(23370-V) - Kulim AR 2014 (combine).… · 124 Sustainability Report. A promising future awaits us....

Kulim (Malaysia) Berhad (23370-V)Level 11, Menara KOMTARJohor Bahru City Centre80000 Johor BahruJohor Darul Takzim, MALAYSIAT: +607 226 7692 / +607 219 5077F: +607 222 3044

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N N U A L RE P O R T 2

0 1 4

inside this integrated annual report

2 AboutThisReport

3 2014Highlights

4 CorporateProfile

8 KeyStrategicFocusandSustainableValueCreation

18 SimplifiedGroupStatement

ofFinancialPosition

20 MessagefromtheChairman

32 ManagingDirector’sReviewofOperation

44 ChiefFinancialOfficer’sReport

48 CorporateEventHighlights2014

50 SustainabilityEventHighlights2014

52 RecognitionsandAccreditations

55 IntheNews

56 FinancialCalendar

seCtion 2ABOUT KULIM

80 Group5-YearFinancialStatistics

83 GroupQuarterlyPerformance2014

84 GroupStatementofValueAdded

85 5-YearPlantationStatistics:

•Group

•Malaysia

•PapuaNewGuinea

•SolomonIslands

•Indonesia

90 HumanCapitalStatistics

91 ShareholdingStatistics

93 WarrantholdingStatistics

95 PricePerformanceandVolume Traded2014-SharesandWarrants

188 GroupFinancialStatements

315 LocationsoftheGroup’sPalmOils

DivisionOperations

316 PropertiesoftheGroupinMalaysia

320 NoticeofAnnualGeneralMeeting

326StatementAccompanyingNoticeof AnnualGeneralMeeting

ProxyForm

98 Plantation

110 IntrapreneurVentures

118 OilandGas

seCtion 3PERFORMANCEHIGHLIGHTS ANd STATISTICS

seCtion 6GOVERNANCE STATEMENT

seCtion 7FINANCIAL STATEMENTS

seCtion 8 OTHER CORPORATE INFORMATION

seCtion 4SEGMENT REVIEW

seCtion 5SUSTAINABILITy

seCtion 12014 SyNOPSIS

60 CorporateMilestones

64 Group’sSignificantSubsidiaries

65 CorporateInformation

66 BoardofDirectors

74 ManagementTeam

76 OrganisationChart

148 CorporateGovernanceReport

168 StatementonRiskManagementand InternalControl

179 AuditCommitteeReport

184 AdditionalComplianceInformation

186 AdditionalDisclosure

124 SustainabilityReport

Apromisingfutureawaitsus.

Realising our infinite potential, we at Kulim are anticipatingtomorrow’s needs today and are focused on expanding ourpossibilities. Moving forward with a strategic thrust, we areenhancingourstrengthsandgainingnewgroundbybreakingintonicheupstreamoilandgasactivities.Withstrongsupportfrom our subsidiaries, we are navigating towards regionalexpansionwhilstharnessingnewgrowthpotential.

ANewEnergy.WeAreGoingBeyond.

Forgingahead,wewillcontinuetodeliverexponentialvalueasweretainourcompetitiveadvantage.Unitedinourpursuitofexcellenceandhelmedbycommittedpeople,weareelevatingour business to new heights. Adopting a CARE approach,it extends beyond everything we do, reaching out to ouremployees,oursocietyandtheenvironmentwhilstdeliveringsuperiorvalueforourshareholdersandstakeholders.

A panoramic birds-eye view of Sedenak Palm

Oil Mill, Kulaijaya; Kulim’s biggest mill with the

capacity of up to 90 tonnes per hour.

IntegratedAnnualReport2014

1

a new energy

About This Report

How to read our Integrated Annual Report

Report Approach

This Integrated Annual Report covers the activities of Kulim (Malaysia) Berhad for the financial year ended 31 December 2014 up to 23 April 2015, being the last practicable date before the printing of this report. Different from our previous years of Annual Reports, our Integrated Annual Report provides a more cohesive and efficient approach to corporate reporting.

The Integrated Annual Report aims to provide concise, relevant and reliable information. A supplementary section of the Integrated Annual Report which expands on the Group’s issues and individual stakeholder requirements is available on the Group’s website at www.kulim.com.my.

Scope and Boundary

The Group’s businesses operate mainly in Malaysia and Indonesia.

The Integrated Annual Report has been compiled while considering to adapt some principles and concepts of the International Integrated Reporting Council’s (“IIRC”) Integrated Reporting Framework (“IRF”), consistent with an integrated thinking approach and compilation of key information.

The printed section of the Integrated Annual Report includes audited financial statements from page 188 to 313. The financial statements comply with all applicable Financial Reporting Standards in Malaysia.

Approvals

Our independent auditors, Messrs. Ernst & Young, issued an audit opinion on the consolidated annual financial statements. The unmodified audit opinion on the Group’s consolidated annual financial statements is incorporated in the consolidated annual financial statements and can be found on pages 195 to 196 of this Integrated Annual Report.

References to future financial performance in the Integrated Annual Report have not been reviewed or reported on by our auditors.

We welcome feedback on our

integrated annual report.

Please contact us at

[email protected] +607 226 7692+607 219 5077

This icon indicates where readers can find related information on a particular topic in our printed section of the Integrated Annual Report.

This icon indicates where readers can find additional information on the Group’s website www.kulim.com.my

Where readers can find information

Message from the Chairman 20

44

32Managing Director’s

Review of Operations

Chief Financial Officer’sReport

Kulim (Malaysia) Berhad (23370-V)

2

2014 HIgHlIgHTs

2014 2013 Variance

FINANCIAlRevenue (RM Million) 1,093.66 1,013.16 7.9%PBT (RM Million) 95.53 106.92 (10.7%)PATMI - including Discontinued Operations (RM Million) 164.30 431.07 (61.9%)EPS (sen) 12.55 33.80 (62.9%)

OPERATIONAl - OIl PAlM FFB Yield Per Hectare (tonnes)- Group (including Discontinued Operations) 22.97 21.82 5.3%- Malaysia 22.34 22.11 1.0%- PNG (Discontinued Operations) 23.13 21.47 7.7%- SI (Discontinued Operations) 25.38 23.89 6.2%

OER (%) - Group (including Discontinued Operations) 21.73 21.43 1.4%- Malaysia 20.58 20.22 1.8%- PNG (Discontinued Operations) 22.34 22.13 0.9%- SI (Discontinued Operations) 22.56 22.47 0.4%

ClOsINg sHARE PRICE (RM) - Lowest 2.97 3.24 - Highest 3.62 4.96

Revenue

Operating Profits

Dividend Per share

shareholders’ Funds

Total Assets

How We Performed During the Year 2014

Corporate DevelopmentHighlights

8%

RM1.09bil

6%

RM138mil

9.5sen 38%

6%

RM4.02bil

10%

RM9.26bil

Completed the acquisition of 74% stake in PT Wisesa Inspirasi Nusantara, which has rights over 40,645 hectares of greenfield in Kalimantan

Signed the Conditional Subscription and Shares Purchase Agreement for 60% equity in PT Citra Sarana Energi - O&G ventures in Indonesia

Converted USD15.34 million worth of Irredeemable Convertible Cumulative Unsecured Loan Securities in Asia Economic Development Fund Limited - foothold in digital-based logistics business

Listing of E.A. Technique (M) Berhad on Bursa Malaysia

Completed the disposal of Nexsol (Malaysia) Sdn Bhd

Integrated Annual Report 2014

3

A New Energy

KulIM (MAlAYsIA) bERHAD

OuR VIsIONDELIVERING VALUE

To excel in delivering value to all our stakeholders through high performance teams who are committed to the highest standards of ethics, integrity and professionalism.

OuR MIssION

We aim to be the most progressive, efficient, profitable and respectable corporate organisation.

We shall : Enhance and deliver value to the stakeholders Optimise the use of resources Produce superior quality products Be a socially and environmentally responsible corporate citizen Operate with due regard for the welfare, health and safety of

employees, the local community and the wider public

Kulim (Malaysia) Berhad (“Kulim”) traces its history back to 1933 when Kulim Rubber Plantations Ltd was incorporated in United Kingdom. Kulim was later incorporated as a public limited company and was listed on Main Board of the Kuala Lumpur Stock Exchange (now known as the Main Market of Bursa Malaysia Securities Berhad) in 1975. In 1976, Johor Corporation became the major shareholder of Kulim.

Over the years, Kulim has grown to become a diversified plantation company and continues to strengthen its position by securing new hectarages while developing and strengthening its intrapreneur ventures. At the end of 2013, Kulim once again made its way into Indonesia with acquisition of 74% equity in PT Wisesa Inspirasi Nusantara, a plantation holding company in Indonesia, holding rights over 40,645 hectares of potential oil palm land in Central

Kalimantan. With the completion of this strategic acquisition, as at the time of writing, the Kulim Group’s direct and indirect landholding stands at over 91,000 hectares (excluding NBPOL which was held for sale as at 31 December 2014), spread across Malaysia and Indonesia.

After having footholds in O&G related businesses in Malaysia, Kulim had on 10 December 2014, entered into a Conditional Subscription and Shares Purchase Agreement with the existing shareholders of PT Citra Sarana Energi (“PT CSE”) for acquisition of 60% equity interest in the Company. This will enable Kulim to expand its involvement in the O&G sector particularly in Indonesia, moving up the value chain into the upstream activities - exploration and production.

CORPORATE PROFIlE


4

WE C.A.R.E.

Kulim (Malaysia) Berhad believes that the spirit of caring is integral to the prosperity and survival of our business. Our concept of caring integrates and extends beyond our capital providers, to include our employees, our society and our environment. It means building our COMPETITIVE capacity with intense biasness towards ACTION in generating profitable growth whilst being firmly guided by our pledge to be RESPONSIBLE and ETHICAL.

We CARE...so we ensure our shareholders are rewarded with superior returnsWe CARE...so we teach and nurture the same spirit among our employeesWe CARE...so we contribute and enrich the lives of our community and societyWe CARE...so we treat the earth with respect for it has given us our reason for beingWe CARE...so we share...

MALAYSIA

INDONESIA

as at December 2014

8,187employees

PLANTATION

INTRAPRENEUR VENTURES

OTHERS

RevenueContributionby Segment

6%

70%

24%


5

A New Energy

our Core businesses


Established as one of Kulim’s principal growth thrust, Intrapreneur Ventures (“IV”) division is involved in a diverse range of businesses including shipping and logistics, support operations for plantations, including agricultural machinery, oil palm nursery and mills maintenance, support operations for Oil and Gas (“O&G”) sector as well as IT-related services. These companies will be developed and nurtured, with the aim to subsequently transform into strategic business division of the Group.

With Kulim’s foray into the O&G upstream activities in Indonesia, O&G support services, namely E.A. Technique (M) Berhad and danamin (M) Sdn Bhd, will be reclassified under the Group’s new O&G business segment effective 1 January 2015.

PLANTATION

Kulim is recognised as one of the leading palm oil groups with operations currently spanning over Malaysia and Indonesia.

Kulim was amongst the earliest palm oil producers to be certified to the Roundtable on Sustainable Palm Oil (“RSPO”) standard. Our management and growth strategy is fundamentally guided by Vision “30:30”, which aims to raise fruit yields to 30 tonnes per hectare and palm product extraction rates to 30%, balanced with sustainable development principles.

OIL AND GAS

driven by its Balance Business Strategy, Kulim is uncovering opportunities in a new business dimension - O&G sector in the quest to business growth and value deliverance to its shareholders.

Having footholds in O&G related businesses such as transportation of clean petroleum products and fabrication of O&G pipelines, Kulim aims at moving up the O&G value chain to expand into upstream O&G activities involving exploration, development and production, particularly in Indonesia as new space being created. This is to enable Kulim to tap into strategic investment opportunities to broaden our earnings base and generate sustainable growth.

Kulim(Malaysia)Berhad(23370-V)

6

BUSINESS STRATEGY

Our business portfolio is a progressive development from our traditional business of palm oil, pursued in line with our aim to sustain value creation for all our stakeholders via the adoption of an evolving and balanced business mix.

While plantation and agriculture will dominate our business profile, we will continue to explore, identify and invest in businesses that offer superior long-term potential for growth and profitability, with the aim to minimise earning fluctuations so as to enable the Group to provide attractive returns to our shareholders. Kulim is confident in carving a new growth path with its experience and proven ability to develop businesses, including those outside its traditional palm oil business, including O&G ventures which is being pursued currently.

Our pursuit of value and growth is firmly underpinned by our commitment to embrace sustainability and strong corporate governance as the overriding philosophy.

SUSTAINABILITY

As a socially and environmentally responsible corporate citizen, Kulim embraces the principles of sustainable development and has continued to work towards demonstrating sustainability throughout our operations.

We recognise sustainability as an opportunity to change the way we do our business. Our Sustainable Palm Oil (“SPO”) programme defines its ultimate objective as to improve Kulim’s business performance and profitability as well as positioning Kulim as a world leader in SPO. Our efforts with regards to sustainable development will continue to guide our business.

We hope that by being mindful of our surroundings and the socioeconomic impact of our actions, we will move forward by developing business methods that are economically viable, environmentally appropriate and socially beneficial.


7

a new energy

CAPABILITy TO dELIVER OVER THE WHOLE LIFECyCLE

Multiple Revenue And Improved Blended Margin

CO

RE

BU

SIN

ES

SE

S

DEVELOP INVEST DESIGN SUPPLY BUILD OPERATE SERVICE

Plantation

Intrapreneur

Ventures

Oil & Gas

Agrofoods

Property

GROUP STRATEGYCOMPONENTS

Expansion / Diversification

Cost Management

Pro

duc

tivi

ty

Impro

vem

ent

Hum

an Cap

ital

Develo

pm

ent

Corp

orate

Resp

onsib

ility

Val

ue U

nlock

ing

KeY strategiC FoCus and sustainable Value Creation

the group’s business strategies

the group strategY is to aCCess the Full inFrastruCture liFeCYCle


8

Corporate Values

CORPORATE PHILOSOPHy

aCtion ethiCalCoMpetitiVe responsible

Business Policy Our operation is currently focused on palm oils, O&G, agrofoods and Intrapreneur Venture businesses – a balanced growth strategy with involvement in industries that will reduce income and profit fluctuations for the Group; of which will be managed with due skill, care and prudence.

Ethics Policy Our business is conducted to the highest standards of ethics, integrity and governance and governed by the various operating standards, policies and procedures.

People Policy Our people are given top priority, in which we are committed to developing their career success while ensuring the immediate and long-term benefits of the organisation and other stakeholders are not jeopardised.

Sustainability Policy We believe in the goal of Sustainable development as the cornerstone of our business policy, which recognises the responsibilities in safeguarding the environment in the course of our business operations.


9

A New Energy

CORPORATE STRATEGIES KEY PROGRAMMES SEGMENTS VALUE CREATED

Productivity Improvement - Progressive replanting - optimise FFB production, towards ideal age profile

- R&D/continuous study on clonal palms and potential commercialisation/tissue culture

- Application of Good Agriculture/Manufacturing Practices and RSPO practices

- New technologies and innovative mechanisation

- year-on-year improvement in FFB and oil yield

- cost savings resulted from systematic work procedure

- more effective management of ever increasing foreign labour cost

– best agriculture practices via training

- deployment of performance measurement of each estate

Cost Management

- Mill working hours/optimum throughput - Value-added ventures - Mill’s downstream, biogas plant, biofertiliser

- Centralised bulk purchasing practice and longer-term partnership


- additional revenue generated from by-products of mill processing

Value Unlocking - Disposal of rightly priced assets - Listing of potential businesses/companies - Share buybacks

- Transforming estates into property

- optimisation of resources

- realisation of higher asset value

- returns to shareholders via dividend

Human Capital Development

- Ensure adequate pool of talents - Succession planning and career development - Promote sense of belonging/loyalty


- lower staff turnover/sustainable manpower

Corporate Responsibility - Enhanced stakeholders engagement - internal and external - Continuous compliance with RSPO - SPO programme and realisation of benefits

- more effective management of stakeholders - reduce cost of damage control

- more efficient in doing business as a result of good relationship with stakeholders

- preserved environment and save the earth

Expansion/Diversification

- Increase landbank - local and abroad - Upstream activities of O&G business - Large scale cattle rearing, expand trading and feedlot activities - Increase hectarage of pineapple planting and downstream products

- increased company value

- diversify earnings base to reduce over-dependence on palm oil activities

- embrace national food security programme

stRategIC tHRUsts

IV Property O&GPlantation Agrofoods

KEYSTRATEGICFOCUSANDSUSTAINAblEVAlUECREATION


10

CORPORATE STRATEGIES KEY PROGRAMMES SEGMENTS VALUE CREATED

Productivity Improvement - Progressive replanting - optimise FFB production, towards ideal age profile

- R&D/continuous study on clonal palms and potential commercialisation/tissue culture

- Application of Good Agriculture/Manufacturing Practices and RSPO practices

- New technologies and innovative mechanisation

- year-on-year improvement in FFB and oil yield


- more effective management of ever increasing foreign labour cost

– best agriculture practices via training

- deployment of performance measurement of each estate

Cost Management

- Mill working hours/optimum throughput - Value-added ventures - Mill’s downstream, biogas plant, biofertiliser

- Centralised bulk purchasing practice and longer-term partnership


- additional revenue generated from by-products of mill processing

Value Unlocking - Disposal of rightly priced assets - Listing of potential businesses/companies - Share buybacks

- Transforming estates into property


- realisation of higher asset value

- returns to shareholders via dividend

Human Capital Development

- Ensure adequate pool of talents - Succession planning and career development - Promote sense of belonging/loyalty


- lower staff turnover/sustainable manpower

Corporate Responsibility - Enhanced stakeholders engagement - internal and external - Continuous compliance with RSPO - SPO programme and realisation of benefits

- more effective management of stakeholders - reduce cost of damage control

- more efficient in doing business as a result of good relationship with stakeholders

- preserved environment and save the earth

Expansion/Diversification

- Increase landbank - local and abroad - Upstream activities of O&G business - Large scale cattle rearing, expand trading and feedlot activities - Increase hectarage of pineapple planting and downstream products

- increased company value

- diversify earnings base to reduce over-dependence on palm oil activities

- embrace national food security programme


11

a New energy

staKeholders engageMent

Em

plo

yees

Business Partners

Investors/Shareholders

Media

Sup

plie

rs

Com

munitie

s

Customers

Government &Regulators

NGOs

Unio

ns

STAKEHOLDER GROUPS

Stakeholder Group Types of Engagement Topics Discussed & The Group’s Response

Employees Dialogues,surveys,employeetrainingprogrammesandsponsorshipprogrammes

• Following climate survey, we conducted benchmark and review of salaries, initiated career and succession

• Initiated online peers and reverse performance feedback, performance appraisal and assess competency training needs

Business Partners Dialogueandrelationshipinvestment • Ethics, values and governance, advocating and embedding sustainability

KEy STRATEGIC FOCUS ANd SUSTAINABLE VALUE CREATION


12

Stakeholder Group Types of Engagement Topics Discussed & The Group’s Response

Investors/ Shareholders

Group/one-on-onemeetings Analystbriefingsessions,operational

sitevisits,annual/quarterlyreports Pressreleases/regulatory

announcements/shareholder’scirculars/factsheets

Updatesonwebsite Activecorrespondencewiththe

investmentcommunityviaconferencecallsonad-hocissues

• Growth opportunities across divisions, mergers & acquisitions, divestments, capital allocation, dividend payout, corporate governance

• Volatility in CPO prices, demand-supply dynamics, enhancement of operational efficiency, strengthening leadership position

• RSPO certification, labour policies and human rights, grievance mechanism, sustainability risk and opportunity, socially-responsible landbank expansion

• Operational developments, risk/opportunities across divisions

Media Pressreleases/regulatoryannouncements/shareholder’scirculars/factsheets

• Operational development at Group and division levels

• Sustainability and Corporate Responsibility developments

Workers AnnualSocialImpactAssessments(“SIAs”)

• Renovated 36 units of staff’s housing (Rengam Estate)

Suppliers Contractinfrastructure • Tender procedure/negotiation

Communities and Outgrowers

Disasterreliefefforts Communityoutreachanddevelopment

programmes

• Response to communities affected by environmental disasters as well as the needs of vulnerable community groups

• Pilot project with a controlled group of smallholder to implement outgrower certification

Customers Jointventuresandad-hocmeetings • Our Certified Sustainable Palm Oil (“CSPO”) is sold to our buyers via the Segregation, Mass Balance and Green Palm Book and Claim traceability mechanisms

• Halal certification of our products is ongoing

Government and Regulators

Regularengagementandcommunication

CorporateResponsibilityinitiatives

• Sustainability, social issues, local communities and sectorial development

• Support of nation-building efforts and national agendas

NGOs Consistentdialogueandengagement Charitablecontributions

• Support of social and environmental policies and Corporate Responsibility programmes

• Implementation of responsible business practices, compliance to local and international laws

Unions Conference • Employees’ terms and conditions of plantation staff and workers through Collective Agreement


13

a new energy

our CoMMitMents and targets – MalaYsia plantations

Targets Maintained Target Comment

Lost Time Accident rate below 10 On-goingCommitment 2014 – 17.39

Isolated cases whereby four (4) continuous MCs

recorded in 2014.

Reduce severity rate below 3.5 On-goingCommitment 2014 – 2.44

Zero fatalities On-goingCommitment 2014 – 2

Continuous improvements are now in place to

enhance the safety standard with the aim to reduce

accident cases.

No peat development On-goingCommitment None

No development on land containing one

or more high conservation values

On-goingCommitment None.

No fine for environment related

incidents

On-goingCommitment None.

Biennial carbon report of Kulim

plantation

2015 The first report was published in 2013. The second

report is in progress and will be published by end

of 2015.

Halal Certification of palm products 2015 The certification is now progressively in place and

we expect to be HALAL certified by end of 2015.

2% reduction in usage of glyphosate on

one year old palms by 2020

2020 On-going effort is being implemented for possible

reduction of glyphosate via usage of plastic

mulching, commenced in September/October

2014.

KEy STRATEGIC FOCUS ANd SUSTAINABLE VALUE CREATION


14

Targets Maintained Target Comment

5% reduce paraquat of total herbicide

usage by 2020

2020 Internal directive was circulated to all operating unit

in March 2015 that no new purchase of paraquat

effective March 2015.

Reduce water usage to 1.2 m3 per tonne

of FFB

1.2m3pertonneofFFB 2014 - 1.05 m3.

ISCC certification in two (2) mills 2017 We will certify Palong Cocoa and Pasir Panjang

Palm Oil Mills in addition to maintain our current

three (3) ISCC certified mills.

CO2 equivalents reduction at mills by

90% by 2017

2017 We have set a progressive CO2 equivalent reduction

target based on the commission of five (5) biogas

plants at our mills over the next three (3) years by

2017.

One (1) biogas plant has been commissioned and

another one (1) is in progress. The other three (3)

plants are expected to be installed by 2017.

100% of external fruit to be certified by

2019

2019 We have set a progressive target to fully certify our

outgrowers by 2019 and traders by 2025.

Achieve average FFB yield of 30 tonnes

per hectare and Palm Product Extraction

Rate (“PPER”) of 30% by 2036

2036 We revised this target based on the estimate of

advancement in planting materials. With a 25-year

replanting cycle, time will be needed to replant

existing oil palm with new higher yielding breeds

of oil palms.

We have set target of:

Short term (15 years) = 25 tonnes per ha: 26% PPER

by 2026

Medium term (25 years) = 27 tonnes per ha: 28%

PPER by 2036

Long term (>25 years) = 30 tonnes per ha: 30%

PPER by 2037


15

a new energy

seCtion 12014 SYNOPSIS

18 SimplifiedGroupStatement

ofFinancialPosition

20 MessagefromtheChairman

32 ManagingDirector’sReviewofOperations

44 ChiefFinancialOfficer’sReport

48 CorporateEventHighlights2014

50 SustainabilityEventHighlights2014

52 RecognitionsandAccreditations

55 IntheNews

56 FinancialCalendar


16

Tractor fetching fresh water for daily field

operations at Sindora Estate, Kluang.


17

a new energy


17

A New Energy

TOTALASSETS

TOTALLIABILITIESANDSHAREHOLDERS’EQUITY

SECTION 1 2014 SyNOPSIS

siMpliFied group stateMent oF FinanCial position

38%

Property, plant and equipment

Intangible assets

Investments

Associates

Assets held for saleInventories

Receivables

Cash

52%

2014 2013

76%

2%

2%

7%

8%5%

1%

2%3%

4%

Retained profits

Borrowings

Deferred tax liabilities

Share capital

Payables

Liabilities held for sale

Other reserves

Non-controlling interest

21%

2014 201313%

2%

4%2%

22%

19%

17%

23%

24%

11%

4%

4%

18%

16%


18

Fertiliser spreader in action at Tereh Utara Estate, Kluang.


19

A New Energy

Message FroM the

CHAIRMAN

dear Stakeholders,

There was much to be positive about Kulim (Malaysia) Berhad’s (“Kulim” or “The Group”) performance, notwithstanding a challenging operating environment for the financial year ended 31 december 2014 (“Fy 2014”). The Group recorded revenue of RM1.09 billion and Profit Before Tax (“PBT”) of RM95.5 million, despite lower palm oil product prices and volatility in the commodities market. Consistent with our policy of rewarding shareholders, an interim dividend of 9.5 sen per share totaling to RM126.11 million in respect of Fy 2014 was paid on 29 december 2014.



20

DATO’ KAMARUZZAMAN ABU KASSIM

Chairman Non-Independent

Non-ExecutiveDirector


21

a new energy

MESSAGE FROM THE CHAIRMAN

We have set in place a Five-year Strategic Plan that has targets that are both realistic and aggressive, providing a real possibility of upside to drive future revenue streams. The challenge before us is to execute our strategic plans and to take our performance to a new level, whilst committing ourselves to the highest standards of integrity, governance and ethics.

In the coming financial year we will be celebrating our 40th anniversary as a Listed Entity. It has been an exhilarating journey that has seen the Company grow from strength to strength.

On behalf of the Board of directors it is my pleasure to present this Integrated Annual Report and Audited Accounts of Kulim (Malaysia) Berhad for the financial year ended 31 december 2014.

We remained focused on improving our businesses and commendable progress were made in managing costs, enhancing productivity and efficiency in our core Plantation Segment, whilst adhering to the principles of sustainability. Our Intrapreneur Ventures (“IV”) segment continued to perform well, validating a strategic decision to diversify into the Oil and Gas (“O&G”) business. It was an eventful year on the corporate front, with several key developments laying the foundations for our growth agenda.

40 years 1975-2015Listed on Main Market, Bursa Malaysia

60 tonnes per hour; Tereh Palm Oil Mill, Kluang



22

Corporate developments We have deliberately chosen “A New Energy” as the theme of this Integrated Annual Report. Whilst clearly representing our choice of the O&G industry as our additional pillar for growth, it also denotes the gusto which we will apply in re-establishing our plantation footprints in Indonesia. Thus the major corporate developments for 2014 were the manifestation of this theme and summarised as follows:

Acquisition of a 74% stake in PT Wisesa Inspirasi Nusantara (“PT WIN”), signaling our re-entry into the Indonesian oil palm plantation business.

divestment of our entire interest in Nexsol (Malaysia) Sdn Bhd (“Nexsol”) to PGEO Group Sdn Bhd (“PGEO Group”).

Conversion of 3-year Irredeemable Convertible Cumulative Unsecured Loan Securities (“ICCULS”) to solidifying our involvement in the global digital logistics business through a 54.21 % equity interest in Asia Economic development Fund Limited (“AEdFL”).

divestment of our entire interest in New Britain Palm Oil Limited (“NBPOL”) to Sime darby Plantation Sdn Bhd (“SdP”).

Execution of a Joint Operating Agreement (“JOA”) in the South West Bukit Barisan (“SWBB”) Production Sharing Contract (“PSC”) to participate in the exploration and development of an O&G field in Indonesia. The participation is further firmed up via the execution of a Conditional Subscription and Shares Purchase Agreement (“CSSPA”) with PT Citra Sarana Energi (“PT CSE”) and its existing shareholders, PT Wisesa Inspirasi Sumatera (“PT WIS”) and PT Inti Energi Sejahtera (“PT IES”) on 10 december 2014, to secure Kulim’s interest at the shareholding level.

Listing of E.A. Technique (M) Berhad (“EATech”) on the Main Market of Bursa Malaysia Securities Berhad on 11 december 2014.

Key Corporate Developments in Year 2014


23

A New Energy

VALUE CREATION STRATEGIES

One of our objectives in this Integrated Annual Report is to provide sufficient insights to enable stakeholders to form a holistic and comprehensive picture of the Group’s performance and of its ability to create and sustain value.

Sustainability Achievements

The Kulim Group aims for sustainable development at multiple levels to satisfy today’s requirements without eroding the livelihood basis of future generations. We all share the conviction that it is only by upholding the three (3) Pillars of Sustainability – People, Planet and Profit that will ultimately translate into achieving cost savings and competitive advantages in the marketplace. Having obtained recertification to RSPO in december 2013, we underwent an RSPO surveillance audit in december 2014 and as we go into print, we are awaiting issuance of the report from the auditor, British Standard Institution.

Improving Margins

Given that our Plantations Segment contributes about 70% of Group revenue, we have embarked on various strategies to improve the performance of our plantation operations. A systematic replanting programme is underway to replace palms that are older than 25 years. With a total of 1,611 hectares replanted in Fy 2014, the maturity profile of our palms in Malaysia has improved to 11.37 years. Last year, our Malaysian operations achieved Fresh Fruit Bunch (“FFB”) yield Per Hectare (“yPH”) of 22.34 tonnes, an improvement from 22.11 tonnes achieved previously. Our Malaysia FFB yPH is higher than the industry average of 18.23 tonnes per hectare. Our Oil Extraction Rate (“OER”) was 20.58%, which compares favourably with the industry average of 20.19%.

To improve yields, the Group has also adopted Good Agricultural Practices and Good Manufacturing Practices at all stages of plantation operations to achieve maximum yields and production outputs in a sustainable manner. We continue to implement various cost controls, including the introduction of labour-reducing technologies, increasing mechanisation of field operations and the renegotiation of fertiliser prices. On average, the Group was able to contain production costs at RM268 per tonne FFB in Fy 2014, beating the budget estimate of RM280 per tonne. The year under review also saw improvement measures implemented at the Group’s Malaysian mills to minimise losses and enhance the quality of palm products.


Oil palm loose fruits collection at Sedenak Estate, Kulaijaya.



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Realising Values

Strategic divestments have always been integral to our portfolio management to extract maximum value and support the longer-term growth agenda of the Company.

NBPOL has been part of Kulim’s stable for almost 20 years, dating back to 1996 with an investment of approximately RM293 million for a 90% stake in the company. By 2007, Kulim had recouped its initial investment via partial disposals and dividends received.

However, after taking into consideration the tenure of the investment holding, the offer price of GBP7.15 per NBPOL share against the prevailing market price of GBP5.25 then, and the initial cost of investment of RM2.94 per NBPOL share, the offer from SdP provided an attractive opportunity for Kulim to realise the value of its long-term investment. It is also in line with Kulim’s strategy to unlock the value of its investments for the benefit of our shareholders.

Geographic Expansion

One of the key objectives of Kulim’s long-term business plan is to expand the Group’s plantation landbank. As arable land suitable for oil palm plantations is getting scarce in Malaysia, and with the impending disposal of our stake in NBPOL, the acquisition of a 74% stake in PT WIN for the right to develop 40,645 hectares of greenfield land in Central Kalimantan, Indonesia comes at an opportune moment given also our previous experience in the region.

The acquisition will increase Kulim’s land bank from 51,160 to over 91,000 hectares (excluding NBPOL) as at the end of Fy 2014. The Group plans to continue exploring emerging opportunities both locally and abroad to expand its landbank.

Diversification into O&G

While the Plantation segment will remain a core business, Kulim’s long-term strategy is to diversify its business activities to provide a cushion against earnings fluctuations as a result of volatility in commodity prices.

With the signing of the JOA and CSSPA with its Indonesian counterparts, the Group is moving up the O&G value chain and will be involved in the niche upstream activities of exploration, development and production in Indonesia’s Central Sumatera Basin. Kulim is confident that the strategic new ventures are expected to contribute positively to Kulim’s future earnings and enhance shareholders value in the long run.

Research and Development

Among Kulim’s competitive strengths are its Research and development (“R&d”) capabilities. The Group’s development of high yielding oil palms is one of the most important drivers of profitability. These high-yielding elite planting materials are the bedrock of the Group’s “30:30” productivity target.


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CORPORATE GOVERNANCE FRAMEWORK

Strong corporate governance practices contribute towards enhancing business prosperity and corporate accountability. The ultimate objective is to create and realise short, medium and long-term value sustainability in the interests of our stakeholders and wider society. Kulim has therefore embarked on a journey to continuously improve its corporate governance framework by gradually adopting the recommendations in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) and the Main Market Listing Requirements by emphasising Board Principal duties and Responsibilities.

Through Fy 2014, we continued to focus on strengthening the Board structure and composition, recognising the pivotal role of directors as active and responsible fiduciaries. The Board met eight (8) times during Fy 2014, with all directors having complied with the minimum 50% attendance. An assessment of the Board’s performance is carried out annually, including the performance of the Independent directors. The Board also plays a vital role in mapping out strategies to meet targets and Key Performance Indicators (“KPI”) to be achieved on a year-to-year basis.

Board Members are governed by a Code of Ethics which is contained in the Board Policy Manual, which sets forth the legal and ethical standards expected of members. during the year, the Group also made a commitment to uphold Anti-Corruption Principles through the Corporate Integrity Pledge signed in January 2014.

AWARDS AND RECOGNITION

For the seventh year in a row, we were the winner of the National Annual Corporate Reporting Award (“NACRA”) for the Plantations & Mining Category. In our efforts to provide holistic and strategic insights to our stakeholders we have in the Fy 2014 report, adopted some of the key principles and concepts of the International Integrated Reporting Council’s (“IIRC”) Integrated Reporting Framework (“IRF”) in this 2014 Report – Kulim’s first Integrated Annual Report. Integrated Reporting (“IR”) is a journey and we are still at an embryonic stage. In laying the foundations, our goal is to have a report that meets the principles of the IIRC framework over the next three (3) years.

At the Asia Corporate Excellence and Sustainability (“ACES”) Awards 2014, our Managing director, Ahamad Mohamad, did the Group proud by being named one the Top Outstanding Leaders in Asia. The Award recognises

exceptional individuals who have demonstrated sound leadership qualities, successfully applying it to spearhead growth and prominence for the company.

Kulim’s Sustainability Report 2012/2013 was also shortlisted for the ACCA Malaysia Sustainability Reporting Awards (“ACCA MaSRA”) 2014. The ACCA MaSRA Awards gives recognition to those companies that report and disclose full sustainability, environmental and social information.

Kulim was also ranked 49th amongst the top 50 companies shortlisted for the Malaysia-ASEAN Corporate Governance Award organised by the Minority Shareholder Watchdog Group (“MSWG”). The award is intended to showcase the top Malaysian publicly-listed companies with good corporate governance practices using the ASEAN Corporate Governance Scorecard Methodology.




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Kulim’s first Integrated Annual Report 2014- our efforts to provide holistic and strategic insights to our stakeholders.

Morning harvest of tall palm at Ulu Tiram Estate, Johor Bahru.


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A New Energy

Kulim (Malaysia) Berhad is proud to be among selected corporations of Malaysian Public Listed Companies included in the new FTSE4Good Bursa Malaysia Index launched on 22 december 2014.

The Index was developed in collaboration with FTSE and is one of the first in Asia to be part of the globally benchmarked FTSE4Good Index Series. The introduction of the new Index is to allow investors to look at value from a new perspective, taking into consideration non-financial aspects such as a company’s Environmental, Social and Governance (“ESG”) initiatives.

Kulim believes that its inclusion to the FTSE4Good Bursa Malaysia Index is a strong recognition of its commitment to its many ESG initiatives. We are committed to sustainable business practices, socially responsible behaviour and respect for the environment wherever we operate.




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OUTLOOK AND PROSPECTS

Kulim and the business environment are in for very challenging but interesting times in the coming year. The sharp decline in oil prices since mid-2014 will support global activity and help offset some of the headwinds to growth in oil-importing developing economies. On the other hand, it will also dampen growth prospects for oil-exporting countries. In January 2015, the Malaysian Government revised its economic growth forecast for the year in the face of a fiscal deficit challenge.

Key Component

By 2020, Malaysia’s palm oil sector is targeted to boost the country’s total Gross National Income (“GNI”) by RM125 billion to RM178 billion and create 41,600 new jobs. The palm oil industry has been identified as one of the National Key Economic Areas (“NKEA”) to transform the nation into a high-income economy by 2020.

Leveraging New Growth

The disposal of NBPOL has enabled the Group to realise its investment in the company at an attractive premium and a gain of approximately RM1.29 billion. The disposal is in line with Kulim’s strategy of constantly evaluating its portfolio of investments and to unlock the value of some of these investments for the benefit of our shareholders.

In addition to returning cash surplus to shareholders, the sale of NBPOL will reduce the gearing level of the Group from approximately 0.40 times to approximately 0.21 times. It will free up cash flow and provide us with further financial flexibility to pursue opportunities to acquire additional plantation land and to venture into other viable business opportunities. Moreover, Kulim has an established track record of identifying new viable assets or businesses that can be acquired and nurtured to sustain growth and profitability.

Consistent with Kulim’s balanced business strategy, our investment in the SWBB PSC venture represents the Group’s first step to expand its involvement in the niche Indonesian O&G activities. The venture also has high potential to contribute positively to Kulim’s future earnings and enhance shareholders’ value in the long-run. Kulim believes that significant results from the O&G business are expected to be visible from 2016 onwards.

The first 500 hectares of land under PT Sumber Sawit Rejo (“PT SSR”) have already been cleared for a new planting programme, along with the setting up of a 80-hectare oil palm nursery in the third quarter of 2014. We expect the first crops to be ready for harvesting in 2017. Meanwhile, the socialisation process with the surrounding villages is ongoing at all three (3) sites, namely PT SSR, PT Harapan Barito Sejahtera (“PT HBS”) and PT Wahana Semesta Kharisma (“PT WSK”).

Downstream Activities

downstream activities that can be expanded alongside the Group’s palm oil milling activities include the biogas plant from Palm Oil Mill Effluent (“POME”), which is our current focus. The Kulim Group’s first biogas plant at Sedenak Palm Oil Mill has commenced operation on 8 April 2014, whereas the next biogas plants in the pipeline are located at Pasir Panjang Palm Oil Mill and Sindora Palm Oil Mill. Apart from the added value to be accrued as downstream activities, the projects are also part of Kulim’s sustainability efforts towards promoting renewable or green energy within the oil palm sector.

SPO Certification

The successful attainment of Sustainable Palm Oil (“SPO”) certification will further enhance Kulim’s reputation globally of its awareness of environmental issues and help it to be the front runner in the global supply chain. Sustainability premiums could become an important contributor to the Kulim Group’s margins.

sedenaK palM oil MillCommenced operations on 8 april 2014

1stbiogas plant


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Showhouse of Kulim’s staff housing project at REM Estate, Kota Tinggi.


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Potential Growth Areas – Property Development

Spurred by Government-driven mega projects, including Iskandar Malaysia (“IM”) and the PETRONAS Refinery and Petrochemicals Integrated development (“RAPId”) project in Pengerang, we see these as great potentials for property development, given the proximity of some of Kulim’s estates to these areas. These estates include the REM Estate (2,576 hectares), Sungai Papan Estate (3,022 hectares) and Siang Estate (3,452 hectares).

As we look forward to the new financial year, our Business Plans and Strategies to achieve them are in place. Our main priorities in Fy 2015 are to leverage growth on the following main pillars:

Although we remain cautious about the global economy, we are confident about the future of the Kulim Group and the businesses we are in. Notwithstanding the uncertainties of the business environment, we are well positioned to pursue opportunities for new growth. We are convinced that our business and investment approach will lead us to unlock further value for our shareholders.

ACKNOWLEDGEMENTS

The way to success is through our employees. High levels of performance, professionalism and dedication on the part of our employees not only in Malaysia, but also in Papua New Guinea and the Solomon Islands were vital success factors in navigating a challenging Fy 2014. As a Group with lofty ambitions, we intend to shape Kulim’s future with undiminished entrepreneurial foresight and energy.

Kulim is where it is today because of the understanding and support of all its stakeholders. We have a great support team comprising our partners, associates, consultants, relevant Government authorities in Malaysia, Indonesia, Papua New Guinea and the Solomon Islands. As always, I thank our shareholders for your support to our Company.

I wish to record my appreciation to my fellow members on the Board for providing the sound counsel and corporate oversight to help set the course we are on today. Specifically, the Board and I wish to thank Wong Seng Lee and Rozan Mohd Sa’at who left the Board on 15 January 2015, for their dedicated services and wish them success in their future undertakings. The Board and I also wish to welcome Rozaini Mohd Sani, who was appointed to the Board on 15 January 2015. We look forward to the diversity of perspective he will bring in providing fresh insights and guidance.

Having come this far in our transformation journey we can not afford to let down our guard. We still have some way to go yet to unlock our full potential. I have no doubt whatsoever we will succeed together.

I thank all of you.

DATO’ KAMARUZZAMAN ABU KASSIMChairmanNon-Independent Non-Executive director

NewBusinesses

2015BUSINESS GROWTH

HighPerformance

Culture

SolidifyingFinancialStrength

Achieving CostEfficiency &Increasing

Productivity

Constantly explore and evaluate business opportunities in promising new areas to achieve multiple revenue streams.

Continue to solidify the financial strength of the Group and fine-tune our operations even more.

Intensify efforts to achieve greater cost efficiency and maximise margins, while increasing productivity abiding by the principles of sustainability.

Inculcate a high performance culture throughout the Group.


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a new energy

AHAMAD MOHAMADManaging Director



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Managing direCtor’s

REVIEW OF OPERATIONS

dear Shareholders,

The financial year ended 31 december 2014 (“Fy 2014”) was a challenging one for Kulim (Malaysia) Berhad (“Kulim” or “The Group”). The Group navigated a myriad of challenges which included among others, the volatility of CPO and crude oil prices, year-on-year rising operational costs, high dependency on foreign labour and vulnerability of Malaysia as an open economy to the downside risks of the global environment.


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MANAGING dIRECTOR’S REVIEW OF OPERATIONS

achieving success With strong Fundamentals and strategic thrusts

expansion of landbank/plantation

Given all the challenges and uncertainties in its operating and business environment, in terms of productivity, I believe Kulim delivered a very credible performance in Fy 2014. Significant progress was made in cost improvement and operational efficiencies. The year in review also saw the Group fast-tracking its geographic expansion into Indonesia. On balance, I believe the results we achieved the past year underscore the inherent strengths of the Kulim Group, the focused execution of its growth strategies, its ability to create value and the promising prospects in moving forward.

CORPORATE DEVELOPMENTS

Expansion of Landbank/Plantation

Having defined the right strategies for new growth, Fy 2014 was a landmark year on the corporate front. The year kicked off with the completion on 14 February 2014, of a 74% equity interest in PT Wisesa Inspirasi Nusantara (“PT WIN”) to take control of 40,645 hectares of oil palm land in Indonesia for a purchase consideration of USd42.86 million. This acquisition is key to Kulim’s goal to diversify its geographical presence and grow its plantation segment, especially with the NBPOL disposal that was subsequently concluded in February 2015.

The importance of increasing our landbank comes into sharp focus as for a number of plantation properties in Malaysia, their conversion into property development is more a question of when rather than if.

solidifying involvement in global digital logistics business

unlocking assets Value

diversification into o&g

Corporate deVelopMents



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Diversification into Oil and Gas (“O&G”)

Consistent with the Group’s long-term business plan to diversify its business activities, our wholly-owned subsidiary, Kulim Energy Nusantara Sdn Bhd (“KENSB”), had on 23 October 2014 executed a Joint Operating Agreement (“JOA”) with PT Graha Sumber Berkah (“PT GSB”) and PT Radiant Bukit Barisan E&P (“PT RBB”) to participate in the exploration and development of an O&G field in the South West Bukit Barisan (“SWBB”) Block in Central Sumatera, Indonesia.

Subsequently, on 10 december, KENSB entered into a Conditional Subscription and Shares Purchase Agreement (“CSSPA”) with PT Citra Sarana Energi (“PT CSE”) and its existing shareholders, PT Wisesa Inspirasi Sumatera (“PT WIS”) and PT Inti Energi Sejahtera (“PT IES”) for a 60% stake in PT CSE for USd133.55 million. The move is aimed to secure Kulim’s interest at the shareholding level and is expected to enable Kulim to expand its involvement in the O&G sector in Indonesia, particularly in the niche upstream activities of exploration, development and production.

Solidifying Our Involvement in Global Digital Logistics Business

On 2 May 2014, Kulim exercised its right to convert its subscription of 3-year Irredeemable Convertible Cumulative Unsecured Loan Securities (“ICCULS”) in Asia Economic development Fund Limited (“AEdFL”) with an aggregate nominal value of USd15.34 million inclusive of capitalised interest. With the conversion, Kulim now holds a 54.21% equity interest in AEdFL - a company holding interest in the global digital logistics business. It will serve as a platform for the Group to participate in a unique new business activity with a “first-mover advantage” in the development and deployment of a global solution towards increasing global trade.

MT FOIS Nautica Tembikai - EATech’s first Floating Storage

Offloading (“FSO”) unit with capacity of about 48,000 dwt.


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A New Energy

Unlocking Asset Value

Divestment of Nexsol

While expanding our asset portfolio, we are also selectively divesting assets that are underperforming, are no longer in line with the Group’s strategic vision or when we can realise significant value from the sale of these assets. Thus on 3 december 2014, the Group disposed its entire 100% equity interest in Nexsol (Malaysia) Sdn Bhd (“Nexsol”) to PGEO Group Sdn Bhd (“PGEO Group”) for a cash consideration of RM27 million. As part of the deal targeted for completion by the first half of 2015, PGEO Group will also purchase 30 acres of leasehold where the plot is located for RM23 million. The divestment of these two (2) assets will enable Kulim to realise some value in its investments in Nexsol and its facilities, which were not in operation. Proceeds from the sale will be utilised as working capital.

Divestment of NBPOL

during the year, Kulim also announced its proposal to dispose its entire interest in NBPOL to Sime darby Plantation Sdn Bhd (“SdP”) for a disposal consideration of approximately RM2.75 billion. The proposed divestment provides a timely opportunity for Kulim to realise its investment in NBPOL at an attractive premium, with a gain on disposal of approximately RM1.29 billion recorded upon completion in February 2015, net of expenses. Part of the proceeds will be utilised to reduce the gearing level of the Group and strengthen its working capital to support its core plantation businesses and other ventures in Malaysia and abroad. At an Extraordinary General Meeting (“EGM”) held on 3 december 2014, shareholders have given Kulim the green light to proceed with the divestment of NBPOL. The divestment exercise was completed on 26 February 2015. The first tranche of RM500 million special dividend arising from the disposal proceeds was subsequently paid on 23 March 2015.




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Listing of E.A. Technique (M) Berhad

In our IV Segment, the most significant development was the listing of E.A. Technique (M) Berhad (“EATech”) on the Main Market of Bursa Malaysia Securities Berhad on 11 december 2014. The Initial Public Offering (“IPO”) exercise is expected to enable the company to raise funds from the capital market to finance its expansion plans. It has also provided an opportunity for the investing community to participate directly in EATech’s equity and continuing growth.

OPERATING ENVIRONMENT

Global economic growth continued to face headwinds in 2014, with many high-income countries grappling with legacies of the global financial crisis while emerging economies were less dynamic in the past. As a result, growth only picked up marginally to 2.6% in 2014, from 2.5% in the previous year. The global outlook for 2014 was driven by several major forces - soft commodity prices, persistently low interest rates, divergent monetary policies across major economies and weak world trade.

The Malaysian economy registered a stronger-than-expected growth of 6.3% in the first half of 2014, supported by resilient domestic demand and strong macroeconomic fundamentals. However, since the middle of the year the Malaysian economy came under increasing pressure as a result of a decline in oil prices and the weakening of the Ringgit which slid to its lowest level in more than five (5) years. Faced with a fiscal deficit challenge, the Government has revised GdP growth for 2014 to between 4.5% and 5.5% from an initial forecast of 5-6%.

5.39m hectares

3.1%

MALAYSIAOil Palm Planted Area

INDUSTRY OVERVIEW

Against a challenging economic backdrop, the Malaysian palm oil industry registered a mixed performance in 2014. According to the Malaysian Palm Oil Board (“MPOB”), CPO production, closing stocks and export revenue increased while export volume and imports declined.

Total oil palm planted area in the country increased 3.1% to 5.39 million hectares, due mainly to new planting in Sarawak. In 2014, CPO production increased by 2.3% to 19.67 million tonnes due to higher OER and increase in new areas coming into production. However, at 18.63 tonnes per hectares, Malaysian FFB yield Per Hectare (“yPH”) for 2014 was lower by 2.1% attributed mainly to the monsoonal floods in Kelantan, Terengganu and Pahang, towards end-2014 which badly affected FFB production. OER registered an increase of 1.8% to 20.62%, thanks to the good weather conditions in the first half of the year as well as better quality harvests received by the mills.

Malaysia’s total exports of palm oil declined by 4.8% to 17.28 million tonnes during 2014, as a result of lower demand from China, Pakistan, United States of America (“USA”), Ukraine and Iran. India has overtaken China as Malaysia’s largest export market with an intake of 3.23 million tonnes or 18.7% of the total exports volume.

In 2014, the overall CPO price showed a slight upward trend, increasing by 0.5% to average RM2,383.50 per tonne. The highest price was achieved in March, when CPO was traded at RM2,855 per tonne while the lowest price was in September at RM2,055.50 per tonne.

World vegetable oils were traded weaker in 2014, especially soybean oil which was down by 14% to USd909 per tonne. Palm oil prices closely track soybean oil prices as soybean oil is a close substitute for CPO. The price of soybean declined sharply in 2014 as a result of abundant supply in the USA and South America. The oversupply situation was exacerbated by ample global inventories in competing vegetable oils, which further depressed CPO prices.


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SEGMENT HIGHLIGHTS

PLANTATION

As at 31 december 2014, the divestment of NBPOL by Kulim was still in progress and was subsequently completed on 26 February 2015. Therefore, for operational reporting purposes, we have included the operational review for plantations in Papua New Guinea (“PNG”) and the Solomon Islands (“SI”).

Key Operational Parameters

Actual Target % Achieved

FFB Production (tonnes) 841,079 813,891 103CPO Production (tonnes) 257,881 236,298 109PK Production (tonnes) 69,681 65,366 107FFB yield Per Hectare (tonnes) 22.34 21.77 103OER (%) 20.58 20.53 100KER (%) 5.56 5.68 98Replanting (hectares) 1,61 1,61 100Field cost (RM per tonne FFB) 268 280 100Milling cost (RM per tonne FFB) 43 49 100

PLANTATION IN MALAYSIA

Of the Group’s total plantation landbank of 226,253 hectares, 22.6% or 51,610 hectares are located in the southern part of Peninsular Malaysia. Another 56.1% or 126,871 hectares are in PNG, SI making up another 3.3% or 7,577 hectares and the balance located in Indonesia.

The Kulim Group is considered one of the industry leaders in the oil palm industry in terms of yield performance. In Fy 2014, the Group including NBPOL production, produced 2.53 million tonnes of FFB, an improvement of 9.5% from 2.31 million tonnes achieved in the previous year. The PNG operations were the biggest contributor to FFB production, accounting for 1.55 million tonnes or 61.3%, followed by Malaysia (33.2%) and SI (5.5%).




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during the year, our Malaysian operations produced a total of 841,079 tonnes of FFB, a 3.09% increase from 815,896 tonnes produced in 2013. Correspondingly, we also achieved a 1.04% increase in yield Per Hectare (“yPH”) to 22.34 tonnes from 22.11 tonnes recorded the previous year. Our FFB performance was superior compared to the average yield achieved by the industry in Johor as well as Peninsular Malaysia, which was 19.50 tonnes and 18.23 tonnes respectively.

The Group is committed to improving the age profile of its palms. In Fy 2014, some 1,611 hectares were replanted with new high yielding clones. Replanting is undertaken on a staggered basis to maximise the crop potential before felling is carried out. As a result of our replanting initiative, the average age profile of our palms has improved to 11.37 years.

Good Agricultural Practices and Manufacturing Practices have been adopted at all stages of our plantation operations to enhance efficiency and productivity. They cover an entire spectrum of activities, ranging from nursery preparation, field planting and up-keeping, right up to FFB harvesting, transportation and processing at the mills.

Over the years, proactive measures have been taken to step up the Group’s mechanisation and automation programmes to reduce dependency on labour, especially for FFB harvesting and evacuation. The latest addition to our mechanisation programme involve the use of a Bin System for faster and more efficient FFB loading and evacuation. The way forward for plantation players like Kulim is to increase the level of mechanisation in the upstream sector of the industry in view of the yearly increase in salary cost as a result of the revision of the collective wage agreements between the Malaysian Agricultural Producers Association (“MAPA”) and the National Union of Plantation Workers (“NUPW”).

In Fy 2014, our five (5) mills in Malaysia produced 257,881 tonnes of Crude Palm Oil (“CPO”), an increase by 1.2% from previous year. This was despite a 0.56% decrease in FFB processed from both the Group’s estates and external suppliers. Palm Kernel (”PK”) production amounted to 69,681 tonnes, a slight decrease of 1.71% from Fy 2013.

We achieved OER of 20.58%, which is an improvement from 20.22% recorded in 2013 as a result of mainly favourable drier weather and increased matured crops from Group’s estates. However, the Kernel Extraction Rate (“KER”) declined marginally from 5.63% to 5.56% over the same period. It is noteworthy that our OER is higher than the industry average of 20.19% for Peninsular Malaysia while our KER is at par with the industry average.

Leguminous Cover Crops at Sedenak Estate, Kulaijaya.


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Palm Oil Supply Chain

Kulim is committed to the Principles and Criteria of the Roundtable on Sustainable Palm Oil (“RSPO”), an organisation that was established to promote the growth and use of certified sustainable palm oil. With more than 35% of our FFB purchased from independent traders, outgrowers and shareholders, we are working on full certification of all FFB processed by our mills. Towards this end, our strategy is to map out the suppliers of external FFB to our mills, identify partners who can work with us to increase awareness of RSPO certification and more importantly, enhancing understanding on its practical implementation.

Kulim’s sustainable palm oil is sold to the market via the RSPO’s Green Palm Book and Claim, and the Mass Balance Mechanisms. The Book and Claim mechanism allows customers to buy tradable certificates for the volume of RSPO-certified palm oil required. The Mass Balance mechanism allows certified palm oil to be mixed with conventional palm oil, but the entire process is monitored administratively. In 2014, we have sold 147,092 certificates of CPO and PKO for a total of approximately USd1.09 million (equivalent to approximately RM3.6 million).

Total Quality Management

Kulim Group has embraced Total Quality Management as a quality and management tool to embed quality in all aspects of the Group’s operations. Four (4) of the Group-owned Operating Units (“OU”), namely Tereh Selatan Estate and Tereh, Sedenak and Sindora Palm Oil Mills have been certified by SIRIM to the internationally recognised MS ISO 9001:2000 quality management system since 1999, currently upgraded to MS ISO 9001:2008. Three (3) other Group-managed plantation units have been similarly accredited. Sedenak and Sindora Estate, and Sindora Palm Oil Mill have also earned accreditation to EMS ISO 14001:2004. The Group is now in the process of obtaining Halal certification by JAKIM for all its mills.

In our quest for continuous improvement in the work environment, Kulim had embarked on a journey towards certification of Quality Environment/5S, a Japanese originated management tool for improving workplace efficiency since 7 September 2013. We are pleased to report that, on 8 January 2015, Kulim had earned its QE/5S certification.

Environment Quality (Clean Air) Regulations 2014

during the year under review, the department of Environment (“dOE”) issued a new regulation under the Environmental Quality (Clean Air) Regulations 2014 setting lower limits for smoke opacity and dust concentration emissions. Existing mills have a grace period of five (5) years to comply with the new regulations while new facilities have to meet the dOE requirement before commissioning. To ensure compliance with the new regulation, additional air pollution systems are being installed at our mills. A new multi-cyclone system called the Hurricane Recyclone System will be installed at our mills to achieve the new limit of below 150 mg/m3

and smoke opacity of not darker than Shade No. 1 of the Ringelmann Chart.

Biogas Plant Projects

The biogas plant project is being implemented at our five (5) mills in phases to reduce the Group’s overall carbon foot-print to 80.5% of the 2012 baseline emission by 2017.

Our first biogas plant, which is located at the Sedenak Palm Oil Mill was commissioned on 8 April 2014 and currently running with average daily production of methane gas of approximately 5,000 m3. Another plant is under construction at the new Pasir Panjang Palm Oil Mill and is targeted for completion by mid-2015. This will be followed by the Sindora Palm Oil Mill, with commissioning planned for early 2016. By 2017, the Palong Cocoa and Tereh Palm Oil Mills will also have their own biogas plants.

FFB are channelled to the loading ramp;

Sedenak Palm Oil Mill, Kulaijaya.




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PLANTATION IN PNG AND SI

during the year, a total of 2,331,756 tonnes of FFB were processed, a 11.8% increase from previous year’s 2,085,670 tonnes. Correspondingly, NBPOL Group’s CPO extraction rate for the year was 22.35% versus 22.15% recorded in 2013. Total oil production was 574.124 tonnes (2013: 507,856 tonnes), with 521,204 tonnes of CPO produced and 52,920 tonnes of PKO produced (2013:462,060 tonnes and 45,796 tonnes respectively).

In 2014, NBPOL Group completed 1,183 hectares of new plantings (with a further 1,479 hectares under preparation) and 2,743 hectares of replanting. CPO prices traded during the year were between USd675 and USd935 per tonne, starting the year at USd785 per tonne, increased to USd935 per tonne during the year and ended at around USd700 per tonne with current prices trading at approximately USd700 per tonne.

Biogas is being used as an additional fuel for the boiler systems, apart from mesocarp fibres and palm shells. A reduction in the use of palm shells can help ensure lower particulate emissions and smoke opacity. Commercially, there is a market for palm shells while excess biogas produced by our mills can be bottled and sold for industrial use. The Group is looking into the viability of these options as another possible revenue stream.

PLANTATION IN INDONESIA

In 2013, Kulim was presented with an opportunity to re-enter Indonesia having left it in 2007. The completion of 74% acquisition in PT WIN paved the way for Kulim and PT GSB to develop 40,645 hectares of new oil palm plantations in Central Kalimantan, Indonesia.

Being a socially and environmentally responsible corporate citizen, Kulim is committed to the expansion of its plantation operations, especially in Indonesia, guided by the RSPO’s New Planting Procedures (“NPP”) apart from the relevant Indonesian regulations through a formal process to secure the necessary documentation to obtain a release permit prior to land development. Accordingly, we initiated the necessary stakeholders’ engagement programme as early as June 2013, including surveys to determine the High Conservation Value (“HCV”) area and engagement with the local Dayak community to explain our development plans and obtain their consent to proceed with our development plans.

In July 2014, the relevant documents were submitted to TUV Rheinland Indonesia, a leading service provider for RSPO certification. The report by auditors from TUV Rheinland was completed in September and was subsequently published on the RSPO website for public notification purposes.

We are also in the final stages to obtain the necessary permits to convert 7,133 hectares of forest (Hutan Produksi Konversi - “HPK”) to grow oil palms (Areal Penggunaan Lain – “APL”). The final approval from the Forestry Ministry is expected by June 2015.


41

a new energy

INTRAPRENEUR VENTURES DIVISION

Kulim’s Intrapreneur Ventures (“IV”) division is the test-bed for the Group’s entrepreneurial talent. We are constantly on the look-out for new and promising businesses that we can nurture to maturity. Our efforts have paid off with some success stories, notably that of EATech and its subsequent listing on the Main Market of Bursa Securities.

As to be expected, we have also had our share of businesses that have not performed in line with expectations. These have been downsized or restructured. Some operations have been outsourced while those under-performing or no longer in line with the Group’s business objectives have been divested. In Fy 2014, we acquired one (1) new company – Sovereign Multimedia Resources Sdn Bhd, disposed of two (2) companies – Superior Harbour Sdn Bhd and General Access Sdn Bhd, while the operations of two (2) companies have been outsourced – Epasa Shipping Agency Sdn Bhd and Akli Resources Sdn Bhd.

With the growing prominence of the O&G business, we will be reclassifying two (2) IV companies – EATech and danamin (M) Sdn Bhd (“danamin”) under the new division.

OIL AND GAS DIVISION

Kulim’s long-term strategy has always been to diversify its business activities in order to cushion any fluctuation in earnings arising from volatile palm oil prices. We established a foot-hold in the O&G industry through EATech, which has since grown organically to become one (1) of the prominent operators in tug boat services and in the business of transportation of clean petroleum products. The other foot-hold is through danamin, which is involved in the fabrication of O&G pipelines, Non-destructive Testing (“NdT”) and the provision of engineering services. Kulim’s investment in the SWBB PSC in Indonesia is therefore not something new. It allows the Group to move up the O&G value chain and participate in the potentially lucrative upstream business of exploration, development and production activities.

The Government of Indonesia (“GOI”) had awarded the SWBB PSC to subsidiaries of PT CSE - PT Radiant Bukit Barisan E&P (“PT RBB”) and PC SKR International Ltd (“PC SKR”) on 13 November 2008 for a period of 30 years. Measuring some 779 square kilometers, SWBB Block is located onshore in the West Sumatera Province and has been explored by previous operators such as PT Caltex Pacific Indonesia (1981-1984) and Hunt Oil-Apache (1991-1994). For the 2015 work programme, Kulim remains focused on exploration drilling in SWBB. Production testing on a SWBB well is currently progressing with very encouraging indications of total Prospective and Contingent Resources of 404 million barrels of oil equivalent. RBB has obtained approval from GOI to drill an additional three (3) wells in 2015. depending on its commercial viability, production can begin in the early 2016 and is expected to ramp up the Group’s revenue.




42

APPRECIATION

What we have achieved the past year would not have been possible without the strength of a talented and very motivated workforce. Kulim aims to be an Employer of Choice and in living up to this aspiration, we help our people achieve professional growth, make meaningful contributions to the Company and generate growing returns for our shareholders. As a result, we are able to attract the best talent and their dedication, professionalism and passion continues to set us apart within the industry. Our people will undoubtedly continue to play a decisive role in shaping Kulim’s corporate future.

The momentum we have established will continue into Fy 2015 and in the years ahead. Kulim is remarkably well positioned for a future of sustainable and profitable growth.

Thank you.

AHAMAD MOHAMAD Managing director

Our Malaysia operations produced a total of

841,079 tonnes of FFB in 2014.


43

a new energy

dear stakeholders,

The financial year ended 31 december 2014 was a challenging one for Kulim (Malaysia) Berhad (“Kulim” or the “Group”). Against a backdrop of crude oil prices falling to levels never seen before in years and a weakening of the Malaysian Ringgit, lower Crude Palm Oil (“CPO”) prices and rising operating costs affected our financial performance.

World demand for CPO was also a major factor that had a bearing on our performance. despite the push towards sustainability, demand for RSPO-compliant CPO went down as consumers settled for lesser quality CPO. At the same time, demand from China, traditionally our main buyer, declined thus saturating the supply market. As a result, supply exceeded demand and prices fell from RM2,534 per tonne in January to RM2.154 per tonne by the end of december.

PERFORMANCE

In Fy 2014, the Group recorded revenue of RM1.09 billion, a 7.95% increase from RM1.01 billion registered in the previous year. The Plantation segment remained by far the biggest contributor, accounting for 70.16% or RM767.27 million of Group revenue.

ChieF FinanCial oFFiCer’s

REPORT

7.95%

RM1.09 billion RevenueFY2014



44

despite a 3.09% increase in the production of Fresh Fruit Bunches (“FFB”), revenue was impacted by lower CPO prices recorded in Fy 2014. The Group’s Malaysia operations achieved an average CPO price of RM2,370 in Fy 2014 compared to RM2,472 per tonne in Fy 2013. However, average PK prices in Fy 2014 was higher at RM1,708 per tonne against RM1,287 per tonne recorded in the previous year. Profit Before Tax (“PBT”) declined to RM95.53 million from RM106.92 million posted previously. Following the disposal of New Britain Palm Oil Limited (“NBPOL”), Kulim will no longer consolidate the earnings of NBPOL, which has been a major contributor to Kulim’s total revenue and profitability.

BALANCE SHEET STRENGTH

Kulim realised a gain of approximately RM1.29 billion (net of expenses) with the disposal of NBPOL upon its conclusion in February 2015. This will reduce the gearing level of the Group from 0.40 times to approximately 0.21 times. Part of the approximately RM2.75 billion proceeds will also be used to strengthen the working capital of Kulim, to support its core plantation business and new ventures locally and abroad.

Facts at a glance

O Fy 2014 Revenue increased by 7.95% to RM1.09 Billion

O FFB Production increased by 3.09%

O Profit Before Tax stood at RM95.53 Million

O Realised Gain of approximately RM1.29 Billion from disposal of NBPOL

O 9.5 Sen Single Tier Interim Dividend paid on 29 december 2014

O Total of RM1.0 Billion earmarked as Dividends

AZLI MOHAMEDChief Financial Officer


45

a new energy

PROCEEDS FROM THE DISPOSAL OF NBPOL

Details of utilisation RM’000

Proposed distribution 1,000,000

Investment/acquisitions of viable asset(s) and business(es)

850,000

Repayment of bank borrowings 600,000

General working capital 300,000

Total 2,750,000

* As announced in the Circular dated 18 November 2014.

DIVIDENDS

In our commitment to deliver consistent returns to our shareholders, a 9.5 sen single tier interim dividend per ordinary share of RM0.25 each was declared on 3 december 2014 and paid on 29 december 2014.

The Board has also earmarked approximately RM1.0 billion from the proceeds from the sale of NBPOL to be paid as dividends to all entitled shareholders of Kulim. The dividends are expected to be paid on a staggered basis over a period of two (2) years to ensure a minimum stream of stable dividend payments to shareholders and to encourage longer term investment in Kulim shares. This represents approximately RM0.78 per Kulim share over the next two (2) years.

First tranche of RM500 million dividend equivalent to 37.65 sen per ordinary share was paid on 23 March 2015.

SHARE PRICE

Kulim is an established oil palm plantation company with a pedigree that goes as far back as 1933 when the Company was incorporated in the United Kingdom. The Kulim counter may not be appealing to investors seeking quick gains. However, for those who are risk averse and want a steady return on their investments, Kulim is one of the best stocks to buy and hold. Known as a plantation player, the vagaries of market demand and supply and fluctuating CPO prices have limited the upside potential of Kulim’s share counter during the review period. In January 2014, the listed price was RM3.60 but was down to RM3.00 as at 31 december 2014, as the counter tracked closely the downtrend of FBM KLCI and Plantation Index.

By and large, our investors are able to look beyond temporal market fluctuations and appreciate our efforts to unlock the full potential the Group has to offer. We are confident that Kulim will continue to add value to shareholders.

LOOKING AHEAD

As we move into Fy 2015, our main concern remains that of volatile commodity prices, especially crude palm oil. In the coming year, market analysts have projected CPO prices to remain range-bound in the near term at RM1,900 to RM2,300 per tonne as the market digests the record US soybean supplies, higher palm oil supplies and lower crude oil prices. Taking the cue from the market analysts, Kulim is confident the supply situation will stabilise in 2015 and CPO prices will trend higher due to slower edible oils output growth and restocking activities by customers, thus drawing down some inventory. If average CPO prices remain at around RM2,300 per tonne as we hope, this will mean that our revenue and profit will not be too far off the 2014 level.

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

2 Jan 2 Feb 2 Mac 2 Apr 2 May 2 Jun 2 Jul 2 Aug 2 Sep 2 Oct 2 Nov 2 Dec 2014

KLCI PLANTATION KULIM

KULIM SHARE PRICE PERFORMANCE 2014

CHIEF FINANCIAL OFFICER’S REPORT



46

The Malaysian Government has announced it will not alter its mandate on the palm oil biodiesel programme nationwide, despite the fall in crude oil prices. It was reported that in 2014, local consumption of CPO for biodiesel exceeded 200,000 tones. Instead, the Government is exploring plans to implement the biodiesel B10 programme nationwide in 2015. This will raise domestic consumption by 1.2 million tonnes annually. The B10 programme is part of the Government’s initiative to reduce stockpiles and increase domestic consumption of palm oil and contribute to the usage of an environmentally friendly and power generation.

We are also keeping a close watch on operating costs. The implementation of the Government Goods & Services Tax (“GST”), higher minimum wages, lower fuel subsidies and increased foreign labour costs will all have an impact on operating costs, pushing them higher in Fy 2015. Kulim has always been aware of the danger of loose financial controls and various programmes have been placed to monitor the operating costs trend. Sensitive risks have been identified and evaluated on a monthly basis, price-agreements with our suppliers and contractors have been established and cost reduction initiatives have been implemented to mitigate rising costs.

It may be pointed out that economic slowdowns are not unchartered territory for the Kulim Group. We have navigated successfully the economic meltdown of 1997 and 2007 and rather than slowing down, we went on expanding and venturing into new business lines. Our track record amply demonstrates that Kulim has what it takes to withstand the

present uncertainties in the economic environment and more importantly, continue to meet the expectations of shareholders and deliver.

In meeting our financial and business targets for Fy 2015, our core strength lies in our human capital. We consider our people our most important asset and even through the most economically challenging times, we have never resorted to a voluntary separation scheme. In return, we have gained the trust of our employees and their loyalty. The result is a cohesive team that shares a common vision and mission in the attainment of corporate and individual goals. This is the extraordinary strength that has enabled Kulim to keep abreast with the larger players in the industry.

The production of FFB from the Group’s Malaysian plantation operations is expected to improve as more fields reach prime maturity. Higher internal production means a lower volume of FFB purchased from third parties and this will reduce costs. Barring any unforeseen circumstances, the Group is expected to record another commendable performance in the next financial year.

Thank you.

AZLI MOHAMEDChief Financial Officer

Morning routine at Mungka Estate, Segamat.


47

A New Energy

Corporate eVent highlights 2014

15-16 January

Kulim participated in Hari Mekar Johor Corporation 2014, a biennial event organised by Johor Corporation (“JCorp”) to promote total quality initiatives, held at Persada Johor.

15-21 May

Kulim participated in the Minggu Sains Teknologi & ICT Negeri Johor 2014 (“MISTI 2014”) at Persada Johor.

21 June

Kulim participated in the Kembara Mahkota Johor 2014 held at Maktab Rendah Sains Mara, Johor Bahru.

25-27 August

Kulim participated in the Biotechnology Conference and Exhibition 2014 (“BIO JOHOR 2014”) held at Persada Johor.

19-21 September

Kulim participated in the Mini Agro Exhibition held at dataran Segamat, Johor.

22-23 September

Kulim participated in the SME Smart Partnership Program for Southern Zone 2014 held at Persada Johor.

24 October

The signing of Joint Operating Agreement (“JOA”) between Kulim Energy Nusantara Sdn Bhd (“KENSB”), PT Graha Sumber Berkah and PT Radiant Bukit Barisan E&P held at Jakarta for Kulim to participate in the exploration and development of Oil and Gas (“O&G”) field in South West Bukit Barisan Block (“SWBB Block”), Central Sumatera, Indonesia.



48

20 November

Kulim won its seventh Industry Excellence Award (Main Board) – Plantations & Mining Category in National Annual Corporate Report Awards 2014 (“NACRA 2014”), held at Grand Hyatt Hotel, Kuala Lumpur.

26 November

ACCA Malaysia Sustainability Reporting Awards 2014 (“MaSRA 2014”) prize giving ceremony was held at The Hilton, Kuala Lumpur. Kulim’s Sustainability Report 2012 / 2013 was shortlisted.

26 November

The Managing director of Kulim, Ahamad Mohamad was awarded as one of the Winners of Top 5 Outstanding Leaders in Asia by Asia Corporate Excellence & Sustainability Awards 2014 (“ACES 2014”) held at Fairmont, Singapore.

Extraordinary General Meeting (“EGM”) in relation to the disposal of New Britain Palm Oil Limited (“NBPOL”) was held at The Puteri Pacific Hotel, Johor Bahru.

Malaysia-ASEAN Corporate Governance Index 2014 was held at Sime darby Convention Centre, Kuala Lumpur. Kulim was ranked 49th among the top 50 companies in the awards.

3 december 9 december

The signing of Conditional Subscription and Shares Purchase Agreement (“CSSPA”) between KENSB with PT Citra Sarana Energi (“PT CSE”) and its existing shareholders for 60% equity interest in PT CSE.

Listing ceremony of E.A. Technique (M) Berhad (“EATech”) on the Main Market of Bursa Malaysia Securities Berhad.

10 december 11 december


49

a new energy

sustainabilitY eVent highlights 2014

12 January

Seminar Pembangunan Kerjaya Initiated by As-Sajadah Unit under Kulim’s ‘We Care, We Share’.

20 February

Kulim donated RM250,000 for Projek Tuisyen yayasan Johor Corporation. The ceremony took place at Persada Johor during the launching of Hari Bistari 2014.

22 February

Hi-Tea Programme with yBhg. dato’ Ustazah Siti Nor Bahyah, Ustaz Wan Akashah and Ustaz Badli Shah, held at Persada Johor.

29 March

Kota Tinggi Mountain Bike Challenge 2014 held at REM Estate, Kota Tinggi.

31 May

“Kulim ECO Boat Challenge 2014” held at Kulim Eco-Trail Retreat, Basir Ismail Estate, Kota Tinggi in conjunction with the visit by dyMM Sultan Johor.

4 June

Closing Ceremony of Raja Zarith Sofiah Wildlife defenders Challenge 2013 held at Galleria @ Kotaraya.

17 May-21 June

Inter Region youth Sports Carnival organised by Sustainability department held at Palong and Sedenak Complex.



50

16-21 June

Trip to London for winners of Raja Zarith Sofiah Wildlife defenders Challenge 2013 - secondary school and IPT categories.

19 August

Majlis Sambutan Hari Raya Aidilfitri Johor Corporation Group with dyMM Sultan Johor held at Persada Johor.

16-19 december

Trip to Sepilok, Orangutan Rehabilitation Centre Sabah for winners of Raja Zarith Sofiah Wildlife defenders Challenge 2013 - primary school category.

24 August

A celebration of Kulim’s 5th International Women’s day was held at Johor Clay Target Shooting Club, REM Estate with the theme ‘Jom Sihat!!’.

23 August

Hari Raya Celebration with the theme of ‘Jom Raya KSRT..!!’ was held at Kelab Sukan & Rekreasi Tiram (“KSRT”) Club House, Ulu Tiram, Johor.

14-16 November

KSRT in collaboration with Kulim Wildlife defenders organised XPdC Taman Negara Endau - Rompin (Kg. Peta).

19 October

Kulim participated in the Minggu Alam Sekitar Malaysia (“MASM”) 2014 for Johor State held at SMK Seri Aman, Felda Bukit Aping, Kota Tinggi.


51

A New Energy

reCognitions and aCCreditations

2014 AWARdEd By RECEIVING COMPANy/

OPERATING UNIT

NACRA AWARDS 2014• Industry Excellence Award (Main Board)

- Plantation & Mining (Winner)

National Annual Corporate

Report Awards

Kulim (Malaysia) Berhad

ACCA Malaysia Sustainability Reporting Awards (MaSRA) 2014• Sustainability Report 2012/2013 - Shortlisted

ACCA Malaysia Kulim (Malaysia) Berhad

Malaysia-ASEAN Corporate GovernanceIndex 2014• Ranked 49th among the top 50 companies

Minority Shareholders Watchdog Group (MSWG)


1st Place for Competition of Agricultural Produce• Malaysia Agriculture, Horticulture &

Agrotourism (MAHA) 2014

department of Agriculture,

Malaysia

Kulim Montel Farm

The Best Performing State GLC• Ranked 20th




52


OPERATING UNIT

NACRA AWARD 2012• Industry Excellence Award (Main Board)



Report Awards


Prime Minister CSR Awards 2011• Best 2011 CSR Programme: Environment

Ministry of Women,

Family and Community

development


The Edge Billion Ringgit Club 2012• Highest Profit Growth Company - Highest

Growth in Profit Before Tax Over Three years

(Plantation Sector)

The Edge Kulim (Malaysia) Berhad

Global CSR Awards 2012• Bronze Award (Workplace Practices)

The Pinnacle Group

International



OPERATING UNIT




Report Awards


ACCA MaSRA 2013• Sustainable Report 2010/2011 – Shortlisted

• Annual Report 2012 – Shortlisted


Malaysia-ASEAN Corporate Governance Index 2013• Ranked 44th among the top 50 companies

MSWG Kulim (Malaysia) Berhad

1st Place (Banana Category)– AGRO Johor 2013

department of Agriculture,

Malaysia

Kulim Montel Farm

Skim Sijil Pengesahan Bahan Tanaman (SPBT) 2013 department of Agriculture,

Johor

Kulim Pineapple Farm

SME 100 Award 2013 Fast Moving Companies 2013 SME & Entrepreneurship

Magazine

Microwell Bio Solutions Sdn Bhd


53

a new energy

RECOGNITIONS ANd ACCREdITATIONS


OPERATING UNIT


- Plantations & Mining (Winner)


Report Awards


3 Star (SME Competitiveness Rating forEnhancement)

SME Group Malaysia Kulim Civilworks Sdn Bhd

ACCA MaSRA 2011• Annual Report 2011 - Shortlisted


Industry Excellence Award• Plantation Sector 2010/2011

• Basis Holdings Sdn Bhd

• Malaysia National News

Agency (BERNAMA)

• Malaysia External Trade

development Corporation

(MATRAdE)


Malaysia’s Best Certificate Federal Agriculture Malaysia

Authority (FAMA)

Kulim Montel Farm(Basir Ismail Estate)

The Edge Billion Ringgit Club Award 2011• Best Performing Stock - Highest Returns to

Shareholders Over Three years

(Plantation Sector)

• Highest Profit Growth Company - Highest

Growth in Profit Before Tax Over Three years

(Plantation Sector)

The Edge Kulim (Malaysia) Berhad


OPERATING UNIT

ACCA MaSRA 2010• Winner – Best Sustainability Report

• Commendation – Reporting on Strategy and

Governance

• Shortlisted – Sustainability Report

• Shortlisted – Sustainability Report within

Annual Report



- Plantations & Mining (Winner)


Awards


Prime Ministers’ CSR Awards 2010• Honorable Mention for Outstanding Work in

Empowerment of Women

Ministry of Women, Family

and Community

development


Scored A in Malaysian Corporate Governance (MCG) Index 2010

MSWG Kulim (Malaysia) Berhad

Skim Amalan Ladang Baik Malaysia department of Agriculture,

Malaysia


Malaysia’s Best Certificate• Ranked 20th

Federal Agriculture Malaysia

Authority (FAMA)

Kulim Montel FarmBasir Ismail Estate



54

in the neWs


55

A New Energy


FinanCial Calendar

Quarter date of Announcement

1st 26.5.2014

2nd 25.8.2014

3rd 28.11.2014

4th 27.2.2015

date

Issuance of Annual Report 2013 2.6.2014

Annual General Meeting 24.6.2014

Extraordinary General Meeting 3.12.2014

Type Sen Entitlement

date

Payment

date

Interim

dividend

9.50 19.12.2014 29.12.2014

Quarterly Results Annual Report and

Annual General Meeting

dividend

Event Units Listed and Quoted Listing Date

1. Exercise of ESOS 2013/2018

– listing of new ordinary shares of RM0.25 each

126,000 21.2.2014

50,100 21.3.2014

96,400 21.7.2014

95,000 21.8.2014

8,000 24.9.2014

137,000 23.10.2014

170,000 21.11.2014

100,000 1.12.2014

200,000 16.12.2014

Total Options exercised in 2014 982,500

Event Units Listed and Quoted Listing Date

2. Exercise of warrants 2011/2016

– listing of new ordinary shares of RM0.25 each

2,740 28.4.2014

500 24.6.2014

780 30.10.2014

24,753,600 6.11.2014

23,000,000 2.12.2014

230 5.12.2014

7,545 12.12.2014

1,550 17.12.2014

Total Warrants converted in 2014 47,766,945

Shares and Warrants



56

In field road at Tereh Utara Estate, Kluang. Integrated Annual Report 2014

57

A New Energy

SECTION 2ABOUT KULIM

60 CorporateMilestones

64 Group’sSignificantSubsidiaries

65 CorporateInformation

66 BoardofDirectors

74 ManagementTeam

76 OrganisationChart


58

Spud-in for commencement of Sinamar 2,

an exploration well for South West Bukit

Barisan PSC at Sijunjung, West Sumatera,

Indonesia.


59

A New Energy


59

A New Energy

SECTION 2 ABOUT KULIM

CORPORATE MILESTONES

1970 - On 16July,KRPLchanged itsnametoKulimGroupLimited(“KGL”)andlisted its shares on London StockExchange(“LSE”).

1973 - KGL’s businesses expanded fromoil palm and rubber plantations, toincludepropertydevelopmentintheUK,hotelsintheTrinidadandTobagoislandsintheCarribeanandarubberplantationinNigeria.

1975 - Incorporation of Kulim (Malaysia)Sdn Bhd on 3 July and was latermade public as Kulim (Malaysia)Berhad (“Kulim”) on 18 August. On14 November, Kulim was listed ontheMainBoardoftheKualaLumpurStock Exchange (now known asthe Main Market of Bursa MalaysiaSecuritiesBerhad).

1976 - The Johor State EconomicDevelopment Corporation (nowknown as Johor Corporation orJCorp) became a shareholder ofKulim.

1977 - KGL withdrew from the LSE andbecame a subsidiary of Kulim. KGLtransferredtoKulimallitsassetsandliabilities and divested its assets intheUK.

1979 - Kulim ventured into propertydevelopment through its wholly-owned subsidiary, AdvanceDevelopmentSdnBhd(“ADSB”).

“REBRANdINg” ANd RESTRUCTURINg

1980 - KulimdisposedoffMinisterBayHotelLimitedinTrinidadandTobago.

1982 - KulimdisposedoffMountIrvineBayHotelLimitedinTrinidadandTobago.

1988 - Kulimacquired60%ofSelaiSdnBhd.

1989 - KulimacquiredLabisBahruEstate,a2,110hectaresofoilpalmandrubberestate

1990 - Kulim disposed off its entire equityin Waterside Rubber Estates Ltd,Nigeria to focus on its Malaysianplantation.

1993 - Kulim acquired 49% of Yule CattoPlantations Sdn Bhd, now knownas Mahamurni Plantations Sdn Bhd(“MPSB”),whichowns7,033hectaresof oil palm with a palm oil mill andrubberestate.

- Kulim acquired 70% equity inSkellerup Industries (Malaysia)Sdn Bhd, a rubber-based productsmanufacturer.

- Kulim constructed the 21-storeymodern intelligent building, MenaraAnsar, which was completed andlaunchedin1997.

CONSOLIdATION ANd gROwTh

ThE BEgINNINg

1933 - Incorporation of Kulim RubberPlantations Ltd (“KRPL”) in theUnitedKingdom(“UK”)on4July.

1947 - KRPLbeganoperationswitha 190hectaresrubberplantationinJohor,Malaysia.


60

1994 - Kulimdiversifiedintotheoleochemicalsbusinessby acquiring 91.38% of Natural OleochemicalsSdnBhd(“NatOleo”)inJuly.

- The acquisition of MPSB was completed alongwithMutiaraEstateandSungaiSembrongEstate.

1995 -NatOleo entered into a joint-venture withStearinerie Dubois Fils, a French company toproduce specialty esters. NatOleo took 55%equity in the new company, Dubois-NaturalEstersSdnBhd(“DNE”).

1996 - Kulim’s regional expansion began with theacquisition of 90% stake in New Britain PalmOil Limited (“NBPOL”) in Papua New Guinea(“PNG”).

- Kulim’s subsidiary, Kulim Plantations (Malaysia)SdnBhd,venturedintoplantationsinIndonesiathrough a 60% stake in PT Padang Bolak JayaandPTMultradaMultiMajuinSumatera.

- JohorLandBerhad(“JLand”)becameasubsidiaryofKulimandwassubsequentlylistedontheMainBoardofKLSE.

1997 - Commissioning of DNE’s ester plant andexpansion of fatty acids plant from 45,000tonnesperannum(“TPA”)to150,000TPA.

1998 - New Britain Nominees Ltd was incorporatedby NBPOL as a vehicle for its employees,outgrowersandtraditionallandownerstoacquireNBPOL’ssharesandallowingthemtoparticipateinNBPOL’sfuturegrowthandprosperity.

- NBPOL Foundation was established to assistcommunities in West New Britain, PNG in thefieldsofhealthandeducation.

1999 - NBPOL was successfully admitted to PortMoresbyStockExchange,PNG.

2000- Kulimacquiredtheremaining40%stakeinSelaiSdnBhd.

- CommissioningofNBPOL’sfourthmill,NumundoPalmOilMillandconstructionofKumbangoPalmOilRefinerywithacapacityof100,000TPA.

2001 - Kulim disposed off 3,104 acres of land in UluTiramEstateforRM313.7million.

2004 - KulimmadeanentryintoKalimantan,Indonesiawhenitacquired100%equityinEPAManagementSdnBhd(“EPA”).

- Kulimacquired92.99%stakeinKumpulanBertamPlantationsBerhad,injectinganadditional1,016hectaresofplantationlandsintotheGroup.

- NBPOLenteredintoagreementfortheformationofGuadalcanalPlainsPalmOilLimited(“GPPOL”),acompanyincorporatedintheSolomonIslandswithNBPOLholding80%equity.

- Kulimenteredintoajoint-venturewithTopPlant

LaboratoriesSdnBhd,toown60%equityinthenewcompany,KulimTopPlantSdnBhd, for theproductionofhigh-yieldingoilpalmclonesusingtissueculturetechnology.

2005 - Kulim purchased 52% stake in QSR BrandsBhd (“QSR”), the operator of Pizza Hut andthe controlling shareholder of KFC Holdings(Malaysia)Bhd(“KFCH”).

- Expansion of NatOleo’s fatty acids productioncapacityfrom150,000TPAto380,000TPA.

2006 - Kulimcompletedacapitaldistribution-in-specieof its entire holding of JLand shares in March,signalling the Group’s exit from the propertybusiness.

- Kulim divested all of the Group’s plantation inSumaterainMarch.

- InJune,KulimcompletedtheacquisitionofQSRwhen itgainedcontrolover theQSR BoardatanExtraordinaryGeneralMeeting(“EGM”)ofthecompany.

2007 - Secondary listing of NBPOL in the LSE inDecember for realisation of NBPOL’s trueearningspotentialinthetradingmarket.

- DivestmentofKalimantanplantationsinAugust,marking the Group’s exit from plantationoperationsinIndonesia.

dIvERSIfyINg ANd fURThER gROwTh


61

A New Energy

CORPORATE MILESTONES

SUSTAINABLE gROwTh

2008 - Sindora became a 77%-owned subsidiaryof Kulim in May, adding plantation landand bringing in a number of IntrapreneurVentures(“IV”)companiesintotheGroup.

- InOctober,NBPOLacquired 100%stake inRamu Agri-Industries Limited (“Ramu”),PNG, further expanding the Group’slandbankto124,833hectares.

- NBPOL became one of the first plantationcompanies to receive Roundtable onSustainablePalmOil (“RSPO”) certificationinSeptember.

- Construction commenced for NBPOL’s200,000TPArefineryplantinUK.

- Expansion of QSR into Cambodia for KFCrestaurants.

2009 - Official RSPO certification was accordedto Kulim-owned plantations in Malaysia inJanuary.

- InJanuary,QSRincreaseditsshareholdingsin KFCH to 50.25% and KFCH became asubsidiaryofQSR.

- Estate swap with Sime Darby PlantationsSdn Bhd (“SDP”) in September, involvingSindora’s Sungai Simpang Kiri Estate andSDP’s Sungai Tawing Estate, to realisepotential rationalisation benefits of theirrespectivelocations.

- Sindoraanditssubsidiary,E.A.Technique(M)SdnBhdacquired20%and18%respectively,ofOrkimSdnBhd (“Orkim”), increasing itstankerfleet,bringingalongchartercontractswithmajoroilcompanies.

- KFCHreceivedthefranchiserightstooperateKFCrestaurantsinMumbaiandPune,India.

2010 - In April, NBPOL acquired 80% stake inCTP (PNG) Ltd (now known as Kula PalmOil Limited), bringing in additional 26,000hectares of plantation land to the Group’slandbank.

- Completion of equity swap in Nexsol (S)Pte Ltd and Nexsol (M) Sdn Bhd betweenKulimandPeterCremer(Singapore)GmBHinApril.Following theexercise,Nexsol (M)SdnBhdbecamea100%subsidiaryofKulim,while at the same time Nexsol (S) Pte LtdceasedtobeanassociateofKulim.

- InMay,NBPOLofficiallylauncheditsrefineryinLiverpool.

- NBPOL’s subsidiary, Ramu, was officiallyaccordedwithRSPOcertificationinAugust.

- InSeptember,Kulimconcludedthedisposalof NatOleo and its subsidiaries, markingthe Group’s exit from the oleochemicalsbusiness.



62

2011 - Kulim completed its capital restructuringexercise, involving a share split, bonussharesandfreewarrantsinMarch2011.

- Kulimacquiredsix (6)parcelsofoilpalmestates measuring approximately 13,687hectares and two (2) palm oil mills fromJCorp.

- Sindorabecameawholly-ownedsubsidiary

ofKulimanddelistedfromtheofficiallistofBursaMalaysiaSecuritiesBerhadeffective30November2011.

2012 - Kulim’s shareholding in NBPOL diluted to48.97%inMaypursuanttotheissuanceofnew shares to the minority shareholdersof KPOL to streamline the shareholdingstructureofKPOL.However,NBPOLisstillconsolidated as a subsidiary pursuant toFRS10:ConsolidatedFinancialStatements.

- KulimviaSindora,completedthedisposalofMetroParking(Malaysia)SdnBhdGrouptoDamansaraRealtyBerhad.

ENTERINg NEw dIMENSION

2013 -The disposal of business and undertakings byQSR and KFCH was concluded in January 2013.Both companies were delisted from the officiallistofBursaMalaysiaSecuritiesBerhadeffective7February2013.

- InApril,KulimviaSindora,completedthedisposalofOrkimSdnBhdtoGMV-OrkimSdnBhd.

- Kulimacquired60%ofDanamin(M)SdnBhd,acompany involved in O&G servicing activities inJune2013.

- KulimlaunchedtheProposedPartialOfferofupto20%ofNBPOLinJune2013.TheProposedPartialOfferwassubsequentlyannouncedaslapsedon5September2013.

- On 3 October 2013, Kulim entered into theConditional Sale and Purchase Agreement(“CSPA”) with PT Graha Sumber Berkah (“PTGSB”)fortheacquisitionofupto75%stakeinPTWisesaInspirasiNusantara(“PTWIN”),whichgaveitcontroloverapproximately40,000hectaresofoilpalmestateinCentralKalimantan.

2014 - On 2 May, Kulim converted the ConvertibleCumulative Loan Securities (“ICCULS”) in AsiaEconomicDevelopmentFundLimited(“AEDFL”)andcapitalisedaccumulatedinterestintoordinaryshares of AEDFL, which entailed AEDFL tobecomea54.21%ownedsubsidiaryofKulim.

- Kulim via its wholly-owned subsidiary companyKulimEnergyNusantaraSdnBhd(“KENSB”)hadon24October2014enteredintoaJointOperatingAgreement(“JOA”)withPTRadiantBukitBarisanE&P(“PTRBB”)andPTGSBtoparticipateintheexplorationanddevelopmentofOil&GasfieldinSouthWestBukitBarisanBlock(“SWBBBlock”),CentralSumatera,Indonesia.

- On 10 December 2014, KENSB entered into aConditional Subscription and Shares PurchaseAgreement(“CSSPA”)withPTCitraSaranaEnergi(“PT CSE”) and its existing shareholders foracquisitionof60%equityinterestinPTCSE.

- E.A.Technique(M)Berhad,anindirectsubsidiaryof Kulim held through Sindora, was admitted totheMainMarketofBursaMalaysiaon11December2014.


63

A New Energy

GROUP’S SIGNIFICANT SUBSIDIARIESAS AT 31 MARCH 2015

The full list of companies under Kulim Group is set out in Notes 16 to the Financial Statements on pages 254 to 265.

KULIM (MALAySIA) BERhAd

PLANTATION

INTRAPRENEURvENTURES

OIL ANd gAS

OThERS

100%

50.8% 60%

100% 100% 100%

SINDORABERHAD

E.A.TECHNIQUE(M)BERHAD

DANAMIN(M)SDNBHD

KULIMENERGYNUSANTARA

SDNBHD

EPASASHIPPINGAGENCYSDNBHD

SINDORATIMBER

SDNBHD

GRANULAB(M)SDN

BHD

MITINSURANCEBROKERSSDNBHD

MICROWELLBIO

SOLUTIONSSDNBHD

KULIMNURSERYSDNBHD

MAHAMURNIPLANTATIONS

SDNBHD

KULIMPLANTATIONS(MALAYSIA)

SDNBHD

ULUTIRAMMANUFACTURING

COMPANY(MALAYSIA)

SDNBHD

100%

82%

100%

90% 60% 75%

100% 54.2%

68% 90%

100% 60% 100%

JTPTRADINGSDNBHD

ASIAECONOMIC

DEVELOPMENTFUNDLIMITED

ASIALOGISTICSCOUNCILSDNBHD

SIMMANUFACTURING

SDNBHDMALAYSIA INDONESIA HONGKONG

SKELLERUP(M)INDUSTRIES

SDNBHD

KULIMTOPPLANTSDNBHD

THESECRETOFSECRET

GARDENSDNBHD

95.26% 100% 74%100%

RENOWNVALUESDN

BHD

EDARANBADANGSDNBHD

KULIMCIVILWORKS

SDNBHD

ExTREMEEDGE

SDNBHD

PINNACLEPLATFORMSDNBHD

KULIMSAFETY

TRAININGAND

SERVICESSDNBHD

KUMPULANBERTAM

PLANTATIONSBERHAD

SELAISDNBHD

PTWISESAINSPIRASI

NUSANTARA

EPAMANAGEMENT

SDNBHD

75% 75% 75% 75% 95% 100%

PERFECTSYNERGYTRADINGSDNBHD

OPTIMUMSTATUS

SDNBHD

75% 75%

SPECIALAPPEARANCE

SDNBHD

AKLIRESOURCES

SDNBHD

KULIMLIVESTOCKSDNBHD

90% 100%

100%

100%

SOVEREIGNMULTIMEDIARESOURCES

SDNBHD100%



64

CORPORATE INFORMATION

BOARd Of dIRECTORS

Chairman/Non-Independent Non-Executive DirectorDATO’ KAMARUZZAMAN ABU KASSIM

Managing DirectorAHAMAD MOHAMAD

Executive DirectorJAMALUDIN MD ALIABDUL RAHMAN SULAIMAN

Non-Independent Non-Executive DirectorDATIN PADUKA SITI SA’DIAH SH BAKIRZULKIFLI IBRAHIM ROZAINI MOHD SANI

Independent Non-Executive DirectorTAN SRI DATO’ SERI UTAMA ARSHAD AYUBDATUK HARON SIRAJDR. RADZUAN A. RAHMANLEUNG KOK KEONG

AUDIT COMMITTEE

TAN SRI DATO’ SERI UTAMA ARSHAD AYUB(Chairman)

DR. RADZUAN A. RAHMAN

LEUNG KOK KEONG

NOMINATION COMMITTEE

DATO’ KAMARUZZAMAN ABU KASSIM(Chairman)

TAN SRI DATO’ SERI UTAMA ARSHAD AYUB

DATUK HARON SIRAJ

REMUNERATION COMMITTEE


TAN SRI DATO’ SERI UTAMA ARSHAD AYUB


BOARD OPTION COMMITTEE


AHAMAD MOHAMAD


ZULKIFLI IBRAHIM

SECRETARIES

IDHAM JIHADI ABU BAKAR(MAICSA 7007381)

NURALIZA A. RAHMAN(MAICSA 7067934)

REGISTERED OFFICE

Level 11, Menara KOMTAR,Johor Bahru City Centre,80000 Johor Bahru, Johor Darul Takzim

Tel. : +607-2267692 / +607-2195077Fax. : +607-2223044

REGISTRAR

Level 11, Menara KOMTAR,Johor Bahru City Centre,80000 Johor Bahru, Johor Darul TakzimTel. : +607-2267692 / +607-2195077Fax. : +607-2223044 Email : [email protected]

PRINCIPAL BANKERS

Asian Finance Bank BerhadCIMB Bank Berhad HSBC Bank Malaysia Berhad Malayan Banking BerhadOCBC Bank (M) BerhadRHB Bank Berhad Standard Chartered Bank MalaysiaThe Bank of Nova Scotia Berhad

AUDITORS

Ernst & Young

WEBSITE

www.kulim.com.my

STOCK EXChANgE LISTINg

gROUP’S LISTEd ENTITIES STOCK EXChANgE LISTEd SINCE STOCK COdE

Kulim (Malaysia) Berhad Main Market -Bursa Malaysia Securities Berhad

14 November 1975 2003

E.A Technique (M) Berhad Main Market -Bursa Malaysia Securities Berhad

11 December 2014 5259


65

A New Energy

BOARDOF

dIRECTORS

From left to right:

DATO’ KAMARUZZAMAN ABU KASSIMChairman/Non-IndependentNon-Executive Director


JAMALUDIN MD ALIExecutive Director

ZULKIFLI IBRAHIMNon-Independent Non-Executive Director



66

From left to right:

ROZAINI MOHD SANINon-Independent Non-Executive Director

TAN SRI DATO’ SERI UTAMA ARSHAD AYUBIndependent Non-Executive Director

DATIN PADUKA SITI SA’DIAH SH BAKIRNon-Independent Non-Executive Director

ABDUL RAHMAN SULAIMANExecutive Director

DATUK HARON SIRAJIndependent Non-Executive Director

DR. RADZUAN A. RAHMANIndependent Non-Executive Director

LEUNG KOK KEONGIndependent Non-Executive Director


67

A New Energy

BOARD OF DIRECTORS

Aged 51, is a Non-Independent Non-Executive Director and the Chairman of Kulim (Malaysia) Berhad (“Kulim”). He was appointed to the Board of Kulim as Director on 1 January 2008 and appointed as Chairman on 12 January 2011. He is also the Chairman of the Board Option Committee. He graduated with a Bachelor of Commerce majoring in Accountancy from the University of Wollongong, New South Wales, Australia in 1987.

Dato’ Kamaruzzaman embarked his career as an Audit Assistant at Messrs. K.E. Chan & Associates in May 1988 and later joined Messrs. Coopers & Lybrand (currently known as Messrs, PricewaterhouseCoopers) in 1989. In December 1992, he left the firm and joined Perbadanan Kemajuan Ekonomi Negeri Johor (currently known as Johor Corporation (“JCorp”) as a Deputy Manager in the Corporate Finance Department and was later promoted to General Manager in 1999.

Dato’ Kamaruzzaman is currently the President and Chief Executive of JCorp with effect from 1 December 2010. Prior to that, he had served as the Chief Operating Officer of JCorp beginning 1 August 2006 and later appointed as Senior Vice President, Corporate Services & Finance of JCorp beginning 1 January 2009.

Dato’ Kamaruzzaman also sits as the Chairman of KPJ Healthcare Berhad and Damansara REIT Managers Sdn Bhd, the manager of Al-Aqar KPJ REIT, companies under JCorp Group listed on the Main Market of Bursa Malaysia Securities Berhad. He is also the Chairman of Johor Land Berhad and Waqaf An-Nur Corporation Berhad, an Islamic endowment institution which spearheads JCorp Corporate Responsibility programmes. In addition, he also sits as Chairman and/or Director of several other companies within JCorp Group.

Other than as disclosed, Dato’ Kamaruzzaman does not have any family relationship with any director and/or major shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences. Dato’ Kamaruzzaman attended all eight (8) Board of Directors’ Meetings of Kulim held during the financial year ended 31 December 2014.

DATO‘ KAMARUZZAMAN ABU KASSIMChairman/Non-Independent Non-Executive Director


Aged 62, is the Managing Director of Kulim (Malaysia) Berhad since 1993. He was appointed to the Board on 24 January 1991. He is also a member of the Board Option Committee.

He graduated with a Bachelor of Economics (Honours) degree in 1976 from the University of Malaya. He joined JCorp in June 1979 as a Company Secretary for various companies within the JCorp Group. He was involved in many of JCorp’s projects, among others are the Johor Specialist Hospital, prefabricated housing project and the Kotaraya Complex in Johor Bahru. He is presently a member of the Board of Directors of KPJ Healthcare Berhad and also the Chairman and Director of several other companies within the JCorp Group.

He is the Chairman of E.A. Technique (M) Berhad, an indirect subsidiary of Kulim company via Sindora Berhad which was listed on the main market of Bursa Malaysia Securities Berhad on 11 December 2014.

He is also a Director of Waqaf An-Nur Corporation Berhad, an Islamic endowment institution that spearheads JCorp Group’s Corporate Responsibility programmes, including the unique Corporate Waqaf Concept initiated by JCorp.

Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences. He attended all eight (8) Board of Directors’ Meetings of the Company in the financial year ended 31 December 2014.



68

JAMALUDIN MD ALI

Executive Director

ABDUL RAHMAN SULAIMANExecutive Director

Aged 57, was appointed to the Board of Kulim (Malaysia) Berhad as a Non-Independent Non-Executive Director on 1 July 2012 and was re-designated as Executive Director on 4 December 2012.

He graduated with a Bachelor of Economics (Honours) degree from University of Malaya in 1982 and Master of Business Administration from University of Strathclyde, Glasgow, Scotland in 1987. He started his career with Malayan Banking Berhad as Trainee Officer in 1982 and later served as International Fund Manager in Permodalan Nasional Berhad in 1991. He joined JCorp in 1992 and was appointed the Managing Director of Johor Capital Holdings Sdn Bhd in 1998. He was also the Group Chief Operating Officer of JCorp since 2001 before he was appointed the Managing Director of QSR Brands Bhd on 8 June 2006 as well as the Managing Director of KFCH Holdings (Malaysia) Bhd on 2 July 2006.

He is also the Chairman and Director of several other companies within the JCorp Group and was appointed as Alternate Director to Ahamad Mohamad in E.A. Technique (M) Berhad on 15 March 2015.

Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences. He attended seven (7) Board of Directors’ Meetings of the Company held during the financial year ended 31 December 2014.

Aged 57, was appointed as Executive Director of Kulim (Malaysia) Berhad on 1 September 2013.

He graduated with a Bachelor of Science (Honours) in Agribusiness in 1980 from Universiti Pertanian Malaysia (now known as Universiti Putra Malaysia) and Master in Business Administration from Henley Management College, United Kingdom in 2005.

After serving Sime Darby Plantations Sdn Bhd since his graduation in 1980, he joined EPA Management Sdn Bhd in 1984 as a Manager. In 1995, he was appointed the Managing Director of Tepak Marketing Sdn Bhd until 2005 before joining Natural Oleochemicals Sdn Bhd as the Chief Operating Officer. He later joined JCorp in 2010 as the Executive Vice President (Land & Business Development) before joining Kulim in September 2013. He is also the Chairman and Director of several other companies within the JCorp Group.

Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences. He attended all eight (8) Board of Directors’ Meetings of the Company held during the financial year ended 31 December 2014.


69

A New Energy

Aged 57, was the Chief Operating Officer of Kulim (Malaysia) Berhad since 3 November 2003 and was re-designated as the Executive Director when he was appointed to the Board on 1 July 2011. He was later re-designated as a Non-Independent Non-Executive Director on 1 September 2013. He is also a member of the Board Option Committe of Kulim. Currently he is the Chief Operating Officer/Senior Vice President of JCorp.

He is a Fellow of the Association of Chartered Certified Accountants, United Kingdom and a member of the Malaysian Institute of Accountants since 1992.

After serving various companies in the private sector since his graduation in 1983, he joined JCorp Group in 1990 as the Financial Controller of Sindora Berhad. In 1996, he was appointed the Managing Director of Antara Steel Mills Sdn Bhd until 2000 before joining PJB Pacific Capital Group in 2001 as the Chief Operating Officer. He joined Kulim as the Chief Operating Officer in 2003. He is also the Chairman and Director of several other companies within the JCorp Group.


ZULKIFLI IBRAHIMNon-Executive Non-Independent Director

DATIN PADUKA SITI SA’DIAH SH BAKIRNon-Independent Non-Executive Director

Aged 63, is a Non-Independent Non-Executive Director of Kulim (Malaysia) Berhad. She was appointed to the Board on 1 January 2005.

She graduated with a Bachelor of Economics from University of Malaya and MBA from Henley Business School, University of Reading, London, United Kingdom.

Datin Paduka is a Non-Independent Non-Executive Director of KPJ Healthcare Berhad (“KPJ”) since 1 January 2013. Prior to that, she served as the Managing Director of KPJ from 1 March 1993 until her retirement on 31 December 2012. She had also served as KPJ’s Corporate Advisor from 1 January 2013 until 31 December 2014. She is also the Chairman and Pro Chancellor of KPJ Healthcare University College since 1 August 2011 to date.

Her career with JCorp commenced in 1974 and she has been directly involved in JCorp’s Healthcare Division since 1978. She was appointed as the Chief Executive of Kumpulan Perubatan (Johor) Sdn Bhd, from 1989 until the listing of KPJ in November 1994.

Throughout her career in KPJ, Datin Paduka is directly involved in developing and implementing the transformational strategies that made KPJ one of Malaysia’s leading private healthcare service providers with 25 hospitals nationwide, four (4) hospitals abroad and more under development.

Datin Paduka currently sits as a Director of Damansara REIT Managers Sdn Berhad, the Manager for AI-’Aqar Healthcare REIT and Chemical Company of Malaysia Berhad. She was a Board member of KFC Holdings (Malaysia) Bhd and QSR Brands Bhd from 2010 until their privatisation in 2013. Datin Paduka was an Independent Non-Executive Director of Bursa Malaysia from 2004 to 2012 and a Board member of MATRADE from 1999 to 2010.

BOARD OF DIRECTORS



70

ROZAINI MOHD SANINon-Independent Non-Executive Director

Aged 42, was appointed to the Board as a Non-Independent Non-Executive Director on 15 January 2015. He obtained his Bachelor of Commerce (Accounting and Finance) with Merit degree from University of New South Wales, Australia in 1994 and is also a Fellow of Chartered Accountants Australia and New Zealand.

He is a qualified Chartered Accountant, with diverse leadership experience in financial management, accounting, corporate strategy, business development and commercial. He started his career in KPMG, Sydney, Australia, where he spent six (6) years in the Assurance & Advisory Division of the firm from 1995 to 2001. His last position in KPMG was Assistant Manager.

He then continued his career in oil and gas, where he served more than 12 years in various business and financial leadership roles in PETRONAS, from March 2001 until November 2013. His last senior position in PETRONAS was Chief Financial Officer (“CFO”) of PETRONAS Dagangan Berhad, the public listed retail and marketing arm of PETRONAS from October 2010 until November 2013.

He then served as CFO of Astro Malaysia Holdings Berhad, an integrated consumer media group listed on Bursa Malaysia from December 2013 until April 2014, before joining JCorp in May 2014 as Vice President, Finance & Corporate Services and Chief Financial Officer. He also sits on the Board of various subsidiaries within JCorp Group.

Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences.

Committed to promoting excellence in healthcare, Datin Paduka is the President of the Malaysian Society for Quality in Health (“MSQH”), the national accreditation body for healthcare services, elected since its inception in 1997 to date. Currently, she also sits on many other councils and committees at the national level.

In 2010, Datin Paduka was named the ‘CEO of the Year 2009’ by the New Straits Times Press and the American Express. She has also received many more awards and accolades from 2011 to 2014, due to her contributions to the healthcare industry in Malaysia.

She launched her biography entitled “Siti Sa’diah: Driven by Vision, Mission and Passion”, penned by Professor Rokiah Talib, Penerbitan Universiti Kebangsaan Malaysia in 2013.

Datin Paduka is a member of the Academic Committee of the Razak School of Government, and sits on several University Committees. She is a member of the University of Reading Malaysia Advisory Board, a member of the Centre for University-Industry Collaboration Advisory Council of Universiti Utara Malaysia (“UUM”) as well as the Adjunct Professor of UUM’s Othman Yeop Abdullah Graduate School of Business, and as a Member of University Malaya’s Research Advisory Committee.

Other than as disclosed, she does not have any family relationship with any Director and/or major shareholder of Kulim. She has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences. She attended seven (7) Board of Directors’ Meetings of the Company held during the financial year ended 31 December 2014.


71

A New Energy

Aged 87, is currently an Independent Non-Executive Director of Kulim (Malaysia) Berhad. He was appointed to the Board of Kulim on 31 January 1987. He is the Chairman of the Audit Committee. Tan Sri is also appointed as a member of the Remuneration and Nomination Committee of Kulim.

Tan Sri is also the Chairman and Independent Non-Executive Director of the following listed companies:-

- Malayan Flour Mills Berhad - Chairman- Tomypak Holdings Berhad - Chairman- Karex Berhad - Chairman- Top Glove Corporation Berhad - Director

Tan Sri also sits on the Board of Directors of several private limited companies amongst others, PFM Capital Holdings Sdn Bhd, Bistari Johor Berhad and Zalaraz Sdn Bhd.

Tan Sri graduated with a Diploma in Agriculture in 1954 from College of Agriculture, Serdang and pursued his Bachelor of Science degree in Economics with Statistics at the University College of Wales, Aberystwyth in the United Kingdom in 1958 and obtained Diploma in Business Administration from IMEDE Lausanne (now IMD), Switzerland in 1964.

He has a distinguished career in the Malaysian Civil Service. Among the top posts he held were First Director, Mara Institute of Technology (1965 - 1975), Deputy Governor of Bank Negara Malaysia (1975 - 1977), Deputy Director-General in the Economic Planning Unit of the Prime Minister’s Department (1977 - 1978) and Secretary-General in the Ministry of Primary Industries (1978), Ministry of Agriculture (1979 - 1981) and Ministry of Land and Regional Development (1981 - 1983). He is the Pro Chancellor of UiTM, Chancellor of KPJ International University College and Chairman of University Malaya Board.

Other than as disclosed, he has no family relationship with any Director and/or substantial shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted of any offences. He attended six (6) Board of Directors’ Meetings of the Company held during the financial year ended 31 December 2014.

TAN SRI DATO’ SERI UTAMA ARSHAD AYUBIndependent Non-Executive Director

DATUK HARON SIRAJIndependent Non-Executive Director

Aged 71, was appointed to the Board of Kulim (Malaysia) Berhad on 9 January 2006 as an Independent Non-Executive Director. He is also a member of the Nomination Committee of Kulim.

He graduated with a Bachelor of Arts (Honours) in Economics in 1968 from the University of Manchester, United Kingdom and Master of Art in Development Economics from Williams College, United States of America in 1975.

He began his career in the Malaysian Administrative and Diplomatic Service after graduating in 1968. Among the senior positions he had held were Assistant Controller of Ministry of Commerce and Industry (1969 – 1971), Principal Assistant Secretary, Ministry of Primary Industries (1972 – 1974), Minister Counselor (Economic Affairs) at the Permanent Mission of Malaysia in Geneva, Switzerland (1980 – 1985), Director of Industrial Development at Ministry of International Trade and Industry (1985 – 1987), Director of International Trade at Ministry of International Trade and Industry (1987 – 1990), Deputy Secretary-General (Trade) Ministry of International Trade and Industry (1990 – 1992), Ambassador, Permanent Representative of Malaysia to United Nations and other International Organisations and Specialised Agencies in Geneva, Switzerland (1992 – 1996), Secretary-General Ministry of Primary Industries (1996 – 2000) and as the Chief Executive Officer of the Malaysian Palm Oil Promotion Council since 2001 until he retired in January 2006.

He also holds directorship in HSBC Amanah Takaful Sdn Bhd and Apex Communications Group Sdn Bhd.


BOARD OF DIRECTORS



72

DR. RADZUAN A. RAHMANIndependent Non-Executive Director

LEUNG KOK KEONGIndependent Non-Executive Director

Aged 72, was appointed to the Board of Kulim (Malaysia) Berhad on 1 November 2006 as an Independent Non-Executive Director. He is also appointed as a member of the Audit, Remuneration and Board Option Committee of Kulim. He graduated with a Bachelor in Agricultural Science (Honours) degree from the University of Malaya in 1969. Subsequently, he obtained his Master and PhD in Resource Economics from Cornell University, New York in 1971 and 1974 respectively. Dr. Radzuan has an outstanding career, both as an academician and corporate practitioner. Amongst the notable distinguished positions held were as Associate Professor and the Dean of the Resource and Agribusiness Faculty, Universiti Pertanian Malaysia (1969 – 1980) (now known as Universiti Putra Malaysia), Regional Director, Sime Darby Plantations for Melaka, Negeri Sembilan and Johor Regions (1980 – 1983), Director, Development Division, Sime Darby Plantations (1983 – 1984), Director, Corporate Planning, Golden Hope Plantations Berhad (1984 – 1992) and Group Director – Plantations, Golden Hope Plantations Berhad (1993 – 1999). He had also served as the Managing Directors for Austral Enterprises Berhad, Island & Peninsular Berhad, Perumahan Kinrara Bhd (1999 – 2004) as well as Tradewinds Plantation Berhad (2005 – 2006). Currently he holds directorships in Idaman Unggul Berhad and Inch Kenneth Kajang Rubber Pte Ltd. Additionally, he sits on the Board of Kenangan Cergas Sdn Bhd, Maep Management Sdn Bhd and Green Capital Sdn Bhd. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences. He attended seven (7) Board of Directors’ Meetings of the Company held during the financial year ended 31 December 2014.

Aged 48, was appointed to the Board of Kulim (Malaysia) Berhad as an Independent Non-Executive Director on 9 November 2011. He is also appointed as a member of the Audit Committee of Kulim. He obtained his Bachelor Degree in Accounting, Curtin University of Technology, Australia in December 1989 and is a Certified Practising Accountant and Chartered Accountant, CPA Australia and a member of Malaysian Institute of Accountants. Trained as an investment banker, he has significant experience in corporate finance and business development as well as management. He was the founding member and former Executive Director of Newfields Advisors Sdn Bhd, a boutique financial and corporate advisory firm from August 2001 to August 2006. He was the Chief Executive Officer, Platinum Energy Group from September 2006 to February 2008. From then on till 2012 he served as an Executive Director in Asia Bioenergy Technologies Berhad. Between September 2013 to February 2015, he briefly served as the Chief Financial Officer of Iskandar Waterfront Holdings Sdn Bhd. His wide and vast experience spanned from his earlier years as an Investment & Corporate Planning Manager, Hong Leong Credit Berhad from 1994 to 2001 and was with Coopers & Lybrand Kuala Lumpur since 1990 to 1994. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of Kulim. He has no personal interest in any business arrangement involving Kulim and has not been convicted for any offences. He attended all eight (8) Board of Directors’ Meetings of the Company held during the financial year ended 31 December 2014.


73

A New Energy

MANAGEMENT TEAM


Aged 62, has been the Managing Director since 1993. He holds a Bachelor of Economics (Honours) from University of Malaya. He joined JCorp in June 1976 as a Company Secretary for various companies within JCorp Group. He was involved in many of JCorp’s landmark projects including the Johor Specialist Hospital, prefabricated housing project and the Kotaraya Complex now known as Galleria @ Kotaraya in Johor Bahru. He is presently the Chairman of E.A. Technique (M) Berhad of several other companies within JCorp and Kulim Group.

JAMALUDIN MD ALIExecutive Director/ Vice President Business Development

Aged 57, is currently an Executive Director of Kulim (Malaysia) Berhad since 4 December 2012. He graduated with a Bachelor of Economics (Honours) from the University of Malaya in 1982 and Master of Business Administration from University of Strathclyde, Glasgow, Scotland in 1987. He joined JCorp in 1992 and has held senior positions within JCorp. He has served as the Group Managing Director of QSR Brands Bhd and KFC Holdings (Malaysia) Bhd from June and July 2006 respectively until 4 December 2012. He is currently an Alternate Director to Ahamad Mohamad in E.A. Technique (M) Berhad. He also sits on the Board of several other companies within JCorp and Kulim Group.

ABDUL RAHMAN SULAIMANExecutive Director/ Vice President Oil & Gas/Plantation Operation

Aged 57, was appointed to the Board as Executive Director on 1 September 2013. Prior to his appointment as the Executive Vice President (Land & Business Development) of Johor Corporation in 2010, he was the Chief Operating Officer of Natural Oleochemicals Sdn Bhd since 2005. He graduated with a Bachelor Science of Agribusiness degree from Universiti Pertanian Malaysia (now known as Universiti Putra Malaysia) in 1980 and Master of Business Administration from Henley Management College, United Kingdom in 2005. He is presently a Director of Sindora Berhad and also the member of the Board of Directors of several other companies within Kulim Group.

From left to right:



74

WONG SENG LEEChairman Audit & Budget Review Committee

Aged 65, has been the Executive Director of Kulim (Malaysia) Berhad since 8 January 1996 before re-designated as Non-Independent Non-Executive Director on 1 February 2014. He resigned from the Board of Kulim on 15 January 2015. He qualified as a Certified Accountant in 1974 and is a Fellow of the Association of Chartered Certified Accountants, United Kingdom. He is also a member of Malaysian Institute of Accountants and Institute of Certified Public Accountant of Singapore. He joined EPA Management Sdn Bhd as an Accountant in 1979 and was the Financial Controller for Kulim until 1994. He also sits on the Board of several other companies within Kulim Group.

METHAL AHMADGeneral Manager Foods and Intrapreneur Ventures

Aged 53, was appointed as the General Manager of Foods and Intrepreneur Ventures on 1 January 2014. He holds the Bachelor of Science (Resource Economic) and Diploma of Science (Forestry) from Universiti Pertanian Malaysia (now known as Universiti Putra Malaysia). He joined Sindora Berhad as a Planning Executive in 1989 and was seconded to Makmuran Sdn Bhd, a subsidiary company of Sindora Berhad from 1996 to 2005. Since then, he has been involved in the management of intrapreneurship scheme within Sindora Berhad and Kulim Group. He also sits on the Board of Directors of several other companies within the Kulim Group.

AZLI MOHAMEDVice President, Finance

Aged 47, appointed as Chief Financial Officer of Kulim (Malaysia) Berhad on 1 June 2011. He is a member of the Malaysian Institute of Accountants. He was with Messrs. PricewaterhouseCoopers from 1992 prior to joining KPJ Healthcare Berhad in 2001 until 2008. He then served JCorp as the General Manager of Finance Division until he assumed the current position. He is currently a Director of E.A. Technique (M) Berhad. He also sits on the Board of other companies within JCorp and Kulim Group.

SATIRA OMARVice President Risk and System Management

Aged 48, was appointed as Vice President, Risk and System Management of Kulim in 2012. She graduated with a Bachelor of Science majoring in Communication from the University of Southern Illinois, United States of America in 1992 and holds a Master of Business Administration from Henley Business School, University of Reading, United Kingdom. She joined JCorp Group in 1993 as an Executive before assuming her position as General Manager in Pro Corporate Management Services Sdn Bhd in 2010. She also sits on the Board of several other companies within Kulim Group.

RAZALI HAMZAHDeputy General Manager Mill Development

Age 40, was appointed as Deputy General Manager of Mill Development Department on 1 January 2013. He holds the Bachelor of Mechanical Engineering (Hons) from Queensland University of Technology, Queensland, Australia and Diploma in Business Administration from Henley Management College London, United Kingdom. He joined the Company on 29 April 1999 as a Cadet Engineer. He also sits on the Board of several companies within Kulim Group.

ZULKIFLY ZAKARIAHVice President, Estate Operation

Aged 55, was appointed as the Vice President of Estate Operation in January 2013. He joined the Company in May 1980 as a Cadet Planter after completion of Higher School Certificate. He has served Kulim’s Indonesian operations from 1999 to 2005. He was the Regional Head for Kulim’s Northern operations in Johor, Malaysia before assuming his current position. He also sits on the Board of several companies within Kulim Group.From left to right:


75

A New Energy

ORGANISATION CHART

MANAgINg dIRECTORAHAMAD MOHAMAD

BOARd Of dIRECTORS

INTERNAL AUdIT

ChAIRMAN AUdIT & BUdgET REvIEw COMMITTEEINSPECTORATE OffICEWONG SENG LEE

EXECUTIvE dIRECTORBUSINESS dEvELOPMENTJAMALUDIN MD ALI

vICE PRESIdENT RISK & SySTEM MANAgEMENTSATIRA OMAR

gENERAL MANAgER fOOdS & IvMETHAL AHMAD

EXECUTIvE dIRECTOR OIL & gAS/PLANTATION OPERATIONABDUL RAHMAN SULAIMAN

vICE PRESIdENTESTATE OPERATIONZULKIFLY ZAKARIAH

vICE PRESIdENT fINANCEAZLI MOHAMED

dEPUTy gENERAL MANAgERMILL dEvELOPMENTRAZALI HAMZAH

ADVISORY ROLE



76

Site visit by Board of Directors and top management to Kulim’s first biogas plant at Sedenak Palm Oil Mill, Kulaijaya.


77

A New Energy

SECTION 3PERFORMANCE HIGHLIGHTS & STATISTICS

80 Group5-YearFinancialStatistics

83 GroupQuarterlyPerformance2014

84 GroupStatementofValueAdded

85 5-YearPlantationStatistics:

•Group

•Malaysia

•PapuaNewGuinea

•SolomonIslands

•Indonesia

90 HumanCapitalStatistics

91 ShareholdingStatistics

93 WarrantholdingStatistics

95 PricePerformanceandVolumeTraded2014-SharesandWarrants


78

MT Nautica Maharani, a tanker locally built in 2011 with capacity of 10,000 deadweight tonnes; currently operating in the Straits of Malacca.


79

A New Energy


79

A New Energy

GROUP 5-YEAR FINANCIAL STATISTICS

SECTION 3 PERFORMANCE HIGHLIGHTS AND STATISTICS

2014 2013 2012 2011 2010

Statement of Comprehensive Income Highlights (RM’000)

Revenue 1,093,665 1,013,156 906,562 836,582 719,911

Segment %: Plantation 70% 77% 79% 74% 80%Intrapreneur Ventures 24% 20% 18% 22% 16%Others 6% 3% 3% 4% 4% Profit from Operations 138,324 146,974 137,369 246,323 144,185

Segment %: Plantation 134% 112% 114% 95% 147%Intrapreneur Ventures 16% 32% 18% 9% (1%)Others (50%) (44%) (32%) (4%) (46%)

Interest income 11,820 11,067 11,050 9,519 5,594 Finance costs (55,197) (51,423) (59,689) (33,052) (34,871)Share of results of associates 586 300 454 6,992 2,174

Profit before taxation 95,533 106,918 89,184 229,782 117,082 Taxation (34,005) (66,817) (25,852) (72,618) (35,415)

Profit after taxation from

- Continuing operations 61,528 40,101 63,332 157,164 81,667 - Discontinued operations 246,913 425,721 372,411 850,702 614,159

Net profit for the year 308,441 465,822 435,743 1,007,866 695,826

Attributable to: Owners of the Company 164,303 431,068 211,210 565,013 385,592 Non-controlling interests 144,138 34,754 224,533 442,853 310,234

Net profit for the year 308,441 465,822 435,743 1,007,866 695,826

* Comparative figures have been restated to reflect the Discontinued Operations retrospectively.

GROUP 5-YEAR PROFIT vs AVERAGE CPO PRICE

PAT (RM Million)

1,0

08

69

6

43

6

46

6

30

8

MPOB Average CPO Price (RM/tonne)

Kulim Group AverageCPO Price (RM/tonne)

20142013201220112010

RM/tonne RM Million

2,604

0

1,000

500

1,500

2,000

2,500

3,500

3,000

0

400

200

600

800

1,000

1,400

1,2003,193

2,764

2,371 2,370

2,701

3,219

2,923

2,472 2,384


80

2014 2013 2012 2011 2010

Statement of Financial Position Highlights (RM’000) ASSETS EMPLOYED Other non-current assets 3,773,743 6,624,596 6,795,342 7,852,213 6,254,289 Intangible assets 33,439 189,762 204,667 1,097,799 1,046,895

Total Non-Current Assets 3,807,182 6,814,358 7,000,009 8,950,012 7,301,184

Other current assets 324,987 1,238,362 1,412,037 1,912,492 1,492,362 Cash and bank balances 342,597 377,180 280,889 644,702 452,146 Assets of disposal group classified as held for sale 4,783,791 - 3,408,193 13,032 -

Total Current Assets 5,451,375 1,615,542 5,101,119 2,570,226 1,944,508

Other current liabilities 173,452 333,899 1,487,009 935,471 1,084,744 Loans and borrowings 750,924 1,030,716 971,347 571,843 995,410 Liabilities of disposal group classified as held for sale 2,084,517 - 1,295,060 - -

Total Current Liabilities 3,008,893 1,364,615 3,753,416 1,507,314 2,080,154

6,249,664 7,065,285 8,347,712 10,012,924 7,165,538

FINANCED BY: Share capital 335,626 323,513 320,637 315,509 159,336 Reserves 1,794,906 1,551,740 1,622,712 1,540,087 1,433,182 Reserves of disposal group classified as held for sale (51,622) - - - - Retained profits 1,943,596 1,905,404 1,474,336 2,436,500 1,972,850

Shareholders’ equity 4,022,506 3,780,657 3,417,685 4,292,096 3,565,368

Non-controlling interests 1,590,197 1,346,491 2,781,972 2,628,603 1,977,374 Long-term borrowings 451,261 1,032,921 1,171,679 2,049,101 931,020 Other long-term liabilities 185,700 905,216 976,376 1,043,124 691,776

6,249,664 7,065,285 8,347,712 10,012,924 7,165,538

Average capital employed 6,657,475 7,706,499 9,180,318 8,589,231 6,922,198Average shareholders’ equity 3,901,582 3,599,171 3,854,891 3,928,732 3,468,367

GROUP 5-YEAR REVENUEVS AVERAGE CAPITAL EMPLOYED

Revenue (RM’000)

Average Capital Employed(RM’000)

0

2,000

4,000

6,000

8,000

10,000

RM’000

2010 2011 2012 2013 2014

6,9

22

8,5

89

9,18

0

7,70

6

6,6

57

720

837

90

7

1,0

13

1,0

94


81

A New Energy

2014 2013 2012 2011 2010

Statement of Cash Flows Highlights (RM’000) Net cash flow from operating activities 683,194 705,369 971,707 1,441,863 804,778 Net cash flow from investing activities (565,141) 405,623 (1,039,503) (1,474,025) (1,077,473) Net cash flow from financing activities 102,688 (1,345,144) 168,250 180,358 316,116

Net change in cash and cash equivalents 220,741 (234,152) 100,454 148,196 43,421

Key Financial Indicators

Profitability and Returns Operating profit margin 12.65% 14.51% 15.15% 29.44% 20.03%PBT margin 8.74% 10.55% 9.84% 27.47% 16.26%PATMI margin 15.02% 42.55% 23.30% 67.54% 53.56%Return on average shareholders’ equity 4.21% 11.98% 5.48% 14.38% 14.79%Return on average capital employed 2.47% 5.59% 2.30% 6.58% 6.55%Net assets per share (RM) 3.03 2.96 2.69 3.48 5.71 Solvency and Liquidity Gearing ratio (times) - Gross 0.21 0.40 0.35 0.38 0.35 - Net 0.15 0.33 0.30 0.29 0.27 Interest cover (times) 2.73 3.08 2.49 7.95 4.36 Current ratio (times) 1.81 1.18 1.36 1.71 0.93 Financial Market EPS (sen) - basic 12.55 33.80 16.84 45.90 30.86 - diluted 12.49 33.48 16.21 45.90 30.86 Gross dividend per share (sen) 9.50 - 98.44 5.00 50.00 Gross dividend rate (%) 38% - 394% 20% 100%Gross dividend yield (%) 2.82% - 21.12% 1.45% 5.83%Net dividend payout rate (%) 76.76% - 593.93% 10.93% 30.38%Average price-to-earnings ratio (times) 26.85 10.44 27.67 7.53 27.77 Average price-to-book ratio (times) 1.11 1.19 1.74 0.99 1.50

GROUP 5-YEAR FINANCIAL STATISTICS



82

GROUP QUARTERLY PERFORmANCE 2014

2014

Q1 Q2 Q3 Q4

Financial Performance (RM’000) Revenue 276,198 271,391 263,581 282,495

Plantation 77% 75% 67% 61% Intrapreneur Ventures 20% 23% 29% 26%Others 3% 2% 4% 13% Operating results 31,230 44,671 25,635 36,788

Plantation 145% 103% 202% 115%Intrapreneur Ventures 45% 18% 4% (2%)Others (90%) (21%) (106%) (13%) Share of results of associates 107 75 25 379 Profit before interest 31,337 44,746 25,660 37,167

Add/(Less): Interest income 1,105 2,700 3,928 4,087 Finance cost (12,243) (12,320) (12,641) (17,993)

Profit before taxation 20,199 35,126 16,947 23,261

Basic earnings per share (sen) 2.98 7.70 1.38 0.49

Operational Results

FFB production (tonnes) - Malaysia 177,399 196,629 184,891 282,160 - PNG and SI (discontinued operations) 455,988 485,958 353,814 394,436

Group 633,387 682,587 538,705 676,596

CPO production (tonnes) - Malaysia 59,960 62,758 69,944 65,219 - PNG and SI (discontinued operations) 137,031 153,483 110,158 120,532

Group 196,991 216,241 180,102 185,751


83

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VALUE ADDED DISTRIBUTION

2014

3% 22%

31%

44%

2013

5%

3%

37%

55%Employees

Providers of Capital

Government

Re-investment

2014 2013 RM’000 RM’000

Revenue 1,093,665 1,013,157 Purchase of goods and services (114,102) (98,921)

Value added by the Group 979,563 914,236

Other income 71,955 39,439 Finance costs (55,197) (51,423)Share of results of associates 586 300 Discontinued operation 246,913 425,721

Value added available for distribution 1,243,820 1,328,273

Distribution

To employees Staff costs 549,951 489,999 To the Government Taxation 34,005 66,817 To providers of capital Dividends to shareholders 126,111 - Non-controlling interests 144,138 34,754 To re-invest in the Group Depreciation and amortisation 351,423 305,635 Retained profits 38,192 431,068

1,243,820 1,328,273

No. of employees at year end (including discontinued operations) 23,820 23,575 Value added per employee (RM) 41,124 38,780 Wealth created per employee (RM) 52,217 56,342 No. of shares at year end (‘000 units) 1,327,481 1,278,731 Value added per share (RM) 0.74 0.71 Wealth created per share (RM) 0.94 1.04

GROUP STATEmENT OF VALUE ADDED



84

5-YEAR PLANTATION STATISTICSGROUP (INCLUDING DISCONTINUED OPERATIONS)

2014 2013 2012 2011 2010

OIL PALM

Production (tonnes)

Fresh Fruit Bunches (FFB) 2,531,275 2,312,042 2,304,012 2,375,388 1,985,619 Crude Palm Oil 779,085 716,795 715,207 737,323 607,653 Palm Kernel 198,433 182,331 177,998 185,009 148,413 FFB processed 3,584,580 3,345,529 3,294,771 3,340,307 2,790,553 Yield and Extraction Rates

FFB yield (tonnes per mature hectare) 22.97 21.82 22.72* 24.36 21.66 OER (%) 21.73 21.43 21.71 22.07 21.78 KER (%) 5.54 5.45 5.40 5.54 5.32

AREA STATEMENT (HECTARES)

Oil palm- mature 110,211 105,977 101,916 101,303 100,185 - immature 18,463 21,015 22,018 17,352 12,039

128,674 126,992 123,934 118,655 112,224

Sugar 7,515 7,718 7,721 7,720 8,231 Other crops (excluding inter-row planted fruits) 794 860 955 910 900

8,309 8,578 8,676 8,630 9,131

Planted area 136,983 135,570 132,610 127,285 121,355

Pastures 9,145 9,282 9,282 9,282 9,518 Reserve land, building sites etc 40,235 40,919 42,204 36,453 34,459

Titled area 186,363 185,771 184,096 173,020 165,332

* Yield per hectare inclusive of annual production of FFB at Palong, Mungka and Kemedak Estate.


85

A New Energy

2014 2013 2012 2011 2010

OIL PALM

Production (tonnes) FFB produced - Processed by own mills 827,341 801,297 605,298 554,156 461,016 FFB produced - Sold to others 13,738 14,599 110,228 82,605 90,210

Total FFB produced 841,079 815,896 715,526 636,761 551,226

Purchased FFB 425,484 458,561 416,393 365,151 345,281 Total FFB processed 1,252,825 1,259,858 1,021,691 919,307 806,297

Crude Palm Oil 257,881 254,735 207,265 185,666 163,233 Palm Kernel 69,681 70,891 58,773 53,678 47,758

Yield and Extraction Rates

FFB yield (tonnes per mature hectare) 22.34 22.11 20.68* 21.89 19.01 OER (%) 20.58 20.22 20.29 20.20 20.24 KER (%) 5.56 5.63 5.75 5.84 5.92

Average Selling Price (RM per tonne) Crude Palm Oil (locally delivered) 2,370 2,472 2,923 3,193 2,604 Palm Kernel (ex-mill) 1,708 1,287 1,599 2,300 1,666

RUBBER Production (kgs) - - - - 33,398 Yield per mature hectare (kgs) - - - - 362 Average selling prices (sen per kg) - - - - 1,032 AREA STATEMENT (HECTARES)

Oil palm - mature 37,654 36,909 35,170 32,865 28,997 - immature 9,469 10,198 10,422 7,458 5,416

47,123 47,107 45,592 40,323 34,413

Other crops:Rubber 337 410 503 498 498Sentang 25 25 25 25 25 Pineapple 173 166 168 128 118 Fruits (inter-row planting with oil palm) 465 666 580 546 425

Planted area 47,658 47,708 46,288 40,974 35,054

Reserve land, building sites etc 3,502 3,452 3,263 2,916 2,396

Titled area 51,160 51,160 49,551 43,890 37,450

* Yield per hectare inclusive of annual production of FFB at Palong, Mungka and Kemedak Estate. ** Rubber area was leased out w.e.f. 1 April 2010.

5-YEAR PLANTATION STATISTICSmALAYSIA



86

5-YEAR PLANTATION STATISTICSPAPUA NEW GUINEA (DISCONTINUED OPERATIONS)

2014 2013 2012 2011 2010

OIL PALM

Production (tonnes) FFB produced 1,551,944 1,364,046 1,457,830 1,608,330 1,313,876 Purchased FFB 630,220 578,548 668,686 668,155 538,041

FFB processed 2,182,164 1,942,595 2,126,516 2,276,485 1,851,917

Crude Palm Oil 487,452 429,906 476,096 520,065 415,801 Palm Kernel 120,763 103,898 111,188 122,999 93,123 Refined Palm Oil 70,289 57,810 67,826 59,741 66,434 Palm Olein 56,682 43,640 48,695 27,120 34,418 Palm Stearin 15,259 12,961 12,496 16,398 15,448 Crude Palm Kernel Oil 49,573 42,623 33,878 36,283 31,039 Oil palm seeds (million sold) 4.32 6.86 14.73 11.78 8.35

Yield and Extraction Rates

FFB yield (tonnes per mature hectare) 23.13 21.47 23.64 25.49 23.60 OER (%) 22.34 22.13 22.39 22.85 22.42 KER (%) 5.53 5.35 5.23 5.40 5.08

Average Selling Prices (USD per tonne CIF)

Crude Palm Oil 882 863 1,062 1,014 771 Refined Palm Oil - - 1,337 - 726 Palm Olein 1,071 1,124 - 1,281 912 Palm Stearin 897 900 1,092 1,226 912 Crude Palm Kernel Oil 1,268 951 1,119 1,675 1,141 Seeds (USD per seed) 0.74 0.78 0.77 0.76 0.73


Oil palm - mature 67,110 63,538 61,668 63,091 65,306 - immature 8,158 10,072 10,560 8,924 6,191

75,268 73,610 72,228 72,015 71,497

Sugar 7,515 7,718 7,721 7,720 8,231 Other crops 259 259 259 259 259

Planted area 83,042 81,587 80,208 79,994 79,987

Pastures 9,145 9,282 9,282 9,282 9,518 Reserve land, building sites etc 35,124 36,002 37,478 32,277 30,800

Titled area 127,311 126,871 126,968 121,553 120,305*

* Inclusive of Kula w.e.f. 1 May 2010.


87

A New Energy

2014 2013 2012 2011 2010

OIL PALM

Production (tonnes) FFB produced 138,252 132,100 130,656 130,297 120,517 Purchased FFB 11,339 10,976 15,908 14,218 11,822

Processed FFB 149,591 143,076 146,564 144,515 132,339

Crude Palm Oil 33,752 32,154 31,846 31,592 28,619 Palm Kernel 7,989 7,542 8,037 8,332 7,532 Crude Palm Kernel Oil 3,347 3,173 3,387 3,537 3,206

Yield and Extraction Rates FFB yield (tonnes per mature hectare) 25.38 23.89 25.73 24.37 21.97 OER (%) 22.56 22.47 21.73 21.86 21.63 KER (%) 5.34 5.27 5.48 5.77 5.69

Average Selling Prices (USD per tonne CIF) Crude Palm Oil 931 898 1,067 1,014 771 Palm Kernel Oil 1,482 1,151 1,450 1,675 1,141


Oil palm- mature 5,447 5,530 5,078 5,347 5,882 - immature 836 745 1,036 970 432

Planted area 6,283 6,275 6,114 6,317 6,314

Reserve land, building sites etc 1,609 1,465 1,463 1,260 1,263

Titled area 7,892 7,740 7,577 7,577 7,577

2014


Oil palm - Immature 71

Planted area 71

Undeveloped land 40,574

Total area with IUP* 40,645 * IUP - Izin Usaha Perkebunan

5-YEAR PLANTATION STATISTICSSOLOmON ISLANDS (DISCONTINUED OPERATIONS)

PLANTATION STATISTICSINDONESIA



88

PLANTATION PERFORmANCE 2014A SNAPSHOT

61%

63%

6%

33%

4%

4%

FFB PRODUCED2,531,275 Tonnes

CPO PRODUCED779,085 Tonnes

FFB PROCESSED3,584,580 Tonnes

PK PRODUCED198,433 Tonnes

33%

61%

61%

35%

4%

35%

Papua New Guinea Solomon IslandsMalaysia


89

A New Energy

HUmAN CAPITAL STATISTICSAS AT 31 DECEmBER 2014

BY DIVISION

BY CATEGORY

CONTINUING OPERATIONS DISCONTINUED OPERATIONS

DIVISION

Plantation and Support

Intrapreneur and Other Services

6,684 73 6,757 14,257 1,376 15,633 22,390

1,430 - 1,430 - - - 1,430

8,114 73 8,187 14,257 1,376 15,633 23,820

CONTINUING OPERATIONS DISCONTINUED OPERATIONS

DIVISION

Managerial and Professional

Executives and Assistant Managers

Office and Field Staff/Guard

General Workers - Field Work

No. of employees

Malaysia Indonesia Papua New Guinea

Intrapreneur and OtherServices

Solomon Islands0

Plantation and Support

50

500

1,000

5,000

100

10,000

15,000

Managerial and Professional

Executive and AssistantManagers

Office and Field Staff/Guard

General Workers- Field Work

Malaysia Indonesia Papua New Guinea Solomon Islands

0

10

100

50

500

1,000

5,000

10,000

12,000

14,000

Malaysia Indonesia Sub Papua New Solomon Sub Grand Total Guinea Islands Total Total

Malaysia Indonesia Sub Papua New Solomon Sub Grand Total Guinea Islands Total Total

179 4 183 59 13 72 255

482 1 483 221 15 236 719

1,422 - 1,422 1,927 111 2,038 3,460

6,031 68 6,099 12,050 1,237 13,287 19,386

8,114 73 8,187 14,257 1,376 15,633 23,820



90

SHAREHOLDING STATISTICSAS AT 14 APRIL 2015

Authorised Share Capital : RM500,000,000.00Issued and Fully Paid-Up Capital : RM335,907,414 less RM6,969,150 Treasury Shares = RM328,938,264Class of Shares : Ordinary Share of RM0.25 each

VOTING RIGHT OF SHAREHOLDERS

Every member of the Company present in person or by proxy shall have one vote on a show of hand and in the case of a poll shall have one vote for every share of which he/she is the holder.

BREAK DOWN OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGS NO. OF NO. OF SHAREHOLDERS % SHARES %

Less than 100 158 1.50 6,182 0.00100 – 1000 1,711 16.23 1,460,386 0.111,001 – 10,000 6,100 57.88 28,336,562 2.1610,001 – 100,000 2,226 21.12 63,858,897 4.85100,001 to less than 5% of Issued Capital 341 3.24 447,202,687 33.995% and above of Issued Capital 3 0.03 774,888,342 58.89

TOTAL 10,539 100.00 1,315,753,056 100.00

TOP THIRTY SECURITIES ACCOUNT HOLDERS

(Without aggregating the securities from different securities accounts belonging to the same depositor)

NAME NO. OF SHARES %

1 Johor Corporation 622,560,160 47.32

2 Kumpulan Wang Persaraan (Diperbadankan) 83,286,200 6.33

3 Waqaf An-Nur Corporation Berhad 69,041,982 5.25

4 HSBC Noms (A) Sdn Bhd - A/C NTGS LDN for Skagen Kon-Tiki Verdipapirfond 50,827,600 3.86

5 RHB Capital Noms (T) Sdn Bhd - A/C Johor Corporation (Jedcon ESSB) 49,753,600 3.78

6 Citigroup Noms (T) Sdn Bhd - A/C Exempt AN for AIA Bhd. 37,784,100 2.87

7 Citigroup Noms (T) Sdn Bhd - A/C Employees Provident Fund Board 36,374,200 2.76

8 RHB Noms (T) Sdn Bhd - A/C JCorp Capital Solutions Sdn. Bhd. 25,650,000 1.95

9 RHB Noms (T) Sdn Bhd - A/C Johor Corporation 23,400,000 1.78


11 Citigroup Noms (A) Sdn Bhd - A/C CBNY for Dimensional Emerging Markets Value Fund 8,659,900 0.66


13 AmanahRaya Trustees Berhad - A/C Public Islamic Select Treasures Fund 6,599,500 0.50

14 Tabung Amanah Warisan Negeri Johor 6,423,200 0.49

15 Zalaraz Sdn Bhd 5,000,800 0.38

16 AmanahRaya Trustees Berhad - A/C Amanah Saham Wawasan 2020 4,772,020 0.36

17 Citigroup Noms (A) Sdn Bhd - A/C Exempt An For Citibank New York (Norges Bank 1) 4,631,484 0.35

18 HSBC Noms (A) Sdn Bhd - A/C Exempt An for JPMorgan Chase Bank, National Association (U.S.A.) 4,525,400 0.34


91

A New Energy

TOP THIRTY SECURITIES ACCOUNT HOLDERS (CONTINUED)

(Without aggregating the securities from different securities accounts belonging to the same depositor) (continued)

NAME NO. OF SHARES %

19 RHB Capital Noms (T) Sdn Bhd - A/C Chai Kin Loong (MTK) 4,472,100 0.34

20 Citigroup Noms (T) Sdn Bhd - A/C Kumpulan Wang Persaraan (Diperbadankan) (CIMB Equities) 4,147,400 0.32

21 AmanahRaya Trustees Berhad - A/C Public Islamic Sector Select Fund 3,963,800 0.30

22 Citigroup Noms (A) Sdn Bhd - A/C CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc 3,059,500 0.23

23 Lembaga Tabung Angkatan Tentera 3,034,400 0.23

24 Citigroup Noms (A) Sdn Bhd - A/C CBNY for DFA Emerging Markets Small Cap Series 2,930,700 0.22

25 Maybank Noms (T) Sdn Bhd - A/C Etiqa Insurance Berhad (Life Par Fund) 2,870,000 0.22

26 CIMSEC Noms (T) Sdn Bhd - A/C CIMB Bank for Arshad bin Ayub (MY1393) 2,772,800 0.21

27 CIMB Commerce Trustee Berhad - A/C Public Focus Select Fund 2,764,200 0.21

28 Malaysia Noms (T) Sendirian Berhad - A/C Great Eastern Life Assurance (Malaysia) Berhad (LPF) 2,675,500 0.20

29 Malaysia Noms (T) Sendirian Berhad - A/C Great Eastern Life Assurance (Malaysia) Berhad (LGF) 2,297,700 0.17

30 Gan Teng Siew Realty Sdn.Berhad 2,256,800 0.17

SUBSTANTIAL SHAREHOLDERS

DIRECT INDIRECT

NAME NO. OF NO. OF SHARES % SHARES %

1 Johor Corporation - 3 a/cs 652,375,360 49.58 171,892,094 13.07

2 Kumpulan Wang Persaraan (Diperbadankan) 83,286,200 Citigroup Noms (T) Sdn Bhd - A/C Kumpulan Wang Persaraan (Diperbadankan) - 3 a/cs 5,895,300 Kenanga Investment Bank Berhad - CLR (B4) For Kumpulan Wang Persaraan (Diperbadankan) 100,000 89,281,500 6.78 - -

3 Waqaf An-Nur Corporation Berhad 69,041,982 5.24 - -

ANALYSIS OF SHAREHOLDERS

NO. OF NO. OF SHAREHOLDERS % SHARES %

Malaysian – Bumiputera 1,097 10.41 986,263,921 74.96

– Others 8,632 81.90 197,018,314 14.97

Foreigners 810 7.69 132,470,821 10.07

TOTAL 10,539 100.00 1,315,753,056 100.00

SHAREHOLDING STATISTICS



92

WARRANTHOLDING STATISTICSAS AT 14 APRIL 2015

BREAK DOWN OF WARRANTHOLDINGS

SIZE OF WARRANTHOLDINGS NO. OF NO. OF WARRANTHOLDERS % WARRANTS %

Less than 100 441 11.50 13,486 0.02100 – 1000 1,542 40.21 890,261 1.161,001 – 10,000 1,415 36.90 5,173,996 6.7810,001 – 100,000 356 9.28 11,339,999 14.85100,001 to less than 5% of Issued Capital 79 2.06 29,210,723 38.265% and above of Issued Capital 2 0.05 29,723,050 38.93

TOTAL 3,835 100.00 76,351,515 100.00

TOP THIRTY SECURITIES ACCOUNT HOLDERS

(Without aggregating the securities from different securities accounts belonging to the same depositor)

NAME NO. OF WARRANTS %


2 HSBC Noms (A) Sdn Bhd - A/C NTGS LDN for Skagen Kon-Tiki Verdipapirfond 8,437,550 11.05

3 Su Ming Keat 2,899,800 3.80

4 Waqaf An-Nur Corporation Berhad 2,434,800 3.19

5 Affin Hwang Noms (T) Sdn Bhd - A/C Mohd Fauzy bin Abdullah (M09) 1,920,000 2.51

6 Toh Cheok 1,038,100 1.36

7 Britz Networks Sdn. Bhd. 815,000 1.07

8 Yayasan Teratai 700,000 0.92

9 CimSec Noms (T) Sdn Bhd - A/C CIMB for Ahmad Fuad bin Md Ali (PB) 640,000 0.84

10 HSBC Noms (A) Sdn Bhd - A/C AA Noms SG for CM Ltd 600,000 0.79

11 Nik Mohamed Din bin Nik Yusoff 600,000 0.79

12 Saw Huat Seong 573,500 0.75

13 Nadzley binti Noordin 550,000 0.72

14 Syed Jalaludin bin Syed Salim 540,000 0.71

15 Lim Feng Chieh 530,000 0.69

16 Toh Cheok 520,000 0.68

17 Low Swee Chong 520,000 0.68

18 Koh Ping Ming @ Quek Ping Ming 500,000 0.65

19 Public Noms (T) Sdn Bhd - A/C Tam Seng @ Tam Seng Sen (E-PPG) 425,000 0.56

20 Kenanga Noms (T) Sdn Bhd - A/C Lee Youn Sue (10MG00003) 414,000 0.54

21 Lau Jit Weng 413,000 0.54

22 Teoh Ah Guan 401,600 0.53

23 Koh Tse Ming @ Quek Tse Ming 400,000 0.52

24 RHB Noms (T) Sdn Bhd - A/C Maybank Kim Eng Securities Pte. Ltd. for Md Yusoff Bin Md Ali (A/C 2) 398,100 0.52

25 CimSec Noms (A) Sdn Bhd - A/C Exempt AN for CIMB Securities (Singapore) Pte Ltd (Retail Clients) 362,288 0.47


93

A New Energy

TOP THIRTY SECURITIES ACCOUNT HOLDERS (CONTINUED)

(Without aggregating the securities from different securities accounts belonging to the same depositor) (continued)

NAME NO. OF WARRANTS %

26 CimSec Noms (T) Sdn Bhd - A/C Exempt AN for CIMB Securities (Singapore) Pte Ltd (Retail Clients) 345,075 0.45

27 Roslin Teoh Mei Lin 345,000 0.45

28 Lee Youn Sue 320,000 0.42

29 Low Moy Kia 320,000 0.42

30 Mohd Hassan Bin Marican 318,000 0.42

SUBSTANTIAL WARRANTHOLDERS

NO. OF NAME WARRANTS %

1 Johor Corporation 21,285,500 27.882 HSBC Noms (A) Sdn Bhd - A/C NTGS LDN for Skagen Kon-Tiki Verdipapirfond 8,437,550 11.05

ANALYSIS OF WARRANTHOLDERS

NO. OF NO. OF WARRANTHOLDERS % WARRANTS %

Malaysian – Bumiputera 385 10.04 32,377,678 42.40

– Others 3,012 78.54 30,828,480 40.38

Foreigners 438 11.42 13,145,357 17.22

TOTAL 3,835 100.00 76,351,515 100.00

WARRANTHOLDING STATISTICS



94

Closing Share Price (RM) Volume Closing Warrant Price (RM) Volume Traded Traded

Month Highest Average Lowest (‘000) Highest Average Lowest (‘000)

JANUARY 3.390 3.300 3.170 89,454 0.695 0.670 0.635 25,873

FEBRUARY 3.490 3.310 3.130 111,655 0.835 0.730 0.650 112,035

MARCH 3.620 3.460 3.360 135,264 0.895 0.800 0.745 84,782

APRIL 3.540 3.490 3.440 80,869 0.875 0.820 0.765 134,362

MAY 3.580 3.520 3.480 59,422 0.960 0.920 0.860 109,014

JUNE 3.500 3.410 3.320 67,457 0.935 0.890 0.860 45,480

JULY 3.420 3.350 3.260 64,200 0.910 0.880 0.840 47,982

AUGUST 3.500 3.410 3.290 172,490 0.920 0.880 0.800 27,872

SEPTEMBER 3.450 3.330 3.270 77,655 0.895 0.840 0.790 33,773

OCTOBER 3.500 3.350 3.220 249,341 0.905 0.850 0.785 25,450

NOVEMBER 3.490 3.420 3.330 98,788 0.895 0.850 0.805 24,541

DECEMBER 3.330 3.150 2.970 75,526 0.795 0.650 0.510 13,677

PRICE PERFORmANCE AND VOLUmE TRADED 2014SHARES AND WARRANTS

SHARES WARRANTS

0

50,000

100,000

150,000

200,000

250,000

0

30,000

60,000

90,000

120,000

150,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Volume Traded (’000) Volume Traded (’000)

Highest Average Lowest Volume Traded

Price (RM) Price (RM)

2.5

3.0

3.5

4.0

0.4

0.6

0.8

1.0


95

A New Energy

SECTION 4SEGMENTREVIEW

98 Plantation

110 IntrapreneurVentures

118 OilandGas


96


97

A New Energy

Unloading of FFB at the loading ramp;

Sindora Palm Oil Mill, Kluang.


97

A New Energy

SECTION 4 SEGMENT REVIEW

PLANTATION

RAZALI HAMZAHDeputy General Manager,Mill Development

ZULKIFLy ZAKARIAHVice President,

Estate Operation


98

RAZALI HAMZAHDeputy General Manager,Mill Development

CPO STATISTICS - Malaysia

(Million tonnes)

OIL PALM PLANTED AREA - Malaysia

Pen. Malaysia

Sarawak

Sabah

Amidst a dynamic and volatile economic environment, 2014 was a challenging year for the Malaysian palm oil industry. While Crude Palm Oil (“CPO”) production, closing stocks and export revenue increased, the industry saw a decline in export volume and imports.

Nevertheless, Malaysia continued to press ahead to consolidate its position as a leading player in the global palm oil industry. With new areas in Sarawak planted with oil palms, the total oil palm planted area in the country has increased 3.1% to 5.39 million hectares. The year in review also saw a 2.3% increase in CPO production to 19.67 million tonnes, due mainly to higher OER and an increase in new areas coming into production. However, the monsoonal floods in Kelantan, Terengganu and Pahang towards

the end of the year, took its toll on Malaysian FFB yield which was lower but better quality harvests received by the mills contributed towards an improvement in OER, which registered an increase of 1.8% to 20.62%.

For the year, the nation’s total exports of palm oil declined by 4.8% to 17.28 million tonnes. This was the result of reduced demand from China, Pakistan, United States of America (“USA”), Ukraine and Iran. During the year, India has supplanted China as Malaysia’s largest export market with an intake of 3.23 million tonnes or 18.7% of the total exports volume.

The overall CPO price showed a slight upward trend in 2014, increasing by 0.5% to average RM2,383.50 per tonne. It reached its peak in March, when CPO was traded at RM2,855 per tonne while the lowest price was in September at RM2,055.50 per tonne.

49%

23%

28%

5

0

10

15

20

2013

CPO Production

19.32 19.67

3.98 4.70

2.011.99

2014

Export of CPO Palm Oil Stocks

5.23 Millionhectares

2014


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A New Energy

PLANTATION

“Production cost per tonne CPO after kernel credit in Malaysia decreased slightly from RM1,520 per tonne in 2013 to RM1,327 per tonne in 2014 mainly due to both higher FFB throughput and CPO production plus greater estate efficiencies and a number of cost control initiatives implemented during the year.”

2014 was a generally weak year for the global trade in vegetable oils. The price of soybean oil, which is the closest competitor to palm oil, was down by 14% to USD909 per tonne. The sharp decline in the price of soybean was attributed mainly to an abundant supply in the USA and South America. Ample global inventories in competing vegetable oils compounded the oversupply situation, which further depressed CPO prices.

In the oil and gas business, the price of crude oil had been around USD100 per barrel, buoyed by growing consumption in developing countries like China and geo-political unrest in the Middle East. Oil production from conventional fields could not keep up with demand, resulting in soaring prices. Over the year, demand for oil from Europe, Asia and the USA began tapering off,

due to weakening economies and new efficiency measures. Meanwhile, high oil prices also spurred oil companies in the USA and Canada to begin drilling for non-conventional reserves. All these factors combined to bring down the price of the benchmark Brent Crude by 44% by year-end 2014 and this had significant ramifications on global economies and investor sentiments.

2014

12.6%EBIT, Malaysia Plantation


Scenic view from the loading ramp, Tereh Palm Oil Mill, Kluang.


100

FINANCIAL HIGHLIGHTS

In Fy 2014, Kulim’s Plantation Division - comprising operations in Malaysia, Papua New Guinea (“PNG”) and the Solomon Islands (“SI”), collectively recorded revenue of RM2.87 billion and EBIT of RM604.65 million. In comparison, the Division revenue and EBIT in Fy 2013 was RM2.57 billion and RM251.08 million respectively.

REVENUE FOR FINANCIAL YEAR 2014

RM2.87 billion

REVENUE

RM0.77 bil

RM2.10 bil

Malaysia Papua New Guinea & Solomon Islands

Despite higher production of FFB and CPO, Malaysia Plantation turned in a slightly lower turnover in Fy 2014, mainly attributed to the lower average CPO price secured. In Fy 2014, Malaysia Plantation sold its CPO at RM2,370 per tonne on average basis, lower than the average of RM2,472 per tonne CPO in Fy 2013. However, Kulim managed to record higher average price for PK at RM1,708 per tonne in Fy 2014 versus RM1,287 per tonne in Fy 2013.

Thanks to the concerted effort by the operation team, our Cost Management and Productivity initiatives have started to show positive result in Fy 2014. At the EBIT level, Malaysia Plantation recorded 12.6% improvement as compared to the previous year, although revenue was 1.7% down in Fy 2014. Significant areas of improvement include manuring, harvesting and mill processing. Production cost after kernel credit was RM1,327 per tonne CPO as compared to RM1,520 per tonne CPO in the previous year. The Group’s operation in Indonesia turned in a small loss of RM1 million in its first year operation.

The Group’s operations in PNG and SI under NBPOL group turned in notable improvement with 17% and 386% increase in revenue and EBIT respectively. Apart from a much better palm product prices fetched in Fy 2014, particularly for PKO, the increased profit was also due to a non-cash gain of USD8.4 million as a result of the acquisition of 95% of the issued share capital of PT Timbang Deli Indonesia.

Following the completion of NBPOL disposal on 26 February 2015, this would be the final year for Kulim to report on operations of NBPOL.

Panoramic view of oil palm plantation and nursery at Sedenak Estate, Kulaijaya.


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A New Energy

PLANTATION

2014 2013 VarianceRevenue (RM Million)- Malaysia 767.27 780.33 (13.07)- PNGandSI(DiscontinuedOperations) 2,097.95 1,789.64 308.31

2,865.21 2,569.98 295.24

EBIT (RM Million)- Malaysia 185.64 164.89 20.76- PNGandSI(DiscontinuedOperations) 479.01 86.19 392.82

604.65 251.08 353.58

FFB Production (‘000 tonnes)- Malaysia 841.08 815.90 25.18- PNGandSI(DiscontinuedOperations) 1,690.20 1,496.15 194.05

2,531.28 2,312.04 219.23

CPO Production (tonnes)- Malaysia 257.88 254.74 3.15- PNGandSI(DiscontinuedOperations) 521.20 462.06 59.14

779.09 716.80 62.29

Palm Product Prices- Malaysia - CPO(RMpertonne) 2,370 2,472 (102) - PK(RMpertonne) 1,708 1,287 421

- PNGandSI(DiscontinuedOperations) - CPO(USDpertonne) 889 868 21 - PKO(USDpertonne) 1,276 965 311



102

OPERATIONAL REVIEW

As at 31 December 2014, the divestment of NBPOL by Kulim was still in progress, and was subsequently completed on 26 February 2015. Therefore, for operational reporting purposes, we have included the operational review for plantations in PNG and SI.

During the year under review, Kulim had operations in Peninsular Malaysia, Papua New Guinea (“PNG”), the Solomon Islands (“SI”) with Indonesia being the latest addition. Of the Group’s total plantation landbank of 226,253 hectares, 22.6% or 51,160 hectares are located in the southern part of Peninsular Malaysia. Another 56.1% or 126,871 hectares are in PNG, the SI making up another 3.3% or 7,577 hectares and the balance located in Indonesia. With the acquisition of 60% equity in PT Wisesa Inspirasi Nusantara (“PT WIN”) concluded on 14 February 2015, it entails Kulim to have the right to develop 40,645 hectares of landbank in the Central Kalimantan, Indonesia.

OilPalmPlantedAreaasat31.12.2014

Titledarea(ha) Mature(ha) Immature(ha) Total(ha) Total(%)

Malaysia 51,160 37,654 9,469 47,123 37%

Indonesia 40,645 - 71 71 -

PNG(discontinuedoperations) 126,871 67,110 8,158 75,268 58%

SI(discontinuedoperations) 7,577 5,447 836 6,283 5%

Total 226,253 110,211 18,534 128,745 100%

In terms of the maturity profile, 37,654 hectares or 73.6% of our planted area in Malaysia consist of mature palms more than three (3) years. Whereas in Indonesia, we have young palms cultivated in 2014 of 71 hectares. In PNG and the SI, mature palms constitute 52.9% and 71.9% respectively.

Kulim Group is considered one (1) of the industry leaders in the oil palm industry in terms of yield performance. In Fy 2014, the Group including NBPOL operations produced 2.53 million tonnes of FFB, an improvement of 9.5% from 2.31 million tonnes achieved in the previous year. The PNG operations were the biggest contributor to FFB production, accounting for 1.55 million tonnes or 61.3%, followed by Malaysia (33.2%) and the SI (5.5%).

PLANTATION IN MALAYSIA

Estate Operations

During the year, our Malaysian operations produced a total of 841,079 tonnes of FFB, a 3.09% increase from 815,896 tonnes produced in 2013. Correspondingly, we also achieved a 1.04% increase in yield per hectare to 22.34 tonnes from 22.11 tonnes recorded the previous year. Our FFB performance was superior compared to the average yield achieved by the industry in Johor as well as Peninsular Malaysia, which was 19.50 tonnes and 18.23 tonnes respectively.

The Group is committed to improving the age profile of its palms. In Fy 2014, some 1,611 hectares were replanted with new high yielding clones. Replanting is undertaken on a staggered basis to maximise the crop potential before felling is carried out. As a result of our replanting initiative, the average age profile of our palms has improved to 11.37 years.

2014

9.5%Group’s FFB Production

2014

8.7%Group’s CPO Production


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A New Energy


PLANTATION

Mill Operations

In Fy 2014, our four (4) mills in Malaysia – Sedenak, Sindora, Tereh and Palong Cocoa produced 257,881 tonnes of Crude Palm Oil (“CPO”), an increase of 1.24% from the previous year. This was despite a 0.56% decrease in FFB processed from both the Group’s estates and external suppliers. Palm Kernel (”PK”) production amounted to 69,681 tonnes, a slight decrease of 1.71% from Fy 2013.

In terms of oil yields, our Malaysian plantations recorded a marginal increase from 4.47 tonnes of CPO per hectare recorded in Fy 2013 to 4.60 tonnes for the year in review. This excludes CPO from FFB purchased from third party suppliers.

We achieved OER of 20.58%, which is an improvement from 20.22% recorded in 2013 as a result of mainly favourable drier weather and increased matured crops from Group’s estates. However, the Kernel Extraction Rate (“KER”) declined marginally from 5.63% to 5.56% over the same period. It is noteworthy that our OER is higher than the industry average of 20.19% for Peninsular Malaysia while our KER is at par with the industry average.

Cost Management and Productivity Initiatives

In the palm oil industry, producers are price takvers as opposed to price movers and there is little leeway for us to exert control over commodity prices. The onus therefore is on producers to control costs whilst increasing productivity in order to remain profitable. For Fy 2014, our cost of production from field was contained at RM268 per tonne, which is 4.29% below our budget estimates.

Good Agricultural Practices and Manufacturing Practices have been adopted at all stages of our plantation operations to enhance efficiency and productivity. They cover an entire spectrum of activities, ranging from nursery preparation, field planting and up-keeping, right up to FFB harvesting, transportation and processing at the mills.

Over the years, proactive measures have been taken to step up the Group’s mechanisation and automation programmes to reduce dependency on labour, especially for FFB harvesting and evacuation. We have expanded the utilisation of the Kulim Crane Free System that was developed in-house for loading and evacuation activities. Other field up-keeping activities such as manuring and pathway maintenance have also been mechanised.

2014

2.91%Malaysia Oil YieldsTo 4.60 tonnesCPO per hectare

Kulim Crane Free System at Sedenak Estate, Kulaijaya.


104

Biogas Plant Projects

The biogas plant project is being implemented in phases at our five (5) mills - including the new Pasir Panjang Palm Oil Mill which was commissioned in March 2015, to reduce the Group’s overall carbon foot-print to 80.5% of the 2012 baseline emission by 2017.

Our first biogas plant, which is located at the Sedenak Palm Oil Mill was commissioned on 8 April 2014 and currently running with average daily production of methane gas of approximately 5,000 m3. Another plant is under construction at the Pasir Panjang Palm Oil Mill and is targeted for completion by mid-2015. This will be followed by the Sindora Palm Oil Mill, with commissioning planned for early 2016. By 2017, the Palong Cocoa and Tereh Palm Oil Mill will also have their own biogas plants.

Biogas is being used as an additional fuel for the boiler systems, apart from mesocarp fibres and palm shells. A reduction in the use of palm shells can help ensure lower particulate emissions and smoke opacity. Commercially, there is a market for palm shells while excess biogas produced by our mills can be bottled and sold for industrial use. The Group is looking into the viability of these options as another possible revenue stream.

2014

1.93%Malaysia OER – 20.58% Higher than industry average of 20.19%.

The latest addition to our mechanisation programme involve the use of Bin System for faster and more efficient FFB loading and evacuation. After field trials conducted last year, the use of motorised harvesting poles known as Cantas and C-Kat has also proven effective for palms that are below five (5) metres and over six (6) metres in height respectively.

Mechanisation has helped to reduce rising labour costs and to some extent mitigated the problem of labour shortages. The collective wage agreements between the Malaysian Agricultural Producers Association (“MAPA”) and the National Union of Plantation Workers (“NUPW”) are up for review and this might impact on labour and production costs. The way forward therefore is for plantation players like Kulim to increase the level of mechanisation in the upstream sector of the industry.

Bin System – Faster and more efficient FFB loading and evacuation

In-field FFB collection before being transported to the mill.


105

A New Energy

RESEARCH AND DEVELOPMENT

Kulim’s investment in research and development (“R&D”) is an integral part of the Group’s strategy to be a key player in the palm oil industry. We have a team of highly trained and experienced research personnel with expertise in agronomics, seed production, plant breeding and biotechnology, among others. R&D for our Malaysian operations is carried out at the Kulim Agro-Tech Centre based in Kota Tinggi, Johor.

Precision Agriculture and Analytical Services

The Kulim Agrotech Information System (“KATIS”) is based on the concept of precision agriculture. It combines the Global Positioning System (“GPS”), Geography Information System (“GIS”) and the Oil Palm Monitoring Programme to capture agronomic and management data. The data provides a quick overview of an estate’s performance so that under-performing areas can be identified and mitigation actions taken.

We are moving ahead with plans to incorporate high-resolution aerial photography into the available GPS digital maps. A pilot project covering some 10,000 hectares was completed early last year, facilitating the production of more accurate and verifiable computer-generated image-based palm census. These photographs give a better perspective of the overall plantation landscape showing the physical infrastructure in place, terrain, land use, field conditions and even the health of palms. It is also useful in the design of road and drainage networks to address the problem of flooding in low-lying areas. The project will be extended to cover another 10,000 hectares in the Palong Estate in 2015.

Analytical Services

The Group’s Ulu Tiram Central Laboratory (“UTCL”) offers expertise in chemical and physical testing of samples, agronomic and fertiliser recommendations to improve productivity, as well as effluent testing for the palm oil mills. The Group has invested in the latest testing equipment such as the Inductive Coupled Plasma-Optical Emission Spectrophotometer (“ICP-OES”), Atomic Absorption Spectrophotometer (“AAS”), Flame Photometer, UV-spectrophotometer and Nitrogen Auto Analyser to ensure reliable analytical results.

With the fully automatic nitrogen analyser, UTCL is able to produce faster results. Using the Dumas method, it only takes five (5) minutes per sample or three (3) hours for a set of 40 samples, compared to 17 minutes and 11 hours it used to take using older machines. Likewise, the ICP-OES has facilitated the efficient and more expedient testing of samples. In Fy 2014, UTCL handled over 13,000 samples from Malaysia and also from NBPOL in Papua New Guinea.

UTCL is accredited to MS ISO/IEC 17025 SAMM (Skim Akreditasi Makmal-Makmal Malaysia), the main ISO standard used by testing and calibration laboratories. UTCL’s competency is also recognised globally and supported by the Mutual Recognition Agreement (“MRA”) endorsed by the International Laboratory Accreditation Cooperation (“ILAC”). The ILAC is an international cooperation initiative with over 40 laboratory bodies having signed the MRA to promote the acceptance of accredited test and calibration data.

PLANTATION



106

Nutrient management as well as soil characterisation and conservation strategies are all aimed at improving soil management.

Long-term fertiliser studies are aimed at improving the efficiency of specific nutrient applications and to evaluate the use of pesticides that are less toxic, cost effective and more environmentally friendly.

Emphasis is given to an optimal balance of inorganic and organic fertilisers to promote efficient energy usage and achieve higher palm oil yields sustainably.

In the face of increasing prices of inorganic fertilisers, biocompost produced from the Group’s milling operations enables the efficient use of by-products covering larger planting areas.

Starting from Fy 2014, the technique of biocompost application on terraces has been improvised from surface to subsoil application.

Integrated Pest Management (“IPM”)

A balanced IPM approach as a means of pest and disease control has reduced overdependence on pesticides, making the control process more sustainable. Barn owls and snakes help keep a check on rodent populations while predatory insects, parasitoids and entomopathogenic fungi keep defoliating insects at bay. It is only in an outbreak situation where natural predation controls are inadequate that we resort to using insecticides.

Research Collaboration

Kulim has long collaborated with other research institutions such as the MPOB. Among recent collaborations has been in the area of Ganoderma, a prominent oil palm disease in Malaysia. In-house research is focused on possible mitigation factors such as the use of microbes.

Zero-Burning Replanting

The Group has long advocated zero-burning replanting as a practical and environmentally sound practice. As opposed to burning, old and uneconomical stands of oil palms are shredded and left to decompose in situ, helping to recycle nutrients into the soil. Besides complying with environmental legislation, zero-burning is also our contribution in the global effort to minimise global warming.

Plant Breeding

Conventional breeding

The selection of elite planting materials to achieve high oil yields remains the primary objective of Kulim’s palm breeding programme. During the year, progeny testing involving various elite duras were field planted in various locations. Seedlings of some new crosses were also nurtured for the 2015 planting. Experiments were undertaken to find new sources of improved dura and pisifera parent palms for future planting materials and ortets for clonal propagation. We have also embarked on a Single Seed Descend (“SSD”) programme to create an in-bred line within a 5-year instead of a 10-year cycle.

Agronomy

To promote the science of soil management and crop production, the Group is supported by a data base built up over 20 years. The data base is used to determine the performance of different planting areas, provide analysis and recommendations on best practices, determine sites for new agronomy trials and optimise planting schedules. Over the years, the responsibilities of the Agronomy Unit have escalated from providing technical advices and services to undertaking full-fledged R&D activities. The findings are made available to estates across the Group to enhance the monitoring of field performance and facilitate benchmarking against the high performers.

Maximising Yields

Agronomic services based on Best Management Practices are tapped to maximise yields and outputs in a sustainable manner:


107

A New Energy

PLANTATION

The Plant Breeding Unit is also focused on developing genetic materials with economically important traits such as ganoderma tolerance, high vitamin E, long-bunch stalk, high bunch number, early bearing, good OER and big fruitlets.

Current planting materials have a stalk length of 10-15 cm, but for harvesting efficiency with a mechanical cutter, the ideal stalk length should be 20 cm. Seedlings derived from Angolan genetic materials with stalk length of 28.8 cm have been nurtured at our nurseries in readiness for the 2015 planting. We have also developed progenies with dwarf characteristics, improved oil yields and high vitamin E content.

Our fast track programme aims to shorten the time taken to develop elite parental palms that produce uniformly high yielding planting materials. During the year, a number of tenera palms with oil/bunch (“O/B”) over 35% and oil yield above 10 tonnes per hectare per year in nine (9) clones of different genetic backgrounds were selected for recloning. Efforts to conserve nine (9) potential BM119 pisifera palms aged 23 years in Basir Ismail Estate was carried out using the slanting technique. Based on earlier progeny testing, seven (7) pisifera palms were certified by SIRIM and can be used as male parents for pollen sources in the commercial production of DxP seeds.

Seed Production

In Malaysia, a total of 1.1 million DxP seeds were produced and 0.87 germinated seeds were sold in 2014 by the Group’s Plant Breeding Unit.

Biotechnology

The Group is constructing a new dedicated R&D facility focusing on genomic research to complement its conventional plant breeding and tissue culture facilities. Genomic research facilitates more accurate results when the legitimacy of a plant breeding material can be confirmed through DNA finger printing. This is particularly useful for quality assessment and control in plant breeding materials and tissue culture ramets. It will also assist in selecting palms that carry the desirable genes. Fruit segregation can be made as early as during the nursery stage rather than the fruit bearing stage in the conventional breeding method. Collaborative efforts with MPOB have confirmed the reliability of the fruit segregation method for dura, tenera and pisifera varieties in a blind testing programme that involved over 100 leaf samples.

Current

10cm- 15cm

20cm

28.8cm

Ideal AngolanGenetic

STALK LENGTH



108

PLANTATION IN INDONESIA

In 2013, Kulim was presented with an opportunity to re-enter Indonesia having left it in 2007. The completion of 74% acquisition in PT WIN paved the way for Kulim and PT GSB to develop 40,645 hectares of new oil palm plantations in Central Kalimantan, Indonesia.

Being a socially and environmentally responsible corporate citizen, Kulim is committed to the expansion of its plantation operations, especially in Indonesia, guided by the RSPO’s New Planting Procedures (“NPP”) apart from the relevant Indonesian regulations through a fomal process to secure the necessary documentation to obtain a release permit prior to land development. Accordingly, we initiated the necessary stakeholders’ engagement programme as early as June 2013, including surveys to determine the High Conservation Value (“HCV”) area and engagement with the local Dayak community to explain our development plans and obtain their consent to proceed with our development plans.

In July 2014, the relevant documents were submitted to TUV Rheinland Indonesia, a leading service provider for RSPO certification. The report by auditors from TUV Rheinland was completed in September and was subsequently published on the RSPO website for public notification purposes.

We are also in the final stages to obtain the necessary permits to convert 7,133 hectares of forest (Hutan Produksi Konversi - “HPK”) to grow oil palms (Areal Penggunaan Lain – “APL”). The final approval from the Forestry Ministry is expected by June 2015.

PLANTATION IN PNG AND SI

During the year, a total of 2,331,756 tonnes of FFB were processed, a 11.8% increase from previous year’s 2,085,670 tonnes. Correspondingly, NBPOL group’s CPO extraction rate for the year was 22.35% versus 22.15% recorded in 2013. Total oil production was 574,124 tonnes (2013: 507,856 tonnes), with 521,204 tonnes of CPO and 52,920 tonnes of PKO produced respectively (2013:462,060 tonnes and 45,796 tonnes respectively).

In 2014, NBPOL group completed 1,183 hectares of new plantings (with a further 1,479 hectares under preparation) and 2,743 hectares of replanting. CPO prices traded during the year between USD675 and USD935 per tonne, starting the year at USD785 per tonne, increased to USD935 per tonne during the year and ended at around USD700 per tonne with current prices trading at approximately USD700 per tonne.

40,645 HANew Oil Palm Plantations

Central Kalimantan, Indonesia

PT Sumber Sawit Rejo; Kulim’s oil palm estate in

Central Kalimantan, Indonesia.


109

A New Energy

INTRAPRENEURVENTURES

METHAL AHMADGeneral ManagerFoods and IV

JAMALUDIN MD ALIExecutive Director

Business Development



110

Kulim’s Intrapreneur Ventures (“IV”) began to take form in 2005 as a key strategy to develop new growth engines for the Group. By tapping the considerable entrepreneurial talent amongst the Group’s employees and nurturing promising businesses with growth potential, the goal is to diversify the Group’s revenue streams and provide long-term growth for shareholders. Today, IV brings together some 17 companies under its corporate umbrella involved in a diverse range of business activities.

Kulim’s IV is the test-bed for the Group’s entrepreneurial talent. We are constantly on the look-out for new and promising businesses that we can nurture to maturity. Our efforts have paid off with some success stories, notably that of E.A. Technique (M) Berhad (“EATech”) and its subsequent

listing on the Main Market of Bursa Securities on 11 December 2014.

As to be expected, we have also had our share of businesses that have not performed in line with expectations. These have been downsized or restructured. Some operations have been outsourced while those under-performing or are no longer in line with the Group’s business objectives have been divested. In Fy 2014, we acquired one (1) new company – Sovereign Multimedia Resources Sdn Bhd (“Sovereign”), disposed of two (2) companies – Superior Harbour Sdn Bhd and General Access Sdn Bhd, while the operations of two (2) companies have been outsourced – Epasa Shipping Agency Sdn Bhd and Akli Resources Sdn Bhd.

With the growing prominence of the O&G business, we will be reclassifying two (2) IV companies – EATech and Danamin (M) Sdn Bhd (“Danamin”) under the new division effective 1 January 2015.

O Listing of E.A. Technique (M) Berhad on Bursa Malaysia

O Acquisition of Sovereign Multimedia Resources Sdn Bhd by Extreme Edge Sdn Bhd

O Disposal of Superior Harbour Sdn Bhd and General Access Sdn Bhd

O Outsourced operation of Epasa Shipping Agency Sdn Bhd and Akli Resources Sdn Bhd

CORPORATE HIGHLIGHTS


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A New Energy


STRATEGIESFOR IVS

Merger &Acquisitions

BusinessExpansion

Pricing/Marketing

NewBusinessStrategy

PriceDifferentiation

Downsizing &Restructuring

Disposal

Focus on Core Competency



112

Financial Highlights

In Fy 2014, Kulim’s IV Division recorded higher revenue at RM266.80 million versus RM201.45 million in Fy 2013 (excluding Discontinued Operations). The revenue improvement was largely attributable to EATech as a result of interim contract of six (6) harbour tugboats with Northport. Other IV companies which contributed to the revenue increase include Extreme Edge Sdn Bhd (“EESB”) as a result of the acquisition of Sovereign which was completed in June 2014.

Division’s Earnings Before Interest and Tax (“EBIT”) net of Discontinued Operations, however, dipped to RM22.01 million as compared to RM46.05 million in the previous year. EATech recorded a RM6.71 million lower EBIT mainly as a result of IPO expenses and relocation of its Floating Storage Unit (“FSU”) – MT Nautica Muar, from Anjung Kecil field to Kayu Manis field during the year. Other companies that registered lower EBIT in Fy 2014 include Kulim Nursery Sdn Bhd and Kulim Civilworks Sdn Bhd. Whereas, IV companies that outperformed its previous year’s EBIT were EESB, Sindora Timber Sdn Bhd, The Secret of Secret Garden and Granulab (M) Sdn Bhd.

E.A. Technique (M) Berhad

EATech is principally a provider of marine transportation, port marine services and is also involved in ship building, repair and minor fabrication at several ports in Malaysia. Despite intense market competition, EATech recorded revenue of RM155.66 million and PBT of RM18.11 million for Fy 2014, extending its track record of eight (8) consecutive years of profitability.

Since Kulim’s investment in EATech (via Sindora Berhad) back in 2006, the company has consolidated its position as a significant player in Malaysia’s O&G industry and related services segment. As at the end of Fy 2014 EATech operated a fleet of 31 marine vessels, of which 22 are self-owned, with the rest charted out to external parties consisting of oil majors and trading houses such as PETCO, and PETRONAS Dagangan. The company also has a FSU used to support offshore production platforms, two (2) Liquefied Petroleum Gas (“LPG”) tankers as well as 16 tugboats and five (5) mooring boats.

2014

Revenue

32.4%RM266.80 million

2014

EBIT

52.2%RM22.01 million


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A New Energy


Initial Public Offering

A highlight of the year was the listing of EATech on the Main Market of Bursa Securities on 11 December 2014. The objective of the listing exercise was to allow the investing community to participate in EATech’s equity and continuing growth as well as enable the company to gain recognition and corporate stature through its listing. The IPO entailed an offer for sale of 15 million existing shares and a public offering of 114 million new shares, of which 25.2 million new shares were made available to the Malaysian public at an issue price of 65 sen per share. The public response to the IPO was overwhelming, with the public portion oversubscribed by 5.12 times.

On its maiden trading day, the share price of EATech suffered a 25.4% or 16.5 sen decline in line with the overall market that fell by 20.95 points or 1.19%. Investor sentiments were weighed down as the benchmark Brent crude fell below USD65 per barrel. As a result, EATech ended its first trading day lower at 48.5 sen compared to its IPO price of 65 sen.

The proceeds raised from the IPO will be utilised to repay bank borrowings, business expansion, working capital and to defray IPO expenses. EATech intends to use approximately RM19.2 million of the IPO proceeds to part finance the purchase of an oil tanker and to convert it into a FSU. Another RM10.0 million will be utilised to expand EATech’s existing shipbuilding facilities in Perak.

EATech’s IPO Listing

5.12timesOversubscribed

by public



114

Living up to its tagline of “World Class, Home Grown”, MIT is a home-grown enterprise that has grown to become significant player in the insurance and brokerage business

Earnings Visibility

EATech’s earnings are expected to improve going forward with the delivery of eight (8) new vessels, including the Floating Storage Offloading (“FSO”) which is currently being refurbished and is expected to be completed in April 2015. The company has already secured a firm contract for the FSO.

As we start a new year, the company has an order book of RM2.0 billion that will keep it busy until 2025. PETRONAS accounts for 55% of its order book with the rest from local O&G companies and its joint-venture with US O&G company and a local port operator. It is also bidding for another RM1.0 billion worth of domestic jobs and is expected to secure one (1) or two (2) projects in the near future.

The plunging oil prices has yet to affect EATech’s business. In fact, the current market conditions provide an opportunity for increased shipping contracts as bunker rates have dropped accordingly as well. An increasing demand for FSOs for marginal fields in the country also provides opportunity for EATech to expand further.

MIT Brokers Insurance Sdn Bhd (“MIT”)

In Fy 2014, total premiums transacted by MIT decreased to RM67.33 million, compared to RM75.51 million achieved in Fy 2013. In tandem with the decrease in premiums placement, MIT’s PBT decline 3.96% to RM1.94 million, from RM2.02 million in Fy 2013. The average margin was 19.26% (2014: 28.8%) when compared to the combined premiums transacted.

Living up to its tagline of “World Class, Home Grown”, MIT is a home-grown enterprise that has grown to become significant player in the insurance and brokerage business. Its client base includes some of the biggest names in Corporate Malaysia, representing power and utilities, infrastructure projects, financial institutions, marine and energy industries, to cite a few examples. The company is backed by a team of experienced professionals to provide its growing client base with innovative solutions to cover a wide variety of business-related risks.

To successfully compete in an increasingly globalised world, MIT has established linkages with some of the world’s leading underwriters and brokers, notably from Singapore, Hong Kong and the United Kingdom. The company also has a network of associates, engineers and consultants who are trained to handle a portfolio of regional projects.


115

A New Energy


EESB is a one-stop centre providing various solution-related networking

services ranging from networking and communications, website design,

development, hosting and management solutions to E-procurement.

MIT also provides services in the areas of Financial Solutions (“FINSOL”), Specialty, Commercial and Employee Benefits. Owing to the highly complex and extensive nature of the liability risks in FINSOL, it has a pool of lawyers and economists with the expert knowledge to assess a company’s exposure. Industry best practices are shared, applied and refined to determine the best business solutions for a dynamic business environment.

Under Specialty, the focus is exclusively on providing solutions for the Infrastructure, Power and Utilities, Marine and Energy sectors as well as Trade Credit and Political Risk exposures. The company acts on behalf of owners, principals, major contractors, financial lenders and sector professionals. In keeping up with developments, MIT has been reassessing the range and applicability of specialist insurance coverage to mitigate the effects of any consequential financial loss. Through its network, MIT has hired experts in the related risks and has sourced markets in the UK, Europe, Middle East and Asia Pacific for the placement of these risks.

Among the range of specialist services provided by MIT, Commercial is rapidly gaining prominence. MIT designs, manages and administers insurance programmes for growing organisations. By tapping the knowledge of the marketplace, it can tailor benefits programmes, property and casualty coverage to meet the specific requirements of an organisation.

In providing Employee Benefits programmes, MIT caters to corporate clients by designing for them a tailor-made and cost effective health care programme. This is followed through with the implementation of the programme as well as consultations to advise client on the newest trends and the changing landscape related to employee health care and benefits.

Extreme Edge Sdn Bhd (“EESB”)

During Fy 2014, EESB group recorded revenue of RM11.21 million, an improvement of over 100% from RM5.49 million posted the previous year. The increase in revenue was mainly due to acquisition of 100% equity interest in Sovereign Multimedia Resources Sdn Bhd (“Sovereign”), an MSC-status company, which was completed in June 2014, apart from an increased project management services contracts secured by the company; not only from Kulim, but also from other external bodies. Correspondingly, PBT rose by 266.40% to RM2.71 million from RM739,000 previously recorded in Fy 2013. The company was founded as a start-up in 2010, and since then it has evolved to become a successful technology and networking services provider in its own right. EESB is a one-stop centre providing various solution-related networking services ranging from networking and communications, website design, development, hosting and management solutions to E-procurement. It also services and maintains servers, UPS devices and personal computers. Its portfolio includes project management and consultation services.

EESB delivers high-value, tailored solutions with measurable results by working collaboratively with clients via a user-centred, technology-based and business-driven solutions methodology. This approach appeals to customers by significantly reducing the time and risks associated with designing and rolling-out complete integrated solutions.

Fy 2014 saw the growing importance of cloud infrastructure, be it public, internal or hybrid. To stay ahead, EESB has been seeking collaboration with software partners and cloud players to deliver the best practices and solutions to end-users. Going forward, EESB has set its sights on greater specialisation of products and services.



116

EBSB is the inventor and manufacturer of a three-wheeler multi-purpose machine “Mechanical Buffalo” named ‘BADANG’. It is mainly used for FFB evacuation and other field works such as manuring.

Guided by its motto to provide “Safety for People,

Planet and Profits”, KSTS offers Occupational Safety and Health (“OSH”) related

services.

Edaran Badang Sdn Bhd (“EBSB”)

For Fy 2014, EBSB registered a revenue of RM26.57 million, compared with RM28.50 million achieved previously. PBT decreased by 10.98% from RM1.73 million posted in Fy 2013 to RM1.54 million in Fy 2014 due to higher operating costs.

EBSB is the inventor and manufacturer of a three-wheeler multi-purpose machine “Mechanical Buffalo” named ‘BADANG’. It is mainly used for FFB evacuation and other field works such as manuring. As part of its diversification and market penetration strategies, EBSB has established a new product distribution centre at Lahad Datu, Sabah. The centre is the sole distributor in Sabah for the Beluga, Tiger and Lion X 1000 range of machinery imported from Korea. Beluga machinery can be used for a range of agricultural activities, even in peat areas. Attesting to its popularity, EBSB also received sizeable new orders for ‘BADANG’ from various plantation companies and government ministries.

Kulim Safety, Training and Services Sdn Bhd

Kulim Safety Training and Services Sdn Bhd (“KSTS”)

KSTS’ revenue improved from RM2.42 million to RM2.46 million in Fy 2014, due mainly to increased customer services activities that registered growth of 56.9%. Pre-tax profit, however, declined to RM325,000 compared to RM565,000 achieved the previous year.

Guided by its motto to provide “Safety for People, Planet and Profits”, KSTS offers Occupational Safety and Health (“OSH”) related services. While the priority is on OSH training, KSTS also conducts training related to human resource development, motivation and quality-related field work. The company also provides advisory services on Health and Safety Management Systems (OHSAS 1800), RSPO, ISO Quality Management Systems. It undertakes auditing, inspection and look into cases related to deaths, accidents and dangerous occurrences at the workplace and make recommendations for improvements.

Apart from providing health screening (medical surveillance), noise monitoring and administering urine and drugs tests, the company is also an authorised gas tester, visiting medical officer and a foreign workers medical screening expert on behalf of the Foreign Workers Medical Examination Monitoring Agency (“FOMEMA”).


117

A New Energy

OIL AND GAS

ABDUL RAHMAN SULAIMANExecutive Director, Oil and Gas/Plantation Operation



118

Kulim’s long-term strategy has always been to diversify its business activities in order to cushion any fluctuation in earnings arising from volatile palm oil prices. We established a foot-hold in the mid-stream of Oil and Gas (“O&G”) industry through E.A. Technique (M) Berhad (“EATech”), which has since grown organically to

become one of the major players in the business of tugboat operations and transportation of clean petroleum products in Malaysia. The other foot-hold is through Danamin (M) Sdn Bhd (“Danamin”), which is involved in the fabrication of O&G pipelines, Non-Destructive Testing (“NDT”) and the provision of engineering services.

O Upstream Exploration and Production • SWBB PSC

O Downstream / Support Services

• EATech • Danamin

KULIM’S INVOLVEMENT IN O&G BUSINESS CHAIN


119

A New Energy

OIL & GAS

On 24 October 2014, Kulim Energy Nusantara Sdn Bhd (“KENSB”), a wholly-owned subsidiary of Kulim, entered into a Joint Operating Agreement (“JOA”) with PT RBB and PT GSB to participate in the E&P in SWBB PSC.

Involvement in South West Bukit Barisan Block

Kulim proposed investment in South West Bukit Barisan (“SWBB”) venture is not something new, expanding its involvement in the O&G sector particularly into the niche upstream activities in Indonesia. It allows the Group to move up the O&G value chain and participate in the upstream business of E&P activities.

The Government of Indonesia (“GOI”) awarded the SWBB PSC to subsidiaries of PT Citra Sarana Energi (“PT CSE”) - PT Radiant Bukit Barisan E&P (“PT RBB”) and PC SKR International Ltd (“PC SKR”) on 13 November 2008 for a period of 30 years. The exploration activities cover an initial exploration period of six (6) years before commencement of O&G development and production. On 31 October 2014, Satuan Kerja Khusus Pelaksana Kegiatan Usaha Hulu Minyak & Gas Bumi (“SKK Migas”) has approved for the

extension of SWBB PSC’s exploration period for up to four (4) years. Measuring some 779 square kilometers, SWBB block is located onshore in the West Sumatera province.

Under the SWBB PSC, PT RBB and PC SKR have participating interests of 51% and 49%, respectively in the SWBB block whereby PT RBB has been appointed as the Operator.

On 24 October 2014, Kulim Energy Nusantara Sdn Bhd (“KENSB”), a wholly-owned subsidiary of Kulim, entered into a JOA with PT RBB and PT GSB to participate in the E&P in SWBB PSC. The JOA is to establish a co-operation between PT RBB, PT GSB and KENSB whereby PT RBB shall remain as the Main Operator while PT GSB and KENSB shall participate as the Co-operators of SWBB Block. On 23 December 2014, Kulim announced that all conditions precedent of the JOA have been fulfilled.

Consistent with the Group’s long-term business plan to diversify its business activities, Kulim had on 3 October 2013 has entered into a MoU with PT Graha Sumber Berkah (“PT GSB”) to establish a framework to explore the possibility of a mutual co-operation to venture into the O&G sector in Indonesia via its participation in the Exploration and Production (“E&P”) of O&G.



120

Following the JOA, KENSB had on 10 December 2014 entered into a Conditional Subscription and Shares Purchase Agreement (“CSSPA”) with PT CSE and its existing shareholders namely, PT Wisesa Inspirasi Sumatera (“PT WIS”), a wholly-owned subsidiary of GSB and PT Inti Energi Sejahtera (“PT IES”) to acquire a 60% equity interest in PT CSE for a total cash consideration of USD133.55 million (approximately RM462.68 million). Barring any unforeseen circumstances, the CSSPA is expected to be completed in the first half of 2015.

Outlook and Prospects

The growth of Kulim’s O&G Division currently hinges on two (2) main factors - completion of acquisition, and the completion of major projects as planned.

As disclosed in its Circular for Proposed Disposal of NBPOL, Kulim had earmarked some RM680 million out of the total proceeds for the O&G business in Indonesia, stretched forward over the next two (2) years, and is not a small sum by any means. For the 2015 work programme, Kulim remains focused on exploration drilling in SWBB. Production testing on a SWBB well is currently progressing with very encouraging indications of total Prospective and Contingent Resources of 404 million barrels of oil equivalent (“MMBOE”). PT RBB has obtained approval from GOI to drill an additional three (3) wells in 2015. Depending

on its commercial viability, production can begin in the early 2016 and is expected to ramp up the Group’s revenue.

The results of E&P activities are uncertain and it may involve unprofitable efforts, not only from dry wells but also wells that are productive but do not have enough reserves to generate positive cash flows after taking into account, amongst others, drilling, development, operating and associated costs. Hence, the completion of a well does not guarantee that there will be returns on the investments or that the costs incurred will be recovered.

Upstream O&G operations also involve a variety of risks that may expose Kulim to substantial liability arising from these hazards, thereby diminishing the returns Kulim can obtain in relation to any discovery. The industry, however, practises high standards of safety precautions thereby mitigating many of these risk factors and the Group take into account all precautionary steps to mitigate the possible risks associated with O&G business. On that note, the Group is taking into account all precautionary steps to mitigate the possible risks associated with the potential new ventures as well as the existing business it is already in. Our risk management team is monitoring various data, formulate a sound risk management strategy to enable quick reaction to any potential shocks.


121

A New Energy

SECTION 5sustainability


122

The wetland of Selai Estate; one of the

largest man-made wetlands within Kulim’s

estates measuring approximately 7 acres.


123

A New Energy

sECtiOn 5 SUSTAINABILITY

In today’s nuanced, more discerning and better informed world, society’s expectations of corporations are changing. In addition to the responsibility for making profits, consumers and investors alike are more conscious about the operational impact corporations have on society and the environment. Almost without exception, for all major businesses and industries worldwide, sustainability is a key word in safeguarding a stable future.

At Kulim, we have long upheld the notion that profitability and growth must go hand-in-hand with the building of a fair, ethical and responsible Company. That is why we have long embedded sustainability and corporate responsibility as an integral part of our core values, policy statements and work practices. Executed well, we believe that sustainability can be a powerful driver of business growth and a core competency to measure our success as a corporation.

OuR sustainability POliCy

Kulim’s strives for performance with a purpose. It is not just about meeting the expectations of our stakeholders. Sustainability is at the core of how we do business. Our business model has been designed to deliver sustainable growth based on the “3Ps” bottom line of People, Planet and Profit. Based on these three (3) Pillars of Sustainability, our approach is to ensure that today’s requirements are satisfied without impairing the livelihood basis of future generations.

CORPORATEVISION & MISSION

SUSTAINABILITYPOLICY

PEOPLE● People Policy ● Core Labour Standards

● OSH Policy ● Workplace Drug Policy ● Sexual Harassment Policy ● Grievance Procedure

PROFIT● Business Policy ● Ethics Policy ● Social Contributions

● Profits with Responsibility ● Fraud Policy ● Quality Policies for Estates and Mills● Production Charter (30:30)

PLANET● Environmental Policy ● Malaysian Palm Oil Association

● Environmental Charter


124

In 2010, we established the Sustainability and Quality Council (“SQC”), now known as Sustainability and Initiative Council (“SIC”) to oversee the Group’s overall Corporate Responsibility (“CR”) strategies and activities on behalf of the Board. CR and sustainability targets established and their performance are closely monitored by the SIC against agreed metrics. The SIC has identified the reduction of herbicide, water usage, carbon emission and reduction in accidents as key priority areas. However, at the same time it is very important for Kulim to maintain and improve employee and stakeholder engagement.

As part of our strategy towards sustainability, we have developed a Sustainable Management System (“SMS”) that is based on the Principles and Criteria set out by the RSPO. Our Principles for a Sustainable Development Performance are as follows:

Conduct all operations consistent with the SMS Framework to maintain a safe, healthy and viable work environment, Kulim will operate in compliance with all applicable national and international legislations and ensure that the achievement of long-term economic viability does not compromise its ethics and business policies.

Kulim will not undertake new developments in areas of primary forest or on land containing one (1) or more High Conservation Value (“HCV”) attributes. Any land development undertaken by Kulim will take into account the conservation of biodiversity, protection of cultural and customary land use and the capacity of the land to sustain any development activities.

Uphold the principles of Free, Prior and Informed Consent (“FPIC”) in all negotiations and interactions with stakeholders.

Ensure that land management practices are consistent with the long-term productivity of the resource so that the land remains suited for agricultural use.

Continue to be a responsible corporate citizen, making a positive contribution to the communities in which it operates.

Invest in the training and development of employees to improve their knowledge, skills and competency to enhance performance and advance their career.

Principles


125

A New Energy

PEOPlEPeople are the reason why any business is successful. When a company is conscientious about its employees and the communities in which it operates, it generates goodwill, additional loyalty, commitment and a sense of shared responsibility. From creating jobs and doing right by our workers, supporting meaningful causes, giving back to the community in cash and kind, and by volunteering our services, we are contributing towards a better world.


Safety first; Mill operator checking on machineries wearing proper Personal Protective Equipment.


126

EMPlOyMEnt stanDaRDs

Beginning in our own backyard, we treat all our employees without exception, with fairness and dignity. Our human resource policies are grounded in Malaysia’s labour legislation as well as the International Labour Organisation’s (“ILO”) Declaration on Fundamental Principles and Rights at Work. The Group is also committed to managing its workforce in a responsible manner guided by the Code of Conduct for Industrial Harmony. The Ethics Declaration Form serves as an important tool to promote a culture of integrity. Under the Whistle-Blower Policy, employees are encouraged to alert management about any infringement of ethics that might have slipped the compliance radar. In the interest of our employees, the Group does not tolerate the use of illegal drugs, banned substances and alcohol in the workplace.

Bangladeshi

Indian

Indonesian

Malaysian

65.0%

22.0%

12.9%

0.1%

83.3%

16.5%

0.2%

Bangladeshi

Indian

Indonesian

wORkERs by natiOnality

FOREiGn natiOnality


127

A New Energy

Policy of non-Discrimination

We recognise the value of diversity and we do not discriminate against women, ethnic or religious minorities and foreign workers. All field, office and management workers are paid the same salaries according to their pre-defined grades. We treat all our workers equally regardless of their race, gender and religion. Workers with HIV/AIDS are guaranteed confidentiality and are retained in employment for as long as they are healthy and able to perform.

Fair wages

The wages we pay our workers and the conditions of employment meet the legal or industry minimum standards. In January 2014, the Minimum Wage Order 2012 stipulating a minimum wage of RM900 a month in Peninsular and RM800 in Sabah, Sarawak and Labuan was fully enforced. We also provide housing and utilities to our workers.

Child and bonded labour

We do not employ young people under the age of 16. Many of our workers reside with their families and their children have access to government schools and amenities that we provide but they do not work for the Company. Nor do we subject any of our workers to bonded labour. Local workers have the freedom to cease employment without penalty while foreign workers need to fulfil a three-year (3) contract.

Freedom of association

We respect the rights of our workers to form and join unions. A total of 1,277 employees or 19.1% of our workforce are members of the National Union of Plantation Workers (“NUPW”). Our Collective Bargaining Agreements with the union are current, with no ongoing disputes.

Recruitment of Foreign workers

The contracts between workers and the Company are signed upon the workers’ arrival to ensure there is no contract substitution occurs.

Managing Overtime

Mill workers tend to work longer hours during the peak harvesting season to ensure the fruits are processed before its quality deteriorates. However, with close monitoring of the overtime limit offered to the workers, we will ensure that this is within the Department of Labour’s regulatory guidelines.

living Conditions

Workers are typically accommodated in a two or three-bedroom house that meet the minimum standard of Housing and Amenities Act 1990.

As at 31 December 2014, we had 6,684 full-time employees in Malaysia, of which 5,517 or 82.5% were categorised as workers. About 78% or 4,305 are foreign workers, predominantly from Indonesia, India and Bangladesh. In 2014, our turnover rate was 27.2%, compared to 17.46% recorded in the previous year. The spike coincided with the repatriation of 845 foreign workers, on completing their three-year contracts.



128

EMPlOyEEs REtEntiOn

Employing outstanding people and providing opportunities for them to apply their talents is critical to our sustainability. We depend on a skilled managerial workforce as a vital success factor in shaping Kulim’s present and future. Throughout 2014, our emphasis was on strengthening our talent-management programmes and instilling a performance-driven culture. We have set up a Performance Management System to ensure our people are being continually developed to keep pace with the Group’s Vision and business expansion plans. As at 31 December 2014, we had 6,684 full-time employees in Malaysia, of which 17.5% comprise of staff and management.

Remuneration Package

An employee Climate Survey conducted in 2010 highlighted the competitiveness of the remuneration package as one (1) of the main concerns of employees. Since then, we have conducted a salary benchmarking survey to review the competitiveness of the salary scheme. Subsequently, the salary scale for executives, non-executives as well as security guards has been revised effective January 2012.

Employee Development

Our employees are also among our key stakeholders. During an engagement session, one of the issues brought up was the lack of young people in the plantation business and the problem of retaining talent. Succession planning is one (1) of the areas we are urgently addressing. To retain the so-called “millennial generation” within the Company, we are giving them space to develop their professional skills and providing opportunities for feedback.

We have training and development programmes for all levels of staff. These programmes are structured around formal courses, seminars and workshops and are conducted internally or by external consultants. In FY 2014, we continued to tap the Strategic Enhanced Executive Development System (“SEEDS”) Programme to ensure we have a ready talent pool and pipeline of future leaders. Since its launched in 2008, more than 62 executives have benefited from this programme and are currently applying their knowledge at different operating units. During the year, we began collaborating with PUSPATRI (Johor Skills Development Centre) to run courses to enhance the technical skills of our employees.

For FY 2014, we spent 2.32% of total payroll cost on training and achieved 3.21 training man-days per employee. This was slightly lower than what was spent in FY 2013 due to revised direction in learning and development strategic planning where focus were on the job training and in-house tailor-made programme. Whereas in FY 2015, focus will be on operational hands-on training as well as upskilling programme.


129

A New Energy

EnGEnDERinG GEnDER EQuality

Kulim’s commitment to promote gender equality is seeing positive results. Various initiatives rolled out to empower women have been gaining traction. As at 31 December 2014, women made up 11.1% of our workforce and 10.9% of them are at the management level. Notwithstanding the challenges that are involved, we not discourage nor discriminate against women working on our estates.

women Onwards

Women OnWards (“WOW”), originally called Panel Aduan Wanita or Women’s Grievance Panel, came into being as part of a larger employee outreach programme. It has been endorsed by management and its activities are fully funded by the Company.

Over the past two (2) years, WOW has been actively providing entrepreneurship opportunities for the women folk of Kulim through a programme known as Jejari Bistari. There is now a WOW Unit at each estate, with each one developing a unique product or service, such as tailoring, baking, arts and handicraft. These products or services are sold to staff and public during the festive season and company events. In 2014, WOW raised approximately RM19,000, the proceeds of which were ploughed back into their fledgling businesses.

For the past four (4) years, we also joined the global movement to celebrate International Women’s Day (“IWD”). Each year a different theme is chosen to celebrate the economic, political and social achievements of women in the past, present and future. In FY 2014, IWD was celebrated together with WOW Carnival with the theme ‘Jom Sihat!’.

2010 2011 2012 2013 2014

19%

81%

17%

83%

18%

82%

24%

76%

27%

73%

Female Male

ManaGEMEnt by GEnDER



130

sexual Harassment

We continued to make headway in reducing the number of reported cases of sexual harassment. In 2014, no cases were reported. This is a result of ongoing efforts to create awareness among employees of what constitutes inappropriate behavior and this is reinforced from time to time. Through a concerted campaign, women are also more aware of their rights and are more receptive to reporting cases of sexual harassment.

Maternity leave

All our female employees are entitled to 60 consecutive days of paid maternity leave, in accordance the Malaysian Government regulations. In 2014, 23 employees took maternity leave and on returning to work, continued to remain employed with the Company. We are proud of the 100% retention rate as employment patterns suggest that women with a new baby are most likely to leave their jobs after one (1) year. No work with pesticide shall be undertaken by pregnant or breastfeeding female workers.

OCCuPatiOnal saFEty anD HEaltH (“OsH”)

In our journey towards sustainability, we have always considered good OSH practices to be an integral part of our business objectives. Kulim aspires to have an occupational safety and health record it can be proud of. Each mill and estate has a designated Occupational Safety and Health (“OSH”) coordinator who is responsible to ensure that the implementation of an OSH system is carried out effectively. These include organising safety training, tool-box safety briefing, OSH quarterly meetings, investigations and reporting all accidents to the OSH Manager.

Each worker undergoes an average of 40 hours or five (5) man-days of safety training annually. The training focuses on safety practices including correct use of personal protection and sharp equipment, as well as the handling, application and safe disposal of chemicals. Workers operating machinery and vehicles undergo 16 hours or two (2) man-days of supervised training and must pass a practical exam before they are allowed to operate independently.

We genuinely believe that there is no more important asset than our people and there is no higher priority than their safety. Despite our best efforts, there were two (2) work-related deaths in 2014. The deaths were a blow to all of Kulim and our thoughts are with the bereaved, the families and friends. To avoid a recurrence, we took on the challenge of reinvesting in and reinvigorating our safety efforts. We began a series of training programmes to reinforce health and safety procedures among senior managements. The lessons learnt will be cascaded down the line to lift our safety performance. We can and we must do better.

Female office staff at Sindora Palm Oil Mill.


131

A New Energy

Fatality RatETarget at zero

lOst tiME aCCiDEnt RatETarget below 10

sEVERity RatETarget below 3.5

20

15

10

5

0

2010 2011 2012 2013 2014

7.605.80 5.90 7.43

17.394.0

3.5

3.0

2.5

2.0

0.5

1.5

1.0

0

2010 2011 2012 2013 2014

1.60

2.28 2.44

4.00

3.34

3.0

2.5

2.0

1.5

1.0

0.5

0

2010 2011 2012 2013 2014

3.0

1.0 1.0 1.0

2.0

FY 2014 saw a drastic increase in the Lost Time Accident Rate (“LTAR”), recorded at 17.39 as compare to our targeted LTAR of 10. This is due to one (1) case of continued medical leave. However, our injury severity rate of 2.44 is still below our target of 3.5. A cause for concern is the increase in number of road accidents on our estate roads. We will be conducting a series road safety awareness campaigns to educate our workers and also carry out more enforcement of traffic regulations. The Group aims for zero fatality and a reduction in the number of work-related accidents by 30% within the next financial year.

We have in place an OSH plan to look into the welfare and health of employees. Under welfare, closer attention is paid to the adequacy and safety aspects of facilities provided by the Group such as crèches, clinics, canteens and workers’ quarters. The health aspect of the programme covers a proper schedule for mosquito fogging, health surveillance and installation of water treatment facilities. The OSH plan also covers various environmental aspects, with closer attention given to the recycling of waste, appropriate domestic waste disposal through proper landfill, line site cleanliness and beautification, proper maintenance of drainage systems and enforcement and adoption of “Asean Guideline on Zero Burning Policy”.

COMMunity DEVElOPMEnt

Our businesses are strongly dependent on its surrounding communities for continuity and growth. We therefore conduct an annual Social Impact Assessment (“SIA”) for a holistic understanding of the net impact of our presence and interventions on the various communities in which we interface. In demonstrating a core principle of putting people first, Kulim has a long interest in supporting strong and vibrant communities. Our goal is to make a difference to the communities in which we work and if possible, to leave behind a favourable impression and a positive legacy.

Our community outreach efforts take many forms. It combines donations in cash and in kind as well as active participation by our employees in community projects and activities. We have an open approach to communication with local communities. Community members can contact the estate or mill manager directly if they have any issues or concerns regarding our operations.



132

Under the banner “We Care, We Share”, our community investment programme is structured mostly around community sports, welfare and education, health and infrastructure improvements. True to the saying that charity begins at home, we have also set up the As-Sajadah Fund, which is an internal charity fund set up to assist our own staff whenever they are in need. In 2014, our community outreach programmes involved a series of road shows to attract the best and the brightest among school leavers and university graduates to work in our Company.

The community investment activities that we were involved in are as follows:

institution/Programme Purposes approximate Contributions (RM’000)

Persatuan Bola Sepak Negeri Johor National sports sponsorship 5,050

Tabung Tijarah Ramadhan A programme to help the under-privileged 100

Bistari Young Entrepreneur Sponsorship for Tunas Bistari and tuition programme 250

Charity @ Mutiara JCorp 2014 Sponsorship for charity concert 77

As-Sajadah Fund Kulim’s internal charity fund, raised especially 204 for recipients within Kulim’s operating units

Raja Zarith Sofiah’ Wildlife Defenders A programme for students to develop a 570 Challenge campaign to increase awareness of wildlife conservation at their respective institution

KPJ Charity Golf Waqaf An Nur 2014 Sponsorship for sporting event 100

Golf Piala Menteri Besar Johor 2014 Sponsorship for sporting event 49

At Kulim, we actively encourage our management and staff to get involved in welfare work and charity projects and we are pleased to note that volunteerism is alive and well among our people. Our people make personal donations. They volunteer their services in support of the communities we serve and when disaster strikes, they are quick to respond. In the true Malaysian spirit of gotong-royong, our people joined local communities during the year in cleaning up mosques, suraus, schools and a local community rehabilitation centre. Kulim’s executive, staff and security personnel have also been involved in awareness activities related to wildlife conservation.

From time to time, the Group also promotes various Islamic-based activities and during the year a High Tea with YBhg. Dato’ Ustazah Siti Nor Bahyah, Ustaz Wan Akashah and Ustaz Badli Shah was organised. During the annual Qurban and Ramadhan festivities, many of our staff pooled their resources together and shared their blessings with the less fortunate families within the Group and in the surrounding communities.

Over the period from 27 December 2014 up to 8 January 2015, our people joined Malaysians from all walks of life in providing humanitarian aid to the victims of the flood-hit east coast states of Kelantan, Terengganu and Pahang. They also volunteered their time and effort in the massive clean-up efforts after the flood waters had subsided through Kompeni Umar Al-Khattab under Bridged Waqaf. In doing so, they have done the Company proud, responding to the needs of the community and fulfilling an important social responsibility.


133

A New Energy

PlanEtA powerful global grassroots movement is transforming way the public think about the environment and the roles corporations must play in treating the planet well. The Kulim Group acknowledges its business has an impact on the environment. It is therefore our duty to incorporate the best practices from the industry into our daily operations so as to mitigate any adverse impact on the environment. Two (2) of our estates and one (1) of our mills are certified to ISO 14001:2004, which is the internationally accepted standard for environmental management. We believe that our pursuit of best environmental practices is ultimately good for our business. By focusing on resource management or eco-efficiency, our efforts in protecting and improving the environment can produce operational and strategic value by reducing costs.

2 Estates1 Mill


Tereh Palm Oil Mill, Kluang; view from Bukit Chepal.


134

COnsERVinG biODiVERsity

Kulim’s plantation operations in Johor border the Endau-Rompin National Park and the Labis Forest Reserve. Since the last survey in 2008 to assess the state of flora and fauna bordering our estates, the plight of the International Union for the Conservation of Nature (“IUCN”) Red-listed mammals has become more precarious.

Kulim acknowledges its critical role in addressing this issue, and this is factored into our biodiversity strategies. Apart from improving biodiverse areas and mitigating the negative impacts, we work closely with our stakeholders including government and NGO partners to provide the additional resources to strengthen our internal monitoring and control mechanisms.

HCV tools

In 2011, we commissioned a birds and bats survey to identify the areas of high interest for the seasonal East Asian-Australasian Flyway migratory route. The HCV tools used for that survey continue to be relevant to monitor the existence of our biodiversity.

Enhancing biodiversity areas

Although our estates do not contain HCVs, we have started planting trees to enhance the small areas of vegetation within our estates. The remaining forested areas will be conserved as full-fledged HCV forests or biological corridors. As at 31 December 2014, we have set aside 33.19 hectares of buffer zones and 32.67 hectares of jungle patches within our estates.

Meanwhile, our Natural Corridor Initiative launched five (5) years ago continued to take shape. Starting with Tree Host Pledge, Kulim has committed itself to Wild Asia’s Natural Corridor Initiatives and have jointly organised tree planting event in 2008 and 2009. This natural corridor initiatives serve to link natural habitats separated by human modified landscapes, thereby increasing the functional space for wildlife to thrive. Our tree planting event has been rebranded as Infaq 1 Warisan since 2010 and it is now into its fifth year. The annual event provides a platform for Kulim employees and the public to do their part in “Greening the Earth”. As of 31 December 2014, over 3,100 trees of more than 30 different native species were planted.

Mitigating impacts

Kulim has several initiatives to mitigate the negative impacts of its operations on the environment:

Kulim has established an Environmental Unit within the Sustainability Department to analyse wildlife data, publish biodiversity bulletins and communicate their findings and outcomes. The unit also functions as a point of reference for environmental issues, notably biodiversity protection and pollution control.

All our estates are required to provide regular updates on the species found in and around the estates and track incidents of wildlife encroachment, particularly elephants.

Buffer zones have been established at major water bodies in and around the estates and adjacent to forest reserves. We conduct regular Biodiversity Monitoring in these zones.

To minimise soil erosion, our roads have been realigned and silt traps constructed for rains.

Hunting, fishing and taking of fauna within our estates and adjacent protected areas are prohibited.

SustainablePalm Oil Transparency Toolkit

During the year, Kulim participated in the online Sustainable Palm Oil Transparency Toolkit (“SPOTT”), an initiative of the Zoological Society of London working in collaboration with organisations such as RSPO. The ground-breaking new project aims to transform how oil palm growers are monitored on their commitments to environmental and social best practices.

In the SPOTT assessment, kulim was ranked number 8 from 25 of the largest oil palm listed companies in terms of its transparency and commitment to the environmental performance of its operations.


135

A New Energy

beyond Estate boundaries

As neighbours to the Endau-Rompin National Park and several forest reserves, our work at biodiversity conservation sometimes extends beyond the boundaries of our estates. We work closely with Wildlife Conservation Society (“WCS”) Johor and the Johor’s Department of Wildlife and Johor National Park to mitigate human-wildlife conflicts. Such incidents take place from time to time, as when wild elephants encroached into the Sungai Tawing and more recently, the Sindora Estate. We also provide information on such elephant incursions to the Johor Planters Association.

Our work with WCS also extends to the protection of areas with HCVs adjacent to our estates. Under the auspices of the Johor Wildlife Conservation Project (“JWCP”), the Johor National Parks Corporation, Wildlife Department and Johor National Parks, Forestry Department as well as the police have all come together to eliminate poaching through intervention and enforcement. Kulim actively participates in JWCP’s patrolling efforts through the Kulim Wildlife Defenders (“KWD”) Programme.

REsOlVinG HuMan-ElEPHant COnFliCts

Incidences of human-elephant conflicts have been reported at Kulim’s Estates of Sindora, Sungai Tawing, Siang, Basir Ismail and REM. In 2014 alone, there were 13 cases reported. With increasing habitat loss, elephants have started encroaching into the resident areas.

According to World Wide Fund for Nature (“WWF”) Malaysia, elephants in Peninsular Malaysia are in danger of becoming extinct. Based on data collected from 2000 to 2012 by the Department of Wildlife and National Parks, there are only about 1,200 to 1,680 Asian elephants left in Peninsular Malaysia.

Despite the material losses, Kulim is committed to protect the national biodiversity and endangered species. We conduct awareness programmes to prepare communities on how to deal with elephant encroachments. As a more permanent solution, we are also collaborating with the Wildlife Conservation Society to determine the effectiveness of electric fencing at the Sungai Tawing Estate. Another alternative that we are considering is to design and construct a natural pathway within our estates so that the elephants can access their water holes without causing any damage to the palm trees. In this way, we hope to minimise the impact of elephant encroachment on our estates.

In the meantime, KWD will join forces with the Johor National Parks Corporation, Wildlife Department, Forestry Department and the police force under the Johor Wildlife Conservation Project to eliminate poaching. With the inception of the KWD, we have employed 48 security guards who are specifically trained to participate in this programme.

Elephants are part of our national heritage. We will continue to invest resources and energy to work with the relevant agencies to see how elephants and humans can co-exist.


Installation of electric fencing to address elephants

encroachment in Sindora Estate, Kluang.


136

Our KWD Programme received a huge boost when the HRH Raja Zarith Sofiah agreed to be the Patron of the Raja Zarith Sofiah Wildlife Defenders Challenge 2013. Her support has generated much wider awareness of conservation issues in Johor.

Launched in August 2013, the objective of the Raja Zarith Sofiah Wildlife Defenders Challenge is to increase awareness of wildlife conservation among students and to encourage them to participate actively in creating awareness among their communities on the importance to conserve and protect wildlife from illegal poaching. A three-stage competition was organised and opened to all levels of educational institutions across Johor.

Sekolah Rendah Bandar Pontian was the winner for the Primary School Category and was rewarded with a trip to the Sepilok Orangutan Rehabilitation Centre, Sabah. In the Secondary School Category, Sekolah Menengah Sri Gading was declared the winner while Universiti Teknologi Malaysia emerged the champion in the Tertiary Education Category. The winners of the two (2) senior categories won a trip to London in the United Kingdom.

The longer-term objective of the biennial programme is to instill a life-long spirit of volunteerism among students. The hope is that such values will be carried into adulthood so that the students who participated in the programme will form an ‘alumni’ working for the good of the community.

Raja ZaRitH sOFiaH wilDliFE DEFEnDERs CHallEnGE

Winners of each category in Raja Zarith Sofiah

Wildlife Defenders Challenge 2013.


137

A New Energy

Water UsaGe (M3 Per tONNe FFB)

2010 2011 2012 2013

1.02

0

0.2

0.4

0.6

0.8

1.0

1.2

0.94

1.171.15

2014

1.05

BOD LeVeLs (PPM)

0

100

200

300

400

500

2010 2011 2012 2013 2014

298261

85114 114.5

seCtION 5 SUSTAINABILITY

Water CONserVatION

According to our updated materiality matrix, water usage by the Group’s estates and mills and the risks of water contamination by chemicals remains one of the top issues of concern raised by our stakeholders.

Our mills recorded a decreased in water usage from 1.17 m3 per tonne of FFB in 2013 to 1.05 m3 in 2014. This was mainly due to higher FFB processed in 2014, with longer boiler running hours to reduce diesel consumption. Boiler water consumption is the main component of mill water usage. We have restricted the use of water for cleaning floors as one of the initiatives to reduce water consumption. Fortunately, water consumption by our estates does not amount too much, as the southern part of the peninsula is blessed with ample rainfall. In estate operations, water is mostly used to maintain our nurseries or for domestic consumption.

eroded soil Particles

To deal with the problem of soil erosion contaminating our waterways, we use fast-growing leguminous cover crops as a standard operating practice. We refrain from using synthetic fertilisers to avoid pollution from heavy metals, utilising organic fertilisers derived from Empty Fruit Bunches (“EFB”) after milling whenever possible. Palm Oil Mill Effluent (“POME”) is also treated and recycled as fertiliser for our fields in a process known as land application. The effluent for land application is measured by the level of Biological Oxygen Demand (“BOD”). The average BOD for our mills effluents has increased marginally from 114 ppm in 2013 to 114.50 ppm in 2014. Nonetheless, this is still a 57% reduction compared to 2011.

An emerging issue that we are closely monitoring involves the impact of approximately 6,700 heads of cattle that we are rearing, integrated with the estates’ operation. Cattle rearing has given rise to the problem of soil compaction, overgrazing and soil erosion. With plans to increase our cattle population to 12,000 heads by 2019, we will need to balance the management goals of our different businesses to achieve a fine balance in line with good agricultural practices.

reducing the Use of Chemicals

We introduced cattle grazing as part of chemical reducing programme in 2008. Chemicals such as pesticides and herbicides are potential waterway contaminants. We are actively seeking to find biological alternatives to chemical pesticides, whenever feasible. As an alternative to using pesticides, Integrated Pest Management (“IPM”) techniques play an important role in our efforts to control pests, diseases, weeds and introduced invasive species. Barn owls, for instance, have been introduced to our estates to control the rodent population.


138

Use of herbicide and paraquat per hectare Since 2004, we have reduced the use of paraquat by 50% although in 2014 our usage increased marginally from 0.05 to 0.06 (active ingredients in litre per hectare). When we resort to using paraquat usually in small doses to treat young palms, we closely monitor our employees to ensure the chemical is properly handled at all stages right up until the disposal of the empty containers. Since 2007, we have been collaborating with Malaysian Croplife and Public Health association and the Department of Agriculture in an initiative known as Empty Pesticides Containers Recycling Programme.

The RSPO has conducted ongoing engagements to develop alternatives to paraquat. We are following developments with interest and will be keen to learn how plantation players can refrain from using paraquat altogether as it is one of the most cost-effective herbicides available in the market. Nonetheless, as of March 2015 we have issued a directive to stop all new purchases of paraquat.

Minimising solid Waste

All solid waste from our mills are disposed of in line with Standard Operating Procedures (“SOP”). EFB is used as biocompost, while more than half of the palm fibres and shells are used as biomass for our mills. The other half is used for biocompost (fibres) while the shells are sold to buyers. Burning the biomass generates a small amount of boiler ash, which can be used to reduce acidity in soil. A small amount of hazardous scheduled waste is generated and this is transported by an authorised agent for safe disposal in designated public facilities.

Use OF herBICIDe aND ParaqUat(aCtIVe INGreDIeNts IN LItre/heCtare)

020142013201220112010

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08 2.0

1.5

1.0

0.5

0

0.02

0.03

0.07

0.05

0.06

0.720.84

1.621.47

1.64

Paraquat Herbicide

Paraquat Herbicide

Weeding process using CDA Sprayer

at Tereh Utara Estate, Kluang.


139

A New Energy

aDDREssinG CliMatE CHanGE

Climate change constitutes the most significant environmental threat to livelihoods and the environment. We believe that any sustainable business must do its part in reducing Greenhouse Gas (“GHG”) emissions. Kulim wholeheartedly supports the initiative by the Malaysian Government to reduce GHG emissions by up to 40% by 2020, as well as the recommendations by the RSPO GHG2 Working Group to incorporate GHG emission reduction requirements into the RSPO Principles and Criteria.

biogas Plants

Methane emissions from POME account for 22% of our total GHG emissions. By installing biogas plants at our five (5) mills, we estimate that this can reduce emissions from POME by 90%. Apart from reducing our dependence on generators to produce electricity, the biogas plants can also help us develop downstream businesses such as the manufacture of organic fertilisers. We estimate a five (5) to seven (7) years payback for our investment in each biogas plant. We target to install biogas plants at all our five (5) mills (including a new mill) by 2017.

Carbon Emission baseline

Another important milestone in the Group’s sustainability journey was reached when Kulim became the first Malaysian plantation company to publish its maiden Carbon Footprint Report in November 2013 using the GHG Beta Version 1a guidelines. These guidelines were developed with funding from RSPO so that palm oil producers can estimate the net GHG emissions produced during oil palm production.

We calculated that our net GHG emissions for 2012 amounted to 412,069 tonnes carbon dioxide equivalent (“CO2e”), which is the internationally recognised measure of GHG emissions. With a total CPO production of 207,265 tonnes and PK production of 58,773 tonnes, this is equivalent to a product carbon footprint of 1.33 tonnes CO2e per tonne of CPO and 1.33 tonnes CO2e per tonne of PK.

Our largest carbon impact comes from the clearing of land which accounts for 54% of total emissions. However, carbon sequestration by planted oil palms actually offsets land clearing, with a carbon positive estimated of 65,000 tonnes CO2e. A small area of peat soil on our estates adds to land emissions by just over 100,000 tonnes CO2e per year.


Biogas Plant at Sedenak Palm Oil Mill, Kulaijaya.


140

Palm kernel shells

About 60,000 tonnes of Palm Kernel Shells (“PKS”) are produced annually, of which 76% is used internally for power generation at our mills. The balance is sold for third party consumption. According to our estimates, if the PKS purchased by third parties is used for power generation to offset the consumption of fossil fuels, this would translate into a potential credit of 30,000 tonnes CO2e.

Fertiliser Efficiency

The more efficient use of fertilisers also helps to reduce our Scope 3 GHG emissions, which according to the GHG Protocol Corporate Standard, are indirect emissions that occur in the value chain. Field data will ascertain the optimal level required for both organic and chemical fertilisers. We have started the composting projects at all four (4) mills to recycle nutrients from EFB and POME back to the fields. One (1) new mill will commence the composting project in 2015.

improving Outgrowers’ GHG Data

Kulim will engage with the relevant stakeholders to reiterate its commitment to lowering GHG emissions and enlist their cooperation to improve the accuracy of field data collected from outgrowers. Special attention will be given to FFB traders who deal with outgrowers with assets near primary forests and peat land. A monitoring mechanism will be put in place to strengthen our resolve not to exploit sensitive areas for palm cultivation.

international sustainability and Carbon Certification (“isCC”)

ISCC is a multi-stakeholder initiative oriented towards the reduction of GHG, sustainable use of land, the protection of natural biospheres and social sustainability.

During the year in review, our Sindora, Tereh and Sedenak Palm Oil Mills were audited and successfully re-certified to the ISCC standard. Due to the poor intake of ISCC-certified CPO in 2014, the management has decided to hold back ISCC certification for the Palong Cocoa and the new Pasir Panjang Palm Oil Mills.

Manual manuring at Tereh Utara

Estate, Kluang.


141

A New Energy

PROFitIncreasingly, corporate citizens are held accountable not only to their shareholders, but also to stakeholders such as employees, consumers, suppliers, local communities and society at large. In a more enlightened age that we live in, companies that invest in eco-efficiency and engage themselves in social well-being generally have a competitive advantage. By earning the goodwill of consumers and communities in the marketplace, this will be reflected in the bottom line and ultimately long-term value for shareholders.


Roll call at Mungka Estate, Segamat.


142

RsPO Certification

Globally, there is growing concern that commodities should be produced without incurring harm to the environment or society. The Roundtable on Sustainable Palm Oil (“RSPO”) aims to transform markets to make sustainable palm oil the norm. Certification to RSPO is an assurance that production standards are sustainable. The RSPO has over 1,600 members globally that represent 40% of the palm oil industry, covering all sectors of the global commodity supply chain. In 2014, RSPO-certified growers accounted for 18% of global palm oil production. (Source : RSPO Website)

Kulim was among the first palm oil companies to sign up for RSPO certification and this was achieved for all its estates in January 2009. Almost all our operating units have undergone prerequisite re-certification audits in December 2013 and with some fine-tuning, the new certification was received in April 2014. As at the end of December 2014, only the Siang and Pasir Panjang Estates remain to be certified and this will be achieved in the next round of certification in 2016. This will include the new Pasir Panjang Palm Oil Mill which has been commissioned in March 2015.

In implementing the RSPO mechanism for traceability, Kulim’s Certified Sustainable Palm Oil (“CSPO”) can be purchased by customers via the Green Palm “Book and Claim”, the “Mass Balance” and the “Segregation” mechanisms. The Book and Claim mechanism is the most simplified method for a buyer to obtain CSPO without high administrative costs and complex logistics. In relation to “Segregation”, currently only CPO processed from Ladang Tereh Palm Oil Mill is sold under Segregation, whereas CPO from the remaining three (3) mills is sold under the Mass Balance System.

international Quality standards

Certifications to internationally recognised quality management systems are a driving force for sustainable development and value creation. An ISO certification is proof of a company meeting clients’ and regulatory requirements and this can be translated into increased market share and the bottom line. All of our mills have obtained certification to the internationally recognised MS ISO 9001:2008 Quality Management System.

Two (2) of our estates and one (1) of our mills have also been accredited to EMS ISO 14001:2004, an Environmental Management System to help improve environmental performance whilst making a positive impact on business results. ISO 14001 provides a framework of reference for our environmental policy, plans and actions.

Our Ulu Tiram Central Laboratory has been accredited to MS ISO IEC 17025, which is the main International ISO standard for testing and calibration laboratories. We are also in the process of obtaining Halal Certification from the Department of Islamic Development Malaysia (“JAKIM”), the country’s sole halal certification body, for all our mills.

Our quest for sustainability is manifested in many different ways. In our endeavours to provide decent working conditions, we have adopted the SA8000 standard. Modeled on the ISO standards, SA8000 is the first auditable social certification standard to measure social performance. Our commitment to the ‘Free, Prior and Informed Consent’ is manifested in all our dealings with communities, particularly over land rights issues.


143

A New Energy

MatERiality MatRiX

Hig

h s

take

ho

lde

r C

on

ce

rns

/ s

up

po

rt C

om

pan

y V

alu

es

business Risk / Opportunity

RSPO premium

Ethnic diversity

Air pollution

Practices in the marketplaces

Environment rehabilitation

Biodiversity

Waste management

Workers unions

Gender diversity

Agricultural productivity

Climate change

Foreign workers

Chemicals

Water

Safety and health

Employee development

Talent attraction

Smallholder

Sand mining

Community and workers’ lives

Good Agricultural Practices

stakeholder Engagement

Stakeholder engagement is essential to our Corporate Responsibility programmes and Sustainability Agendas and is key to achieving the 3Ps bottom line. We see the long-term success of Kulim closely allied to our interactions with our stakeholders. These include among others, our employees, business partners, investors, media, suppliers, community at large, customers, government agencies, Non-Governmental Organisations (“NGOs”) and unions.

Stakeholder relationships are pursued strategically and in sync with our business strategies. In the process of exchanging information, listening to and learning from our stakeholders with the goal of building understanding and trust on issues of mutual interest, stakeholder engagement will help drive long-term sustainability, shareholder value and be a source of competitive advantage. As we engage stakeholders in the consensus-building process, their understanding and cooperation can help improve our business performance by highlighting the potential risks or opportunities to be exploited and bring forward new and challenging values.

Issues are prioritised in a materiality matrix, which combines our findings from our engagements with stakeholders as well as our organisational priorities. The top three (3) material issues that are most significant to our stakeholders and to Kulim are as follows:

Since 2008, we have also developed metrics to help us measure our progress against each of them. This is reviewed and adjusted annually to reflect current realities and concerns and ensure their relevance as a useful tool to help us manage our Sustainability Agenda.

Use of chemicals, such as paraquat, herbicides and pesticides in our estates

Amount of water used at our estates and mills

Safety and Health standards at the workplace



144

Among our many stakeholders that we deal with on a regular basis, outgrowers and smallholders occupy a special place in our quest to establish a fully traceable sustainable supply chain. Obtaining RSPO Supply Chain Certification is all the more challenging because of the complexity in tracing individual outgrowers, given that about 39% of the FFB processed by our mills are sourced externally and supplied by smallholders. There are presently six (6) outgrowers and 17 traders registered to supply FFB to our mills. In an initial consulation with a sample group of suppliers, the majority were aware of RSPO but did not have detailed knowledge of the RSPO requirements. We have conducted series of awareness on RSPO implementation to our FFB suppliers. To date, we have only been successful in certifying two (2) outgrowers, one (1) in 2013 and another in 2014. Together they represent only 5.5% of external FFB supplied to our mills. In the face of the challenges involved, we have revised our target to certify all our external FFB only by 2019.

We are also proactively engaging with government officials, staff and workers’ union officials and relevant agencies to facilitate an effective exchange of information and build rapport. The frequent consultations and exchange of views have gone a long way in resolving differences and grievances.

aCHiEVinG MORE

Much has been achieved in the past year in our journey towards building a sustainable business. But in a rich and rapidly changing landscape, we realise the journey is never-ending and the performance bar will continually be raised. We need to do more. Kulim is constantly exploring new avenues to determine where we can play a more meaningful role. But we are also determined to go beyond platitudes. In our quest for sustainability, action speaks louder than words.

Quality Environment/5s Certification

In our quest for continual improvement in the work environment and working conditions, our parent company Johor Corporation, has mandated that all companies within the Group be certified to 5S, a Japanese-originated management tool for improving workplace efficiency. Abbreviated from the Japanese words, Seiri, Seiton, Seiso, Seiketsu and Shitsuke, it loosely translates into Sort, Systemise, Sweep, Standardise and Self-Discipline.

The 5S philosophy is based on the cleanliness and tidiness contributes towards a safe and conducive work environment. This in turn, would have a bearing on profitability and performance.

The main objectives of 5S certification are to :

Improve the corporate image of Kulim

Ensure the participation of all employees in the 5S programme to inculcate good work habits

Achieve an average score of 70% for all zones

Set a target of file and item retrieval within 30 seconds

With the help of a consultant, the journey towards certification began on 7 September 2013. Over the course of one (1) year, several audits were conducted before reaching the final hurdle – a pre-audit by the Malaysia Productivity Corporation on 22 December 2014.

On 8 January 2015, the Kulim Corporate Office earned its QE/5S Certification. Congratulations!


145

A New Energy

SECTION 6governancestatement

148 CorporateGovernanceReport

168 StatementonRiskManagement

andInternalControl

179 AuditCommitteeReport

184 AdditionalComplianceInformation

186 AdditionalDisclosure


146

Pa vit, ommos sequi quid que nist pelitaqui

omnimol orehent lam, num qui occuptatium

An engine operator carrying out

routine checking in the engine room

at Sindora Palm Oil Mill, Kluang.


147

A New Energy


147

A New Energy

The Group are committed to being responsible, accountable and fair in all business activities and to continue to build on the governance foundations that has been established and uphold the highest standards of ethics, transparency and good governance.

The Board of Directors plays a key role in the governance process through its review and approval of the Group’s direction and strategy, its monitoring of professional standards and business performance, its review of the adequacy and integrity of the Group’s internal control systems, including the identification of principal risks and ensuring the implementation of appropriate systems to manage those risks, and the acceptance of its underlying duty to ensure that the Company and the Group meets its responsibilities to its shareholders.

The Board of Directors of Kulim (Malaysia) Berhad subscribes to and supports the followings guidelines and regulatory requirements as a basis for practices and enhancing on corporate governance:

• The Malaysian Code on Corporate Governance 2012 (“MCCG 2012”)

• The Main Market Listing Requirements

The Board is pleased to report that it had continued to practise good corporate governance throughout the Group which involved in strengthening Board structure and composition, recognising the role of Directors as active and responsible fiduciaries. The Board believe that the Group has provided a narrative statement on corporate governance practices for shareholders benefit which conveying the key elements and the state of the Group’s Corporate Governance. Pursuant to Paragraph 15.25 of the Main Market Listing Requirements and except for the matters specifically identified, the Board, to the best of their knowledge, confirms that the Group has applied the Principles set out in the MCCG 2012 together with the Recommendations stated under each Principle.

Kulim’s commitment to strong governance and the continual enhancement of shareholders’ value is evidenced by the following recognitions and accreditations conferred on the Group in 2014 and up to the reporting date in 2015:

CORPORATE GOVERNANCE REPORT

sectIon 6 GOVERNANCE STATEMENT

IntroDUctIon

CORPORATE GOVERNANCE CONCERNiNG MuCh MORE ThAN A SET Of RuLES AND PRACTiCES GOVERNiNG ThE RuNNiNG Of ThE GROuP. GOOD CORPORATE GOVERNANCE PRACTiCES ShOuLD ExTEND BEyOND MERE COMPLiANCE AND ShOuLD ATTAiN ThE hiGhEST STANDARDS Of BuSiNESS EThiCS, ACCOuNTABiLiTy, iNTEGRiTy AND PROfESSiONALiSM ACROSS ALL ThE GROuP’S ACTiViTiES AND CONDuCTS. iN ADDiTiON, ThE BOARD CONSiDERS STRONG GOVERNANCE AS ONE Of ThE KEy STRATEGy DETERMiNANTS iN BuiLDiNG A COMPETiTiVE ORGANiSATiON, AChiEViNG iTS SET CORPORATE AND BuSiNESS OBjECTiVES AND uLTiMATELy iN REALiSiNG iNVESTORS’ CONfiDENCE AND ShAREhOLDER VALuE, whiLST TAKiNG iNTO ACCOuNT ThE iNTERESTS Of OThER STAKEhOLDERS.

Kulim was ranked 49th among the top 50 companies.

national annual corporate report (“nacra”) awards 2014

asia corporate excellent and sustainability (“aces”) awards 2014

acca malaysia sustainability reporting (“masra”) awards 2014

msWg malaysia-asean corporate governance awards 2014

th


148

Being amongst the earliest plantation companies in the world to be certified as a sustainable palm oil producer under RSPO serve as a testament to the Group’s commitment towards enhancing its governance standards. The Group took its sustainable commitment to the next level when it became the first within the plantation industry to publish sustainability reporting. This report emphasized the Group’s commitment towards subscribing to the RSPO Principle and Criteria. The Group produced its inaugural Sustainability Report 2007/2008 in October 2008, published separately for both its Plantation operations in Malaysia and Papua New Guinea. The Group continuously produced the biennial Sustainability Report as an effort in fulfilling its responsibilities towards promoting Sustainable Palm Oil practices. The publication year of the reports was listed as follows:

Year tHeme gUIDeLInes

1st Sustainability Report 2007/2008 Embracing The Challenge Ahead GRi G3.02nd Sustainability Report 2009 we C.A.R.E. – unlocking Sustainable Value GRi G3.03rd Sustainability Report 2010/2011 A New Road for Sustainable Growth GRi G3.14th Sustainability Report 2012/2013 Expanding horizon, Affirming Commitments GRi G4.0

The reports which are benchmarked against the international Global Reporting index (“GRi”) guidelines seek to present transparent overview, performance evaluation and the Group’s target towards Sustainable Palm Oil practices. it also forms the basis of additional communications and engagement with Kulim’s broader stakeholder groups. The Report is available upon request and can also be downloaded from the Company’s website.

Kulim’s has been certified with the international Sustainability and Carbon Certification (“iSCC”) in february 2013 and all the certified Palm Oil Mills will be audited every year for re-certification. The iSCC certification standard is for biomass and bioenergy and meets the Renewable Energy Directive of the European union. Report on iSCC is contained on page 141 of this integrated Annual Report.

The Group continuously maintains its commitment towards sustainability and transparency and was the first Malaysian Plantation Company to use RSPO GhG Beta Version 1a guidelines in the Carbon footprint Report 2012. The report was published in November 2013.

cLear roLes anD resPonsIBILItIes

BoarD oF DIrectors

size and composition of Board

Kulim (Malaysia) Berhad is led by an effective Board of Directors. The Board, as at the date of this Statement, consists of:

BOARDOF

DIRECTOR

3Executive Directors

4Independent

Non-Executive Director

4Non-Independent

Non-Executive Director

AhamadMohamad

JamaludinMdAli

AbdulRahmanSulaiman

Dato’KamaruzzamanAbuKassim

ZulkifliIbrahim

DatinPadukaSitiSa’diahShBakir

RozainiMohdSani

TanSriDato’SeriUtamaArshadAyub

Dr.RadzuanA.Rahman

DatukHaronSiraj

LeungKokKeong

ss

s

s


149

A New Energy

All four (4) independent Non-Executive Directors are independent as defined under the Listing Requirements.

tHe InDePenDent non-eXecUtIve DIrectors

TANSRIDATO’SERIUTAMA

ARSHADAYUB

DR.RADZUANA.RAHMAN DATUKHARONSIRAJ LEUNGKOKKEONG

Chairman of the Board shall be an independent Director

Recommendation 3.5 of the MCCG 2012 states that where the Chairman of the Board is not an independent Director, the Board must comprise of a majority of independent Directors.

Although Kulim is yet to be in line with Recommendation 3.5, the Board believes that the interests of shareholders would be better served by a Chairman and a team of Board members who act collectively in the best overall interests of shareholders.

The approach is not an uncommon practice among to global companies and leading multi-national corporations. The prime consideration is the strategic advantage that Kulim being part of jCorp’s larger group provides wider access and greater reach to a much larger pool of talent, skills and expertise. Collectively, the Directors bring to the Board a wide range of business, financial and technical experience for the effective management of the Kulim is diversified businesses.

Gender Diversity Policy

The Company does not presently have a formal gender diversity policy. The Board is of the opinion that it is important to recruit and retain the best available talent regardless of gender, to maximise the effectiveness of the Board; taking into account the balance of skills, experience, knowledge and independence, and based on the Group’s need and circumstances.

Board’s Assessment

The Board strives to achieve a balance of skills, experience, diversity and perspective among its Directors. The Nomination Committee conducts an annual review of the size and composition of the Board, taking into consideration the required mix of skills, competencies and experience relevant to the business of Kulim Group.

An assessment of the Board’s performance is carried out every year, including the independent Directors’ performance. for the year under review, the Board is satisfied with the existing number and composition of its members and is of the view that with the current mix of skills, knowledge, experience and strengths, the Board is able to discharge its duties and responsibilities effectively.




150

Principal Duties and responsibilities

Kulim recognised the value of good governance and for the reason that the Company is committed to promoting and sustaining a strong culture of corporate governance. with that, Kulim has embarked on a journey to continuously improve its corporate governance framework by gradually adopting the recommendations in the MCCG 2012.

The Board, representing the Shareholders, is empowered to ensure the proper management of the entity, including optimising long-term financial returns. The Board is responsible for ensuring that the Group is managed to achieve this result.

in addition to fulfilling its obligations for increased shareholder value, the Board has responsibility to the Group’s customers, employees and suppliers, and to the communities where it operates, all of whom are fundamental to a successful business. All of these responsibilities are founded upon the successful continuation of the business.

The duties, powers and functions of the Board are governed by the Articles of Association of the Company, the Companies Act 1965, regulatory guidelines and requirements that are in force.

The Board assumes the following responsibilities:

1. reviewing and adopting a strategic plan for the company

The Board will review and approve the annual budget

and strategic plan for the Group.

The Group’s strategic and business plan for 2015 was tabled, discussed and approved by the Board at its meeting on 19 November 2014.

Additionally, on an ongoing basis as need arises, the Board will assess whether projects, purchases and sale of equity as well as other strategic consideration being proposed at Board meetings during the year are in line with the objectives and broad outline of the adopted strategic plans.

2. overseeing the conduct of the company’s business to determine whether the business is being properly managed.

At Board meetings, all operational matters will be discussed and expert advice will be sought if necessary.

The performances of the various companies and operating units within the Group represent the major element of Board agenda. where and when available, data are compared against national trends and performance of similar companies.

The Group uses KPi system as the primary driver and anchor to its performance management system, of which is continually refined and enhanced to reflect the changing business circumstances.

3. Identifying principal risks and ensuring the implementation of appropriate internal control and mitigation measures

The Group has set up a Risk and issues Management Committee for this purpose to assist the Board.

The Risk and issues Management Committee (“RiMC”) met four (4) times in 2014 to review the Group’s risks. Details on Risk and issues Management Committee are on pages 168 to 172 of this integrated Annual Report.

4. succession planning

The Board’s responsibility in this aspect is being closely supported by the human Resource Department. More importantly, after several years of continuous efforts in emphasising and communicating the importance of succession planning, the subject has now become an ongoing agenda being reviewed at various high-level management and operational meetings of the Group.

Proceedings during the year 2014, the Group has identified and send its qualified potential successor to a Leadership Program and Business intelligence Awareness and Education Program organised by jCorp and 13 of our young Executives with high performance has been undergoing the programme.

5. overseeing the development and implementation of a shareholder’s communication policy for the company

Various strategies and approaches are employed by the Group so as to ensure that investors and shareholders are well-informed about the Group’s affairs and developments. information on our shareholders’ communication activities is on pages 166 to 167 of this integrated Annual Report.


151

A New Energy

6. reviewing the adequacy and the integrity of the management information and internal control system of the company

The Board’s function as regard to fulfilling the above responsibility is supported and reinforced through the various Committees established at both the Board and managing agent’s level. Aided by an independent function of the internal Audit Department, the active functioning of these Committees through their regular meetings and discussions would provide a strong check and balance and reasonable assurance on the adequacy of the Company’s internal controls. Details on the internal Audit functions are further discussed in the Statement on Risk Management and internal Control and Audit Committee Report in this integrated Annual Report.

Board committees

The Board Committees are essentially the cornerstone in governing the direction of the Group’s strategies and operations in line with its mission and vision in tandem with the regulatory guidelines and requirements. The Board Committees are supported by several committees to facilitate the operations of the Group. Each committee has written terms of reference defining their scope, powers and responsibilities. The committees are reviewed regularly and changes are approved by the Board. Apart from the Board Committees, there are internal/management committees established at Kulim Corporate Office level and within the Group’s significant/strategic subsidiaries which facilitate the function of Board of Kulim as well as their respective company. These internal/management committees and their primary functions are set out on pages 172 to 174 of this integrated Annual Report.


The list of Board committees includes:

audit committee The Audit Committee facilitates the Board of Directors to fulfill its corporate governance and overseeing responsibilities in relation to the Group’s financial reporting, internal control system, risk management system and internal and external audit functions. The role of the Audit Committee is to provide advice and recommendations to the Board within the scope of its terms of reference.

Pursuant to paragraph 15.15 of the Listing Requirements, the Audit Committee Report for the financial year which sets out the composition, terms of reference and a summary of activities of the Audit Committee, is contained on pages 179 to 183 of this integrated Annual Report.

option committee The Board Option Committee was formed following the establishment of Kulim (Malaysia) Berhad Employees’ Share Option Scheme (“ESOS”) on 31 December 2013. The ESOS was approved by the shareholders in the EGM held on 13 December 2013 and will expire on 30 December 2018.

The composition of the Board Option Committee is as follows:-

Dato’ Kamaruzzaman Abu Kassim – Chairman

Ahamad Mohamad

Dr. Radzuan A. Rahman

Zulkifli ibrahim

* notes : Rozan Mohd Sa’at resigned on 15 january 2015

: Zulkifli ibrahim was appointed as a new member on 23 february 2015



152

option committee Pursuant to the By-laws, the Committee shall administer the ESOS in such manner as it shall in (continued) its discretion deem fit and with such powers and duties as are conferred upon it by the Board

including the powers: a. Subject to the provisions of the ESOS, to construe and interpret the ESOS and option(s) granted

under it, to define the terms therein and to recommend to the Board to establish, amend and revoke rules and regulations relating to the ESOS and its administration. The Committee in the exercise of this power may correct and defect, supply any omission or reconcile any inconsistency in the ESOS or in any agreement providing for an option(s) in a manner and to the extend it shall deem necessary to expedite and make the ESOS fully effective; and

b. To determine all questions of policy and expediency that may arise in the administration of the ESOS and generally exercise such powers and perform such acts as are deemed necessary or expedient to promote the best interests of the Company.

nomination The Board of the Company established its own Nomination and Remuneration Committee and remuneration (“NRC”) in order to exercise the Best Practices of Corporate Governance by assisting and committee advising the Board in connection with its responsibilities and obligations towards the Company’s

shareholders, employees and other stakeholders.

The NRC is accountable to the Board of the Company and not to the executive management of the Company. Subject to the Corporate Governance Principles, the primary functions of the NRC are to:

in performing its duties, the NRC shall have direct access to the resources of the Company as it may reasonably require and shall seek to maintain effective working relationships with the management.

NRCPRIMARY

FUNCTION

Assess thenecessary and

desirablecompetencies

of Board members

Evaluate theBoard’s

performance

Makerecommendations

to the Board

ReviewBoard’s

successionplans

❍ Executive remuneration and

incentive policies;

❍ Remuneration packages of senior

management;

❍ The Company’s recruitment,

retention and termination policies

for senior management;

❍ Incentive Schemes

❍ Superannuation arrangements; and

❍ The remuneration framework

for Directors


153

A New Energy

reQUIrement

Pursuant to the Main Market Listing Requirements Paragraph 15.08A:

1. Comprises exclusively of Non-Executive Directors, a majority of whom must be independent.

2. Must have written terms of reference dealing with its authority and duties which must include the selection and assessment of Directors.

3. A statement about the activities of the Nomination Committee in the discharge of its duties for the financial year.

The Nomination Committee should develop, maintain and review the criteria to be used in the recruitment process and annual assessment of Directors in accordance to the Principle 2, Recommendation 2.2 of MCCG 2012.

reQUIrement

in accordance to the Principle 2, Recommendation 2.3 of MCCG 2012, the Board should establish formal and transparent remuneration policies and procedures to attract and retain Directors.

fair remuneration is critical to attract, retain and motivate Directors. The remuneration package should be aligned with the business strategy and long-term objectives of the Company. Remuneration of the Board should reflect the Board’s responsibilities, expertise and complexity of the Company’s activities.

PrImarY PUrPose

1. identify and recommend to the Board, candidates for board directorships of the Company;

2. Recommend to the Board, directors to fill the seats on Board Committees;

3. Evaluate the effectiveness of the Board and Board Committees (including its size and composition) and contributions of each individual Director; and

4. Ensure an appropriate framework and plan for Board succession for the Company.

term oF reFerence

PrImarY PUrPose

1. Provide assistance to the Board in determining the remuneration of Executive Directors and, if applicable, senior management and in particular the Chief Executive Officer where the person is not a member of the Boards of Directors. in fulfilling this responsibility, the Committee is to ensure that Executive Directors and applicable senior management of the Company:

• are fairly rewarded for their individual contributions to overall performance;

• that the compensation is reasonable in light of the Company’s objectives; and

• that the compensation is similar to other companies

2. Establish the Managing Director/Chief Executive Officer’s goals and objectives; and

3. Review the Managing Director/Chief Executive Officer’s performance against the goals and objectives set.


The compositions of the NRC of the Company are as follows:

nomInatIon commIttee

memBers

Dato’ Kamaruzzaman abu KassimChairman

tan sri Dato’ seri Utama arshad ayub

Datuk Haron siraj

remUneratIon commIttee

memBers


tan sri Dato’ seri Utama arshad ayub

Dr. radzuan a. rahman



154


memBersHIP

The Nomination Committee shall have at least three (3) members, all of whom shall be Non-Executive Directors with the majority being independent Directors. The quorum for the Committee shall be two (2) members, of which one (1) should be independent Director.

The Nomination Committee members and Chairperson shall be appointed by the Board. The appointment of a Committee member terminates when the member ceases to be a Director, or as determined by the Board.

in the event of equality of votes, the Chairperson of the Committee shall have a casting vote (except where two (2) Directors from the quorum). in the absence of the Chairperson of the Committee, the members present shall elect one (1) of their numbers to chair the meeting.

The Nomination Committee shall have no executive powers.


memBersHIP

The Remuneration Committee shall consist entirely of Non-Executive Directors. it shall have at least three (3) members and the quorum for the Committee shall be two (2) members. Remuneration Committee members and the Chairperson shall be appointed by the Board based on the recommendations of the Nomination Committee. The appointment of a committee member terminates when the member ceases to be a Director, or as determined by the Board.

in the event of equality of votes, the Chairperson of the Committee shall have a casting vote (except where two (2) Directors from the quorum). in the absence of the Chairperson of the Committee, the members present shall elect one (1) of their number to chair the meeting.

The Committee members shall:

• have a good knowledge of the Company and its Executive Directors, and a full understanding of shareholders’ concern; and

• have a good understanding, enhanced as necessary by appropriate training or access to professional advice, on/off areas of remuneration.

meetIngs

The Committee shall meet at least once a year. Additional meetings shall be scheduled as considered necessary by the Committee or Chairperson.

The Committee shall have access to such information and advice, both from within the Group and externally, as it deems necessary or appropriate in accordance with the procedures determined by the Board and at the cost of the Company. The Committee may request other Directors, members of management, counsels, and consultants as applicable to participate in Committee meetings, as necessary, to carry out the Committee’s responsibilities.

The Secretary of the Committee shall be appointed by the Committee from time to time. The Chairperson may also request management to participate in this process. The agenda for each meeting including supporting information shall be circulated at least seven (7) days before each meeting to the Committee members and all those who are required to attend the meeting.

The minutes of the Committee meeting shall be available to all Board members.

meetIngs

The Committee shall meet at least once a year. Additional meetings shall be scheduled as considered necessary by the Committee or Chairperson.

The Committee may consult the Chairperson of the Board regarding proposals relating to the remuneration of Executive Directors. The Committee may consult other Non-Executive Directors in its evaluation of the Managing Director/Chief Executive Officer. The Committee may request other Directors and key executives to participate in Committee meetings, as necessary, to carry out the Committee’s responsibilities.

The Committee shall have access to such information and advice, both from within the Group and externally, as it deems necessary or appropriate in accordance with the procedures determined by the Board and at the cost of the Company. The Committee is authorised by the Board to obtain external legal or other professional advice, as well as information about remuneration practices elsewhere. The Committee may, if it thinks fit, secure the attendance of external advisers with relevant experience and expertise, and shall have the discretion to decide who else other than its own members, shall attend its meetings.


155

A New Energy


scoPe oF actIvItIes

1. To determine the criteria for Board membership, including qualities, experience, skills, education and other factors that will best qualify a nominee to serve on the Board.

2. To review annually and recommend to the Board with regards to the structure, size, balance and composition of the Board and Committees including the required mix of skills and experiences, core competencies which Non-Executive Directors should bring to the Board and other qualities to function effectively and efficiently.

3. To consider, evaluate and propose to the Board any new board appointments, whether of executive or non-executive position. in making a recommendation to the Board on the candidate for directorship, the Committee shall have regard to:

• Size, composition, mix of skills, independence and diversity (including gender diversity) required to meet the needs of the Board;

scoPe oF actIvItIes

1. To establish and recommend the remuneration structure and policy for Executive Directors and key executives, if applicable, and to review for changes to the policy, as necessary.

2. To ensure that a strong link is maintained between the level of remuneration and individual performance against agreed targets, the performance-related elements of remuneration setting forming a significant proportion of the total remuneration package of Executive Directors.

3. To review and recommend the entire individual remuneration packages for each of the Executive Directors and as appropriate, other senior executives, including the terms of employment or contract of employment/service; any benefit, pension or incentive scheme entitlement; any other bonuses, fees and expenses; and any compensation payable on the termination of the service contract by the Company.


meetIngs (continued)

The Committee, through its Chairperson, shall report to the Board at the next Board of Directors’ meeting after each Committee meeting. when presenting any recommendation to the Board, the Committee will provide such background and supporting information as may be necessary for the Board to make an informed decision. The Committee shall provide such information to the Board as necessary to assist the Board in making a disclosure in the integrated Annual Report in accordance to the Principle 2 of MCCG 2012.

The Chairperson of the Committee shall be available to answer questions about the Committee’s work at the AGM of the Company.


meetIngs (continued)

The Secretary of the Committee shall be appointed by the Committee from time to time. The Chairperson may also ask management to participate in this process.

The agenda for each meeting shall be circulated at least seven (7) days before each meeting to the Committee members and all those who are required to attend the meeting. written materials including information requested by the Committee from management or external consultants shall be received together with the agenda for the meetings.

The minutes of the Committee meeting shall be available to all Board members.

The Committee, through its Chairperson, shall report to the Board at the next Board of Directors’ meeting after each Committee meeting. when presenting any recommendation to the Board, the Committee will provide such background and supporting information as may be necessary for the Board to make an informed decision. The Committee shall provide such information to the Board as necessary to assist the Board in making a disclosure in the integrated Annual Report in accordance with the Principle 2 of MCCG 2012. The Chairperson of the Committee shall be available to answer questions about the Committee’s work at the AGM of the Company.



156


scoPe oF actIvItIes (continued)

• The Board nomination and election process of the Directors and criteria used by the Nomination Committee in the selection process; and

• The assessment undertaken by the Nomination Committee in respect of Board, committees and individual Directors together with the criteria used for such assessment.

4. To propose to the Board the responsibilities of Non-Executive Directors, including membership and Chairperson of Board Committees.

5. To evaluate and recommend the appointment of senior executive positions, including that of the Managing Director or Chief Executive and their duties and the continuation (or not) of their service.

6. To establish and implement process for assessing the effectiveness of the Board as a whole, the Committee of the Board and for assessing the contribution of each Director.

7. To evaluate on an annual basis:

• the effectiveness of each Director’s ability to contribute to the effectiveness the Board and the relevant Board Committees and to provide the necessary feedback to the Directors in respect of their performances;

• the effectiveness of the Committees of the Board; and

• the effectiveness of the Board as a whole. 8. To recommend to the Board:

• whether Directors who are retiring by rotation should be put forward for re-election; and

• termination of membership of individual Directors in accordance with policy, for cause or other appropriate reasons

9. To establish appropriate plans for succession at Board level, and if appropriate, at senior management level.

10. To provide for adequate training and orientation of new Directors with respect to the business, structure and management of the Group as well as the expectations of the Board with regards to their contribution to the Board and Company.

11. To consider other matters as referred to the Committee by the Board.


scoPe oF actIvItIes (continued)

4. To review with the Managing Director/Chief Executive Director, his/her goals and objectives and to assess his/her performance against these objectives as well as contribution to the corporate strategy.

5. To review the performance standards for key executives to be used in implementing the Group’s compensation programmes where appropriate.

6. To consider and approve compensation commitments/severance payments for Executive Directors and key executives, where appropriate, in the event of early termination of the employment/service contract.

7. To consider other matters as referred to the Committee by the Board.


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A New Energy


FormaLIseD etHIcaL stanDarDs tHroUgH coDe oF etHIcs

in general, the code of ethics defines the standards of conduct that are assisting the employees to make the right decision at the highest standards of ethic, integrity and governance as per stated on page 177.

The Board has set up guidelines which are designed to legalise acceptable behaviours for the committee members to increased confidence in the Group by showing that the Board Members are committed to following basic ethical guidelines in the course of doing its duty that cover:

• Corporate Governance

• Relationship with Shareholders, Employees, Creditors and Customers

• Social Responsibilities and the Environment

The Directors adhere to the Code of Ethics which is contained in the Board Policy Manual consists of the important aspects of which are as follows:

• Members must represent non-conflicted loyalty to the interests of the Group;

• Members must avoid conflict of interest with respect to their fiduciary responsibility;

• Members may not attempt to exercise individual authority over the Group except as explicitly set forth in Board Policy; and

• Members will respect the confidentiality appropriate to issues of a sensitive nature.

in the context of this Code, a company Director means any person occupying the position of Director of a corporation by whatever name called, and includes a person in accordance with whose directions and instructions the Directors of a corporation are accustomed to act, and an alternate or substitute Director. A Director also includes both Executive and Non-Executive Director as well as Executive and Non-Executive Chairman.

The Group is strongly committed to an environment of sound governance, sound internal controls and a culture that will safeguard shareholders’ investments, stakeholders’ interests and the Group’s assets. The safeguarding against loss by fraud or negligence and establishing an environment which effectively minimises fraud risk is a key responsibility of management. All employees have an obligation to support the efforts.


comPLIance

requirement comply

Term of Reference 3 3

Number of members At least 3 3

Quorum Majority 3 independent Directors

Meeting frequency At least once 3 a year


comPLIance

requirement comply

Term of Reference 3 3

Number of members At least 3 3

Quorum Non-Executive 3 Directors

Meeting frequency At least once 3 a year



158

The Group also upholds the principles of integrity, respect and accountability which includes the maintenance of a workplace that is free from fraud. This involves embedding fraud control into the organisation’s decision making culture and practices through the following policies and exercises:

Whistleblowing in 2013, the whistleblowing Policy has been introduced by the Group to support transparent Policy ethical conduct. The policy is intended to provide guidance to employees on how to report and

deal with fraud and misconduct.

The detail of whistleblowing Policy is contained on pages 176 to 177.

ethic Declaration The Group has also long established a formal avenue for all employees to report directly to the Form Managing Director of any misconduct or unethical behaviour conducted by any employees of

the Group through a declaration in the Ethic Declaration form.

This emphasises active participation and dialogues on a structured basis involving key people at all levels, as well as ensuring accessibility to information and transparency on all executive action.

grievance Policy Kulim has established a Grievance Policy and Procedure as well as women Onwards to and Procedure ensure that throughout the Group, there is a transparent process for ensuring stakeholders’

grievances and complaints are dealt with fairly, consistently and promptly. The corporate climate is also continuously nourished by value-centred programmes for team-building and active subscription to core values.

corporate Integrity The Group has made a commitment to uphold the Anti-Corruption Principles through the Pledge Corporate integrity Pledge that has been signed in january 2014. The Group will work towards

creating a business environment that is free from corruption, protect the interests of the Company and the Board of Directors and will uphold the Anti-Corruption Principles in the conduct of its business.

no gift Policy As the continuous effort on the Group’s commitment to uphold the Anti-Corruption Principles through the Corporate integrity Pledge, the No Gift Policy was established in july 2014 with the primary objective to avoid conflict of interest and to indicate the Group’s commitment to accord equal treatment to all individuals and organisations in their dealings with the Group .

The detail of No Gift Policy is contained on page 177.

Board meetings and supply of Information

All Board meetings for the ensuing year are scheduled by December in the year before so as to allow Directors to plan ahead. Board meetings are held at least four (4) times a year. Apart from the regular scheduled meetings, additional meetings are convened as and when necessary to deliberate and approve ad-hoc, urgent and important issues.

The Chairman, assisted by the Company Secretary takes responsibility in ensuring that the Directors receive all notices, agendas and minutes of the previous meetings and is supplied with pertinent information well in advance of each meeting. The Managing Director in consultation with the Chairman would decide on the agenda and accordingly structure and prioritise the respective matters based on their relevance and importance so as to enable quality

and in-depth discussion of the matters. All decisions and conclusions of the Board meetings are to be duly recorded and minutes are kept by the Company Secretary.

The Board recognises the importance of providing timely, relevant and up-to-date information in ensuring an effective decision making process by the Board. in this regard, the Board is provided with not just quantitative information but also those of qualitative nature that is pertinent and of a quality necessary to allow the Board to effectively deal with matters that are tabled in the meeting. All Directors have unrestricted access to all information within the Company in furtherance of their duties. in addition, all Directors have access to the advice of the Company Secretary and where necessary, in furtherance of their duties, take independent professional advice at the Group’s expense.


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A New Energy


Board discussions should be open and constructive, recognising that genuinely held differences of opinion could, in circumstances, bring greater clarity and lead to better decisions. The Chairman will, nevertheless, seek a consensus in the Board but may, where considered necessary, call for a vote. All discussions and their record will remain confidential unless there is a specific direction from the Board to the contrary or disclosure is required by law. Subject to legal or regulatory requirements, the Board will decide the manner and timing of the publication of its decisions.

in addition to matters relating to the responsibilities discussed above, other specific topics tabled for Board’s deliberation and decisions include:

• updates of relevant factors within the Group external business environment such as economic development and policies, customers and markets and competitors;

• current updates of key financial and operational results and performances of the Group, Company and its subsidiaries;

• strategic and corporate initiatives such as approval of corporate plans and budgets, acquisitions and disposal of material assets and major investments;

• changes to management and control structure of the Group, including key policies, procedures and authority limits;

• approval of any interim and special dividend as well as recommendation of any final dividend; and

• approval of all circulars, resolutions and corresponding documentation sent to shareholders

in conjunction with the scheduled meetings or on separate occasions, the Directors also visit locations of operating units, sites of new projects and other operations sites to allow them to have better assessments of the operational progress, status of developments and any important issues to be addressed on new proposals. in between meetings, the Managing Director meets regularly with the Chairman and other Board members to keep them abreast of current development. Circular Resolutions are used for determination of matters arising in between meetings. This is in accordance to Principle 1 of the MCCG 2012.

The Directors, in the event that they have interest in proposals considered by the Board, will be required to make declaration to that effect. The interested Directors will thereupon abstain from deliberations and decisions of the Board on the said proposals.

The Board met eight (8) times during the financial year 2014 and all Directors have complied with the minimum 50% attendance as required by Para 15.05 of the Listing Requirements. The members of the Board of Directors and their attendances at Board meetings in 2014 are set out below:

277th special 278th special 279th special 280th special BoD BoD BoD BoD BoD BoD BoD BoD 23.2.2014 7.4.2014 20.5.2014 24.6.2014 19.8.2014 9.10.2014 19.11.2014 3.12.2014 %

Dato’ Kamaruzzaman Abu Kassim / / / / / / / / 100

Ahamad Mohamad / / / / / / / / 100

Tan Sri Dato’ Seri utama Arshad Ayub / x / / / / / x 75

Datin Paduka Siti Sa’diah Sh Bakir / x / / / / / / 88

Zulkifli ibrahim / / / / / / / / 100

jamaludin Md Ali / / / / / / / x 88

wong Seng Lee / / / / / / / / 100

Datuk haron Siraj / / / / / / / / 100

Dr. Radzuan A. Rahman / / / / / / x / 88

Rozan Mohd Sa’at / / / / / / / / 100

Leung Kok Keong / / / / / / / / 100

Abdul Rahman Sulaiman / / / / / / / / 100

notes:-• wong Seng Lee: re-designated as Non-independent Non-Executive Director on 1.2.2014 and resigned from the Board on 15.1.2015.• Rozan Mohd Sa’at: resigned from the Board as Non-independent Non-Executive Director on 15.1.2015.• Rozaini Mohd Sani: appointed to the Board as Non-independent Non-Executive Director on 15.1.2015.



160

STRENGTHEN COMPOSITION AND REINFORCE INDEPENDENCE

APPOINTMENT AND RE-ELECTION OF DIRECTORS

The number and composition of Board membership are reviewed on a regular basis appropriate to the prevailing size, nature and complexity of the Group’s business operations so as to ensure the relevance and effectiveness of the Board in accordance to Principle 2 of MCCG 2012 where the Board should have transparent policies and procedures that will assist in the selection of the Board members. In the event of a need to appoint new member(s) of the Board, nominations will be tabled and deliberated in the Company’s Nomination Committee (“NC”) meeting to assess the qualified candidate with the required core competency to effectively discharge his/her role as a Director of the Company. The NC will then recommend their findings for consideration and approval by the Board. The power to appoint the Director(s) nominated is vested wholly on the Board.

The appointment process involves the following stages:-

The Board is responsible to the shareholders. All Directors appointed during the financial year resign at the Annual General Meeting (“AGM”) of the Company in the period of appointment and are eligible for re-election. In compliance with the Paragraph 7.26(2) of the Listing Requirements, all Directors shall retire once at least in every three (3) years.

In accordance with Article 97 of the Company’s Article of Association, Datin Paduka Siti Sa’diah Sh Bakir and Leung Kok Keong retire by rotation at the forthcoming AGM and being eligible, offer themselves for re-election.

In accordance with Article 103 of the Company’s Article of Association, Rozaini Mohd Sani, who was appointed during the year, retire at the forthcoming AGM and being eligible, offer himself for re-election.

Tan Sri Dato’ Seri Utama Arshad Ayub, Dr. Radzuan A. Rahman and Datuk Haron Siraj being above 70 years of age, retire in accordance with Section 129(2) of the Companies Act 1965 and have offered themselves for re-appointment in accordance with Section 129(2) of the said Act, to hold office until the conclusion of the next AGM of the Company.

In addition, in line with Recommendation 3.2 and 3.3 of the MCCG 2012, the NC has conducted an assessment of independence under the nomination and election process of Independent Non-Executive Directors, particularly for Tan Sri Dato’ Seri Utama Arshad Ayub and Datuk Haron Siraj, whose tenure on the Board exceed a cumulative term of more than nine (9) years since their appointment to the Board on 31 January 1987 and 9 January 2006 respectively. The NC is satisfied with the judgement, skills and contributions both Directors have provided to the Board.

In this regard, the Board supports and recommends the re-appointment of Tan Sri Dato’ Seri Utama Arshad Ayub and Datuk Haron Siraj as Independent Non-Executive Directors, subject to the shareholders’ approval at the Company’s forthcoming AGM, due to their wide knowledge and experience in the industry, as well as most pertinently, professionalism and objectivity.

Evaluation of the Board Composition

Screening forPotential Directors

Directors Assessment Deliberation by NC Board Approval


161

A New Energy


eFFectIveness oF BoarD

The effectiveness of the Board is vital to the success of the Group that symbolises good governance. for that reason, a large portion of the Board Policy Manual is devoted to explaining and outlining the format and procedure for evaluating Board Members performance. The availability of the structured format for Board Members evaluation assists the members in discharging their duties effectively and efficiently.

The Group believes that the Board has carried out its duties and responsibilities in ensuring the Group is properly managed and constantly improved so as to protect and enhance shareholder value, and to meet the Group’s obligations to all parties with which the Group interacts – its stakeholders.

The Board views that the number and composition of the current Board members is sufficient and well-balanced for the Company to carry out its duties effectively, whilst providing assurance that no individual or small group of individuals can dominate the Board’s decision making.

A statutory declaration is made to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) by all independent Non-Executive Directors in their individual capacity to the effect that they are independent in compliance with the Listing Requirements.

The Position Description for the Chairman and for the Managing Director is prescribed in the Board Policy Manual. At the end of each financial year the Board will set Key Performance indicators (“KPi”) that should be achieved by the management for the next financial year.

There is clear segregation of duties between the Chairman and the Managing Director. The Board is led by the Chairman, Dato’ Kamaruzzaman Abu Kassim whose principal responsibility is to ensure the effective running of the Board and independent of the management. The current Chairman has never held the post of Managing Director of the Company.

The post of Managing Director or the Chief Executive Officer of the Group is held by Ahamad Mohamad whose primary task is to report, communicate and recommend key strategic and operational matters and proposals to the Board for decision making purposes as well as to implement policies and decisions approved by the Board. The Non-independent Non-Executive Directors are from various business and professional backgrounds and bring with them a wealth of experience that is brought to bear favourably in board decisions and policy formulations. Together, the Directors bring a wide range of business and financial experience relevant to the direction of the expanding Group.

The independence of each independent Non-Executive Directors is safeguarded as none is involved in the day-to-day management of the Group and they do not engage in any business dealings or other relationships with the Group. The presence of four (4) independent Non-Executive Directors, representing more than a third of the total members with necessary calibre, ensures that the Board is well-balanced and could carry sufficient weight on Board’s decisions. Although all the Directors have equal responsibilities for the Group’s operations, the role of these independent Non-Executive Directors is particularly important in ensuring that all business strategies proposed by the executive management are fully and independently discussed and assessed, and take into account the long term interest, not only of shareholders, but also employees, customers, suppliers, and the many communities in which the Group operates. The Board is satisfied that the size and composition of the independent Non-Executive Directors has fulfilled its requirement adequately.

The profiles of the Directors’ biographies are set out in pages 68 to 73 of the integrated Annual Report.

Pursuant to Recommendation 1.7 of MCCG 2012 stated that the Board should formalise, periodically review and make public its Board charter. The Company has in place a Board Policy Manual or Board Charter to assist the Board in discharging its duties effectively. The revised Board Charter has been approved by the Board of Directors of Kulim (Malaysia) Berhad on 24 june 2014. The Board Charter will definitely adopt any changes to the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”), the Main Market Listing Requirements, the Companies Act 1965 or any other relevant rules and regulations from time to time for Best Practices.



162

Among others, the Board Policy Manual covers the following important scopes:

The independent Non-Executive Directors provide broader views, and an independent and balanced assessment of proposals. The Board has appointed Tan Sri Dato’ Seri utama Arshad Ayub as the Senior independent Non-Executive Director of the Board to whom concerns of the Group may be conveyed.

Over and above the issue of independence, each Director has a continuing responsibility to determine whether he has a potential or actual conflict of interest in relation to any material transaction or matter which comes before the Board. Such a situation may arise from external associations, interests or personal relationships. Each Director is required to disclose any interest in a transaction. if so, the Director abstains from the deliberations and decisions of the Board on the subject.

DIrectors’ remUneratIon

The Board believes that the levels of remuneration offered by the Group are sufficient to attract Directors of calibre and with sufficient experience and talents to contribute to performance of the Group. Comparison with similar position within the industry and other major public listed companies is made in order to arrive at a fair rate of remuneration. The Board will determine the level of remuneration paid to Members, taking into consideration the recommendations of the Board Remuneration Committee.

The details of the remuneration of each Director paid by the Company during the year are as follows: Fees / allowances / esos / other Benefit Basic salary emoluments Bonuses in-kind total rm’000 rm’000 rm’000 rm’000 rm’000

executive Directors Ahamad Mohamad 990 540 454 182 2,166Abdul Rahman Sulaiman 318 234 77 34 663 jamaludin Md Ali 600 380 250 74 1,304

non-Independent non-executive Directors Dato’ Kamaruzzaman Abu Kassim - 158 - 69 227 Datin Paduka Siti Sa’dah Sh Bakir - 78 - - 78 wong Seng Lee 250 158 126 7 541 Zulkifli ibrahim - 61 - - 61 Rozan Mohd Sa’at - 62 - - 62

Independent non-executive Directors Tan Sri Dato’ Seri utama Arshad Ayub - 69 - - 69 Datuk haron Siraj - 62 - - 62 Dr. Radzuan A. Rahman - 68 - - 68 Leung Kok Keong - 68 - - 68

2,158 1,938 907 366 5,369

notes:Total Directors’ Remuneration of RM5,369,000 differs from those reported under Audited financial Statement of RM6,596,000 mainly due to recognition of cost of ESOS pursuant to fRS2: Share-based Payment, which was determined by the fair value at the date when the grant is made using an appropriate valuation model.

BOARDPOLICY

MANUAL

BoardOrganisation

GroupOrganisation

ManagingDirector

EvaluationGuidelines and

Procedure

DirectorEvalution

Guideline andProcedure

BoardProcedures

BoardResponsibilities


163

A New Energy


On 31 December 2013, the Company established its second Employees’ Share Option Scheme (“ESOS”) at Option Price of RM3.05, applicable throughout the 5-year ESOS tenure ending 30 December 2018. The Option Price was later revised to RM2.69 per ESOS Option effective 13 March 2015 pursuant to the distribution of Special Dividend amounted to approximately RM500 million, paid on 23 March 2015. The details of respective Director’s entitlement to the ESOS are as follows:

esos entitlement exercised in 2014 Balance

Unit

Dato’ Kamaruzzaman Abu Kassim 1,000,000 200,000 800,000

Ahamad Mohamad 500,000 - 500,000

jamaludin Md Ali 250,000 50,000 200,000

Abdul Rahman Sulaiman 250,000 50,000 200,000

wong Seng Lee 250,000 50,000 200,000

Tan Sri Dato’ Seri utama Arshad Ayub 150,000 - 150,000

Datin Paduka Siti Sa’diah Sh Bakir 150,000 100,000 50,000

Zulkifli ibrahim 150,000 - 150,000

Datuk haron Siraj 150,000 - 150,000

Dr. Radzuan A. Rahman 150,000 - 150,000

Rozan Mohd Sa’at 150,000 - 150,000

Leung Kok Keong 150,000 - 150,000

3,300,000 450,000 2,850,000

BoarD PerFormance evaLUatIon

The purpose of the Board Evaluation is to assess the processes by which the Board fulfils its responsibilities, including those provided by the Malaysian Code on Corporate Governance and outlined by the Board Policy Manual. Regardless of whether all or some of these responsibilities have been delegated to board committees, the responsibilities still form part of the Board Evaluation as the Board is ultimately accountable.

The Board, through its Nomination Committee, undertakes a rigorous evaluation each year in order to assess how well the Board, its committees, the Directors and the Chairman are performing including assessing the independence of independent Non-Executive Directors which taking into account the individual Director’s capability to exercise independent judgement at all times. The evaluation covers the Board’s composition, skills mix, experience, communication, roles and responsibilities, effectiveness as well as conduct. All Directors completed a questionnaire regarding the Board and committees’ processes, their effectiveness and where improvements may be considered. The process also includes a peer review in which Directors assess their fellow Directors’ performance against set criteria, including the skills they bring to the Group and the contribution they make. The Company Secretary reported the outcome of the evaluation exercise to the Nomination Committee and then to the Board for review.

following the performance evaluation process for 2014, which was conducted in february 2015, the Directors have concluded that the Board and its committees operate effectively. Additionally, the Chairman has concluded that each Director continues to make an effective contribution to the work of the Board, is well prepared and informed concerning items to be considered by the Board, has a good understanding of the Group’s business and their commitment to the role remains strong.

Foster commItment

All new Directors who are appointed from among the Group’s senior executives must attend an internally-administered Directors’ course and pass the examination set prior to being eligible for appointment to the Board. All new Directors will be given comprehensive briefing of the Group’s history, operations and financial control systems in order to provide them with first-hand knowledge of the Group’s operations. in the light of increasing complexities in global markets as well as within the industry, in financial reporting and in shareholders’ expectations, training is an ongoing process in an effort to help Directors to stay abreast of relevant new developments.



164

DIrectors’ traInIng

The Company complies with the requirements set out in the amendments to the Listing Requirements that it regularly assesses the training needs of its Directors to ensure that they are equipped with the requisite knowledge and competencies to make effective contribution to the Board’s functioning. Directors have devoted sufficient time to carry out the responsibilities, regularly update their knowledge and enhance their skills as promoted in Principle 4 of the MCCG 2012. All Directors have successfully completed the Mandatory Accreditation Programme (“MAP”) prescribed by Bursa Malaysia. The Continuous Education Programme (“CEP”) was repealed by Bursa Malaysia with effect from 1 january 2005 and Directors who were required to fulfill this programme complied with the deadline before due date. Nevertheless, Directors are encouraged to continue attending various training programmes that are relevant to the discharge of their responsibilities.

Training programmes, seminars and briefings attended by the Directors during the year were, among others:

The Board is gratified with the time commitment given by all the Directors towards fulfilling their roles and responsibilities. This is evidenced by the attendance record of the Board meetings and number of directorship in Public Listed Companies (“PLC”) held by the individual Directors which are at the maximum of five (5) PLCs. This will enable Directors to sustain their active participation in Board discussion and have a sufficient time to execute their responsibilities.

UPHoLD IntegrItY In FInancIaL rePortIng

FInancIaL rePortIng

in presenting the annual financial statement and quarterly announcements to shareholders, the Directors aim to present a balanced and candid assessment of the Group’s position and prospects. This is in accordance to Principle 5 of the MCCG 2012 and also applies to other price-sensitive public reports and reports to regulators. Timely release of announcements reflects the Board’s commitment to provide up-to-date and transparent information on the Group’s performance.

in the preparation of the financial statements, the Directors will consider compliance with all applicable financial Reporting Standards, provisions of the Companies Act 1965 and relevant provision of laws and regulations in Malaysia and the respective countries in which the subsidiaries operate. The Board is assisted by the Audit Committee who reviews both annual financial statements and the quarterly announcements to ensure reports reflect a true and fair view of the state of affairs of the Group and Company.

Pursuant to paragraph 15.15 of the Listing Requirements, the Audit Committee Report for the financial year which sets out the composition, terms of reference and a summary of activities of the Audit Committee, is contained on pages 179 to 183 of this integrated Annual Report.

statement oF DIrectors’ resPonsIBILItY In PreParIng aUDIteD FInancIaL statements

The Directors are required by Companies Act 1965 to prepare financial statements for each financial year which have been made out in accordance with the applicable approved accounting standards and 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 the results and cash flows of the Group and Company for the financial year.

in preparing the financial statements, the Directors have:

• adopted suitable accounting policies and applied them consistently;

• made judgment and estimates that are reasonable and prudent;

• ensured that all applicable financial Reporting Standards in Malaysia have been followed; and

• prepared financial statements on the going concern basis as the Directors have a reasonable expectation, having made enquiries that the Group and Company have resources to continue in operational existence for the foreseeable future.

Mukmin Professional johor Corporation

johor Corporation’s Directors Enhancement Programme 2014: Mandatory Accreditation Programme for Directors of Public Listed Company

innovating Malaysia Conference 2014: Return to innovation

6th Annual Corporate Governance Summit

Audit Committee Conference 2014: Stepping up for Better Governance

Leadership Development workshop by Mr. Michael wagner: Spurring innovation – Translating Transformative ideas into Performance Gains

johor Corporation’s Empower the Digital Economy Knowledge Transfer Seminar


165

A New Energy


The Directors have responsibility for ensuring that the Group and the Company keeps 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 Companies Act 1965.

The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group to prevent and detect fraud and other irregularities.

reLatIonsHIP WItH tHe eXternaL aUDItors

The Board through the Audit Committee has maintained a formal procedure of carrying out an independent review of all quarterly reports, annual audited financial statements, External Auditor’s audit plan, report, internal control issues and procedures. The Committee meets with the External Auditors without the presence of the Executive Board and Senior Management at least once a year. During the year, two (2) meetings have been conducted without the presence of the management Representatives from the External Auditors are also invited to attend every Annual General Meeting.

The role of the Audit Committee in relation to the External Auditors is described on page 182.

recognIse anD manage rIsKs

The Group recognised that is obliged to systematically manage and regularly review its risk profile at a strategic, financial and operational level. The Group has done this by developing and adopting risk management framework that determines the process and identifies tools for realising its objectives. Not only does it to minimise its risk but also maximises it opportunities. it enhances the Company’s capability to respond timely to the changing environment and it ability to make better decision. This is in accordance to Principle 6 of the MCCG 2012.

The Board also has established an internal audit function which is led by the Certified internal Auditor (“CiA”) who reports directly to the Board of Audit Committee and responsible for providing independent assurance to the Board on the effectiveness of internal control.

The Group’s Statement on Risk Management and internal Control are set out on pages 168 to 178.

ensUre tImeLY anD HIgH QUaLItY DIscLosUre; anD strengtHen reLatIonsHIP BetWeen comPanY anD sHareHoLDers

corPorate DIscLosUre

communication and Investor relations

in line with the Group’s commitment as stated in Principle 7 of the MCCG 2012, the Group continually ensures that it maintains a high level of disclosure and communication with its shareholders and stakeholders through various practicable and legitimate channels. The Group is duty-bound to keep the shareholders and investors informed of any major developments and changes affecting the Group.

Communications are primarily effected through announcements via Bursa Securities Link, meetings, briefings, press releases and conference calls. in addition, the Group has established its official website at www.kulim.com.my which investors and shareholders can access for information. The website has been revamped in 2015 in conjunction with the issuance of Kulim’s integrated Annual Report 2014. it will be continuously improved to include more relevant information to investors and to better facilitate its navigation and reference from the integrated Annual Report.

Meetings and briefings are held regularly with shareholders, investors, research analysts, bankers and the press to explain and expand on Group’s latest performance results, current developments and future directions. During meetings, participants are encouraged to pose any question to the Board members or the Senior Management team of the Group to seek any clarification or explanation on any issues rose. whilst these forms of communications are important, the Group takes full cognisance of its responsibilities to not disclose any price-sensitive information.

Investor relations activities 2014 no. of times

iR meetings 3Conference calls 2Company visits 2

Senior Management Personnel in investor Relations activities are:

• jamaludin Md Ali, Executive Director• Abdul Rahman Sulaiman, Executive Director • Azli Mohamed, Vice President – finance• Abdul Shukor Abdullah, General Manager, Corporate

Affairs



166

Other than that, the Board believes that the Company’s Annual Report also serves as an important communication tool to the shareholders, investors and all stakeholders in general. As such, each year, the Company strives to produce a value-added and transparent reporting to its readers. The Company has adopted some of the key principles and concepts of the international integrated Reporting Council’s (“iiRC”) integrated Reporting framework (“iRf”) in this 2014 Report – Kulim’s first integrated Annual Report. integrated Reporting (“iR”) is a journey and we are still at an embryonic stage. in laying the foundations, our goal is to have a report that meets the principles of the iiRC framework over the next three (3) years.

The Company acknowledges that stakeholder’s engagement is crucial to sustainability and organisational success. Stakeholder engagement enhances accountability by allowing an organisation to identify, understand and deliver the sustainable returns. Most importantly, it’s enable us to develop trust and transparency in our relationship with the stakeholders. The Stakeholders Engagement is contained on pages 12 to 13 of this integrated Annual Report.

annual general meeting (“agm”)

The AGM is a vital platform for dialogue and interaction with the shareholders of the Company. The shareholders are given sufficient time through an early notice of AGM which allows them to make the necessary arrangements to attend, participate and opportunity to vote on the regular businesses of the meeting by show of hands. Each item of special business included in the notice of the meeting will be accompanied by detailed explanations. Separate resolutions are proposed for substantially different issues at the meeting and the Chairman declares the number of proxy votes received both for and against each resolutions. The resolutions passed at the meeting are released to Bursa Malaysia in a timely manner.

Besides the usual agenda, the Board also presents the progress and performance of the Group at each AGM. Shareholders, including the minority shareholders, are encouraged to participate and raise questions during the question and answer session with the Directors. All Board members, senior management and the external auditors are present to respond to questions from the shareholders during AGM. where appropriate, the Chairman will undertake to provide a written answer to any significant question that cannot be readily answered at the meeting.

Other than the Board Chairman and the Managing Director, the shareholders or any stakeholders may convey any concerns that they may have to Tan Sri Dato’ Seri utama Arshad Ayub, an independent Non-Executive Director and Chairman of the Audit Committee.

related Party transactions

All related party transactions entered into by the Group were made in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with other persons or charged on the basis of equitable rates agreed between the parties. All related party transactions are reviewed by the internal auditors and a report on the reviews conducted is submitted to the Audit Committee for their monitoring.

Details of the transactions entered into by the Group during the financial year ended 31 December 2014 are set out on pages 289 to 293 of this integrated Annual Report.

this statement is in accordance with the approval by the Board of Directors made on 23 February 2015.



167

A New Energy

STATEmENT ON RISk mANAGEmENT ANd INTERNAl CONTROl

IntroDUctIon

ThE BOARD Of DiRECTORS Of KuLiM (MALAySiA) BERhAD (“ThE BOARD”) iS PLEASED TO PROViDE ThE STATEMENT ON RiSK MANAGEMENT AND iNTERNAL CONTROL PuRSuANT TO PARAGRAPh 15.26(B) Of ThE MAiN MARKET LiSTiNG REQuiREMENTS Of ThE BuRSA MALAySiA SECuRiTiES BERhAD AND ThE REViSED MALAySiAN CODE ON CORPORATE GOVERNANCE 2012 (“MCCG 2012”) ThAT REQuiRES DiRECTORS Of LiSTED COMPANiES TO iNCLuDE A STATEMENT iN ThEiR ANNuAL REPORTS ON ThE STATE Of ThEiR iNTERNAL CONTROL AND TO ESTABLiSh A SOuND RiSK MANAGEMENT fRAMEwORK AND iNTERNAL CONTROL SySTEM.

ThE STATEMENT iS PREPARED iN ACCORDANCE wiTh ThE “STATEMENT ON RiSK MANAGEMENT AND iNTERNAL CONTROL: GuiDELiNES fOR DiRECTORS Of LiSTED iSSuERS”. ThESE GuiDELiNES SET OuT ThE OBLiGATiONS Of MANAGEMENT AND ThE BOARD wiTh RESPECT TO RiSK MANAGEMENT AND iNTERNAL CONTROL. iT ALSO PROViDES GuiDANCE ON ThE KEy ELEMENTS NEEDED iN MAiNTAiNiNG A SOuND SySTEM Of RiSK MANAGEMENT AND iNTERNAL CONTROL AND DESCRiBES ThE PROCESS ThAT ShOuLD BE CONSiDERED iN REViEwiNG iTS EffECTiVENESS.

BoarD’s resPonsIBILItIes

The Board acknowledges overall responsibility for the Group’s risk management and internal controls. This includes the establishment of an appropriate control environment and framework, as well as reviewing the effectiveness, adequacy and integrity of this system.

The Board recognizes the importance of sound risk management and internal control system practices to good corporate governance with the objective of safeguarding the shareholders’ investment and the Group’s assets.

Good corporate governance practices contribute towards enhancing business prosperity and corporate accountability with the ultimate objective of realising long-term shareholder value, whilst taking into account the interests of other stakeholders.

The Group has in place an ongoing control structure and process for identifying, analysing, evaluating and managing the significant risks to the achievement of strategy, policies and business objectives throughout the financial year under review up to the date of approval of this statement. This process is regularly reviewed by the Board with assistance from the management. The Board retains overall responsibility for implementing and monitoring the internal control and risk management process within the Group.

The Group’s system of internal control is designed to manage, rather than eliminate the risk which could arise from human error, the possibility of poor judgment in decision making, control process being deliberately circumvented by employees and others, management overriding controls and the incidence of unforeseeable circumstances. Accordingly, it must be recognised that the system can only provide reasonable and not absolute assurance against misstatement, breaches of laws or regulations, fraud or losses. in addition, the management needs to consider the expected cost and benefits to be derived from the implementation of the internal control system.

rIsK management FrameWorK

The Group adopts an Enterprise Risk Management (“ERM”) framework which incorporates the principles and guidelines of iSO 31000:2009 Risk Management. The framework determines the process and identifies tools for realising the Group’s objectives aside from supporting and sustaining risk management throughout the organisation. it supports the Group’s efforts to achieve the highest levels of corporate governance, including the creation of value in the short and long-term.

The Group recognises that it is obliged to systematically manage and regularly review its risk profile at a strategic, financial, compliance and operational level. The Group has two (2) committees that have risk management and internal control oversight responsibilities, namely Audit Committee of the Board (“BAC”) and Risk and issues Management Committee (“RiMC”).



168

STATEMENT ON RiSK MANAGEMENT

AND iNTERNAL CONTROL

The BAC assess the quality and effectiveness of the systems of internal control and the efficiency of the Group’s operations, particularly those relating to areas of significant risks. The BAC also evaluate the process the Group has in place for assessing and continuously improving internal controls.

The RiMC is chaired by the Executive Director of the Group; and represented by senior management members from all functions of the Group. The Committee met four (4) times in 2014. Apart from complying with the governance requirement, this Committee, which is cross-functional in nature, was formed to assist the Board in implementing the processes for identifying, analysing, evaluating, monitoring

and reporting of risks and internal control and to ensure proper management of risks to which the Group is exposed and to take appropriate and timely actions to manage such risks.

On an annual basis, the internal Audit function assists the BAC in reviewing the effectiveness of risk management and internal controls and providing an independent view on specific risks and control issues, the state of internal controls, trends and events.

The ERM risk reporting structure; risk management and internal controls are intertwined within the activities at strategic and operational level.

Board of Directors

Board Audit

Committee

(“BAC”)

Management

Committee (“MC”)

Risk and issues Management

Committee (“RiMC”)

Non-management and

supporting staff

Business

Development

Oil & Gas/Plantation

Operation

internal Audit

Risk Management

Department

Board

RiMC

Risk Owners

Co-Owners

and Staff

The structure of the ERM risk reporting promotes the active participation of executive management in all of the operational and strategic decisions affecting their business units. A strong culture of ownership and accountability is built through a clear identification of specific roles and responsibilities from the Board, Audit Committee, Management Committee, RiMC, Risk Department, Risk Owner, Risk Co-Owner, Staff and internal Audit Department.

The unambiguous identification of roles and responsibilities among these groups promotes excellent accountability so that there are neither gaps in controls nor unnecessary duplications of coverage. This has also improved the control owner’s understanding of the boundaries of

their responsibilities and how their positions fit into the organisation’s overall risk and control structure.

The Three (3) Lines of Defense make a distinction among three (3) groups involved in effective risk management. As the first line of defense, management owns and manages risks. They also are responsible for implementing corrective actions to address process and control deficiencies.

The second line of defense serves a vital purpose to ensure that the first line of defense is properly designed, in place, and operating as intended. As management functions, they may intervene directly in modifying and developing the internal control and risk systems.

Thirdlineofdefense

Secondlineofdefense

Firstlineofdefence

Functionthatprovides

independentassurance.l BoardofAuditCommitteel NominationandRemuneration

Committee(“NRC”)l InternalAuditl ExternalAudit

Functionthatoverseesrisks.l RiskandIssues

ManagementCommitteel RiskManagement

Departmentl CreditControlCommitteel ComplianceOfficer

Functionthatownsand

managesrisksl ManagingDirectorl Management&Staff


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A New Energy

On the third line of defense, the BAC, NRC and External Auditor have an important role in the Group’s overall corporate governance, risk management and internal control structure. internal audit provides assurance on the effectiveness of governance, risk management, and internal controls, including the manner in which the first and second lines of defense achieve risk management and control objectives.

The key success factors of the Group’s risk management process are active contribution and communication at operational or strategic level. Group risks are managed on an integrated basis and their evaluation is incorporated into the Group’s decision-making process such as strategic planning and project feasibility studies. This will ensure the Group has reliable information and appropriate planning to handle the changing environment.

The Group has identified and implemented a systematic approach in managing the significant risks. This is done through the Risk Action Plan process which documents the detailed actions on how the approved chosen treatment options will be implemented as well as clearly identifies the priority order and designated person through which individual risk treatments should be implemented. furthermore, to ensure that the agreed Risk Action Plan is being appropriately implemented, follow up processes are periodically performed on the Risk Owner until the agreed treatment options are executed successfully.

STATEMENT ON RiSK MANAGEMENT AND iNTERNAL CONTROL

The Group’s ERM approach which prioritises risks according to their likelihood and impact goes through the following steps:

Presentation to the rImc:The Risk Management Department will facilitate the risk owner during the risk assessment and risk action planning. On a quarterly basis, the Group Chief Risk Officer will present all the risks and its mitigation actions from the departments and business units to the RiMC. The RiMC will review, rank and debate the risk ratings, control effectiveness, risk treatment options and risk action plans identified and by risk owners.

compilation of group risk Profile:The Group Chief Risk Officer extracts all the endorsed top risks as tabled in RiMC as the Group Risk Profile in accordance to the Group’s financial or non-financial risk parameter.

Board of audit committee review:A risk management report is tabled to the BAC on a quarterly basis and to the Board on a half-yearly basis. The BAC provides an objective view on the Top Group Risks, requests and challenges risk information from the business and acts as change catalyst in risks and control areas in the Group.

Internal audit review:Reviewing the effectiveness of risk management and internal controls and providing an independent view on specific risks and control issues, the state of internal controls, trends and events.

Department or Business Unit risk assessment: The risk owner performs the identification and assessment of risks exercise. The exercise also covers the hazard identification, Risk Assessment & Risk Control (“hiRAC”). The risk owner updates their risk register to the Risk Management Department on a quarterly basis. The risk level is determined according to their respective financial or non-financial risk parameter.



170

risk Factors mitigating strategies

economy-wide phenomena which effects

the rate of growth, CPO prices and costs.

new Investment risk with regards to the

industry, laws and regulations, political,

country and local risks.

replacement of Investment is critical

in ensuring the growth and business

sustainability.

Liquidity risk on existing and future

funding requirements which could change

the Group’s gearing level and risk exposure

on the interest rate and foreign exchange.

safety, Health and environment commitment towards building a fair, ethical

and responsible company.

3 Market intelligence and being market informative.

3 Combination of sales and marketing strategies depending on market forecast and

fundamental.

3 Enhance the productivity, efficiency and utilisation of available resources, while at

the same time abiding to the principles of sustainability.

3 Continuous effort in cost saving initiatives and prudent CAPEx and OPEx

management.

3 Putting in place workable internal control and monitoring framework including

corporate and systems infrastructure.

3 Proactive engagement with business partners and local stakeholders.

3 Take opportunity on the government’s liberalisation approach.

3 Take advantage of potential value-unlocking opportunity.

3 Expansion of existing business - transforming business units into Strategic

Businesses.

3 Exploring new viable and potential opportunities.

3 incorporate a good governance and internal control practices.

3 Matching of inflows and outflows of cash and maintaining sufficient credit facilities.

3 Capital restructuring.

3 Monitor the agreed covenants with the lenders.

3 Rationalisation of dividend payment.

3 Kulim embraces the principles of sustainable development in respect of People,

Planet and Profit – ensuring the future generations will continue to benefit from

today’s actions.

3 Continuous training, monitoring and improvement action planning.

in ensuring the Group achieves its objectives, sustains the businesses and continues to add value to the stakeholders in the short, medium and long-term, the risk management process and approach is tailored to Kulim’s structure and its constantly changing environment to ensure that the Group can continuously monitor and review its risks and the effectiveness of its risk management over time. Continuous ERM phases are practised by the Group and based on the results of monitoring and reviews, decisions are made on how the risk management programme can be improved. These decisions should lead to improvements in the Group’s management of risks and its risk management culture.

A separate risk management function also exists within the Group’s significant listed subsidiaries with the establishment of Risk and issue Management Committee (“RiMC”) within the respective companies to assess and evaluate the risk management process of the respective companies on a periodic basis.

in essence, the management of risks is treated as an iterative process. The benefits arising from effective risk management processes is the creation of awareness among employees of different departments to take cognisance of risk on Group-wide basis. This enhances the Risk Ownership factor across the Group significantly.

top five (5) group risks

The followings represent the Group’s top strategic and operational risk that may create a significant or material adverse impact to the Group as well as impede the achievement of the established objectives and affect the Group’s ability to create value over the short, medium and long term.


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B

controL envIronment anD controL actIvItIes

Key to the Group’s internal Control and Risk Management process is its Control Self-Assessment (“CSA”) process. The process is a recognised and flexible management tool for acquiring information about business process risks, while empowering the risk owners to undertake responsibility for managing those risks. Risk assessment and evaluation form an integral part of the annual strategic cycle. The Board, as part of the annual strategic review, considers and approves the Group’s risk structure.

The Board has adopted a control framework in ensuring the achievement of Group’s established objectives and that the Group’s business operations are effectively managed.

The key elements of the Group’s system of internal control are as follows:

Board and management committees

Board and Management Committees are set up to promote corporate governance, transparency and accountability and to assist the Board in implementing and monitoring the system of internal controls within the Group with the aim of realising the vision, mission, strategies and objectives established for the Group.

The Committees oversee the areas assigned according to their Terms of Reference (“TOR”) which are carefully developed to ensure it is aligned with Group’s objectives, short-term and long-term strategic plans and to avoid overlapping activities and gaps in governance coverage.

committee structure

BOD

Board ofSurvey

MCM - BudgetTender & Af

Sustainability and intitiatives

CouncilExCO

MCM

BAC

NRC

BOC

iV Monitoring& ExCO

Risk and issues Management

Appraisal, KPi & Bonus

Palm Oil Marketing Plantation Performance

Audit ReviewiV

TrainingPlantation

Budget Review OSh

CreditControl

Agreement

Project RiskEvaluation iV

Strategic Direction

Performance Monitoring

Strategic & Business Direction Direction Monitoring & Risk Control

financial Operation & Business Risk




172

B

name oF commIttee PrImarY FUnctIon

Board audit committee (“Bac”)

nomination and remuneration committee (“nrc”)

Board option committee(“Boc”)

To assist the Board in maintaining a sound system of internal control by ensuring the openness, integrity and accountability of the Group’s activities so as to safeguard the rights and interest of the shareholders.

To oversee the selection and assessment of directors by development, maintenance and review of the criteria to be used in the recruitment process and annual assessment of directors. The Committee is also responsible for establishing formal and transparent remuneration policies and procedures to attract and retain directors.

To administer the ESOS in accordance with the By-laws of the ESOS.

To review and amend at any time and, from time to time, any provision of the By-laws.

BoarD commIttee

management committee (“mcm”)

executive committee (“eXco”)

management committee – Budget, tender and additional capital & revenue expenditure (“mcm – Budget, tender & aF”)

risk and Issues management committee

To review and evaluate the performance progress including the key policy and strategy implementations of the various divisions, subsidiaries and operating units of the Group. where authorised, to formulate and approve matters relating to Group policy, objectives and business strategy and projects, and where necessary to evaluate and recommend for Board’s approval.

To coordinate departmental roles and administrative matters in relation to the various divisional operations and to review, recommend and seek Management’s approval on any related proposals.

To recommend to the MCM the award of contracts for purchases and projects to suppliers/contractors in accordance with the Contract Administration Guidelines and Procedures of the Company.

To review the budget and all requests pertaining to capital and revenue spending and to recommend them for the ratification of the MCM.

To conduct risk identification, evaluation and review of risk treatment process on a periodic basis to ensure that the Group is managing risks effectively. further details on the Committee are set out in pages 168 to 172.

management commIttee


Plantation Performance committee

Palm oil marketing committee

Board of survey

To ensure that estates and mills owned and managed by the Group operate in accordance with Group’s requirements and at the best possible standards.

To review and decide on the appropriate selling arrangement, quantity and prices of the Group’s palm products.

To review all requests pertaining to write-off/back of fixed assets, debtors, stocks and creditors and recommend them for the ratification of the MCM.


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sustainability and Initiatives council

appraisal, KPI and Bonus committee

training committee

Plantation Budget review

osH committee

To oversee and monitor the development, implementation, maintenance, compliance and effectiveness of all matters relevant to sustainability and quality initiatives of the Group as well as ensuring compliance with the principles and criteria of RSPO.

To deliberate on performance, KPis, behavioural competencies and recommend appropriate increments, promotions and merit of all executives and corporate office staff.

To formulate training plans to meet the objective of enhancing the knowledge, skill and competencies of Kulim’s employees.

To ensure the Plantation Operation budget is prepared with the objective of maximising the long-term profitability of the Group’s oil palm plantations, and at the same time, maintaining their sustainability.

To foster cooperation and consultation between management and workers in identifying, evaluating and controlling hazards at workplaces.

The Company has also established committees to ensure the effective management and supervision of the intrapreneur VentureS (“iV”) companies.

Iv monitoring & executive committee (“Iv eXco”)

To monitor progress and development of all the iV companies with the objective of strengthening their business and management capabilities by providing necessary business guidance and referrals.

To evaluate viability of projects, proposals, funding, capital expenditure or capital adequacy of the iV companies.

commIttee For IntraPreneUr ventUres


credit control committee

Project risk evaluation committee

audit review committee

agreement committee

To appraise the financial health, performance of the iV companies and their compliance to accounting standards, income Tax Act and internal controls by the iVs.

To ensure that iV companies/projects of the Group are being run, coordinated and managed at the best possible standards and in compliance with the Group’s requirements and risk management policies.

To monitor the internal Control System and recommend improvement of the internal Control System and practices to achieve the company’s objectives.

To ensure operations of iV companies are in compliance with laws and regulations and the Group’s Code of Conduct and Business Ethics and that the iV companies are being managed in line with the aspiration and expectations of Kulim.

To ensure that material agreements are forwarded for Committee discussion and/or approval. This is to ensure and safeguard the Group’s interest.



management commIttee



174

organisation structure

The Board has established a formal organisation

structure for the Group with delineated lines of authority,

responsibility and accountability. The organisation structure

is formed by focusing both on performance delivery and

business continuity through succession planning. it fosters

and promotes the continual development of employees,

and ensures that key positions maintain some measure

of stability, thus enabling the Group to achieve business

objectives.

The structure supports the Group’s ability to ensure that

qualified and experienced management personnel which

head the Group’s diverse operating units are always

available and in place to carry out their job functions.

Their performance is measured against Key Performance

indicators which have been approved by the Board.

Internal audit

The Board recognises that the internal Audit function is an

integral component of the governance process. The internal

Audit Department operates within the Audit Charter

approved by the Audit Committee and performs internal

audit across the Group’s diverse areas and environment

focusing on any management, accounting, financial and

operational activities including the effectiveness of risk

management process and internal control within the

organisation. in year 2014, 80% of the audit coverage

were focused on high risk areas which were identified by

leveraging the organisation’s risk management framework

as well as internal Audit Department’s own risk assessment,

and the remaining 20% were focused on management

request inclusive of ad-hoc audit, compliance audit, special

requested audit by management and Audit Committee,

investigations, consulting and control self-assessment

programme which are in line with the Audit Charter.

The Group’s internal Audit maintains a Quality Assurance

and improvement Programme (“QAiP”) and continuously

monitors its overall effectiveness. in year 2014, formal periodic

assessment review on conformance with the international

Standards for the Professional Practice of internal Auditing

(“Standards”) and follow up on the action plans taken

pertaining to observations and recommendations previously

highlighted during the 2013’s periodic assessment was

performed.

external auditors

The External Auditors issue a Management Letter highlighting issues and weaknesses, which came to their attention during the conduct of their normal audit procedures. The Group’s internal Audit subsequently performs follow-up reviews to determine the extent to which the recommendations have been implemented.

The External Auditors are appointed by the Board to review this Statement on Risk Management and internal Control and to report thereon.

This Statement on Risk Management and internal Control has been reviewed by the External Auditors as required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements. The External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of the internal controls.

otHer eLements oF InternaL controL

Apart from the committees and parties mentioned in the Corporate Governance Statement, the Audit Committee Report and sections above, the other elements of the Group’s internal Controls are as follows:

Financial authority Limit

The financial Authority Limit defines revenue and capital expenditure spending limits for each level of management within the Group. These limits cover authority for cheques signatories, major capital and revenue expenditure spending limits, purchasing and contract procedures and approval mechanism for budget.

Budget approval

Budget is an important control mechanism used by the Group to ensure an efficient allocation of Group’s resources and that the operational managers have sufficient guidance in making business decisions. Budgets are generated annually at each subsidiary and operating unit.

for the plantation units, budgets will be reviewed by the Regional Controllers followed by their presentation to a Plantation Budget Review Committee for further deliberation.

Significant subsidiaries will have their budgets reviewed by their own budget committee. All budgets will then be presented for deliberation of the MCM - Budget, Tender and Af Committee, and subsequently will be tabled to MCM for approval and endorsement. finally the budgets will be presented to the Board for final review and approval.


175

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Procurement

A centralised and coordinated procurement function is established at each of the Group’s key business division which enables the Group to leverage on economies of scale and ensures adherence to authority limits, policies and procedures.

Major contract and supply works of both capital and revenue nature exceeding the defined threshold amounts in the relevant contract procedure are required to be tendered out. Eligible bidders for contract works will need to attend a contract interview with the Contract interview Committee, which is made up of representatives from several departments at the divisional head-quarter including the acquiring unit’s Manager. The Contract interview Committee will then forward the recommendations to the MCM - Budget, Tender and Af Committee for further review and approval.

operating and Procedural manuals

The Group has reference manuals covering agricultural practices, procurement, financial operating system and financial policies and procedures. These will assist and guide employees on purchasing and contract awards, preparing of financial statements, observing the various internal control policies and procedures, as well as maintaining good management practices to ensure cost efficiencies, integrity of financial records and to safeguard the Group’s assets. The Board believes that all these control measures will significantly enhance the internal control of the Group.

The major written Policy and Procedure Manuals include:

Agricultural Manual

Accounting Policies and Procedures

Executive and Staff Schemes of Service

Contract Administration and Purchasing Guidelines Procedures

RSPO Malaysia National interpretation working Group (RSPO - My NiwG 5)

ERM framework

internal Audit Manual

internet Access Policy and Notebook Accommodation Policy

Standard Operating Procedures

Forward sales Policy

The Group has in place a forward sales policy for its palm products which has been approved by the Board. for Malaysian palm oil products, the Group adopts a forward policy covering a maximum of six (6) months and 90% of the Group’s own fruits.

regulatory compliance

The Group adheres strictly to health, safety and environmental regulations and is subject to regular inspections by the relevant government authorities.

for the Group’s Plantation division, the Sustainability Department is responsible to ensure that the plantation operations are conducted within the applicable laws, regulations and quality standards.

Whistleblowing Policy

The Group is committed to the highest standard of integrity, openness and accountability in the conduct of its businesses and operations. it aspires to conduct its affairs in an ethical, responsible and transparent manner.

This Policy was introduced in year 2013 to ensure that a process is in place to allow stakeholders to report alleged improper or unlawful conduct without fear of retribution. it is an integral component of Kulim’s zero tolerance policy on fraud and corruption.

The Group views any detrimental action taken against a whistleblower or any person related to or associated with the whistleblower in reprisal for a disclosure of improper conduct seriously and will treat such action as gross misconduct.

This Policy aims to:

• Encourage stakeholders to feel confident in raising serious concerns and to question and act upon concerns.

• Provide avenues to raise those concerns and receive feedback on any action taken.

• Ensure that whistleblower receive a response and aware of how to pursue further action if they are not satisfied.

• Provide reassurance that whistleblower will be protected from possible retaliations.




176

The Group has also established a Grievance Policy and Procedure as well as women Onwards so as to allow employees to bring to the attention of management of Kulim any dissatisfaction or feeling of injustice which may exist in respect of the workplace. The management will attempt to resolve the grievance in a manner, which is acceptable to the employee concerned and the Group.

no gift Policy

The No Gift Policy was established in july 2014 as the continuous effort on the Group’s commitment to uphold the Anti-Corruption Principles through the Corporate integrity Pledge that has been signed in january 2014.

All employees and directors are required to demonstrate commitment to treating all people and organisations impartially, unbiased professionalism and non-discriminatory actions in relation to all suppliers, customers, contractors, employees, potential suppliers, potential employees, and any other individual or organisation.

The Group will work towards creating a business environment that is free from corruption, protect the interests of the shareholders and will uphold the above principles in the conduct of its business.

code of ethics

This Code of Ethics defines the standards of conduct that are expected of employees to help them make the right decision in the course of performing their jobs to the highest standards of ethic, integrity and governance. Among others, the Code also requires the employees to ensure the followings:

• maintaining full and accurate Company records;

• all assets and property of the Company will be used only for the benefit of the Company;

• always deal with customers and suppliers based on merit and fairness;

• engage competitors in a fair manner and not to engage in any unfair or illegal practice in order to gain an unfair advantage;

• always act to ensure a workplace environment that is free from harassment and discrimination; and

• deal with all team members with respect, courtesy and fairness.

All employees are required to adhere to the Group’s Code of Ethics and to submit the Ethics Declaration form annually.

maintaining compliance to the rsPo certification requirement

Sustainability is a core value of the Group. Kulim has established its sustainability credentials by attaining RSPO certification. Safeguarding this reputation is critical to the organisation and the Group has put in place the control measures in the form of appropriate policies, monitoring systems and procedures so as to minimise, if not prevent the risks of non-compliance with the stringent requirements of RSPO. Among the key measures are:

• Site follow-up visits and inspections are conducted on periodic basis to review the status of compliance, weaknesses and gaps in the implementations of various programs, which is also in line with the requirement of Principle 8 of RSPO on Continuous improvement;

• Key Performance indicators (“KPi”) affecting key aspects of the certification requirements are developed to complement the economic indicators, which are subject to regular monitoring on their achievement progress;

• RSPO trainings and briefings are conducted regularly to ensure changes and updates on RSPO requirements are communicated to all affected employees;

• in relation to the requirements of laws and regulation in the areas of safety, health and environment, Kulim regularly collaborates with suppliers and contractors towards ensuring both parties’ responsibilities in complying with the relevant legislations;

• Proper documentation and reference systems are established. These include Kulim Sustainability handbook that sets out all the relevant policies to guide employees. All system documentation are monitored and controlled through the Document Annual Review; and

• in relation to the social impact of the business on the various levels of stakeholders, internal social impact assessments, guided by the SA8000 Standard are conducted on all Operating units to identify shortcomings which are monitored through the Social Register.


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concLUsIon

for the financial year under review and up to the date of issuance of the financial statements, the Board is of the view that the system of internal controls instituted throughout the Group is sound and effective and provides a level of confidence on which the Board relies for assurance. There has been no significant control failure or weakness or any adverse compliance events that would result in any material losses, contingencies or uncertainties that would require separate disclosure in the integrated Annual Report.

The Board will ensure that the review of the internal control system of the Group be carried out continuously to ensure ongoing adequacy and effectiveness of the system of internal controls and risk management practices to meet the changing and challenging operating environment.

The Board’s view is arrived at after taking into consideration the following:

The Board is therefore pleased to affirm that the state of internal controls of the Group is adequate, appropriate and effective and in line with the Malaysian Code of Corporate Governance and the Risk Management and internal Control: Guidelines for Directors of Listed issuers.

consistent internal audit and risk management reports;

periodic discussions and debates on the internal audit and risk management reports;

continuous risk and internal control reviews in the Risk and issues Management Committee and Management Committee involving the Managing Director (“MD”) and Chief financial Officer (“CfO”) that are debated and presented to the Audit Committee and the Board.

assurance from the MD and CfO that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects based on the risk management and internal control system of the Group; and

periodic management reports on the state of the Group’s internal controls



178

AUdIT COmmITTEE REPORT

comPosItIon anD attenDance

fOR ThE fiNANCiAL yEAR ENDED 31 DECEMBER 2014 ThE AuDiT COMMiTTEE CONSiSTS Of ThREE (3) DiRECTORS, ALL Of whOM ARE ALSO MEMBERS Of ThE BOARD Of KuLiM (MALAySiA) BERhAD.

The composition of the Audit Committee is as follows:

The attendance record of the members of the Audit Committee during the financial year 2014 is as follows:

TAN SRi DATO’ SERi uTAMA ARShAD AyuB

Chairman / independent Non-Executive Director

DR. RADZuAN A. RAhMANMember /

independent Non-Executive Director

LEuNG KOK KEONGMember /

independent Non-Executive Director

Directors Date of meeting %

20.2.2014 19.5.2014 18.8.2014 17.11.2014

TanSriDato’SeriUtamaArshadAyub / / / / 100 Dr.RadzuanA.Rahman / / / / 100 LeungKokKeong / / / / 100


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A New Energy

The Terms of Reference of the Audit Committee are as follows:-

terms oF reFerence

Primary Purpose

The primary purposes of the Audit Committee are:

1. To ensure openness, integrity and accountability in the Group’s activities so as to safeguard the rights and interests of the shareholders;

2. To provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices;

3. To improve the Group’s business efficiency, the quality of accounting and audit function and strengthening of public’s confidence in the Group’s reported results;

4. To maintain a direct line of communication between the Board and the External and internal Auditors;

5. To enhance the independence of the External and internal Audit functions; and

6. To create a climate of discipline and control, this will reduce the opportunity for fraud.

membership

1. The members of the Committee shall be appointed by the Board of Directors of Kulim and shall consist of not less than three (3) members, all of whom must be Non-Executive Directors, with a majority of them being independent Directors. if membership for any reason falls below three (3) members, the Board of Directors shall, within three (3) months of that event, appoint such number of new members as may be required to fulfill the minimum requirement.

2. No alternate Directors shall be appointed to the Committee.

3. At least one (1) member of the Audit Committee:

i. must be a member of the Malaysian institute of Accountants (“MiA”); or

ii. if he is not a member of MiA, he must have at least three (3) years of working experience and:

• he must have passed the examinations specified in Part i of the 1st Schedule in the Accountants Act, 1967; or

• he must be a member of one (1) of the associations of accountants specified in Part ii of the 1st Schedule in the Accountants Act, 1967; or

• fulfills such other requirement as prescribed or approved by the Exchange.

4. The Committee Members shall collectively have:

i. knowledge of the industries in which the Group operates;

ii. the ability to read and understand fundamental financial statements, including a company’s balance sheet, income statement, cash flows statement and key performance indicators; and

iii. the ability to understand key business and financial risks and related controls and control processes.

authority

The Committee for the performance of its duties shall, in accordance to the same procedures adopted by the Board and at the cost of the Group:

1. have the authority to investigate any activity within its Terms of Reference;

2. have the resources which are required to perform its duties;

3. have full and unrestricted access to any employee and information pertaining to the Group. All documents of the Group shall be made accessible to the Committee;

4. have direct communication channels with the External Auditors and person(s) carrying out the internal Audit function or activity for the Group;

5. have the authority to direct the internal Audit Department (corporate, subsidiaries, associates, joint ventures, where applicable) in its activities, including approval of appointments of senior executives and budget in these functions; and

6. To be able to engage independent professional advisors or other advisors and to secure attendance of outsiders with relevant experience and expertise if it considers this necessary.

AuDiT COMMiTTEE REPORT



180


181

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meetings

1. Meetings of the Committee shall be held not less than four (4) times during the financial year of the Company.

2. upon the request of any member of the Committee, the head of internal Audit or the External Auditor, the Chairman of the Committee shall convene a special meeting of the Committee to consider any matter brought up by them.

3. The quorum for the meeting of the Committee shall be two (2) members and the majority of the members present shall be independent Non-Executive Directors. in the absence of the Chairman, the members present shall elect a chairman for the meeting from amongst the members present.

4. The meetings of the Committee shall be governed by the provisions contained in the Memorandum and Articles of Association of the Company for regulating the meetings and proceedings of Directors unless otherwise provided in this Terms of Reference.

5. The Non-Executive Directors of the Board who are not members of the Committee may also attend the meeting of the Committee, but they shall not have any voting rights.

6. The meetings of the Committee shall normally be attended by the head of internal Audit and the Management of the Company shall be represented by the Managing Director and the head of finance, or their nominated person(s), at the invitation of the Committee and shall excuse themselves from the meeting when so directed by the Committee.

7. The Committee may request other directors, members of management, counsels, internal auditors (including subsidiaries) and External Auditors, applicable to participate in the Committee meetings, as necessary and when so invited, to carry out the Committee’s responsibilities.

8. The Committee shall meet the External Auditors, the internal Auditors or both, excluding the attendance of other directors and employees, whenever deemed necessary.

9. A Committee member shall excuse himself/herself from the meeting during discussions or deliberation of any matter which gives rise to an actual or perceived conflict of interest situation for the member. where this cause insufficient directors to make up a quorum, the Committee has the right to appoint another director(s) which meets the membership criteria.

10. The Secretary of the Committee shall be the Company Secretary or his/her appointed nominee with the appropriate qualifications and experience.

11. The agenda for the Committee meeting shall be the responsibility of the Committee Chairman with input from the Committee members. The Chairman may also ask the management and others to participate in this process.

12. The notice and agenda of each meeting shall be circulated at least seven (7) working days before each meeting to the Committee members and all those who are required to attend the meeting. written materials including information requested by the Committee, from the management, internal Auditors and External Auditors shall be received together with the agenda for the meetings.

13. Reports of the Committee meeting shall be tabled at the meeting of the Board Directors of the Company.

14. The Committee, through its Chairman, shall report to the Board after each meeting.

15. The Chairman of the Committee shall be available to answer questions about the Committee’s work at the AGM of the Company.

Functions and Duties

The Committee shall carry out the following responsibilities:

Financial statements

1. Review and recommend acceptance or otherwise of major accounting policies, principles and practices.

2. Review the Group’s quarterly results and annual financial statements of the Company and the Group before submission to the Board. The review should focus primarily on:

i. any changes in or implementation of major accounting policy changes;

ii. major judgmental areas, significant and unusual events;

iii. significant adjustments resulting from audit;

iv. the going concern assumptions;

v. compliance with accounting standards; and

vi. compliance with stock exchange and legal requirements.

3. Review with management and the external auditors, the results of the audit, including any difficulties encountered.


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AuDiT COMMiTTEE REPORT

4. Review with the Group’s Counsel, any legal matter that could have a significant impact on the organisation’s financial statements.

Internal control

1. Assess the quality and effectiveness of the systems of internal control and the efficiency of the Group’s operations, particularly those relating to areas of significant risks. To evaluate the process the Group has in place for assessing and continuously improving internal controls.

2. Assess the internal processes for determining and managing key risks other than those that are dealt with by other specific Board committees.

3. Review the scope of internal and External Auditors’ review of internal control over the Group.

4. Review internal Audit reports (including those of the Group) and the management’s response and ensure that appropriate action is taken in respect of these reports and the Committee’s resolutions. where actions are not taken within adequate time frame by management, the Committee will report to the Board for its decision.

5. Review External Auditor and the management’s response and ensure that appropriate action is taken in respect of these reports and the Committee’s resolutions.

Internal audit

1. Approve the Corporate Audit Charter and charters of the internal Audit functions in the Group and ensure that the internal Audit functions are adequately resourced and have appropriate standing in the Group. This includes a review of the organisational structure, resource budgets and qualifications of the internal Audit functions.

2. Review the adequacy of the internal Audit plans and the scope of audits and that the internal Audit Department has the necessary authority, competency and resources to carry out its work.

3. Approve the appointment of head of internal Audit.

4. Review appraisals or assessments of members of the internal Audit functions.

5. inform itself of resignations of internal Audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

6. Direct any special investigations to be carried out by the internal Audit.

external audit

1. Review External Audit plans and scope of work before the audit commences.

2. Discuss problems and reservations arising out of External Audits, including assistance given by the employees and any matters the auditors may wish to discuss, in the absence of Management or Executive Directors where necessary.

3. Nominate the External Auditors together with such other functions as may be agreed to by the Committee and the Board, and recommend for approval of the Board the external audit fees, and consider any questions of resignation or dismissal, experience, resources and capability.

compliance

1. Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of the management’s investigation and follow-up of any instances of non-compliance.

2. Review the findings of any examinations by regulatory authorities.

3. Obtain regular updates from the management and Group’s legal counsel regarding compliance matters.

4. Review any related party transactions and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of the management integrity.

5. where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved, resulting in a breach to the Main Market Listing Requirements, the Committee must promptly report such matters to the Bursa Malaysia.

other responsibilities

1. Review and reassess, with the assistance of the management, the External Auditors and legal counsel, the adequacy of the Terms of Reference of the Committee at least annually.

2. Confirm annually that all responsibilities outlined in the Terms of Reference have been carried out.

3. Perform other duties as directed by the Board.



182

summary of activities

During the period, the Audit Committee carried out its duties and responsibilities in accordance with its Terms of Reference.

The main activities undertaken by the Audit Committee were as follows:

1. Review and approval of the annual internal Audit plan for the year 2014/2015;

2. Review of the External Auditors’ audit observations, the audit report and recommendations in respect of control weaknesses noted in the course of their audit;

3. Review of the audited financial statements for the financial year ended 31 December 2014 before recommending the same to the Board of Directors for approval;

4. Review of the Company’s compliance, in particular the quarterly and year-end financial statements with the Main Market Listing Requirements of Bursa Malaysia and the applicable approved accounting standard issued by the Malaysian Accounting Standard Board;

5. Review of the quarterly unaudited financial results announcements before recommending them for the Board of Directors’ approval;

6. Review of the internal Audit activities related to management and operations, capacity, internal Audit framework and of the analytical process and reporting procedures;

7. Review of the audit reports presented by the internal Auditors and management’s responses thereto and reviewing management’s assurance that significant finding are adequately addressed;

8. Review of related party transactions entered into by the Group;

9. Review of the extent of the Group’s compliance with the relevant provisions set out under the Malaysian Code on Corporate Governance for the purpose of preparing the Corporate Governance Statement and Statement on Risk Management and internal Control pursuant to the Main Market Listing Requirements; and

10. Review of the risk management development presented by Chief Risk Officer.

Internal audit Function

The Group’s internal Audit function is carried out by the internal Audit Department (“iAD”) and led by a Certified internal Auditor (“CiA”). The iAD reports directly to the Audit Committee and is guided by its internal Audit Charter. The iAD assists the Board in fulfilling its fiduciary responsibilities over the areas of financial, operational, information systems, investigations, risk management and governance process in accordance with the approved Risk Based Annual Audit Plan.

On quarterly basis, the iAD provides the Audit Committee with independent and objective reports on the state of internal control, highlighting any areas for improvement and updates on the extent to which the recommendations have been implemented. The management is responsible to ensure that corrective actions on reported weaknesses as recommended are taken within the required time frame to ensure that all potential weaknesses in system and risks under reviewed area are mitigated or remain within acceptable levels.

Other iAD activities carried during the year are summarised as below: 1. Conducted consultation and validation on the existing

and new Control Self-Assessment (“CSA”) topic with the estate/mill management at all complexes – six (6) Consultation Visits and twelve (12) Evaluation Visits have been carried out in 2014.

2. worked together with the estates and mills in specific risk and control review through Control programmes

3. Participated in Corporate Social Responsibility (“CSR”) programmes organised by management including Infaq 1 Warisan and Darul hannan.

4. Performed periodic self-assessment review on conformance with the international Standards for the Professional Practise of internal Auditing (“Standards”).

5. Conducted special review based on requests from the Audit Committee and/or management. The total number of special requested audits conducted in 2014 – five (5) audit visits.

The total cost incurred for the internal Audit function at the Group Corporate Office level for the financial year ended 31 December 2014 was approximately RM1,851,000.


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AddITIONAl COmPlIANCE INFORmATION

ThE fOLLOwiNG iNfORMATiON iS PROViDED iN COMPLiANCE wiTh ThE MAiN MARKET LiSTiNG REQuiREMENTS Of BuRSA MALAySiA SECuRiTiES BERhAD (“BuRSA MALAySiA”) fOR ThE fiNANCiAL yEAR ENDED 31 DECEMBER 2014:

UtILIsatIon oF ProceeDs From corPorate ProPosaLs

There was no corporate proposal, specifically intended to raise funds undertaken during the financial year ended 31 December 2014, which has resulted in the receipt of proceeds for utilisation.

sHare BUY-BacKs

The Company had, on 20 june 2013, obtained the shareholders’ approval to purchase its own shares up to 10% of its issued and paid up share capital.

During the financial year, the Company has renewed the mandate for the share buy-back and approved by the shareholders of the Company at the 39th AGM held on 24 june 2014. The Company however, did not implement any share buy-back exercise during the financial year ended 31 December 2014.

As at 31 December 2014, the number of ordinary shares were held as treasury shares remained at 15,322,000 units.

oPtIons, Warrants or convertIBLe secUrItIes eXercIseD

Effective from 31 December 2013, the Company has implemented the Employees’ Share Option Scheme (“ESOS”) for the eligible employees and Directors of Company and its subsidiaries to subscribe for up to 63,935,462 new ordinary shares of the Company (“ESOS Options”). The ESOS Options have vesting period of five (5) years commencing 31 December 2013 and expiring on 30 December 2018.

The Directors have obtained a relief under Section 169(1) of the Companies Act 1965 (“the Act”) exempting the Company from including a list of the share options granted and exercised during the financial year pursuant to Section

169(11) of the Act in the integrated Annual Report, except for grantees receiving ESOS Options amounting to 150,000 units and above. This exemption is subject to a yearly renewal. All information regarding the allocation and exercise of the said ESOS Options are registered in the Company’s Register of Options.

During the financial year end 31 December 2014, a total of 982,500 units of ESOS Options were exercised into new ordinary shares of the Company. in 2011, a total of 156,174,319 free warrants were issued by the Company in conjunction with the share split and bonus issue on 28 february 2011. The warrants have an exercise period of five (5) years commencing 28 february 2011 and expiring on 27 february 2016.

A total of 47,766,945 warrants were converted into new ordinary shares in 2014. As at 31 December 2014, the accumulated warrants converted amounted to 79,783,304 units while the number of warrants outstanding stood at 76,391,015 units.

The Company has not issued any other convertible securities in respect of the financial year ended 31 December 2014.

DePosItorY receIPt Programme

The Company has not sponsored any depository receipt programme for the financial year ended 31 December 2014.

sanctIons anD/or PenaLtIes

There were no material sanctions and/or penalties imposed on the Company and its subsidiary companies, directors or management arising from any significant breach of rules/guidelines/legislations by the relevant regulatory bodies during the financial year.



184

non-aUDIt Fees

During the financial period under review, non-audit fees paid to the External Auditors of the Group amounted to RM1,050,000 (please refer to page 230 of the audited financial statements).

varIatIon In resULts

There is no material variance between the results for the financial year and the unaudited results previously announced by the Group.

ProFIt gUarantee

The Company did not issue any profit forecast or profit guarantee for the financial year ended 31 December 2014.

materIaL contracts

Other than those disclosed in the financial statements from pages 289 to 293, there was no material contract including contracts relating to any loans entered into by the Group and its subsidiaries involving Directors and major shareholders’ interest.

recUrrent reLateD PartY transactIons oF revenUe anD/or traDIng natUre

At the AGM held on 24 june 2014, the Company obtained a shareholders’ mandate to allow the Group to enter into recurrent related party transactions of revenue and/or trading nature from the even date up to the next forthcoming AGM.

The list of significant recurrent related party transactions entered into by the Group is described on page 186 of the integrated he Annual Report.


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AddITIONAl dISClOSUREPURSUANT TO ThE lISTING REqUIREmENTS

recUrrent reLateD PartY transactIons oF revenUe anD/or traDIng natUre

ThE AGGREGATE VALuE Of ThE RECuRRENT TRANSACTiONS Of REVENuE AND/OR TRADiNG NATuRE CONDuCTED PuRSuANT TO ThE ShAREhOLDERS’ MANDATE DuRiNG ThE fiNANCiAL yEAR ENDED 31 DECEMBER 2014 BETwEEN ThE COMPANy AND/OR iTS SuBSiDiARy COMPANiES wiTh RELATED PARTiES ARE SET OuT BELOw:

reLateD PartIes InvoLveD natUre oF aggregateWItH tHe comPanY anD/or InteresteD DIrector anD/ reLatIonsHIP tYPe oF vaLUe oFsUBsIDIarY comPanIes or maJor sHareHoLDer WItH KULIm groUP transactIon transactIon (rm)

1. johor Corporation (“jCorp”) Dato’ Kamaruzzaman Abu Kassim Kulim is a 61.93% Purchasing 170,000 Ahamad Mohamad owned subsidiary of and sales jamaludin Md Ali jCorp commission Abdul Rahman Sulaiman on oil palm Datin Paduka Siti Sa’diah Sh Bakir products Zulkifli ibrahim Rozaini Mohd Sani Sales of goods 2,712,000 Replanting 2,253,000 services

2. johor franchise Development Dato’ Kamaruzzaman Abu Kassim jfDSB is a wholly Sales of goods 1,942,000 Sdn Bhd (“jfDSB”) Ahamad Mohamad owned subsidiary jamaludin Md Ali of jCorp Abdul Rahman Sulaiman Datin Paduka Siti Sa’diah Sh Bakir Zulkifli ibrahim Rozaini Mohd Sani

jCorp

3. johor Land Berhad (“jLand”) Dato’ Kamaruzzaman Abu Kassim jLand is a wholly Purchase of 1,877,000 Ahamad Mohamad owned subsidiary ffB jamaludin Md Ali of jCorp Abdul Rahman Sulaiman Datin Paduka Siti Sa’diah Sh Bakir Zulkifli ibrahim Rozaini Mohd Sani

jCorp



186

SECTION 7financial statements

188 Directors’Report

194 StatementbyDirectors

194 StatutoryDeclaration

195 IndependentAuditors’Report

197 StatementsofComprehensiveIncome

199 StatementsofFinancialPosition

201 StatementsofChangesinEquity

204 StatementsofCashFlows

206 NotestotheFinancialStatements

313 SupplementaryInformation

DIRECTORS’ REPORT

Directors’ report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2014.

principal activities

The Company is principally engaged in oil palm plantation, investment holding and property investment in Malaysia whilst the principal activities of the subsidiaries are as stated in Note 16 to the financial statements.

There have been no significant changes in the nature of the principal activities during the financial year.

results Group company rm’000 rm’000 Profit net of tax 308,441 8,956

Profit attributable to :Owners of the Company 164,303 8,956Non-controlling interests 144,138 - 308,441 8,956

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company were not substantially affected by any item, transaction or event of a material and unusual nature other than as disclosed in the financial statements.

DiviDenDs

The amounts of dividends paid by the Company since 31 December 2013 were as follows:

In respect of the financial year ended 31 December 2014:

rm’000 Interim tax exempt (single-tier) dividend of 9.50 sen per share, totalling approximately RM126,111,000 declared on 3 December 2014 and paid on 29 December 2014 126,111 Total dividends paid by the Company since 31 December 2013 126,111

SECTION 7 FINANCIAL STATEMENTS


188

DiviDenDs (cont’D)

The directors do not recommend the payment of any final dividend for the financial year ended 31 December 2014.

On 26 February 2015, the Company declared a special tax exempt (single-tier) dividend of 37.65 sen per ordinary share in respect of the financial year ending 31 December 2015. The financial statements for the current financial year ended 31 December 2014 do not reflect this approved dividend and this will be acounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2015.

Directors

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Dato’ Kamaruzzaman Abu KassimTan Sri Dato’ Seri Utama Arshad AyubAhamad MohamadDatin Paduka Siti Sa’diah Sh BakirDatuk Haron SirajDr Radzuan A. RahmanZulkifli Ibrahim Leung Kok Keong Jamaludin Md AliAbdul Rahman SulaimanRozaini Mohd Sani (appointed on 15 January 2015) Rozan Mohd Sa’at (resigned on 15 January 2015) Wong Seng Lee (resigned on 15 January 2015)

Directors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 9 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 29 to the financial statements.


189

A New Energy

DIRECTORS’ REPORT

Directors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

number of ordinary shares of rm0.25 each company as at as at 1.1.2014 acquired Disposed 31.12.2014 Direct interest Tan Sri Dato’ Seri Utama Arshad Ayub 4,000 - - 4,000Ahamad Mohamad 963,400 - - 963,400Wong Seng Lee 251,200 50,000 - 301,200Datin Paduka Siti Sa’diah Sh Bakir 278,000 100,000 - 378,000Rozan Mohd Sa’at 8,800 - - 8,800 Jamaludin Md Ali - 50,000 - 50,000

indirect interest Dato’ Kamaruzzaman Abu Kassim - 200,000 - 200,000Tan Sri Dato’ Seri Utama Arshad Ayub 7,223,600 250,000 - 7,473,600Abdul Rahman Sulaiman - 50,000 - 50,000

number of options over ordinary shares of rm0.25 each as at as at 1.1.2014 Granted exercised 31.12.2014 Dato’ Kamaruzzaman Abu Kassim 1,000,000 - (200,000) 800,000Ahamad Mohamad 500,000 - - 500,000Wong Seng Lee 250,000 - (50,000) 200,000Jamaludin Md Ali 250,000 - (50,000) 200,000Abdul Rahman Sulaiman 250,000 - (50,000) 200,000Datin Paduka Siti Sa’diah Sh Bakir 150,000 - (100,000) 50,000Rozan Mohd Sa’at 150,000 - - 150,000Zulkifli Ibrahim 150,000 - - 150,000Tan Sri Dato’ Seri Utama Arshad Ayub 150,000 - - 150,000Datuk Haron Siraj 150,000 - - 150,000Dr. Radzuan A. Rahman 150,000 - - 150,000Leung Kok Keong 150,000 - - 150,000

number of ordinary shares of rm0.25 each in related companies as at as ate.a technique (m) berhad 1.1.2014 acquired Disposed 31.12.2014 Direct interest Ahamad Mohamad - 500,000 - 500,000Rozan Mohd Sa’at - 327,500 - 327,500



190

Directors’ interests (cont’D)

number of ordinary shares of rm0.50 each in related companies (cont’d) as at as atKpJ Healthcare berhad 1.1.2014 acquired Disposed 31.12.2014 Direct interest Ahamad Mohamad 1,125 - - 1,125Tan Sri Dato’ Seri Utama Arshad Ayub 1,576,500 79,166 - 1,655,666Rozan Mohd Sa’at 750 - - 750Datin Paduka Siti Sa’diah Sh Bakir 1,092,375 54,749 - 1,147,124

indirect interest Tan Sri Dato’ Seri Utama Arshad Ayub 4,117,500 300,300 - 4,417,800Datin Paduka Siti Sa’diah Sh Bakir 18,750 833 - 19,583

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

issue of sHares

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM323,513,000 to RM335,626,000 by way of the issuance of 48,450,000 ordinary shares of RM0.25 each upon the conversion of 47,767,000 warrants and exercise of 683,000 share options at the exercise price of RM3.13 and RM3.05 respectively per new ordinary share .

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

treasury sHares

Issued ordinary shares repurchased by the Company from the open market are held as treasury shares in accordance with Section 67A of the Companies Act, 1965. The Company did not repurchase any of its issued ordinary shares from the market during the financial year.

At 31 December 2014, the Company held as treasury shares a total of 15,322,000 of its 1,342,503,000 issued ordinary shares. Such treasury shares are held at a carrying amount of RM67,063,000 and further relevant details are disclosed in Note 27(h) to the financial statements.

employee sHare option scHeme

At an Extraordinary General Meeting held on 13 December 2013, shareholders approved the Employee Share Option Scheme (“ESOS”) for the granting of non-transferable options that are settled by issuance of the ordinary shares of the Company to eligible senior executives and employees.

The salient features and other terms of the ESOS are disclosed in Note 27(j) to the financial statements.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of option holders, other than directors, who have been granted options to subscribe for less than 150,000 ordinary shares of RM0.25 each. Details of options granted to directors are disclosed in the section on directors’ interests in this report. No other persons have been granted more than 150,000 options.


191

A New Energy

DIRECTORS’ REPORT

otHer statutory information

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the

Company were made out, the directors took reasonable steps :

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render

adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year. (f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) other than as disclosed in the financial statements, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.



192

siGnificant events

Details of significant events are disclosed in Note 31 to the financial statements.

subsequent events

Details of subsequent events are disclosed in Note 32 to the financial statements.

auDitors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 30 March 2015.

Dato’ Kamaruzzaman abu Kassim ahamad mohamad


193

A New Energy

STATEmENT by DIRECTORSPuRSuANT TO SECTION 169(15) Of ThE COmPANIES ACT, 1965

We, Dato’ Kamaruzzaman Abu Kassim and Ahamad Mohamad, being two of the directors of Kulim (Malaysia) Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 197 to 312 are drawn up in accordance with Financial Reporting Standards and requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2014 and of their financial performance and cash flows for the year then ended.

The information set out in Note 39 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 30 March 2015.

Dato’ Kamaruzzaman abu Kassim ahamad mohamad

STATuTORy DEClARATIONPuRSuANT TO SECTION 169(16) Of ThE COmPANIES ACT, 1965

I, Azli Mohamed, being the officer primarily responsible for the financial management of Kulim (Malaysia) Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 197 to 313 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the )above named Azli Mohamed at Johor )Bahru in the State of Johor on 30 March 2015 ) azli mohamed

Before me,



194

INDEPENDENT AuDITORS’ REPORTTO ThE mEmbERS Of KulIm (mAlAySIA) bERhAD (INCORPORATED IN mAlAySIA)

report on the financial statements

We have audited the financial statements of Kulim (Malaysia) Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 197 to 312.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Financial Reporting Standards and the requirement of the Companies Act 1965 in Malaysia.The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

report on otHer leGal anD reGulatory requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the

Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 16 to the financial statements, being financial statements that have been included in the consolidated financial statements.


195

A New Energy

report on otHer leGal anD reGulatory requirements (cont’D)

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act.

otHer reportinG responsibilities

The supplementary information set out in Note 39 on page 313 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

otHer matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ernst & young abraham verghese a/l t.v. abrahamAF 0039 1664/10/16(J) Chartered Accountants Chartered Accountant

Johor Bahru, MalaysiaDate: 30 March 2015

INDEPENDENT AUDITORS’ REPORT



196

STATEmENTS Of COmPREhENSIvE INCOmEfOR ThE fINANCIAl yEAR ENDED 31 DECEmbER 2014

Group company

2014 2013 2014 2013 note rm’000 rm’000 rm’000 rm’000 restated

continuing operationsRevenue 4 1,093,665 1,013,157 183,669 200,424Cost of sales (824,425) (738,779) (92,410) (87,506)

Gross profit 5 269,240 274,378 91,259 112,918Other income 60,135 28,372 6,727 608,041Distribution expenses (6,578) (5,209) (298) (367)Administrative expenses (158,837) (136,778) (59,193) (45,509)Other expenses (25,636) (13,789) (31,030) (10,728)

profit from operating activities 138,324 146,974 7,465 664,355Interest income 6 11,820 11,067 8,470 5,030Finance costs 7 (55,197) (51,423) (5,539) (7,568)Share of results of associates 586 300 - -

Profit before tax 8 95,533 106,918 10,396 661,817Income tax expense 10 (34,005) (66,817) (1,440) (16,740)

Profit from continuing operations 61,528 40,101 8,956 645,077Discontinued operationsGain from discontinued operations, net of tax 11 246,913 425,721 - -

profit for the year 308,441 465,822 8,956 645,077

net other comprehensive income, to be reclassified to profit or loss in subsequent periodsForeign currency translation differences for foreign operations 95,613 (266,781) - - Transfer to reserves - 254 - - Cash flow hedges (9,504) 1,573 - - Fair value changes on available-for-sale financial assets 1,503 (655) 1,089 (721)

other comprehensive income for the year, net of tax 87,612 (265,609) 1,089 (721)


197

A New Energy

STATEMENTS OF COMPREHENSIvE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 (CONT’D)

Group company

2014 2013 2014 2013 note rm’000 rm’000 rm’000 rm’000 restated

total comprehensive income for the year 396,053 200,213 10,045 644,356

profit attributable to: Owners of the Company 164,303 431,068 8,956 645,077 Non-controlling interests 144,138 34,754 - -

profit for the year 308,441 465,822 8,956 645,077

total comprehensive income attributable to: Owners of the Company 193,288 306,954 10,045 644,356 Non-controlling interests 202,765 (106,741) - -

total comprehensive income for the year 396,053 200,213 10,045 644,356

basic earnings per ordinary share (sen):- from continuing operations 12 3.65 3.78- from discontinued operations 12 8.90 30.02

12.55 33.80

Diluted earnings per ordinary share (sen):- from continuing operations 12 3.63 3.74- from discontinued operations 12 8.86 29.73

12.49 33.47

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.



198

STATEmENTS Of fINANCIAl POSITIONAS AT 31 DECEmbER 2014

Group company

2014 2013 2014 2013 note rm’000 rm’000 rm’000 rm’000

assets non-current assets Property, plant and equipment 13 3,517,968 6,433,580 1,118,675 1,106,421Investment properties 14 110,768 107,758 110,768 107,758Intangible assets 15 33,439 189,762 - -Investment in subsidiaries 16 - - 674,139 784,657Investments in associates 17 76,522 2,060 - -Other investments 18 68,485 81,198 21,598 62,991

3,807,182 6,814,358 1,925,180 2,061,827

current assets Other investments 18 16,839 12,609 3,189 -Inventories 20 40,602 655,327 1,274 2,041Trade and other receivables 21 204,873 503,478 197,253 212,827Prepayments 9,532 23,293 287 383Current tax assets 15,398 27,536 2,478 12,386Derivatives 22 2,449 16,119 - -Cash and bank balances 23 342,597 377,180 160,630 147,270

632,290 1,615,542 365,111 374,907 Assets of disposal group classified as held for sale 11(b) 4,819,085 - 216,390 -

5,451,375 1,615,542 581,501 374,907

total assets 9,258,557 8,429,900 2,506,681 2,436,734


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STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014 (CONT’D)

Group company

2014 2013 2014 2013 note rm’000 rm’000 rm’000 rm’000

equity and liabilities current liabilities Trade and other payables 25 168,540 307,410 51,936 56,993Current tax liabilities 4,887 26,489 - -Loans and borrowings 24 750,924 1,030,716 150,000 130,000Dividend payable 25 - - -

924,376 1,364,615 201,936 186,993

Liabilities of disposal group classified as held for sale 11(b) 2,084,517 - - -

3,008,893 1,364,615 201,936 186,993

net current assets 2,442,482 250,927 379,565 187,914

non-current liabilities Loans and borrowings 24 451,261 1,032,921 - -Deferred tax liabilities 19 185,700 905,216 67,990 68,767

636,961 1,938,137 67,990 68,767

total liabilities 3,645,854 3,302,752 269,926 255,760

net assets 5,612,703 5,127,148 2,236,755 2,180,974

equity attributable to owners of the company Share capital 26 335,626 323,513 335,626 323,513Reserves 27 1,794,906 1,551,740 1,340,498 1,179,675Retained profits 28 1,943,596 1,905,404 560,631 677,786Reserves of disposal group classified as held for sale 11(b) (51,622) - - -

4,022,506 3,780,657 2,236,755 2,180,974non-controlling interests 1,590,197 1,346,491 - -

total equity 5,612,703 5,127,148 2,236,755 2,180,974

total equity and liabilities 9,258,557 8,429,900 2,506,681 2,436,734




200

at

tribu

tabl

e to

shar

ehol

ders

of t

he c

ompa

ny

non-

distr

ibut

able

eq

uity

re

serv

e Di

strib

u

tran

sla-

fa

ir re

valu

a

tra

nsac

cla

ssifi

ed

-tabl

e

non-

sh

are

shar

e W

arra

nt

esos

tio

n

Hed

ge

valu

e -ti

on

othe

r tr

easu

ry

-tion

as

held

re

tain

ed

cont

rollin

g to

tal

ca

pita

l pr

emiu

m

rese

rve

rese

rve

rese

rve

rese

rve

rese

rve

rese

rve

rese

rve

shar

es

rese

rve

for s

ale

profi

ts to

tal

inte

rests

eq

uity

Grou

p

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

open

ing

balan

ce a

t 1 Ja

nuar

y 201

4

323,5

13

247,5

07

90,58

6

9,715

(7

6,302

) 4,

628

(2

,696)

1,33

9,983

4,

933

(6

7,063

) 44

9

- 1,9

05,4

04

3,780

,657

1,3

46,4

91

5,127

,148

Fore

ign

exch

ange

tra

nslat

ion

diffe

renc

es

- -

- -

32,13

5

- -

- -

- -

- -

32,13

5

63,4

78

95,61

3Ca

sh fl

ow h

edge

s -

- -

- -

(4,65

3)

- -

- -

- -

- (4

,653)

(4

,851)

(9

,504)

Fa

ir va

lue ch

ange

s on

av

ailab

le-fo

r-sale

finan

cial a

sset

s -

- -

- -

- 1,5

03

- -

- -

- -

1,503

-

1,503

tota

l oth

er co

mpr

ehen

sive

inc

ome f

or th

e yea

r -

- -

- 32

,135

(4

,653)

1,5

03

- -

- -

- -

28,98

5

58,62

7

87,61

2Pr

ofit f

or th

e yea

r -

- -

- -

- -

- -

- -

- 16

4,30

3

164,

303

14

4,13

8

308,4

41

tota

l com

preh

ensiv

e i

ncom

e for

the y

ear

- -

- -

32,13

5

(4,65

3)

1,503

-

- -

- -

164,

303

19

3,288

20

2,765

39

6,053

tran

sact

ions

with

own

ers

Conv

ersio

n of

war

rant

s 11,

942

17

2,420

(3

4,85

1)

- -

- -

- -

- -

- -

149,5

11

- 14

9,511

Gran

t of e

quity

-set

tled

shar

e

optio

ns to

empl

oyee

s -

- -

20,25

4

- -

- -

- -

- -

- 20

,254

-

20,25

4Ex

ercis

e of E

mpl

oyee

shar

e opt

ions

17

1 2,5

18

- (6

07)

- -

- -

- -

- -

- 2,0

82

- 2,0

82Iss

ue o

f sha

res b

y su

bsid

iary

to

non

-con

trollin

g in

tere

sts

- -

- -

- -

- -

- -

4,57

9

- -

4,57

9

69,54

1 74

,120

Acqu

isitio

n fro

m

no

n-co

ntro

lling

inter

ests

-

- -

- -

- -

- -

- (1,

487)

-

- (1,

487)

(2

8,807

) (3

0,29

4)

Parti

al di

spos

al of

shar

es b

y

subs

idiar

y to

non

-con

trollin

g

inter

ests

-

- -

- -

- -

- -

- (2

67)

- -

(267

) 57

0

303

Divid

ends

to sh

areh

olde

rs

- -

- -

- -

- -

- -

- -

(126,1

11)

(126,1

11)

- (12

6,111)

Di

viden

ds to

non

-con

trollin

g

inter

ests

of s

ubsid

iaries

-

- -

- -

- -

- -

- -

- -

- (4

3,484

) (4

3,484

) Ac

quisi

tion

of n

ew

su

bsid

iaries

-

- -

- -

- -

- -

- -

- -

- 4

2,366

42

,366

Disp

osal

of su

bsid

iaries

-

- -

- -

- -

- -

- -

- -

- 75

5

755

Rese

rves

attri

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ble t

o

disp

osal

grou

p cla

ssifie

d

as h

eld fo

r sale

-

-

- -

46,36

0

25

- 5,2

37

- -

- (5

1,622

) -

- -

-

At 3

1 Dec

embe

r 201

4 33

5,626

42

2,445

55

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29

,362

2,1

93

- (1,

193)

1,34

5,220

4,

933

(6

7,063

) 3,2

74

(51,6

22)

1,943

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4,0

22,50

6

1,590

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5,6

12,70

3

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f C

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E f

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EN

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1 D

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014


201

A New Energy

ST

AT

EM

EN

TS

OF

CH

AN

GE

S IN

Eq

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at

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of t

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uity

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on

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ca

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rese

rve

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profi

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tal

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uity

Grou

p

rm’0

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rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

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rm’0

00

rm’0

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rm’0

00

rm’0

00

rm’0

00

rm’0

00

rm’0

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open

ing

balan

ce a

t 1 Ja

nuar

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3

320,

637

20

4,82

0

98,97

9

- 48

,766

3,8

58

(2,0

41)

1,339

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4,

933

(4

5,829

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2,597

) 2,4

04

1,474

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3,4

17,68

5

2,781

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6,1

99,65

7

Fore

ign

exch

ange

tra

nslat

ion

diffe

renc

es

- -

- -

(124,

483)

-

- -

- -

- -

- (12

4,48

3)

(142,2

98)

(266

,781)

Adjus

tmen

t to

reva

luatio

n

rese

rves

-

- -

- -

- -

254

-

- -

- -

254

-

254

Cash

flow

hed

ges

- -

- -

- 77

0

- -

- -

- -

- 77

0

803

1,5

73Fa

ir va

lue ch

ange

s on

av

ailab

le-fo

r-sale

finan

cial a

sset

s -

- -

- -

- (6

55)

- -

- -

- -

(655

) -

(655

)

tota

l oth

er co

mpr

ehen

sive

inc

ome f

or th

e yea

r -

- -

- (12

4,48

3)

770

(6

55)

254

-

- -

- -

(124,

114)

(141,4

95)

(265

,609)

Pr

ofit f

or th

e yea

r -

- -

- -

-

-

- -

- -

- 43

1,068

4

31,0

68

34

,754

4

65,82

2

tota

l com

preh

ensiv

e i

ncom

e for

the y

ear

- -

- -

(124,

483)

77

0

(655

) 25

4

- -

- -

431,0

68

306,9

54

(106,7

41)

200,

213

tran

sact

ions

with

own

ers

Conv

ersio

n of

war

rant

s 2,8

76

42,68

7

(8,39

3)

- -

- -

- -

- -

- -

37,17

0

- 37

,170

Gran

t of e

quity

-set

tled

shar

e

op

tions

to em

ploy

ees

- -

- 9,7

15

- -

- -

- -

- -

- 9,7

15

- 9,7

15Iss

ue o

f sha

res b

y su

bsid

iary

to

non

-con

trollin

g in

tere

sts

- -

- -

- -

- -

- -

- -

- -

2,990

2,9

90Tr

easu

ry sh

ares

acqu

ired

-

- -

- -

- -

- -

(21,2

34)

- -

- (2

1,234

) -

(21,2

34)

Divid

ends

to n

on-c

ontro

lling

int

eres

ts o

f sub

sidiar

ies

- -

- -

- -

- -

- -

- -

- -

(24,

718)

(2

4,71

8)

Disp

osal

of su

bsid

iaries

-

-

- -

(585

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- 31

0

- -

33,0

46

(2,4

04)

- 30

,367

(1,3

07,0

12) (

1,276

,645)

at 3

1 Dec

embe

r 201

3

323,5

13

247,5

07

90,58

6

9,715

(7

6,302

) 4,

628

(2

,696)

1,33

9,983

4,

933

(6

7,063

) 44

9

- 1,9

05,4

04

3,780

,657

1,3

46,4

91

5,127

,148



202

a

ttri

buta

ble

to s

hare

hold

ers

of t

he c

ompa

ny

non

-dis

trib

utab

le

D

istr

ibu

-t

able

sh

are

sh

are

W

arra

nt

eso

s r

eval

uati

on f

air

valu

e

oth

er

trea

sury

r

etai

ned

ca

pita

l pr

emiu

m

rese

rve

re

serv

e

rese

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re

serv

e

rese

rve

sh

ares

pr

ofits

to

tal

com

pany

r

m’0

00

r

m’0

00

r

m’0

00

r

m’0

00

r

m’0

00

r

m’0

00

r

m’0

00

r

m’0

00

r

m’0

00

r

m’0

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at

1 Ja

nuar

y 20

13

320

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20

4,8

20

98,9

79

-

897,

579

(2

,093

)

4,16

5

(45,

829)

32

,70

9

1,510

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Fair

valu

e ch

ange

s on

avai

labl

e-fo

r-sa

le fi

nanc

ial a

sset

s,

re

pres

entin

g to

tal o

ther

co

mpr

ehen

sive

inco

me

-

-

-

-

-

(7

21)

-

-

-

(7

21)

Pro

fit fo

r th

e ye

ar

-

-

-

-

-

-

-

-

645,

077

64

5,0

77To

tal c

ompr

ehen

sive

inco

me

fo

r th

e ye

ar

-

-

-

-

-

(721

)

-

-

645,

077

64

4,3

56C

onve

rsio

n of

war

rant

s

2,87

6

42,

687

(8

,393

)

-

-

-

-

-

-

37,17

0G

rant

of e

quity

-set

tled

shar

e

optio

ns t

o em

ploy

ees

-

-

-

9,

715

-

-

-

-

-

9,

715

Trea

sury

sha

res

acqu

ired

-

-

-

-

-

-

-

(2

1,234

)

-

(21,2

34)

at

31 D

ecem

ber

2013

32

3,51

3

247,

507

90

,586

9,

715

89

7,57

9

(2,8

14)

4

,165

(6

7,0

63)

67

7,78

6

2,18

0,9

74

Fair

valu

e ch

ange

s on

avai

labl

e-fo

r-sa

le fi

nanc

ial a

sset

s,

re

pres

entin

g to

tal o

ther

co

mpr

ehen

sive

inco

me

-

-

-

-

-

1,0

89

-

-

-

1,089

Pro

fit fo

r th

e ye

ar

-

-

-

-

-

-

-

-

8,95

6

8,95

6

Tota

l com

preh

ensi

ve in

com

e

for

the

year

-

-

-

-

-

1,0

89

-

-

8,95

6

10,0

45

Con

vers

ion

of w

arra

nts

11

,94

2

172,

420

(3

4,8

51)

-

-

-

-

-

-

14

9,51

1G

rant

of e

quity

-set

tled

shar

e

optio

ns t

o em

ploy

ees

-

-

-

20

,254

-

-

-

-

-

20

,254

Exe

rcis

e of

em

ploy

ee s

hare

op

tions

17

1 2,

518

-

(6

07)

-

-

-

-

-

2,

082

Div

iden

ds t

o sh

areh

olde

rs

-

-

-

-

-

-

-

-

(126

,111)

(1

26,11

1)

At

31 D

ecem

ber

2014

33

5,62

6

422

,44

5

55,7

35

29,3

62

897,

579

(1

,725

)

4,16

5

(67,

063

)

560

,631

2,

236,

755

Th

e a

cco

mp

an

yin

g a

cco

un

tin

g p

olic

ies

an

d e

xp

lan

ato

ry n

ote

s fo

rm a

n in

teg

ral p

art

of

the fi

nan

cia

l st

ate

men

ts.


203

A New Energy

STATEmENTS Of CASh flOwSfOR ThE fINANCIAl yEAR ENDED 31 DECEmbER 2014

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000 restated

operating activitiesProfit before tax- continuing operations 95,533 106,918 10,396 661,817- discontinued operations 382,600 459,974 - -

Adjustments for:Reversal of impairment loss on other investment (2,979) (5) - - Fair value changes on other investments (13,869) 3,010 1,791 (29) Allowance for slow moving inventories - 8 - - Net provision for/(reversal of) allowances for impairment losses on receivables 3,104 1,307 - - Amortisation and depreciation of:- intangible assets 1,168 1,761 - -- property, plant and equipment 351,423 305,635 17,904 15,793Change in fair value of investment properties (3,010) (12,156) (3,010) (12,156) Dividend income (1,377) (1,831) (43,160) (59,123) (Gain)/loss on:- disposal of subsidiary (885) (408,508) 24,707 (592,264)- disposal of other investments (53) 934 - 1,440- disposal of property, plant and equipment (13,519) (1,255) (11) 16Group’s share of net results in associates (586) (300) - - Grant of equity-settled share options to employees 20,254 9,715 20,254 9,715Interest expense on:- continuing operations 55,197 51,423 5,539 7,568- discontinued operations 27,875 33,388 - - Interest income (11,820) (11,067) (8,470) (5,030) Unrealised foreign exchange loss/(gain), net 52,465 80,798 (434) 648Write off of property, plant and equipment 3,815 3,789 63 3,177Negative goodwill (384) - - -Write down of inventories 70 342 - -

Operating profit before changes in working capital 945,022 623,880 25,569 31,572Changes in working capital: Inventories 40,940 55,953 768 271 Payables 38,024 (13,810) (5,984) (106,813) Receivables and prepayments (220,035) 86,846 (67,159) 95,646

Cash generated from/(used in) operations 803,951 752,869 (46,806) 20,676Tax paid (148,134) (47,500) (6,845) (14,609) Tax refunded 27,377 - 14,536 360

net cash generated from/(used in) operating activities 683,194 705,369 (39,115) 6,427



204

Group company


cash flows from investing activitiesAcquisition of subsidiaries, net cash outflow (58,184) (6,648) - - Dividends received 1,377 1,831 43,160 59,123Interest received 11,820 11,067 8,470 5,030Additions to:- equity interest in subsidiaries - - (27,892) (12,948)- other investments (21,816) (33,045) (8,430) (20,160)- property, plant and equipment (513,582) (596,581) (30,258) (25,235) Net cash inflow on disposal of subsidiaries 27,437 982,126 27,000 1,137,131Addition to fixed deposits (32,115) - - - Proceeds from:- disposal of other investment 161 43,006 - 41,093- disposal of property, plant and equipment 19,761 3,867 48 311

net cash flows (used in)/generated from investing activities (565,141) 405,623 12,098 1,184,345

cash flows from financing activitiesDividends paid to:- shareholders of the Company (126,111) (1,158,450) (126,111) (1,158,450)- minority shareholders of subsidiaries (43,484) (24,718) - - Proceeds from borrowings 283,299 638,281 20,000 - Repayment of borrowings (329,042) (734,372) - - Issue of shares arising from conversion of warrants 149,511 37,170 149,511 37,170Proceeds from exercise of ESOS 2,082 - 2,082 - Acquisition from non-controlling interests (30,294) - - - Proceeds from partial disposal of shares to non-controlling interests 303 - - - Purchase of treasury shares - (21,234) - (21,234) Issue of shares to non-controlling interests 74,120 2,990 - - Interest paid- continuing operations (55,197) (51,423) (5,539) (7,568)- discontinued operations (27,875) (33,388) - -

net cash flows (used in)/generated from financing activities (102,688) (1,345,144) 39,943 (1,150,082)

net increase/(decrease) in cash and cash equivalents 15,365 (234,152) 12,926 40,690effect of exchange rate fluctuations on cash held 8,682 46,410 434 (648)cash and cash equivalents at 1 January 321,231 508,973 146,920 106,878

cash and cash equivalents at 31 December (note 23) 345,278 321,231 160,280 146,920



205

A New Energy

NOTES TO ThE fINANCIAl STATEmENTS 31 DECEmbER 2014

1. corporate information

The Company is a public limited liability company incorporated and domiciled in Malaysia and is listed on the Main Board of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are as follows:

Principal place of businessUlu Tiram Estate81800 Ulu TiramJohor

Registered officeLevel 11, Menara KOMTAR,Johor Bahru City Centre, 80000 Johor Bahru, Johor.

The Company’s ultimate holding corporation is Johor Corporation (“JCorp”), a body corporate established under the Johor Corporation Enactment (No. 4, of 1968) (As amended by Enactment No.5, 1995).

The principal activities of the Company consist of oil palm plantation, investment holding and property investment in Malaysia. The principal activities of the subsidiaries are described in Note 16. There have been no significant changes in the nature of the principal activities during the financial year.

2. siGnificant accountinG policies

2.1 basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRSs which are mandatory for financial periods beginning on or after 1 January 2014 as described fully in Note 2.2.

The financial statements have been prepared on the historical basis, except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

2.2 changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2014, the Group and the Company adopted the following new and amended FRSand IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2014:

Amendments to FRS 132: Offsetting Financial Assets and Financial LiabilitiesAmendments to FRS 10, FRS 12 and FRS 127: Investment EntitiesAmendments to FRS 136: Recoverable Amount Disclosures for Non-Financial Assets Amendments to FRS 139: Novation of Derivatives and Continuation of Hedge Accounting IC Interpretation 21 Levies

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.



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2. siGnificant accountinG policies (cont’D)

2.3 standards issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

effective for annual periodsDescription beginning on or after

Amendments to FRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014Annual Improvements to FRSs 2010–2012 Cycle 1 July 2014Annual Improvements to FRSs 2011–2013 Cycle 1 July 2014Annual Improvements to FRSs 2012–2014 Cycle 1 January 2016Amendment to FRS 10 and FRS 128: Sales or Contribution of Assets between an Investor and its Associate or Joint venture 1 January 2016Amendment to FRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016FRS 14 Regulatory Deferral Accounts 1 January 2016Amendments to FRS 116 and FRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016Amendments to FRS 127: Equity Method in Separate Financial Statements 1 January 2016Amendment to FRS 10, FRS 12 and FRS 128: Investment Entities: 1 January 2016 Applying the Consolidation ExceptionAmendments to MFRS 101: Disclosure Initiatives 1 January 2016FRS 9 Financial Instruments 1 January 2018

The directors expect that the adoption of the above standards and interpretations will not have any material impact on the financial statements in the period of initial application.

malaysian financial reporting standards (mfrs framework)

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2017.

The Company falls within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 December 2017. In presenting its first MFRS financial statements, the Group and the Company will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. The Group and the Company are in the midst of assessing the impact of adopting the MFRS Framework.


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2.4 basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2014. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through.

- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

- Exposure, or rights, to variable returns from its involvement with the investee - The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

- The contractual arrangement with the other vote holders of the investee- Rights arising from other contractual arrangements- The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

Notes to the fiNaNcial statemeNts



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2.5 business combination and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of FRS 139 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in profit or loss or as a change to OCI. If the contingent consideration is not within the scope of FRS 139, it is measured in accordance with the appropriate FRS. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.


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2.6 investment in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.

The Group’s investments in associates are accounted for using the equity method.

Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is not tested for impairment individually.

The statement of profit or loss reflects the Group’s share of the results of operations of the associate. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of profit or loss outside operating profit and represents profit or loss after tax and non- controlling interests in the subsidiaries of the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognises the loss as ‘Share of profit of an associate’ in the statement of profit or loss.

Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

In the Company’s separate financial statements, investments in associates are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.




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2.7 current versus non-current classification

The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is:

- Expected to be realised or intended to sold or consumed in normal operating cycle; - Held primarily for the purpose of trading; - Expected to be realised within twelve months after the reporting period; or - Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least

twelve months after the reporting period.

All other assets are classified as non-current. A liability is current when: - It is expected to be settled in normal operating cycle; - It is held primarily for the purpose of trading; - It is due to be settled within twelve months after the reporting period; or - There is no unconditional right to defer the settlement of the liability for at least twelve months after the

reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.8 fair value measurement

The Group measures financial instruments such as derivatives, and non-financial assets such as investment properties, at fair value at each balance sheet date. Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed, are summarised in the respective notes.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability; or- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

valuation techniques that are appropriate in the circumstances and for which sufficient data are available, are used to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.


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2.8 fair value measurement (cont’d)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 - valuation techniques for which the lowest level input that is significant to the fair value

measurement is directly or indirectly observable Level 3 - valuation techniques for which the lowest level input that is significant to the fair value is

unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Policies and procedures are determined by senior management for both recurring fair value measurement and for non-recurring measurement.

External valuers are involved for valuation of significant assets and significant liabilities. Involvement of external valuers is decided by senior management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The senior management decides, after discussions with the external valuers, which valuation techniques and inputs to use for each case.

2.9 foreign currency

(a) functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(b) foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.




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2.9 foreign currency (cont’d)

(b) foreign currency transactions (cont’d)

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(c) foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

2.10 property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Freehold and leasehold plantation lands of the Group have not been revalued since they were last revalued in 1997. The directors have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded. As permitted under the transitional provisions of IAS 16 (Revised) Property, Plant and Equipment, these assets continue to be stated at their 1997 valuation less accumulated depreciation.

All expenditure relating to the development of oil palm field (immature field) is classified under estate development expenditure. This cost will be amortised over the useful life when the field reaches maturity. The maturity date for estate development expenditure is the point in time when such new planting areas achieve yields of at least 8.60 tonnes of fresh fruit bunches per hectare per annum or 48 months from the date of initial planting, whichever is earlier. Estate overhead expenditure is apportioned to profit or loss and estate development expenditure on the basis of proportion of mature to immature areas.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.


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2.10 property, plant and equipment (cont’d)

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, as follows:

Leasehold land 33 - 904 years Leasehold improvements and renovations 10 years Estate development expenditure 17 - 22 years from year of maturity Buildings 4 - 50 years Other assets, comprising:- vessels, plant and machinery 3 - 25 years- Furniture and equipment 2 - 15 years- Motor vehicles 3 - 5 years

Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

2.11 investment properties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.10 up to the date of change in use.




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2.12 intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

2.13 impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.


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2.13 impairment of non-financial assets(cont’d)

Impairment losses are recognised in profit or loss.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss. Impairment loss on goodwill is not reversed in a subsequent period.

2.14 financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(a) financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non- current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.




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2.14 financial assets (cont’d)

(b) loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

(d) available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.


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2.14 financial assets (cont’d)

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

2.15 impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been

incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced through the use of an allowance account. When the asset becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.




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2.15 impairment of financial assets (cont’d)

(c) available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.

2.16 cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts, pledged deposits and deposits with maturity of more than 90 days.

2.17 inventories

Inventories are measured at the lower of cost and net realisable value. Cost is determined using the weighted average cost method other than inventories relating to the Group’s quick service restaurant business segment. These inventories, comprising raw materials, groceries, poultry and consumables, equipment and spares and finished goods, are determined on the first-in, first out method.

The cost of agricultural produce is based on the weighted average method and includes the cost of direct materials and an appropriate proportion of estate revenue expenditure, manufacturing costs and overhead costs based on normal operating capacity.

Agricultural produce consist mainly of palm oil products and sugar stocks. Inventories of palm oil products comprises processed and refined palm oil products in tanks awaiting shipment at the end of the reporting period. The cost of palm oil produce includes direct materials and labour and an appropriate proportion of overheads relating to the milling and refining process.

The cost of materials, consumables and livestocks is based on the weighted average method and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

In the case of nursery seed stocks and manufactured finished goods, cost includes direct materials and labour and an appropriate share of fixed and variable overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.


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2. siGnificant accountinG policies (cont’D) 2.18 provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.19 financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

(b) other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.




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2.19 financial liabilities (cont’d)

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.20 financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

2.21 borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

2.22 employee benefits

Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.


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2.23 leases

(a) as lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) as lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are

classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.25(d).

2.24 Discontinued operation

A component of the Group is classified as a “discontinued operation” when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations or is part of a single coordinated major line of business or geographical area of operations. A component is deemed to be held for sale if its carrying amounts will be recovered principally through a sale transaction rather than through continuing use.

Upon classification as held for sale, non-current assets and disposal groups are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.




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2.25 recognition of revenue and other income

Revenue or other income is recognised to the extent that it is probable that the economic benefits will flow to the Group and the amount can be reliably measured. Revenue or other income is measured at the fair value of consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognised:

(a) sale of palm-based products These represents revenues earned from sales of the Group’s palm-based products, net of trade

allowance and duties and taxes paid. Revenue is recognised when there has been a passing of the title and risk to the customer, and:

• The produce is in a form suitable for delivery and sale and no further processing is required;

• The quantity and quality of the product can be determined with reasonable accuracy;

• The product has been despatched to the customer and is no longer under the physical control of the Group; and

• The selling price can be determined with reasonable accuracy. (b) freight and time charter hire income

Revenues from sea transportation, shipping and forwarding services which include freight, time charter and other related income are recognised when services are rendered.

(c) services

Revenue from parking management, bulk mailing and printing and plantation management services, are recognised as and when the services are rendered.

(d) rental income

Rental income from investment properties is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

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

2.26 income taxes

(a) current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.


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2.26 income taxes (cont’d)

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.27 segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report to the Group Managing Director who regularly reviews the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 36, including the factors used to identify the reportable segments and the measurement basis of segment information.




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2.28 share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.29 treasury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

2.30 contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

2.31 share-based payments

Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

That cost is recognised, together with a corresponding increase in ESOS reserve included in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The statement of profit or loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.


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2.31 share-based payments (cont’d)

equity-settled transactions (cont’d)

When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 12).

2.32 Derivative financial instruments and hedge accounting

The Group uses derivative financial instruments such as forward commodity contracts and interest rate swaps to hedge its commodity price and interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to profit or loss when the hedged item affects profit or loss.

For the purpose of hedge accounting, certain hedges are classified as cash flow hedges when hedging the exposure to variability of cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:

cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss as other operating expenses.

The Group uses forward commodity contracts to hedge its exposure to volatility in the commodity prices. Refer to Note 22 for more details.




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2.32 Derivative financial instruments and hedge accounting (cont’d)

cash flow hedges (cont’d)

Amounts recognised in OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged forecast sale occurs. When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the non-financial asset or liability.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.

3. siGnificant accountinG estimates anD JuDGements

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

(a) impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill are given in Note 15.

(b) impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount and details of the Group’s receivables at the reporting date are disclosed in Note 21.


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4. revenue

Group company


Sales of goods: Palm-based products 764,665 779,115 124,373 124,227 Livestocks and meats 13,155 3,025 - - Rubber-based manufactured products 3,317 4,588 - - Banana products 10,243 10,627 5,806 6,626 Agricultural equipment and other related products 14,222 18,308 - - Intrapreneur ventures: Freight time-charter hire and related services 163,174 127,088 - - Sales of wood-based products 3,004 1,876 - - Insurance brokerage 7,066 6,367 - - Construction of oil and gas equipment 26,146 15,531 - - Plantation management services and sales of related goods 78,460 35,541 - -Rental income from investment properties 8,836 9,260 8,836 9,260Dividend income 1,377 1,831 43,160 59,123Other income - - 1,494 1,188

1,093,665 1,013,157 183,669 200,424




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5. Gross profit

Group company


Sales of goods: Palm-based products 175,115 195,704 49,723 47,131 Livestocks and meats (1,598) (956) - - Rubber-based manufactured products 24 691 - - Banana products 3,543 3,616 (1,978) 1,881Agricultural equipment and other related products 9,855 10,358 - -Intrapreneur ventures: Freight time-charter hire and related services 47,088 45,745 - - Sales of wood-based products 410 (719) - - Insurance brokerage 7,066 6,367 - - Construction of oil and gas equipment 6,004 5,852 - - Plantation management services and sales of related goods 17,163 786 - -Rental income from investment properties 3,193 5,103 3,193 5,103Dividend income 1,377 1,831 43,160 59,123Other income - - (2,839) (320)

269,240 274,378 91,259 112,918

6. interest income

Group company


Interest income on: Deposits with licensed banks 11,820 11,067 3,059 2,716 Amount due from subsidiaries - - 4,295 2,302 Others - - 1,116 12

11,820 11,067 8,470 5,030


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7. finance costs

Group company


Interest expense on : Bank overdraft 591 620 - - Term loans 21,026 24,762 - - Other borrowings 33,580 26,041 5,539 6,330 Amount due to subsidiaries - - - 1,238

55,197 51,423 5,539 7,568

8. profit before tax

Group company


Profit before tax and net gain from discontinued operations is arrived at after charging: Allowance for slow moving inventories - 8 - - Allowance for impairment losses on trade and other receivables 5,192 1,520 - - Amortisation and depreciation of:- Intangible assets 1,168 1,761 - -- Property, plant and equipment 351,423 305,635 17,904 15,793Auditors’ remuneration:- Statutory audit - Ernst & Young 1,017 911 105 100 - Other auditors 2,095 1,921 - -- Other services - Ernst & Young 295 325 230 325- Other auditors 755 692 - - Fees paid/payable to ultimate holding corporation for services of directors 188 183 - -Loss on disposal of subsidiary - - 24,707 -Loss on disposal of property, plant and equipment - - - 16Loss on disposal of other investment - 934 - 1,440




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8. profit before tax (cont’D)

Group company


Foreign exchange loss: - Realised 150 343 - -- Unrealised 53,062 80,830 - 648Technology transfer fee payable to corporate shareholder of a subsidiary 200 200 - - Write down of inventories 70 342 - -Write off of property, plant and equipment 3,815 3,789 63 3,177Rental of plant and machinery 2,363 1,649 - -Rental of land and building paid to:- Ultimate holding corporation 629 629 629 629- Others 18,892 18,258 - - Staff costs (excluding key management personnel): - Salaries, wages, allowances and bonuses 531,123 476,152 31,992 31,788- Defined contribution plan 14,682 10,408 2,082 1,147- Other employee benefits 4,146 3,439 180 93 Fair value changes on other investments - 3,010 1,791 - and after crediting : Dividend income from:- Unquoted shares in Malaysia 1,228 1,228 1,228 1,228- Shares quoted in Malaysia 149 603 149 603- Shares quoted outside Malaysia - - 41,708 19,962- Subsidiaries (unquoted shares in Malaysia) - - 75 37,330

Gain on:- Disposal of subsidiaries 885 408,508 - 592,264- Disposal of property, plant and equipment 13,519 1,255 11 -- Disposal of other investments 53 - - Foreign exchange gain:- Realised 2,135 2,424 - -- Unrealised 597 32 434 - Rental income 942 2,259 - 988Reversal of allowance for impairment losses:- Trade and other receivables 2,088 213 - -- Other investment (non current) 2,979 5 - - Fair value gain on investment properties 3,010 12,156 3,010 12,156Fair value changes on other investments 13,869 - - 29Guaranteed return on car park concession 2,343 2,152 - -


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9. Directors’ remuneration

The details of remuneration receivable by directors of the Company during the year are as follows:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Executive Directors- Fees 378 644 341 141- Salaries, allowances and bonuses 3,052 2,307 3,040 2,307- Estimated money value of benefits-in-kind 175 196 175 196- Defined contribution plan 464 468 464 468- ESOS 371 178 371 178- Other emoluments 114 263 114 253

4,554 4,056 4,505 3,543

Non-executive Directors- Fees 372 517 342 300- Salaries, allowances and bonuses 502 1,070 493 1,070- Estimated money value of benefits-in-kind 77 140 77 140- Defined contribution plan 56 169 56 169- ESOS 630 303 630 303- Other emoluments - 203 - 194

1,637 2,402 1,598 2,176

Independent non-executive Directors- Fees 200 208 200 208- ESOS 223 107 223 107- Other emoluments 67 61 67 61

490 376 490 376

Total directors’ remuneration 6,681 6,834 6,593 6,095




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9. Directors’ remuneration (cont’D)

The number of Directors of the Company whose total remuneration during the year fell within the following bands is analysed below :

number of Directors 2014 2013

Executive Directors :RM500,000 - RM1,000,000 1 1RM1,000,001 - RM1,500,000 1 1RM2,000,001 - RM2,500,001 1 1

Non executive Directors :RM0 - RM100,000 3 3RM200,001 - RM300,000 1 1RM500,001 - RM600,000 1 1

‘Independent Non-Executive DirectorsBelow RM100,000 4 4

10. income tax expense

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2014 and 2013 are:

Group company


Current income tax- Malaysian income tax 29,688 35,745 5,807 12,916- Foreign tax - 3,520 - - (Over)/underprovision in prior year (1,388) 518 (3,590) 2,526

28,300 39,783 2,217 15,442

Deferred tax (Note 19) : Origination and reversal of temporary differences 7,774 29,548 (456) 3,720Overprovision in prior year (2,069) (2,514) (321) (2,422)

5,705 27,034 (777) 1,298

Income tax attributable to - Continuing operations 34,005 66,817 1,440 16,740 - Discontinued operations (Note 11) 135,687 34,253 - -

Income tax expenses recognised in profit and loss 169,692 101,070 1,440 16,740


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10. income tax expense (cont’D)

Reconciliation between tax expense and accounting profit

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated assessable profit for the year. The Malaysian statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective year of assessment 2016. The computation of deferred tax as at 31 December 2014 has reflected the effect of the reduction in Malaysian income tax rate.

The reconciliation between income tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2014 and 2013 are as follows:

Group company


Profit before tax from: - Continuing operations 95,533 106,918 10,396 661,817 - Discontinued operations (Note 11) 382,600 459,974 - -

478,133 566,892 10,396 661,817

Taxation at Malaysian statutory tax rate of 25% (2013: 25%) 119,533 141,723 2,599 165,454Different tax rates in other countries 19,809 6,294 - - Deferred tax recognised at different tax rate (6,764) - (2,833) - Effect of non-deductible expenses 39,802 42,915 16,518 4,700Effect of income exempt from tax (3,407) (109,945) (10,933) (153,518) Utilisation of previously unrecognised deferred tax assets (113) (336) - - Deferred tax assets not recognised 1,532 4,113 - - (Over)/underprovision of income tax in prior year - Continuing operations (1,388) 518 (3,590) 2,526 - Discontinued operations 2,757 18,302 - - Overprovision of deferred tax in prior years (2,069) (2,514) (321) (2,422)

169,692 101,070 1,440 16,740




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11. DiscontinueD operations anD Disposal Group classifieD as HelD for sale

(a) Disposals of discontinued operations in 2014

(i) Disposal of General access sdn bhd (“General access”)

During the financial year, the Group entered into an agreement for the disposal of its subsidiary, General Access, which is involved in field clearing, earthwork, road construction and resurfacing services. The decision is in line with the Group’s business exit strategy for identified companies under its Intrapreneur venture segment to maximise returns and mitigate risks.

The disposal was completed during the current financial year. (ii) Disposal of superior Harbour sdn bhd (“superior Harbour”)

On 25 September 2014, the Group announced that it had entered into an agreement for the disposal of its subsidiary, Superior Harbour which is involved in the aquaculture business. The decision is in line with the Group’s business exit strategy for identified companies under its Intrapreneur venture segment to maximise returns and mitigate risks.

The disposal was completed during the current financial year.

(iii) Disposal of nexsol sdn bhd (“nexsol”)

On 27 August 2014, the Group announced that it had entered into an agreement for the disposal of its subsidiary, Nexsol which is principally involved in manufacturing and marketing of biodiesel and related products. The decision is in line with the Group’s business exit strategy for identified companies under its Intrapreneur venture segment to maximise returns and mitigate risks.

The disposal was completed during the current financial year.


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11. DiscontinueD operations anD Disposal Group classifieD as HelD for sale (cont’D)

(a) Disposals of discontinued operations in 2014 (cont’d)

The disposals of General Access, Superior Harbour and Nexsol had the following effects on the financial position and results of the Group for the year ended 31 December 2014:

assets and liabilities of the disposed subsidiaries

General superior access Harbour nexsol total rm’000 rm’000 rm’000 rm’000

Property, plant and equipment 61 158 29,864 30,083Inventories - - 123 123Trade and other receivables 394 - 242 636Current tax assets 86 - - 86Cash and cash equivalents 13 1 76 90Trade and other payables (881) (3,355) (832) (5,068)Loans and borrowings (60) - - (60)Taxation - - (3) (3)

Net (liabilities)/assets (387) (3,196) 29,470 25,887Non-controlling interests 52 703 - 755

Net (liabilities)/assets attributable to the Group (335) (2,493) 29,470 26,642Cash proceeds from disposal (207) (320) (27,000) (27,527)

(Gain)/loss on disposal to the Group (542) (2,813) 2,470 (885)

Cash inflow arising on disposals:Cash consideration 207 320 27,000 27,527Cash and cash equivalents of subsidiaries disposed (13) (1) (76) (90)

Net cash inflow on disposals 194 319 26,924 27,437

(b) planned disposal of new britain palm oil ltd (“nbpol”)

On 9 October 2014, Sime Darby Plantation Sdn Bhd (“SDP”) served a takeover notice on NBPOL and announced its intention to make a cash offer to acquire all NBPOL shares at an offer price of GBP7.15 or PNG Kina 28.79 per NBPOL share (“Offer”).

On 23 October 2014, Kulim announced that it had received the formal offer document (“Offer Document”) from SDP and that the Offer would be presented to the shareholders of Kulim at an Extraordinary General Meeting (“EGM”) to be convened to consider the Offer.

Acceptance of the Offer would entail Kulim disposing its entire equity interest in NBPOL comprising of 73,482,619 ordinary shares in NBPOL, to SDP for a disposal consideration of approximately GBP525.4 million (equivalent to approximately RM2.75 billion).




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(b) planned disposal of new britain palm oil ltd (“nbpol”) (cont’d)

On 3 December 2014, the Kulim’s shareholders voted to accept the Offer from SDP at the Extraordinary General Meeting convened to consider the Offer.

On 27 January 2015, Sime Darby Berhad (“Sime Darby”), the parent of SDP, announced that SDP had obtained clearance from the European Commission on its proposed takeover of NBPOL.

On 18 February 2015, Sime Darby announced that all conditions precedent in the Offer Document had been fulfilled and that the Offer was now unconditional.

On 26 February 2015, the Company announced that the disposal of NBPOL was complete following the receipt of the cash consideration from SDP. Accordingly, NBPOL ceased to be a subsidiary of the Group.

As at 31 December 2014, given its impending disposal, the assets, liabilities and reserves of NBPOL have been classified as a disposal group held for sale. In accordance with the requirements of FRS 5, the results of NBPOL and other discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit after tax from discontinued operations in the statement of comprehensive income (including the comparative period). The impact on the statement of comprehensive income for the comparative period is as follows:

2013 2013 rm’000 rm’000 rm’000 originally stated adjustment restated

Revenue 2,851,753 (1,838,596) 1,013,157 Cost of sales (1,936,457) 1,197,678 (738,779)Profit before tax 149,626 (42,708) 106,918 Taxation (99,864) 33,047 (66,817)Profit from continuing operations 49,762 (9,661) 40,101 Gain from discontinued operations, net of tax 416,060 9,661 425,721


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(b) planned disposal of new britain palm oil ltd (“nbpol”) (cont’d)

The major classes of assets and liabilities of NBPOL classified as held for sale and the related reserves as at 31 December 2014 are as follows:

Group rm’000

assets:

Property, plant and equipment 3,459,279 Intangible assets 160,449 Inventories 572,721 Trade and other receivables 544,752 Prepayments 15,233 Current tax assets 7,383 Cash and cash equivalents 59,268

Assets of disposal group classified as held for sale 4,819,085

liabilities:

Deferred tax liabilities (1,044,296) Trade and other payables (174,019) Loan and borrowings (866,202)

Liabilities directly associated with disposal group classified as held for sale (2,084,517)

Net assets directly associated with disposal group classified as held for sale 2,734,568

reserves:

Translation reserve (46,360) Hedge reserve (25) Revaluation reserve (5,237)

(51,622)

companyassets:

Investment in subsidiaries 216,390

Details of the Company’s investment in subsidiaries classified as held for sale are disclosed in Note 16.




238


(c) Disclosure on discontinued operations and disposal groups classified as held for sale in year 2014

results of discontinued operations for the year ended 31 December 2014

General superior nbpol access Harbour nexsol total rm’000 rm’000 rm’000 rm’000 rm’000 (4 months) (7 months) (11 months)

Revenue 2,097,946 187 158 11 2,098,302Expenses (1,678,937) (223) (4,223) (5,383) (1,688,766)

Profit from operations 419,009 (36) (4,065) (5,372) 409,536Interest income 54 - - - 54Finance costs (27,761) (2) (112) - (27,875)Gain/(loss) on disposal to the Group - 542 2,813 (2,470) 885

Profit before tax from discontinued operations 391,302 504 (1,364) (7,842) 382,600Taxation (135,687) - - - (135,687)

Gain/(loss) from discontinued operations, net of tax 255,615 504 (1,364) (7,842) 246,913

cash flows attributable to the discontinued operations

General superior nbpol access Harbour nexsol total rm’000 rm’000 rm’000 rm’000 rm’000

Net cash from operating activities 370,341 (66) 743 3,305 374,323Net cash from investing activities (232,843) (2) - - (232,845)Net cash from financing activities (171,054) (20) - - (171,074)

Net cash (outflows)/inflows (33,556) (88) 743 3,305 (29,596)


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(d) Disposals of discontinued operations in 2013

(i) Disposal of foods and restaurants business under qsr brands bhd and its subsidiaries (“qsr”)

On 18 May 2012, qSR announced that it had entered into an agreement to dispose substantially all of its businesses and undertakings to qSR Brands (M) Holdings Sdn Bhd (formerly known as Triple Platform Sdn Bhd) (“qSRB”), a wholly-owned subidiary of Massive Equity Sdn Bhd (“MESB”).

qSR’s foods and restaurants business represents a separate major line of business of the Group and this decision was made as part of a internal restructuring of operations at the holding corporation (JCorp) level.

On 21 January 2013, qSR announced that the disposals were completed. Following the completion of the disposals, qSR was delisted from the Main Board of Bursa Malaysia Securities Berhad on 7 February 2013.

(ii) Disposal of orkim sdn bhd (“orkim”)

On 30 November 2012, the Group announced that it had entered into an agreement for the disposal of its subsidiary, Orkim which is involved in the provision of shipping and forwarding services. This decision is consistent with the Group’s strategy to focus on its main core businesses in oil palm plantations.

The disposal was completed during the previous financial year.

(iii) Disposal of pro office sdn bhd (“pro office”)

During the previous financial year, the Group entered into an agreement to dispose of its interest in Pro Office which is respectively involved in bulk mailing and printing. This decision is consistent with the Group’s strategy to focus on its main core businesses in oil palm plantations.

The disposal was completed during the previous financial year.




240


(d) Disposals of discontinued operations in 2013 (cont’d)

The disposals of qSR, Orkim and Pro Office had the following effects on the financial position and results of the Group for the year ended 31 December 2013:

assets and liabilities of the disposed subsidiaries

qsr orkim pro office total rm’000 rm’000 rm’000 rm’000

Property, plant and equipment 1,457,910 194,182 1,659 1,653,751Intangible assets 893,570 7,318 1,931 902,819Investment in associates - 27,128 - 27,128Inventories 270,254 - 311 270,565Trade and other receivables 184,096 63,805 10,348 258,249Current tax assets 14,294 - 240 14,534Cash and cash equivalents 250,910 21,701 (743) 271,868Deferred tax liabilities (88,809) (66) (278) (89,153)Employee benefits (3,347) - - (3,347)Trade and other payables (469,188) (11,081) (2,951) (483,220)Loans and borrowings (495,730) (190,410) (1,562) (687,702)Taxation (13,334) (791) - (14,125)Reserves 30,567 - - 30,567

Net assets 2,031,193 111,786 8,955 2,151,934Non-controlling interests (1,225,285) (79,274) (1,889) (1,306,448)

Net assets attributable to the Group 805,908 32,512 7,066 845,486Cash proceeds from disposal (1,137,131) (110,000) (6,863) (1,253,994)

(Gain)/Loss on disposal to the Group (331,223) (77,488) 203 (408,508)

Cash inflow arising on disposals:Cash consideration 1,137,131 110,000 6,863 1,253,994Cash and cash equivalents of subsidiaries disposed (250,910) (21,701) 743 (271,868)

Net cash inflow on disposals 886,221 88,299 7,606 982,126


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(d) Disposals of discontinued operations in 2013 (cont’d)

results of discontinued operations for the year ended 31 December 2013 (restated)

nbpol qsr orkim others total rm’000 rm’000 rm’000 rm’000 rm’000

Revenue 1,789,642 - 31,235 65,939 1,886,816Expenses (1,703,410) - (21,557) (77,823) (1,802,790)

Profit from operations 86,232 - 9,678 (11,884) 84,026Finance costs (30,798) - (2,358) (232) (33,388)Share of results of associate - - 828 - 828Gain/(loss) on disposal to the Group - 331,223 77,488 (203) 408,508

Profit before tax from discontinued operations 55,434 331,223 85,636 (12,319) 459,974Taxation (33,044) - (65) (1,144) (34,253)

Gain from discontinued operations, net of tax 22,390 331,223 85,571 (13,463) 425,721

cash flows attributable to the discontinued operations

qsr orkim others total rm’000 rm’000 rm’000 rm’000

Net cash from operating activities 472,101 (4,365) 3,982 471,717Net cash from investing activities (225,712) (223) (2) (225,937)Net cash from financing activities (170,993) (6,080) (20) (177,093)

Net cash inflows/(outflows) 75,396 (10,668) 3,960 68,687




242

12. earninGs per sHare

Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year.

The following reflect the profit and share data used in the computation of basic earnings per share for the years ended 31 December:

Group

2014 2013 rm’000 rm’000

Profit for the year attributable to shareholders- continuing operations 47,791 48,210- discontinued operations 116,512 382,858

164,303 431,068

‘000 ‘000

Weighted average number of ordinary shares 1,308,968 1,275,386

sen sen

Basic earnings per share - continuing operations 3.65 3.78- discontinued operations 8.90 30.02

12.55 33.80

The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

Group

2014 2013 ’000 ’000

Weighted average number of ordinary shares for basic earnings per share computation* 1,308,968 1,275,386Effect of dilution arising from :- conversion of warrants 5,540 11,189- exercise of share options 985 1,238

Weighted average number of ordinary shares adjusted for the effect of dilution 1,315,493 1,287,813


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12. earninGs per sHare (cont’D)

* The weighted average number of shares takes into account the weighted average effect of changes in treasury share transactions during the year.

Group

2014 2013 sen sen

Diluted earnings per share:- continuing operations 3.63 3.74- discontinued operations 8.86 29.73

12.49 33.47

13. property, plant anD equipment

long leasehold estate term improve land develop capital freehold leasehold -ment and use -ment other work in land land renovation rights expenditure buildings assets progress totalGroup rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

cost

At 1 January 2013 1,298,416 771,267 353 - 2,290,884 1,332,208 2,274,247 328,032 8,295,407Acquisition of subsidiaries - 2,212 - - - 57 1,832 1,684 5,785Additions - 59,960 - - 249,448 7,520 85,691 194,434 597,053Disposals - - - - - (25) (5,925) - (5,950) Write off - - - - (33,131) (562) (6,415) (99) (40,207) Reclassification - - - - - 54,405 251,501 (305,906) - Exchange differences - - - - (267,903) (104,135) (34,010) (15,291) (421,339)

At 31 December 2013/ 1 January 2014 1,298,416 833,439 353 - 2,239,298 1,289,468 2,566,921 202,854 8,430,749Acquisition of subsidiaries - - - 76,185 2,286 12 574 - 79,057Additions - 2,648 571 4,782 152,608 7,050 175,307 172,942 515,908Disposals (2,693) (1,173) - - (1,686) (1,504) (16,742) - (23,798) Write off (3,317) - - - (11,907) (644) (3,446) - (19,314) Disposal of subsidiaries - - - - - (29,913) (58,156) (178) (88,247) Attributable to discontinued operations - - - - (1,793,122) (1,192,209) (1,884,652) (92,631) (4,962,614) Reclassification - - - - - 56,605 107,078 (163,683) - Exchange differences - - - - 322,054 40,747 28,980 9,950 401,731

At 31 December 2014 1,292,406 834,914 924 80,967 909,531 169,612 915,864 129,254 4,333,472




244

13. property, plant anD equipment (cont’D)

long leasehold estate term improve land develop capital freehold leasehold -ment and use -ment other work in land land renovation rights expenditure buildings assets progress totalGroup rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

accumulated depreciation

At 1 January 2013 - 49,740 92 - 373,022 249,963 946,193 - 1,619,010Charge for the year - 9,121 41 - 49,581 42,573 204,319 - 305,635Disposals - - - - - (194) (3,144) - (3,338) Write off - - - - (30,016) (538) (5,864) - (36,418) Exchange differences - - - - 4,444 9,161 36,539 - 50,144

At 31 December 2013/ 1 January 2014 - 58,861 133 - 397,031 300,965 1,178,043 - 1,935,033Charge for the year - 10,914 - - 84,949 41,884 213,676 - 351,423Disposals - (35) - - (396) (454) (15,810) - (16,695) Write off - - - - (11,641) (612) (3,246) - (15,499) Disposal of subsidiaries - - - - - (6,953) (11,459) (18,412) Attributable to discontinued operations - - - - (216,762) (247,740) (1,038,833) - (1,503,335) Exchange differences - - - - 31,775 10,957 18,734 - 61,466

At 31 December 2014 - 69,740 133 - 284,956 98,047 341,105 - 793,981

accumulated impairment losses

At 1 January 2013 61,293 540 1,276 - 12,177 30,867 50,286 940 157,379Attributable to discontinued operations (61,293) (540) (1,276) - - (30,867) (1,267) - (95,243)

At 31 December 2013/ 1 January 2014 - - - - 12,177 - 49,019 940 62,136Disposals - - - - - - (157) (704) (861) Disposal of subsidiaries - - - - - - (39,752) - (39,752)

At 31 December 2014 - - - - 12,177 - 9,110 236 21,523

net carrying amount:

At 31 December 2013 1,298,416 774,578 220 - 1,830,090 988,503 1,339,859 201,914 6,433,580

At 31 December 2014 1,292,406 765,174 791 80,967 612,398 71,565 565,649 129,018 3,517,968


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Other assets of the Group can be further analysed as follows :

vessels, furniture plant and and motor machinery equipment vehicles totalGroup rm’000 rm’000 rm’000 rm’000

cost

At 1 January 2013 2,152,412 78,279 43,556 2,274,247Acquisition of subsidiaries 1,556 104 172 1,832Additions 75,929 4,398 5,364 85,691Disposals (905) (90) (4,930) (5,925)Write off (3,657) (452) (2,306) (6,415)Reclassification 251,424 77 - 251,501Exchange differences (34,010) - - (34,010)

At 31 December 2013/1 January 2014 2,442,749 82,316 41,856 2,566,921Acquisition of subsidiaries - 479 95 574Additions 163,052 3,255 9,000 175,307Disposals (13,929) (1,069) (1,744) (16,742)Write off (1,269) (354) (1,823) (3,446)Disposal of subsidiaries (52,848) (4,630) (678) (58,156)Attributable to discontinued operations (1,884,652) - - (1,884,652)Reclassification 106,746 332 - 107,078Exchange differences 28,980 - - 28,980

At 31 December 2014 788,829 80,329 46,706 915,864


At 1 January 2013 889,707 28,915 27,571 946,193Charge for the year 194,883 4,747 4,689 204,319Disposals (185) (313) (2,646) (3,144) Write off (3,124) (1,170) (1,570) (5,864) Exchange differences 36,539 - - 36,539

At 31 December 2013/1 January 2014 1,117,820 32,179 28,044 1,178,043Charge for the year 201,652 4,190 7,834 213,676Disposals (13,908) (711) (1,191) (15,810) Write off (1,111) (345) (1,790) (3,246) Disposal of subsidiaries (8,167) (2,675) (617) (11,459) Attributable to discontinued operations (1,038,833) - - (1,038,833) Exchange differences 18,734 - - 18,734

At 31 December 2014 276,187 32,638 32,280 341,105




246


Other assets of the Group can be further analysed as follows : (cont’d)

vessels, furniture plant and and motor machinery equipment vehicles totalGroup rm’000 rm’000 rm’000 rm’000

accumulated impairment losses

At 1 January 2013 49,009 1,267 10 50,286Impairment loss for the year - (1,267) - (1,267)

At 31 December 2013/1 January 2014 49,009 - 10 49,019Disposals (157) - - (157) Disposal of subsidiaries (39,752) - - (39,752)

At 31 December 2014 9,100 - 10 9,110

carrying amount

At 31 December 2013 1,275,920 50,137 13,802 1,339,859

At 31 December 2014 503,542 47,691 14,416 565,649

long term estate capital freehold leasehold development other work in land land expenditure buildings assets progress totalcompany rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

cost

At 1 January 2013 774,737 207,768 164,844 53,183 31,844 8,734 1,241,110Additions - - 18,684 250 1,602 4,699 25,235Disposals - - - - (533) (99) (632)Write off - - (11,389) (42) (651) - (12,082)Reclassification - - - 552 77 (629) -

At 31 December 2013/ 1 January 2014 774,737 207,768 172,139 53,943 32,339 12,705 1,253,631Additions - 2,127 19,645 367 3,962 4,157 30,258Disposals - - - - (205) - (205) Write off - - (3,073) (233) (847) (49) (4,202) Reclassification - - - 9,649 414 (10,063) -

At 31 December 2014 774,737 209,895 188,711 63,726 35,663 6,750 1,279,482


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long term estate capital freehold leasehold development other work in land land expenditure buildings assets progress totalcompany rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

accumulated depreciation At 1 January 2013 - 13,345 71,662 31,333 24,287 - 140,627Charge for the year - 1,218 10,342 1,789 2,444 - 15,793Disposals - - - - (305) - (305)Write off - - (8,274) (42) (589) - (8,905)

At 31 December 2013/ 1 January 2014 - 14,563 73,730 33,080 25,837 - 147,210Charge for the year - 1,232 12,341 1,871 2,460 - 17,904Disposals - - - - (168) - (168) Write off - - (3,073) (222) (844) - (4,139)

At 31 December 2014 - 15,795 82,998 34,729 27,285 - 160,807

net carrying amount:

At 31 December 2013 774,737 193,205 98,409 20,863 6,502 12,705 1,106,421

At 31 December 2014 774,737 194,100 105,713 28,997 8,378 6,750 1,118,675

Other assets of the Company can be further analysed as follows :

furniture plant and and motor machinery fittings vehicles totalcompany rm’000 rm’000 rm’000 rm’000

cost

At 1 January 2013 13,741 8,445 9,658 31,844Additions 272 396 934 1,602Disposals - - (533) (533)Write off (208) (132) (311) (651)Reclassification - 77 - 77

At 31 December 2013/1 January 2014 13,805 8,786 9,748 32,339Additions 1,905 636 1,421 3,962Disposals - (61) (144) (205)Write off (230) (95) (522) (847)Reclassification 136 278 - 414

At 31 December 2014 15,616 9,544 10,503 35,663




248


Other assets of the Company can be further analysed as follows : (cont’d)

furniture plant and and motor machinery fittings vehicles totalcompany rm’000 rm’000 rm’000 rm’000


At 1 January 2013 11,087 6,388 6,812 24,287Charge for the year 718 758 968 2,444Disposals - - (305) (305)Write off (208) (131) (250) (589)

At 31 December 2013/1 January 2014 11,597 7,015 7,225 25,837Charge for the year 869 609 982 2,460Disposals - (24) (144) (168)Write off (230) (92) (522) (844)

At 31 December 2014 12,236 7,508 7,541 27,285

carrying amount

At 31 December 2013 2,208 1,771 2,523 6,502

At 31 December 2014 3,380 2,036 2,962 8,378

Assets held under finance lease

During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of approximately RM515,908,000 (2013 : RM597,053,000) and RM30,258,000 (2013 : RM25,235,000) respectively, of which RM2,326,000 (2013 : RM472,000) of the Group’s acquisitions were made via finance lease.

Included in property, plant and equipment of the Group are assets acquired under lease arrangements at net book value of RM2,944,000 (2013 : RM3,092,000). The leased assets consist of equipment and motor vehicles (Note 24).


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Assets pledged as security for borrowings

Group

2014 2013 rm’000 rm’000

Carrying amount of assets pledged as security for borrowings :- long term leasehold lands 755 -- estate development expenditure - 1,172,491- buildings 1,370 902,743- other property, plant and equipment 531,547 1,371,161

533,672 3,446,395

14. investment properties

Group and company

2014 2013 rm’000 rm’000

At 1 January 107,758 95,602Net gain from fair value adjustments recognised in profit or loss (Note 8) 3,010 12,156

At 31 December 110,768 107,758

Investment properties comprise a number of commercial properties that are leased to third parties. Subsequent renewals are negotiated with the lessee and no contingent rents are charged.

As at 31 December 2014 and 2013, the fair values of the properties are based on valuations performed by Rahim & Co, an accredited independent valuer. Rahim & Co is a specialist in valuing various types of investment properties.

Group and company

2014 2013 rm’000 rm’000

Rental income derived from investment properties 8,836 9,260Direct operating expenses (including repairs and maintenance) generating rental income (included in cost of sales) (5,643) (4,157)

Profit arising from investment properties carried at fair value 3,193 5,103




250

14. investment properties (cont’D)

The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

The Group has assessed that the highest and best use of its properties do not differ from their current use.

In arriving at the fair value of investment properties, the comparison method and investment method of valuation have been adopted.

The investment method entails the determination of the probable gross annual rental the property is capable of producing and deducting the outgoings to arrive at the annual net income. An appropriate discount rate is applied on the estimated annual income to arrive at the market value of the property. Significant unobservable inputs include the gross rental value per square foot, rental growth rate, estimated outgoings per square foot and discount rate.

The comparison method entails critical analyses of recent transactions/sales of similar types of land in the locality and making relevant adjustments for differences in factors like location, shape and size, terrain, tenure, restriction in interest to arrive at the market value.

15. intanGible assets

concession supplier Goodwill rights relationship others totalGroup rm’000 rm’000 rm’000 rm’000 rm’000

cost

At 1 January 2013 19,959 14,405 176,888 3,537 214,789Acquisition of subsidiaries 8,589 - - - 8,589Exchange differences - - (21,733) - (21,733)

At 31 December 2013 /1 January 2014 28,548 14,405 155,155 3,537 201,645Attributable to discontinued operations - - (160,449) - (160,449) Exchange differences - - 5,294 - 5,294

At 31 December 2014 28,548 14,405 - 3,537 46,490


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15. intanGible assets (cont’D)

concession supplier Goodwill rights relationship others totalGroup rm’000 rm’000 rm’000 rm’000 rm’000

accumulated amortisation and impairment

At 1 January 2013 2,780 5,167 - 2,175 10,122 Amortisation - 468 - 1,293 1,761

At 31 December 2013 /1 January 2014 2,780 5,635 - 3,468 11,883Amortisation - 1,099 - 69 1,168

At 31 December 2014 2,780 6,734 - 3,537 13,051

net carrying amount

At 31 December 2013 25,768 8,770 155,155 69 189,762

At 31 December 2014 25,768 7,671 - - 33,439

Supplier relationship

The supplier relationship arose from the acquisition of palm oil plantations in Papua New Guinea and reflect the net present value of the future benefits from purchase of fresh fruit bunches produced by neighbouring smallholders. As at 31 December 2014, the supplier relationship has been presented as assets of disposal group held for sale.

Concession rights

The concession rights arose from a 15 year Concession Agreement with the ultimate holding corporation for a subsidiary to manage, operate and maintain a multi-storey car park together with other parking facilities at Persada Johor International Convention Centre. The Group anticipates that the cost will be recovered through future income derived from the car park operations. The income is guaranteed by the ultimate holding corporation pursuant to the Concession Agreement. The Concession Agreement has a remaining amortisation period of 6.8 years (2013 : 7.8 years).




252

15. intanGible assets (cont’D)

Impairment testing of intangible assets with indefinite useful lives

For the purpose of impairment testing, intangible assets with indefinite useful lives have been allocated to the following cash-generating units (“CGU”).

supplier concession Goodwill relationship rights total

2014 2013 2014 2013 2014 2013 2014 2013Group rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

Parking operator - - - - 7,671 8,770 7,671 8,770 Shipping and forwarding agent 5,829 5,829 - - - - 5,829 5,829Provision of sea transportation and related services 5,660 5,660 - - - - 5,660 5,660Insurance broker 1,642 1,642 - - - - 1,642 1,642Agricultural fertilizer trading and biotechnology research and development 3,584 3,584 - - - - 3,584 3,584Palm oil milling - - - 155,155 - - - 155,155Construction of oil and gas equipment 8,589 8,589 - - - - 8,589 8,589Others 464 464 - - - 69 464 533

25,768 25,768 - 155,155 7,671 8,839 33,439 189,762

Key assumptions used in determining the recoverable amounts

The recoverable amount of the supplier relationship attributable to discontinued operations has been determined based on fair value less costs to sell. The disposal consideration from the planned disposal of NBPOL (as disclosed in Note 11) was used as the basis to estimate the fair value less costs to sell. Since the fair value less costs to sell exceed the carrying amount of the CGU, no impairment loss has been recognised in respect of the supplier relationship.

In respect of the other intangible assets not attributable to discontinued operations, the recoverable amount of the CGUs have been determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management.

The key assumptions on which management has based its cash flow projections are as follows:

• Cash flows are projected based on the management’s most recent 5-year business plan.

• Profit margins are projected based on the industry trends, historical profit margin achieved or pre-determined profit margin for property projects

• Discount rates used for cash flows discounting purpose is the Group’s weighted average cost of capital. The average discount rate applied for cash flow projections is 10%.

The values assigned to the key assumptions represent management’s assessment of future trends in the industry.


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A New Energy

16. investment in subsiDiaries

company

2014 2013 rm’000 rm’000

At cost :Unquoted shares in Malaysia 590,053 589,972Unquoted shares outside Malaysia 105,791 - Less : Impairment losses (21,705) (21,705)

674,139 568,267quoted shares outside Malaysia - 216,390

674,139 784,657

Market value:quoted shares outside Malaysia - 1,577,065

As disclosed in Note 11(b), the Company’s investment in New Britain Palm Oil Limited amounting to RM216,390,000 has been classified as held for sale.

Details of the subsidiaries are as follows: name of subsidiaries country of principal activities % of ownership % of ownership incorporation interest held by interest held by the Group non-controlling interests*

2014 2013 2014 2013

Held by the company :

Mahamurni Plantations Sdn. Bhd. Malaysia Oil palm plantation 100.00% 100.00% - -Selai Sdn. Bhd. Malaysia Oil palm plantation 100.00% 100.00% - -

Ulu Tiram Manufacturing Company (Malaysia) Sdn. Bhd. Malaysia Oil palm plantation 100.00% 100.00% - -

Kumpulan Bertam Plantations Malaysia Oil palm plantation 94.49% 94.49% 5.51% 5.51% Berhad

EPA Management Sdn. Bhd. Malaysia Investment holding, 100.00% 100.00% - - provision of management services and consultancy, and mechanical equipment assembler

Skellerup Industries (Malaysia) Malaysia Manufacturer of 100.00% 100.00% - - Sdn. Bhd. rubber-based products




254

16. investment in subsiDiaries (cont’D)

Details of the subsidiaries are as follows: (cont’d) name of subsidiaries country of principal activities % of ownership % of ownership incorporation interest held by interest held by the Group non-controlling interests*

2014 2013 2014 2013

Held by the company (cont’d) :

Kulim Topplant Sdn. Bhd. Malaysia Production of oil palm 60.00% 60.00% 40.00% 40.00% clones

JTP Trading Sdn. Bhd. Malaysia Trading/distribution of 100.00% 100.00% - - tropical fruits

Kulim Energy Sdn. Bhd. Malaysia Investment holding 80.00% 100.00% 20.00% -

Pristine Bay Sdn. Bhd. Malaysia Investment holding 51.00% 51.00% 49.00% 49.00%

Kulim Plantations (Malaysia) Malaysia Oil palm plantation 100.00% 100.00% - - Sdn. Bhd.

+@ New Britain Palm Papua New Oil palm plantation 48.97% 48.97% 51.03% 51.03% Oil Limited Guinea

Sindora Berhad Malaysia Investment holding, 100.00% 100.00% - - operations of oil palm million and rubber estates

Cita Tani Sdn. Bhd. Malaysia Cultivation of sugar cane 100.00% 100.00% - - and other agriculture produce

Renown value Sdn. Bhd. Malaysia Cultivation of pineapples 75.00% 75.00% 25.00% 25.00% and other agricultural produce

Kulim Nursery Sdn. Bhd. Malaysia Oil palm nursery and other 75.00% 75.00% 25.00% 25.00% related services

The Secret of Secret Garden Malaysia Marketing of personal 100.00% 100.00% - - Sdn. Bhd. care products

Danamin Sdn. Bhd. Malaysia Construction of oil and gas 60.00% 60.00% 40.00% 40.00% equipment

PT Wisesa Sumber Inspirasi Indonesia Investment holding 74.00% - 26.00% - Nusantara

Asia Economic Development Hong Kong Investment holding 54.21% - 45.79% - Fund Limited

Kulim Energy Nusantara Malaysia Investment holding 100.00% - - - Sdn. Bhd.


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2014 2013 2014 2013

Held through mahamurni plantations sdn. bhd. :

Pembangunan Mahamurni Malaysia Investment holding 100.00% 100.00% - - Sdn. Bhd.

United Malayan Agricultural Malaysia Oil palm plantation 100.00% 100.00% - - Corporation Berhad

Held through ulu tiram manufacturing company (malaysia) sdn. bhd. :

EPA Futures Sdn. Bhd. Malaysia Dormant 51.00% 51.00% 49.00% 49.00% Held through epa management sdn. bhd. : Akli Resources Sdn. Bhd. Malaysia Provider of in-house and 95.00% 95.00% 5.00% 5.00% external training programmes

Edaran Badang Sdn. Bhd. Malaysia Dealer in agricultural 75.00% 75.00% 25.00% 25.00% machinery and parts

Kulim Civilworks Sdn. Bhd. Malaysia Facilities maintenance, 75.00% 75.00% 25.00% 25.00% project and construction works

Panquest ventures Limited British virgin Dormant 100.00% 100.00% - - Island

Kulim Livestocks Sdn. Bhd. Malaysia Breeding and sale of cattle 100.00% 100.00% - -

Special Appearance Sdn. Bhd. Malaysia Production house and 90.00% 90.00% 10.00% 10.00% event management

Superior Harbour Sdn. Bhd. Malaysia Aquaculture - 78.00% - 22.00%

Extreme Edge Sdn. Bhd. Malaysia Computer equipment 75.00% 75.00% 25.00% 25.00% supplier and services

Pinnacle Platform Sdn. Bhd. Malaysia Software maintenance and 95.00% 95.00% 5.00% 5.00% supplier

Kulim Safely Training & Services Malaysia Provision of training services 100.00% 100.00% - - Sdn. Bhd. and any other services related to occupational safety, health, environmental and security systems

+PT Kulim Agro Persada Indonesia Management services 100.00% 100.00% - -




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2014 2013 2014 2013

Held through Kulim livestocks sdn. bhd. :

Exquisite Livestock Sdn. Bhd. Malaysia Commercial cattle farming 100.00% 100.00% - - Held through edaran badang sdn. bhd. :

Perfect Synergy Trading Sdn. Bhd. Malaysia Fertilizer supplier 56.25% 56.25% 43.75% 43.75%

Optimum Status Sdn. Bhd. Malaysia Mill maintenance 56.25% 56.25% 43.75% 43.75%

Held through Kulim civilworks sdn. bhd. :

KCW Hardware Sdn. Bhd. Malaysia Dormant 75.00% 75.00% 25.00% 25.00%

KCW Kulim Marine Services Malaysia Dormant 75.00% 75.00% 25.00% 25.00% Sdn. Bhd.

KCW Electrical Sdn. Bhd. Malaysia Dormant 75.00% 75.00% 25.00% 25.00%

KCW Roadworks Sdn. Bhd Malaysia Dormant 75.00% 75.00% 25.00% 25.00% Held through skellerup industries (malaysia) sdn. bhd. :

Skellerup Foam Products Malaysia Dormant 100.00% 100.00% - - (Malaysia) Sdn. Bhd.

Skellerup Latex Products (M) Malaysia Dormant 100.00% 100.00% - - Sdn. Bhd.

SIM Manufacturing Sdn. Bhd. Malaysia Investment holding and 90.00% 90.00% 10.00% 10.00% manufacturers and dealers in rubber and rubber products of all kinds

Held through extreme edge sdn. bhd.

Sovereign Multimedia Resources Malaysia Information and communication 75.00% - 25.00% - Sdn. Bhd. technology business


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2014 2013 2014 2013

Held through Jtp trading sdn. bhd. :

JTP Montel Sdn. Bhd. Malaysia Trading and distribution of 100.00% 100.00% - - tropical fruits

Held through new britain palm oil limited :

+Dami Australia Pty. Limited Australia Research and production 48.97% 48.97% 51.03% 51.03% of oil palm seeds

+New Britain Nominees Limited Papua New Operate as legal entity for 48.97% 48.97% 51.03% 51.03% Guinea New Britain Palm Oil Limited Share Ownership Plan

+Guadalcanal Plains Oil Limited Solomon Operate as legal entity for 39.18% 39.18% 60.82% 60.82% Islands New Britain Palm Oil

+New Britain Plantation Services Singapore Sale of germinated oil palm 48.97% 48.97% 51.03% 51.03% Pte. Limited seeds

+Ramu Agri-Industries Limited Papua New Oil palm, cultivation of sugar 48.97% 48.97% 51.03% 51.03% Guinea cane and other agriculture produce

+Dumpu Limited Papua New Landholding 48.97% 48.97% 51.03% 51.03% Guinea

+New Britain Oils Limited United Refinery 48.97% 48.97% 51.03% 51.03% Kingdom

+Kula Palm Oil Limited Papua New Oil palm cultivation and 39.18% 39.18% 60.82% 60.82% Guinea processing

+Plantation Contracting Papua New Contractual earthworks and 48.97% 48.97% 51.03% 51.03% Services Limited Guinea roadworks projects +Poliamba Limited Papua New Oil palm cultivation 39.18% 39.18% 60.82% 60.82% Guinea




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2014 2013 2014 2013

Held through sindora berhad:

Sindora Wood Products Sdn. Bhd. Malaysia Property letting 100.00% 100.00% - -

Sindora Timber Products Malaysia Dormant 100.00% 100.00% - - Sdn. Bhd.

Sindora Trading Sdn. Bhd. Malaysia Dormant 100.00% 100.00% - -

Sindora Development Sdn. Bhd. Malaysia Dormant 100.00% 100.00% - -

Sindora Timber Sdn. Bhd. Malaysia Timber logging, processing 82.03% 82.03% 17.97% 17.97% and sale of sawn timber, timber doors, laminated timber scantling and trading of wood products

Granulab (M) Sdn. Bhd. Malaysia Trading of GranuMas, a 90.00% 90.00% 10.00% 10.00% granular synthetic bone graft

Epasa Shipping Agency Sdn. Bhd. Malaysia Shipping and forwarding agent 100.00% 100.00% - -

#E.A. Technique (M) Berhad Malaysia Provision of sea transportation 50.60% 51.00% 49.40% 49.00% and related services

Microwell Bio Solutions Sdn. Bhd. Malaysia Trading of agricultural 60.00% 60.00% 40.00% 40.00% fertilizers, water treatment, biotechnology research and development

MIT Insurance Brokers Sdn. Bhd. Malaysia Insurance broking and 75.00% 90.00% 25.00% 10.00% consultancy

Held through sindora timber sdn. bhd.:

General Access Sdn. Bhd. Malaysia Field clearing, earthwork, - 71.98% - 28.02% road construction and resurfacing

Tiram Fresh Sdn. Bhd. Malaysia Cultivation and trading of 82.03% 82.03% 17.97% 17.97% mushroom and related products

Jejak Juara Sdn. Bhd. Malaysia Manufacturers and dealers 72.92% 72.92% 27.08% 27.08% in rubber products


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2014 2013 2014 2013

Held through e.a. technique (m) berhad:

Johor Shipyard & Engineering Malaysia Shipbuilding, fabrication of 50.60% 51.00% 49.40% 49.00% Sdn. Bhd. steel structures, engineering services and consultancy

Held through microwell bio solutions sdn. bhd.:

Microwell Trading Sdn. Bhd. Malaysia Trading of biochemical 60.00% 60.00% 40.00% 40.00% fertilizer

Held through Danamin sdn. bhd.: Dq-IN Sdn. Bhd. Malaysia Dormant 60.00% - 40.00% -

Xcot Tech Sdn. Bhd. Malaysia Dormant 60.00% - 40.00% -

Held through pt Wisesa inspirasi nusantara:

+PT Sawit Sumber Rejo Indonesia Oil palm plantation 70.30% - 29.70% -

+PT Wahana Semesta Kharisma Indonesia Oil palm plantation 70.30% - 29.70% -

+PT Harapan Barito Sejahtera Indonesia Oil palm plantation 70.30% - 29.70% -

* Equals to the proportion of voting rights held+ Audited by firms other than Ernst & Young@ Listed on Port Moresby Stock Exchange and London Stock Exchange# Listed on Main Board of Bursa Malaysia Securities Berhad




260


acquisition of subsidiaries in 2014

acquisition of pt Wisesa inspirasi nusantara (“pt Win’)

During the current financial year, the Group acquired 8,318,000 ordinary shares in PT WIN representing 74% of the issued and paid up share capital of PT WIN for a total purchase consideration of RM58,754,000. Following the acquisition of the interest, PT WIN became a subsidiary of the Group.

acquisition of sovereign multimedia resources sdn bhd (“smr”)

During the current financial year, the Group acquired 250,000 ordinary shares in SMR representing 100% of the issued and paid up share capital of SMR for a total purchase consideration of RM2,825,000. Following the acquisition of the interest, SMR became a subsidiary of the Group.

acquisition of asia economic Development fund limited (“aeDfl”)

On 23 April 2014, Kulim sent a notice of conversion to AEDFL to exercise its right to convert its existing holdings of Irredeemable Convertible of Loan Securities (“ICCULS”) in AEDEL into ordinary shares of AEDFL. Following the conversion of the ICCULS into ordinary shares, Kulim held 54.21% of the total issued and paid-up share capital of AEDFL, thus making AEDFL a subsidiary of the Group.

The acquisitions of PT WIN, SMR and AEDFL had the following effects on the Group’s assets and liabilities on the acquisition date:

fair values recognised on acquisition pt Win smr aeDfl total rm’000 rm’000 rm’000 rm’000

Property, plant and equipment 78,577 480 - 79,057Investment in associate - - 69,630 69,630Cash and cash equivalents 1,508 1,816 71 3,395Receivables 24 1,270 210 1,504Payables (712) (357) (1,149) (2,218)

Net identifiable assets 79,397 3,209 68,762 151,368Less : Non-controlling interest on acquisition (20,643) - (21,723) (42,366)

Group’s share of net assets 58,754 3,209 47,039 109,002Negative goodwill on acquisition - (384) - (384)

Total cost of acquisition 58,754 2,825 47,039 108,618Less: Non cash consideration - - (47,039) (47,039)

Consideration settled in cash 58,754 2,825 - 61,579Cash and cash equivalents acquired (1,508) (1,816) (71) (3,395)

Net cash outflow/(inflow) 57,246 1,009 (71) 58,184


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Disposal of subsidiaries in 2014

As disclosed in Note 11, the Group disposed of its equity interests in General Access, Superior Harbour and Nexsol for a total consideration of RM27,527,000 during the year. The effects of the disposals on the financial position and results of the Group and the Company are disclosed in Note 11(a).

acquisition of subsidiary in 2013

During the previous financial year, the Group acquired 1,059,000 ordinary shares in Danamin Sdn. Bhd. (“Danamin”) representing 60% of the issued and paid up share capital of Danamin Sdn. Bhd. for a total purchase consideration of RM10,548,000. Following the acquisition of the interest, Danamin became a subsidiary of the Group. The acquisition of Danamin had the following effect on the Group’s assets and liabilities on the acquisition date:

fair value recognised on acquisition rm’000

Property, plant and equipment 5,785Inventory 50Cash and cash equivalents 3,900Receivables 8,322Borrowings (12,187) Payables (2,149) Current tax liabilities (372)

Net identifiable assets 3,349Less : Non-controlling interest on acquisition (1,390)

Group’s share of net assets 1,959Goodwill on acquisition 8,589

Consideration paid, satisfied in cash 10,548Cash and cash equivalents acquired (3,900)

Net cash outflow 6,648

Disposal of subsidiaries in 2013

As disclosed in Note 11(d) , the Group disposed of its equity interest in qSR, Orkim and Pro Office for a total consideration of RM1,253,994,000 during the previous financial year. The effect of the disposals on the financial position and results of the Group and the Company is disclosed in Note 11(d).




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summarised financial information of subsidiaries which have non-controlling interests that are material to the Group

Proportion of equity interest held by non-controlling interests:

2014 2013 % %

New Britain Palm Oil Limited. (“NBPOL”) 51.03% 51.03% E.A. Technique (M) Berhad (“EAT”) 49.40% 49.00%

Accumulated balances of non-controlling interests:

2014 2013 rm’000 rm’000

NBPOL 1,384,846 1,249,916EAT 132,713 93,121 Profit allocated to non-controlling interests:

2014 2013 rm’000 rm’000

NBPOL 137,471 11,426EAT 6,430 27,882

Summarised statements of financial position before intra-group elimination:

nbpol eat total rm’000 rm’000 rm’000

at 31 December 2014

Current assets 1,199,357 120,832 1,320,189Non-current assets 3,619,728 541,776 4,161,504Current liabilities (1,040,221) (90,583) (1,130,804) Non-current liabilities (1,044,296) (303,375) (1,347,671)

total equity 2,734,568 268,650 3,003,218

Attributable to:- Equity holders of the Company 1,349,722 135,937 1,485,659- Non-controlling interests 1,384,846 132,713 1,517,559

2,734,568 268,650 3,003,218


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summarised financial information of subsidiaries which have non-controlling interests that are material to the Group (cont’d)

Summarised statements of financial position before intra-group elimination (cont’d):


at 31 December 2013

Current assets 973,702 56,354 1,030,056Non-current assets 3,196,843 447,029 3,643,872Current liabilities (469,831) (80,691) (550,522)Non-current liabilities (1,306,488) (232,649) (1,539,137)

total equity 2,394,226 190,043 2,584,269

Attributable to: - Equity holders of the Company 1,144,310 96,922 1,241,232- Non-controlling interests 1,249,916 93,121 1,343,037

2,394,226 190,043 2,584,269

Summarised statements of comprehensive income before intra-group elimination:


year ended 31 December 2014 Revenue 2,097,946 155,657 2,253,603Cost of sales (1,246,492) (110,020) (1,356,512)Other income 196,648 4,448 201,096Administrative and other expenses (629,039) (17,654) (646,693)Finance costs (27,761) (14,323) (42,084)

Profit before tax 391,302 18,108 409,410Income tax expense (135,687) (5,091) (140,778)

Profit for the year 255,615 13,017 268,632

Attributable to non-controlling interests 137,471 6,430 143,901Dividends paid to non-controlling interests 43,458 - 43,458




264


summarised financial information of subsidiaries which have non-controlling interests that are material to the Group (cont’d)

Summarised statements of comprehensive income before intra-group elimination (cont’d):


year ended 31 December 2013 Revenue 1,789,642 121,118 1,910,760Cost of sales (1,139,225) (80,549) (1,219,774)Other income 33,681 43,242 76,923Administrative and other expenses (597,866) (12,849) (610,715)Finance costs (30,798) (14,541) (45,339)Share of results of associate - 2,947 2,947

Profit before tax 55,434 59,368 114,802Income tax expense (33,044) (2,465) (35,509)

Profit for the year 22,390 56,903 79,293

Attributable to non-controlling interests 11,426 27,882 39,308Dividends paid to non-controlling interests 24,583 - 24,583

Summarised cash flows before intra-group elimination :

year ended 31 December 2014 Operating 370,341 30,228 400,569Investing (232,843) (154,799) (387,642)Financing (171,054) 139,861 (31,193)

Net (decrease)/increase in cash and cash equivalents (33,556) 15,290 (18,266)

year ended 31 December 2013

Operating 472,101 25,660 497,761Investing (225,712) (39,368) (265,080)Financing (170,993) 12,606 (158,387)

Net increase/(decrease) incash and cash equivalents 75,396 (1,102) 74,294


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17. investments in associates

Group

2014 2013 rm’000 rm’000

at costUnquoted shares in Malaysia 82,676 8,800Share of post-acquisition reserves 1,846 1,260

84,522 10,060

Less: Accumulated impairment losses (8,000) (8,000)

76,522 2,060

Details of the significant associates are as follows:

name country of principal % of ownership interest accounting incorporation/ activities held by the Group* model principal place applied of business 2014 2013

Held through Sindora Berhad

Tepak Marketing Malaysia Tea blending 20.00% 20.00% equity Sdn. Bhd. and packaging method (“Tepak”)

MM vita Oils Malaysia Manufacturing 30.00% 30.00% equity Sdn. Bhd. and marketing method of edible oil product

Held through Asia Economic Development Fund Limited

Asia Logistics Malaysia E-Commerce 38.00% - equity Council Sdn. Bhd. method

* equals to the proportion of voting rights held

Asia Logistics Council Sdn. Bhd. (“ALC”) is an associate of Asia Economic Development Fund Limited (“AEDFL”). ALC become an associate of the Group following the acquisition of AEDFL as disclosed in Note 16.

MM vita Oils Sdn. Bhd. has entered into receivership status and the investment has been impaired in full in previous financial years.




266

17. investments in associates (cont’D)

summarised financial information on associates

Summarised financial information in respect of each of the Group’s material associates is set out below. The summarised financial information represents the amounts in the financial statements of the associates and not the Group’s share of those amounts.

(i) Summarised statements of financial position

tepak alc total rm’000 rm’000 rm’000

as at 31 December 2014 Current assets 12,170 82,524 94,694Non-current assets 2,811 2,176 4,987Current liabilities (2,559) (11,582) (14,141)Non-current liabilities (266) (96) (362)

Equity 12,156 73,022 85,178

Proportion of Group’s ownership 20% 38%

Equity attributable to the Group 2,431 27,748 30,179Premium paid on acquisition of AEDFL - 21,322 21,322Fair value and other adjustments - 25,021 25,021

Carrying amount of the investment 2,431 74,091 76,522

tepak rm’000

as at 31 December 2013

Current assets 10,544Non-current assets 2,662Current liabilities (2,688)Non-current liabilities (217)

Equity 10,301

Proportion of Group’s ownership 20%

Carrying amount of the investment 2,060


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17. investments in associates (cont’D)

summarised financial information on associates (cont’d)

(ii) Summarised statements of comprehensive income

tepak alc total rm’000 rm’000 rm’000

as at 31 December 2014 Revenue 30,330 - 30,330Cost of sales (25,976) - (25,976)Other income - 908 908Administration expenses (2,492) (337) (2,829)Finance cost (7) (7) (14)

Profit for the year 1,855 564 2,419

Total comprehensive income for the year 1,855 564 2,419

Group’s share of profit for the year 371 215 586

tepak rm’000

as at 31 December 2013

Revenue 26,469Cost of sales (22,807)Administration expenses (2,056)Finance cost (104)

Profit for the year 1,502

Total comprehensive income for the year 1,502

Group’s share of profit for the year 300




268

18. otHer investments

Warrants in shares in malaysia malaysia fund total unquoted quoted quoted investments Group rm’000 rm’000 rm’000 rm’000 rm’000

2014

non-currentAvailable-for-sale financial assets 30,356 768 20,831 - 8,757Held for trading 28,129 - 28,129 - -Loan and receivable # 10,000 10,000 - - -

68,485 10,768 48,960 - 8,757

current Available-for-sale financial assets 13,650 - - - 13,650Held for trading 3,189 - - 3,189 -

16,839 - - 3,189 13,650

85,324 10,768 48,960 3,189 22,407

Representing items: At cost/amortised cost 10,768 10,768 - - - At fair value 74,556 - 48,960 3,189 22,407

85,324 10,768 48,960 3,189 22,407

# These represent share subscription monies paid in advance for redeemable convertible preference shares.


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18. otHer investments (cont’D)

equity instruments outside shares in malaysia malaysia fund total unquoted quoted unquoted investments Group rm’000 rm’000 rm’000 rm’000 rm’000

2013

non-current Available-for-sale financial assets 68,733 768 16,356 45,930 5,679Held for trading 12,465 - 12,465 - -

81,198 768 28,821 45,930 5,679

currentAvailable-for-sale financial assets 12,609 - - - 12,609

93,807 768 28,821 45,930 18,288

Representing items: At cost/amortised cost 46,698 768 - 45,930 - At fair value 47,109 - 28,821 - 18,288

93,807 768 28,821 45,930 18,288




270

18. otHer investments (cont’D)

equity instruments Warrants outside shares in malaysia in malaysia malaysia total unquoted quoted quoted unquoted company rm’000 rm’000 rm’000 rm’000 rm’000

2014

non-currentAvailable-for-sale financial assets 21,598 768 20,830 - -

currentHeld for trading 3,189 - - 3,189 -

24,787 768 20,830 3,189 -

Representing items: At cost/amortised cost 768 768 - - - At fair value 24,019 - 20,830 3,189 -

24,787 768 20,830 3,189 -

2013

non-currentAvailable-for-sale financial assets 62,991 768 16,293 - 45,930

Representing items: At cost/amortised cost 46,698 768 - - 45,930 At fair value 16,293 - 16,293 - -

62,991 768 16,293 - 45,930


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19. DeferreD tax assets anD liabilities

Deferred tax (liabilities)/assets as at 31 December relate to the following :

fair value property, tax losses gains on plant and carried Hedge financial equipment forward reserve instruments others totalGroup rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

At 1 January 2013 (1,174,635) 5,166 (7,666) 699 (84,593) (1,261,029)Recognised in profit or loss (40,368) (4,170) - - 17,504 (27,034)Recognised in other comprehensive income - - 2,853 (699) - 2,154Attributable to discontinued operations 19,818 - - - - 19,818Translation exchange difference 348,053 615 763 - 11,444 360,875

At 31 December 2013 (847,132) 1,611 (4,050) - (55,645) (905,216)

At 1 January 2014 (847,132) 1,611 (4,050) - (55,645) (905,216)Recognised in profit or loss 24,103 8,249 (66) - (37,991) (5,705)Recognised in other comprehensive income - - 4,050 - - 4,050Attributable to discontinued operations 951,588 (9,812) - - 102,520 1,044,296Translation exchange difference (325,072) (48) 66 - 1,929 (323,125)

At 31 December 2014 (196,513) - - - 10,813 (185,700)

fair value property, gains on unabsorbed plant and financial capital equipment instruments allowances totalcompany rm’000 rm’000 rm’000 rm’000

At 1 January 2013 (67,469) 699 - (66,770) Recognised in profit or loss (1,240) - (58) (1,298) Recognised in other comprehensive income - (699) - (699)

At 31 December 2013 (68,709) - (58) (68,767) Recognised in profit or loss 67 - 710 777

At 31 December 2014 (68,642) - 652 (67,990)




272

19. DeferreD tax assets anD liabilities (cont’D)

At the reporting date, deferred tax assets have not been recognised in respect of the following items:

Group

2014 2013 rm’000 rm’000

Unutilised tax losses 56,082 47,711 Unabsorbed capital allowances 35,601 38,449 Other deductible temporary differences 3,526 3,373

95,209 89,533

The availability of the above tax losses and allowances for offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and other guidelines issued by the tax authority.

20. inventories

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

At cost: Agricultural produce 1,459 592,254 - -Finished goods 5,130 900 - -Materials and consumables 33,567 23,967 1,274 2,041Livestocks 79 37,888 - -Work-in-progress 367 318 - -

40,602 655,327 1,274 2,041

During the year, the amount of inventories recognised as an expense in cost of sales of the Group and Company were RM648,610,000 (2013 : RM618,437,000) and RM86,767,000 (2013 : RM83,350,300) respectively.


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21. traDe anD otHer receivables

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

current trade receivables Third parties 119,007 366,680 287 188Subsidiaries - - 34,429 13,096Ultimate holding corporation 18,920 56,645 1 38,143Related companies 3,301 17,128 541 524

141,228 440,453 35,258 51,951

Less : Allowance for impairment lossesThird parties (8,321) (4,421) - -Related companies (1,020) (1,225) - -

(9,341) (5,646) - -

Trade receivables, net 131,887 434,807 35,258 51,951

current other receivables Third parties 70,640 69,472 35,480 43,647Subsidiaries - - 137,057 230,190Ultimate holding corporation - 372 94 372Deposits 8,053 5,916 1,043 1,461

78,693 75,760 173,674 275,670

Less : Allowance for impairment lossesThird parties (5,707) (7,089) (5,707) (5,707)Subsidiaries - - (5,972) (109,087)

(5,707) (7,089) (11,679) (114,794)

72,986 68,671 161,995 160,876

Total trade and other receivables 204,873 503,478 197,253 212,827

(a) trade receivables

Third party trade receivables are non-interest bearing and payment terms range from payment in advance to 90 days (2013: payment in advance to 90 days). They are recognised at their original invoice amounts which represent their fair values on initial recognition.




274

21. traDe anD otHer receivables (cont’D)

Ageing analysis of trade receivables

The ageing analysis of the Group’s and the Company’s trade receivables is as follows:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Neither past due nor impaired 42,100 298,337 119 33

1 to 30 days past due not impaired 27,941 32,522 6,607 2,40931 to 60 days past due not impaired 3,860 15,385 8,625 1,15461 to 90 days past due not impaired 16,478 12,919 2,449 72791 to 120 days past due not impaired 6,420 - 10,284 10,520More than 121 days past due not impaired 35,088 75,644 7,174 37,108 89,787 136,470 35,139 51,918Impaired 9,341 5,646 - -

141,228 440,453 35,258 51,951

Receivables that are neither past due nor impaired are mainly due from regular customers that have been transacting with the Group. None of these balances have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group and Company have trade receivables amounting to RM89,787,000 (2013 : RM136,470,000) and RM35,139,000 (2013 : RM51,918,000) respectively that are past due at the reporting date but not impaired. These balances are not secured.

Receivables that are impaired

The Group’s and the Company’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Trade receivables - nominal amounts 9,341 5,646 - -Less: Allowance for impairment (9,341) (5,646) - -

- - - -


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Movement in allowance accounts:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

At 1 January 5,646 8,153 - - Charge for the year 5,192 687 - - Reversal of impairment loss (706) (213) - - Written off (791) (2,981) - -

At 31 December 9,341 5,646 - -

Trade receivables that are determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on repayments. These receivables are not secured by any collateral or credit enhancements.

(b) amount due from subsidiaries (non-trade)

These amounts are unsecured, non-interest bearing and repayable on demand except for an amount of RM 46,201,000 (2013 : RM46,621,000) which bears interest of 6.60% to 6.85% (2013 : 5.15% to 6.50%) per annum.

(c) amount due from ultimate holding corporation (non-trade)

These amounts are unsecured, non-interest bearing and repayable on demand.

(d) other receivables that are impaired

The Group’s and the Company’s other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Other receivables - nominal amounts 5,707 7,089 11,679 114,794Less: Allowance for impairment (5,707) (7,089) (11,679) (114,794)

- - - -




276


(d) other receivables that are impaired (cont’d)

Movement in allowance accounts:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

At 1 January 7,089 6,256 114,794 114,794Charge for the year - 833 - - Reversal of impairment loss (1,382) - - - Written off - - (103,115) -

At 31 December 5,707 7,089 11,679 114,794

22. Derivatives Group

contractual nominal value fair value

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

current assetsForward commodity contracts - 180,463 - 13,498Interest rate swap 375,000 375,000 2,449 2,621

2,449 16,119

(a) forward contracts

The Group, via its subsidiary, NBPOL has entered into commodity forward contracts to hedge its exposure to movements in palm oil prices. These forward contracts have been designated as a hedge of highly probable forecast sales of crude palm oil and related products. It is not the Group’s policy to engage in speculative hedging activities.

As all hedge transactions are highly effective, all gains and losses relating to their remeasurement to fair value are recognised in the hedge reserve within equity and subsequently brought to account in the income statement in the same period as the physical sales transaction to which the hedges relate occurs.

The cash flow hedges of the highly probable forecast sales of crude palm oil and related products were assessed to be highly effective and as at 31 December 2014, a net loss of RM9,504,000 (2013 : Gain of RM1,573,000) was included in other comprehensive income in respect of these contracts. There were no outstanding forward contracts as at 31 December 2014.


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22. Derivatives (cont’D)

(b) interest rate swap

The Group has entered into an interest rate swap contract with a notional amount of RM375,000,000 that is designed to convert its floating rate liabilities to fixed rate liabilities to reduce the Group’s exposure to adverse fluctuations in interest rate on its borrowings.

Under the interest rate swap contract, the Group pays a fixed rate of interest of 4.18% per annum and receives a variable rate based on one month KLIBOR on the amortised notional amount.

The above interest rate swap is not designated as a cash flow or fair value hedge and is entered into for a period consistent with the transaction exposure. It does not qualify for hedge accounting.

During the financial year, the Group and the Company recognised a loss of RM172,000 (2013: RM2,261,000) arising from fair value changes in the interest rate swap. The fair value changes are attributable to changes in interest rates.

The method and assumptions applied in determining the fair value of derivatives are disclosed in Note 33.

23. casH anD banK balances

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Cash and bank balances 119,804 203,940 34,433 43,305Deposits placed with licensed banks 124,776 47,530 78,850 23,585Short-term money market funds 98,017 125,710 47,347 80,380

342,597 377,180 160,630 147,270

Included in deposits placed with licensed banks of the Group and of the Company are amounts of RM44,081,000 (2013 : RM12,551,000) and RM350,000 (2013 : RM350,000) respectively, pledged for bank facilities granted to the Group and the Company.

The weighted average interest rate and maturities of the fixed deposits at the reporting date were 2.63% (2013: 2.45%) and 22 (2013: 38) days respectively.

Short-term money market funds are highly liquid fund investments which can be realised within 7 days. They bear interest at rates ranging between 3.11% to 3.57% (2013: 3.18% to 3.48%).




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23. casH anD banK balances (cont’D)

For the purposes of the statements of cash flows, cash and cash equivalents comprise the following at the reporting date:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Cash and short-term deposits- Continuing operations 342,597 377,180 160,630 147,270- Discontinued operations (Note 11) 59,268 - - -

401,865 377,180 160,630 147,270Less : Deposits pledged (44,081) (12,551) (350) (350)Bank overdrafts (Note 24) (7,775) (39,252) - -Deposits placed with licensed banks with maturities more than 90 days (4,731) (4,146) - -

Cash and cash equivalents 345,278 321,231 160,280 146,920

24. loans anD borroWinGs

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

current

secured:Obligations under finance leases 1,130 926 - - Bank overdrafts 1,472 34,278 - - Revolving credit 176,400 288,060 - - Term loans 41,293 138,137 - - Bankers’ acceptances 660 47,048 - -

220,955 508,449 - -

unsecured:Bank overdrafts 6,303 4,974 - - Bankers’ acceptances - 1,857 - - Revolving credit 468,666 460,436 150,000 130,000Term loans 55,000 55,000 - -

529,969 522,267 150,000 130,000

current loans and borrowings 750,924 1,030,716 150,000 130,000


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24. loans anD borroWinGs (cont’D)

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

non-current

secured:Obligations under finance leases 2,980 1,257 - - Term loans 283,943 813,318 - -

286,923 814,575 - -

unsecured:Term loans 164,338 218,346 - -

164,338 218,346 - -

non-current loans and borrowings 451,261 1,032,921 - -

total loans and borrowingsObligations under finance leases (Note 30(c)) 4,110 2,183 - - Bank overdrafts (Note 23) 7,775 39,252 - - Bankers’ acceptances 660 48,905 - - Revolving credit 645,066 748,496 150,000 130,000Term loans 544,574 1,224,801 - -

1,202,185 2,063,637 150,000 130,000




280


Details of the Group’s term loans are as follows: <----------------------- repayment ---------------------------> 2015 2016 2017 - 2019 >2019 year of carrying under 1 1 - 2 3 - 5 over 5Group maturity amount year years years years2014 rm’000 rm’000 rm’000 rm’000 rm’000

Bai Bithaman Ajil Term Financing (3) Tg Puteri 1 2017 3,251 1,036 1,110 1,105 -Bai Bithaman Ajil Term Financing (4) Tg Puteri 11 2017 3,246 1,037 1,110 1,099 -Conventional Term Loan Nautica Johor Bahru 2016 6,550 3,927 2,623 - -Bai Bithaman Ajil Term Financing (9) 2020 44,784 5,506 5,889 20,244 13,145Term Loan (NTP 7,8,9,10) 2016 1,200 960 240 - -Term Loan (2) 2016 3,425 2,740 685 - -Musyarakah Mutanaqisah (NTP11) 2020 10,181 1,545 1,628 5,424 1,584Musyarakah Mutanaqisah (NTP12) 2020 10,525 1,545 1,627 5,424 1,929Musyarakah Mutanaqisah (NTP15) 2020 10,521 1,545 1,628 5,424 1,924Musyarakah Mutanaqisah (NTP16) 2020 9,469 1,469 1,548 5,160 1,292Mv.T.PUTERI 17 2018 10,486 1,370 1,429 4,742 2,945NAUTICA MUAR 2018 17,727 5,750 5,750 6,227 -MT N.B.PAHAT/MT K.TINGGI 2022 63,491 9,445 9,445 28,336 16,265Mv.TG.PUTERI 19 2022 10,811 1,503 1,504 4,511 3,293Mv.TG.PUTERI 20 2022 11,335 1,504 1,504 4,511 3,816Mv.TG.PUTERI 21 2023 12,675 - 1,463 2,925 8,287Mv.TG.PUTERI 22 2023 7,605 - 1,316 1,755 4,534Mv.TG.PUTERI 23 2023 7,605 - 877 1,755 4,973Mv.TG.PUTERI 24 2023 14,000 - 2,961 3,231 7,808Mv.TG.PUTERI 25 2023 13,125 - 2,776 3,029 7,320Mv.TG.PUTERI 26 2023 13,125 - 2,271 3,029 7,825MT.Nautica Tembikai 2023 35,894 - 7,478 8,973 19,443Malaysian Debts ventures 2019 2,192 226 742 1,224 -Commodity Murabahah Financing - i 2018 219,338 55,000 55,000 109,338 -Fixed loan (1) 2029 360 20 20 59 261Term loan (Finance 3 storey shop office) 2020 322 52 55 180 35Fixed loan (2) 2022 425 42 44 147 192Fixed loan (3) 2025 906 71 75 253 507

544,574 96,293 112,798 228,105 107,378


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Details of the Group’s term loans are as follows: (cont’d) <----------------------- repayment ---------------------------> 2015 2016 2017 - 2019 >2019 year of carrying under 1 1 - 2 3 - 5 over 5Group maturity amount year years years years2013 rm’000 rm’000 rm’000 rm’000 rm’000

Bai Bithaman Ajil Term Financing (3) Tg Puteri I 2017 4,220 968 1,036 2,216 -Bai Bithaman Ajil Term Financing (4) Tg Puteri II 2017 4,220 968 1,036 2,216 -Bai Bithaman Ajil Term Financing (6) Tg Puteri Iv 2014 914 914 - - -Bai Bithaman Ajil Term Financing (8) Tg Puteri v 2014 1,456 1,456 - - -Conventional Term Loan Nautica Johor Bahru 2016 10,480 3,927 3,927 2,626 -Bai Bithaman Ajil Term Financing (9) 2020 48,695 5,148 5,506 18,927 19,114Term Loan (NTP 7,8,9,10) 2016 2,160 960 960 240 -Term Loan (2) 2016 6,165 2,740 2,740 685 -Musyarakah Mutanaqisah (NTP11) 2020 11,634 1,454 1,545 5,148 3,487Musyarakah Mutanaqisah (NTP12) 2020 11,973 1,448 1,545 5,148 3,832Musyarakah Mutanaqisah (NTP15) 2020 11,974 1,452 1,545 5,149 3,828Musyarakah Mutanaqisah (NTP16) 2020 10,849 1,380 1,469 4,897 3,103Mv.T.PUTERI 17 2018 11,570 1,084 1,360 4,511 4,615NAUTICA MUAR 2018 23,091 5,750 5,750 11,591 -MT N.B.PAHAT/MT K.TINGGI 2022 75,591 9,445 9,445 28,336 28,365Mv.TG.PUTERI 19 2022 11,939 1,002 1,504 4,511 4,922Mv.TG.PUTERI 20 2022 12,121 1,002 1,504 4,511 5,104Malaysian Debts ventures 2014 2,540 2,540 - - -Commodity Murabahah Financing - i 2018 273,346 55,000 55,000 163,346 -Fixed Loan (1) 2029 245 8 8 26 203Term Loan (SME Assistance Guarantee Scheme) 2014 60 60 - - -Term Loan (Finance 3 storey shop office) 2020 429 66 66 199 98Fixed Loan (2) 2022 581 65 63 192 261Fixed Loan (3) 2025 1,438 127 124 380 807Term Loan (I) 2016 598,566 80,699 80,699 437,168 -Term Loan (II) 2021 54,118 7,213 7,213 21,647 18,045Term Loan (III) 2015 4,122 2,346 1,776 - -Term Loan (Iv) 2021 30,304 3,915 3,912 11,731 10,746

1,224,801 193,137 189,733 735,401 106,530




282


securities

The term loans are secured by the following:

(a) Charges over certain property, plant and equipment of the Group as disclosed in Note 13;

(b) Charges over certain fixed deposits of the Group as disclosed in Note 23; and

(c) Corporate guarantee from the Company.

significant covenants

In connection with the significant term loan facilities, the Group and the Company have agreed on the following significant covenants with the lenders:

(i) The ratio of the consolidated total borrowings to the consolidated shareholders’ funds will not exceed 125% at all times;

(ii) The Company will procure and ensure that each of its subsidiary companies does not and/or will not enter into any agreements which impose restrictions on each of the subsidiary companies’ ability to make or pay dividends or other forms of distributions to the shareholders.

The loans and borrowings of the Group and Company bear interest at the following rates:

Group company

2014 2013 2014 2013 % % % %

Weighted average effective interest rates at the end of reporting period - Obligations under finance leases 3.66 3.60 - - - Bank overdrafts 7.05 7.31 - - - Revolving credit and bankers’ acceptances 4.07 3.76 4.05 3.67 - Term loans 4.69 4.61 - -


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25. traDe anD otHer payables

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

currenttradeThird parties 91,955 134,267 5,118 4,927Ultimate holding corporation 154 1,075 172 14Subsidiaries - - 7,010 29,200Related companies - 3,651 231 547

92,109 138,993 12,531 34,688

non-tradeThird parties 76,431 168,417 5,793 4,791Subsidiaries - - 33,609 17,361Related companies - - 3 153

76,431 168,417 39,405 22,305

Total trade and other payables 168,540 307,410 51,936 56,993

(a) trade payables

Trade and other payables are generally unsecured and non-interest bearing. Credit terms range from payment in advance to 90 days (2013: payment in advance to 90 days).

(b) amounts due to subsidiaries (non-trade)

These amounts which arose mainly from advances and payments on behalf are unsecured, non-interest bearing and repayable on demand.




284

26. sHare capital

Group and company

number of ordinary shares amount

2014 2013 2014 2013 ’000 ’000 rm’000 rm’000

authorisedAt 1 January/ 31 December 2,000,000 2,000,000 500,000 500,000

issued and fully paidAt 1 January 1,294,053 1,282,549 323,513 320,637Conversion of warrants 47,767 11,504 11,942 2,876Exercise of ESOS 683 - 171 -

At 31 December 1,342,503 1,294,053 335,626 323,513

(a) share capital

The holders of the ordinary shares are entitled to receive dividends, as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

(b) issue of shares

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM323,513,000 to RM335,626,000 by way of the issuance of 48,450,000 ordinary shares of RM0.25 each upon the conversion of 47,767,000 warrants and exercise of 683,000 share options at the exercise price of RM3.13 and RM3.05 respectively per new ordinary share.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.


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27. otHer reserves

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

reserves

non-distributable Share premium reserve (a) 422,445 247,507 422,445 247,507Translation reserve (b) 2,193 (76,302) - -Hedge reserve (c) - 4,628 - -Fair value reserve (d) (1,193) (2,696) (1,725) (2,814)Revaluation reserve (e) 1,345,220 1,339,983 897,579 897,579Other reserve (f) 4,933 4,933 4,165 4,165Warrant reserve (g) 55,735 90,586 55,735 90,586Treasury shares (h) (67,063) (67,063) (67,063) (67,063)Equity transaction reserve (i) 3,274 449 - -ESOS reserve (j) 29,362 9,715 29,362 9,715

1,794,906 1,551,740 1,340,498 1,179,675

The movements of each category of the reserves during the financial year are disclosed in the statements of changes in equity.

The nature and purpose of each category of reserves are as follows :

(a) share premium reserve

This reserve comprises the premium paid on subscription of shares in the Company over and above the par value of the shares.

(b) translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations where functional currencies are different from that of the Group’s presentation currency.

(c) Hedge reserve

The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges related to hedged transactions that have not yet occurred.

(d) fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognised or impaired.




286

27. otHer reserves (cont’D)

The nature and purpose of each category of reserves are as follows (cont’d):

(e) revaluation reserve

The revaluation reserve relates to the revaluation of the Group’s freehold and leasehold lands in Malaysia on 31 December 1997.

(f) other reserve

Other reserves consist mainly of reserves arising from the scheme of reconstruction, amalgamation and liquidation of a former subsidiary in 1975.

(g) Warrant reserve

A total of 156,174,000 free warrants were issued by the Company in conjunction with the share split and bonus issue on 28 February 2011. Each warrant entitles the holder to subscribe for one (1) new sub-divided share at the exercise price of RM3.85 per share at any time during the exercise period. On 14 January 2014, the exercise price was adjusted to RM3.13 per share. On 13 March 2015, there was a second adjustment to the exercise price from RM3.13 to RM2.77. The warrants have an exercise period of five (5) years commencing 28 February 2011 and expiring on 27 February 2016.

As at the reporting date, 79,783,000 (2013 : 32,016,000) warrants have been exercised and the number of outstanding warrants was 76,391,000 (2013 : 124,158,000).

(h) treasury shares

Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale or issuance. Rights on treasury shares are suspended until those shares are reissued.

No shares were repurchased during the current financial year. During the previous financial year, the Company acquired 5,442,000 shares in the Company through purchases on Bursa Malaysia Securities Berhad. The total amount paid to acquire the shares was RM21,234,000 and this was presented as a component within shareholders’ equity.

The Directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares.

At 31 December 2014, the Company held 15,322,000 of its own shares of RM0.25 each (2013 : 15,322,000 shares of RM0.25 each). The number of outstanding ordinary shares of RM0.25 each in issue after the set-off is 1,327,181,000 (2013 : 1,278,731,000 ordinary shares of RM0.25 each).

(i) equity transaction reserve

The equity transaction reserve comprises the differences between the share of non- controlling interests in subsidiaries acquired/disposed and the consideration paid/received.


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27. otHer reserves (cont’D)

The nature and purpose of each category of reserves are as follows (cont’d):

(j) esos reserve

An Executives’ Share Options Scheme (“ESOS”) was implemented on 31 December 2013 for the benefit of senior executives and employees of the Company. The ESOS has a duration of 5 years. The fair value of each share option on the grant date was RM0.89. The options are to be settled only by the issuance and allocation of new ordinary shares of the Company. There are no cash settlement alternatives.

The exercise price of the share options granted under the ESOS is RM3.05 each. The options granted are divided into 5 tranches which vest on 31 December 2013, 31 December 2014, 31 December 2015, 31 December 2016 and 31 December 2017. The vesting condition is that the offeree must be an employee or director, as the case may be, of the Company or its subsidiaries on the respective vesting and exercise dates. The options expire on 31 December 2018. On 13 March 2015, the exercise price of the share options was adjusted to RM2.69.

Movement of share options during the financial year

The following table illustrates the number of, and movements in, share options of the Company during the financial year:

number of share options at exercise price of rm3.05 each

2014 2013 ’000 ’000

Outstanding at beginning of financial year 10,924 -- vested 10,567 10,924- Exercised (683) -- Forfeited (322) -

Outstanding at end of financial year 20,486 10,924

Exerciseable at end of financial year 20,486 10,924

28. retaineD earninGs

The entire retained earnings of the Company as at 31 December 2014 may be distributed as dividends under the single tier system.




288

29. relateD party transactions

(a) sale and purchase of goods and services

For the purposes of the financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

All entities within the Johor Corporation Group are considered related companies/parties.

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:

transaction value for the year ended 31 December

2014 2013 rm’000 rm’000

Group

ultimate holding corporation

Johor corporation - Agency fees received 486 176- Sales of oil palm fresh fruit bunches - 14,578- Acquisition of estates and mills - 71,783- Purchase and sales commission received 170 1,614- Planting advisory and agronomy fees received 80 95- Computer charges received 4,094 72- Inspection fees received - 23- Training, seminar and course fees received - 86- Sales of goods 2,712 2,429- Sales of cattle 6,277 - - Construction work and maintenance fees received - 168- Event management fees & replanting services received 2,253 2,677- Rental income 239 467- Sales of oil palm seedling and bio compost fertilizer 105 746- Rental payable (629) (629)- Purchase of oil palm fruit bunches (14,279) -- Insurance chargers 86 86- Profit shared from Persada Parking Concession 1,246 1,292


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29. relateD party transactions (cont’D)

(a) sale and purchase of goods and services (cont’d)


2014 2013 rm’000 rm’000

Group

other related companies

Johor franchise Development sdn. bhd.- Agency fees received 632 210- Purchase and sales commission received 466 644- Planting advisory and agronomy fees received 79 83- Computer charges received 58 44- Training, seminar and course fees received 4 6- Sales of goods 1,942 2,128- Construction work and maintenance fees received 595 -- Event management fees, replanting fees and booth rental received 406 1,207- Sales of oil palm seedling and bio compost fertilizer 63 482

akademi Jcorp sdn. bhd.- Training, seminar and course fees payable (49) (48)

pro biz solution sdn. bhd.- Rental income 60 60

pro corporate management services sdn. bhd.- Secretarial and share registration fees paid (391) (661)

Damansara assets sdn. bhd.- Management fees and services payable (11) (8)- Rental commission payable (575) (555)- Computer charges received 120 -

Johor land berhad- Purchase of oil palm fresh fruit bunches (1,877) (1,880)- Management fees received 288 255- Rendering of services 1,061 1,501- Rental Payable (85) (89)




290




2014 2013 rm’000 rm’000

Group

other related companies (cont’d)

Kelab bolasepak perbadanan Johor- Donation paid (5,101) (3,650)

tanjung langsat port sdn. bhd.- Computer charges received 382 1,538

massive equity sdn. bhd.- Proceeds from disposal of subsidiary - 1,137,131

pacific rim plantations services pte limited- Sales and marketing agency commission paid - (11,090)- Project management service fees received - 2,737- Interest and other charges received - 49- Short term working capital advances - (90,618)

larkin sentral property sdn. bhd.- Construction work 993 335

company

ultimate holding corporation

Johor corporation- Sales of oil palm fresh fruit bunches - 37


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2014 2013 rm’000 rm’000

company

other related companies

Kelab bolasepak perbadanan Johor- Donation paid (3,550) (3,650)

Damansara assets sdn. bhd.- Rental commission payable (575) (555)

massive equity sdn. bhd. - Proceeds from disposal of subsidiary - 1,137,131

subsidiaries

new britain palm oil limited- Dividend income 41,708 19,962

pro biz solution sdn. bhd.- Rental income 60 60

mahamurni plantations sdn bhd- Sales of oil palm fresh fruit bunches 64,968 63,674

Kulim plantations (m) sdn bhd- Sales of oil palm fresh fruit bunches 39,581 41,487

sindora berhad- Sales of oil palm fresh fruit bunches 19,824 19,029

asia economic Development fund limited- Conversion of ICCULS 47,038 -




292




2014 2013 rm’000 rm’000

company

epa management sdn bhd - Agency fees payable (4,624) (751)- Purchasing and sales commission payable (295) (848)- Planting advisory and agronomy fees payable (1,922) (235)- Computer charges payable (2,199) (1,213)- Training, seminar and course fees payable (10) (37)- Purchase of goods (5,182) (5,604)- Construction work and maintenance fees payable (6,204) (9,360)- Event management fees replanting and booth rental payable (1,367) (961)- Interest paid - (494)

Kulim nursery sdn bhd- Purchase of oil palm seedlings and bio compost fertilizers (3,626) (7,737)

(b) compensation of key management personnel

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel includes all the Directors of the Group, and certain members of senior management of the Group.

The compensation of directors of the Company are disclosed in Note 9. The compensation of other members of senior management considered as key management personnel (excluding directors of the Company) are as follows:

Group

2014 2013 rm’000 rm’000

Salaries, allowance and bonuses 2,078 2,343Defined contribution plan 288 323Other employee benefits 80 148ESOS 283 136

2,729 2,950


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30. commitments

(a) capital commitments

Committed capital expenditure as at the reporting date is as follows:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Authorised capital expenditure in respect of property, plant and equipment not provided for in the financial statements at the end of the year:- Contracted for 196,584 17,460 357 287- Not contracted for 18,867 97,686 - 316

215,451 115,146 357 603

Authorised capital expenditure in respect of investment in new subsidiaries- Contracted for 524,826 108,284 524,826 108,284

(b) operating lease commitments - as lessee

As at the end of the previous financial year, NBPOL had entered into non-cancellable operating lease agreements for the use of mini estate land, for terms of 20 or 40 years, and state-owned land for terms of 99 years. These leases are renewable.

Future minimum rentals payable under non-cancellable operating leases at the reporting date are as follows:

Group

2014 2013 rm’000 rm’000

Not later than one year 34,076 50,768Later than 1 year but not later than 5 years 21,010 38,667Later than 5 years 3,237 143,283

58,323 232,718




294

30. commitments (cont’D)

(b) operating lease commitments - as lessee (cont’d)

operating lease commitments - as lessor The Group has entered into non-cancellable operating lease agreements on its vessels. These leases have remaining non-cancellable lease terms of between 1 to 10 years.

The future lease payments receivable under non-cancellable operating leases contracted for as at the reporting date but not recognised as receivables, are as follows:

Group

2014 2013 rm’000 rm’000

Not later than 1 year 142,742 144,355Later than 1 year and not later than 5 years 615,788 425,204Later than 5 years 257,177 308,163

1,015,707 877,722

Charter hire revenue earned from chartering the Group’s vessels are recognised as revenue during the financial year as disclosed in Note 4.

(c) finance lease commitments

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

Group

2014 2013 rm’000 rm’000

minimum lease paymentsNot later than one year 1,334 1,045 Later than 1 year but not later than 5 years 3,487 1,565

Total minimum lease payments 4,821 2,610Less: Amounts representing finance charges (711) (427)

Present value of minimum lease payments 4,110 2,183

present value of payments Not later than one year 1,130 926Later than 1 year but not later than 5 years 2,980 1,257

Present value of minimum lease payments 4,110 2,183Less: Amount due within 12 months (1,130) (926)

Amount due after 12 months 2,980 1,257


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31. siGnificant events

(a) acquisition of subsidiary in indonesia

On 3 October 2013, Kulim (Malaysia) Berhad (“Kulim”) announced that it had entered into a Memorandum of Understanding with PT Graha Sumber Berkah (“PT GSB”) to explore the possibility of collaborating in palm oil cultivation and upstream and downstream oil and gas businesses in Kalimantan, Indonesia. On the same date, Kulim also announced that it had entered into a Conditional Share Sale Agreement (“CSSA”) with PT GSB in relation to the proposed acquisition of 75% equity interest in PT Wisesa Inspirasi Nusantara (“PT WIN”) and its subsidiaries for a total consideration of up to USD43.44 million (approximately RM138.86 million). PT Win is the vehicle for the Group’s proposed venture into palm oil cultivation in Kalimantan, Indonesia.

Pursuant to the other shareholding requirements imposed by the Indonesian regulators, Kulim and PT GSB agreed to the following transactions:

(i) the transfer of 3,326,338 PT WIN Shares from PT GSB and 1,000 PT WIN Shares from another party to Kulim pursuant to a Deed of Sale and Purchase of Shares dated 10 January 2014, for a cash consideration of approximately USD17.14 million (equivalent to approximately RM58.75 million) (“Shares Transactions”);

(ii) the issuance of 4,991,007 new PT WIN Shares to be subscribed by Kulim at the nominal par value of IDR1,000 per PT WIN Share, for a cash consideration of IDR4.99 billion (equivalent to approximately RM1.40 million) (“Issuance of Shares”) (the Shares Transactions and Issuance of Shares are collectively referred to as the “Acquisition”); and

(iii) injection by Kulim of approximately USD25.30 million (equivalent to approximately RM88.43 million) into PT WIN and/or its subsidiaries as working capital to acquire titles to plantation land in Kalimantan, Indonesia (“Further Investment”).

The total investment under the Acquisition and Further Investment amount to approximately USD42.86 million (equivalent to approximately RM149.81 million).

Following the fulfillment of the conditions precedent of the CSSA and the execution of a Shareholders’ Agreement between Kulim and PT GSB, the transfer/subscription of PT WIN Shares was effected on 14 February 2014, thus making PT WIN a subsidiary of the Group.

Further details are disclosed in Note 16.

(b) conversion of irredeemable convertible cumulative unsecured loan securities (“icculs”) in asia economic Development fund limited (“aeDfl”)

On 23 April 2014, Kulim sent a notice of conversion to AEDFL to exercise its right to convert its existing holdings of ICCULS amounting to RM47,039,000 into ordinary shares of AEDFL. Following the conversion of the ICCULS into ordinary shares, Kulim held 54.21% of the total issued and paid-up share capital of AEDFL, thus making AEDFL a subsidiary of the Group.

Further details are disclosed in Note 16.




296

31. siGnificant events (cont’D)

(c) proposed acquisition of 60% equity interest in citra sarana energi (“cse’) to participate in the exploration and development of an oil & gas (o&G) field in south West bukit barisan block, central sumatera, indonesia

On 10 December 2014, Kulim announced that Kulim Energy Nusantara Sdn Bhd (“KENSB”), its wholly owned subsidiary company had entered into a Conditional Subscription and Shares Purchase Agreement (“CSSPA”) with CSE and its existing shareholders namely, PT Wisesa Inspirasi Sumatera and PT Inti Energi Sejahtera, to acquire a 60% equity interest in CSE to participate in the exploration and development of an O&G field in South West Bukit Barisan Block, Central Sumatera, Indonesia for a total cash consideration of approximately USD133.55 million (equivalent to approximately RM466.81 million).

As at the reporting date, the Group is in the midst of completing the various conditions precedent as defined in the CSSPA.

(d) listing of subsidiary on the main market of bursa securities

On 11 December 2014, Kulim announced that E.A. Technique (M) Berhad, a subsidiary of the Group was successfully listed and quoted on the Main Market of Bursa Malaysia Securities Berhad.

32. subsequent events

(a) Disposal of new britain palm oil limited (“nbpol”) and its subsidiaries

On 9 October 2014, Sime Darby Plantation Sdn Bhd (“SDP”) served a takeover notice on NBPOL and announced its intention to make a cash offer to acquire all NBPOL shares at an offer price of GBP7.15 or PNG Kina 28.79 per NBPOL share (“Offer”).

On 23 October 2014, Kulim announced that it had received the formal offer document (“Offer Document”) from SDP and that the Offer would be presented to the shareholders of Kulim at an Extraordinary General Meeting (“EGM”) to be convened to consider the Offer.

Acceptance of the Offer would entail Kulim disposing its entire equity interest in NBPOL comprising of 73,482,619 ordinary shares in NBPOL, to SDP for a disposal consideration of approximately GBP525.4 million (equivalent to approximately RM2.86 billion).

On 3 December 2014, the Kulim’s shareholders voted to accept the Offer from SDP at the Extraordinary General Meeting convened to consider the Offer.

On 27 January 2015, Sime Darby Berhad (“Sime Darby”), the parent of SDP, announced that SDP had obtained clearance from the European Commission on its proposed takover of NBPOL.

On 18 February 2015, Sime Darby announced that all conditions precedent in the Offer Document had been fulfilled and that the Offer was now unconditional.

On 26 February 2015, the Company announced that the disposal of NBPOL was complete following the receipt of the cash consideration from SDP. Accordingly, NBPOL ceased to be a subsidiary of the Group.


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32. subsequent events (cont’D)

(b) acquisition of additional equity stake in asia logistics council sdn bhd

On 6 March 2015, Kulim announced that Asia Economic Development Fund Limited (“AEDFL”), a subsidiary of Kulim had on 5 March 2015, entered into the following agreements: (i) a share sale agreement with Johor Logistics Sdn Bhd (“Jlog”), a subsidiary of Johor Corporation (“Jcorp”)

in relation to the proposed acquisition of 2,109,212 ordinary shares in Asia Logistics Council Sdn Bhd (“ALC”) (ALC Shares”) representing approximately 30% equity interest in ALC, for a total consideration of approximately RM23.17 million to be satisfied by the issuance of 158,958 ordinary shares in AEDFL (“Proposed Acquisition”);

(ii) a conditional subscription agreement with Kulim in relation to the subscription of 271 new Redeemable Non-Cumulative Convertible Preference Shares (“RCPS”) in AEDFL at a nominal value of USD13.55 million (equivalent to approximately RM47.36 million); and

(iii) a shareholder’s loan agreement with ALC to grant and make available to ALC a loan of up to USD25.0 million (equivalent to approximately RM87.38 million).

Upon completion of the Proposed Acquisition, ALC will become a 68% owned subsidiary of AEDFL, thus

making ALC an indirect subsidiary of the Group.

Barring any unforeseen circumstances, the above agreements are expected to be completed in the first half of 2015.

33. financial risK manaGement obJectives anD policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the management team. The audit committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group applies cash flow hedge accounting on those hedging relationships that qualify for hedge accounting.




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33. financial risK manaGement obJectives anD policies (cont’D)

The following sections provide details regarding the Group’s and Company’s exposure to the above- mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investments, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group seeks to invest cash assets safely and profitably. The Group has no significant concentration of credit risk and it is not the Group’s policy to hedge its credit risk. The Group has in place, for significant operating subsidiaries, policies to ensure that sales of products and services are made to customers with an appropriate credit history and sets limits on the amount of credit exposure to any one customer. The management does not expect any material losses from non-performance by counterparties.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:

- The carrying amount of each class of financial assets recognised in the statements of financial position;

- Corporate guarantees provided by the Company to banks for credit facilities granted to subsidiaries. The amount outstanding on such facilities was RM688,968,000 (2013 : RM736,939,000) as at the reporting date.

Financial guarantees have not been recognised in the financial statements as the directors are of the opinion that the fair value on initial recognition was not material and that it is not probable that a future sacrifice of economic benefits will be required.

Credit risk concentration profile

Other than the amounts due from the subsidiaries to the Company, the Group and the Company is not exposed to any significant concentration of credit risk in the form of receivables due from a single debtor or from groups of debtors.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 21. Deposits with banks and other financial institutions and investments are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 21.


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(b) liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group and the Company’s liabilities (excluding those attributable to discontinued operations) at the reporting date based on contractual repayment obligations.

on demand or one to over within one year five years five years total rm’000 rm’000 rm’000 rm’000

Group

at 31 December 2014financial liabilities:Trade and other payables 168,540 - - 168,540 Loans and borrowings 794,464 376,825 111,682 1,282,971

Total discounted financial liabilities 963,004 376,825 111,682 1,451,511

at 31 December 2013 financial liabilities: Trade and other payables 307,410 - - 307,410 Loans and borrowings 1,259,655 1,013,394 115,021 2,388,070

Total discounted financial liabilities 1,567,065 1,013,394 115,021 2,695,480

company at 31 December 2014 financial liabilities: Trade and other payables 51,936 - - 51,936 Loans and borrowings 150,000 - - 150,000 Financial guarantees 688,968 - - 688,968

Total discounted financial liabilities 890,904 - - 890,904

at 31 December 2013 financial liabilities: Trade and other payables 56,993 - - 56,993 Loans and borrowings 130,000 - - 130,000 Financial guarantees 736,939 - - 736,939

Total discounted financial liabilities 923,932 - - 923,932




300


(c) interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk whereas those issued at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

Sensitivity analysis for interest rate risk

At the reporting date, a change of 50 basis points (“bp”) in interest rates would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Group company

rm’000 rm’000 rm’000 rm’000

50 bp increase in interest rates (3,868) (9,155) (683) (650)50 bp decrease in interest rates 3,868 9,155 683 650

(d) foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group operates internationally and is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group entities. The foreign currency in which these transactions are denominated is principally United States Dollars (“USD”).

The Group’s exposure to foreign currency risk (excluding those arising from discontinued operations), based on carrying amounts as at the end of the reporting period was:

Group

2014 2013 rm’000 rm’000

Denominated in usD as at 31 December

Trade receivables 305 56,758Trade payables (1,382) (42,535) Loans and borrowings - (780,277) Derivative financial instruments - 13,498

Net exposure in the statement of financial position (1,077) (752,556)


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(d) foreign currency risk (cont’d)

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s (excluding discontinued operations) profit net of tax and other comprehensive income net of tax (“OCI”) to a reasonably possible change in the USD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

other comprehensive profit net of tax income net of tax

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

USD - strengthen 5% (2013: 5%) (40) (28,221) 3,771 12,657- weaken 5% (2013: 5%) 40 28,221 (3,771) (12,657)

(e) market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investment in quoted equity instruments which are mainly listed on Bursa Malaysia.

Sensitivity analysis for market price risk

At the reporting date, a 5% (2013: 5%) strengthening in the FTSE Bursa Malaysia KLCI would have increased the Group’s pre-tax profit and other comprehensive income by RM159,000 (2013 : RMNil) and RM2,378,000 (2013 : RM1,441,000) respectively. A 5% weakening in the FTSE Bursa Malaysia KLCI would have an equal but opposite effect on the Group’s pre-tax profit and other comprehensive income.




302


(f) fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair values

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximations of fair values:

note

Trade and other receivables 21Loans and borrowings 24Trade and other payables 25

The carrying amounts of these financial assets and liabilities are reasonable approximations of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the current portion of loans and borrowings are reasonable approximation of fair values due to insignificant impact of discounting.

The fair values of loan and borrowings are estimated by discounting expected future cash flows at the market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

quoted equity instruments

Fair value is determined directly by reference to their published market bid price at the reporting date.

Derivatives

Forward currency contracts and interest swap contracts are valued using a valuation technique with market observable inputs. The most frequently applied valuation technique include forward pricing and swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.

Financial guarantees

The Company provides financial guarantees to banks for credit facilities granted to certain subsidiaries. The fair value of such guarantees is not expected to be material due to the following reasons:

- The likelihood is remote that the guaranteed party will default within the guaranteed period;

- The estimated loss exposure to the Company arising from the outstanding credit facility that is not recovered if the guaranteed party were to default is not expected to be significant as the guaranteed party has net assets in excess of the outstanding amount of credit facilities.


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(f) fair value (cont’d)

Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities:

fair value measurement using

quoted prices in significant significant active observable unobservable total markets inputs inputs (level 1) (level 2) (level 3) rm’000 rm’000 rm’000 rm’000

assets measured at fair value

Group

at 31 December 2014quoted shares 48,960 48,960 - - quoted warrants 3,189 3,189 - - Fund investments 22,407 - 22,407 - Derivative financial instruments 2,449 - 2,449 - Investment properties 110,768 - - 110,768

at 31 December 2013quoted shares 28,821 28,821 - - Fund investments 18,288 - 18,288 - Derivative financial instruments 16,119 - 16,119 - Investment properties 107,758 - - 107,758

170,986 28,821 34,407 107,758

company

at 31 December 2014quoted shares 20,830 20,830 - - quoted warrants 3,189 3,189 - - Investment properties 110,768 - - 110,768

134,787 24,019 - 110,768

at 31 December 2013quoted shares 16,293 16,293 - - Investment properties 107,758 - - 107,758

124,051 16,293 - 107,758




304

34. financial instruments

The financial instruments of the Group and the Company as at 31 December are categorised into the following classes:

note 2014 2013 rm’000 rm’000

Group

(a) loans and receivables Trade and other receivables 21 204,873 503,478 Cash and cash equivalents 23 342,597 377,180 Unquoted redeemable convertible preference shares 18 10,000 -

547,470 880,658

(b) available-for-sale financial assets Other investments 18 44,006 81,342

(c) financial assets at fair value through profit or loss - held for trading Forward commodity contracts 22 - 13,498 Interest rate swap 22 2,449 2,621 quoted warrants 18 3,189 - quoted shares 18 28,129 12,465

33,767 28,584

(d) financial liabilities measured at amortised cost Trade and other payables 25 168,540 307,410 Loans and borrowings 24 1,202,185 2,063,637

1,370,725 2,371,047


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34. financial instruments (cont’D)

The financial instruments of the Group and the Company as at 31 December are categorised into the following classes: (cont’d)

note 2014 2013 rm’000 rm’000

company

(a) loans and receivables Trade and other receivables 21 197,253 212,827 Cash and cash equivalents 23 160,630 147,270

357,883 360,097

(b) financial assets at fair value through profit or loss - held for trading quoted warrants 18 3,189 -

(c) available-for-sale financial assets Other investments 18 21,598 62,991

(d) financial liabilities measured at amortised cost Trade and other payables 25 51,936 56,993 Loan and borrowings 24 150,000 130,000

201,936 186,993

35. capital manaGement

The primary objective of the Group’s capital management is to ensure that it maintains a strong capital base and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2014 and 31 December 2013.

A subsidiary of the Group which is involved in insurance broking and consultancy is required by Bank Negara Malaysia to maintain a minimum shareholders’ fund of RM600,000 at any point in time. This externally imposed capital requirement has been complied with by the above-mentioned subsidiary for the financial years ended 31 December 2014 and 2013.




306

35. capital manaGement (cont’D)

Bursa Malaysia Practice Note No. 17/2005 imposes a requirement on the Company to maintain a consolidated shareholders’ equity equal to or not less than the 25 percent of the issued and paid up capital (excluding treasury shares) and such shareholders’ equity is to be not less than RM40 million. The Company has complied with this requirement.

The Group monitors capital using the debt-to-equity ratio. The Group’s policy, which is unchanged from 2013, is to maintain the debt-to-equity ratio at the lower bound of the band between 0.5:1 and 0.8:1. The debt-to-equity ratios at 31 December 2014 and at 31 December 2013 were as follows:

Group

2014 2013 rm’000 rm’000

Total borrowings (Note 24) 1,202,185 2,063,637Less: Cash and bank balances (Note 23) (342,597) (377,180)

Net debt 859,588 1,686,457

Total equity 5,612,703 5,127,148

Debt-to-equity ratios 0.15 0.33

36. seGment information

For management purposes, the Group is organised into strategic business units based on their products and services, and has five reportable segments. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. The Group Managing Director (Group MD) reviews internal management reports for each of the strategic business units on a monthly basis. The operations of each of the Group’s reportable segments are summarised below:

• Plantation operations - Oil palm planting, crude palm oil processing and plantation management services and consultancy

• Intrapreneur ventures - Sea transportation, sales of wood based products and others

• Property investment - Rental of office building

Performance is measured based on segment profit before tax and interest as included in the internal management reports that are reviewed by the Group MD. Management believes that segment profits are the most relevant measure by which it can assess the results of the segments against those of other entities operating in the same industries.

Other operations of the Group mainly comprise investment holding and other miscellaneous activities which are not of sufficient size to be reported separately.


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36. seGment information (cont’D)

<------ plantation ------> papua new Guinea & solomon adjustments islands intrapreneur property other and malaysia (discontinued) ventures investment operations eliminations notes consolidated rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

31 December 2014

Segment revenue 767,265 2,097,946 266,811 8,836 50,764 (2,097,957) a 1,093,665

results Interest income 1,010 54 2,292 - 8,518 (54) a 11,820Finance costs 37,326 27,761 19,479 - (1,608) (27,761) a 55,197Depreciation of property, plant and equipment 80,302 232,317 35,066 - 3,738 - 351,423Amortisation of intangible assets - - 1,099 - 69 - 1,168Share of result of associate - - - - 586 - 586Segment profit/(loss) 185,644 419,009 22,010 3,193 (77,895) (413,637) a 138,324

assets Investments in associates - - - - 76,522 - 76,522Intangible assets - 160,449 24,386 - 9,053 (160,449) a 33,439Additions to non-current assets 119,574 238,882 150,004 - 7,448 - 515,908Segment assets 3,353,979 4,819,085 736,299 110,768 169,941 68,485 b 9,258,557

segment liabilities 1,045,968 2,084,517 493,941 - 21,428 - 3,645,854




308


<------ plantation ------> papua new Guinea & solomon adjustments islands intrapreneur property other and malaysia (discontinued) ventures investment operations eliminations notes consolidated rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

31 December 2013

Segment revenue 780,334 1,789,642 204,384 9,260 68,133 (1,838,596) A 1,013,157

resultsInterest income 4,385 42 986 - 5,696 (42) A 11,067Finance costs 35,171 30,798 16,512 - (28) (31,030) A 51,423Depreciation of property, plant and equipment 76,809 195,705 27,353 - 5,768 - 305,635Amortisation of intangible assets - - 468 - 1,293 - 1,761Segment profit/(loss) 164,887 86,190 45,495 5,103 (81,005) (73,696) A 146,974

assets Investments in associates - - - - 2,060 - 2,060Intangible assets - 155,158 25,483 - 9,121 - 189,762Additions to non-current assets 171,006 309,595 109,836 - 6,616 - 597,053Segment assets 3,461,118 4,170,544 571,962 107,758 37,320 81,198 B 8,429,900

segment liabilities 1,082,368 1,776,318 419,817 - 24,249 - 3,302,752


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The intrapreneur venture business segment can be further analysed as follows:

Wood adjustments total sea based and intrapreneur transportation products others eliminations venture rm’000 rm’000 rm’000 rm’000 rm’000

31 December 2014 Segment revenue 163,174 2,348 101,634 (345) 266,811

results Interest income 2,174 1 117 - 2,292Finance costs 14,323 151 5,119 (114) 19,479Depreciation of property, plant and equipment 25,123 70 9,873 - 35,066Amortisation of intangible assets - - 1,099 - 1,099Segment profit/(loss) 30,895 (28) (4,756) (4,101) 22,010

assets Intangible assets 11,489 - 12,897 - 24,386Additions to non-current assets 128,291 30 21,683 - 150,004Segment assets 677,566 1,915 56,818 - 736,299

segment liabilities 398,527 22,479 77,231 (4,296) 493,941




310


bulk mailing Wood and adjustments total sea based printing and intrapreneur transportation products (discontinued) others eliminations venture rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

31 December 2013

Segment revenue 158,380 3,464 16,984 73,776 (48,220) 204,384

resultsInterest income 922 3 - 61 - 986Finance costs 16,900 155 - 1,815 (2,358) 16,512Depreciation of property, plant and equipment 20,837 197 - 6,319 - 27,353Amortisation of intangible assets - - - 468 - 468Segment profit/(loss) 48,401 (467) 636 7,255 (10,330) 45,495

assetsIntangible assets 11,487 - - 13,996 - 25,483Additions to non-current assets 18,299 12 - 91,525 - 109,836Segment assets 504,476 2,440 - 65,046 - 571,962

segment liabilities 320,831 23,384 - 75,602 - 419,817

notes nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements

A The amounts relating to discontinued operations have been excluded to arrive at the amounts shown in

the consolidated statement of comprehensive income as they are presented separately in the statement of comprehensive income within one line item, “Gain from discontinued operations, net of tax”.

B This amount comprises of other items which cannot be allocated to any operating segment.


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Geographical information

Revenue and total assets information based on the geographical location of customers and assets respectively are as follows:

revenue total assets

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

continuing operations: Malaysia 1,093,665 1,013,157 4,436,041 4,259,355Indonesia - - 3,431 -

1,093,665 1,013,157 4,439,472 4,259,355

Discontinued operations: - Papua New Guinea 238,985 273,499 536,215 505,519 - Europe (mainly United Kingdom and Netherlands) 1,858,961 1,516,143 4,282,870 3,665,026

2,097,946 1,789,642 4,819,085 4,170,545

Total 3,191,611 2,802,799 9,258,557 8,429,900

37. DiviDenDs

Group and company

2014 2013 rm’000 rm’000

recognised during the financial year: Dividends on ordinary shares: - Interim tax exempt (single-tier) dividend for 2014: 9.50 sen per share 126,111 -

On 26 February 2015, the Company declared a special tax exempt (single-tier) dividend of 37.65 sen per ordinary share in respect of the financial year ended 31 December 2015. The financial statements for the current financial year do not reflect this approved dividend and this will be acounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2015.

38. autHorisation of financial statements for issue

The financial statements for the year ended 31 December 2014 were authorised for issue in accordance with a resolution of the directors on 30 March 2015.




312

39. supplementary information on tHe breaKDoWn of realiseD anD unrealiseD profits anD losses

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed entities pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses.

On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.

The breakdown of the retained earnings of the Group and of the Company as at 31 December 2014, into realised and unrealised profits, pursuant to the directive, is as follows:

Group company

2014 2013 2014 2013 rm’000 rm’000 rm’000 rm’000

Total retained earnings of the Company and its subsidiaries: - realised 2,965,387 4,136,816 659,924 746,553- unrealised (244,782) (784,131) (99,293) (68,767)

2,720,605 3,352,685 560,631 677,786

Total share of retained earnings of associate: - realised 1,846 1,260 - -

2,722,451 3,353,945 560,631 677,786

Add: Consolidated adjustments (778,855) (1,448,541) - -

Total retained earnings 1,943,596 1,905,404 560,631 677,786

The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20 December 2010.


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SECTION 8OTHER CORPORATEINFORMATION314 LocationoftheGroup’s

PalmOilsDivisionOperations

316 PropertiesoftheGroupinMalaysia

320 NoticeofAnnualGeneralMeeting

326 StatementAccompanyingNoticeofAnnualGeneralMeeting

ProxyForm

MuaraTeweh

INDONESIA


314Kulim(Malaysia)Berhad(23370-V)

314

LOCATIONOFTHEGROUP’SPALMOILSDIVISION

OPERATIONS

Pahang

Sembilan

Melaka

Singapore

JOHOR

MALAYSIA

JOHOR

Negeri


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PROPERTIESOFTHEGROUPINMALAYSIA

Net Book Value @ Year of 31.12.2014 Acquisition/ Tenure Hectares Description RM’000 RevaluationKULIM (MALAYSIA) BERHADLabisBahruEstate Freehold 2,109 Oilpalmand 43,950 1997*KB517 rubberestate 85009Segamat,Johor MutiaraEstate Leaseholdexpiring Oilpalmestate 28,905 1997*POBox21 20.06.2085 1,619 KampungBaruKahang 26.09.2085 324 86700Kahang,Johor 4.11.2074 607BasirIsmailEstate Freehold 2,875 Oilpalmestate 432,330 1997*KB50281909KotaTinggi,Johor REMEstate Freehold 1,583 Oilpalmestate 330,094 1997*KB501 Leaseholdexpiring: 81909KotaTinggi,Johor 12.03.2911 988 Oilpalmestate 15.04.2093 4 Stafftraining 14.03.2100 1 centre (Buildingage:16years) Sg.SembrongEstate Leaseholdexpiring Oilpalmestate 16,297 1997*POBox21 05.05.2074 607 KahangNewVillage 25.11.2082 607 86700Kahang,Johor 13.10.2102 29UluTiramEstate Freehold 502 Oilpalmestate 93,491 1997*KB71080990JohorBahru,Johor KualaKabungEstate Leaseholdexpiring 1,693 Oilpalmestate - 1997*No70,JalanRia3 16.08.2081 TamanRia,BukitBatu 81020Kulai,Johor MukimofPlentong,Johor Vacantland 17,458 1997*Lot1581 Freehold 5Lot2222 Freehold 8 Lot2223 Freehold 66 Lot2226 Freehold 4 Lot2227 Freehold 5 MenaraAnsar Leaseholdexpiring - 21-storeyintelligent 107,740 199865,JalanTrus 18.12.2080 officebuilding80000JohorBahru (Buildingage:16years) comprising3-level basementcarpark, 5-levelpodiumand 16-leveltower MukimSungaiTiram Leaseholdexpiring 20 Factoryand 22,588 2008PTD3932HSD454418 16.01.2068 vacantland 13,656 1,092,853

SECTION 8 OTHER CORPORATE INFORMATION


316

Net Book Value @ Year of 31.12.2014 Acquisition/ Tenure Hectares Description RM’000 RevaluationKULIM PLANTATIONS (MALAYSIA) SDN BHDTerehSelatanEstate Freehold 1,929 Oilpalmestate 43,587 1997*KB537 Leaseholdexpiring 869 86009Kluang,Johor 27.08.2078 TerehUtaraEstate Freehold 834 Oilpalmestate 44,319 1997*KB536 Leaseholdexpiring 1,560 86009Kluang,Johor 27.08.2078 Leaseholdexpiring 607 27.06.2079 5,799 87,906

MAHAMURNI PLANTATIONS SDN BHDRengamEstate Freehold 2,439 Oilpalmand 165,317 1997*KB104 rubberestate 86300Rengam,Johor SedenakEstate Freehold 2,861 Oilpalmestate 185,912 1997*KB726 80990JohorBahru,Johor UMACEstate Leaseholdexpiring Oilpalmestate 16,465 1997*POBox64 17.03.2070 228 86007Segamat,Johor 29.08.2071 237 11.12.2071 324 28.11.2072 346 25.02.2074 481 SiangEstate Leaseholdexpiringon 3,414 Oilpalmestate 98,954 2011KB515 23.01.2087 81909KotaTinggi,Johor Sg.PapanEstate Leaseholdexpiringon 3,026 Oilpalmestate 90,601 2011POBOX15, 22.09.2090 BandarPenawar 81909KotaTinggi,Johor PalongEstate Leaseholdexpiringon 1,928 Oilpalmestate 54,052 2012KB530 11.09.2112 85009Segamat,Johor MungkaEstate Leaseholdexpiringon 1,928 Oilpalmestate 53,681 2012KB525 11.09.2112 85009Segamat,Johor KemedakEstate Leaseholdexpiringon 1,786 Oilpalmestate 49,960 2012KB525 11.09.211285009Segamat,Johor


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PROPERTIESOFTHEGROUPINMALAYSIA

Net Book Value @ Year of 31.12.2014 Acquisition/ Tenure Hectares Description RM’000 RevaluationPasirPanjangEstate Leaseholdexpiringon 1,610 OilPalmestate 50,726 2013KB527 16.09.211281909KotaTinggi,Johor 20,608 765,668

ULU TIRAM MANUFACTURING COMPANY (MALAYSIA) SDN BHDBukitLayangEstate Freehold 401 Oilpalmestate 52,383 1997*KB502 81909KotaTinggi,Johor 401 52,383

SELAI SDN BHD EnggangEstate Freehold 355 Oilpalmestate 25,872 1997*KB503 86009Kluang,Johor SelaiEstate Freehold 3,180 Oilpalmestate 23,618 1997*KB529 86009Kluang,Johor 3,535 49,490 KUMPULAN BERTAM PLANTATIONS BERHAD SepangLoiEstate Freehold 1,016 Oilpalmestate 9,609 2003KB520 85009Segamat 1,016 9,609 SINDORA BERHADSindoraEstate Leaseholdexpiring 3,919 Oilpalmestate 52,441 1987KB539 24.01.2086 86009Kluang,Johor Sg.TawingEstate Leaseholdexpiring 2,226 Oilpalmestate 31,981 2009KB531 27.06.2079 86009Kluang,Johor 6,145 84,422 85,663Total - Plantation 51,160 2,142,331

*Thesepropertieswererevaluedin1997.TheaccountingpolicyonrevaluationisdisclosedinNote2.10totheFinancialStatements.



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Net Book Value @ Year of 31.12.2014 Acquisition/ Tenure Area Description RM’000 RevaluationSINDORA BERHADSindoraTimberComplex 60yearslease 2.56 Industriallandand 118 2000Lot1384IndustrialAreaPhase1 expiringon24.11.2059 hectares building BandarTenggara (Buildingage:15years) 81000Kulai,Johor

60yearslease 2,344,000 Industriallandand 6,600 1983 expiringon30.01.2041 sq.ft. buildingforoffice (Buildingage:32years) andfactory

60yearslease 5,000 Factorybuilding 40 1986 expiringon30.01.2041 sq.ft. (Buildingage:29years) No1,JalanTemenggong10 Leaseholdexpiringon 6,000 1unitofdouble- 52 1987BandarTenggara 18.04.2085 sq.ft. storeybungalow 81000Kulai,Johor (Buildingage:28years) (staffresidence) No17,JalanResam Leasehold 0.5699 1unitofdouble 582 1990GreenPlains,TamanBukitTiram (Buildingage:25years) hectares -storeybungalow81800UluTiram,Johor (staffresidence) 7,392

E.A. TECHNIQUE (M) BERHADSetiawangsaBusinessSuites Freehold 6,402 Officebuilding 1,433 2006UnitC-3A-3A (Buildingage:9years) sq.ft. No2,JalanSetiawangsaIITamanSetiawangsa 54200KualaLumpur 1,433

DANAMIN (M) SDN BHDPTB811,JalanIndustriA6, Leasehold(60years) 2.9 Officebuilding 2,700 2013KawasanPerindustrianBandarPenawar hectares 81970BandarPenawar,Johor 11&13,JalanSerangkai1, Leasehold(99years) 348m2 Shopoffice 1,700 2013TamanBukitDahlia, Expiringon30.09.2013 81700PasirGudang,Johor 2,JalanBukit6, Freehold 291m2 Store 450 2013KawasanPerindustrianMIEL, BandarBaruSeriAlam, 81750Masai,Johor ExpansionPlantinBandarPenawar Leasehold(60years) 2,600m2 Industriallandand 4,906 2014KawasanPerindustrianMIEL, buildingforplant BandarBaruSeriAlam, 81750Masai,Johor 9,756

DQ-IN Sdn BhdLotPT11254,TamanPerindustrianPaka, Leasehold(85years) 143m2 Shopoffice 297 201423100PakaDungunTerengganuTotal - Intrapreneur Ventures 18,878


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NOTICEOFANNUALGENERALMEETING

NOTICE IS HEREBY GIVEN THATTHEFORTIETH(40TH)ANNUALGENERALMEETING OF KULIM (MALAYSIA) BERHAD wILL BE HELD AT PERMATABALLROOM,LEVELB2,THEPUTERIPACIFICHOTELJOHORBAHRU,JALANABDULLAH IBRAHIM, 80000 JOHOR BAHRU, JOHOR, MALAYSIA ONTUESDAY,2JUNE2015AT12:00NOON,FORTHEFOLLOwINGPURPOSES:

ORDINARY BUSINESS

1. ToreceiveandadopttheDirectors’andAuditors’ReportsandAuditedFinancialStatementsinrespectoftheyearended31December2014.

2. Tore-electthefollowingDirectorswhoretireinaccordancewiththeCompany’s

ArticlesofAssociation: (i) DatinPadukaSitiSa’diahShBakir (ii) LeungKokKeong

3. To consider, and if thought fit, to pass the following resolution pursuant toSection129(6)oftheCompaniesAct,1965(“Act”);

“THAT TanSriDato’SeriUtamaArshadAyub,whoisovertheageofseventy(70)years,beherebyre-appointedasDirectoroftheCompanytoholdofficeuntilthenextAnnualGeneralMeeting(“AGM”)oftheCompany.”

4. To consider, and if thought fit, to pass the following resolution pursuant toSection129(6)oftheAct;

“THATDr.RadzuanA.Rahman,whoisovertheageofseventy(70)years,beherebyre-appointedasDirectoroftheCompanytoholdofficeuntilthenextAGMoftheCompany.”

5. To consider, and if thought fit, to pass the following resolution pursuant toSection129(6)oftheAct;

“THATDatukHaronSiraj,whoisovertheageofseventy(70)years,beherebyre-appointedasDirectoroftheCompanytoholdofficeuntilthenextAGMoftheCompany.”

6. ToapprovethepaymentofDirectors’feesinrespectofthefinancialyearended31December2014.

7. To re-appoint Messrs. Ernst & Young as Auditors of the Company and toauthorisetheDirectorstofixtheirremuneration.

Resolution 1

Resolution 2Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8



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Resolution 9

Resolution 10

Resolution 11

8. SPECIAL BUSINESS

Toconsiderand,ifthoughtfit,topassthefollowingresolutions:

8.1 Ordinary Resolution

InlinewithRecommendation3.2and3.3oftheMalaysianCodeonCorporateGovernance2012 ("MCCG2012"), theNominationCommittee (“NC”)hadconductedanassessmentofindependence under the nomination and election process of Independent Non-ExecutiveDirectors("INED"),wherebytheNCreviewedwhetherthenominatedcandidatehadsatisfiedthecriteria foran independentdirectorasprescribed inBursaMalaysiaSecuritiesBerhad("Bursa Malaysia") Main Market Listing Requirements ("Main Market LR") and its PracticeNote13priortoseekingshareholders’approvalatthe40thAGMontheappointmentasINED.

Toconsider,andifthoughtfit,topassthefollowingresolutionpursuanttoPracticeNote13oftheBursaMalaysiaListingRequirements;

“THATTanSriDato’SeriUtamaArshadAyub,whosetenureontheBoardexceedsacumulativeterm of more than nine (9) years be hereby re-appointed as Independent Non-ExecutiveDirectoroftheCompany.”(SeeExplanatoryNote1onSpecialBusinessbelow)


In line with Recommendation 3.2 and 3.3 of the MCCG 2012, the NC had conducted anassessmentofindependenceunderthenominationandelectionprocessofINED,wherebytheNCreviewedwhetherthenominatedcandidatehadsatisfiedthecriteriaforanindependentdirectorasprescribed inBursaMalaysiaMainMarketLRand itsPracticeNote 13prior toseekingshareholders’approvalatthe40thAGMontheappointmentasINED.

Toconsider,andifthoughtfit,topassthefollowingresolutionpursuanttoPracticeNote13oftheBursaMalaysiaListingRequirements;

“THATDatukHaronSiraj,whose tenureon theBoardexceedsacumulative termofmorethannine(9)yearsbeherebyre-appointedasIndependentNon-ExecutiveDirectoroftheCompany.”(SeeExplanatoryNote2onSpecialBusinessbelow)


AuthoritytoAllotandIssueSharesPursuanttoSection132DoftheAct

“THAT pursuant to Section 132D of the Act, full authority be and is hereby given to theDirectorstoissuesharesoftheCompanyfromtimetotimeuponsuchtermsandconditionsandforsuchpurposesastheDirectorsmayintheirabsolutediscretiondeemfitprovidedthattheaggregatenumberofsharestobeissuedpursuanttothisresolutiondoesnotexceedtenpercent(10%)oftheissuedsharecapitaloftheCompanyandthatsuchauthorityshallcontinueinforceuntiltheconclusionofthenextAGMoftheCompany,andthattheDirectorsbeandisherebyempoweredtoobtaintheapprovaloftheBursaMalaysiaforthelistingandquotationforthenewsharessoissued.”(SeeExplanatoryNote3onSpecialBusinessbelow)


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Resolution 12


ProposedRenewalofShareholders'MandatetoEnabletheCompanytoPurchaseuptoTenPercent(10%)ofitsIssuedandPaid-upShareCapital("ProposedRenewaloftheShareBuy-BackAuthority")

“THATsubjecttotheAct,rules,regulationsandordersmadepursuanttotheAct,provisionsof the Company’s Memorandum and Articles of Association and the Main Market LR ofBursaMalaysiaandanyotherrelevantauthority,theCompanybeandisherebyauthorisedtopurchaseand/orholdsuchamountofordinarysharesofRM0.25eachintheCompany’sissued and paid-up share capital (“Proposed Renewal of the Share Buy-Back Authority”)throughBursaMalaysiauponsuchtermsandconditionsastheDirectorsmaydeemfitintheinterestoftheCompanyprovidedthat:-

(a) the aggregate number of shares so purchased and/or held pursuant to this ordinaryresolution(“PurchasedShares”)doesnotexceedtenpercent(10%)ofthetotalissuedandpaid-upsharecapitaloftheCompanyatanyonetime;and

(b)themaximumamountoffundstobeallocatedforthePurchasedSharesshallnotexceedtheaggregateoftheretainedprofitsand/orsharepremiumoftheCompany;

AND THAT theDirectorsbeandareherebyauthorisedtodecideattheirdiscretioneitherto retain thePurchasedShares as treasury shares (asdefined inSection67Aof theAct)and/or tocancel thePurchasedSharesand/or to retain thePurchasedSharesas treasuryshares for distribution as share dividends to the shareholders of the Company and/or beresoldthroughBursaMalaysiainaccordancewiththerelevantrulesofBursaMalaysiaand/orcancelledsubsequentlyand/ortoretainpartofthePurchasedSharesastreasurysharesand/orcanceltheremainderandtodealwiththePurchasedSharesinsuchothermannerasmaybepermittedbytheAct,rules,regulations,guidelines,requirementsand/orordersofBursaMalaysiaandanyotherrelevantauthoritiesforthetimebeinginforce;

AND THATtheDirectorsbeandareherebyempoweredtodoallactsandthings(includingthe opening and maintaining of a central depositories account(s) under the SecuritiesIndustry(CentralDepositories)Act,1991andtotakesuchstepsandtoenterintoandexecuteallcommitments,transactions,deeds,agreements,arrangements,undertakings,indemnities,transfers,assignments,and/orguaranteesastheymaydeemfit,necessary,expedientand/orappropriateinthebestinterestoftheCompanyinordertoimplement,finaliseandgivefull effect to the Proposed Renewal of the Share Buy-Back Authority with full powers toassenttoanyconditions,modifications,variations(ifany)asmaybeimposedbytherelevantauthorities;

AND FURTHER THAT theauthorityconferredbythisordinaryresolutionshallbeeffectiveimmediately upon passing of this ordinary resolution and shall continue in force until theconclusionofthenextAGMoftheCompanyortheexpiryoftheperiodwithinwhichthenextAGMoftheCompanyisrequiredbylawtobeheld(whicheverisearlier),unlessearlierrevokedor varied by ordinary resolution of the shareholders of the Company in general meeting,butshallnotprejudicethecompletionofpurchase(s)bytheCompanybeforethataforesaidexpirydateandinanyeventinaccordancewithprovisionsoftheListingRequirementsandotherrelevantauthorities.”(SeeExplanatoryNote4onSpecialBusinessbelow)




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Resolution 13


ProposedRenewalofExistingShareholders’MandateforRecurrentRelatedPartyTransactions(“RRPT”)ofaRevenueand/orTradingNatureandNewMandateforAdditionalRRPTofaRevenueand/orTradingNature(“ProposedShareholders’MandateforRRPT”)

“THATauthoritybeandisherebygiveninlinewithParagraph10.09oftheListingRequirements,fortheCompany,itssubsidiariesoranyofthemtoenterintoanyofthetransactionsfallingwithinthetypesoftheRRPT,particularsofwhicharesetoutintheCirculartoShareholdersdated 11 May 2015 (“the Circular”), with the Related Parties as described in the Circular,providedthatsuchtransactionsareofrevenueand/ortradingnature,whicharenecessaryfortheday-to-dayoperationsoftheCompanyand/oritssubsidiaries,withintheordinarycourseofbusinessoftheCompanyand/oritssubsidiaries,madeonanarm’slengthbasisandonnormalcommercialtermswiththosegenerallyavailabletothepublicandarenotdetrimentaltotheminorityshareholdersoftheCompany;

AND THAT suchauthorityshallcommence immediatelyuponthepassingof thisordinaryresolutionuntil:-

(a) theconclusionofthenextAGMoftheCompanyfollowingthegeneralmeetingatwhichtheordinaryresolutionfortheProposedShareholders’MandateforRRPTispassed,atwhichtimeitshalllapse,unlesstheauthorityisrenewedbyaresolutionpassedatthenextAGM;or

(b)theexpirationoftheperiodwithinwhichthenextAGMafterthedateitisrequiredbylawtobeheld;or

(c) revokedorvariedbyordinaryresolutionpassedbytheshareholdersoftheCompanyatageneralmeeting,

whicheveroccursfirst;

AND FURTHER THATtheDirectorsoftheCompanybeauthorisedtocompleteanddoallsuchactsandthings(includingexecutingallsuchdocumentsasmayberequired)astheymayconsiderexpedientornecessaryorgiveeffecttotheProposedShareholders’MandateforRRPT.”(SeeExplanatoryNote5onSpecialBusinessbelow)

9. Totransactanyotherbusinessofwhichduenoticeshallhavebeengiven.

BY ORDER OF THE BOARD

IDHAM JIHADI ABU BAKAR.ACIS(MAICSA7007381)NURALIZA A. RAHMAN.ACIS(MAICSA7067934)CompanySecretaries

JohorBahru,Johor11May2015


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NOTES:

Proxy

1. AproxymaybutneednotbeamemberoftheCompany,anadvocate,anapprovedcompanyauditororapersonapprovedbytheRegistrarofCompanies,andtheprovisionsofSection149(1)(b)oftheCompaniesAct1965shallnotapplytotheCompany.

2. Inthecaseofacorporatemember,theinstrumentappointingaproxyshallbe(a)underitsCommonSealor(b)underthehandofadulyauthorisedofficerorattorneyandinthecaseof(b),besupportedbyacertifiedtruecopyoftheresolutionappointingsuchofficerorcertifiedtruecopyofthepowerofattorney.

3. Amembershallnot,subjecttoParagraphs(4)and(5)below,beentitledtoappointmorethantwo(2)proxiestoattendandvoteatthesamemeeting.whereamemberappointsmorethanone(1)proxytoattendandvoteatthesamemeeting,eachproxyappointedshallrepresentaminimumof100sharesandsuchappointmentshallbeinvalidunlessthememberspecifiestheproportionofhisshareholdingtoberepresentedbyeachproxy.

4. whereamemberisanauthorisednominee,asdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991,itmayappointatleastone(1)proxybutnotmorethantwo(2)proxiesinrespectofeachsecuritiesaccountitholdswhichiscreditedwithordinarysharesoftheCompany.Theappointmentoftwo(2)proxiesinrespectofanyparticularsecuritiesaccountshallbeinvalidunlesstheauthorisednomineespecifiestheproportionofitsshareholdingtoberepresentedbyeachproxy.

5. whereamemberisanexemptauthorisednominee("EAN")asdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991whichholdsordinarysharesintheCompanyformultiplebeneficialownersinonesecuritiesaccount(omnibusaccount),thereisnolimittothenumberofproxieswhichtheEANmayappointinrespectofeachomnibusaccountitholds.

6. Anyalterationtotheinstrumentappointingaproxymustbeinitialised.TheInstrumentappointingaproxymustbedepositedattheregisteredofficeatLevel11,MenaraKOMTAR,JohorBahruCityCentre,80000JohorBahru,Johornotlessthanforty-eight(48)hoursbeforethetimeappointedforholdingthemeetingoradjournedmeetingatwhichthepersonnamedinsuchinstrumentproposestovote;otherwisethepersonsonamedshallnotbeentitledtovoteinrespectthereof.

Abstention from Voting

1. AlltheNon-ExecutiveDirectors("NED")oftheCompanywhoareshareholdersoftheCompanyshallabstainfromvotingonResolution7concerningremunerationtotheNEDatthe40thAGM.

2. AnyDirectorreferredtoinResolution2,3,4,5and6,whoisashareholderoftheCompanyshallabstainfromvotingontheresolutioninrespectofhiselectionorre-appointmentatthe40thAGM.

3. AnyDirectororDirectorswhoistheappointednomineeoftheshareholder(s)oftheCompanyassetoutintheCirculartoShareholdersdated11May2015shallabstainfromvotingonresolution13inrespectofRRPTatthe40thAGM.

Explanatory Notes for Special Business

1. Ordinary Resolution 9 – Re-appointment of Director pursuant to Recommendation 3.2 and 3.3 of the MCCG 2012

TheNominationCommitteeissatisfiedwiththeskills,contributionandindependentjudgmentthatTanSriDato’SeriUtamaArshadAyubdeliverstotheBoard.TanSriDato’SeriUtamaArshadAyubhassatisfactorilydemonstratedthatheisindependentofmanagementandfreefromanybusinessorotherrelationshipwhichcouldinterferewiththeexerciseofindependentjudgment,objectivityortheabilitytoactinthebestinterestsoftheCompany.Inviewthereof,theBoardrecommendsandsupportsthere-appointmentofTanSriDato’SeriUtamaArshadAyub,ashehasofferedhimselfforre-appointmentasINEDoftheCompany,tobeapprovedbyshareholdersatthe40thAGMoftheCompanyasfollows:

“THATTanSriDato’SeriUtamaArshadAyub,whosetenureontheBoardexceedsacumulativetermofmorethannine(9)yearsbeherebyre-appointedasIndependentNon-ExecutiveDirectoroftheCompany.”

TanSriDato’SeriUtamaArshadAyub,aged87,wasappointedon31January1987asINEDoftheCompany.Hisprofileisassetoutinpage72,Section2oftheIntegratedAnnualReport.TanSriDato’SeriUtamaArshadAyubhasexceededhistenureontheBoardacumulativetermofmorethannine(9)yearssincehisappointmentdate.PursuanttoRecommendation3.2and3.3oftheMCCG2012,hemayberegardedasNon-IndependentNon-ExecutiveDirector,forcontinuingtoholdofficeasaDirectoroftheCompanyexceedingnine(9)yearsfromhisdateofappointment.

TheBoard,subjecttotheassessmentoftheNominationCommitteeissatisfiedwiththelevelofindependenceofTanSriDato’SeriUtamaArshadAyubandbasedonthejustificationabove,herebyrecommendsthatTanSriDato’SeriUtamaArshadAyubbere-appointedasINEDoftheCompanyuntilthenextAGMoftheCompany.




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2. Ordinary Resolution 10 – Re-appointment of Director pursuant to Recommendation 3.2 and 3.3 of the MCCG 2012

TheNominationCommitteeissatisfiedwiththeskills,contributionandindependentjudgmentthatDatukHaronBinSirajdeliverstotheBoard.DatukHaronBinSirajhassatisfactorilydemonstratedthathe is independentofmanagementand free fromanybusinessorother relationshipwhichcouldinterferewiththeexerciseof independent judgment,objectivityortheabilitytoact inthebest interestsoftheCompany. Inviewthereof, theBoardrecommendsandsupportsthere-appointmentofDatukHaronBinSiraj,ashehasofferedhimselfforre-appointmentasINEDoftheCompany,tobeapprovedbyshareholdersatthe40thAGMoftheCompanyasfollows:

“THATDatukHaronSiraj,whosetenureontheBoardexceedsacumulativetermofmorethannine(9)yearsbeherebyre-appointedasIndependentNon-ExecutiveDirectoroftheCompany.”

DatukHaronSiraj,aged71,wasappointedon9January2006asINEDoftheCompany.Hisprofileisassetoutinpage72,Section2oftheIntegratedAnnualReport.DatukHaronBinSirajhasexceededhistenureontheBoardacumulativetermofmorethannine(9)yearssincehisappointmentdate.PursuanttoRecommendation3.2and3.3oftheMCCG2012,hemayberegardedasNon-IndependentNon-ExecutiveDirector,forcontinuingtoholdofficeasaDirectoroftheCompanyexceedingnine(9)yearsfromhisdateofappointment.

TheBoard,subjecttotheassessmentoftheNominationCommitteeissatisfiedwiththelevelofindependenceofDatukHaronSirajandbasedonthejustificationabove,herebyrecommendsthatDatukHaronSirajbere-appointedasINEDoftheCompanyuntilthenextAGMoftheCompany.

3. Ordinary Resolution 11 – Proposed renewal of the authority for Directors to issue shares

TheproposedOrdinaryResolution11,isproposedforthepurposeofgrantingarenewedgeneralmandateforissuanceofsharesbytheCompanyunderSection132DoftheAct.TheOrdinaryResolution11,ifpassed,willgivetheDirectorsoftheCompanyauthoritytoissueordinarysharesintheCompanyatanytimeintheirabsolutediscretionwithoutconveningaGeneralMeeting.Theauthorisation,unlessrevokedorvariedbytheCompanyataGeneralMeeting,willexpireattheconclusionofthenextAGMoftheCompany.

TheCompanyhad,atthe39thAGMheldon24June2014,withdrawnfromobtainingitsshareholders’approvalforthegeneralmandateforissuanceofsharespursuanttoSection132DoftheCompaniesAct,1965(“theAct”).TheOrdinaryResolution11proposedunderitem8.3oftheAgendaisarenewalofthegeneralmandateforissuanceofsharesbytheCompanyunderSection132DoftheAct.Atthisjuncture,thereisnodecisiontoissuenewshares.Ifthereisadecisiontoissuenewsharesafterthegeneralmandateisobtained,anannouncementwillbemadebytheCompanyinrespectofthepurposeandutilisationofproceedsarisingfromsuchissue.

ThegeneralmandateifgrantedwillprovideflexibilitytotheCompanyforanypossiblefundraisingactivities,includingbutnotlimitedtofurtherplacingofshares,forthepurposeoffundingfutureinvestmentproject(s),workingcapitaland/oracquisition(s).

4. Ordinary Resolution 12 – Proposed Renewal of the Share Buy-Back Authority

TheproposedOrdinaryResolution12,ifpassedwillenabletheCompanytoutiliseanyofitssurplusfinancialresourcestopurchaseitsownsharesthroughBursaMalaysiauptotenpercent(10%)oftheissuedandpaid-upcapitaloftheCompany.Thisauthoritywill,unlessrevokedorvariedataGeneralMeeting,expireattheconclusionofthenextAGMoftheCompany.

Further informationon theProposedRenewalof theShareBuy-BackAuthorityaresetout in theCircular toShareholdersof theCompanywhich isdispatchedtogetherwiththeCompany’sIntegratedAnnualReportfortheyearended2014.

5. Ordinary Resolution 13 – Proposed Shareholders’ Mandate for RRPT

The proposed Ordinary Resolution 13 if passed is primarily to authorise the Company and/or its unlisted subsidiaries to enter into arrangements ortransactionswithRelatedParties,particularsofwhicharesetoutinSection3.2,3.3and3.4oftheCirculartoShareholdersdated11May2015circulatedtogetherwiththisIntegratedAnnualReport,whicharenecessaryfortheday-to-dayoperationsoftheGroupandarebasedonnormalcommercialtermsthatarenotmorefavorabletotheRelatedPartiesthanthosegenerallymadeavailabletothepublic.


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STATEMENTACCOMPANYINGNOTICEOFANNUALGENERALMEETINGPurSuANT TO PArAgrAPh 8.28(2) Of ThE LISTINg rEquIrEmENT Of ThE BurSA mALAySIA

1. Directorswhoarestandingforre-electionatthe40thAnnualGeneralMeetingareasfollows:

(i) DatinPadukaSitiSa’diahShBakir (ii) LeungKokKeong

ParticularsofDirectorsseekingre-electionattheAnnualGeneralMeetingaresetoutbelow:

Nationality/Age :

Academic/Professional Qualification(s) :

Present Directorship(s) :

Present Appointment(s) :

Appointed to the Board of the Company:

Resolution 2

Datin Paduka Siti Sa’diah Sh Bakir

Malaysian/63

• BachelorofEconomics,UniversityofMalaya

• MBAfromHenleyBusinessSchool,UniversityofReading,London,UnitedKingdom

• MemberoftheBoardofDirectorsofseveralothercompanieswithintheJCorpGroup

Non-IndependentNon-ExecutiveDirector,Kulim(Malaysia)Berhad

1January2005

Resolution 3

Leung Kok Keong

Malaysian/48

• BachelorDegreeinAccounting,CurtinUniversityofTechnology,Australia

• CertifiedPractisingAccountantandCharteredAccountant,CPAAustraliaandamemberoftheMalaysianInstituteofAccountants

• AsiaBioenergyTechnologiesBerhad

IndependentNon-ExecutiveDirector,Kulim(Malaysia)Berhad

9November2011



326

2. FurtherdetailsofDirectorwhoisstandingforre-apppointmentasperAgenda3,4,5,8.1and8.2oftheNoticeof40thAGMareasfollows:

Nationality/Age :





Resolution 4 & 9

Tan Sri Dato’ Seri Utama Arshad Ayub

Malaysian/87

• DiplomainAgriculture,CollegeofAgriculture,Serdang• BachelorofScienceDegreeinEconomicswithStatistics,UniversityCollegeof

wales,Aberystwyth,UnitedKingdom• DiplomainBusinessAdministration,IMEDELausanne(nowIMD),Switzerland

• ProChancellorofUiTM• ChancellorofKPJInternationalUniversityCollege• ChairmanofUniversityMalayaBoard• ChairmanofMalayanFlourMillsBerhad• ChairmanofTomypakHoldingsBerhad• ChairmanofKarexBerhad• DirectorofTopGloveCorporationBerhad


31January1987

Nationality/Age :





Resolution 5

Dr. Radzuan A. Rahman

Malaysian/72

• BachelorinAgriculturalScience(Honours)degree,UniversityofMalaya

• MasterandPhDinResourceEconomics,CornellUniversity,NewYork

• IdamanUnggulBerhad• InchKennethKajangRubberPte

Ltd• KenanganCergasSdnBhd• MaepManagementSdnBhd• GreenCapitalSdnBhd


1November2006

Resolution 6 & 10

Datuk Haron Siraj

Malaysian/71

• BachelorofArts(Honours)inEconomicsin1968fromtheUniversityofManchester,UnitedKingdom

• MasterofArtinDevelopmentEconomicsfromwilliamsCollege,UnitedStatesofAmerica

• HSBCAmanahTakafulSdnBhd• ApexCommunicationsGroup

SdnBhd


9January2006


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STATEMENTACCOMPANYINGNOTICEOFANNUALGENERALMEETING

3. The39thAnnualGeneralMeetingoftheCompanywasheldatBilikPermata3,LevelB2,ThePuteriPacificHotelJohorBahru,JalanAbdullahIbrahim,80000JohorBahru,Johor,MalaysiaonTuesday,24June2014at11:30a.m.

4. Atotalofeight(8)Boardmeetingswereheldduringthefinancialyearended31December2014.DetailsofattendanceofDirectorsatBoardmeetingsheldduringthefinancialyearended31December2014areasfollows:

277th Special 278th Special 279th Special 280th Special BOD BOD BOD BOD BOD BOD BOD BOD 23.2.2014 7.4.2014 20.5.2014 24.6.2014 19.8.2014 9.10.2014 19.11.2014 3.12.2014 %

Dato’KamaruzzamanAbuKassim / / / / / / / / 100AhamadMohamad / / / / / / / / 100TanSriDato’SeriUtamaArshadAyub / X / / / / / X 75DatinPadukaSitiSa’diahShBakir / X / / / / / / 88ZulkifliIbrahim / / / / / / / / 100JamaludinMdAli / / / / / / / X 88WongSengLee / / / / / / / / 100DatukHaronSiraj / / / / / / / / 100Dr.RadzuanA.Rahman / / / / / / X / 88RozanMohdSa’at / / / / / / / / 100LeungKokKeong / / / / / / / / 100AbdulRahmanSulaiman / / / / / / / / 100

Notes:- • WongSengLeewasre-designatedasNon-IndependentNon-ExecutiveDirectoron1.2.2014.Subsequently,WongSengLeeresignedfromtheBoardasNon-Executive

Non-IndependentDirectoron15.1.2015. • RozanMohdSa’atresignedfromtheBoardasNon-IndependentNon-ExecutiveDirectoron15.1.2015. • RozainiMohdSaniwasappointedtotheBoardasNon-IndependentNon-ExecutiveDirectoron15.1.2015.

Meeting No.

277thBODMeeting

SpecialBODMeeting

278thBODMeeting

SpecialBODMeeting

279thBODMeeting

SpecialBODMeeting

280thBODMeeting

SpecialBODMeeting

Date

23February2014

7April2014

20May2014

24June2014

19August2014

9October2014

19November2014

3December2014

Venue

BoardRoom,UluTiramEstate,Johor

TheLegendsBallroom,Level2TheLegendsGolf&CountryResort

Sedenak,Kulai,Johor

BerlianRoom,LevelB2TheHotelPuteriPacificJohorBahruJalanAbdullahIbrahim,JohorBahru

BilikTeraju,Level24,MenaraKOMTARJohorBahruCityCentre,JohorBahru

BerlianRoom,LevelB2

TheHotelPuteriPacificJohorBahruJalanAbdullahIbrahim,JohorBahru



328

PROXYFORMNo.ofordinary

sharesheldCDSaccountno.of

authorisednominee(i)

I/we*_______________________________________________________________________________________________ (FullnameandNRICNo./CompanyNo.inblockletters)

of__________________________________________________________________________________________________ (Fulladdressinblockletters)

beingamember(s)ofKULIM(MALAYSIA)BERHADherebyappoint_________________________________________________

___________________________________________________________________________________________________ (Fullnameinblockletters)


orfailinghim/her______________________________________________________________________________________ (Fullnameinblockletters)


orfailinghim/her,theChairmanofthemeetingasmy/ourproxytovoteforme/us*onmy/our*behalfatthe40thAnnualGeneralMeetingoftheCompanytobeheldatPermataBallroom,LevelB2,ThePuteriPacificHotelJohorBahru,JalanAbdullahIbrahim,80000JohorBahru,Johor,MalaysiaonTuesday,2June2015at12:00noonandatanyadjournmentthereofinrespectofmy/ourholdingsofsharesin

themannerindicatedbelow:

RESOLUTION DESCRIPTION FOR AGAINST

1 ToadopttheDirectors’andAuditors’ReportsandAuditedFinancialStatements2014

2 Tore-electDirector–DatinPadukaSitiSa’diahShBakir

3 Tore-electDirector–LeungKokKeong

4 Tore-appointDirector–TanSriDato’SeriUtamaArshadAyub

5 Tore-appointDirector–Dr.RadzuanA.Rahman

6 Tore-appointDirector–DatukHaronSiraj

7 ToapprovepaymentofDirectors’fees

8 Tore-appointMessrs.Ernst&Youngasauditors

9 Tore-appointIndependentNon-ExecutiveDirector

-TanSriDato’SeriUtamaArshadAyub

10 Tore-appointIndependentNon-ExecutiveDirector

-DatukHaronSiraj

11 Authoritytoallotandissueshares

12 ProposedrenewalofShareBuy-Back

13 ProposedShareholders’MandateforRRPT

Anyotherbusiness

(Pleaseindicatewitha(3)intheappropriateboxwhetheryouwishyourvotetobecastfororagainsttheresolution.Intheabsenceofspecificdirection,yourproxywillvoteorabstainashe/shethinksfit.However,ifmorethanoneproxyisappointed,pleasespecifyinthetablebelowthenumberofsharesrepresentedbyeachproxy,failingwhichtheappointmentshallbeinvalid)

Forappointmentoftwoproxies,percentageofshareholdingstobepresentedbytheproxies:

No.ofshares Percentage

Proxy1

Proxy2

Total 100%

____________________________________Signature(s)/CommonSealofShareholder(s)

Datedthis……dayof……………………2015

NOTE:i. Applicabletosharesheldthroughanomineeaccount.ii. AproxymaybutneednotbeamemberoftheCompany,anadvocate,anapprovedcompanyauditorora

personapprovedbytheRegistrarofCompanies,andtheprovisionsofSection149(1)(b)oftheCompaniesAct1965shallnotapplytotheCompany.

iii. Inthecaseofacorporatemember,theinstrumentappointingaproxyshallbe(a)underitsCommonSealor(b)underthehandofadulyauthorisedofficerorattorneyandinthecaseof(b),besupportedbyacertifiedtruecopyoftheresolutionappointingsuchofficerorcertifiedtruecopyofthepowerofattorney.

iv. Amembershallnot,subjecttoParagraphs(v)and(vi)below,beentitledtoappointmorethantwo(2)proxiestoattendandvoteatthesamemeeting.whereamemberappointsmorethanone(1)proxytoattendandvoteatthesamemeeting,eachproxyappointedshallrepresentaminimumof100sharesandsuchappointmentshallbeinvalidunlessthememberspecifiestheproportionofhisshareholdingtoberepresentedbyeachproxy.

v. whereamemberisanauthorisednominee,asdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991,itmayappointatleastone(1)proxybutnotmorethantwo(2)proxiesinrespectofeachsecuritiesaccountitholdswhichiscreditedwithordinarysharesoftheCompany.Theappointmentoftwo(2)proxiesinrespectofanyparticularsecuritiesaccountshallbeinvalidunlesstheauthorisednomineespecifiestheproportionofitsshareholdingtoberepresentedbyeachproxy.

vi. where a member is an exempt authorised nominee (“EAN”) as defined under the Securities Industry(CentralDepositories)Act1991whichholdsordinarysharesintheCompanyformultiplebeneficialownersinonesecuritiesaccount(omnibusaccount),thereisnolimittothenumberofproxieswhichtheEANmayappointinrespectofeachomnibusaccountitholds.

vii. Anyalterationtotheinstrumentappointingaproxymustbeinitialised.TheInstrumentappointingaproxymustbedepositedattheregisteredofficeatLevel11,MenaraKOMTAR,JohorBahruCityCentre,80000JohorBahru,Johornotlessthanforty-eight(48)hoursbeforethetimeappointedforholdingthemeetingor adjourned meeting at which the person named in such instrument proposes to vote; otherwise thepersonsonamedshallnotbeentitledtovoteinrespectthereof.

Foldhere

Foldhere

The Secretary

KULIM (MALAYSIA) BERHADLevel11MenaraKOMTARJohorBahruCityCentre80000JohorBahruJohor,Malaysia

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