LADANG PERBADANAN-FIMA BERHAD

Co. No. 52682-H

Incorporated in Malaysia

A N N UA L

R E P O RT

2 0 0 5

Cover
Cover Rationale
T
he young seedling signifies the Company's continued growth and renewed vigor in increasing profitability and enhancing shareholders' value. Nurtured by 26 roots reaching far and beyond into the fertile soil, the Company is backed by 26 years of multi-faceted experience and knowledge in the plantation business. The roots of varying degree in thickness depict the success achieved and challenges which the Company had faced and overcome since its incorporation to attain the position it holds today. The soil presented in green represents the strength of the Company after 26 years in operation. Green, which is synonymous with life, growth and regeneration, is also the colour of the Company's core business activity - cultivation of oil palms. Set against the white background, the Company reaffirms its commitment in embracing transparency and high standard of corporate governance. The simplicity of the design encapsulates the Company's clear and unhindered path towards achieving its Vision and Mission.

Rationale

Annual Report 2005

CONTENTS
Notice of Annual General Meeting Statement Accompanying Notice of Annual General Meeting Corporate Vision and Mission Corporate & Organisational Structures Corporate Information Directors' Profile Chairman's Statement Audit Committee Report Corporate Governance Statement Internal Control Statement 3 4 5 6-7 8-9 10 - 12 13 - 18 19 - 23 24 - 25 2 Additional Disclosures Financial Calendar Financial Highlights Quarterly Performance Area Statement Properties Shareholding Statistics Directors' Responsibility Statement Financial Statements Proxy Form 26 - 27 28 29 30 31 32 33 - 34 35 36 - 62

Notice Annual General Meeting
of

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

2

NOTICE IS HEREBY GIVEN THAT the Twenty-Sixth Annual General Meeting of the Company will be held at Crystal 1 Ballroom, Casuarina Ipoh, 18 Jalan Raja Dr. Nazrin Shah, 30250 Ipoh, Perak, Malaysia on Saturday, 29 April 2006 at 11:00 a.m. for the following purposes: 1. To receive and consider the Audited Financial Statements for the year ended 31 December 2005 and the Reports of the Directors and Auditors thereon. 2. To sanction the payment of a final dividend of 5 sen less 28% tax for the year ended 31 December 2005 as recommended by the Board. 3. To re-elect YBhg. Dato' Shamsul Bahari bin Salleh Khir who retires in accordance with Article 66 of the Company's Articles of Association. 4. To re-elect YBhg. Dato' Haji Ahmad Zakiuddin bin Harun who retires in accordance with Article 66 of the Company's Articles of Association. 5. To re-elect Puan Sharifah Nor Hashimah binti Syed Kamaruddin who retires in accordance with Article 72 of the Company's Articles of Association. 6. To approve the increase and payment of Directors' fees for the year ended 31 December 2005. 7. To re-appoint Messrs. KPMG Desa Megat & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration. 8. To transact any other ordinary business of the Company of which due notice shall have been given.

NOTICE OF BOOK CLOSURE
NOTICE IS HEREBY GIVEN THAT the Register of Members of the Company will be closed on 29 May 2006 for the purpose of determining members' entitlement to the dividend. The dividend, if so approved at the Twenty-Sixth Annual General Meeting, will be paid on 12 June 2006 to depositors registered in the Register of Depositors at the close of business at 5:00 p.m. on 26 May 2006. FURTHER NOTICE IS HEREBY GIVEN THAT a depositor shall qualify for entitlement to the dividend only in respect of: (a) Shares transferred into the Depositor's Securities Account before 4:00 p.m. on 26 May 2006 in respect of transfers; (b) Shares deposited into the Depositor's Securities Account before 12:30 p.m. on 24 May 2006 in respect of shares exempted from mandatory deposit; (c) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of the Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD Gowrie Navaratnam Mohd Nasir Bin Ismail Secretaries IPOH 28 March 2006

NOTE A member of the Company entitled to attend and vote at this meeting is also entitled to appoint one or more proxies to attend and vote in his stead. Where a member appoints two proxies or more, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy. A proxy need not be a member of the Company. A Proxy Form is enclosed herewith and should be completed and deposited at the Registered Office of the Company not less than 48 hours before the time fixed for the meeting.

3
1.0
1.1 (i) 1.2 (i)

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Statement Accompanying
Notice of Annual General Meeting

DIRECTORS STANDING FOR RE-ELECTION AT THE 26TH ANNUAL GENERAL MEETING
The Directors retiring by rotation pursuant to Article 66 of the Company's Articles of Association and seeking re-election are: Dato' Shamsul Bahari bin Salleh Khir

(ii) Dato' Haji Ahmad Zakiuddin bin Harun The Director who was appointed during the year and seeking re-election as Director of the Company pursuant to Article 72 of the Company's Articles of Association is: Puan Sharifah Nor Hashimah bin Syed Kamaruddin

The details of Directors standing for re-election and their shareholdings are set out in the Directors' Profile and Shareholding Statistics appearing in the Annual Report.

2.0

ATTENDANCE OF DIRECTORS AT BOARD MEETINGS
A total of nine (9) Board Meetings were held during the financial year ended 31 December 2005. Details of the Directors' attendance are as listed below: Name of Director Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Dato' Jaafar bin Lajis Kamisan bin Suja' Yeoh Hock Thong Sharifah Nor Hashimah bin Syed Kamaruddin (appointed 12 August 2005) Ir. Muhammad Hafni bin Ibrahim (resigned on 30 June 2005) Dato' Richard Ong Guan Seng (retired on 22 June 2005) Attendance 9/9 7/9 8/9 9/9 9/9 1/1 6/7 5/6

3.0

DATE, TIME AND VENUE OF THE 26TH ANNUAL GENERAL MEETING
Date Time Venue : 29 April 2006 : 11:00 a.m. : Crystal 1 Ballroom Casuarina Ipoh 18, Jalan Raja Dr. Nazrin Shah 30250 Ipoh Perak, Malaysia

Corporate Vision and Mission VISION

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

4

LADANG PERBADANAN-FIMA BERHAD strives to be a successful, responsible and exemplary homegrown plantation company.

MISSION
• Generate good earnings and steady growth to Our Shareholders through enhancing productivity and efficiency in the management of its plantation and milling operations, expanding the Company's existing business and exploring new opportunities to expanding the Company's earning base with a view of enhancing shareholder value. • Promote a conducive and performance based working environment to Our Employees while focusing on human resource development and long-term employment. • Meet Our Customers' needs, preferences and expectations through the provision of quality produce more efficiently than our competitors. • Develop and maintain mutually beneficial relationship with Our Business Associates. • Participating and contributing to Our Country through provision of employment, business opportunities and development of agricultural land. • By being a good corporate citizen, we maintain our commitment to the needs of Our Environment through responsible agronomic practices.

5

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Corporate Organisational
Structures

&

CORPORATE STRUCTURE

LPF PROPERTIES SDN BHD (100%)

MILLJET SDN BHD (40%)

ORGANISATIONAL STRUCTURE

BOARD OF DIRECTORS
COMPANY SECRETARY RISK MANAGEMENT COMMITTEE MANAGEMENT COMMITTEE RISK MANAGEMENT UNIT FINANCE & ADMINISTRATION INTERNAL AUDIT PLANTATION OPERATIONS MILL OPERATIONS AUDIT COMMITTEE TENDER COMMITTEE

NOMINATING COMMITTEE

Corporate Information
CORPORATE PROFILE
Company no. Legal form Country of incorporation Date of incorporation Authorised share capital Par value Paid-up share capital Financial year end Principal activities Registered office Telephone no. Facsimile no. E-mail : : : : : : : : : : : : :

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

6

52682-H Public Limited Company Malaysia 29 November 1979 RM150.0 million RM1.00 per share RM114.3 million 31 December Oil palm cultivation and production and sale of crude palm oil and palm kernel No. 10 Persiaran Gopeng Satu, 31350 Ipoh, Perak, Malaysia 605-2415661 / 2411002 605-2559846 lpfb@streamyx.com

SECRETARIES

Gowrie Navaratnam Mohd Nasir bin Ismail

AUDITORS PRINCIPAL BANKERS

KPMG Desa Megat & Co., Chartered Accountants

Bumiputra-Commerce Bank Berhad Malayan Banking Berhad RHB Bank Berhad

SHARE REGISTRAR

Symphony Share Registrars Sdn Bhd 35 Jalan Hussein, 30250 Ipoh, Perak, Malaysia Telephone no. : 605-241 5633 Facsimile no. : 605-241 5578

STOCK EXCHANGE LISTING

Listing Sector Stock code Listing date

: : : :

Main Board of Bursa Malaysia Securities Berhad Plantations 5851 11 November 1994

7
MANAGEMENT COMMITTEE

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Corporate Information
Dato' Shamsul Bahari bin Salleh Khir (re-designated Chairman on 10 August 2005) Dato' Haji Ahmad Zakiuddin bin Harun Dato' Jaafar bin Lajis Kamisan bin Suja' Yeoh Hock Thong Sharifah Nor Hashimah binti Syed Kamaruddin (appointed on 12 August 2005) Ir. Muhammad Hafni bin Ibrahim (resigned on 30 June 2005) Dato' Richard Ong Guan Seng (retired on 22 June 2005) Dato' Shamsul Bahari bin Salleh Khir (re-designated Chairman on 10 August 2005) Kamisan bin Suja' (appointed on 10 August 2005) Ir. Muhammad Hafni bin Ibrahim (resigned on 30 June 2005) Yeoh Hock Thong (resigned on 10 August 2005) Dato' Jaafar bin Lajis (Chairman) Dato' Shamsul Bahari bin Salleh Khir Dato' Richard Ong Guan Seng (retired on 22 June 2005) Dato' Haji Ahmad Zakiuddin bin Harun (re-designated Chairman on 10 August 2005) Dato' Shamsul Bahari bin Salleh Khir Yeoh Hock Thong (appointed on 10 August 2005) Sharifah Nor Hashimah binti Syed Kamaruddin (appointed on 25 February 2006) Kamisan bin Suja' (resigned on 10 August 2005) Dato' Richard Ong Guan Seng (retired on 22 June 2005 ) Dato' Haji Ahmad Zakiuddin bin Harun (re-designated Chairman on 10 August 2005) Dato' Shamsul Bahari bin Salleh Khir Yeoh Hock Thong (appointed on 10 August 2005) Sharifah Nor Hashimah binti Syed Kamaruddin (appointed on 25 February 2006) Kamisan bin Suja' (resigned on 10 August 2005) Dato' Richard Ong Guan Seng (retired on 22 June 2005 ) Dato' Jaafar bin Lajis (Chairman, appointed on 10 August 2005) Dato' Shamsul Bahari bin Salleh Khir Yeoh Hock Thong Dato' Richard Ong Guan Seng (retired on 22 June 2005)

BOARD OF DIRECTORS

TENDER COMMITTEE

AUDIT COMMITTEE

RISK MANAGEMENT COMMITTEE

NOMINATING COMMITTEE

Directors' Profile
DATO' SHAMSUL BAHARI BIN SALLEH KHIR DPMP, PCM, AMP, PPT
Independent, Non-Executive Chairman, 59 years of age, Malaysian

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

8

A First Director of the Company he was re-designated Chairman on 10 August 2005. He previously served as Chairman of the Company from 29 November 1979 and as Executive Chairman from 1994 until November 2000. He also serves as Chairman of the Management Committee and as a member of the Tender, Audit, Risk Management and Nominating Committees. He obtained his Bachelor of Arts in Economics from University Malaya in 1969 and his Master in Rural Development from Institute of Social Studies, The Hague, Netherlands in 1977. He worked with the Perak State Government from 1970 to 1982. In 1978, he was seconded to the Perak State Agricultural Development Corporation and was appointed its General Manager and Chief Executive in 1982 until 1994. He does not hold any directorship in any other public listed companies.

DATO' HAJI AHMAD ZAKIUDDIN BIN HARUN DSDK, AMK
Independent, Non-Executive Director, 64 years of age, Malaysian A lawyer by profession, he was appointed to the Board on 4 August 1994 and serves as a member of the Audit and Risk Management Committees since their formation in 1994 and 2001 respectively. On 10 August 2005, he was re-designated Chairman of both Committees. He qualified as a Barrister at Law (Inner Temple), London, United Kingdom in 1976 and currently runs his own legal practice, Messrs. Hoe and Ahmad Zaki, since 1980. He does not hold any directorship in any other public listed companies.

DATO' JAAFAR BIN LAJIS DMSM, DSM, PJK
Non-Independent, Non-Executive Director, 53 years of age, Malaysian He was appointed a Director on 11 December 2004 and Chairman of the Tender Committee on 4 January 2005. On 10 August 2005, he was also appointed Chairman of the Nominating Committee. He graduated from Universiti Kebangsaan Malaysia with Bachelor of Economics. After graduation, he served in the civil service for more than 16 years where he was responsible for socio economic matters for rural residents and infrastructure in Malacca. Between 1980 and 1986, he was the State Development Officer of Malacca, attached to the Prime Minister's Department. In 1986, he was a State Assemblyman where he was appointed an Executive Councilor and the Malacca State Assembly Speaker for two terms from 1986 to 1994. He is still active in politics and business. Currently, he is a Director of DPS Resources Berhad, Chairman for Penasihat Panel Kesihatan Melaka, Director of Malacca Farmer Association and Board member of Malacca Smallholder Cooperative.

9

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Directors' Profile

KAMISAN BIN SUJA'
Non-Independent, Non-Executive Director, 46 years of age, Malaysian He was appointed a Director on 11 December 2004 and served as a member of the Audit Committee and Risk Management Committee from 4 January 2005 to 10 August 2005. On 10 August 2005, he was appointed a member of the Management Committee. He holds a Bachelor of Art Architecture from Hull School of Architecture, United Kingdom and practiced architecture after graduating until 1994 when he became involved in businesses of various activities such as contractor, project management, turnaround management, project financing and property development. Currently, he is the Group Senior Vice President of Pubel Berhad, a property development based company and sits on the Board of its subsidiary companies, PuBel U-Home Everight Sdn Bhd and PuBel Project Management Sdn Bhd. He is also a Director of Musfa & Co Sdn Bhd, a PKK Class "A" contractor. He does not hold any directorship in any public listed company.

YEOH HOCK THONG
Non-Independent, Non-Executive Director, 50 years of age, Malaysian He was appointed a Director on 11 December 2004 and member of the Nominating Committee on 26 February 2005. He served on the Management Committee from 4 Jan 2005 to 10 August 2005 when he was appointed a member of the Audit and Risk Management Committees respectively. He is a Chartered Member of the Institute of Internal Auditors and a Professional Member of the National Institute of Accountants, Australia. He is at present Executive Vice President of Kejuruteraan Bintai Kindenko Sdn Bhd and Director of Kamni Corporation Sdn Bhd. Previous to that, he was the Group Chief Financial Officer/Executive Director of Siah Brothers Corporation Berhad from 1997 to 2001. Between 1994 to 1997, he was the General Manager - Finance, Business Planning and Business Development of Land and General Berhad. Prior to 1994, he held various positions in the banking and finance industry. He does not hold any directorship in any public listed company.

SHARIFAH NOR HASHIMAH BINTI SYED KAMARUDDIN
Independent, Non-Executive Director, 45 years of age, Malaysian A BSc in Agriculture degree holder from Universiti Putra Malaysia (formerly Universiti Pertanian Malaysia), she was appointed to the Board on 12 August 2005 and member of the Audit and Risk Management Committees on 25 February 2006. She served in the Ministry of Agriculture from 1986 to 1990. She was then transferred to the Perak State Government where she served until 1997 after which she joined Perak Corporation Berhad. She currently holds the position of Assistant General Manager, Land & Property Division. She does not hold any directorship in any public listed company.

NOTE Save as disclosed, all of the Directors named above do not have any conflict of interest with the Company or have any family relationships with any Director and/or substantial shareholders of the Company. None of the Directors have been convicted of any offence.

Chairman's Statement
Dear Shareholders,

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

10

On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of LADANG PERBADANAN-FIMA BERHAD for the financial year ended 31 December 2005.
BUSINESS ENVIRONMENT
CPO prices were on the decline in 2005 compared to the strong showing last year. The national average CPO price recorded for 2005 was RM1,394 per metric tonne against RM1,610 per metric tonne in 2004. Despite the lackluster performance in the CPO market, the Board of Directors is pleased to inform that the Company had performed reasonably well under the challenging business environment.

FINANCIAL RESULTS
The Group is solely involved in the cultivation of oil palms and the production and sale of crude palm oil and palm kernel. Therefore, the Company's results are to a certain extent determined by the prices obtained for its CPO and PK. However, the effects of the declining prices were slightly mitigated by the higher oil extraction rates obtained. Under the aforesaid conditions, the Group's revenue was lower by 9% at RM40.62 million compared with RM44.57 million whilst pre-tax profits dropped by 35% to RM11.61 million from RM17.80 million in 2004.

REVIEW OF OPERATIONS
In 2005, a total of 404.60 hectares was felled and replanted under the Company's accelerated replanting programme. Another 714.30 hectares will be felled and replanted in 2006. As of end 2005, 75% of the Company's planted hectarage consisted of mature palms whilst immature palms stood at 25%. As part of our efforts towards conservation of the environment, we have adopted the zero-burning policy in our replanting; the felled palms were chipped and then pulverized mechanically. With improved agronomic practices and stringent control over crop processing, higher extraction rates were attained, amidst increase in young crop from the replanted fields. The Company is continuing with its efforts to increase mechanisation to improve efficiency whilst reducing reliance on foreign labour, which remains one of the limiting factors plaguing the industry. Your Management initiated the integration of two of the Company's oil palm estates, Ladang Lekir I and Ladang Lekir II into a single entity to streamline administration and plantation management practices that emphasise on continuous improvements in yields and in cost efficiencies. The Estate Management had also set up its own team of security personnel to enhance the security features at the Estates.

11

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Chairman's Statement

DIVIDENDS
Our dividend policy will balance the need to provide shareholders with sustainable cash returns in reward for their continued support and confidence in the Group whilst conserving adequate funds for reinvestment that are necessary to enhance the Group's future profitability and shareholders' value. The Board is pleased to recommend a final dividend of 5 sen less 28% tax, subject to shareholders' approval at the forthcoming Annual General Meeting. Together with the interim dividend of 5 sen less 28% tax paid on 15 September 2005, the total dividends declared for the financial year ended 31 December 2005 is 10 sen less 28% tax totalling RM8.23 million.

PROSPECTS
The Board has been continuosly looking into opportunities to expand the Company's plantation base by exploring the possibility of acquiring land suitable for oil palm cultivation. During the year under review, the Company had received an offer for the purchase of 100% equity interest in two unquoted plantation based companies. As part of the terms of offer and to indicate the Company's interest, the Company had paid a refundable earnest deposit of RM4.8 million. The proposed purchase is being considered by the Board of Directors and the terms of the offer are still being negotiated by both parties. The Company has not to-date entered into any sale and purchase agreement with the offeror. With regard to the CPO market, the outlook for 2006 is encouraging with expectation of CPO price to strengthen at above the 2005 levels, boosted by global demand for biodiesel, the implementation of biofuel policies in Asian countries and increase in demands from China, following their uplifting of import duties on the commodity beginning January 2006. The Board believes that under such positive market sentiments, the Company will continue to perform satisfactorily in 2006.

CORPORATE GOVERNANCE
We have included statements on Corporate Governance and Internal Control in our Annual Report, which affirms the Board's commitment in ensuring that the highest standards of corporate governance are practiced throughout the Group.

Chairman's Statement
DIRECTORATE

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

12

The year 2005 saw the departure of my predecessor, Ir. Muhammad Hafni bin Ibrahim as well as YBhg. Dato' Richard Ong Guan Seng, the Chairman of the Audit Committee. On behalf of the Board, I would like to convey my sincere and heartfelt gratitude and appreciation for their invaluable service and contribution over the years. The Board extends a warm welcome to Puan Sharifah Nor Hashimah binti Syed Kamaruddin, who was appointed Director of the Company with effect from 12 August 2005.

ACKNOWLEDGEMENT
On behalf of the Board, I would like to express my appreciation to the Management team and employees who have worked tirelessly to enable the Company to meet the challenging conditions encountered during the year. I also wish to thank our valued shareholders, business associates and relevant government authorities for their confidence, assistance and continued support to the Group. Finally, my special thanks to my fellow Directors for their wise counsel and support.

DATO' SHAMSUL BAHARI BIN SALLEH KHIR CHAIRMAN

13
1.0 COMPOSITION

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Audit Committee Report

The Board of Directors is pleased to present the Audit Committee Report for the year ended 31 December 2005.

The Audit Committee comprises the following members: Chairman Dato' Haji Ahmad Zakiuddin bin Harun (re-designated on 10 August 2005) Dato' Richard Ong Guan Seng (retired on 22 June 2005) Members Dato' Shamsul Bahari bin Salleh Khir Yeoh Hock Thong (appointed on 10 August 2005) Sharifah Nor Hashimah binti Syed Kamaruddin (appointed on 25 February 2006) Kamisan bin Suja' (resigned on 10 August 2005) Secretary Gowrie Navaratnam

(Independent, Non-Executive Director) (Independent, Non-Executive Director)

(Independent, Non-Executive Director) (Non-Independent, Non-Executive Director) (Independent, Non-Executive Director) (Non-Independent, Non-Executive Director)

2.0

MEETINGS
The Audit Committee met 4 times in the year under review and the attendance of each committee member was as follows: Audit Committee Members Dato' Haji Ahmad Zakiuddin bin Harun Dato' Shamsul Bahari bin Salleh Khir Yeoh Hock Thong Sharifah Nor Hashimah binti Syed Kamaruddin Dato' Richard Ong Guan Seng Kamisan bin Suja' * No meetings were held after the date of her appointment. No. of Meetings Attended 3/4 4/4 1/1 Not applicable* 2/2 3/3

3.0

ACTIVITIES
During the year, the main activities undertaken by the Audit Committee were as follows: (i) Reviewed the annual audit plan with the External Auditors focusing on reporting deadlines, audit strategy and significant risks areas and the impact of changes in the accounting standards and regulatory requirements. Reviewed with the External Auditors the audit report and results of their audit and assessed the assistance and cooperation given by the Management and other employees of the Company to the External Auditors during the course of the audit. Considered and reviewed the audited financial statements of the Group and the Company before recommending the same for the Board of Directors' approval. Reviewed the Internal Audit Department's resources requirement, programmes and plan for the financial year and assessed the Internal Audit Department's performance.

(ii)

(iii)

(iv)

Audit Committee Report
(v) (vi)

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

14

Received and considered reports from the Internal Audit Department on its activities and findings together with recommendations and reported the same to the Board. Recommended to the Board steps to strengthen the internal controls in the Company. Assessed and considered the internal audit coverage on the Company's principal risk areas and the Internal Audit Department's authority and independence in carrying out its function. Reviewed whether Management had taken appropriate action on the recommendations of the Internal Audit Department and assessed whether Management and other employees of the Company had given the required assistance and cooperation to the Internal Audit Department in carrying out its function. Reviewed and considered the quarterly results of the Group and the Company and recommended the same to the Board for approval. Reviewed the Company's application of the principles set out in Part 1 of the Malaysian Code on Corporate Governance and the extent of the Company's compliance with the Best Practices set out in Part 2 of the Malaysian Code on Corporate Governance and recommended to the Board on the necessary action for compliance. Considered and recommended to the Board the re-appointment of the External Auditors and the audit fees to be received by them. Reviewed the Company's compliance with applicable laws, regulations, rules, directives and guidelines.

(vii)

(viii)

(ix)

(x)

(xi)

4.0
4.1

TERMS OF REFERENCE
Composition 4.1.1 (i) (ii) (iii) The Board of Directors shall appoint an Audit Committee from amongst themselves and shall: Comprise of no fewer than 3 members; A majority of the members must be independent directors; and At least one member must be a member of the Malaysian Institute of Accountants or if he is not, then he must be a person who complies with Paragraph 15.10 of the Listing Requirements of Bursa Malaysia Securities Berhad. The Chairman, who shall be elected by the members of the Committee, shall be an independent non-executive director. No alternate director may be appointed as a member of the Committee. In the event of any vacancy in the Audit Committee resulting in non-compliance with subparagraph 4.1.1, the Company must fill the vacancy within 3 months.

4.1.2

4.1.3 4.1.4

4.2

Objectives 4.2.1 (i) The primary objectives of the Audit Committee are to: Provide assistance to the Board in fulfilling its fiduciary responsibilities, particularly in the areas relating to the Company's accounting, operation and management controls, financial reporting and business ethics and policies. Provide greater emphasis on the audit function by increasing the objectivity and independence of the External and Internal Auditors and providing a forum for discussion that is independent of the Management. Maintain through regularly scheduled meetings a direct line of communication between the Board and the External Auditors, Internal Auditors and Financial Management.

(ii)

(iii)

15
4.3 Authority 4.3.1 (i) (ii) (iii) (iv) (v) (vi) (vii)

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Audit Committee Report

The Audit Committee is authorised by the Board to undertake the following: Investigate any matters within its term of reference. Have the necessary resources to perform its duties. Have full and unrestricted access to any information and documents relevant to its activities. Have direct communication channels with External Auditors, Internal Auditors, members of the Management and other employees of the Company and Group. Convene meetings with or request the attendance of the External Auditors, Internal Auditors, members of the Management and/or other employees of the Company during the Committee's meetings whenever deemed necessary. Obtain external legal and other independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it considers necessary. Promptly report to Bursa Malaysia Securities Berhad matters, which result in breach in the listing requirements.

4.4

Functions In fulfilling its primary objectives, the Audit Committee shall, amongst others, discharge the following functions and report to the Board of Directors: 4.4.1 External and Internal Audit The Audit Committee shall oversee all matters relating to the External and Internal Audit as outlined in Paragraphs 4.4.1(i) to (iii) below. (i) External Auditors (a) Review the annual audit plan with the External Auditors prior to the commencement of the annual audit and discuss: • • • The general outline of the scope and timing of the auditors' proposed coverage and reporting deadlines. The nature of the audit procedures to be performed. The extent of any planned reliance on the work of Internal Auditors and the anticipated effect of this reliance on the examination. Any significant accounting and auditing problems that the auditors may foresee. The impact on the financial statements of any new or proposed changes in the accounting standards or legal or regulatory requirements.

• •

The Audit Committee may also request the External Auditors to perform additional audit work directed at specific areas of concern.

Audit Committee Report

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

16

(b) Recommend to the Board the re-appointment of External Auditors on expiry of their tenure. In considering the re-appointment, the Audit Committee shall consider whether there are any reasons (supported by grounds) to believe that the External Auditor is not suitable for re-appointment and if justified, to recommend to the Board for termination. (c) Receive any letter of resignation from the External Auditors of the Company. (d) Recommend to the Board the nomination of a person or persons for appointment as External Auditors. (e) Recommend to the Board the audit fees to be received by the External Auditors. (ii) Internal Audit (a) Review the audit programme, processes and the results of the internal audit programme, processes or investigation undertaken. (b) Assess the adequacy of the scope, functions and resources of the internal audit function and whether it has the necessary authority and independence to carry out its work. (c) Review whether or not Management has taken appropriate actions on the recommendations of the Internal Auditors. (d) Review any appraisal or assessment of the performance of the members of the internal audit function. (e) Approve any appointment or termination of senior staff members of the internal audit function. (f) Be informed of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning. (iii) Others (a) Review the assistance and cooperation given by the Management and other employees of the Company to the External and Internal Auditors. (b) Upon request of the External and/or Internal Auditors, the Chairman of the Audit Committee shall convene a meeting of the Committee, excluding the attendance of the executive members of the Committee, whenever deemed necessary to hear and consider any matters the auditors believed should be brought to the attention of the Committee. 4.4.2 (i) Internal Controls and Financial Reporting Appraise with Management: (a) The adequacy, integrity and effectiveness of the Company's internal controls in safeguarding shareholders' investment and the Company's assets. The internal controls cover financial, operational and compliance controls and risk management. (b) The adequacy of compliance with applicable laws, regulations, rules, directives and guidelines. (c) The adequacy of established policies, procedures and guidelines on the Company's accounting, financial and operational activities. (ii) Meet and discuss with the External and Internal Auditors on their evaluation of the Company's system of internal control. Consider the nature and disposition of the relevant comments appearing in the reports prepared by the Internal Auditors and in the External Auditors' management letter and Management's response.

(iii)

17
4.4.3 (i) (ii) (iii) (iv) (v) (vi)

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Audit Committee Report

Interim and Annual Financial Statements Review the interim financial statements of the Group and Company with Management before recommending approval to the Board for announcement to Bursa Malaysia Securities Berhad. Meet with the Management and External Auditors to discuss and review the annual financial statements of the Group and the Company and the audit report of the External Auditors at the conclusion of the annual audit before recommending to the Board for approval. Review the nature and resolution of any significant accounting and auditing problems encountered during the annual audit. Review the nature of any significant adjustments, reclassifications or additional disclosures proposed by the External Auditors that are currently significant or may become significant in the future. Review compliance with accounting standards and other legal and regulatory requirements. Review any implementation or changes in major accounting policies, accounting standards, significant and unusual events and/or legal and regulatory requirements during the year and the adequacy of disclosure in the financial statements. Review the reasons for major fluctuations in balances in the financial statements for the current year compared to the previous year. Review the nature of any significant and unusual events, commitments, contingent liabilities and post balance sheet events. Review the going concern assumption. Related Party Transactions The Audit Committee shall from time to time consider and review the nature of any related party transactions or conflict of interest situation that may arise within the Group or the Company including any transaction, procedure or course of conduct that raises questions of Management's integrity.

(vii)

(viii)

(ix) 4.4.4

4.4.5

Other Duties and Responsibilities The Audit Committee shall undertake any other additional duties and responsibilities as may be decided by the Board from time to time.

4.5

Meetings 4.5.1 The Audit Committee shall hold a minimum of four (4) meetings a year, although additional meetings may be called at any time at the Chairman of the Audit Committee's discretion. Notice of meetings shall be sent at least seven (7) days before the time set for the meeting to all members of the Committee and any persons that may be required to attend.

4.5.2

4.6

Attendance 4.6.1 4.6.2 A quorum shall comprise of at least three (3) members consisting of a majority of independent directors. The other directors, members of the Management, the Head of Internal Audit and representatives of the External Auditors may be invited to be present in the meeting for the duration where their presence is considered relevant, as determined by the Chairman of the Audit Committee.

Audit Committee Report
4.7 Minutes 4.7.1 4.7.2 4.7.3 4.8

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

18

The Company Secretary shall be the Secretary to the Audit Committee and shall be present at all meetings to record minutes of the meeting. Minutes of each meeting shall be kept and distributed to each member of the Audit Committee. The Chairman shall report on each meeting to the Board.

Performance Evaluation The Board shall review the terms of office and the performance of the Audit Committee and each of its members at least once every 3 years to determine whether the Audit Committee and members have carried out their duties in accordance with their terms of reference.

5.0

INTERNAL AUDIT FUNCTION
The Audit Committee is assisted by the Internal Audit Department in discharging its duties and responsibilities. The Internal Audit Department adopts a risk-based approach, focusing its work mainly on key processes and principal risk areas of the operating units and provides the Audit Committee with independent reports on the state of internal controls of the operating units and the extent of compliance of the operating units with established policies and procedures. The Audit Committee reports the same to the Board after reviewing and deliberating on the internal audit reports. During the financial year, the Internal Audit Department carried out and completed audits of the key processes and principal risk areas and reports were issued to the process owners incorporating its findings and recommendations. The audits focused on key controls to mitigate risks, safeguard assets, compliance with policies and procedures and promote effectiveness of management and efficiency of operations. The Internal Audit Department also followed up on implementation and disposition of previous significant findings and recommendations.

6.0

EMPLOYEES' SHARE OPTION SCHEME ("ESOS")
The Company has not at the moment subscribed to any share scheme for its employees.

This report is made in accordance with a resolution of the Board of Directors dated 3 March 2006.

19
PRINCIPLES STATEMENT 1.0 1.1 BOARD OF DIRECTORS

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Governance Statement

Corporate

The Board of Directors fully appreciates the importance of adopting high standards of corporate governance within the Group. The Board views corporate governance as synonymous with three key concepts; namely transparency, accountability as well as corporate performance. As such, the Board strives to adopt the substance behind corporate governance prescriptions and not merely the form. The Board is thus fully committed to the maintenance of high standards of corporate governance by supporting and implementing the prescriptions of the principles and best practices set out in Parts 1 and 2 of the Malaysian Code on Corporate Governance ("the Code"), respectively. The Board is pleased to present the following statement, which outlines the main corporate governance practices that were in place throughout the financial year, unless otherwise stated.

The following statement sets out how the Company has applied the principles in Part 1 of the Code. The principles are dealt with under the following headings: Board of Directors, Directors' Remuneration, Shareholders and Accountability and Audit.

Board Balance and Responsibilities The Group acknowledges the pivotal role played by the Board of Directors in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfill this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. As at the date of this statement, the Board consists of six (6) members; comprising three (3) Independent NonExecutive Directors and three (3) Non-Independent Non-Executive Directors. The concept of independence adopted by the Board is in tandem with the definition of an Independent Director in Section 1.01 of the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Malaysia"). The key elements for fulfilling the criteria are the appointment of an Independent Director who is not a member of management (a nonexecutive Director) and who is free of any relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Board complied with paragraph 15.02 of the Listing Requirements, which requires that at least two (2) Directors or one-third of the Board of the Company, whichever is the higher, be Independent Directors. The Directors, with their different backgrounds and specialisation, collectively bring with them a wide range of experience and expertise in areas such as operations, corporate affairs, finance and administration. The profile of each Director is presented in Directors' Profile in the Annual Report. There is a clear division of responsibilities at the head of the Company to ensure a balance of authority and power. The Board is led by a non-executive Chairman and the day-to-day operations of the Company are overseen by the Management Committee, on behalf of the Board. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company.

1.2

Board Committees The Board of Directors delegates certain responsibilities to the Board Committees, namely the Management Committee, the Audit Committee, the Risk Management Committee, the Tender Committee and the Nominating Committee in order to enhance business and operational efficiency as well as efficacy.

Corporate Governance Statement

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

20
NOMINATING COMMITTEE

BOARD OF DIRECTORS

MANAGEMENT COMMITTEE

AUDIT COMMITTEE

RISK MANAGEMENT COMMITTEE

TENDER COMMITTEE

All committees have written terms of reference. The Chairman of the various committees briefs the Board on the outcome of the Committee meetings and minutes of these meetings are circulated to the full Board. The members of the Board Committees are listed in the Corporate Information appearing in the Annual Report. • Management Committee The Management Committee was established on 9 November 2000, which functions as a subsidiary of the Board of Directors, to focus on Corporate Governance, the operational performance of the estates and mill and the compliance of internal controls established by the Company. The Management Committee examined in depth of the performance of the business and agreed on recommendations to enhance and improve on operational matters affecting the Group. On matters such as expenditure exceeding a prescribed limit, the Management Committee makes recommendation to the Tender Committee, for their approval. In addition, the Management Committee will explore and recommend to the Board of Directors new business ventures, expansion and diversification opportunities with the aim to enhance the growth and performance of the Group. • Audit Committee The Audit Committee, established on 22 August 1994 assists the Board in discharging its duty in maintaining a sound system of internal control to safeguard the shareholders' investments and the Company's assets. The terms of reference and activities of the Audit Committee are provided in the Audit Committee Report appearing in the Annual Report. • Risk Management Committee The Risk Management Committee was established on 8 October 2001 and is entrusted to formalise the identification, measurement and control of risks that threaten the assets or earnings of the Group. For further details on the Company's risk management, please refer to the Internal Control Statement presented in the Annual Report. • Tender Committee The Tender Committee was established on 28 April 1982 and is entrusted to facilitate a fair and transparent tender submission and review process and award of contract procedure. The Committee is responsible to ensure that the most advantageous tenders are accepted taking into account the price and the quality of the service or product. The Tender Committee, therefore, ensures transparency in the award of contracts. • Nominating Committee The Nominating Committee was established on 8 October 2001 and is entrusted with the specific task of identifying and recommending new nominees to the Board. The actual decision as to who shall be nominated should be the responsibility of the Board as a whole after considering the recommendations of the Committee. The Nominating Committee also reviews the mix of experience and expertise of each Director and assessed the effectiveness of the Board as a whole and the respective Board Committees and contribution of each individual Director.

21
1.3 Meetings 1.4 Supply of Information

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Governance Statement

Corporate

The Board ordinarily meets at least four times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. For the year under review, the Board had 9 meetings. Details of the Directors' meeting attendances since the last financial year can be found in the Statement Accompanying the Notice of Annual General Meeting of the Annual Report. The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. All proceedings from the Board meetings are minuted and signed by the Chairman of the meeting. In addition, the Directors meet, review and approve all corporate announcements, including the announcement of the unaudited interim financial statements, prior to releasing them to Bursa Malaysia.

The Chairman ensures that all Directors have full and timely access to information with Board papers distributed in advance of meetings. Every Director has also unhindered access to the advice and services of the Company Secretaries. The Board believes that the Company Secretaries are capable of carrying out their duties to ensure the effective functioning of the Board. The Articles of Association specify that the removal of the Company Secretary is a matter for the Board as a whole. Prior to the meetings of the Board and the Board Committees, Board papers which include the agenda and information relevant to the issues of the meetings covering the areas of strategic, financial, operational and regulatory compliance matters, are circulated in advance to all the Directors for their information, in order to be properly briefed before the meeting. Further, there is a schedule of matters reserved specifically for the Board's decision, including the approvals of annual budgets, acquisitions and disposals of undertakings and properties of substantial value, major investments and financial decisions and changes to management including key policies and delegated authority limits. The Board as a whole determines, whether as a full Board, as a full Board Committee or in their individual capacity, to take independent professional advice, where necessary and in appropriate circumstances, in furtherance of their duties, at the Group's expense. 1.5 Directors' Training In-house briefings were organised by the Company in 2005 to aid Board members' understanding of the Company's business operations and financial reporting. Director's attendance at external courses was based on the training needs of individual Directors. A Director who was appointed in August 2005 completed her Mandatory Accreditation Programme in October 2005 and shall be attending training in 2006 as determined by the Board. 1.6 Re-election The Articles of Association provide that at the first Annual General Meeting ("AGM") of the Company, all the Directors shall retire from office and at least one-third of the Board, are subject to retirement by rotation at each subsequent AGM. The Directors to retire in each year are the Directors who have been longest in office since their appointment or re-appointment. The Articles of Association also provide that all the Board members shall also retire once at least in each three years and shall be eligible for re-election. These provide an opportunity for the shareholders to renew their mandates. The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meeting attendance and the shareholdings in the Group of each Director standing for election are furnished in the Annual Report, which also includes the Notice of the AGM. The Company Secretaries will ensure that all appointments are properly made, that all information necessary is obtained, as well as all legal and regulatory obligations are met.

Corporate Governance Statement
2.0 DIRECTORS' REMUNERATION

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

22
Total RM' 000 300

The Company pays its Directors annual fees, which are approved annually by the shareholders. Members of the Board and Board Committees are paid allowances for each meeting they attended. In addition, members of the Management Committee are paid allowances for their additional responsibility. The nature and amount of each major element of the remuneration of the Directors of the Company for the financial year ended 31 December 2005 are as follows: (a) Aggregate remuneration of Directors categorised into the appropriate components: Fees RM' 000 Non-Executive Directors 241 Other emoluments RM' 000 59

(b) The number of Directors of the Company whose total remuneration falls within the respective bands of RM50,000: Range of remuneration Less than RM50,000 Between RM50,000 and RM100,000 * Includes Directors who resigned during the financial year. 3.0 SHAREHOLDERS The policy of the Company is to maintain an active dialogue with its shareholders with the intention of giving shareholders as clear and complete a picture of the Company's performance and position as possible. The Annual General Meeting provides the platform for two-way communication between the Company and shareholders. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. At the AGM, the shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group's operations in general. Members of the Boards as well as the External Auditors of the Company are present to answer questions raised by the shareholders. Besides the various announcements made to Bursa Malaysia, the timely release of the unaudited interim financial statements provides shareholders with an overview of the Group's performance and operations. Members of the public can also access the Company's announcements and Annual Reports from the Bursa Malaysia's website. In addition, nominees of the Company's major shareholders sit in the Board. This provides a forum for interactions and direct communications between the Board, Management and major shareholders. All queries from shareholders, whether by mail or telephone call, are communicated to the Company Secretaries. Number of Non-Executive Directors 7* 1

23
4.0 4.1 Financial Reporting 4.2 Internal Control 4.3

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Governance Statement

Corporate

ACCOUNTABILITY AND AUDIT

The Board aims to provide and present a balanced and meaningful assessment of the Group's financial performance and prospects at the end of the financial year, primarily through the annual financial statements and unaudited interim financial statements to shareholders as well as the Chairman's Statement in the Annual Report. The Board is assisted by the Audit Committee to oversee the Group's financial reporting processes and the quality of its financial reporting. The directors' responsibility in respect of the preparation of the audited financial statements is detailed in the Directors' Responsibility Statement included in the Annual Report.

The information on the Group's internal control is detailed in the Internal Control Statement appearing in the Annual Report. Relationship with the Auditors Key features underlying the relationship of the Audit Committee with the External and Internal Auditors including a summary of the activities of the Audit Committee during the year and evaluation of the independent audit process are included in the Audit Committee Report appearing in the Annual Report.

COMPLIANCE STATEMENT Save as disclosed below, the Group has complied with the Principles and Best Practices of the Code throughout the year: (a) appointment of a senior independent non-executive director to whom concerns may be conveyed has not been made as the Board believes to be not necessary since the Chairman encourages full participation during discussion and deliberation of issues affecting the Group by all the Board members; establishment of a Remuneration Committee has not been undertaken as none of the Board members are Executive Directors. In addition, the Board as a whole recommends the Directors' fees to be approved at the AGM and determines the other emoluments of the Directors with the individual Director abstaining from decisions in respect of their individual remuneration; remuneration of each member of the Board of Directors is not detailed as the Directors after due consideration, are of the opinion that the transparency and accountability aspects of Corporate Governance as applicable to Directors' remuneration are appropriately served by the band disclosure made in this Statement; and there is informal succession planning within the organisation whereby middle Management is constantly being appraised to assess their capability of taking over the Senior Management's positions.

(b)

(c)

(d)

This statement is made in accordance with a resolution of the Board of Directors dated 3 March 2006.

Internal Control Statement
RESPONSIBILITY

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

24

In accordance with the principles of good corporate governance, the Board of Directors of Ladang Perbadanan-Fima Berhad ("the Board") is pleased to provide the disclosure statement on the state of internal control of the Group for the year under review.

The Board affirms its overall responsibility for maintaining a sound system of internal control to safeguard shareholders' investment and the Group's assets. The internal control system, by its nature, is designed to manage the Group's risks rather than to eliminate the risk of failure to achieve business objectives of the Group. Accordingly, the system can only provide reasonable and not absolute assurance against material misstatement, fraud or loss.

KEY ELEMENTS OF INTERNAL CONTROL FRAMEWORK The key elements of the Group's system of internal control are summarised as follows: 1. Risk Management The Board regards risk management as an integral part of the business operations and has adopted a risk management framework for the Group to identify, evaluate and manage significant risks faced by the Group. The Management of each operating units is responsible for the identification and evaluation of significant risks applicable to their respective areas of operations and to formulate suitable internal controls to manage the risks. For the year under review, the process was reviewed by the Board. The Board confirms that the risk management process is in place for the financial year under review. 2. Code of Business Conduct and Ethics All employees are required to adhere to the Code of Business Conduct and Ethics, which defines the minimum standard of behaviour and ethical conduct for all employees of the Group. 3. Internal Audit Function The Internal Audit function provides the Board via the Audit Committee with the independent assurance on the adequacy and effectiveness of the internal control system within the Group. Details of the activities undertaken by the Audit Committee and Internal Audit function are set out in the Audit Committee Report. 4. Other Key Elements of Internal Control These include the following: • Delegation of responsibilities to Board Committees through defined terms of reference including authorisation levels for various aspect of the business. The Board receives and reviews the Group's financial statements including quarterly reports to Bursa Malaysia Securities Berhad on a regular basis. The financial results are monitored against the year's budget and previous year's results and major variances are deliberated by the Board. Regular meetings of the Board Management Committee are conducted to review and monitor matters pertaining to the business operations based on reports, which provide information on financial and non-financial matters. Comprehensive annual budgeting process requiring all operating units to submit budgets which are reviewed by the Board Management Committee and approved by the Board. Critical information of the Group such as financial data and human resource data are captured within the various information systems in place to keep track of the Group's operations. Relevant information is also obtained from external sources to monitor and benchmark the Group's performance.

25
• • • • • • • CONCLUSION

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Internal Control Statement

Segregation of duties is in place to reduce scope for error and fraud. Major purchases of goods and contract works are referred to the Board Tender Committee or Board of Directors for consideration and approval. Services of a Visiting Adviser and Mill Consultant are engaged to review and advise the Board Management Committee on the estate and mill operations. Adequate insurance coverage on major assets is in place to ensure that the Group's assets are sufficiently protected against any mishap that will result in losses to the Group. Visits by members of the Board Management Committee and Management to the operating units. Emphasis is placed on improving the quality and ability of employees with continuing education, training and development. Investment proposals covering the acquisition of properties and long term investments are thoroughly appraised by the Board.

The Board is of the view that there was no significant breakdown or weakness in the Group's system of internal control that may result in material losses being incurred by the Group for the financial year under review. The External Auditors have reviewed the Internal Control Statement in accordance with the Auditing Technical Release 5, Guidance for Auditors on the review of Directors' Statement on Internal Control, for inclusion in the Annual Report 2005. Based on their review, the External Auditors have reported that nothing had come to their attention that caused them to believe that the said Statement was inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of the internal controls of the Group.

This statement is made in accordance with a resolution of the Board of Directors dated 3 March 2006.

Additional Disclosures
1. Non-Audit Fees Name of Auditors KPMG Desa Megat & Co. KPMG Tax Services Sdn. Bhd.

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

26
RM 6,000 4,700 RM 3,000

Non-audit fees paid to the Company's External Auditors in the financial year ended 31 December 2005 were as follows: Nature of Engagement Review of Internal Control Statement Taxation Services

2.

Recurrent Related Party Transactions of Revenue Nature Recurrent related party transactions of a revenue nature of the Company for the financial year ended 31 December 2005 were as follows: Related Party Perak Meat Industries Sdn Bhd Relationship A company which Dato' Shamsul Bahari bin Salleh Khir has an interest Nature of Transaction Lease rental received

3.

Revaluation Policy on Landed Properties The revaluation policy of the Group in relation to landed properties is set out in the Notes to the Financial Statements appearing in the Annual Report.

4.

Sanctions and/or Penalties During the financial year, there were no sanctions and/or penalties imposed on the Company or its subsidiary company, Directors or Management arising from any significant breach of rules/guidelines/legislations by the relevant regulatory authorities.

5.

Profit Estimate, Forecast or Projection The Group has not provided any profit estimate, forecast or projection in the financial year ended 31 December 2005.

6.

Variation in Results There was no major variation in results (differ by 10% or more) from unaudited results announced.

7.

Profit Guarantee The Group has not provided any profit guarantee in the financial year ended 31 December 2005.

8.

Material Contracts There were no material contracts entered into by the Company and its subsidiary company which involved Directors' and substantial shareholders' interests either still subsisting at the end of the financial year ended 31 December 2005 or entered into since the end of the previous financial year.

27
9. Share Buyback 10. 11. 12.

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Additional Disclosures

During the financial year under review, the Company did not exercise any share buy backs permitted by Section 67A, Companies Act, 1965. Utilisation of Proceeds Raised from Corporate Proposals There were no corporate proposals conducted in the financial year under review. Options, Warrants and Convertible Securities There were no options, warrants or convertible securities in issue in the financial year under review. American Depository Receipt ("ADR") or Global Depository Receipt ("GDR") Programme The Company did not sponsor any ADR or GDR programme during the financial year.

Financial Calendar
Financial Events Quarterly Result Announcement • • • • 1st 2 3
nd rd

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

28

Date

Quarter 2005 Quarter 2005 Quarter 2005

26 May 2005 10 August 2005 29 November 2005 27 February 2006

4th Quarter 2005

2005 Annual Report

28 March 2006

Notice of Annual General Meeting

28 March 2006

26th Annual General Meeting Dividends • Interim • • • • • Declaration Entitlement Book Closure Payment

29 April 2006

10 August 2005 1 September 2005 2 September 2005 15 September 2005

Final* • • • • Declaration Entitlement Book Closure Payment 25 February 2006 26 May 2006 29 May 2006 12 June 2006

* Subject to shareholders' approval at the Company's 26th Annual General Meeting.

29
Results Revenue Profit before tax Profit after tax Assets and Liabilities Share capital Reserves Shareholders' funds Share Information Basic earnings per share Gross dividend per share Net assets per share

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Financial Highlights
2001 (Restated) RM'million RM'million RM'million 30.5 3.5 2.3 35.8 13.9 10.0 40.5 14.7 10.6 44.6 17.8 17.8 40.6 11.6 8.3 2002 2003 2004 2005

RM'million RM'million RM'million

114.3 50.3 164.6

114.3 51.3 165.6

114.3 52.0 166.3

114.3 57.5 171.8

114.3 49.3 163.6

sen sen RM

2.04 6.00 1.44

8.77 12.00 1.45

9.27 15.00 1.46

15.57 20.00 1.50

7.25 10.00 1.43

164.6

165.6

17.8

166.3

171.8 2004 1.50 2005 2004 2005 1.43 163.6

14.7

Profit before tax

3.5

Shareholders' fund
2001

44.6

40.5

40.6

13.9

30.5

35.8

11.6

Revenue

2002

2003

2001 2001 2002 2003 2004 15.57 2005

2002

2003

2004

2005 1.44 1.45 2002 1.46 2003

20.00

Gross dividend per share

Basic earings per share

7.25

6.00

Net assets per share
2001

12.00

15.00

8.77

9.27

2001

2.04

2001

2002

2003

2004

2005

2002

2003

2004

2005

10.00

Quarterly Performance
1st Quarter Financial Performance Revenue Operating profit Profit before taxation Net profit after taxation Basic earnings per share Gross dividend per share RM'million RM'million RM'million RM'million sen sen 8.95 1.99 2.30 1.58 1.39 0.00 11.58 3.56 3.87 2.77 2.42 5.00 2nd Quarter

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

30
4th Quarter Year 2005 7.92 0.98 1.23 0.94 0.82 5.00 40.62 10.53 11.61 8.29 7.25 10.00 4,483 1,193 23,532 6,373

3rd Quarter

12.17 4.00 4.21 3.00 2.62 0.00

Plantation Production Crude palm oil Palm kernel m/tonnes m/tonnes 5,651 1,585 6,464 1,817 6,934 1,778

3.87

4.21

Basic earnings per share

11.58

12.17

2.30

1.39

2.42

2.62 0.82

8.95

Profit before tax

7.92

1.23

1st 2nd 3rd 4th Quarter Quarter Quarter Quarter

Revenue

1st 2nd 3rd 4th Quarter Quarter Quarter Quarter

1,817 6,464 6,934 1,585

1,778 1,193

1st 2nd 3rd 4th Quarter Quarter Quarter Quarter

5,651

CPO production

PK production
1st 2nd 3rd 4th Quarter Quarter Quarter Quarter

1st 2nd 3rd 4th Quarter Quarter Quarter Quarter

4,483

31
Estate Ladang Lekir Ladang Changkat Chermin Ladang Raja Hitam Total 71 %

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Area Statement
As At 31 December 2005
Oil Palms Mature Hectare 3,015.74 1,961.03 764.70 5,741.47 Immature Hectare 866.60 404.60 647.50 1,918.70 Total Hectare 3,882.34 2,365.63 1,412.20 7,660.17 Others Hectare 257.89 175.76 77.45 511.10 Total Hectare 4,140.23 2,541.39 1,489.65 8,171.27

Land Usage
30 %

Age Profile
48 %

5%

24 % Others

13 %

9% 16 - 20 Years Above 20 Years

Planted - Mature Planted - Immature

0 - 10 Years 11 - 15 Years

Location Of Estates

Lad
an

gR

aja H a m it

La

da

ng

Le k

ir

L a d an g Chang

PERAK

Ce

Ipoh

ka

t

rm

in
Lumut Sitiawan

Properties
As At 31 December 2005
Location Description & Existing Use Tenure Year of Expiry Area

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

32
Date of Last Acquisition/ Revaluation Net Book Value RM'million Revalued on 29 July 1993 26.14 Revalued on 27 July 1993 10.62

Approximate Age of Buildings

Lot 3916, Mukim Lekir, Daerah Manjung, Perak and Lot 67 & 68, Mukim Jaya Baru, Daerah Perak Tengah, Perak.

Ladang Lekir (Oil palm and mango plantation)

Freehold

-

4,140.23 hectares

21 - 24 years

Lot 65 & 66, Mukim Jaya Baru, Daerah Perak Tengah, Perak, Lot 10944, Mukim Bota, Daerah Perak Tengah, Perak, P.T. 365 & 366, Mukim Sitiawan, Daerah Manjung, Perak and Lot 20079, 20402 - 20406 & 20409 - 20412, Mukim Sitiawan, Daerah Manjung, Perak.

Ladang Changkat Leasehold Chermin (Oil palm plantation & palm oil mill)

2080

2,541.39 hectares

21 - 24 years

P.T. 344, 345 & 371, Ladang Raja Hitam Mukim Sitiawan, (Oil palm plantation) Daerah Manjung, Perak and P.T. 86 & Lot 7761, Mukim Beruas, Daerah Manjung, Perak.

Freehold

-

1,489.65 hectares

24 years

Revalued on 26 July 1993

9.41

Head Office H.S. (D) Ka 1132/74, Lot 11730S, Bandar Ipoh, Daerah Kinta, No. 10, Persiaran Gopeng Satu, 31350 Ipoh, Perak.

Head Office (Office building)

Freehold

-

1,843.10 sq. metres

31 years

Acquired on 30 September 1993

0.13

33
1. SHARE CAPITAL Authorised share capital Issued and fully paid Class of shares Voting right 2. Size of shareholdings Total

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Shareholding Statistics
As At 20 February 2006
: : : : 150,000,000 ordinary shares of RM1.00 each 114,300,000 ordinary shares of RM1.00 each Ordinary share of RM1.00 each One vote per ordinary share

ANALYSIS BY SIZE OF SHAREHOLDINGS No. of shareholders 2 1,063 380 50 26 3 1,524 % of Total % of issued shareholders shareholdings share capital 0.13 69.75 24.93 3.28 1.71 0.20 100.00 100 1,049,300 1,364,500 1,062,500 33,099,600 77,724,000 114,300,000 0.00 0.92 1.19 0.93 28.96 68.00 100.00

Less than 100 100 to 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares

3.

SUBSTANTIAL SHAREHOLDERS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS No. of shares held 36,524,000 27,520,000 17,600,000 % of issued share capital 31.95 24.08 15.40

No. 1. 2. 3.

Name of shareholders Glamour Green Sdn Bhd Taipan Heritage Sdn Bhd Ablington Holdings Sdn Bhd

4.

DIRECTORS' SHAREHOLDINGS AS PER THE REGISTER OF DIRECTORS' SHAREHOLDINGS Direct interest 10,000 Deemed interest 2,000,000 36,524,000 36,524,000 Total shareholdings 2,000,000 10,000 36,524,000 36,524,000 % of issued share capital 1.75 0.01 31.95 31.95 -

No. 1. 2. 3. 4. 5. 6.

Name of Directors Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Dato' Jaafar bin Lajis Kamisan bin Suja' Yeoh Hock Thong Sharifah Nor Hashimah binti Syed Kamaruddin

Shareholding
Statistics As At 20 February 2006
5. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Name of shareholders Amsec Nominees (Tempatan) Sdn Bhd (Ambank (M) Berhad for Glamour Green Sdn Bhd) HDM Nominees (Tempatan) Sdn Bhd (Malaysian Assurance Alliance Berhad for Taipan Heritage Sdn Bhd) Ablington Holdings Sdn Bhd Hamidah binti Abdul Rahman HDM Nominees (Tempatan) Sdn Bhd (Leong Tuck Onn for Taipan Heritage Sdn Bhd) Ng Song Choon Enterprises Sdn Berhad United Plantations Berhad HDM Nominees (Asing) Sdn Bhd (DBS Vickers Secs (S) Pte Ltd for Ong Beng Huat) S.B.S.K. Plantations Sdn Bhd Malaysian Assurance Alliance Berhad Mayban Securities Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Poh Gaik Lye) Malaysian Assurance Alliance Berhad Malaysian Assurance Alliance Berhad Ong Teng Kek RHB Capital Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Leong Wei Kong) Malaysian Assurance Alliance Berhad TA Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Ronald Leong Vui Khiong) M & A Nominee (Asing) Sdn Bhd (FRLA Services Sdn Bhd for Thomas Chua Boon Lee) EB Nominees (Tempatan) Sendirian Berhad (Pledged Securities Account for Ho Soon Mei) EB Nominees (Tempatan) Sendirian Berhad (Pledged Securities Account for Ong Teng Kek) Cimsec Nominees (Tempatan) Sdn Bhd (EON Finance Berhad for Azian bin Osman) M & A Nominee (Tempatan) Sdn Bhd (Jendarata Bernam Provident Fund) Sinny United Sdn Bhd RHB Capital Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Abd Aziz bin Jantan) SK Capital Sdn Bhd M & A Nominee (Tempatan) Sdn Bhd (United Plantations Workers Benevolent Retirement Scheme) Sahamann @ Basir bin Ismail Ong Tong Chen Mayban Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Thai Seong) Mayban Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Cheah Siew Huen)

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

34
No. of shares held 36,524,000 23,600,000 17,600,000 5,284,000 3,920,000 2,445,000 2,115,000 2,000,000 2,000,000 1,567,000 1,532,000 1,477,000 1,475,000 1,353,000 1,119,000 1,022,000 800,000 744,000 730,000 670,000 500,000 432,500 428,800 381,000 370,000 320,000 156,000 135,000 123,300 50,000 % of issued share capital 31.95 20.65 15.40 4.62 3.43 2.14 1.85 1.75 1.75 1.37 1.34 1.29 1.29 1.18 0.98 0.89 0.70 0.65 0.64 0.59 0.44 0.38 0.38 0.33 0.32 0.28 0.14 0.12 0.11 0.04

THIRTY (30) LARGEST SHAREHOLDERS AS IN THE REGISTER OF MEMBERS AND THE RECORD OF DEPOSITORS

35

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Reponsibility Statement

Directors'

The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of their results and cash flows for the financial year then ended. In preparing the financial statements for the financial year ended 31 December 2005, the Directors have: • complied with the applicable approve accounting standards in Malaysia • adopted and consistently applied appropriate accounting policies • made judgements and estimates that are prudent and reasonable The Directors have responsibility for ensuring that the Group and the Company keep accounting records, which disclose with reasonable accuracy the financial position of the Group and the Company and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Directors are also responsible 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. The Directors consider that they have pursued the actions necessary to meet their responsibilities as set out in this Statement.

This statement is made in accordance with a resolution of the Board of Directors dated 3 March 2006.

Financial
Directors' Report Statement by Directors Statutory Declaration Auditors' Report Balance Sheets Income Statements Statements of Changes in Equity Cash Flow Statements Notes to the Financial Statements

Statements
38 - 40 41 42 43 44 45 46 47 48 - 62

Directors' Report
For The Year Ended 31 December 2005
PRINCIPAL ACTIVITIES

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

38
Group RM'000 Company RM'000 8,287 8,286

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2005.

The Company is principally engaged in oil palm cultivation and production and sale of crude palm oil and palm kernel, whilst the principal activity of the subsidiary is set out in Note 4 to the financial statements. There has been no significant change in the nature of these activities during the financial year. RESULTS

Net profit for the year

RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the year.

DIVIDENDS Since the end of the previous financial year, the Company paid: (i) a final dividend of 10 sen less 28% tax and a special dividend of 5 sen less 28% tax for the year ended 31 December 2004 amounting to RM8,229,600 and RM4,114,800 respectively on 12 July 2005; and (ii) an interim dividend of 5 sen less 28% tax totalling RM4,114,800 in respect of the financial year ended 31 December 2005 on 15 September 2005. The Directors recommend a final dividend of 5 sen less 28% tax in respect of the financial year ended 31 December 2005 amounting to RM4,114,800 subject to approval of the shareholders at the forthcoming Annual General Meeting.

DIRECTORS OF THE COMPANY Directors who served since the date of the last report are: Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Dato' Jaafar bin Lajis Kamisan bin Suja' Yeoh Hock Thong Sharifah Nor Hashimah binti Syed Kamaruddin Ir. Muhammad Hafni bin Ibrahim Dato' Richard Ong Guan Seng

(appointed on 12.08.2005) (resigned on 30.06.2005) (retired on 22.06.2005)

In accordance with Article 66 of the Company's Articles of Association, Dato' Shamsul Bahari bin Salleh Khir and Dato' Haji Ahmad Zakiuddin bin Harun retire by rotation from the Board at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. Sharifah Nor Hashimah binti Syed Kamaruddin, who was appointed during the year retires in accordance with Article 72 of the Company's Articles of Association and, being eligible, offers herself for re-election.

39
DIRECTORS' SHAREHOLDINGS Dato' Jaafar bin Lajis - held directly - deemed interest Kamisan bin Suja' - held directly - deemed interest

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Directors' Report
For The Year Ended 31 December 2005
<------------- Number of Ordinary Shares --------------> of RM 1 each Balance at Balance at 1.1.2005 Bought Sold 31.12.2005

The holdings and deemed holdings in the ordinary shares of the Company of those who were Directors at year end as recorded in the Register of Directors' Shareholdings are as follows:

Dato' Shamsul Bahari bin Salleh Khir - held directly - deemed interest Dato' Haji Ahmad Zakiuddin bin Harun - held directly - deemed interest

2,000,000

-

-

2,000,000

10,000 -

-

-

10,000 -

36,524,000

-

-

36,524,000

36,524,000

-

-

36,524,000

None of the other Directors holding office at 31 December 2005 had any interest in the ordinary shares of the Company and of its related corporations during the financial year.

DIRECTORS' BENEFITS Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than any deemed benefits that may accrue to certain Directors by virtue of normal trading transactions by the Group and the Company with related parties as disclosed in Note 22 to the financial statements. There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in the Company or any other body corporate.

ISSUE OF SHARES There were no changes in the issued and paid-up capital of the Company during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued shares of the Company during the year.

Directors' Report
For The Year Ended 31 December 2005
OTHER STATUTORY INFORMATION

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

40

Before the financial statements of the Group and the Company were made out, the Directors took reasonable steps to ascertain that: (i) there are no bad debts to be written off and no provision need to be made for doubtful debts, and (ii) all current assets have been stated at the lower of cost and net realisable value. At the date of this report, the Directors are not aware of any circumstances: (i) that would render it necessary to write off any bad debts or provide for any doubtful debts, or (ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or (iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or (iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist: (i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or (ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liabilities of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2005 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

AUDITORS The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-appointment.

Signed in accordance with a resolution of the Directors:

Dato' Shamsul Bahari bin Salleh Khir Director

Yeoh Hock Thong Director

IPOH Date: 3 March 2006

41

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Statement By Directors
Pursuant to Section 169(15) of the Companies Act, 1965

In the opinion of the Directors, the financial statements set out on pages 44 to 62 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2005 and of the results of their operations and cash flows for the year ended on that date.

Signed in accordance with a resolution of the Directors:

Dato' Shamsul Bahari bin Salleh Khir Director

Yeoh Hock Thong Director

IPOH Date: 3 March 2006

Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

42

I, Gowrie Navaratnam, the officer primarily responsible for the financial management of Ladang Perbadanan-Fima Berhad, do solemnly and sincerely declare that the financial statements set out on pages 44 to 62 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed at Ipoh in the State of Perak Darul Ridzuan on 3 March 2006

) ) ) ) )

Gowrie Navaratnam

BEFORE ME:

Clarence Joseph (No. A044) Commissioner for Oaths Ipoh

43
In our opinion:

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

of the Auditors
To the Members

Report

We have audited the financial statements set out on pages 44 to 62. The preparation of the financial statements is the responsibility of the Company's Directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the content of this report. We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards require that we plan and perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to give reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit also includes an assessment of the accounting principles used and significant estimates made by the Directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion.

(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of: (i) the state of affairs of the Group and of the Company at 31 December 2005 and the results of their operations and cash flows for the year ended on that date; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; and (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and its subsidiary have been properly kept in accordance with the provisions of the said Act. We are satisfied that the financial statements of the subsidiary that have been consolidated with the Company's financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit report on the financial statements of the subsidiary was not subject to any qualification and did not include any comment made under subsection (3) of Section 174 of the Act.

KPMG Desa Megat & Co. Firm Number: AF-0759 Chartered Accountants

Johan Idris Partner Approval Number: 2585/10/06 (J)

IPOH Date: 3 March 2006

Balance Sheets
At 31 December 2005
Note PROPERTY, PLANT AND EQUIPMENT PLANTATION DEVELOPMENT EXPENDITURE SUBSIDIARY COMPANY ASSOCIATED COMPANY OTHER INVESTMENTS CURRENT ASSETS Inventories Trade receivables Other receivables Tax recoverable Amount due from subsidiary company Deposits Cash and bank balances 7 8 4 9 1,410 713 7,079 283 22,500 745 32,730 CURRENT LIABILITIES Trade payables Other payables Provision for taxation 938 2,332 3,270 Net current assets 29,460 178,163 Financed by: CAPITAL AND RESERVES Share capital Reserves 10 114,300 49,288 163,588 LONG TERM LIABILITIES Deferred taxation Retirement benefits 12 13 12,621 1,954 14,575 178,163 2 3 4 5 6 50,144 98,439 120

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

44
COMPANY 2005 2004 RM'000 RM'000 50,144 98,439 120 51,172 98,439 120 1,410 713 7,079 283 9 22,500 745 32,739 1,917 678 2,704 8 37,800 194 43,301

GROUP 2005 2004 RM'000 RM'000 51,172 98,439 120

1,917 678 2,704 37,800 194 43,293

1,771 3,516 1,095 6,382 36,911 186,642

938 2,331 3,269 29,470 178,173

1,771 3,515 1,095 6,381 36,920 186,651

114,300 57,462 171,762

114,300 49,298 163,598

114,300 57,471 171,771

13,037 1,843 14,880 186,642

12,621 1,954 14,575 178,173

13,037 1,843 14,880 186,651

The financial statements were approved and authorised for issue by the Board of Directors on 3 March 2006.

The notes set out on pages 48 to 62 form an integral part of, and should be read in conjunction with, these financial statements.

45
Revenue Operating profit Interest income Profit before taxation Tax expense Net profit for the year Earnings per share (sen)

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Income Statements
For The Year Ended 31 December 2005
Note GROUP 2005 2004 RM'000 RM'000 40,616 44,574 COMPANY 2005 2004 RM'000 RM'000 40,616 44,574 14

15 17

10,532 1,077 11,609

16,538 1,265 17,803 (9) 17,794

10,533 1,077 11,610 (3,323) 8,287

16,539 1,265 17,804 (9) 17,795

18

(3,323) 8,286

19 20

7.2 7.2

15.6 14.4

Net dividends per ordinary share (sen)

The notes set out on pages 48 to 62 form an integral part of, and should be read in conjunction with, these financial statements.

Statements of Changes in Equity
For The Year Ended 31 December 2005
Share capital RM'000 GROUP At 1 January 2004 Net profit for the year Dividends: - 2003 final (Note 20) - 2004 interim (Note 20) At 31 December 2004 Net profit for the year Dividends: - 2004 final (Note 20) - 2004 special (Note 20) - 2005 interim (Note 20) At 31 December 2005 114,300 114,300 114,300 20,409 20,409 20,409

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

46
Total reserves RM'000 Total RM'000 52,013 17,794 (8,230) (4,115) 57,462 8,286 (8,230) (4,115) (4,115) 49,288 166,313 17,794 (8,230) (4,115) 171,762 8,286 (8,230) (4,115) (4,115) 163,588

Nondistributable Distributable Revaluation Retained reserve profits RM'000 RM'000

31,604 17,794 (8,230) (4,115) 37,053 8,286 (8,230) (4,115) (4,115) 28,879

Note 10 COMPANY At 1 January 2004 Net profit for the year Dividends: - 2003 final (Note 20) - 2004 interim (Note 20) At 31 December 2004 Net profit for the year Dividends: - 2004 final (Note 20) - 2004 special (Note 20) - 2005 interim (Note 20) At 31 December 2005 114,300 114,300 114,300

Note 11

20,409 20,409 20,409

31,612 17,795 (8,230) (4,115) 37,062 8,287 (8,230) (4,115) (4,115) 28,889

52,021 17,795 (8,230) (4,115) 57,471 8,287 (8,230) (4,115) (4,115) 49,298

166,321 17,795 (8,230) (4,115) 171,771 8,287 (8,230) (4,115) (4,115) 163,598

Note 10

Note 11

The notes set out on pages 48 to 62 form an integral part of, and should be read in conjunction with, these financial statements.

47
Net profit before taxation

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Cash Statements Flow
For The Year Ended 31 December 2005
GROUP 2005 2004 RM'000 RM'000 COMPANY 2005 2004 RM'000 RM'000

Cash flows from operating activities 11,609 124 2,041 (4) (1,075) (2) (32) 108 201 12,970 507 (35) (4,564) (833) (1,184) (6,109) Cash generated from operations Income taxes paid Retirement benefits paid Income taxes refunded Net cash generated from operating activities Cash flows from investing activities Proceeds from disposal of equipment Purchase of plant and equipment Dividends from quoted investments Interest income from fixed deposits Interest income from vehicle loans Net cash generated from investing activities Cash flows from financing activities Dividends paid Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Analysis of cash and cash equivalents: Deposits (excluding deposits pledged) Cash and bank balances 22,000 745 22,745 37,300 194 37,494 22,000 745 22,745 37,300 194 37,494 (16,460) (14,749) 37,494 22,745 (12,345) 3,108 34,386 37,494 (16,460) (14,749) 37,494 22,745 (12,345) 3,108 34,386 37,494 32 (1,245) 4 1,264 2 57 52 (1,272) 3 1,216 3 2 32 (1,245) 4 1,264 2 57 52 (1,272) 3 1,216 3 2 6,861 (5,117) (90) 1,654 17,803 124 1,750 (3) (1,262) (3) (52) 87 54 18,498 (484) 238 137 731 594 1,216 19,714 (4,554) 291 15,451 11,610 124 2,041 (4) (1,075) (2) (32) 108 201 12,971 507 (35) (4,564) (833) (1,184) (1) (6,110) 6,861 (5,117) (90) 1,654 17,804 124 1,750 (3) (1,262) (3) (52) 87 54 18,499 (484) 238 137 731 594 (1) 1,215 19,714 (4,554) 291 15,451 Adjustments for: Amortisation Depreciation Dividends from quoted investments Interest income from fixed deposits Interest income from vehicle loans Gain on disposal of equipment Property, plant and equipment written off Retirement benefits charged Operating profit before working capital changes Decrease / (Increase) in inventories (Increase) / Decrease in trade receivables (Increase) / Decrease in other receivables (Decrease) / Increase in trade payables (Decrease) / Increase in other payables Increase in amount due from subsidiary company

The notes set out on pages 48 to 62 form an integral part of, and should be read in conjunction with, these financial statements.

Notes Financial Statements
To The 31 December 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of accounting

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

48

The following accounting policies are adopted by the Group and by the Company and are consistent with those adopted in previous years.

The financial statements of the Group and of the Company are prepared on the historical cost basis and in compliance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. 1.2 Basis of consolidation Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of the subsidiary are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. The financial statements of the subsidiary are consolidated using the acquisition method of accounting. A subsidiary is excluded from consolidation when either control is intended to be temporary if the subsidiary is acquired and held exclusively with a view of its subsequent disposal in the near future and it has not previously been consolidated or it operates under severe long term restrictions which significantly impair its ability to transfer funds to the Company. Subsidiaries excluded on these grounds are accounted for as investments. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the year are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries' net assets are determined and these values are reflected in the Group financial statements. The difference between the acquisition cost and the fair values of the subsidiaries' net assets is reflected as goodwill or negative goodwill as appropriate. Intragroup transactions and balances and the resulting unrealised profits are eliminated on consolidation. Unrealised losses resulting from intragroup transactions are also eliminated unless the cost cannot be recovered. 1.3 Associated company Associated companies are those enterprises in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the total recognised gains and losses of the associated company on an equity accounted basis from the date that significant influence effectively commences until the date that significant influence effectively ceases. Unrealised profits arising on transactions between the Group and its associated company which are included in the carrying amount of the related assets and liabilities are eliminated partially to the extent of the Group's interest in the associated company. Unrealised losses on such transactions are also eliminated partially unless cost cannot be recovered. Goodwill on acquisition is calculated based on the fair value of net assets acquired. 1.4 Property, plant and equipment Freehold land and long term leasehold land are stated at valuation. Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Property, plant and equipment retired from active use and held for disposal are stated at the carrying amount at the date when the asset is retired from active use, less impairment losses, if any. Depreciation and amortisation (a) Freehold and leasehold land Freehold land is not amortised. Leasehold land is amortised in equal instalments over the lease period of 99 years.

49
1.
Revaluation

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Notes Financial Statements
To The 31 December 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Property, plant and equipment The straight line method is used to write off the cost of the other property, plant and equipment over the term of their estimated useful lives at the following principal annual rates: Buildings and renovation Mill machinery Motor vehicles Furniture and fittings Equipment 5% 15% 20% 10% - 20% 10% - 40%

Revaluation of freehold land, long term leasehold land and plantation development expenditure (Note 1.5) in 1993 was not intended to effect a change in accounting policy to one of revaluation of properties. Hence, in accordance with the transitional provisions issued by MASB on Approved Accounting Standard IAS 16: Property, Plant and Equipment, the valuations of 1993 are not revised. Surpluses arising from revaluation are dealt with in the revaluation reserve account. Any deficit arising is offset against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount is charged to the income statement. 1.5 Plantation development expenditure (a) New planting expenditure New planting expenditure incurred on land clearing and upkeep of trees to maturity is capitalised under Plantation Development Expenditure and is not amortised. (b) Replanting expenditure Replanting expenditure is charged to the income statement in the financial year in which the expenditure is incurred. 1.6 Investments Long term unquoted investments including investments in the subsidiary and associated company are stated at cost, less impairment loss where applicable. An allowance is made when the Directors are of the view that there is a diminution in their value which is other than temporary. Long term quoted investments are stated at the lower of cost and market value on an individual investment basis. 1.7 Inventories Inventories are valued at the lower of cost and net realisable value. Inventories of produce include cost of raw materials, direct labour and an appropriate proportion of fixed and variable production overheads, and are determined by the weighted average basis. Seedlings include cost of seeds, fertilisers, sprays and certain variable costs, and are determined by the weighted average basis. Stores and materials are determined by the weighted average basis and include purchase price and transportation charges. 1.8 Trade and other receivables Trade and other receivables are stated at cost less allowance for doubtful debts. 1.9 Trade and other payables Trade and other payables are stated at cost.

Notes Financial Statements
To The 31 December 2005
1.
1.10 Cash and cash equivalents

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

50

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of pledged deposits. 1.11 Impairment The carrying amount of assets, other than inventories (refer note 1.7), deferred tax assets (refer Note 1.12) and financial assets (other than investments in the subsidiary and associated company), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment losses are recognised in the income statement, unless the asset is carried at a revalued amount, in which case the impairment loss is charged to equity. The recoverable amount is the greater of the asset's net selling price and its value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The reversal is recognised in the income statement, unless it reverses an impairment loss on a revalued asset, in which case it is taken to equity. 1.12 Income tax Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that at the time of the transaction affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. 1.13 Retirement benefits The Group and the Company provide for retirement benefits for eligible employees on an unfunded defined benefit basis. Full provision has been made for retirement benefits payable to all eligible employees based on the last drawn salaries at the year end and the length of service rendered. The present value of the defined benefit obligations as required by FRS 119 2004, Employee Benefits has not been used in arriving at the provision, as the amount involved is insignificant to the Group and the Company. Accordingly no further disclosure as required by the standard is made. 1.14 Employee benefits (a) Defined contribution plan Obligations for statutory employer's contribution for employees are recognised as an expense in the income statement as incurred.

51
1.
1.15 Revenue recognition (a) Sale of goods (b) Interest income (c) Dividend income

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Notes Financial Statements
To The 31 December 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Short term employee benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the income statement in the period in which the associated services are rendered by the employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer.

Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset.

Dividend income is recognised when the right to receive payment is established.

2.

PROPERTY, PLANT AND EQUIPMENT
GROUP/COMPANY Land and buildings RM'000 57,986 183 (55) 58,114 Mill machinery RM'000 18,459 299 (1,628) 17,130 Motor vehicles, equipment, furniture and fittings RM'000 5,530 763 (127) (199) 5,967

At Cost/Valuation At 1 January 2005 Additions Disposals Written off At 31 December 2005 Representing items at: Cost Directors' valuation

Total RM'000 81,975 1,245 (127) (1,882) 81,211

12,379 45,735 58,114

17,130 17,130

5,967 5,967

35,476 45,735 81,211

Accumulated Amortisation and Depreciation At 1 January 2005 Charge for the year Disposals Written off At 31 December 2005 Net Book Value At 31 December 2005 At 31 December 2004 Depreciation charge for the year ended 31 December 2004 46,347 46,593 478 (Note 2.1) 2,461 3,487 900 1,336 1,092 496 50,144 51,172 1,874 11,393 426 (52) 11,767 14,972 1,228 (1,531) 14,669 4,438 511 (127) (191) 4,631 30,803 2,165 (127) (1,774) 31,067

Notes Financial Statements
To The 31 December 2005
2.
2.1

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

52
Buildings and renovation RM'000 12,251 183 (55) 12,379 Total RM'000 57,986 183 (55) 58,114 12,379 12,379 12,379 45,735 58,114

PROPERTY, PLANT AND EQUIPMENT (continued)
Land and Buildings Long term leasehold land RM'000 10,945 10,945

At Cost/Valuation At 1 January 2005 Additions Written off At 31 December 2005 Representing items at: Cost Directors' valuation

Freehold land RM'000 34,790 34,790

34,790 34,790

10,945 10,945

Accumulated Amortisation and Depreciation At 1 January 2005 Charge for the year Written off At 31 December 2005 Net Book Value At 31 December 2005 At 31 December 2004 Depreciation charge for the year ended 31 December 2004 34,790 34,790 9,330 9,454 2,227 2,349 46,347 46,593 1,491 124 1,615 9,902 302 (52) 10,152 11,393 426 (52) 11,767

-

124

354

478

The freehold land, long term leasehold land and plantation development expenditure (as disclosed in Note 3) are stated at Directors' valuation based on professional valuation made by a chartered surveyor on the open market basis conducted in July 1993. Subsequent additions thereafter are stated at cost. A piece of freehold land totalling 34.8 acres is leased to a company in which a Director has an interest, for 60 years from the year ended 31 December 1996. Had the land been carried at historical cost less accumulated depreciation, the carrying amount of the revalued assets that would have been included in the financial statements at the end of the year would be as follows: GROUP/COMPANY 2005 2004 RM'000 RM'000 Freehold land Long term leasehold land 4,697 964 5,661 4,697 1,131 5,828

53
3.
At Cost/Valuation Representing items at: Cost - Freehold land - Long term leasehold land Directors' valuation: - Freehold land - Long term leasehold land

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Notes Financial Statements
To The 31 December 2005
GROUP/COMPANY 2005 2004 RM'000 RM'000

PLANTATION DEVELOPMENT EXPENDITURE

At 1 January and 31 December

98,439

98,439

1,302 194 1,496

1,302 194 1,496

62,453 34,490 96,943 98,439

62,453 34,490 96,943 98,439

The basis of revaluation for plantation development expenditure is the same as disclosed in Note 2. The carrying value of plantation development expenditure on freehold land and leasehold land had this asset been carried at cost would be as follows: GROUP/COMPANY 2005 2004 RM'000 RM'000 Freehold land Long term leasehold land 43,240 21,429 64,669 43,240 21,429 64,669

4.

SUBSIDIARY COMPANY
GROUP/COMPANY 2005 2004 RM'000 RM'000

4.1 4.2

Unquoted shares at cost* Amount due from subsidiary company (non-trade)

9

8

Notes Financial Statements
To The 31 December 2005
4. SUBSIDIARY COMPANY (continued)
Details of the subsidiary company are as follows:

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

54
Principal activity Dormant COMPANY 2005 2004 RM'000 RM'000 400 (400) 400 (400) -

The amount due from subsidiary company is unsecured, non-interest bearing and has no fixed terms of repayment.

Name of company LPF Properties Sdn. Bhd.

Place of incorporation Malaysia

Effective ownership interest 2005 2004 100% 100%

* The cost of investment in subsidiary is RM2 (2004: RM2).

5.

ASSOCIATED COMPANY
GROUP 2005 2004 RM'000 RM'000

5.1

Unquoted shares at cost Less: Allowance for diminution in value of investment

400 400

400 400 (400) -

Group's share of post-acquisition losses

(400) -

5.2

Amount due from associated company Less: Allowance for doubtful debt

1,380 (1,380) -

1,380 (1,380) -

1,380 (1,380) -

1,380 (1,380) -

The Group's share of the cumulative losses amounting to RM539,000 (2004: RM539,000) has not been recognised in the Group's income since commencement of consolidation in 1999 as the Group's share of losses had exceeded the carrying amount of its investment in the associated company. The losses not recognised were based on the last available audited financial statements of the associated company, which were for the financial year ended 31 December 2001. Subsequent to this, the associated company has not prepared its audited financial statements and is currently under creditors' liquidation. The amount due from associated company is unsecured, interest free with no fixed repayment terms. Details of the associated company are as follows: Effective ownership interest 2005 2004 40% 40%

Name of company Milljet Sdn. Bhd.*

Place of incorporation Malaysia

Principal activity Development and marketing of new processes for crude palm oil clarification.

* In creditors' liquidation

55
6.
Long term In Malaysia Quoted shares, at cost In Malaysia

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Notes Financial Statements
To The 31 December 2005
GROUP/COMPANY 2005 2004 RM'000 RM'000

OTHER INVESTMENTS

Unquoted shares, at cost Less: Allowance for diminution in value

20 (20) 120 120

20 (20) 120 120

Market value at 31 December

Quoted shares, at market value

119

199

7.

INVENTORIES
GROUP/COMPANY 2005 2004 RM'000 RM'000 At cost: Fresh fruit bunches Crude palm oil Palm kernel Seedlings Stores and materials 10 253 43 617 487 1,410 11 593 123 511 679 1,917

8.

OTHER RECEIVABLES
The Company had received an offer for the purchase of 100% equity interest in two unquoted plantation based companies. As part of the terms of offer and to indicate the Company's interest, the Company had paid a refundable earnest deposit of RM4.8 million, which had been included under other receivables. The proposed purchase is being considered by the Board of Directors and the terms of the offer are still being negotiated by both parties. The Company has not to-date entered into any sale and purchase agreement with the offeror.

Notes Financial Statements
To The 31 December 2005
9. DEPOSITS

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

56
GROUP/COMPANY 2005 2004 RM'000 RM'000 18,500 2,500 21,000 1,500 22,500 34,000 2,000 36,000 1,800 37,800

Fixed deposits with licensed banks Fixed deposits with licensed financial institutions

Repo with licensed banks

Fixed deposits amounting to RM500,000 (2004: RM500,000) are held under lien by one bank (2004: one bank) for banking facilities granted to the Company.

10.

SHARE CAPITAL
GROUP/COMPANY 2005 2004 RM'000 RM'000 Authorised: 150,000,000 ordinary shares of RM1 each Issued and fully paid: 114,300,000 ordinary shares of RM1 each

150,000

150,000

114,300

114,300

11.

REVALUATION RESERVE - GROUP/COMPANY
The revaluation reserve is in relation to the revaluation of freehold land, long term leasehold land and plantation development expenditure and is stated at Directors' valuation based on professional valuation made by a registered valuer on the open market basis conducted in July 1993.

12.

DEFERRED TAXATION
The recognised deferred tax assets and liabilities (before offsetting) are as follows: GROUP/COMPANY 2005 2004 RM'000 RM'000

Property, plant and equipment - Capital allowances - Revaluation Plantation development expenditure - Agricultural allowances claimed Provisions Other taxable temporary differences

562 8,422 4,101 (547) 83 12,621

859 8,452 4,106 (516) 136 13,037

57
13.
Balance at 1 January Provision for the year Paid during the year Balance at 31 December

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Notes Financial Statements
To The 31 December 2005
GROUP/COMPANY 2005 2004 RM'000 RM'000 1,843 201 (90) 1,954 1,789 54 1,843

RETIREMENT BENEFITS

14.

REVENUE
Revenue consists of invoiced value of crude palm oil and palm kernel sold.

15.

OPERATING PROFIT
GROUP 2005 2004 RM'000 RM'000 Revenue Cost of sales Gross profit Selling and distribution expenses Other operating expenses Other operating income Administrative expenses Operating profit Operating profit is arrived at after charging: Amortisation Auditors' remuneration Depreciation Directors' remuneration (Note 22.3) - fees - other emoluments Property, plant and equipment written off Replanting expenditure Provision for retirement benefits and crediting: Dividends from quoted investments Gain on disposal of equipment Lease rental Canteen and shop rental (4) (32) (3) (6) (3) (52) (3) (2) (4) (32) (3) (6) (3) (52) (3) (2) 124 28 2,041 241 59 108 5,856 201 124 28 1,750 258 40 87 5,139 54 124 27 2,041 241 59 108 5,856 201 124 27 1,750 258 40 87 5,139 54 40,616 (15,286) 25,330 (930) (5,912) 75 (8,031) 10,532 44,574 (14,116) 30,458 (1,101) (5,179) 142 (7,782) 16,538 COMPANY 2005 2004 RM'000 RM'000 40,616 (15,286) 25,330 (930) (5,912) 75 (8,030) 10,533 44,574 (14,116) 30,458 (1,101) (5,179) 142 (7,781) 16,539

Notes Financial Statements
To The 31 December 2005
16. EMPLOYEE INFORMATION

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

58
GROUP/COMPANY 2005 2004 RM'000 RM'000 8,352 7,369 GROUP/COMPANY 2005 2004 RM'000 RM'000

Employee costs

The number of employees for the Group and the Company at the end of the financial year was 696 (2004: 600). Included in employee costs is the Company's contribution to the Employees Provident Fund of RM644,000 (2004: RM623,000) for the year ended 31 December 2005.

17.

INTEREST INCOME

Fixed deposits interest earned Vehicle loan interest received

1,075 2 1,077

1,262 3 1,265

18.
18.1

TAX EXPENSE
Components of tax expense: GROUP/COMPANY 2005 2004 RM'000 RM'000 Current year provision for income tax Deferred taxation - Reversal of temporary differences - Effect of change in tax rate applied on plantation development expenditure 3,728 (416) 3,312 11 3,323 5,105 (103) (5,002) 9 9

Under provision in previous years

18.2

Reconciliation of effective tax rate: GROUP/COMPANY 2005 2004 % % Statutory tax rate Non-deductible expenses Effect of change in tax rate applied on plantation development expenditure 28.0 0.5 28.5 0.1 28.6 28.0 0.1 (28.0) 0.1 0.1

Under provision in previous years

59
18.
18.3

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Notes Financial Statements
To The 31 December 2005

TAX EXPENSE (continued)
Subject to agreement with the Inland Revenue Board, the Company has sufficient tax exempt income and Section 108 credit to frank all of its retained profits as at 31 December 2005, if paid out as dividends.

19.

EARNINGS PER SHARE - GROUP
Earnings per share has been calculated based on the Group's profit after tax of RM8,286,000 (2004: RM17,794,000) and 114,300,000 (2004: 114,300,000) ordinary shares in issue.

20.

DIVIDENDS
GROUP/COMPANY 2005 2004 RM'000 RM'000 Dividends paid: 2005 Interim dividend of 5 sen less 28% tax 2004 Final dividend of 10 sen less 28% tax 2004 Special dividend of 5 sen less 28% tax 2004 Interim dividend of 5 sen less 28% tax 2003 Final dividend of 10 sen less 28% tax 4,115 8,230 4,115 16,460 Dividends proposed: 2005 Final dividend of 5 sen less 28% tax (2004: 10 sen less 28% tax) 2004 Special dividend of 5 sen less 28% tax 4,115 4,115 8,230 4,115 12,345 4,115 8,230 12,345

The proposed final dividend for the financial year ended 31 December 2005 has not been accounted for in the financial statements.

21.

CAPITAL COMMITMENTS
GROUP/COMPANY 2005 2004 RM'000 RM'000 Property, plant and equipment Contracted but not provided for in the financial statements Approved but not contracted for 421 1,914 119 4,207

Notes Financial Statements
To The 31 December 2005
22.
22.1

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

60
GROUP/COMPANY 2005 2004 RM'000 RM'000 3 3

RELATED PARTIES - GROUP/COMPANY
The Company has controlling related party relationship with its subsidiary as disclosed in Note 4 to the financial statements. Related parties transactions Transaction with a company in which Dato' Shamsul Bahari bin Salleh Khir has an interest.

22.2

Perak Meat Industries Sdn Bhd Lease rental received

These transactions have been entered into in the normal course of business and have been established under negotiated terms. 22.3 Directors' remuneration Members of the Board of Directors were remunerated for their services rendered as Directors of the Company. Details of the Directors' remuneration are as follows: GROUP/COMPANY 2005 2004 RM'000 RM'000 Remuneration of Non-Executive Directors: - Fees - Other emoluments Total

241 59 300

258 40 298

Range of remuneration

Number of Non-Executive Directors 2005 2004 7* 1 10* 1

Less than RM50,000 Between RM50,000 and RM100,000

* Includes Directors who resigned during the financial year.

23.

SEGMENTAL INFORMATION - GROUP
The Group only engages in oil palm cultivation and production and sale of crude palm oil and palm kernel in Malaysia and accordingly, no segmental information is presented.

61
24.
24.1 Interest rate risk

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

Notes Financial Statements
To The 31 December 2005

FINANCIAL INSTRUMENTS
Financial risk management objectives and policies The main risks arising from the normal course of the Group's and the Company's business are interest rate risk, liquidity risk and credit risk. The Group's and the Company's normal practice for managing each of these risks are summarised below:

The Group and the Company places cash balances with reputable banks and financial institutions to generate interest income for the Group and the Company. The Group and the Company manages its interest rate risk by monitoring market rates and placing such balances on varying maturities and interest rate terms. Effective interest rates analysis: In respect of interest earning financial assets, the following table indicates their effective interest rates at the balance sheet date and the periods in which they mature or reprise, whichever is earlier. GROUP/COMPANY 2005 2004 Effective interest rates Deposits (maturing within 1 year) (RM'000) 2.25% - 3.80% 22,500 2.35% - 4.40% 37,800

Liquidity risk In the management of liquidity risk, the Group and the Company monitor and maintain a level of cash and cash equivalents deemed adequate by the management to finance the Group's and the Company's operations and mitigate the effects of fluctuations in cash flows. Credit risk The Group's and the Company's primary exposure to credit risk arises through its trade receivables. The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Appropriate credit evaluations are performed on all customers requiring credit from the Company. Concentration of credit risk on trade receivables of the Group and the Company is limited to a small number of customers as is common to the industry. At the balance sheet date, 2 (2004: 5) customers owed a majority of the Group's and Company's trade receivables, which had been received after the balance sheet date. Other than the concentration of credit risk described above, the Group and Company are not materially exposed to any individual customer. The maximum exposure to credit risk is represented by the carrying amount of each financial asset presented in the balance sheet. 24.2 Fair value of recognised financial instruments In respect of cash and cash equivalents, trade and other receivables and trade and other payables, the carrying amounts approximate fair value due to the relatively short term nature of these financial instruments. For the unquoted shares as disclosed in Note 6 to the financial statements, it was not practicable to estimate the fair value of this unquoted investment as the information for the said fair value was not available. The carrying amount to this investment had been fully allowed for in previous years.

Notes Financial Statements
To The 31 December 2005
25. SIGNIFICANT EVENT

LADANG PERBADANAN-FIMA BERHAD ANNUAL REPORT 2005

62

As was previously disclosed, the Board of Directors had on 14 December 2004 received a Notice of Conditional Mandatory General Offer from Ablington Holdings Sdn Bhd, a wholly owned subsidiary of Kuala Lumpur Kepong Berhad. On 16 December 2004, Glamour Green Sdn Bhd, a shareholder of the Company obtained an injunction from the High Court of Malaya restraining Kuala Lumpur Kepong Berhad and Ablington Holdings Sdn Bhd from implementing the Mandatory Offer. Kuala Lumpur Kepong Berhad and Ablington Holdings Sdn Bhd had subsequently applied to the High Court of Malaya for the preservation of the assets of the Company and on 11 April 2005, a Consent Order pending disposal of the suit between the parties mentioned had been recorded. The trial was conducted in August 2005 and as of to-date, decision of the Court had not been handed down.

LADANG PERBADANAN-FIMA BERHAD
Company No. 52682-H Incorporated in Malaysia

PROXY FORM
26TH ANNUAL GENERAL MEETING No. of shares held

I/We ___________________________________________________________________________________________________________________________ of
__________________________________________________________________________________________________________________________________

being a member of LADANG PERBADANAN-FIMA BERHAD, hereby appoint ____________________________________________________________
________________________________________________________________________________________________________________________________ of ________________________________________________________________________________________________________________________________ or

failing him______________________________________________________________________________________________________________________ of
________________________________________________________________________________________________________________________________ as

my/our proxy to vote for me/us on my/our behalf at the 26th Annual General Meeting of the Company, to be held on Saturday, 29 April 2006 at 11:00 a.m. and at any adjournment thereof. My/our proxy is to vote as indicated below: No. 1. 2. 3. 4. 5. 6. 7. 8. Motions To receive and consider the Audited Financial Statements for the year ended 31 December 2005 and the Reports of the Directors and Auditors thereon. To sanction the payment of a final dividend of 5 sen less 28% tax for the year ended 31 December 2005 as recommended by the Board. To re-elect YBhg. Dato' Shamsul Bahari bin Salleh Khir who retires in accordance with Article 66 of the Company's Articles of Association. To re-elect YBhg. Dato' Haji Ahmad Zakiuddin bin Harun who retires in accordance with Article 66 of the Company's Articles of Association. To re-elect Puan Sharifah Nor Hashimah binti Syed Kamaruddin who retires in accordance with Article 72 of the Company's Articles of Association. To approve the increase and payment of Directors' fees for the year ended 31 December 2005. To re-appoint Messrs. KPMG Desa Megat & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration. To transact any other ordinary business of the Company of which due notice shall have been given. For Against

(Please indicate with a "X" in the space provided as to how you wish your votes to be cast.)

Dated this____________day of_________________________2006

____________________________ Signature / Company Seal

NOTES

1. 2. 3. 4.

The proxy form, duly signed, must be deposited at the Registered Office of the Company, No. 10 Persiaran Gopeng Satu, 31350 Ipoh, Perak Darul Ridzuan, not less than 48 hours before the meeting. A corporation must complete the proxy form under its common seal or under the hand of an officer or attorney duly authorised. A proxy need not be a member of the Company. Unless voting instructions are indicated in the spaces provided in the proxy form, the proxy may vote as he thinks fit.

Fold here

STAMP

THE COMPANY SECRETARY

LADANG PERBADANAN-FIMA BERHAD
NO. 10, PERSIARAN GOPENG SATU 31350 IPOH PERAK MALAYSIA

2nd Fold here

3rd Fold here