of all kinds; 4. Carried out ad hoc audit assignments and special reviews; 5. Recommended improvements to the existing system of controls; and 6. Identified opportunities to improve the operations of and processes within the. Summary of Activities of the Audit Committee During the financial year ended 31 March 2006, the Audit Committee performed its duties as set out in its terms of reference. The main activities undertaken by the Audit Committee were as follows: 1. Reviewed the audit plans for the prepared by the internal auditor; 2. Reviewed the external auditors scope of work and audit plans for the year; 3. Reviewed the internal audit reports, recommendations and management s response, and discussed actions taken with Management to improve the internal controls system based on internal audit findings; 4. Reviewed the quarterly Risk Assessment exercise to assist the Board in identifying and managing the s risks; 5. Reviewed the quarterly unaudited financial results announcements with the Managing Director and Head of Finance & Accounts before recommending it for the Board s approval; and 6. Reviewed the audited financial statements of the Company and the prior to the submission to the Board for their consideration and approval (to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards issued by MASB). GENERAL (RTD) TAN SRI BORHAN HJ AHMAD Chairman of Audit Committee (Independent Non-Executive Director) 28 July 2006

23 22 STATEMENT OF INTERNAL CONTROL INTRODUCTION The Board of Directors of Land & General Berhad is committed to maintaining a sound system of internal controls for the and is therefore pleased to provide the Statement of Internal Control, which outlines the key elements of this system within the. BOARD S RESPONSIBILITY The Board of Directors recognises the importance of sound internal controls and risk management practices for good corporate governance. The Board has the overall responsibility for the s system of internal controls and risk management practices, which are reviewed continuously for their adequacy and integrity. However it should be noted that such systems are designed to manage rather than eliminate risks that may impede the achievement of the s business objectives. The systems can therefore only provide reasonable, and not absolute, assurance against any material misstatement or losses. The has in place an on-going process for identifying, evaluating, monitoring and managing significant risks that may affect the achievement of business objectives throughout the year under review and up to the date of this report. This process is regularly reviewed by the Board through its Audit Committee, which dedicates separate time for discussion of this matter. RISK MANAGEMENT POLICY AND FRAMEWORK The Risk Management Committee, comprising members of senior management, was established in April The Committee has developed a Risk Management Policy and Framework for the. The Board approved and accepted this risk policy, which now forms an integral part of good management practice for the. The purpose of this policy is to foster a proactive risk management culture within the s companies and departments. Compliance to the risk policy is mandatory and is subjected to close monitoring by the Board via the Internal Audit Department. The Board has delegated the responsibility of reviewing the effectiveness of risk management to the Risk Management Committee. The effectiveness of the risk management system is monitored and evaluated by all levels of management, i.e. the Chief Risk Officers, on an ongoing basis. All employees are encouraged to identify weaknesses so as to improve efficiency and effectiveness within the. In embedding the risk management policy into the s management system, each Chief Operating Officer and/or the Head of Department acts as the Chief Risk Officer for his business unit and/or department. As such it is his responsibility for promoting and managing risk management and control systems within his unit and/or department. The year has seen much progress since the establishment of the risk management policy. Resources were put in place to ensure that the objectives of this policy were met. In its efforts to achieve these objectives, the Risk Management Committee carried out the following activities: Undertook the third revision of the Risk Management Policy in June 2005 which was duly completed in March This policy which was originally issued in March 2003 will undergo revision on an annual basis. The next revision (i.e. the fourth revision) is expected to be completed by March 2007 Developed appropriate risk policies and procedures. As the faces a variety of risks in conducting its businesses, policies and procedures have been developed to enable it to respond to these risks. Formal procedures now exist to ensure that critical success factors are identified as part of the planning process. The risk profiles of each aspect of operations, and changes in risk factors, are taken into consideration during the budgeting and planning process Reviewed the key business risks facing the including operational, legal, regulatory, financial, human resources, tax, technology and market risks identified in the revised Risk Management Policy. The monitoring, reviewing and reporting framework will give reasonable assurance that there is an acceptable level of risks throughout the s business An on-going risk management process has been instituted at all levels of management within the organisation to identify and manage existing and new significant risks faced by the