Contents
02 .. Notice of Annual General Meeting
06 .. Statement Accompanying Notice of Annual General Meeting
07 .. Corporate Information 08 .. Corporate Structure 09 .. Chairman’s Statement 12 .. Profile of Directors
15 .. Statement of Corporate Governance 21 .. Report of The Audit Committee 26 .. Statement on Internal Control
28 .. Statement of Directors’ Responsibilities 29 .. Additional Compliance Information 31 .. Financial Statements
73 .. Properties Owned By The Group 74 .. Analysis of Shareholdings
75 .. Directors’ Interests In The Company 76 .. 30 Largest Securities Accounts Holders
Proxy Form Rimbunan Sawit
NOTICE IS HEREBY GIVEN that the Second Annual General Meeting of the Company will be held at the Auditorium Room, Ground Floor, No. 66-78, Pusat Suria Permata, Jalan Upper Lanang, C.D.T. 123, 96000 Sibu, Sarawak on Tuesday, 30 January 2007 at 11.30 am to transact the following businesses :-
A G E N D A
1. To receive the Audited Financial Statements of the Company for the financial year ended 31 August 2006 together with the Reports of the Directors and Auditors thereon.
2. To declare a first and final dividend of 3 sen per share, tax exempt, for the financial year ended 31 August 2006.
3. To approve the payment of Directors’ fees of RM19,000.00 for the financial year ended 31 August 2006.
4. To re-elect the following Directors retiring pursuant to Article 88 of the Company’s Articles of Association, and being eligible offer themselves for re-election :-
(i) Mr. Tiong Kiong King;
(ii) Mr. Tiong Chiong Ong;
(iii) Mr. Tiong Chiong Ie;
(iv) Mr. Bong Wei Leong; and (v) Mr. Tiong Ing Ming.
5. To consider and if thought fit, to pass the following resolution :-
“THAT pursuant to Section 129(6) of the Companies Act, 1965, YBhg. Tan Sri Datuk Diong Hiew King @ Tiong Hiew King be hereby re-appointed as a director of the Company to hold office until the conclusion of the next Annual General Meeting.”
6. To re-appoint Messrs. Hii & Lee as Auditors for the ensuing year and to authorise the Directors to fix their remuneration.
7. As special businesses :-
To consider and, if thought fit, pass the following resolutions as ordinary resolutions :- Ordinary Resolution No. 1
• Authority to issue shares pursuant to Section 132D of the Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject always to the Company’s Articles of Association and approvals of the relevant authorities, the Directors be hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Directors be hereby empowered to obtain approval for the
Resolution 1
Resolution 2
Resolution 3 Resolution 4 Resolution 5 Resolution 6 Resolution 7
Resolution 8
Resolution 9
Resolution 10
NOTICE OF ANNUAL GENERAL MEETING
Ordinary Resolution No. 2
• Proposed shareholders’ ratification for recurrent related party transactions of a revenue or trading nature
“THAT all recurrent related party transactions of a revenue or trading nature entered into by the Company and/or its subsidiaries (“RSB Group”) with the related parties, as set out in point 3(b) (pages 3 to 6) of the Circular to Shareholders dated 8 December 2006 (“Circular”), from the date of listing of the Company, 28 June 2006 up to the date of the Second Annual General Meeting of the Company, which are necessary for the Group’s day-to-day operations, be hereby approved and ratified.”
Ordinary Resolution No. 3
• Proposed shareholders’ mandate for recurrent related party transactions of a revenue or trading nature
“THAT approval be hereby given to the Company and/or its subsidiaries to enter into any of the category of recurrent related party transactions of a revenue or trading nature as outlined in point 3(b) (pages 3 to 6) of the Circular, with the specific related parties mentioned therein which are necessary for the RSB Group’s day-to-day operations subject further to the following :-
(a) the transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those available to the public and not to the detriment of the minority shareholders; and
(b) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial period where :-
(i) the consideration, value of the assets, capital outlay or costs of the aggregated transactions is equal to or exceeds RM1 million; or
(ii) any one of the percentage ratios of such aggregated transactions is equal to or exceeds 1%, whichever is the lower,
and amongst others, based on the following information :-
• the type of recurrent transactions made; and
• the names of the related parties involved in each type of the recurrent transactions made and their relationship with the Company.
AND THAT, such approval shall continue to be in force until :-
(a) the conclusion of the next annual general meeting (“AGM”) of the Company; or
(b) the expiration of the period within which the next AGM of RSB subsequent to the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the “Act”) [but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act]; or (c) revoked or varied by resolution passed by the shareholders in general meeting;
Resolution 11
Resolution 12
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
whichever is the earlier;
AND THAT the Directors of the Company be hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to the proposed shareholders’
mandate.
AND THAT the estimated value given on the recurrent related party transactions specified in point 3(b) of the Circular being provisional in nature, the Directors of the Company be hereby authorised to agree to the actual amount or amounts thereof provided always that such amount or amounts comply with the review procedures set out in point 3(e) of the Circular.”
8. To transact any other business of which, due notice shall have been given in accordance with the Companies Act, 1965 and the Articles of Association of the Company.
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
NOTICE IS ALSO HEREBY GIVEN that a first and final dividend of 3 sen per share, tax exempt, in respect of the financial year ended 31 August 2006, if approved at the forthcoming Second Annual General Meeting, will be paid on 19 March 2007 to Depositors whose names appear in the Record of Depositors on 21 February 2007.
A Depositor shall qualify for entitlement only in respect of :-
(a) Shares transferred to the Depositor’s securities account before 4.00 pm on 21 February 2007 in respect of transfers; and (b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia
Securities Berhad.
By order of the Board
Toh Ka Soon (MAICSA 7031153) Voon Jan Moi (MAICSA 7021367) Joint Company Secretaries Date : 8 January 2007 Sibu
Notes :-
1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.
2. To be valid, this form, duly completed must be deposited at the registered office of the Company at No. 66-78, Pusat Suria Permata, Jalan Upper Lanang 12A, 96000 Sibu, Sarawak not less than 48 hours before the time for holding the
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with.
4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
5. If the appointor is a corporation this form must be executed under its common seal or under the hand of an officer or attorney duly authorised.
6. Explanatory Notes on Special Businesses :-
Ordinary Resolution in relation to Section 132D of the Companies Act, 1965
The proposed resolution No. 10 in relation to authority to issue shares pursuant to Section 132D of the Companies Act, 1965, if passed, will empower the Directors to issue and allot shares up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being, for such purposes as the Directors consider would be in the interests of the Company. This authority unless revoked or varied at a general meeting will expire at the next annual general meeting. With this authority, the Company will be able to raise capital from the equity market in a shorter period of time and the costs to be incurred will also be lower as the need to convene an extraordinary general meeting will be dispensed with.
Ordinary Resolution in relation to proposed shareholders’ ratification for recurrent related party transactions of a revenue or trading nature
The proposed resolution No. 11, if passed, will empower the Company to ratify all recurrent related party transactions of a revenue or trading nature (“RRPT”) that have been entered into by the RSB Group with the mandated related parties as identified in point 3(b) (pages 3 to 6) of the Circular, since the date of listing of the Company, 28 June 2006 up to the date of the Second Annual General Meeting of the Company, which are necessary for the Group’s day-to-day operations.
Ordinary Resolution in relation to proposed shareholders’ mandate for RRPT
Paragraph 10.09 of Bursa Malaysia Securities Listing Requirements states that with regard to related party transactions involving recurrent transactions of a revenue or trading nature which are necessary for its day-to-day operations, the public listed company may seek a shareholders’ mandate.
The proposed resolution No. 12, if passed, will authorise the Company and each of its subsidiaries to enter into RRPT with the mandated related parties as identified in point 3(b) (pages 3 to 6) of the Circular, which are necessary for the RSB Group’s day-to-day operations, provided that such transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those available to the public and not to the detriment of the minority shareholders.
By obtaining the shareholders’ mandate, the necessity to convene separate meetings from time to time to seek shareholders’
approval as and when such recurrent related party transactions occur would not arise. This would reduce substantial administrative time and costs associated with the convening of such meetings without compromising on the corporate objectives of the RSB Group or adversely affecting the business opportunities available to the RSB Group.
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
1. Names of Directors standing for re-appointment or re-election
The Directors who are standing for re-appointment or re-election at the Second Annual General Meeting of the Company are :-
(i) Tan Sri Datuk Diong Hiew King @ Tiong Hiew King;
(ii) Mr. Tiong Kiong King;
(iii) Mr. Tiong Chiong Ong;
(iv) Mr. Tiong Chiong Ie;
(v) Mr. Bong Wei Leong; and (vi) Mr. Tiong Ing Ming.
2. Profile of Directors who are standing for re-appointment or re-election
Further details of Directors who are standing for re-appointment or re-election at the Second Annual General Meeting are available on pages 12 to14 of this annual report.
3. Details of attendance of Directors at Board Meetings
There was only one (1) Board of Directors’ Meeting held during the financial year ended 31 August 2006.
Details of attendance at Board Meeting are outlined on page 16 of this annual report.
4. Place, date and time of the Second Annual General Meeting
STATEMENT ACCOMPANYING NOTICE OF
ANNUAL GENERAL MEETING
BOARD OF DIRECTORS
Tan Sri Datuk Diong Hiew King @ Tiong Hiew King (Executive Chairman)
Tiong Kiong King
(Non-Independent Non-Executive Vice Chairman) Tiong Chiong Ong
(Managing Director) Tiong Chiong Ie
(Non-Independent Non-Executive Director) Bong Wei Leong
(Independent Director) Tiong Ing Ming (Independent Director)
COMPANY SECRETARIES
Toh Ka Soon (MAICSA 7031153) Voon Jan Moi (MAICSA 7021367)
REGISTERED OFFICE
No. 66-78, Pusat Suria Permata Jalan Upper Lanang 12A 96000 Sibu, Sarawak Tel. No. : 084-216155 Fax No. : 084-215217
HEAD OFFICE
No. 85 & 86, Pusat Suria Permata Jalan Upper Lanang 12A
96000 Sibu, Sarawak Tel. No. : 084-218555 Fax No. : 084-219555
E-mail address: [email protected]
CORPORATE INFORMATION
SHARE REGISTRAR
Symphony Share Registrars Sdn. Bhd.
Level 26, Menara Multi-Purpose Capital Square
No. 8, Jalan Munshi Abdullah 50100 Kuala Lumpur
Tel. No. : 03-27212222
Fax No. : 03-27212530 / 27212531
AUDITORS
Hii & Lee (AF : 0123) Chartered Accountants No. 1, 2nd Floor Lorong Pahlawan 7A2 Jalan Pahlawan 96000 Sibu, Sarawak
STOCK EXCHANGE LISTING
Listed on Main Board of Bursa Malaysia Securities Berhad Stock name : RSAWIT
Stock code : 5113
PRINCIPAL BANKERS
RHB Bank Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad
CORPORATE STRUCTURE
RIMBUNAN SAWIT BERHAD
(COMPANY NO. 691393-U)
(100%) Midas Plantation Sdn. Bhd.
(Company No. 671956-A)
R.H. Plantation Sdn. Bhd. 100%
(Company No. 153619-A)
Timrest Sdn. Bhd. 100%
(Company No. 168720-D)
Rimbunan Sawit Holdings Berhad 100%
(Company No. 667071-H)
CHAIRMAN’S STATEMENT
O n behalf of the Board of Directors, I am pleased to present the annual report of Rimbunan Sawit Berhad (“the Group”) for the financial year ended 31
stAugust, 2006.
TAN SRI DATUK DIONG HIEW KING @ TIONG HIEW KING
FINANCIAL PERFORMANCE
For the financial year under review, the Group generated revenue of RM59.32 million, profit before taxation of RM11.60 million and profit after tax of RM8.08 million with earnings per share of 12.41 sen and net assets of 66 sen per share.
CORPORATE DEVELOPMENT
Rimbunan Sawit Berhad made its debut in the Main Board of Bursa Malaysia Securities Berhad on 28th June, 2006. The Group has about 13,663 hectares of plantation land of which 10,231 hectares are matured. The Group has also upgraded its palm oil mill which is strategically located within the plantation in Miri from a capacity of 40 metric tonnes per hour to 80 metric tonnes per hour. The increase in the installed capacity would cater to the future growth of the palm oil mill. While focusing on improving the yield and increase in production, the Group also focused on reducing the cost of operations to ensure that the whole production processes are efficient and effective.
OPERATIONS REVIEW
For the financial year under review, the Group production of fresh fruit bunches (“FFB”) was 144,634 metric tones with an average annual yield of 14.14 metric tonnes per hectare (“ha”). Production of crude palm oil (“CPO”) was 68,711 metric tonnes and palm kernel (“PK”) was 14,734 metric tones, with oil extraction rate (“OER”) and kernel extraction rate (“KER”) of 21.51%
and 4.61% respectively. The Group continues to look into measures to further improve the OER and KER at the mill, which include stringent grading of FFB at the estates and the mill, close liaison and co-operation between the mill and plantations to ensure that FFB sent for processing were of optimal ripeness. In addition, the Group also ensures that the harvested FFB including loose fruits are delivered to the mill timely.
The FFB production of the Group is expected to increase over the next few years with the relatively young palms coming to maturity and their yields improving. The Group is also in the process of developing 1,911 ha of its land bank to enlarge its planted area.
AGE PROFILE OF OIL PALM TREES AS AT 31 AUGUST 2006
YEARS (YRS) AREA (HA)
Below 5 yrs 347
Yrs 6 – 10 yrs 4,722
Yrs 11 – 15 yrs 4,974
Above 16 yrs 188
Total: 10,231
======
HUMAN RESOURCE DEVELOPMENT
The Group had recruited 36 additional staff to strengthen the existing management and plantation team. The Group is committed to its most valuable assets, its employees. As such various training and courses were initiated across all levels. In addition, the Group believes in training, skills development and acquiring of knowledge particularly in managing employees and estates’
workers relationship to enhance team building efforts.
CORPORATE SOCIAL RESPONSIBILITY
The Group continues to carry out industrial training programmes for under-graduates students from various universities in the country ranging from two to four months attachment in the plantation and palm oil mills. In the course of the year, a number of community and charitable projects were organized and implemented for the benefit of the society.
OUTLOOK AND PROSPECTS
Looking forward, the Group will continue to rationalize, consolidate business operating units in addition to identifying plantation land for acquisitions and continuous training of human capital.
The palm oil prices are anticipated to remain buoyant in the coming year with increasing demand from India and China and coupled with an increase in usage of palm oil as bio-diesel fuel.
Despite the challenges attributed by increasing in fuel prices, the Group will focus on enhancing production yield, improving quality of FFB, training of its workers and managing its cost of production effectively to maintain its competitiveness.
Malaysia continue to experience positive growth in 2006 and for 2007, Gross Domestic Product (GDP) is forecasted at 5.8% with this healthy growth of the economy, barring any unforeseen events, the Group is confident of delivering another year of improved performance.
CHAIRMAN’S STATEMENT (CONT’D)
DIVIDEND
The Board has deliberated upon the financial performance of the Group and taking into account of reinvesting its profits to sustain growth, the Board proposes a first and final tax exempted dividend of 3 sen per ordinary share amounting to RM3.85 million for the financial year ended 31st August, 2006.
ACKNOWLEDGEMENT
On behalf of the Board of Directors, I would like to express my sincere appreciation and thanks to my fellow directors, management and employees for their dedicated performance, strong commitment and contributions towards the growth of the Group. I also wish to thank our customers, bankers, business associates, advisers, shareholders and the authorities for their support and endorsement.
Tan Sri Datuk Tiong Hiew King Executive Chairman
CHAIRMAN’S STATEMENT (CONT’D)
TAN SRI DATUK DIONG HIEW KING @ TIONG HIEW KING
Aged 71, Malaysian, Executive Chairman
Tan Sri Datuk Diong Hiew King @ Tiong Hiew King is a businessman with vast and extensive experience in various business sectors including newspaper publishing, information technology, timber harvesting, timber processing, tree plantation and oil palm plantation. He was appointed to the Board of Rimbunan Sawit Berhad (“RSB”) on 14 February 2006 and was appointed as Executive Chairman on 15 February 2006.
Over the years, Tan Sri Datuk Tiong has started and built up the Rimbunan Hijau Group of Companies, a large diversified conglomerate which has interests in various businesses in Malaysia as well as outside Malaysia. Currently, he is the Executive Chairman and Managing Director of the Rimbunan Hijau Group. Tan Sri Datuk Tiong also sits on the boards of Sin Chew Media Corporation Berhad and other private limited companies.
During the financial year ended 31 August 2006, Tan Sri Datuk Tiong attended the only Board meeting held. His shareholdings
PROFILE OF DIRECTORS
From left to right:
Mr. Tiong Ing Ming, Mr. Tiong Kiong King, Tan Sri Datuk Diong Hiew King@Tiong Hiew King, Mr. Tiong Chiong Ong, Mr. Tiong Chiong Ie, Mr. Bong Wei Leong
TIONG KIONG KING
Aged 59, Malaysian, Non-Independent Non-Executive Vice Chairman
Mr. Tiong Kiong King is a businessman and was appointed to the Board of RSB on 14 February 2006. Subsequently, he was appointed as Non-Independent Non-Executive Vice Chairman on 15 February 2006. He is also the chairman of Remuneration and Nomination Committees.
Mr. Tiong joined the Rimbunan Hijau Group in 1975 where he has held various positions including being a Director in one of the subsidiaries of RSB since December 1997. He has more than 35 years of managerial experience in the timber industry. Currently, he is the President for Sibu Chinese Chamber of Commerce and Industry. Mr. Tiong also sits on the board of Subur Tiasa Holdings Berhad and several private limited companies.
Mr. Tiong has attended the only Board meeting held during the financial year ended 31 August 2006. His shareholdings in RSB Group as at 30 November 2006 are disclosed in page 75 of this annual report.
TIONG CHIONG ONG
Aged 48, Malaysian, Managing Director
Mr. Tiong Chiong Ong is a businessman. He was appointed to the Board of RSB on 14 February 2006 and was appointed as Managing Director of RSB on 15 February 2006. Mr. Tiong graduated with a Bachelor of Law and Economics from Monash University, Australia in 1984 and joined RH Group in 1986. He has more than 15 years of experience in various capacities in the plantation and timber industries. He is also the chairman of Risk Management Committee and a member of Audit Committee.
Currently, Mr. Tiong is an associate member of the CPA Australia and a member of the Victorian and Sarawak Bar and the Institute of Approved Company Secretaries. He also holds directorship in EON Bank Berhad and several private limited companies.
During the financial year ended 31 August 2006, Mr. Tiong has attended the only Board meeting held. His shareholdings in RSB Group as at 30 November 2006 are disclosed in page 75 of this annual report.
TIONG CHIONG IE
Aged 36, Malaysian, Non-Independent Non-Executive Director
Mr. Tiong Chiong Ie, a businessman, was appointed to the Board of RSB on 14 February 2006. He graduated with a Bachelor of Business in Information System from Monash University, Australia in 1994. Mr. Tiong joined the Rimbunan Hijau group of companies in 1996 and has more than 10 years of managerial experience in the timber, transportation provider and shipping industry. He is also a member of Remuneration Committee.
Mr. Tiong holds directorships in Technodex Berhad, Hornbilland Berhad and several private limited companies. Mr. Tiong has attended the only Board meeting held during the financial year ended 31 August 2006.
His shareholdings in RSB Group as at 30 November 2006 are disclosed in page 75 of this annual report.
PROFILE OF DIRECTORS (CONT’D)
BONG WEI LEONG
Aged 39, Malaysian, Independent Director
Mr. Bong Wei Leong is a businessman. He was appointed to the Board of RSB on 14 February 2006. He graduated with a Bachelor of Business (Accountancy) and Bachelor of Law from Queensland University of Technology, Australia in 1993. Mr.
Bong was a Partner of a public accountants firm prior to starting his own practice in 2004. He has more than 12 years of experience in providing auditing, accounting and taxation services to various clients. He is a member of the Malaysian Institute of Accountants and the CPA Australia. Mr. Bong also sits in the Board of one of the subsidiaries.
Mr. Bong is the Senior Independent Director to whom concerns regarding the Company may be conveyed. He is also chairman of Audit Committee and members of Remuneration and Nomination Committees. During the financial year ended 31 August 2006, Mr. Bong attended the only Board meeting held. He holds no share in RSB Group.
TIONG ING MING
Aged 49, Malaysian, Independent Director
Mr. Tiong Ing Ming is a registered quantity surveyor of the Board of Quantity Surveyors, Malaysia and a member of the Institution of Surveyors Malaysia. He was appointed to the Board of RSB on 14 February 2006. He graduated with a Bachelor of Building (Hons) from University of Melbourne, Australia in 1982 and began his career as Staff Quantity Surveyor with Kumpulan Ukor Bahan Sarawak from 1983 to 1994. Subsequently, he established Perunding Juru Ukur Bahan Tiong. His portfolio of quantity surveying services ranges from private sector to government projects. Mr. Tiong is also members of Audit and Nomination Committees.
Mr. Tiong has attended the only Board meeting held during the financial year ended 31 August 2006. His shareholdings in RSB Group as 30 November 2006 are disclosed in page 75 of this annual report.
Notes :-
a. Tan Sri Datuk Diong Hiew King @ Tiong Hiew King and Tiong Kiong King are brothers and is the father and uncle of Tiong Chiong Ong respectively. Both Tan Sri Datuk Diong Hiew King @ Tiong Hiew King and Tiong Kiong King, and Tiong Chiong Ong are the uncles and cousin of Tiong Chiong Ie respectively. Apart from these, the other Directors have no family relationship with each other or the substantial shareholders of RSB.
b. None of the Directors have been convicted of offences within the past 10 years other than traffic offences.
c. Apart from Tan Sri Datuk Diong Hiew King @ Tiong Hiew King, Tiong Kiong King, Tiong Chiong Ong and Tiong Chiong Ie, none of the other Directors hold any directorship in public companies.
d. Apart from Tan Sri Datuk Diong Hiew King @ Tiong Hiew King, Tiong Kiong King, Tiong Chiong Ong and Tiong Chiong Ie,
PROFILE OF DIRECTORS (CONT’D)
STATEMENT OF CORPORATE GOVERNANCE
INTRODUCTION
The Malaysian Code on Corporate Governance (“the Code”) sets out principles and best practices on structures and processes that companies may use in their operations towards achieving optimal governance framework. To this end, Bursa Malaysia Securities Listing Requirements (“Listing Requirements”) requires listed companies to disclose in their annual report a statement on the application of these principles and best practices as advocated by the Code.
The Board of Directors of Rimbunan Sawit Berhad (“RSB” or “the Company”) believes in the principles of good corporate governance and supports the implementation of the highest standards of corporate governance throughout the RSB Group as a fundamental part of discharging its fiduciary responsibilities to protect and enhance shareholders’ value and the financial performance of the RSB Group.
In line with this, the Board of RSB is pleased to disclose the manner in which it has applied the principles of good governance and the extent to which it has complied with the best practices set out in Part 2 of the Code. These disclosures are contained in this statement, the Statement on Internal Control and the Report of the Audit Committee.
THE BOARD OF DIRECTORS (1) Composition of the Board
The RSB Group is led and managed by an experienced Board comprising six (6) members. The Executive Chairman, the Non-Independent Non-Executive Vice Chairman, the Managing Director and three (3) Non-Executive Directors, two (2) of whom are independent, have a wide range of experience in relevant fields required to successfully direct and supervise the RSB Group’s business activities. The profiles of each Director are presented on pages 12 to 14 of this annual report.
To ensure that there is balance of power and authority, the roles of the Chairman and the Managing Director are clearly separated and defined. The Chairman heads the Board and is primarily responsible for the orderly conduct and effectiveness of the Board, whilst the Managing Director is responsible for the operating units, organisational effectiveness and implementation of Board policies and executive decisions making.
The Independent Directors play an important role in ensuring impartiality of the Board’s deliberations and decision- making process. The presence of directors fulfils a crucial role in corporate governance, for the provision of unbiased and independent views, advice and judgement to take account of the interests, not only of the RSB Group, but also of all shareholders including employees, customers, suppliers and the many communities in which the RSB Group conducts business. Mr. Bong Wei Leong is the appointed Senior Independent Director to whom concerns or queries concerning the RSB Group may be conveyed to.
(2) Board Procedures
Besides its statutory duties, the Board is responsible for good corporate governance, including the setting of the RSB Group’s overall strategic direction, overseeing the conduct of the businesses, identifying principal risks, ensuring that systems are in place to manage these risks, implementation of succession planning programme for Senior Management, implementation of an investors relations programme and reviewing the adequacy of the RSB Group’s system of internal controls.
STATEMENT OF CORPORATE GOVERNANCE
(CONT’D)
As the RSB Group was only formed on 8 February 2006 and the Company was newly listed on the Main Board of Bursa Malaysia Securities Berhad on 28 June 2006, only one (1) Board meeting was held during the financial year ended 31 August 2006. The details of attendance of each of the Director at the Board meeting are outlined as follows :-
Attendance at the only Board meeting held
Tan Sri Datuk Diong Hiew King @ Tiong Hiew King √
Tiong Kiong King √
Tiong Chiong Ong √
Tiong Chiong Ie √
Bong Wei Leong √
Tiong Ing Ming √
(3) Supply of Information
Every Director has ready and unrestricted access to the information pertaining to the RSB Group’s business and affairs to enable them in discharging their duties and responsibilities. All Directors are provided with an agenda and a set of board papers in a timely manner prior to Board meeting, to ensure the Directors receive sufficient relevant information and to allow sufficient time for their detailed review and consideration so as to enable them to participate effectively in Board decisions. All Directors have the right to make further enquiries where they consider necessary prior to Board meeting.
All Directors have access to the Company Secretaries, independent external professional advisors, and internal/external auditors in appropriate circumstances for advice and services in the furtherance of their duties, at the Company’s expense.
(4) Committees of The Board
The following Board Committees have been established to assist the Board in discharging its duties. All Board Committees do not have executive powers but to report to the Board on all matters considered and their recommendations thereon.
The terms of reference of each Committee have been approved by the Board and, where applicable, comply with the recommendations of the Code.
• Audit Committee
The Audit Committee, formed on 2 March 2006, reviews issues of accounting policy and presentation for external financial reporting, monitors the work of the in-house internal auditor, ensures that an objective and professional relationship is maintained with the external auditors, and that conflicts of interest are avoided.
The Report of the Audit Committee is set out on pages 21 to 25 of this annual report.
• Nomination Committee
The Board has on 7 April 2006 set up a Nomination Committee, which is mainly responsible for the identification and recommendation of new nominees to the Board, for the annual review of the required mix of skills and
STATEMENT OF CORPORATE GOVERNANCE
(CONT’D)
The members of the Nomination Committee, all of whom are non-executive Directors and a majority of whom are independent, are as follows :-
Chairman : Tiong Kiong King (Non-Independent Non-Executive Vice Chairman) Members : Bong Wei Leong (Independent Director)
Tiong Ing Ming (Independent Director)
• Remuneration Committee
The Remuneration Committee was established on 7 March 2006 and is principally responsible for setting the policy framework and for making recommendations to the Board on remuneration packages and benefits extended to the Executive Directors. The Remuneration Committee did not meet during the financial year ended 31 August 2006 as the RSB Group was only formed on 8 February 2006 and the Company was newly listed on the Main Board of Bursa Malaysia Securities Berhad on 28 June 2006.
The members of the Remuneration Committee, the majority of whom are non-executive, are as follows :- Chairman : Tiong Kiong King (Non-Independent Non-Executive Vice Chairman)
Members : Tiong Chiong Ie (Non-Independent Non-Executive Director) Bong Wei Leong (Independent Director)
• Risk Management Committee
The Risk Management Committee assists the Board in fulfilling its corporate governance responsibilities by monitoring, managing and mitigating the risks associated with the RSB Group’s business with a view to the long term viability of the RSB Group.
The members of the Risk Management Committee are as follows :- Chairman : Mr. Tiong Chiong Ong (Managing Director) Members : Mr. Khoo Lian Hong (Chief Operating Officer)
Mr. Robert Ling Tong Ung (Chief Accountant) Mr. Ngu Ming Kwong (Head of Internal Audit) Mr. Pang Seng Nam (General Manager, Plantation)
Mr. Lam Kah Kuan (Mill Manager - RH Bakong Palm Oil Mill) (5) Appointments to the Board
As indicated above, the Nomination Committee recommends the appointment of new Directors to the Board.
Thereafter upon approval by the Board, the new Directors undergo a familiarisation programme, which includes visits to the RSB Group’s operating units, and meetings with Senior Management, as appropriate, to facilitate the new Directors’ understanding of the RSB Group.
(6) Re-election of Directors
In accordance with RSB’s Articles of Association, all Directors who are appointed by the Board are subject to election by shareholders at the ensuing Annual General Meeting after their appointment.
STATEMENT OF CORPORATE GOVERNANCE
(CONT’D)
Additionally, in accordance with the RSB’s Articles of Association and in compliance with the Listing Requirements, one-third (1/3) of the remaining Directors, including the Managing Director, are required to submit themselves for re-election by rotation at each Annual General Meeting, and all Directors must submit themselves for re-election at least once every three (3) years.
Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
(7) Directors’ Training
All the Directors have attended the Mandatory Accreditation Programme as required by Bursa Securities after the Company listed on the Main Board of Bursa Malaysia Securities Berhad on 28 June 2006.
The Board acknowledges that continuous training is important to broaden their perspectives and to keep them abreast with regulatory and corporate governance developments. During the financial year ended 31 August 2006, the Directors have attended appropriate training programmes conducted by external experts and the description of the training/seminar are set out below :-
Title of training/seminar Number of day spent
Advance Pratical Auditing 1 day
Property Development and Construction Contract 1/2 day
Public Rulings 1 day
National Tax Conference 2006 2 days
Contemporary Issues in Construction Contracts 1 day
Directors & Senior Management Training 3 days
Presentation on Business Continuity Management 1 day
All Directors will continue to attend further training as may be required from time to time to equip themselves with the knowledge to discharge their duties more effectively and to keep abreast of developments in the marketplace.
DIRECTORS’ REMUNERATION
RSB recognises the need to ensure that remuneration of Directors is appreciative and reflective of the responsibility and commitment that goes with Board membership. In line with this, the Board, via its Remuneration Committee, has adopted a remuneration structure that attempts to retain and attract the Executive Directors with the right caliber for RSB. The fees for Non- Executive Directors are determined by the Board as a whole.
Contrary to the disclosure recommendations as indicated in the best practices of the Code, the Board would not be providing details of remuneration awarded to each Director. The Board is of the opinion that matters pertaining to Directors’ remuneration are of a personal nature.
STATEMENT OF CORPORATE GOVERNANCE
(CONT’D)
In compliance with the Listing Requirements, the fees and remuneration paid to Directors of the RSB Group during the financial year ended 31 August 2006, in aggregate and analysed into bands of RM50,000, were as follows :-
Executive Directors Non-Executive Directors
RM RM
Fee - 61,383
Salary 277,085 -
Bonus 15,726 -
Allowances - -
Benefits-in-kind - -
Commissions - -
Executive Directors Non-Executive Directors
No. No.
RM200,001 to RM250,000 - -
RM150,001 to RM200,000 - -
RM100,001 to RM150,000 - -
RM50,001 to RM100,000 2 -
RM50,000 and below - 4
SHAREHOLDERS COMMUNICATION
RSB maintains a regular policy of disseminating information that is material for shareholders’ information via announcements made through the Bursa Securities website. In compliance with the Listing Requirements, the Company also releases timely financial information on a quarterly basis, which includes an overview of the performance of RSB Group.
The Company uses the Annual General Meeting as a principal forum for dialogue with shareholders. Shareholders are encouraged to participate in the questions and answers session. Members of the Board as well as the external auditors of the Company are present to answer queries raised at the meeting.
ACCOUNTABILITY AND AUDIT (1) Financial Reporting
The Directors aim to present a balanced and understandable assessment of the RSB Group’s position and prospects in presenting its annual financial statements and quarterly announcements to shareholders. These financial statements are drawn-up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards of the Malaysian Accounting Standards Board, and are reviewed by the Audit Committee prior to approval by the Board.
In compliance with statutory requirements, the annual financial statements are subjected to audit by an independent external auditor.
STATEMENT OF CORPORATE GOVERNANCE
(CONT’D)
(2) Internal Control
The Board of Directors acknowledge their responsibility for the RSB Group’s system of internal control, which is designed to identify and manage the risks of the businesses of the RSB Group, in pursuit of its objectives. In addition, the system of internal control practiced by the RSB Group spans over financial, operational and compliance aspects, particularly to safeguard the RSB Group’s assets and hence shareholders’ investments. In executing this responsibility, the Board via the Audit Committee and the internal auditors, has adopted procedures to monitor the ongoing adequacy and integrity of the system of internal control.
Further details of the state of the system of internal control of the RSB Group are presented on pages 26 to 27 of this annual report.
(3) Relationship with the Auditors
Through the Audit Committee, the RSB Group has established a formal and transparent relationship with the external auditors. The Audit Committee meets with the external auditors at least once a year.
The Audit Committee has been explicitly accorded the power to communicate directly with both external auditors and internal auditors. The auditors may from time to time throughout the financial year, highlight to the Audit Committee and the Board on matters that require the Board’s attention.
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee of Rimbunan Sawit Berhad (“RSB” or “the Company”) was established on 2 March 2006 and comprises the following Directors :-
Chairman : Bong Wei Leong (Independent Director) Members : Tiong Chiong Ong (Managing Director)
Tiong Ing Ming (Independent Director)
Mr. Bong Wei Leong is a member of the Malaysian Institute of Accountants, one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967.
The term of office and performance of the Audit Committee and each of the members shall be reviewed by the Board of Directors at least once every three (3) years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.
TERMS OF REFERENCE
The terms of reference of the Audit Committee are as follows :- (1) Objectives
The Audit Committee has been formed with the following objectives :-
(a) enhance openness, integrity and accountability in the activities of the Company and the Group so as to safeguard the rights and interests of the shareholders;
(b) provide assistance to the Board of Directors in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices;
(c) enhance the Company’s and the Group’s business effectiveness and efficiency, quality of the accounting and audit functions and strengthen the public’s confidence in the reported results of the Company and the Group;
(d) maintain, through regularly scheduled meetings, a direct line of communication between the Board of Directors and the internal and external auditors; and
(e) enhance the independence of the internal audit functions.
(2) Membership
The Audit Committee shall be appointed by the Board of Directors from amongst their number and shall consist of not less than three (3) members. The majority of the Audit Committee members shall be independent directors and no alternate director shall be appointed as a member of the Audit Committee.
At least one (1) member of the Audit Committee :-
· must be a member of the Malaysian Institute of Accountants (“MIA”); or
· must have at least three (3) years’ working experience if he is not a member of MIA and :-
REPORT OF THE AUDIT COMMITTEE
- must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
- must be a member of one (1) of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or
• must hold a degree/masters/doctorate in accounting or finance and at least three (3) years’ post qualification experience in accounting or finance; or
• must have at least seven (7) years’ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation.
If membership of the Audit Committee for any reason falls below three (3) members, the Board of Directors shall, within three (3) months of that event, appoint such number of new members as may be required to fulfil the minimum requirement.
(3) Chairman
The Chairman of the Audit Committee shall be elected from amongst their number who shall be an independent director appointed by the Board of Directors.
(4) Secretary
The Secretary to the Audit Committee shall be any one (1) of the joint company secretaries.
(5) Quorum
A quorum shall consist of a majority of independent directors and shall not less than two (2) independent directors.
(6) Meetings and Minutes
The Audit Committee shall hold at least four (4) meetings a year. Additional meeting may be held as and when necessary, upon request by any Audit Committee member, the Management, internal or external auditors. The Internal Audit Manager and the Group Financial Controller are normally invited to attend the meetings. Other members of the Board of Directors, employees and representative of external auditors shall attend the meetings upon the invitation of the Audit Committee.
A resolution in writing signed by all Audit Committee members shall be deemed to have been passed at a meeting held on the date on which it was signed by the last member.
The Audit Committee shall meet with the external auditors without the presence of Executive Directors and the Management at least once a year.
Minutes of meetings shall be kept and distributed to each member of the Audit Committee and the Board of Directors. The Chairman of the Audit Committee shall report on each meeting to the Board of Directors.
(7) Review of the Composition of the Audit Committee
The term of office and performance of the Audit Committee and each of the members shall be reviewed by the Board of Directors at least once every three (3) years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.
REPORT OF THE AUDIT COMMITTEE (CONT’D)
(8) Authority
The Audit Committee is authorised by the Board of Directors to :-
(a) investigate any activity/matter within its terms of reference and shall have unrestricted access to all employees of the Company and the Group;
(b) have the resources in order to perform its duties as set out in its terms of reference;
(c) have full and unrestricted access to any information pertaining to the Company and the Group;
(d) have direct communication channels with the internal and external auditors; and (e) obtain external legal or other independent professional advice as necessary.
Notwithstanding anything to the contrary hereinbefore stated, the Audit Committee does not have executive powers and shall report to the Board of Directors on matters considered and its recommendations thereon, pertaining to the Company and the Group.
(9) Responsibility
Where the Audit Committee is of the view that a matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Bursa Malaysia Securities Listing Requirements (“Listing Requirements”), the Audit Committee has the responsibility to promptly report such matter to Bursa Malaysia Securities Berhad (“Bursa Securities”).
(10) Functions and Duties
The duties of the Audit Committee are to: -
(a) consider the nomination, appointment, re-appointment, resignation and dismissal of external auditors, the auditors’
remuneration and any questions of resignation or dismissal;
(b) review the nature and scope of audit plans prepared by the internal and external auditors before the audit commence, and ensure co-ordination where more than one audit firm is involved;
(c) review the audit reports prepared by the external auditors, the major findings and the Management’s responses thereto;
(d) discuss problems and reservations arising from the interim and final audits, and any matter the external auditors may wish to bring up;
(e) review the quarterly and annual financial statements of the Company and the Group primarily focusing on the matters set out below, before submission to the Board of Directors for approval :-
• any changes in or implementation of major accounting policies and practices, where applicable;
• significant and unusual events;
• significant adjustments arising from the audit;
• the going concern assumption; and
• compliance with accounting standards and other regulatory/legal requirements.
REPORT OF THE AUDIT COMMITTEE (CONT’D)
(f) consider the internal audit reports, major findings and the Management’s responses thereto on any internal investigations carried out by the internal auditors and ensure that appropriate action is taken by the Management in respect of the audit observations and the Audit Committee’s recommendations;
(g) review the auditors’ evaluation of the systems of internal controls;
(h) review the adequacy of the scope, functions and resources of the internal audit functions and whether it has the necessary authority to carry out its work;
(i) review any appraisal or assessment of the performance of the members of the internal audit function;
(j) approve any appointment or termination of senior staff members of the internal audit function;
(k) be informed of any resignation of the internal audit staff members and to provide the resigning staff member an opportunity to submit his or her reasons for resigning;
(l) review the assistance given by the Company’s and the Group’s employees to the auditors;
(m) review related party transactions entered into by the Company and the Group to ensure that such transactions are undertaken on the Company’s and the Group’s normal commercial terms and on an arm’s length basis;
(n) review any conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of the Management integrity; and
(o) perform such other functions as may be agreed to by the Audit Committee and the Board of Directors.
ACTIVITIES OF THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR
(1) Meetings and Attendance
As the Group was only formed on 8 February 2006 and the Company was newly listed on the Main Board of Bursa Malaysia Securities Berhad on 28 June 2006, only one (1) Audit Committee meeting was held during the financial year ended 31 August 2006. The details of attendance of each of the Audit Committee member are outlined as follows :-
Attendance at the only Audit Committee meeting held
Bong Wei Leong √
Tiong Chiong Ong √
Tiong Ing Ming √
(2) Summary of Activities of Audit Committee
The following activities were carried out by the Audit Committee during the financial year ended 31 August 2006 in discharge of its functions and duties :-
REPORT OF THE AUDIT COMMITTEE (CONT’D)
(b) reviewed and deliberated the quarterly financial results of the RSB Group prior to submission to the Board of Directors for their consideration and approval;
(c) reviewed of any related party transactions to be entered into by the Company and the RSB Group prior to submission to the Board of Directors for their consideration and approval;
(d) reviewed adequacy of the disclosure on related party transactions entered into by the Company and the RSB Group in the quarterly reports of the Company; and
(e) met with the external auditors.
ACTIVITIES OF THE INTERNAL AUDIT FUNCTION
The internal audit department of the Group assists the Audit Committee in the discharge of its duties and responsibilities and is principally responsible for the independent assessment of the adequacy, effectiveness and efficiency of the internal control systems in place, in anticipating the risks exposures over key business processes so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively.
During the financial year ended 31 August 2006, the internal auditor has performed audit work on the following :-
• reviewing and appraising the soundness, adequacy and application of accounting, financial and operation and other controls of the RSB Group over inventory management, treasury and receivable process, and the production process flow;
• ascertaining the extent of compliance with established policies, procedures and statutory requirements;
• ascertaining the extent to which the RSB Group’s assets are accounted for and safeguarded from losses of all kinds;
• conducting of the following :- - review of internal control;
- review of estate’s performance;
- review of mill’s performance;
- review of manuring status; and
- review of field conditions and harvesting standard;
• identifying ways and opportunities to improve the effectiveness and efficiency of the operations of and processes within the RSB Group, in particular over financial reporting of key indicators for Management’s information;
• appraising the reliability and usefulness of data and information generated for management;
• attending year-end stock counts at all operating units; and
• reviewing related party transactions carried out by the RSB Group.
REPORT OF THE AUDIT COMMITTEE (CONT’D)
STATEMENT ON INTERNAL CONTROL
INTRODUCTION
The Company was listed on the Main Board of the Bursa Malaysia Securities Berhad on 28 June 2006. Its Audit Committee was established prior to the Company’s listing, on 2 March 2006.
The Company and its subsidiaries (the “Group”) continuously identify, evaluate, monitor and manage key controls and risks that could affect the Group, using certain well-established procedures. The Group is now in the process of formalizing those procedures by setting up a formal framework for the purpose of reporting to the Audit Committee.
BOARD RESPONSIBILITY
The Group implements a system of internal controls which is summarized below. The Board of Directors (“the Board”) recognizes the importance of an effective and efficient system of internal controls which includes risk management, financial, operational and compliance controls to safeguard shareholders’ investment and the Group’s assets, and the Board acknowledges its overall responsibility to ensure the adequacy and integrity of the same.
The internal control system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable rather than absolute assurance against material misstatement or loss.
The key elements of the Group’s system of internal control are summarized as follows:
Risk Management Framework
The Board is mindful of the risks attendant on the Group’s business and shall endeavour to exercise due care to anticipate such risks.
Control Structure and Environment
The Board is fully committed to ensuring that a proper control environment is maintained within the organisation to govern the manner in which the Group and its employees conduct themselves.
Independence of the Audit Committee
The Audit Committee comprises executive and non-executive Directors, a majority of them are independent and all of whom bring with them a wide variety of experience. The Audit Committee has full and unimpeded access to both the internal as well as external auditors.
Internal and External Audit
The Group has an internal audit function whose primary responsibility is to independently assure the Board, through the Audit Committee, that the system of internal controls functions as intended. The internal Auditors regularly audit the internal control practices and report significant findings to the Audit Committee with proposed recommendations. The core function of the internal auditors is to perform an independent appraisal of the Group’s activity, to provide assurance on and to help management to maintain the best internal control system. The management is responsible to ensure that corrective actions on reported weaknesses are undertaken within an appropriate time frame.
STATEMENT ON INTERNAL CONTROL (CONT’D)
In addition, the activities of the Audit Committee in reviewing the results and work of the internal auditor and the findings arising from the external auditors’ audit of the statutory financial statements, will assist them in their evaluation of the control environment existing within the Group.
Financial authority and operational information
The Company has implemented a system of controls as set out in the Operations Manual. The Board will review from time to time and update the financial authority limits set out therein as and when necessary.
A detailed budgeting process takes place annually, where each business unit prepares its budget for the following financial year and the budget is then reviewed by the Managing Director, after which the budget is submitted to the Board for formal approval.
At each Board meeting, the Board is furnished with timely and detailed Board papers, endorsed by the Managing Director and the Board is further briefed on all significant matters for their consideration and deliberation.
MONITORING AND REVIEW
Monitoring the Group’s business risks is one of the primary processes of the internal audit function, which then reviews and reports its findings on any significant changes in the risk profile of the Group to the Audit Committee periodically.
The system of internal controls described in this statement is considered by the Board to be adequate and there was no material internal control failure resulting in material losses during the financial year ended 2006 that would require separate disclosure in the Group’s Annual Report.
The Directors are required under the Bursa Malaysia Securities Listing Requirements, to issue a statement explaining their responsibility for preparing the annual financial statements.
The Directors are also required by the Companies Act, 1965 (“the Act”) to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company as at the financial year end and of the results and cash flows of the Group and of the Company for the financial year then ended.
As required by the Act, the financial statements have been prepared in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Act. The Directors have considered that in preparing the financial statements of Rimbunan Sawit Berhad for the financial year ended 31 August 2006 as set out on pages 39 to 72 of this annual report, appropriate accounting policies have been adopted and are consistently applied and supported by reasonable and prudent judgment and estimates. The Directors have also confirmed that the financial statements have been prepared on a going concern basis.
The Directors have responsibility to ensure the Group and the Company maintain proper accounting records which disclose with reasonable accuracy at any time, the financial position and performance of the Group and the Company, and to enable them to ensure the financial statements comply with the provisions of the Act.
The Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
ADDITIONAL COMPLIANCE INFORMATION
1. Utilisation of proceeds from corporate proposal
During the financial year, a total gross proceeds of RM18 million was raised from the public issue of 18 million new ordinary shares of RM0.50 each at an issue price of RM1.00 per ordinary share pursuant to the listing of the Company on the Main Board of Bursa Malaysia Securities Berhad on 28 June 2006. The status of the utilisation of proceeds raised are as follows :-
RM’000
Gross proceeds from public issue 18,000
Listing expenses (2,134)
Plantation expenditure Nil
Cost of general upgrading and maintenance of plant and Nil machinery
Cost of upkeeping and maintenance of staff quarters, Nil canteens and offices
---
Net proceeds as at 31 August 2006 15,866
=======
2. Share buy-backs
During the financial year ended 31 August 2006, the Company did not enter into any share buy-back transaction.
3. Options, warrants and convertible securities
There were no exercise of options, warrants and convertible securities during the financial year.
4. Depository receipt programme
During the financial year under review, the Company did not sponsor any American Depository Receipt or Global Depository Receipt programme.
5. Sanctions and/or penalties
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended 31 August 2006.
6. Non-audit fees
The amount of non-audit fees paid to the external auditors, Messrs. Hii & Lee by the Company and its subsidiaries during the financial year ended 31 August 2006 amounted to RM174,228.
7. Variance in profit estimate, forecast or projection
There is no significant variance on the profit estimate, forecast or projection between the Prospectus dated 31 May 2006 and audited financial statements.
8. Variance in results
There is no significant variance between the results for the financial year and the unaudited results previously released by the Company.
9. Profit guarantee
No profit guarantee had been given by the Company in respect of the financial year under review.
10. Material contracts
There were no material contracts of the Company or its subsidiaries involving Directors and substantial shareholders’
interest subsisting at the end of the financial year under review or entered into since the end of the financial year under review or entered into since the end of the previous financial year.
11. Revaluation policy on landed properties
There were no revaluation policies on landed properties adopted by the Group during the financial year under review.
12. Recurrent related party transactions
The value and the type of significant related party transactions are set out in note 27 to the Financial Statements from pages 68 to 70 of this annual report. The Company is proposing the following to the shareholders at the forthcoming Annual General Meeting of the Company :-
(i) to ratify the recurrent related party transactions of a revenue or trading nature entered from the date of listing of the Company, 28 June 2006 up to the date of the forthcoming Annual General Meeting of the Company; and (ii) to approve the shareholders’ mandate for recurrent related party transactions of a revenue or trading nature for
the period from the date of the forthcoming Annual General Meeting of the Company to the next Annual General Meeting of the Company.
ADDITIONAL COMPLIANCE INFORMATION
(CONT‘D)
31
Directors’ Report .. 32
Statement by Directors .. 36
Statutory Declaration .. 36
Report of the Auditors .. 37
Consolidated Balance Sheet .. 39 Consolidated Income Statement .. 40 Consolidate Statement of Changes In Equity .. 41
Balance Sheet .. 44
Income Statement .. 45
Statement of Changes in Equity .. 46
Cash Flow Statement .. 47
Notes to the Financial Statements .. 49
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31st August 2006.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and provision of management services.
FINANCIAL RESULTS The Group The Company
RM RM
Net profit for the year after taxation 8,081,536 4,303,223
========== ==========
DIVIDENDS
No dividend has been paid or declared by the Company since the end of the previous financial period.
The Board of Directors proposed a tax-exempt final dividend of 3.0 sen per ordinary share totaling RM3,848,004 in respect of the financial year ended 31st August 2006. The dividend is not recognised as a liability at the balance sheet date and will be accounted for as an appropriation of retained profits in the financial year ending 31st August 2007 after approval by the members at the forthcoming Annual General Meeting.
ISSUE OF SHARES
During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM53 to RM64,133,400 by the allotment of 128,266,694 new ordinary shares of RM0.50 each pursuant to the floatation exercise as follows:-
(i) the allotment of 86,935,808 new ordinary shares of RM0.50 each at an issue price of RM0.50 per ordinary share as purchase consideration for the acquisition of R.H. Plantation Sdn Bhd.
(ii) the allotment of 23,330,886 new ordinary shares of RM0.50 each at an issue price of RM0.50 per ordinary share as purchase consideration for the acquisition of Timrest Sdn Bhd.
(iii) the public issue of 18,000,000 ordinary shares of RM0.50 each at an issue price of RM1.00 per share for cash, for purpose as approved by the Securities Commission.
The above new ordinary shares rank pari passu with the then existing ordinary shares of the Company.
RESERVES AND PROVISIONS
33
DIRECTORS’ REPORT (Cont’d)
DIRECTORS OF THE COMPANY
The directors who served since the date of last report are:-
Tang Tiong Kin (Resigned on 14.2.2006)
Peter Ng Choong Joo @ Ng Chong Yu (Resigned on 14.2.2006) Tan Sri Datuk Diong Hiew King
@ Tiong Hiew King (Appointed on 14.2.2006)
Tiong Chiong Ong (Appointed on 14.2.2006)
Tiong Kiong King (Appointed on 14.2.2006)
Tiong Chiong Ie (Appointed on 14.2.2006)
Bong Wei Leong (Appointed on 14.2.2006)
Tiong Ing Ming (Appointed on 14.2.2006)
In accordance with Article 88 of the Company’s Articles of Association, Tiong Chiong Ong, Tiong Kiong King, Tiong Chiong Ie, Bong Wei Leong and Tiong Ing Ming shall retire from the board at the forthcoming Annual General Meeting and being eligible, offers themselves for re-election.
Tan Sri Datuk Diong Hiew King @ Tiong Hiew King retires pursuant to Section 129(1) of the Companies Act 1965 and separate resolution will be proposed for his re-appointment as director under the provision of Section 129(6) of the said act to hold office until the next Annual General Meeting of the Company.
The directors holding office at 31st August, 2006 and their interests in the share capital of the Company, as recorded in the register of directors’ shareholdings were as follows:-
Other holdings in which Holdings registered in directors are deemed to the name of directors as at have an interest as at
1.9.2005 Bought Sold 31.8.2006 1.9.2005 Bought Sold 31.8.2006 Tan Sri Datuk Diong Hiew
King @ Tiong Hiew King - 2,102,680 1,802,680 300,000 - 95,201,679 24,625,785 705,758,894 Tiong Chiong Ong - 1,882,294 1,003,894 878,400 - - - - Tiong Kiong King - 1,233,235 284,735 948,500 - 4,347,225 1,319,925 3,027,300 Tiong Chiong Ie - 300,000 - 300,000 - 3,541,570 1,075,370 2,466,200 Bong Wei Leong - - - - - - - - Tiong Ing Ming - 25,000 - 25,000 - - - - DIRECTORS’ BENEFITS
Since the end of the previous financial period no director has received or become entitled to receive any benefit required to be disclosed by Section 169(8) of the Companies Act 1965.
DIRECTORS’ REPORT (Cont’d)
Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
BAD AND DOUBTFUL DEBTS
Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and, the making of allowance for doubtful debts and that all known bad debts had been written off and adequate allowance had been made for doubtful debts.
At the date of this report, the directors of the Company are not aware of any circumstances that would render the amount written off for bad debts, or the amount of the allowance for doubtful debts, in the Group and in the Company inadequate to any substantial extent.
CURRENT ASSETS
Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps to ascertain whether any current assets, other than debts, were unlikely to realise in the ordinary course of business including their value as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an amount that they might be expected to realise.
At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities in the Company and Group financial statements misleading or inappropriate.
CHARGES AND CONTINGENT LIABILITIES Since the end of the financial year:-
i) no charge on the assets of the Company or any corporation in the Group has arisen which secures the liabilities of any other person,
ii) no contingent liability of the Company or any corporation in the Group has arisen in the financial statements.
ABILITY TO MEET OBLIGATIONS
35
DIRECTORS’ REPORT (Cont’d)
CHANGE OF CIRCUMSTANCES
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 of the Group and of the Company that would render any amount stated in the respective financial statements misleading.
UNUSUAL ITEMS
In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year were not, substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in the financial statements.
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, in the opinion of the directors, to affect substantially the results of the operations of the Group or of the Company for the current financial year.
AUDITORS
The auditors, Hii & Lee, Chartered Accountants, have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors:
TAN SRI DATUK DIONG HIEW KING @ TIONG HIEW KING Director
TIONG CHIONG ONG Director
Sibu, Sarawak.
Date: 6 December 2006
STATEMENT BY DIRECTORS
In the opinion of the directors, the financial statements set out on pages 39 to 72 are drawn up in accordance with the applicable approved accounting standards so as to give a true and fair view of:-
(i) the state of affairs of the Group and of the Company as at 31st August, 2006 and of its results for the year ended on that date; and
(ii) the cash flows of the Group and of the Company for the year ended 31st August, 2006.
Signed on behalf of the Board in accordance with a resolution of the Directors:
TAN SRI DATUK DIONG HIEW KING @ TIONG HIEW KING Director
