Arc Plantation Annual Report 2012

annual report 2012
nurturing sustainability
Contents
2 3 4 5 6 8 13 14 16 Vision, Mission and Culture Statement Location of Operations Group Corporate Structure Group Organisation Chart Financial Highlights, Share & Warrant Performance 5-Year Group Plantation Statistics Board of Directors & Secretaries IJMP in The Headlines Senior Management Key Events FY2012
Vision
To be a leading regional plantation group.
Culture
We strive to: uphold the highest standards of professionalism and exemplary corporate governance to maximise the benefits for all stakeholders; respect the different cultures, gender, religion, human rights and dignity of our stakeholders; ensure the standard of our agricultural and milling practices is of quality that matches or exceeds others in the industry;
Mission
To uphold the highest standards of performance in our plantations and agri-businesses.
20 26 32 39 40 42 44
Chairmans Statement CEOs Review of Operations Statement on Corporate Governance Statement of Value Added & Distribution Audit Committee Report Statement on Internal Control Statement and Report on Corporate Social Responsibility Statement and Report on Environment Statement and Report on Workplace Statement and Report on Community Statement and Report on Marketplace
57
Financial Statements
132 List of Properties 133 Analysis of Shareholdings & Warrantholdings 139 Notice of Annual General Meeting Form of Proxy Corporate Information
create a conducive environment for team spirit among our employees to work towards a unified workforce; and be a responsible and respected corporate citizen with concerns for social, safety, health and environmental issues.
27
General th Annual Meeting
IJM PLANTATIONS BERHAD (133399-A)

Venue : Victorian Ballroom, Level 1, Holiday Villa Hotel & Suites Subang, 9 Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan Date : Friday, 24 August 2012 Time : 3.30 p.m.
LOCATION OF OPERATIONS
KOTA KINABALU
9 19 18 17 16 15 14 12 13 11
BELURAN
5 8 7 6 10 4 3
TELUPID
1 2
SANDAKAN
PLANTATION
3 5 6 8 9 11 14 15 16 17 19 20 21 22 23 24 25 26 27 Minat Teguh Estate Sijas Estate Desa Talisai South Estate Desa Talisai North Estate Meliau Estate Sungai Sabang Estate Berakan Maju Estate Excellent Challenger I Estate Excellent Challenger II Estate Rakanan Jaya South Estate Rakanan Jaya North Estate Sajau Estate Binai Estate Pertama Estate Belidan Estate Manubar Estate Kaliorang Estate Mengenai Estate Alumga Estate
Sabah
TAWAU
LAHAD DATU
TARAKAN TANJUNG SELOR

20 21
PROCESSING
2 4 7 12 18 IJMEO Kernel Crushing Plant Minat Teguh Palm Oil Mill Desa Talisai Palm Oil Mill Sabang Palm Oil Mill I Sabang Palm Oil Mill II
East Kalimantan
SERVICES
1 Wisma IJM Plantations 10 Quality, Training and Research Centre 13 Sugut Training Centre
25
26
22 23
24
SANGATTA
PALEMBANG
27
Sumatra
SAMARINDA
LAMPUNG
Annual Report 2012
IJM PLANTATIONS BERHAD
GROUP CORPORATE STRUCTURE AS AT 30 JUNE 2012
GROUP ORGANISATION CHART
BOARD OF DIRECTORS
Audit Committee
> Risk Management Committee > Internal Audit
Securities & Options Committee
Nomination & Remuneration Committee
Company Secretaries
CEO & Managing Director
CEO Indonesia Project
CFO & Executive Director
Plantations
> Estates > Processing > Research, Training & Development
Group Support Services

> Agro Management Services > Commodity Selling & Outside Crop > Finance & Accounts > Human Resource > Land & Legal > Purchasing & Administration
Project Team
Annual Report 2012
FINANCIAL HIGHLIGHTS
REVENUE
(RM000) 590,434
PROFIT BEFORE TAX

(RM000)
TOTAL ASSETS
(RM000)
506,284
491,604
478,029
215,247
196,016
189,973
1,842,268
1,504,282
160,477
1,387,453
406,745
1,041,779 09
3.35
12
11
10
09
08
12
11
112,632
10
09
08
12
11
10
Financial year ended
SHARE & WARRANT PERFORMANCE

SHARE PERFORMANCE (RM)
3.30 3.30 Mar 0.94
2.97
2.84
2.76
2.73
2.67
2.65
Apr
May
Jun
Jul
2011
Aug
2.49
2.60
2.82
Sep
Oct
Nov
Dec
Jan
2012
Feb 0.94
0.78
0.81
0.77
0.69
0.68
0.63
WARRANT PERFORMANCE (RM)
0.59
0.69
0.71
0.86
999,539 08
5-YEAR GROUP PLANTATION STATISTICS

E S TAT E S Oil Palm Area Malaysia Operation Mature (> 20 Years) Mature-Prime (8 20 Years) Mature-Young (4 7 Years) Immature (1 3 Years)
UNIT
2012
2011
2010
2009
2008
hectare hectare hectare hectare
2,938 19,464 2,135 904 25,441
1,980 19,694 2,600 925 25,199
705 17,380 5,505 1,632 25,222
900 14,447 7,764 2,136 25,247
15,600 7,040 2,653 25,293
Indonesia Operation Mature-Prime (8 20 Years) Mature-Young (4 7 Years) Immature (1 3 Years)
hectare hectare hectare
726 826 19,768 21,320 46,761
563 13,043 13,606 38,805
5,306 5,306 30,528
308 308 25,555
25,293
Total Planted Area FFB Production Malaysia Indonesia
tonne tonne
648,853 21,980 670,833
575,210 575,210
604,663 604,663
600,205 600,205
567,324 567,324
Total Yield Per Mature Hectare Malaysia Indonesia
tonne tonne
26.4 14.2 25.7
23.7 23.7
25.6 25.6
26.0 26.0
25.1 25.1
Total M I LLS FFB Processed Own Outside
tonne tonne
648,853 156,846 805,699
575,210 133,312 708,522
604,663 152,207 756,870
577,066 173,526 750,592
554,968 169,393 724,361
Total Palm Kernels Processed Own Outside
tonne tonne
37,267 37,267
32,909 32,909
34,201 34,201
29,175 11,530 40,705
33,777 19,177 52,954
Total P RO D U CT I ON Crude Palm Oil Palm Kernel Crude Palm Kernel Oil Palm Kernel Expeller
tonne tonne tonne tonne
166,171 37,340 16,908 18,509
151,096 32,574 14,941 16,457
163,452 33,897 15,147 17,092
157,376 35,022 17,721 20,922
154,174 34,269 23,042 27,717
Annual Report 2012

EX T RAC T I O N R AT E S Crude Palm Oil Palm Kernel Crude Palm Kernel Oil Palm Kernel Expeller OI L Y I E LD P E R HE CTA R E AVE RAGE S E LL I NG P R I CE S Crude Palm Oil Palm Kernel Crude Palm Kernel Oil Palm Kernel Expeller F I N AN C I AL RE SULT S Revenue Operating Profit Finance Costs Associates Jointly Controlled Entities Profit Before Tax Taxation Non-Controlling Interests Net Profit Shareholders Fund Total Assets Earnings Per Share Basic Earnings Per Share Diluted Gross Dividend Per Share Net Assets Per Share Share Price High Low Closing Warrant 2009/2014 Price High Low Closing
UNIT
% % % % tonne
2012
20.6 4.6 45.4 49.7 5.4
2011
21.3 4.6 45.4 50.0 5.1
2010
21.6 4.5 44.3 50.0 5.5
2009
21.0 4.7 43.5 51.4 5.5
2008
21.3 4.7 43.5 52.3 5.3
RM/tonne RM/tonne RM/tonne RM/tonne
3,049 1,854 4,102 326
2,760 1,927 4,259 377
2,246 1,116 2,555 195
2,641 1,180 3,107 358
2,544 1,481 3,251 381
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
590,434 216,474 (1,227) 215,247 (57,821) (113) 157,313
506,284 192,746 3,389 (119) 196,016 (48,822) (1) 147,193
406,745 122,154 (4,409) 34 (5,147) 112,632 (32,973) (171) 79,488
491,604 161,896 (3,741) 2,596 (274) 160,477 (37,420) 129 123,186
478,029 192,982 (6,071) 2,979 83 189,973 (47,846) (14) 142,113 776,327 999,539 23.82 22.49 4.50 1.22 4.30 1.68 3.58
RM000 1,383,861 1,306,017 1,203,927 830,993 RM000 1,842,268 1,504,282 1,387,453 1,041,779 sen 19.62 18.37 11.01 18.33 sen 19.41 18.22 11.01 18.33 sen 8.00 5.00 8.00 12.00 RM 1.73 1.63 1.50 1.30 RM RM RM 3.42 2.38 3.30 3.24 2.38 2.95 3.10 2.47 2.55 4.00 1.28 2.09
RM RM RM
0.95 0.53 0.94
1.41 0.49 0.85
0.80 0.32 0.70
Manpower Staff Labour
789 7,789
740 5,757
575 5,190
534 4,705
449 3,991
BOARD OF DIRECTORS & SECRETARIES
Y. BHG. TAN SRI DATO WONG SEE WAH DSNS, PSM

Certificate in Teaching Independent Non-Executive Chairman Y. Bhg Tan Sri Dato Wong See Wah, born in January 1946, was appointed an Independent Non-Executive Director of IJM Plantations Berhad (IJMP) on 16 August 2006, and Independent Non-Executive Chairman on 28 May 2007. He holds a Certificate in Teaching from the Malayan Teachers College, Pulau Pinang, and started his career in the education arena before devoting to politics in 1982. He was the State Assemblyman for Kuala Klawang Constituency (1982-1986) and Peradong Constituency (1986-1990), Member of Parliament for Rasah Constituency (1990-1999), Deputy Minister in the Prime Ministers Department (1990-1995) and Deputy Minister of the Finance Ministry (1995-1999). He was also the Negeri Sembilan State Government Executive Councillor responsible for the Water and Electricity Supply Portfolios (1982-1990) and the Chief Administrative Director for MCA Headquarters (2001-2005). His directorships in other public companies include Unisem (M) Berhad and Ewein Berhad.
JOSEPH TEK CHOON YEE

B. Sc. (Hons), MPhil. (Cantab) Chief Executive Officer & Managing Director Securities & Options Committee Mr Joseph Tek Choon Yee, born in January 1966, was appointed the Chief Executive Officer & Managing Director (CEO&MD) of IJMP on 23 May 2010. He graduated with a Bachelor of Science (First Class Honours) degree from Universiti Kebangsaan Malaysia. He was a Commonwealth ODASS/Sime Darby scholar and obtained his Masters in Philosophy (Plant Breeding) from Cambridge University, England. He also attended the ASEAN Senior Management Development Programme organised by Harvard Business School Alumni Club of Malaysia. He joined IJMP in September 2004 to head the research, training and development activities of the Group, and was appointed an Alternate Director on 22 May 2008 and Executive Director on 19 October 2008 besides being the General Manager Plantations (Sabah). He was then redesignated to the position of Chief Operating Officer & Executive Director on 18 May 2009, prior to his appointment as CEO&MD of IJMP. Prior to joining IJMP, he was with Sime Darby Plantations Sdn Bhd as Plant Breeder in Ebor Research (1991-1997), R&D Manager (1997-2000) and later Manager-Agritech Business (2000-2001) with Sime Aerogreen Sdn Bhd and Sime Gardentech Sdn Bhd. His last position was Head of R&D with Malaysian Palm Oil Association (MPOA) (2001-2004). He is currently a member of the Programme Advisory Committee (PAC) of the Malaysian Palm Oil Board (MPOB) (2011-2013) and a Council Member of the Malaysian Estate Owners Association (MEOA) since 2009. He was also a Council Member of the Malaysian Oil Scientists and Technologists Association (MOSTA) (2006-2007), a member of the Criteria Working Group for the Roundtable on Sustainable Palm Oil (RSPO) (2005-2006) and Vice-Chairman of the MPOA Environment Working Committee (2004-2005).
Annual Report 2012
PURUSHOTHAMAN A/L KUMARAN

B. Acc. (Hons), CA, MBA Chief Financial Officer & Executive Director Mr Purushothaman a/l Kumaran, born in October 1961, was appointed the Chief Financial Officer & Executive Director (CFO&ED) of IJMP on 23 May 2010. He graduated with a Bachelor of Accounting (Honours) degree from University of Malaya in 1985 and holds a Masters degree in Business Administration from Anglia Polytechnic University, Cambridge, England. He is a member of Malaysian Institute of Accountants. He joined IJMP as Financial Controller on 1 January 2004. He was redesignated to General Manager Corporate Affairs & Finance on 1 January 2007, prior to his appointment as CFO&ED. Prior to joining IJMP, he was with Unilever Group for over 14 years, serving various finance and commercial positions in Malaysia, England and Indonesia. His last post was as Commercial Director of its plantation operations in Malaysia.
KHOO KHEE MING

B. Agri. Sc. Senior Independent Non-Executive Director Audit Committee, Nomination & Remuneration Committee, Securities & Options Committee Mr Khoo Khee Ming, born in July 1942, was appointed an Independent Non-Executive Director of IJMP on 24 March 2003, and Senior Independent Non-Executive Director on 26 February 2004. He obtained his Bachelor of Agricultural Science degree in 1966 from the University of Malaya and has attended the General Management Course at Sundridge Park (UK) as well as the Senior Management Programme at Cranfield School of Management (UK). He was the Executive Director & Chief Operating Officer of PPB Oil Palms Berhad from 1999 to 2002. Prior to that, he was with Sime Darby Plantations for 26 years and served as Senior Agronomist (1972-1978), Estate Manager (1978-1980), Planting Advisor (1980-1987), Estates Director (1987-1997) and Business Development Director (1997-1998). Over the years he has been appointed to serve on the Boards of Malaysian Palm Oil Board, Malaysian Palm Oil Promotion Council, Malaysian Rubber Research and Development Board, International Rubber Research Development Board, Malaysian Cocoa Board, and as Council Member and Honorary Treasurer of the Malaysian Palm Oil Association.
10
Y. BHG. DATUK OH CHONG PENG PJN, JSM

FCA Independent Non-Executive Director Audit Committee Y. Bhg. Datuk Oh Chong Peng, born in July 1944, was appointed an Independent Non-Executive Director of IJMP on 24 March 2003. He undertook his accountancy training in London and qualified as a Chartered Accountant in 1969 and is a Fellow of the Institute of Chartered Accountants in England and Wales. He is also a member of the Malaysian Institute of Certified Public Accountants (MICPA) and the Malaysian Institute of Accountants. He joined Coopers & Lybrand in London in 1969 and in Malaysia in 1971. He was a senior partner of Coopers and Lybrand (now known as PricewaterhouseCoopers), Malaysia from 1974 until his retirement in 1997. He was a Government appointed Committee Member of the Kuala Lumpur Stock Exchange (1990-1996), a past President (1994-1996) and Council Member (1981-2002) of the MICPA, and also a member of the Listing Committee of Bursa Malaysia Berhad from 2008 to May 2011. His directorships in other public companies include Alliance Financial Group Berhad (Chairman), British American Tobacco (Malaysia) Berhad, Dialog Group Berhad, IJM Corporation Berhad, Kumpulan Europlus Berhad, Malayan Flour Mills Berhad and Ingenious Growth Berhad. He is also a Trustee of UTAR Education Foundation; and a Government appointed Member of the Labuan Financial Services Authority.
M. RAMACHANDRAN A/L V. D. NAIR

FMIM, FMOSTA, FISP, FBIM, B. Agri. Sc. (Econs) Independent Non-Executive Director Audit Committee, Nomination & Remuneration Committee Mr M. Ramachandran A/L V. D. Nair, born in September 1938, was appointed an Independent Non-Executive Director of IJMP on 28 May 2007. He obtained a degree in Agricultural Economics and Technology from the University of Adelaide, Australia in 1960. He joined Socfin Group in 1962 after a short stint with Harrisons & Crossfield. He retired in 1996 as Director and Head of Plantations of Socfin Company Berhad. He worked for Tanjong PLC as a Managing Consultant in 1998. In 1999, he was the Project Manager appointed by plantation companies to spearhead the formation of the Malaysian Palm Oil Association and served as its Chief Executive from January 2000 till April 2005. He has served various commodity based bodies which were essential to the overall well being of the plantation industry in Malaysia. He played a key role in the formation of the global multi-stakeholder platform, Roundtable on Sustainable Palm Oil (RSPO) in 2004 and is an Honorary Member and Advisor to RSPOs Executive Board. He is presently the Chairman of EcoChances Sdn Bhd, Director of EcoOils Sdn Bhd, Ecolnnovation Sdn Bhd and EcoOils Processors Sdn Bhd - subsidiaries of the Singapore based Kewalram Chanrai Group. He is also a Director of Incorporated Society of Planters, ISP Management Sdn Bhd, Saraya Hygiene Malaysia Sdn Bhd and a member of the Board of Commissioners of PT Agro Indomas, Indonesia (a Carson Cumberbatch Company). He serves on the Board of Governors of the International School of Penang (Uplands) and as a Trustee of the Malaysian Estate Staff Provident Fund.
Annual Report 2012
11
Y. BHG. TAN SRI DATO TAN BOON SENG @ KRISHNAN PSM, DSPN, SMS
B. Econs (Hons), CPA(M), MBA Non-Executive Director Y. Bhg Tan Sri Dato Tan Boon Seng @ Krishnan, born in December 1952, was appointed Director on 7 December 1993. He qualified as a Certified Public Accountant in 1978 after graduating with a Bachelor of Economics (Honours) degree from the University of Malaya in 1975. He also holds a Masters degree in Business Administration from the Golden Gate University, San Francisco, USA. He was the Group Financial Controller of Kumpulan Perangsang Selangor Berhad prior to joining IJM Corporation Berhad (IJM) as Financial Controller in 1983. He was appointed an Alternate Director of IJM on 12 June 1984, Director on 10 April 1990 and Deputy Group Managing Director on 1 November 1993. He was then appointed Group Managing Director on 1 January 1997 and was redesignated Chief Executive Officer & Managing Director (CEO & MD) on 26 February 2004. He stepped down as the CEO&MD of IJM on 31 December 2010 and was appointed Executive Deputy Chairman on 1 January 2011. His directorships in other public companies include IJM, IJM Land Berhad (Chairman), Malaysian Airline System Berhad, Malaysian Community & Education Foundation and Grupo Concesionario del Oeste S.A., Argentina. He is a member of the Board of Governors of Malaysia Property Incorporated (MPI). He also serves as a Trustee of Perdana Leadership Foundation. He is actively involved in the promotion of Malaysia India business ties and is currently the President of the Malaysia-India Business Council (MIBC) and Chairman of the Malaysia India CEO Forum.
Y. BHG. DATO TEH KEAN MING DSPN, PKT B.E (Civil), P.Eng., MIEM Non-Executive Director Audit Committee, Nomination & Remuneration Committee
Y. Bhg. Dato Teh Kean Ming, born in April 1955, was appointed a Non-Executive Director of IJMP on 9 July 2009. He graduated with a Bachelor of Engineering degree from University of New South Wales, Australia in 1981. He was a Resident Civil & Structural Engineer of Dayabumi Phase 3 Project (1981-1983) and Menara Maybank (1983-1987) and Area Engineer of Antah Biwater J.V. Sdn Bhd (1987-1989) prior to joining IJM Construction Sdn Bhd as Project Manager (1989-1993), Senior Manager (Project) (1994-1997) and Project Director (1998-2001). He was the head of the Property Division of IJM from 2001 to 2008. He was also the Group General Manager of IJM from 1 April 2001 to 31 December 2004 and Managing Director of IJM Properties Sdn Bhd from 1 January 2005 to 10 June 2009. He joined the Board of IJM as an Alternate Director on 1 September 2005 and was the Deputy Chief Executive Officer & Deputy Managing Director of IJM from 1 July 2008 to 31 December 2010. He was then appointed Chief Executive Officer & Managing Director of IJM on 1 January 2011. His directorships in other public companies include IJM, IJM Land Berhad, Road Builder (M) Holdings Bhd and ERMS Berhad.
12
JEREMIE TING KENG FUI

MBA, FCIS Company Secretary Mr Jeremie Ting Keng Fui, born in September 1957, was appointed Company Secretary on 17 October 1994. He is also the Company Secretary of IJM and IJM Land Berhad, and heads the Corporate Services, Administration, and Information Systems Departments of IJM. He completed the examinations of The Institute of Chartered Secretaries and Administrators (ICSA) in 1981, after obtaining a Diploma in Foundations of Administration from Chelmer Institute of Higher Education, Chelmsford, Essex, England in 1979, and obtained a Masters degree in Business Administration from Golden Gate University, San Francisco, USA in 1986. He is presently a Council Member of the Malaysian Institute of Chartered Secretaries & Administrators (MAICSA) and has been in Council for many years since 1994. He is also MAICSA Adviser for Bursa Affairs, and Chairman of the Governance Committee and Corporate Communications & Publications Committee, and a member of the National Disciplinary Tribunal, and Technical & Professional Practice Committee. He was adjudged the winner of the ROC-MAICSA Company Secretary Award 2000 under the Listed Company Category, and was the MAICSA President for 2004. He was a member of the Committee of Adjudicators of the Malaysian Corporate Governance (MCG) Index 2011 and 2010 of the Minority Shareholder Watchdog Group (MSWG), and a member of the Focus Group for the Malaysian Code on Corporate Governance 2012 and Working Group for the Corporate Governance Blueprint 2011 of the Securities Commission.
NG YOKE KIAN
ACIS Company Secretary Ms Ng Yoke Kian, born in August 1967, was appointed Company Secretary on 6 April 2012. She is also the Company Secretary of IJM and IJM Land Berhad. She is an Associate of Malaysian Institute of Chartered Secretaries & Administrators (MAICSA). She started her career with a secretarial firm for about 5 years and was an Assistant Manager of the Technical and Research Department of the MAICSA prior to joining IJM. She has more than 20 years experience in corporate secretarial work.
Note: 1. There are no family relationship between the Directors and/or major shareholders of the Company. 2. All Directors are Malaysians except for M. Ramachandran A/L V.D. Nair who is a Singaporean/Permanent Resident of Malaysia. 3. None of the Directors have any conflict of interest with the Company. 4. All Directors maintain a clean record with regard to convictions for offences.
Annual Report 2012
13
IJMP IN THE HEADLINES
14
SENIOR MANAGEMENT
VELAYUTHAN A/L TAN KIM SONG M.MIN, D.DIV (India & USA)
Chief Executive Officer (Indonesia) Born in 1954, he is the Chief Executive Officer for the Groups expansion project in Indonesia. He obtained a Diploma in Management from the Malaysian Institute of Management in 1985. He was with Multi-Purpose Holdings Berhad for five (5) years before joining IJM Corporation Berhad in 1985 as their Project Officer to initiate their plantation business in Sandakan, Sabah. He was appointed Group General Manager of IJMP in 1994 before being appointed Executive Director in 1997 and Managing Director in 2003. He was redesignated the Chief Executive Officer & Managing Director in 2004 until his retirement on 22 May 2010. He also served as Group Executive Director of IJM Corporation Berhad from 2001 to 2003. He was conferred with an Honorary Fellowship of the Malaysian Oil Scientists & Technologists Association (MOSTA) in June 2010 and also Sabah Sports Laureate (Tokoh Sukan) in 2010. He was a Council Member of the Malaysian Estate Owners Association (MEOA) for the term 2010/2011. He was also a Council Member of Malaysian Palm Oil Association (MPOA) and alternate Board Member on the Malaysian Palm Oil Board (MPOB). He is the President of the Sabah Rugby Union since 2002 and Founding President of Sandakan Rugby Club.
P. K. VENUGOPAL B. Sc Botany (India) Country Estates Director (Indonesia)

Born in 1954, he is the Country Estates Director (Indonesia). He holds a Bachelor of Science (Botany) degree from the University of Madras, India. He is a planter with wide experience in the industry. He spent seventeen (17) years in KL Kepong Berhad holding various positions from Cadet Assistant to Manager (1979-1995) before joining Lai Fook Kim Corporation Sdn Bhd as General Manager Plantations (1995-2001). He joined IJMP in 2002 to be responsible for IJM Agri Services Sdn Bhd, that provides management and advisory services to third party clients. He was promoted to General Manager Plantations (Indonesia) in 2007.
NG CHUNG YIN B. Sc. Horticulture (Taiwan)

Group Planting Advisor Born in 1957, he is the Group Planting Advisor. He obtained his Bachelor of Science (Horticulture) degree from the Chinese Culture University in Taiwan. He started his career in the plantation industry in 1983 with Kong Borneo Development Company Sdn Bhd in Sandakan. He joined IJMP in 1989 as Assistant Manager and was subsequently promoted to Senior Assistant Manager in 1991, Divisional Manager in 1993, Plantation Manager/Regional Manager in 1997, Plantation Controller in 1999 and Senior Plantation Controller in 2004. He assumed the role of Group Planting Advisor in 2007.
GROUP SUPPORT SERVICES
Annual Report 2012
15
LEFT TO RIGHT
o Velayuthan A/L Tan Kim Song, Joseph Tek Choon Yee,

Purushothaman A/L Kumaran
t P. K. Venugopal, Ng Chung Yin, Madusoodanan A/L K. A. Nair,

Francis Chai Min Fah, S. Kugarajah
MADUSOODANAN A/L K. A. NAIR B. Sc Engineering (Hons), MBA

Head of Engineering Born in 1952, he joined IJMP to head the Engineering Department in August 2008. He graduated with a Bachelor of Science (Mechanical Engineering) First Class Honours degree from University of Calicut, India. He is a competent First Grade Steam Engineer and has successfully completed the Management Training Programme of the MOPGC in 1981. He holds a Masters degree in Business Administration from the University of Leicester, United Kingdom. He has also obtained the Engineering Council Exams Part 1 of the Institution of Mechanical Engineers UK. He started his career in the plantation industry with United Plantations Bhd (UP) in May 1977. After serving UP for 25 years he joined PT SMART Tbk (Sinarmas Agribusiness Division) in May 2003 as a Production Controller and served in North Sumatra and South Kalimantan regions for 5 years. He is a Member of the Institution of Mechanical Engineers India (1986) and Institution of Certified Engineers Malaysia (1989). He is also a Member of Malaysian Oils and Scientists Technologists Association (MOSTA) (1985).
FRANCIS CHAI MIN FAH Dip. In Agriculture General Manager Agri Services
Born in 1955, he is the General Manager Agri Services. He holds a Diploma in Agriculture from Universiti Pertanian Malaysia. He started his career as a planter with Harrisons & Crossfields in 1978. He joined IJMP in 1996 as Controller of Agri Services after working with KPD Holdings Sdn Bhd (1988-1996) where his last position was as its Regional Manager. He left IJMP in 2001 to join MHC Plantations Bhd as its General Manager. He returned to IJMP in 2007 to assume the post of General Manager Agri Services.
S. KUGARAJAH Dip. In Agriculture General Manager Plantations (Sabah)

Born in 1946, he is the General Manager Plantations (Sabah). He holds a Diploma in Agriculture from College of Agriculture Malaya, Serdang. He started his career in the plantation industry in 1970 with Harrisons & Crossfield. He served in various capacities within the group for thirty two (32) years. He accumulated experiences in managing both oil palm and rubber plantations located in various parts of the country. During this career, Mr Kugarajah held office in a number of industry organisations including the Incorporated Society of Planters, Malacca Planters Association, East Malaysia Planters Association, Sabah Employers Consultative Association and United Planting Association of Malaysia. He was a Plantation Consultant prior to joining IJMP in 2009.
16
PRODUCTIVITY & INNOVATIONS

APR 11 1 Stakeholder engagement activity with fund managers, journalists and reseachers. 2 IJM DxP Seeds Seminar at QTRC. MAY 11 3 IJM DxP seeds talk in Keningau. OCT 11 4 Official launching of High Performance Culture initiative. 5 Annual MPOB Code of Practices surveillance audit. JAN 12 6 Australian Senator Nick Xenophon & YB Dato Shahrir Abdul Samad visited IJMP. FY2011/12 7 FFB Quality Day in all mills to enhance crop quality. 8 In-field mechanisation introductory briefing to employees. 9 Completed field planting of more than 21,000 ha in Indonesia.
2
Annual Report 2012
17
CARE FOR ENVIRONMENT

JUN 11 1 Avi-fauna survey at the Hundred-Acre Wood in collaboration with local NGO, Borneo Bird Club. SEP 11 2 Documentary filming on mangrove ecosystem by Sabah Forestry Dept at IJMPs Hundred-Acre Wood. 3 Hosted the Environmental Educational Race for the Ministry of Education. OCT 11 4 Continuous support and participation in Borneo Bird Festival. FY2011/12 5 Activities related to integrated pest management. 6 Enrichment of flora in Hundred-Acre Wood with Bornean Orchid collections. 7 Quarterly recycling campaign Greening Saturday. 8 Planting of rainforest tree species at flood prone areas and degraded land.
KEY EVENTS FY2012
4 1
18
10
INVESTOR IN PEOPLE
MAY 11 1 Family Day gathering organised at operating units. 2 Pesta Kaamatan celebration in Sugut region. JUN 11 3 Team building activity at Sepilok Rainforest Discovery Centre. AUG 11 4 Opening of learning centre at Sandakan head office. 5 OSHA Awareness Month with various safety briefings and health talks. DEC 11 6 IJM My Voice employee survey to improve workplace. FEB 12 7 IJMP HPC Football League to promote esprit-de-corps among the employees. FY2011/12 8 Series of health talks for employees in the operating units. 9 Structured training and re-training programmes for all levels of employees. 10 Various inter-estates sports competition were organised.
1
Annual Report 2012
19
RETURNING TO COMMUNITY
5
APR 11 1 Participation in the youth job placement programme organised by Jabatan Tenaga Kerja. MAY 11 2 Organised netball friendly match with government departments. JUL 11 3 3rd Edition of IJMP-MSSS-SRU 7-aside rugby tournament for different age groups. 4 Violinist Dr. Joanne Yeoh invited for engagement with children from the surrounding community. DEC 11 5 IJM G.I.V.E Day a community service activity organised throughout IJM group.
MAR 12 6 Breast health awareness campaign at SMK Bongkol, Pitas. 7 Community outreach at Kampung Bongkol, Pitas. 8 10th Edition of IJMP-MSSS-SRU 10-aside rugby tournament for different age groups. FY2011/12 9 Blood donation campaigns at operating units. 10 Continuous effort in promoting sports excellence at a local primary school through rugby coaching activities.
KEY EVENTS FY2012
6 2 3
10
20
On behalf of the Board of Directors, it is my privilege to present the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 31 March 2012.
The Groups continued success stems from an amalgam of factors which include a proven business model developed with expertise accumulated over the years, an entrepreneurial flair to seize opportunities as they arise and commitment to process excellence to execute carefully mapped-out strategies. The game plan has been to leverage on our core competencies in upstream management and all the inherent synergies to unlock their potential. By doing so, the Group has remained true to the goal of creating sustainable long-term value for stakeholders, abiding by a well-articulated set of principles to continue operating in a socially responsible manner and with due regard to environmental stewardship.
Tan Sri Dato Wong See Wah

Independent Non-Executive Chairman
Annual Report 2012
21
PERFORMANCE
While the financial markets were much preoccupied by the prevailing debt crisis and stagnant economies in the Eurozone, emerging economies moved ahead backed by the growth in China and India, albeit at a slower pace. The markets for soft commodities as a result remained strong. Supported by the high petroleum prices, prices of palm commodities remained bullish during the year. Crude palm oil (CPO) prices were high for most parts of the year under review. As a result, the Groups average CPO selling price for the year was higher at RM3,049 per tonne (2011: RM2,760 per tonne), an increase of 10% from the preceding year. Crude palm kernel oil (CPKO) prices, however, recorded a decline of 4% to RM4,102 per tonne (2011: RM4,259 per tonne) as the palm lauric market consolidated. Due to the palm biological stress suffered in the previous year, fresh fruit bunches (FFB) production started the year conservatively. It however recovered and moved into a prolonged peak cropping season from June 2011 before gradually slowing down to the normal trough. In tandem with this, the Group harvested 648,853 tonnes (2011: 575,210 tonnes) of FFB to achieve a growth of 13% during the year under review. FFB processed by the mills in the Group, including outside fruit purchase, increased to achieve 805,699 tonnes (2011: 708,522 tonnes).
CHAIRMANS STATEMENT
The Group remained diligent and vigilant in its focus to curb and mitigate escalating production costs. A raft of cost-mitigating measures have been adopted over the past years and these were constantly reviewed to check for effectiveness. The cost-containment measures were also complemented by the various activities undertaken by the Groups Research and Development (R&D) team working together with the operating units to achieve higher yields. Underpinned by these positive factors, the Group registered yet another strong financial performance to deliver a record high revenue and profit before tax of RM590.43 million (2011: RM506.28 million) and RM215.25 million (2011: RM196.02 million) respectively. Profit after tax was RM157.31 million (2011: RM147.19 million) while basic earnings per share attributable to shareholders was 19.62 sen (2011: 18.37 sen). Net tangible assets per share as at 31 March 2012 was RM1.73 (2011: RM1.63).
22
CHAIRMANS STATEMENT
In addition, the Group made good progress with its planting programme in Indonesia. As at financial year end, total planted area grew to 21,320 hectares (2011: 13,606 hectares), a notable 57% increase. Another 4,000 hectares have been cleared and are available for planting in the next financial year. Meanwhile, the Groups first palm oil mill in Indonesia is expected to come into operation to capture the peak crop season of 2012.
On 29 May 2012, the Directors declared a single tier interim dividend of 10 sen per share. This dividend has been paid on 3 July 2012 to every member who was entitled to receive the dividend at the close of the business on 15 June 2012. The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2012.
DIVIDEND
The Company is committed to the payment of annual dividends. The quantum of dividends is determined after taking into account, inter alia, the level of available funds, the amount of retained earnings, capital expenditure commitments and other investment planning requirements. In respect of the financial year ended 31 March 2011, a single tier interim dividend of 8 sen per share amounting to RM64.14 million was paid on 11 July 2011.
CORPORATE GOVERNANCE
The Group firmly believes that good corporate governance is vital to continued enhancement and protection of stakeholders value. These practices are essential for building investors confidence in the overall operations and performance of the business. The Groups commitment towards this remains strong and some guiding principles of this commitment are set out in the Statement on Corporate Governance (pages 32 to 38) and Statement on Internal Control (pages 42 to 43).
Rakanan Jaya North Estate
Annual Report 2012
23
The Company, its subsidiaries, Directors and Management were not sanctioned and had no material penalties imposed by any relevant regulatory body during the year.
RETURNING TO COMMUNITY
The Group continued to develop its CSR projects to forge closer relationships with the surrounding communities. Social projects initiated form part of the Groups sincere effort to give back and contribute to the community in a meaningful and beneficial manner. The Groups two main areas of focus are youth development projects and public health awareness. Under the youth development projects, the Groups incorporation and development of rugby in Sabah schools extra-curricular activity is a benchmark of successful engagement with the community. Various activities were actively organised under the umbrella of The Academy of Rugby Excellence, a landmark platform established in collaboration with the Sabah Education Department and Sabah Rugby Union. This partnership is aimed at nurturing schoolchildren in the sport of rugby. As in the preceding years, the Group organised coaching programmes and tournaments for schools at the Sabah state level for both boys and girls. Under the health awareness initiatives, the Group continued to organise breast health public awareness fora to enlighten the local community on breast self examinations (BSE). During the year, the Group conducted outreach programmes in the district of Pitas and Kunak in Sabah, targeting school girls. The fora also touched on the benefits of palm oil in relation to the fight against breast cancer as reported by research findings. We believe education is a key pillar for community development. The Group continued to fund education based initiatives. In addition to catering for children on our plantations, the facilities of kindergartens and learning centres established by the Group are extended to surrounding communities. In collaboration with a social NGO, Humana Child Aid Society Sabah, the learning centres in Desa Talisai Estate and the recently established centre in Excellent Challenger II Estate now cater for over 300 children of different age groups.
RELATED PARTY TRANSACTIONS

Related party transactions of the Group for the financial year are disclosed in Note 29 to the Financial Statements. This note also sets out the recurrent transactions conducted during the period in accordance with the general mandate obtained from shareholders at the Extraordinary General Meeting held on 22 August 2011. Except for those disclosed in Note 29 to the Financial Statements, there were no material contracts of the Group involving Directors and major shareholders interest during the period.
CARE FOR ENVIRONMENT

A deep sense of responsibility to environmental stewardship is synonymous to the Groups culture. The Group recognises the importance of good environmental practices and makes conscious effort in its daily operations to ensure that economic and social development are in harmony to the environment. In ensuring that the Groups operating practices are in line with good industry standards, all the operating units were certified under the MPOBs Code of Practices (CoPs) for quality, food safety and sustainability. The Group is also a member of the Roundtable of Sustainable Palm Oil (RSPO). The Group hosted numerous stakeholders during the year. This is part of the Groups initiative to continuously engage with its stakeholders from different disciplines. These engagements enabled the Group to create awareness among stakeholders and to strengthen dialogue on the Groups sustainability initiatives while obtaining valuable feedback.
24
CHAIRMANS STATEMENT
INVESTOR IN PEOPLE
The Group continued to build on the foundation of strong leadership, a pioneering spirit, and a culture of hard work, passion and perseverance. The mission, vision and core values of the Group have also been rolled out to all employees with the aim of striving for higher performance and making the organisation a good place to work. To achieve higher levels of productivity, it is crucial that the living conditions on the plantations are adequate and appropriate. In line with this, the Group continued its initiatives of upgrading its housing infrastructure, planting of vegetables and fruit trees, and provision of amenities. Through the provision of sports facilities, employees and their families are encouraged to live a healthy lifestyle. Joint consultative committees (JCC) too have been established. Through their regular scheduled meetings, they provide a formal channel of communication between employees and management. Being conscious of the challenges faced in recruiting, training and retaining talent and skilled human resource under the current competitive environment, the Group continued with its training and retraining programmes
for all levels of employees. The Intensive Cadetship programme tailored to meet the requirements of the Groups Indonesian operations continued to support the rapid progress in the expansion project. The Cadets were equipped with knowledge of sound plantation operations and agronomy practices before being mobilised to the various locations of the expansion project. In addition, a mentorship programme towards succession planning has been initiated targeting at young executives.
PROSPECTS AND OUTLOOK

The Group remains optimistic on the outlook for palm oil industry in view of its well-supported fundamentals. Following the tightening of supply and stocks within the global edible oil market, industry experts are anticipating support for high prices. However, downside risk arising from the prolonged and expanded Eurozone debt crisis may exert downward pressure on the demand for vegetable oils globally, inevitably affecting prices. In addition to the adverse effect of labour scarcity, the industry will also experience cost pressures arising from the introduction of minimum wages and rising input costs of fertilisers and fuel. Nevertheless, the maturity profile of our Malaysian operations and the good progress in planting programme in Indonesia augers well for the future performance of the Group. Taken as a whole and barring unforeseen circumstances, the Group is poised to deliver yet another good performance in the coming year.
Annual Report 2012
25
Training for employees working in confined space
ACKNOWLEDGEMENTS
Over the past years, our people have shared the Groups bold vision and ambition to achieve greater heights of performance. On behalf of the Board, I would like to thank the Directors, management and all employees of the Group for their continued dedicated service, commitment and contribution during the year. The year ahead will continue to be challenging amidst the volatility of commodity prices along with uncertainties in weather conditions. Nonetheless, with similar commitment, strong teamwork, passion and perseverance as exhibited in the past, I am confident that we can shoulder the load and continue to achieve common goals of higher performance as we unlock the potential of our enlarged land-bank.
On behalf of the Group, I wish to take the opportunity to place on record our deepest appreciation to Mr Khoo Khee Ming and Datuk Oh Chong Peng, who are retiring as Directors on 24 August 2012, for their dedication and contribution to the Group over the last 9 years on the Board. The Groups success is also attributed to the continued support and cooperation received from various quarters including our business associates, financiers, regulatory authorities, customers and all other stakeholders. They remain the driving force behind the Groups achievements and we hope to continue to enjoy their support as we move ahead to realise the full potential the Group.
26
The Group had another year of stellar performance with record revenue and profits. This was propelled by the convergence of favourable palm product prices, increased in crop production and effective control on escalating costs of production.
Amidst an uncertain global economic landscape, palm oil proved its resilience yet again as sustainable growth in the global consumption and encouraging cues from other oilseeds elevated the selling prices. Against this backdrop, the Group achieved a higher average crude palm oil (CPO) price of RM3,049 per tonne (2011: RM2,760 per tonne), an increase of 10% over the preceding year. Own crop production registered a further double-digit growth. The Group ended the year with a record revenue and profit before tax of RM590.43 million (2011: RM506.28 million) and RM215.25 million (2011: RM196.02 million) respectively.
Joseph Tek Choon Yee

Chief Executive Officer & Managing Director
Annual Report 2012
27
PLANTED AREA AND AGE PROFILE

Total plantation land of the Group in Sabah was 29,092 hectares (2011: 29,088 hectares) at the close of the financial year. Area planted with oil palm was 25,441 hectares (2011: 25,199 hectares) spreading over 11 estates in Sandakan and Sugut regions. Sugut region made up 63% of the total planted area while the remaining 37% is located in Sandakan region. Out of the planted hectarage, mature area totalled 24,537 hectares (2011: 24,274 hectares) representing 96% of total planted area while the remaining area of 904 hectares (2011: 925 hectares) are immature. The immature area will come into production in the next two years. Meanwhile, the mature areas that are over 20 years of age will be replanted in phases. The Group enjoys a favourable oil palm maturity profile in Sabah, with 85% or 21,599 hectares of the land bank planted with palms classified as young and of prime age. Good progress was made on our planting program in Indonesia. Total planted area grew to 21,320 hectares as at 31 March 2012, a notable increase of 57% over the preceding year (2011: 13,606 hectares). Details of the Groups oil palm age profile are as follows: MALAYSIA Mature (> 20 years) Mature Prime (8 20 years) Mature Young (4 7 years) Immature (1 3 years) Total INDONESIA Mature Prime (8 20 years) Mature Young (4 7 years) Immature (1 3 years) Total HECTARES 2,938 19,464 2,135 904 25,441 HECTARES 726 826 19,768 21,320 % 12 77 8 3 100 % 3 4 93 100
CEOS REVIEW OF OPERATIONS
The Groups land bank in Indonesia is as follows: LOCATION Bulungan HECTARES 22,488 STATUS With SHGU* 9,088 Ha/ Location permit 13,400 Ha With SHGU* 10,104 Ha/ Cadastral 5,920 Ha With SHGU* 10,252 Ha/ Location permit 291 Ha
Kutai Timur
16,024
Lampung
10,543
Total
49,055
* SHGU Sertifikat Hak Guna Usaha
PLANTATIONS
The year in review saw an improvement in fresh fruit bunches (FFB) production in Sabah on the back of an upturn in the crops biological cycle following the biological stress in the preceding year due to both El Nino and La Nina conditions. As a result, one of the Groups key performance indicator, namely FFB production grew by 13% to 648,853 tonnes (2011: 575,210 tonnes), outpacing the broader national growth rate. The average FFB yield registered at 26.4 tonnes per hectare (2011: 23.7 tonnes per hectare).
28
Mechanisation of in-field crop evacuation
EXPANSION IN INDONESIA
With close supervision and monitoring of the planting activity in the expansion project in Indonesia, the Group made significant progress with its planting programme. As at 31 March 2012, total planted area reached 21,320 hectares (2011: 13,606 hectares), an increase of 57% over the planted area at the end of the preceding year. In tandem with the expansion, another 4,000 hectares have been cleared and will be planted during 2012. The nurseries established at respective planting sites held over two million seedlings at year end. These seedlings would be available for planting in stages to cover over 12,000 hectares. FFB harvested was 21,980 tonnes (2011: Nil).
During the year under review, the two (2) oil mills located in Sandakan region processed 313,561 tonnes (2011: 273,106 tonnes) of FFB which represented an increase of 15% in production volume over the preceding year. As for the other two (2) mills under Sugut region, it registered a growth of 13% to achieve 492,138 tonnes (2011: 435,416 tonnes) of FFB. Average CPO extraction rate was 20.6%, a decline from 21.3% from the preceding year while kernel extraction rate remained stable at 4.6%. In addition to losses arising from the constraint in labour availability during the year, the drop in average CPO extraction rate was due to the poor fruit set arising from the onset of unusual weather pattern. The decline was also experienced by other mills in the regions where we operate. On the processing of palm kernel, the Groups kernel crushing plant crushed 37,267 tonnes (2011: 32,909 tonnes) of palm kernel to produce 16,908 tonnes (2011: 14,941 tonnes) of crude palm kernel oil (CPKO) and 18,509 tonnes (2011: 16,457 tonnes) of palm kernel expellers (PKE). The extraction rate for CPKO was stable at 45.4% (2011: 45.4%). To cater for the first batch of new plantings which will soon come into maturity, the Group is expecting to complete its first palm oil mill in Indonesia in 2012.
PALM OIL MILLS

The Group has four (4) palm oil mills with a total processing capacity of 195 tonnes of FFB per hour (2011: 195 tonnes) which are strategically located in Sandakan and Sugut regions. In line with the increase in FFB yield, total FFB processed together with outside purchased crops rose by 14% to 805,699 tonnes (2011: 708,522 tonnes).
Annual Report 2012
29
OPERATIONAL EXCELLENCE
The Groups drive for higher performance remains a constant pursuit. Industry-wide challenges over availability of workers continued to be addressed through various proactive initiatives including stepping up recruitment of workers, introducing more attractive out-turn incentives, competitive harvesting rates and rolling out mechanisation on site-specific areas in the estates. Towards this, the use of Cantas motorised cutter were introduced and mechanically assisted crop evacuation were implemented. Other cost effective initiatives such as soil and water conservation were also actively pursued and implemented in critical areas to improve productivity and sustain yields. As part of an ongoing commitment to raise performance standards, operating units throughout the Group were certified under the MPOB Code of Practices for quality, food safety and sustainability. This covers 1 nursery, 11 estates, 4 palm oil mills and 1 kernel crushing plant in Sabah. At the same time, the Group continued to carry key initiatives aimed at enhancing productivity and environmental sustainability. Environmental impact assessment (EIA) was carried out for the replanting programme in Desa Talisai estates. In the effort to increase operational efficiency and mitigate the impact of chemical pesticide usage on the environment, the Group continued its adoption of integrated pest management (IPM) in its oil palm field operations. This involves a combination of different techniques covering cultural control, biological control and a pest and disease monitoring and census system. Activities involving collection, breeding and multiplication of predatory insects continued to be diligently pursued by the Groups insectarium. In addition to the diverse natural vegetation already being preserved, specific beneficial plants, such as Antigonon and Turnera, acting as effective alternative food source for the predatory insects continued to be propagated and planted throughout the estates. In the control of Rhinoceros beetles, Oryctes rhinoceros, both pheromone trapping and biopesticides continued to be used. In the processing operations, integrated waste management continued to be practised to ensure proper recycling of palm by-products and handling of effluent resulting from the cultivation of oil palm
and milling of FFB. This was put in place through the process of composting of empty fruit bunches (EFB) with palm oil mill effluent (POME). Due to the abundant nutrient content found in EFB, these by-products were applied to the fields in the plantations serving as organic fertilisers that enhance the soil condition while improving nutrient uptake. This has also enabled the Group to reduce the usage of inorganic fertiliser and resulted in cost savings.
HUMAN RESOURCE
The direct workforce engaged in the Groups operations was as follows: 31 MAR 2012 Malaysia Indonesia Total 4,938 3,640 8,578 31 MAR 2011 3,951 2,546 6,497
The workforce had been increasing in successive years mainly due to the expansion in Indonesia. There was a significant increase in our Malaysian operation during the year as a result of direct employment of workers who were previously under a contract system. Whilst the workforce numbers are adequate to meet the present operational needs, more personnel will be recruited and trained in the coming years to cater the demand arising from the expansion in Indonesia. Success in establishing a plantation cannot be left to chance. Intense management and good agronomic practices are needed to bring bare land to commercial production for growth and continued success. Therefore, the Group appreciates that employees need to be equipped with competencies and expertise in their respective fields. This is to ensure that they can discharge their responsibilities to achieve business objectives and to provide an adequate talent pool to cater for both current human resource requirement as well as succession plans. In support of its operational agenda, the Group is committed to continuous investment and growth of its human capital. This investment took the form of initiatives to attract and retain talent as well as conducting training programmes to optimally strengthen the employees capabilities.
30
Drip irrigated oil palm nursery
During the year under review, the Group conducted a total of 32 (2011: 21) in-house training sessions and workshops comprising a wide range of subjects namely agronomic practices, occupational safety and health, general management, leadership skills and quality systems for all relevant employees. A total of 458 participants (2011: 521) benefited directly from these sessions. To support the Groups rapid growth in Indonesia, an intensive cadet training programme for young new recruits from Indonesia continued its training in Indonesia while others were given on-the-job refresher training and exposure in Sugut. With this, the total number of cadets trained has increased to 65 (2011: 43) since it was started in 2008. The Group also continued to accept and train young Sabahans recruited through various government sponsored or private vocational training centres and universities. These youths were given first-hand exposure on practical and work related issues to enable them to build their skills and knowledge of the plantation industry. During the year, 58 youths (2011: 62) were trained.
RESEARCH AND DEVELOPMENT

Recognising the importance of research and development, the Group had established its own Quality, Training and Research Centre (QTRC) located in Sijas Estate, Sandakan and its sub-station in Sugut. The main focus of the establishment was to contribute towards better performance in relation to oil palm seed breeding and production as well as to harness environmental sustainability through agronomy and integrated pest management. Its sub-station located in Sugut provides the necessary support for the Groups plantations in that region while ploughing with the Groups environmental care initiatives. QTRC functions as the service centre in the provision of agronomic and technical advice to the estates. In this, fertiliser recommendations were prepared by agronomists based on soil and foliar analysis coupled with observations from their field visits. Diligent testing
Annual Report 2012
31
and analysis of fertilisers were carried out with the aim of optimising the usage of fertiliser. In addition, QTRC personnel were responsible for performing quality checks of crop received at palm oil mills, estate field audits and pest and disease census. To cater for the Groups employees training programme, various plantation management training briefing and agronomy courses were also held at QTRC. Long term yield improvement through the testing of oil palm germplasm using conventional breeding methodology continued to be carried out by the Group in collaboration with MPOB. New parental genetic blocks were established to evaluate and select the next generation of improved mother palms in the Groups seed garden located at Desa Talisai South Estate. Progeny testing trials were carried out for the purpose of evaluating new DxP crosses. The entire breeding and testing programme will allow the Group to continuously improve its planting materials for its needs in the future. The Group established its Oil Palm Seed Production Unit in QTRC in collaboration with MPOB a decade ago. At present, it has the capacity to produce over one million DxP germinated seeds per year. The Unit is accredited with the MS157:2005 certification by SIRIM as well as certified under MPOBs Code of Practice. Selected mother palms from the genetic blocks located in Sijas Estate have also been certified by SIRIM and are used for commercial seed production. During the financial year, consignments of seeds were sent to the Groups operations in Indonesia. The Group also conducted seminars with the objective of promoting its commercial seeds to external parties together with educational talks in relation to the breeding of oil palm seeds.
QUALITY, SAFETY AND HEALTH

The emphasis on quality, safety and health remains a key priority of the Group. In enhancing a safe and healthy working environment for the Groups plantation and mill employees, safety and health committees of the respective operating units held regular meetings and deliberated on issues and proposals relating to safety and health concerns. The Groups safety and health programmes included providing training through demonstration and talks amongst all employees in order to raise awareness on safety and health issues. The Group conducted regular internal monitoring and inspections to ensure that effective quality management systems. These practices and management systems were guided by standards established by Hazard Analysis Critical Control Point (HACCP), Good Manufacturing Practice (GMP), Good Agricultural Practice (GAP) and MPOBs CoP throughout the supply chain.
CONCLUSION
Moving forward, the Group anticipates a challenging operating environment. Nevertheless, the Group will remain diligent in enhancing operational efficiencies and maximising labour productivity. The Groups long term prospect is positive and this will enhance value to all stakeholders.
32
STATEMENT ON CORPORATE GOVERNANCE
The Board of Directors (the Board) fully support the eight (8) principles of the Malaysian Code on Corporate Governance 2012 (the Code), which the Company will endeavour to adopt in making good corporate governance an integral part of its business dealings and culture. The Board is committed to ensuring that the highest standards of corporate governance, as embodied in the Code, are practiced throughout IJM Plantations Berhad and its subsidiaries (the Group).
I. BOARD OF DIRECTORS
Board Charter The Board Charter as a source of reference and primary induction literature, providing insights to prospective Board members and senior management, has been adopted by the Board on 25 May 2012. The core areas of the Board Charter include the following: (i) Board Membership, which includes composition, appointments and re-election, independence of Director and new directorship; (ii) Board Role, which includes duties and responsibilities and matters reserved for the Board; (iii) Chairman and the Chief Executive Officer & Managing Director (CEO&MD); (iv) Board Committees; (v) Board Meetings; (vi) Financial Reporting; (vii) Directors Remuneration; (viii) Directors Training & Continuing Education; (ix) Company Secretary; (x) Investor Relations and Shareholder Communication; and (xi) Access to Information and Independent Advice. The details of the Board Charter are available for reference in the IJM Group website at www.ijm.com. Composition of the Board Six (6) of the eight (8) Board members are Non-Executive Directors and among the Non-Executive Directors, four (4) are independent. The Chairman is one of the Independent Non-Executive Directors. Mr Khoo Khee Ming is the Senior Independent Non-Executive Director, who will attend to any query or concern raised by the shareholders. The composition and size of the Board are reviewed from time to time to ensure its appropriateness.
The balance between Independent Non-Executive, Non-Executive and Executive Directors, together with the support from Management, is to ensure that there is an effective and fair representation for the shareholders, including minority shareholders. It further ensures that issues of strategy, performance and resources are fully addressed and investigated to take into account long-term interest of shareholders, relevant stakeholders and the community in which the Group conducts its business. The Independent Non-Executive Directors are able to provide independent judgment, experience and objectivity without being subordinated to operational considerations. They help to ensure that the interests of all shareholders are taken into account by the Board and that the relevant issues are subjected to objective and impartial consideration by the Board. In line with the recommendation of the Code, the tenure of an Independent Director of the Company shall not exceed a cumulative term of nine (9) years. An Independent Director may continue to serve the Board subject to the re-designation of the Independent Director as a Non-Independent Director. In the event the Board intends to retain the Independent Director as an Independent Director after serving a cumulative term of nine (9) years, shareholders approval will be sought. Two (2) of the Independent Directors, namely Mr Khoo Khee Ming and Datuk Oh Chong Peng, who have served the Board for more than nine (9) years as Independent Directors, will continue to serve the Board as Independent Directors until the conclusion of the Annual General Meeting on 24 August 2012. The role of the Independent Non-Executive Chairman and the CEO&MD are distinct and separate to ensure there is a balance of power and authority. The Independent Non-Executive Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board. The Independent Non-Executive Chairman did not previously hold the position of CEO&MD in the Group. The CEO&MD has overall responsibility for the day-to-day management of the business and implementation of the Boards policies and decisions. The CEO&MD is responsible to ensure due execution of strategic goals, effective operation within the Group, and to explain, clarify and inform the Board on key matters pertaining to the Group.
Annual Report 2012
33
Duties and Responsibilities of the Board The Board is primarily responsible for the Groups overall strategic plans for business performance, conduct of business, succession planning, risk management, shareholders communication, internal control, management information and statutory matters; while the Management is accountable for the execution of the expressed policies and attainment of the Groups corporate objectives. The demarcation complements and reinforces the supervisory role of the Board. The Directors have a diverse set of skills, experience and knowledge necessary to govern the Group. The Non-Executive Directors are professionals in the field of agriculture, finance, accounting, engineering and public administration. They collectively bring a wide range of competencies, capabilities, technical skills and relevant experiences to support the needs of the Group to make it one of the foremost plantation companies in the country. Board Meetings The Board holds at least four (4) regular scheduled meetings annually, with additional meetings for particular matters convened as and when deemed necessary. However, informal meetings and consultations are frequently and freely held to share expertise and experiences. Four (4) Board meetings were held during the financial year ended 31 March 2012, and the attendance record of each Director is as follows:
Number of Meetings Attended Percentage Executive Directors Mr Joseph Tek Choon Yee Mr Purushothaman a/l Kumaran Independent Non-Executive Directors Tan Sri Dato Wong See Wah Mr Khoo Khee Ming Datuk Oh Chong Peng Mr M. Ramachandran a/l V.D. Nair Non-Executive Directors Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming 4/4 4/4 100% 100% 4/4 4/4 4/4 4/4 100% 100% 100% 100% 4/4 4/4 100% 100%
The Directors also attend the IJM Group annual Senior Management Forum where operational strategies, performance progress and other issues are extensively presented, discussed and communicated to senior managers of the Group. Supply of Information All Directors are provided with the performance and progress reports on a timely basis prior to the scheduled Board meetings. All Board papers, including complicated issues or specific matters, are distributed in advance to ensure Directors are well informed and have the opportunity to seek additional information, and are able to obtain further clarification from the Company Secretaries, should such a need arise. Where necessary, the services of other senior management or external consultants will be arranged to brief and help the Directors clear any doubt or concern. The schedule of matters reserved specifically for the Boards deliberation include the approval of corporate plans, annual budgets, new ventures, acquisitions and disposals of undertakings and properties of substantial value, and changes to the management and control structure within the Group. Proper minutes of all deliberations of the Board are recorded, including the issues discussed and the conclusion of decisions. All Directors have access to the advice and services of the Company Secretaries. The Directors may seek independent advice where necessary, at the expense of the Company, so as to ensure the Directors are able to make independent and informed decisions. Committees Established by the Board In order to assist in the execution of the Boards responsibilities for the Group, certain functions have been delegated by the Board to Committees. Clear defined terms of reference have been given to these Committees to enable them to operate effectively. The Committees are authorised by the Board to deal with and to deliberate on matters delegated to them within their terms of reference. The Chairman of the respective Committees reports to the Board the outcome of the Committee meetings and such reports are incorporated in the Board papers.
34
1. Audit Committee The Audit Committee was established on 26 April 2003 and is chaired by Datuk Oh Chong Peng and other members are Mr Khoo Khee Ming, Mr M. Ramachandran a/l V.D. Nair and Dato Teh Kean Ming. The terms of reference and summary of activities of the Audit Committee are as set out in the Audit Committee Report. 2. Nomination & Remuneration Committee The Nomination & Remuneration Committee was established on 26 April 2003, comprises wholly of Non-Executive Directors. Mr Khoo Khee Ming chairs the Committee and the other members are Mr M. Ramachandran a/l V.D. Nair and Dato Teh Kean Ming. The duties and responsibilities of the Nomination & Remuneration Committee are to assist the Board in reviewing and recommending the appropriate remuneration policies applicable to Directors, CEO&MD and senior management, and the appointment and evaluation of the performances of Directors. The terms of reference of the Nomination & Remuneration Committee include reviewing and determining the mix of skills, experience and other qualities (including core competencies of Non-Executive Directors on an annual basis); and to assess the effectiveness of the Board as a whole, the committees of the Board and the contribution of each individual Director on an annual basis, including the independence of Independent Non-Executive Director (INED). The details of the terms of reference of the Nomination & Remuneration Committee are available for reference at the Companys website at www.ijm.com/plantation. The activities of the Nomination & Remuneration Committee for the financial year include the following: (i) reviewed the salary, promotion and bonus & incentive of senior management of the Group; (ii) assessed and evaluated the effectiveness of Directors through Self & Peer Assessments and the Assessment of the Board as a whole (including the CEO&MD and the independence of INED);
(iii) reviewed the Directors Fees; (iv) reviewed the terms of reference of the Nomination & Remuneration Committee; (v) reviewed the service contract for senior contract staff; (vi) reviewed the composition of the Board; (vii) reviewed the proposed incentive scheme for employees; and (viii) reviewed the organisation chart of the Group. The Nomination & Remuneration Committee will meet as required. Four (4) meetings, which were attended by all the members, were held during the financial year and the attendance record of each member of the Committee is as follows:
Number of Meetings Attended Percentage Mr Khoo Khee Ming Mr M. Ramachandran a/l V.D. Nair Dato Teh Kean Ming 4/4 4/4 4/4 100% 100% 100%
All recommendations of the Nomination & Remuneration Committee are subject to endorsement of the Board. 3. Securities & Options Committee The Securities and Options Committee was established on 21 November 2007 combining the roles and responsibilities of the Share Committee and Employee Share Option Scheme Committee which was previously established on 26 April 2003 and 19 August 2003 respectively. The Securities and Options Committee is responsible for implementing and administering of options, and regulating and approving the securities transactions and registrations. The Securities and Options Committee is chaired by Mr Khoo Khee Ming with Mr Joseph Tek as the other member. Board Evaluation The Nomination & Remuneration Committee was satisfied with the performance and effectiveness of the Board and Board Committees. The Board evaluation criteria was reviewed and enhanced by the Nomination & Remuneration Committee during the year.
Annual Report 2012
35
The Board evaluation comprises a Board Assessment, an Individual (Self & Peer) Assessment and an Assessment of Independence of Independent Directors. The assessment of the Board is based on specific criteria, covering areas such as the Board composition and structure, principal responsibilities of the Board, the Board process, the CEO&MD performance, succession planning and Board governance. For Individual (Self & Peer) Assessment, the assessment criteria include contribution to interaction, role and duties, knowledge and integrity and assessment of independence. The criteria for assessing the independence of an Independent Director include the relationship between the Independent Director and the Company and his involvement in any significant transaction with the Company. Appointment to the Board The Nomination & Remuneration Committee is responsible for making recommendations to the Board, including those of subsidiaries and associated companies. The Nomination & Remuneration Committee considers the required mix of skills and experience that the Directors should bring to the Board in making these recommendations. The process for the appointment of NonExecutive Directors (both the Independent and non-Independent Directors) to the Board is as follows: (i) Nomination & Remuneration Committee reviews annual Board assessment & evaluation; (ii) Nomination & Remuneration Committee determines skills matrix; (iii) source for the candidate; (iv) Nomination & Remuneration Committee evaluates and matches the criteria of the candidate, and will consider diversity, including gender, where appropriate; (v) Nomination & Remuneration Committee recommends to the Board for appointment; and (vi) the Board approves the appointment of the candidate.
Re-election The Articles of Association provides that every new appointed Director be subjected to re-election at the immediate Annual General Meeting. Furthermore, one third of the Board shall retire from office and, if eligible, seek re-election at the Annual General Meeting, and all the Directors should submit themselves for re-election every three years. This has been consistently practiced. Training for Directors All Directors have attended the Directors Mandatory Accreditation Programme organised by Bursa Malaysia Securities Berhad (Bursa Securities). Our Directors have attended conferences, seminars, and training programmes from time to time covering areas in finance, risks management, and in regulatory laws, rules and guidelines. An induction briefing is also provided by our Company Secretaries to newly appointed Directors. The Company is aware of the importance of continuous training for Directors to enable the Directors to effectively discharge their duties, and will on a continuous basis, evaluate and determine the training needs of its Directors. During the year, all the Directors have attended various training programmes, seminars and/or conferences. The details of each of the Directors Training and participation in activities of the Group are available for reference in the Companys website at www.ijm.com/plantation. Updates on companies and securities legislations, and other relevant rules and regulations, such as amendments to the Companies Act, 1965 (the Act), Main Market Listing Requirements of Bursa Securities, the Code and Corporate Governance Blueprint 2011, and Capital Markets & Services Act 2007 were provided to the Board, together with the Board papers, in order to acquaint them with the latest developments in these areas.
36
Where possible and when the opportunity arises, Board meetings will be held at locations within the Groups operating businesses to enable the Directors to obtain a better perspective of the business and enhance their understanding of the Groups operations. The Board had during the year visited the plantation development and mill in Indonesia.
Directors Remuneration 1. The Directors total remuneration consists of different components as shown in the table below:
Bonus, Incentives Benefits-in& Others kind Total RM000 RM000 RM000 413 52 48 1,411 590
Salaries Fees RM000 RM000 Executive Directors Non-Executive Directors 950 538
II. REMUNERATION
The remuneration policy of the Company is based on the philosophy of giving heavy weightage on performance-related bonuses. These are entrenched in the remuneration policy for Executive Directors and senior management, which are reviewed annually by the Nomination & Remuneration Committee. The Group also participates in industry specific surveys by independent professional firms to obtain current data in benchmarking the Group. The performance of the Directors are measured by the Directors contribution and commitment to both the Board and the Group. The Executive Directors and senior managements remuneration depend on the performance of the Group, achievement of the goals and/or quantified organisational targets as well as Key Performance Indicators (KPI) set at the beginning of each year. The strategic initiatives or KPI set for the CEO&MD for financial year ending 31 March 2013 encompass the four (4) main areas of Commercial, Stakeholders, Efficiency, and Infrastructure. In the case of Non-Executive Directors, the level of remuneration reflects the contribution and level of responsibilities undertaken by the particular Non-Executive Director. In addition to the basic salary and bonus & incentives for all its employees, including the Executive Directors, the Group also offers benefits-in-kind such as private medical care in accordance with the Human Resource Manual Scheme and Conditions of Service of the Company.
2. Aggregate remuneration of each Director is:

RM000 Executive Directors Mr Joseph Tek Choon Yee Mr Purushothaman a/l Kumaran Non-Executive Directors Tan Sri Dato Wong See Wah Mr Khoo Khee Ming Datuk Oh Chong Peng Mr M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming 120 106 95 103.5 62 103.5 747 664
III. INVESTOR RELATIONS & SHAREHOLDER COMMUNICATION

Dialogue between the Company and Investors The Company places great importance in ensuring the highest standards of transparency and accountability in the disclosure of pertinent information to its shareholders as well as to potential investors, analysts and the public. Timely announcements and disclosures to Bursa Securities are made, including the release of financial results on a quarterly basis, with view to provide the shareholders and the investing public with updated overview of the Groups performance and operations. The Companys full year audited financial results are released within two (2) months after the financial year end. The Annual Report is released within four (4) months after the financial year end. The Group conducts regular dialogues with financial analysts. At least two (2) scheduled IJM Group
Annual Report 2012
37
Briefings are held each year, usually co-inciding with the release of the IJM Groups second and final quarterly results, to explain the results achieved and the strategies going forward. A press conference is normally held after the Annual General Meeting and/or Extraordinary General Meeting of the Company to provide the media the opportunity of receiving an update from the Board on the proceedings at the meetings and to address any queries or areas of interest of the media. In addition, the Group participates in several institutional investors forums, both locally and outside Malaysia. Any information that may be regarded as material would not be given to any single shareholder or shareholder group on a selective basis, except to the extent of their representation in the Board. Annual General Meeting A principal forum for dialogue with shareholders is at the Annual General Meeting. In accordance with the Companys Articles of Association, notice of meeting and the annual report are sent out to shareholders at least 21 days before the date of the meeting. At each Annual General Meeting, a presentation is given by the CEO&MD to explain the Groups strategy, performance and major developments to shareholders. The Board also encourages shareholders to participate in the question and answer session at the Annual General Meeting. Openness and Transparency The Group has established a comprehensive and current website at www.ijm.com/plantation to further enhance investor relations and shareholder communication. To better serve stakeholders of the Group, a feedback page on the website provides an avenue for stakeholders to suggest improvements to the Group via email: ijmir@ijm.com. In addition, stakeholders who wish to reach the Group can do so through the Contact Us or Feedback page. Investor queries pertaining to financial performance or company developments can be directed to the Investor Relations Manager of IJM, Mr Shane Guha Thakurta (Tel: +603-79858041, Fax: +603-79529388, E-mail: shanethakurta@ijm.com), whereas shareholder and company related queries can be referred to
the Company Secretaries, Ms Ng Yoke Kian and Mr Jeremie Ting Keng Fui (Tel: +603-79858131, Fax: +603-79521200, E-mail: csa@ijm.com). Electronic Dividend Payment (eDividend) The Company has implemented eDividend in 2010 following the announcement of Bursa Malaysia to promote greater efficiency of the dividend payment system. The eDividend refers to the payment of cash dividends by directly crediting into the bank accounts of shareholders instead of making payment via bank cheques. The Company strongly encourages all shareholders to register for eDividend through the stock brokers offices where the CDS accounts of the shareholders are maintained. Further details can be obtained from Bursa Malaysias website at www.bursamalaysia.com.
IV. ACCOUNTABILITY AND AUDIT

Financial Reporting The Board takes responsibility for the announcements of quarterly unaudited and yearly audited financial statements. These reports are submitted to Bursa Securities within the prescribed period. The Board aims to present a balanced assessment of the Groups position and prospects in these reports. This applied to other price sensitive public reports and reports to regulators as well. Directors Responsibility Statement The Act requires the Directors to prepare financial statements for each financial year in accordance with the applicable approved accounting standards to give a true and fair view of the state of affairs of the Group and Company at the end of the financial year and of the results and cash flows of the Group and Company for the financial year. Where there are new accounting standards or policies that become effective during the year, the impact of these new treatments would be stated in the notes to financial statements. The Directors have, in preparing the financial statements: used appropriate accounting policies which were consistently applied; made judgments and estimates that are reasonable and prudent; ensured that all applicable accounting standards have been followed; and
38
prepared financial statements on a going concern basis as the Directors have a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operations for the foreseeable future. The Directors have also taken such steps that are reasonably open to them to safeguard the assets of the Group, and to prevent fraud and other irregularities. Internal Control The Groups Statement on Internal Control is set out on pages 42 and 43. Relationship with the Auditors Through the Audit Committee, the Board has direct relationship with the external auditors. The role of the Audit Committee in relation to the external auditors is set out on pages 40 and 41. The external auditors are invited to attend Audit Committee meetings and all general meetings and receive internal audit reports. Non-Audit Fee There was no non-audit fee paid to the external auditors to the Company for the financial year ended 31 March 2012. Related Party Transactions Related party transactions of the Group for the financial year are disclosed in Note 29 to the Financial Statements, including recurrent transactions conducted during the financial year in accordance with the general mandate obtained from shareholders at the Extraordinary General Meeting held on 22 August 2011.
(ii) confidential information; (iii) inside information and securities trading; (iv) protection of assets and funds; (v) business records and control; (vi) compliance to the law; (vii) personal gifting; (viii) health and safety; (ix) sexual harassment; (x) outside interests; (xi) fair and courteous behaviour; and (xii) misconduct. The details of the CEC are available for reference in the IJM Group website at www.ijm.com. Whistle-Blowing Policy The Whistle-Blowing Policy of the Company has been adopted since 2006. The Policy was revised in May 2011 following the introduction of the Whistleblower Protection Act 2010 to enhance the coverage and protection to whistleblowers, which encompasses report of suspected and/or known misconduct, wrongdoings, corruption and instances of fraud, waste, and/or abuse involving the resources of the Group. The Whistle-Blowing Policy is posted on the IJM Groups intranet portal and website at www.ijm.com for ease of access for reporting by employees and associates of the Group. Corporate Disclosure Policy The Board places importance in ensuring disclosure made to shareholders and investors are comprehensive, accurate and on a timely and even basis as it is critical towards building and maintaining corporate credibility and investor confidence. A Corporate Disclosure Policy for the Group to set out clear policies and procedures for disclosure of material information is being addressed, following the emphasis of Bursa Securities as outlined in its Corporate Disclosure Guide. Signed on behalf of the Board of Directors in accordance with its resolution dated 17 July 2012.
V. CODES AND POLICIES

Code of Ethics and Conduct The Code of Ethics and Conduct (the CEC), which sets out the principles and standards of business ethics and conduct of the Group, has been adopted by the Board on 25 May 2012. The CEC is applicable to all employees (including full time, probationary, contract and temporary staff) and Directors of the Group. The core areas of conduct under the CEC include the following: (i) conflict of interest;
Tan Sri Dato Wong See Wah Chairman
Annual Report 2012
39
STATEMENT OF VALUE ADDED & DISTRIBUTION

VA LU E AD D E D Revenue Purchases of goods & services Value added by the Group Share of results of an associate Share of results of jointly controlled entities Total value added D I S T RI B U T I O N To employees Salaries & other staff costs To governments Taxation Sabah sales tax MPOB cess Windfall profit levy To providers of capital Dividends Finance costs Non-controlling interests Retained for future reinvestment & growth Depreciation & amortisation of leasehold land and land use rights Retained profits Total distribution
2012 RM000
590,434 (234,416) 356,018 356,018
2011 RM000
506,284 (191,352) 314,932 3,389 (119) 318,202
67,864 57,821 38,512 2,329 1,561 64,137* 1,227 113 29,278 93,176 356,018
56,263 48,822 34,087 2,210 1,625 40,067# 1 28,001 107,126 318,202
Value added is a measure of wealth created. The above statement shows the Groups value added for 2012 and 2011 and its distribution by way of payments to employees, governments and capital providers, with the balance retained in the Group for future reinvestment and growth.

RE C O N C I LI AT I ON Profit for the year Add: Depreciation & amortisation of leasehold land and land use rights Finance costs Staff costs Taxation Sabah sales tax MPOB cess Windfall profit levy Non-controlling interests Total value added * Dividends in respect of financial year ended 31 March 2011 were paid on 11 July 2011. # Dividends in respect of financial year ended 31 March 2010 were paid on 17 August 2010.
2012 RM000
157,313 29,278 1,227 67,864 57,821 38,512 2,329 1,561 113 356,018
2011 RM000
147,193 28,001 56,263 48,822 34,087 2,210 1,625 1 318,202
40
AUDIT COMMITTEE REPORT

During the financial year, the Audit Committee carried out its duties and responsibilities in accordance with its terms of reference and held discussions with the internal auditors, external auditors and management staff. The Audit Committee is of the view that no material misstatements or losses, contingencies or uncertainties have arisen, based on the reviews made and discussions held. Membership The Audit Committee shall be appointed by the Board of Directors from amongst the Non-Executive Directors and shall consist of not less than three (3) members, with a majority of them being Independent Directors. In determining independence, the Board will observe the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities). The Chairman of the Audit Committee, Y. Bhg. Datuk Oh Chong Peng is a qualified Chartered Accountant, a Fellow of the Institute of Chartered Accountants of England and Wales, and a member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants. The Board of Directors shall review the term of office and performance of the Audit Committee and each of its members at least once every three years. Meetings and Minutes Meetings shall be held at least four (4) times a year with the attendance of the Chief Financial Officer, Head of Internal Audit and representatives of the external auditors. Other Board members and senior management may attend meetings upon the invitation of the Audit Committee. At least twice a year, the Audit Committee shall meet with the external auditors and internal auditors without the presence of Management. The auditors, both internal and external, may request a meeting if they consider that one is necessary. The Chairman of the Audit Committee engages on a continuous basis with senior management, Head of Internal Audit and the external auditors, in order to keep abreast of matters and issues affecting the Group. A quorum consists of two (2) members present and a majority of whom must be Independent Directors. During the financial year, the Audit Committee convened four (4) meetings. The Audit Committee members and their details of attendance at Audit Committee meetings are tabled below: No. of Meetings Attended Datuk Oh Chong Peng Chairman of the Audit Committee (Independent Non-Executive Director) Khoo Khee Ming Member (Senior Independent Non-Executive Director) M. Ramachandran a/l V.D. Nair Member (Independent Non-Executive Director) Dato Teh Kean Ming Member (Non-Executive Director) 4/4
4/4
4/4
4/4
The Company Secretaries act as secretaries to the Audit Committee. Minutes of each meeting are distributed to each Board member and the Chairman of the Audit Committee reports on key issues discussed at each meeting to the Board. Authority The Audit Committee shall in accordance with the procedure determined by the Board and at the cost of the Company: have authority to investigate any activity within its terms of reference; have full, free and unrestricted access to any information pertaining to the Group; have direct communication channels with the external and internal auditors, as well as all employees of the Group; and be able to obtain external independent professional advice or other advice and to secure the attendance of outsiders with the relevant experience and expertise if it considers this as necessary. Duties The following are the summary of the main duties and responsibilities of the Audit Committee collectively: To review the quarterly results to Bursa Securities and year end financial statements of the Group before submission to the Board. To consider the nomination and appointment of external auditors, as well as their audit fee. To consider any letter of resignation from the external auditors, and any questions of resignation or dismissal. To discuss with the external auditors, prior to the commencement of audit, their audit plan, which states the nature of the audit, and to ensure co-ordination of audit where more than one (1) audit firm is involved.
Annual Report 2012
41
To review with the external auditors their evaluation of the system of internal controls, management letter and the managements response. To review the assistance given by the employees of the Company to the external auditors. To review the internal audit scope, functions, competency and resources of the internal audit together with the internal audit plan and programme. To monitor any related party transactions and situations where a conflict of interest may arise within the Company or Group. To review the reports of the Risk Management Committee in relation to the adequacy and integrity of the Groups internal control system. To discuss problems and reservations arising from the interim and final external audits, and any matters the external auditors may wish to discuss (in the absence of management, where necessary). To review all prospective financial information provided to the regulators and/or the public. To report promptly to the Bursa Securities on any matter reported by it to the Board of Directors, which has not been satisfactorily resolved resulting in the breach of the Bursa Securities Listing Requirements. The details of the terms of reference of the Audit Committee are available for reference at the Companys website at www.ijm.com/plantation.
3.
External Audit Reviewed the external auditors audit strategy, audit plan and scope of work for the year; Reviewed the findings of the external auditors reports, particularly issues raised in the management letter and ensure where appropriate, the necessary corrective action has been taken by management. Risk Management Committee Reviewed the Risk Management Committees reports and assessments. Related Party Transactions Reviewed the related party transactions that arose within the Group.
4.
5.
TRAINING
During the year, the Audit Committee members have attended conferences, seminars and training programmes. Details of these are available at the Companys website at www.ijm.com/plantation. Internal Audit Function The Internal Audit function has been outsourced to the IAD of IJM Corporation Berhad. The Board has chosen to outsource this audit function as the Board is of the opinion that the operations of the Group by itself cannot support an effective IAD in terms of availability of appropriate skills and resources, which a large IAD through IJM Corporation Berhad can provide. The Internal Audit fees charged to the Group for the financial year ended 31 March 2012 was RM160,000. The IAD reports directly to the Audit Committee on its activities based on the approved annual Internal Audit Plan. The IAD adopts a risk-based auditing approach, taking into account global best practices and industry standards. The main role of the IAD is to provide the Audit Committee with independent and objective reports, performed with impartiality, proficiency and due professional care, on the effectiveness of the system of internal controls within the Group. The Audit Committee then deliberates on the internal audit reports to ensure recommendations from the reports are duly acted upon by management. In an effort to provide value added services, the IAD also plays an active advisory role in the review and improvement of existing internal controls within the Group. This Audit Committee Report is made in accordance with the resolution of the Board of Directors dated 17 July 2012.
SUMMARY OF ACTIVITIES FOR THE FINANCIAL YEAR

During the year, the Audit Committee carried out the following activities: 1. Financial Reporting Reviewed the quarterly financial result announcements and the year end financial statements of the Group; In the review of the annual audited financial statements, the Audit Committee discussed with management and the external auditors the accounting principles and standards that were applied and their judgement of the items that may affect the financial statements. Internal Audit Reviewed the annual audit plan proposed by the Internal Auditors to ensure the adequacy of the scope and coverage of work; Reviewed the effectiveness of the audit process, resource requirements for the year and assessed the performance of the Internal Audit Department (IAD); Reviewed the audit reports presented by the Internal Auditors on their findings and recommendations with respect to system and control weaknesses. The Audit Committee then proposed that control weaknesses be rectified and recommendations for improvements be implemented.
2.
42
STATEMENT ON INTERNAL CONTROL
RESPONSIBILITY
The Board recognises the importance of sound internal control and risk management practices to good corporate governance. The Board affirms its responsibility to maintain a sound system of internal control and risk management including the review for adequacy and integrity of those systems in order to safeguard shareholders investment and the Groups assets. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. In addition, the concept of reasonable assurance also recognises that the cost of control procedures should not exceed the expected benefits. The Board confirms that there is an ongoing process for identifying, documenting, evaluating, monitoring and managing the significant risks faced by the Group that could affect its business objectives. The process was present throughout the financial period under review and up to date of approval of the annual report and financial statements.
Risk assessment and evaluation form an integral part of the strategic planning cycle. Having identified the risks involved in achieving strategic, financial and operational, and other business objectives, each section is required to document actions to mitigate all identified significant risk. New areas are introduced for assessment as the business risk profile changes. The Groups risk management system was developed in 2003 with the help of both related and external expert. Under this system, each section of the Group, excluding associates, will prepare on an annual basis a risk map which summarises risks, controls and processes for managing them with the means of assuring management that the controls and processes are effective. The Head Office also considers any risk to the Groups strategic objectives, which are not addressed by the sections. The risk maps and any proposed changes to the controls and processes are reported to the RMC. A summary is then furnished for notification and consideration by the Audit Committee.
OTHER KEY ELEMENTS OF INTERNAL CONTROL

The other key elements of the Groups internal control system include: a formal organisational structure which defines the functions, responsibilities and segregation of duties; established operating policies and procedures with respect to key operational areas are continuously reviewed and updated by management to reflect changing risk profile; a detailed budgeting process where operating units prepare budgets for the coming year which are approved both by the respective sections and the Board; the Groups performance is monitored through a system that requires all material variances against budget to be identified and reviewed by the senior management during monthly management meeting for the appropriate corrective measures; information covering operational and financial performance of the Group is provided to the Board on a quarterly basis together with key risk and operational performance indicators;
RISK MANAGEMENT FRAMEWORK

The Board has established an organisational structure with clearly defined lines of accountability and delegated authority. It has extended the responsibilities of the Audit Committee to include monitoring of all internal controls on its behalf, with the assistance of the Internal Auditors. The Group has put in place a Risk Management Committee (RMC) that is chaired by the Chief Executive Officer & Managing Director (CEO&MD) and includes representatives from operations. Section heads have been trained to lead the risk management function of their respective units. The RMC is tasked to develop and maintain an effective risk management system in the Group. Reviews cover matters such as responses to major risks identified, changes to internal control systems and outputs from monitoring processes. The RMC reports to the Audit Committee on a regular basis.
Annual Report 2012
43
the CEO&MD provides briefing to the Board on the operations of the Group on a quarterly basis; visits to operating sites by members of the Board and senior management; an independent internal audit function reports directly to the Audit Committee on a quarterly basis, which provides reasonable independent assurance on the effectiveness of the Groups system of internal control. During the financial year, all the sections within the Group have carried out their reviews on their risk profiles and accordingly certain changes to the risk management and internal control processes have been made. The changes were reviewed by RMC and were subsequently reported to the Audit Committee.
A number of minor internal control weaknesses were identified during the year, all of which have been or are being addressed. None of the weaknesses have resulted in any material losses, contingencies or uncertainties that would require a disclosure in the Annual Report. The Group will continue to monitor all major risks affecting the Group under its RMC and take the necessary actions to mitigate or eliminate them, providing a framework for safeguarding our competitive position. This Statement on Internal Control is made in accordance with the resolution of the Board of Directors dated 17 July 2012.
44
The Group believes that palm oil can be produced in a sustainable manner. The Groups business model towards higher performance is intertwined with its commitment and adoption of a holistic approach in managing socio-environmental stewardship. As such, Corporate Social Responsibility (CSR) initiatives and business practices in the Group are carried out to promote ethical values, respect for the employees, the community and the environment while continuing to ensure real long-term benefits for all relevant stakeholders. Our vision is to achieve commercial success by balancing the imperatives of People, Planet and Profit.
The Groups sustainability framework is classified to four (4) parts that we tag as Productivity and Innovations, Care for Environment, Investor in People and Returning to the Community under the thematic ambit of Nurturing Sustainability. All these sustainability initiatives are also in line with Bursa Malaysias CSR framework centred on the Environment, Workplace, Community and Marketplace. CSR Framework Comparison BURSA MALAYSIAS CSR NO. FRAMEWORK 1 2 3 4 Environment Workplace Community Marketplace IJMPS CSR FRAMEWORK WITHIN NURTURING SUSTAINABILITY Care for Environment Investor in People Returning to Community Productivity and Innovation CORRESPONDING STATEMENTS IN THE REPORTING YEAR Statement and Report on Environment Statement and Report on Workplace Statement and Report on Community Statement and Report on Marketplace, Statement on Corporate Governance and Statement on Internal Control
Annual Report 2012
45
STATEMENT AND REPORT ON CORPORATE SOCIAL RESPONSIBILITY

1. STATEMENT AND ENVIRONMENT REPORT ON
The Group has set-aside more than 8% or equivalent to 5,620 acres of its land bank in Sabah for the purpose of conservation, research and education. These conservation areas comprise of natural landscapes that includes wetlands, water bodies, hilly terrains, and secondary forest with high conservation values. The Group continued its in-situ conservation effort and rehabilitation of remnant degraded forests with planting of tropical timber saplings such as mahogany (Swietenia spp.), merbau (Intsia spp.) and jelutong (Dyera costulata). During the financial year, belian tree saplings (Eusideroxylon zwageri or better known as Borneo Ironwood) were raised in the estate nurseries and planted at suitable areas within the conservation sites. Flood resistant tree species, bongkul (Neonauclea subdita) which were earlier planted in the low lying areas of Sugut are growing vigorously and the Group will continue to monitor and nurture its growth. The Hundred-Acre Wood, located in Sg. Sabang Estate in Sugut region remains the crowning showcase of the Groups commitment on sustainable green projects. It demonstrates the Groups eco-conservation initiatives, recreational facility, natural science education and training hub within the 100-acre plot of land. It hosts a unique garden with more than 150 species of traditional medicinal plants, fruit orchard, water catchment and secondary forest with high value timber species. This reserve is home to more than 400 stands of valuable tree species, dominant with Shorea spp. including Shorea kudatensis which is endemic to Sabah. In the reporting year, about 200 species of indigenous orchids were also introduced into the Hundred-Acre Wood. Most of the orchid species were identified as indigenous wild species found in Sabah.
1.1 ENVIRONMENTAL STEWARDSHIP Commitment to environmental stewardship has been an integral part of the Groups business model since its inception. We embrace the principles and practices of sustainable development geared towards balancing the need for economic prosperity, environmental stewardship and social welfare. As such, Care for Environment is one of the cornerstones of the Groups sustainability framework. Land Use, Conservation & Carbon Sequestration
0.4 2.0 8.2 0.2 2.0 3.0 84.2 Mature Immature Plantable Reserve Nursery Conservation Area Infrastructure Mill Complex
46
900,000 800,000 700,000 600,000

Total Carbon Sequestered (MT)
500,000 400,000 300,000 200,000 100,000 0 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012
Oil palm have high rates of net primary productivity, thus provide a powerful sink for climate change-linked gases by way of carbon sequestration. Based on the methodology developed by the Malaysian Palm Oil Board (MPOB), the total carbon sequestered by the Group in the reporting year based on the age profile of the oil palm has reached more than 768,000 metric tonne or 30 metric tonne per planted hectare in Sabah. It is approximately 4% higher as compared to the previous year.
Endemic to Borneo-Dendrobium cymboglossum in Hundred-Acre Wood
Annual Report 2012
47
1.2 RESOURCE STEWARDSHIP Protection of natural resources, including the air we breathe, the water we drink, the food we consume and the energy supplies that keep economies going are critical issues in sustainability. The Group is committed to this and has its management policies and practices aligned towards this objective. 1.2.1 Soil Management The Group has identified and documented best management practices in its Planting Manual and Standard Operating Procedures in order to improve soil fertility, reduce erosion and address pollution management. These practices are implemented throughout the operating units. The Group advocates zero burning policy for land clearing in both its new plantings and replanting areas. In the replanting areas of Desa Talisai Estate, oil palm biomass are chipped and spread in the field to decompose. The return of the biomass to the soil contributes to the fertility and conditioning of the soil. The deboling and chipping practice also mitigate the incidences of Ganoderma disease. The Groups fertiliser programme is based on recommendations by qualified agronomists. The recommendation is based on analysis of the soil and leaf nutrients as well as yield performance profile of the oil palm in their respective blocks. The Group also closely monitors the quantity of agrochemicals used while adopting integrated pest management. A green policy in weed control is adopted in order to minimise the loss of nutrients while facilitate in maintaining non-deleterious ground vegetation and mitigate soil erosion. The Group puts in place integrated pest management (IPM) which involves a combination of different pest management techniques in order to maintain a high level of biodiversity within the estate ecosystem. This serves to keep the level of pest population within their thresholds. The Groups R&D department maintains a pest census system to monitor the population of both pests and their natural predators. One of the vital components in IPM is the planting of beneficial plants such as Antigonon leptopus, Turnera subulata and Cassia cobanensis to encourage the proliferation of natural predatory insects. In the financial year, more than 5,000 beneficial plants in polybags were planted in the fields. Some 2,800 predatory insects such as Platynopus spp. and Cantheconedia spp. were also released in the fields to keep the level of pest population below the thresholds.
Zero burning technique for replanting
48
1.2.2 Water Conservation The Group is prudent in managing water resources and always strives to reduce and recycle the water where possible. In nursery management, drip irrigation technology was implemented to replace the conventional sprinkle watering system. During the financial year, the drip irrigation system was further enhanced with the installation of a dripper system in Desa Talisai North. The usage of the dripper will reduce water wastage resulting from soil surface evaporation and shorten the irrigation time. The Group has also conducted trial using peat moss as medium in the pre-nursery pot-tray system. Peat moss is able to retain moisture and nutrients which in turn reduce water and fertiliser consumption. All operating units have at least one water reservoir that doubles up as water reserve. This is part of risk mitigation effort to manage adverse impact of potential droughts. There is also a system established in the Group to monitor the amount of water used per tonne of fresh fruit bunches processed in the mills to ensure optimum water usage. In addition, treated palm oil mill effluent (POME) is channelled to selected and approved fields for land irrigation. For domestic consumption, housing quarters in the plantations are equipped with water storage tanks to harvest rainwater. Harvesting rainwater reduces the dependency on water supply from treatment plants.
Pot tray system at pre-nursery
Annual Report 2012
49
1.2.3 Air Quality Management The air pollutant levels from the palm oil milling process are closely monitored through real-time Continuous Emission Monitoring System (CEMS) that are linked up to the Department of Environment via dial-up communication. Some operating units have used soil sealant technology for roads at the housing camps to reduce dust in the living environment. 1.2.4 Solid Waste Management The Group has identified by-products or waste resources generated from its business activities. The disposal and treatment of these wastes adhere to legal requirements and are based on industry best practices. The Group has a zero waste discharge policy in the palm oil milling process. The palm oil mill by-products particularly empty fruit bunches (EFB) and treated POME are recycled into the field. Mesocarp fibres and fruit shells are also utilised as boiler fuel to generate power and steam in replacement of non-renewable fossil fuel. Sabang Palm Oil Mill-1 continues to produce bio compost by integrating shredded EFB and POME. The bio compost is applied to the field systematically as soil conditioner in addition for its beneficial nutrient value. Household wastes were collected by in-house waste collection truck on routine basis and disposed at designated landfill sites within the operating units. The Group also encouraged its employees to practice 3Rs (Reduce, Reuse, Recycle) by organising quarterly recycling campaigns.
50
2. STATEMENT AND REPORT ON WORKPLACE

In moving forward, the Group envisages transforming itself to become a high performing organisation in order to remain competitive and relevant. It targets on developing its people asset towards building a high performing team by embracing the organisational core values and principle of shared destiny. 2.1 HOUSING AND FOOD INITIATIVES The Group places emphasis on the housing infrastructure and living facilities in the operating units in order to provide decent working and living environment for our people. There is an on-going phased construction of new houses and upgrading of housing infrastructure throughout the Group. All housing areas are equipped with appropriate amenities including electricity and water supply, clinics, day care centres, kindergartens and recreational facilities. We encourage cultivation of food produce, poultry and fish rearing in the operating units. These initiatives are supported through the provision of planting materials and agrofertiliser inputs. The harvests are then distributed among employees. In addition, retail prices for essential food items at the grocery shops in the operating units are monitored to ensure that those items are reasonably priced. 2.2 STRENGTHENING ENGAGEMENT WITH EMPLOYEES The Group recognises that engagement with all levels of employees is a key to build a high performance culture within the organisation. An employee engagement survey called IJM My Voice was carried out during the year where all levels of employees were encouraged to participate in voicing and giving their views on issues that affect their work environment. Joint Consultative Committees (JCC) were established in the operating units and were represented by all levels of employees. JCC plays an important role in providing a platform for dialogue and engagement, and contributes towards enhancing harmony at the work place.
Monthly medical surveillance for sprayers
Fire fighting training at operating unit
Annual Report 2012
51
2.3 SAFE WORKPLACE The Group is committed to protect the safety and health of all employees. Safety meetings and training were held in accordance to the occupational safety and health programme at all the operating units. OSHA Week is held annually throughout the Group to promote safety and health. In the financial year, the month of August was dedicated as OSHA Month when series of health talks and related safety trainings were organised throughout the Group. Weekly newsletter with special issues on safety and health matters were sent to all the operating units to promote safety awareness among our people. In addition, the Group National Institute of Occupational Safety and Health (NIOSH) to carry out various competency training for those working at height and in confined space. The in-house civil defence emergency response team at the Groups kernel crushing plant continued to conduct competency courses on various emergency rescue aspects, including the fire fighting, emergency rescue simulation and first aid. The team is competent to respond to emergency call both at workplace as well as the ability to extend the services to the surrounding community. All employees involved in works with potential hazards, such as sprayers and mill operators are equipped with appropriate personal protective equipment (PPE). Routine medical check-up for sprayers and vaccination for children are carried out in all the operating units. During the year under review, health talks, blood donation campaign and basic health screening were organised for employees. Gotong-royong and cleaning up activities were conducted to step up the hygiene condition at housing camps. Sports and family gathering events were organised to promote healthy lifestyle in the operating units while fostering esprit de corps among the employees.
Sport activities at operating units
IJMP Invitational Netball Friendly Match
52
2.4 HUMAN CAPITAL DEVELOPMENT One of the Groups talent management strategies is to engage with employees through a mentoring process by senior personnel. During the year, a mixture of structured training and on the job training programmes was also conducted. The programmes were carefully designed based on the training needs analysis to equip the employees with work-based knowledge and skills. Self-improvement and soft skill trainings are also encouraged in the Group. During the year, executives were exposed to project management skills through involvement in various job enhancement projects. One of the in-house initiated team building activities Green Hunter 2011 was organised to enhance the teamwork among the production staff and support group. 2.5 PROMOTION OF SPORTS AND CULTURAL HERITAGE Our employees comprise of different ethnic groups and embrace different customs and traditions. We acknowledge the need to preserve and promote this diverse cultural heritage. During the year, a traditional bamboo house was built in Rakanan Jaya South Estate to serve as the Groups Centre of Excellence for the promotion of cultural heritage. The centre now displays traditional music instruments, costumes and handicrafts. Traditional dances were choreographed and performed at various functions with the traditional musical instruments played by talented employees.
Winner of 1st IJMP HPC Football League-Mongoose team from Sugut Region
IJMPs Unduk Ngadau winner of the year
Annual Report 2012
53
Our employees, regardless of their religious beliefs or ethnic diversity, celebrate the Pesta Kaamatan of the Kadazandusun community in the month of May with various cultural activities offering thanksgiving for bountiful harvest. For the second year in a row, the Group organised and celebrated this festival in Sugut region. The celebration was officiated with tagung (gong beating) and followed by Sumazau dance by in-house performers, together with groups singing the Kaamatan song. The concluding highlight of the festival was the Unduk Ngadau pageant contest. During the reporting year, various inter-operating unit sports competition were organised to strengthen teamwork and promote solidarity amongst employee. The inaugural IJMP High Performance Culture Football League that involved all operating units in the Group was successfully organised. 2.6 CHILDREN EDUCATIONAL SUPPORT The Group strives to provide basic education to children of the employees and from the surrounding communities within all its operating units. This is implemented through the establishment of kindergartens and learning centres. The Groups first learning centre in Desa Talisai Estate was established in 2007 and has been a beacon and model centre for educating children on plantations. During the financial year, a new learning centre was established in Excellent Challenger II Estate. This school is managed in collaboration with a social NGO, Humana Child Aid Society Sabah, and is able to cater for more than 200 students. Another learning centre to be located in Sg. Sabang Estate is expected to be ready this year.
Promotion of cultural performance at education learning centre
Family oriented events in operating units
54
3. STATEMENT COMMUNITY
AND
REPORT
ON
3.1 YOUTH DEVELOPMENT THROUGH SPORTS The sports excellence project for youth through the rugby project remains in the forefront of the Groups CSR platform for sustainable sports development in Sabah. The Academy of Rugby Excellence, initiated since 2002, is a landmark platform established in collaboration with the Sabah Education Department, Sabah Rugby Union and Sandakan Rugby Club geared towards nurturing youth in this sport. The Academy of Rugby Excellence involves a total of 70 schools throughout Sabah where rugby has been incorporated into their school extra-curriculum activities. During the year, the Group sponsored forty (40) boys by placing them in a residential school in Sandakan. While assisting them in their academic performance through private tuition classes, they were exposed to structured training in the sport which was conducted by professional rugby coaches engaged from Fiji and Samoa. During the year, the 3rd Edition of IJMPMSSS-SRU 7-aside and 10th edition of IJMP/MSSS/ SRU Rugby 10s rugby tournaments were organised for students of different age groups from all over Sabah.
Medical outreach to Kg. Bongkol
Health awareness talk at SMK Bongkol
Annual Report 2012
55
3.2 EMPOWERING WOMEN THROUGH BREAST HEALTH AWARENESS The Group continues to promote breast health awareness among the public with special target on secondary school girls in the rural areas of Sabah. In the reporting year, the project covered the districts of Pitas and Kunak. In addition to health awareness talk, breast self-examination demonstrations were also conducted. In collaboration with Sandakan Breast Health Awareness Society and Kinabalu Pink Ribbon team, the Group also sponsored and participated at various public talks and fund raising programmes. During the month of October, a campaign called Pink October was organised throughout the Group to promote awareness among employees. The education process involved self-examination demonstration for the women employees, distribution of informative leaflets and organised quiz. 3.3 MEDICAL OUTREACH TO SURROUNDING COMMUNITIES The Group engages in an outreach programme to extend medical care to the villagers in the interiors of Sugut/Paitan region in Sabah. Jointly working with qualified doctors and nurses on voluntary social missions, this outreach programme is about extending medical treatment including vaccination and healthcare consultations to places where such facilities are rarely available. 3.4 PLANTATION ATTACHMENT TRAINING The Group has never ceased to support local tertiary centres in extending learning opportunities to undergraduates through work attachments and placement trainings. During the financial year, the internship was extended to forty one (41) undergraduates. The Group also recruited eight (8) cadets and seven (7) field conductors to undergo intensive plantation training course as part of the career development programme for local talent. 3.5 CHARITABLE ENDEAVOURS AND VOLUNTEERISM The Group encourages employees to actively participate in social activities outside of their workplace. Amongst the activities that were held during the year include a gotongroyong visit to the Sandakan Cheshire Home to assist in cleaning the centre, setting up a permanent jumble sale outlet and organising a festive celebration. Some employees were involved in the painting of a privately run primary school in Sandakan while others volunteered to help in the running of the annual Borneo Bird Festival as part of its commitment to green engagement. The Group also participated in the Environmental Education Race (EERace) organised by Sabah Forestry Department.
Rugby coaching at a primary school
Community Service at Sandakan Cheshire Home
56
4. STATEMENT AND REPORT ON MARKETPLACE

The Group has implemented various policies, procedures and practices on business ethics, good corporate governance and initiated participatory stakeholder engagements in order to ensure market confidence in its conduct of business. It is also committed to produce quality and safe palm products that meet market specifications and standards. Flow of information can be found in the Groups website, information portal, annual reports and during various sessions with the stakeholders. 4.1 COMPLIANCE AND CONTROL The Group is committed to ensure compliance with relevant regulatory requirements and industry standards for quality products and food safety. We closely monitor the implementation of standards and requirements through quality management systems including Good Manufacturing Practice, Good Agricultural Practice, Hazard Analysis Critical Control Point and MPOB Industry Code of Practices. The Groups oil palm seed production unit has the SIRIM MS157:2005 accreditation. In addition, FFB Quality Day were organised in all the palm oil mills to promote the importance of product quality. The Groups operating units comprising of nursery, oil palm estates, palm oil mills and kernel crushing plant were accredited under the MPOB Code of Practices certification. The certification encompasses industry best practices, regulatory compliance and related emphasis on quality, food safety, sustainability and safe workplace for our employees. The Group is also a member of the Roundtable for Sustainable Palm Oil. Systems and procedures are in place to ensure efficiency in the production costs. Control and monitoring measures such as tendering procedures, budgetary system and regular management meeting have been implemented to track costs movement and contain cost increases. Other details pertaining to Marketplace are also covered in the Statement on Corporate Governance in pages 32 to 38 and Statement on Internal Control in pages 42 to 43. 4.2 STRENGTHENING DIALOGUE WITH STAKEHOLDERS The Group continued to engage with relevant stakeholders from various disciplines by hosting visits covering the entire supply chain from seed production to oil despatches. During the financial year, more than ten (10) engagement visits were hosted. The Group is also engaged with the International Plant Nutrition Institute (IPNI) through a collaborative best management practice field research entitled Seed to Peak. This is spearheaded by the Groups in-house research support services. 4.3 INNOVATIONS & NEW TECHNOLOGIES Continuous improvement initiatives and innovative ideas were encouraged and promoted in the operating units. Various site specific mechanisation such as the use of net and crane crop evacuation system and in-field minitractor Paya-King were implemented in selected operating units in Sugut Region. The estates are also exploring the suitability of the motorised cutter, Cantas for the harvesting operation. The mills have incorporated various improvements at several work stations to improve cost effectiveness and enhance productivity.
Stakeholder engagement activity
F inancial Statements
58 64 65 67 69 70 72 129 130 Directors Report and Statement Statements of Comprehensive Income Balance Sheets Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Statements of Cash Flows Notes to The Financial Statements Statutory Declaration Independent Auditors Report
58
DIRECTORS REPORT AND STATEMENT

The Directors have pleasure in presenting their report and statement together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2012.
PRINCIPAL ACTIVITIES
The principal activities of the Company are cultivation of oil palm, investment holding, trading of crude palm oil and provision of management services to the subsidiaries. The principal activities of the subsidiaries are stated in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities of the Company and its subsidiaries during the financial year.
FINANCIAL RESULTS
Net profit for the financial year Attributable to: Owners of the Company Non-controlling interests Group RM000 157,426 157,313 113 157,426 Company RM000 116,389 116,389 116,389
DIVIDENDS
Dividends paid since the end of the previous financial year are as follows: In respect of the financial year ended 31 March 2011 as reported in the Directors Report and Statement of that year: A single tier interim dividend of 8 sen per share, on 801,713,437 ordinary shares, paid on 11 July 2011 RM000
64,137
On 29 May 2012, the Directors declared a single tier interim dividend amounting to 10 sen per share in respect of the financial year ended 31 March 2012. The single tier interim dividend will be paid on 3 July 2012 to every member who is entitled to receive the dividend as at 5.00 p.m. on 15 June 2012. The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2012.
RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.
SHARE CAPITAL
During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM400,673,488 to RM400,857,381 by way of the issuance of 367,786 new ordinary shares of RM0.50 each arising from the exercise of Warrants 2009/2014 at the exercise price of RM2.62 per share in accordance with the Deed Poll dated 30 September 2009. The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company.
Annual Report 2012
59
WARRANTS 2009/2014
The Warrants 2009/2014 are constituted by a Deed Poll dated 30 September 2009. On 9 November 2009, the Company allotted 160,268,583 Rights Shares together with 80,134,149 Warrants at an issue price of RM2.10 per Rights Share, on a renounceable basis of two (2) Rights Shares and one (1) Warrant for every eight (8) existing ordinary shares held on 15 October 2009. Each Warrant 2009/2014 entitles the registered holder to subscribe for one (1) new ordinary share in the Company at any time on or after 9 November 2009 up to the date of expiry on 7 November 2014, at an exercise price of RM2.62 in accordance with the Deed Poll dated 30 September 2009. Any Warrants 2009/2014 not exercised at the date of maturity will lapse and cease to be valid for any purpose. The Warrants 2009/2014 is listed on the Main Market of Bursa Malaysia Securities Berhad with effect from 13 November 2009. The ordinary shares issued from the exercise of Warrants 2009/2014 shall rank pari passu in all respects with the existing issued ordinary shares of the Company except that they shall not be entitled to any dividends, distributions or rights, the entitlement date of which is prior to the date of the allotment of the new shares arising from the exercise of Warrants 2009/2014. As at 31 March 2012, 79,762,301 Warrants 2009/2014 remained unexercised.
DIRECTORS
The Directors in office since the date of the last report and statement are: Tan Sri Dato Wong See Wah Joseph Tek Choon Yee + Purushothaman a/l Kumaran Khoo Khee Ming @ Koo Khee Ming * # + Datuk Oh Chong Peng # M. Ramachandran a/l V.D. Nair * # Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming* # Members of Nomination and Remuneration Committee Members of Audit Committee + Members of Securities and Options Committee
* #
DIRECTORS BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than the warrants of a related corporation. Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than the fees and other emoluments shown in Note 10 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.
60
DIRECTORS REPORT AND STATEMENT (contd)
DIRECTORS INTERESTS
According to the Register of Directors Shareholdings, particulars of interests of Directors in office at the end of the financial year in shares and Warrants of the Company, its ultimate holding company and related corporations during the financial year are as follows: IJM Plantations Berhad Direct interest: Purushothaman a/l Kumaran Khoo Khee Ming @ Koo Khee Ming Datuk Oh Chong Peng M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Indirect interest: Khoo Khee Ming @ Koo Khee Ming Tan Sri Dato Tan Boon Seng @ Krishnan IJM Plantations Berhad Direct interest: Purushothaman a/l Kumaran Khoo Khee Ming @ Koo Khee Ming Datuk Oh Chong Peng M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Indirect interest: Khoo Khee Ming @ Koo Khee Ming Tan Sri Dato Tan Boon Seng @ Krishnan Ultimate holding company - IJM Corporation Berhad Direct interest: Purushothaman a/l Kumaran M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Indirect interest: Khoo Khee Ming @ Koo Khee Ming Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming 18,000 21,000 2,449,180 84,000 189,000(1) 1,095,136(1) 91,000(1) 650,000(1) 18,000 21,000 2,449,180 84,000 189,000(1) 445,136(1) 91,000(1) 90,000 12,500 10,000 5,000 70,060 7,500(1) 51,051(1) 5,000 7,500(1) 95,000 12,500 10,000 5,000 70,060 51,051(1) 782,500 115,000 100,000 50,000 646,000 65,000(1) 429,982(1) 782,500 115,000 100,000 50,000 646,000 65,000(1) 429,982(1) Number of ordinary shares of RM0.50 each At At 1.4.2011 Acquired Disposed 31.3.2012
Number of Warrants 2009/2014 At Disposed/ At 1.4.2011 Acquired Exercised 31.3.2012
Number of ordinary shares of RM1.00 each At At 1.4.2011 Acquired Disposed 31.3.2012
Annual Report 2012
61
DIRECTORS INTERESTS (contd)

Ultimate holding company - IJM Corporation Berhad Direct interest: Purushothaman a/l Kumaran M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Indirect interest: Khoo Khee Ming @ Koo Khee Ming Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Related company - IJM Land Berhad Direct interest: M. Ramachandran a/l V.D. Nair Indirect interest: Tan Sri Dato Tan Boon Seng @ Krishnan Related company - IJM Land Berhad Direct interest: Purushothaman a/l Kumaran Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Indirect interest: Khoo Khee Ming @ Koo Khee Ming Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Notes:
(1)
2,100 1,424,348 39,300 9,300(1) 670,000(1) 39,800(1)
10,000 380,000(1)
10,000 2,100 1,424,348 39,300 9,300(1) 1,050,000(1) 39,800(1)
Number of ordinary shares of RM1.00 each At At 1.4.2011 Acquired Disposed 31.3.2012
20,000 20,000(1)
20,000 20,000(1)
70,000 1,248,610 147,000 2,400(1) 123,900(1) 5,200(1)
2,400(1)
70,000 1,248,610 147,000 123,900(1) 5,200(1)
Through a family member
None of the other Directors in office at the end of the financial year had any interest in shares and Warrants of the Company, its ultimate holding company and related corporations during the financial year.
62
DIRECTORS REPORT AND STATEMENT (contd)
OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps: (a) to ascertain the action taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there were no known bad debts and that adequate allowance had been made for doubtful debts; and (b) to ensure that any current assets, other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. At the date of this report and statement, the Directors are not aware of any circumstances: (a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts of the Group and of the Company inadequate to any material extent or the values attributed to current assets of the Group and of the Company misleading; or (b) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or (c) not otherwise dealt with in this report and statement or in the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading. In the interval between the end of the financial year and the date of this report and statement: (a) no item, transaction or other events of a material and unusual nature has arisen which, in the opinion of the Directors, would substantially affect the results of the operations of the Group and of the Company for the current financial year; or (b) no charge has arisen on the assets of any company in the Group which secures the liability of any other person nor has any contingent liability arisen in any company in the Group. No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Company and its subsidiaries to meet their obligations when they fall due. In the opinion of the Directors: (a) other than as disclosed in the financial statements, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature; (b) the financial statements of the Group and of the Company set out on pages 64 to 128 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2012 and of the results and cash flows of the Group and of the Company for the financial year ended on that date in accordance with the Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965; and (c) the information set out in Note 33 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.
Annual Report 2012
63
HOLDING COMPANY
The Directors regard IJM Corporation Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad, as the ultimate holding company.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors dated 29 May 2012.
TAN SRI DATO WONG SEE WAH Director
JOSEPH TEK CHOON YEE Director
64
STATEMENTS OF COMPREHENSIVE INCOME

for the financial year ended 31 March 2012
Note Revenue Cost of sales 4 5 Group 2012 2011 RM000 RM000 590,434 (280,807) 309,627 10,262 (16,303) (67,096) (20,016) 216,474 (1,227) 215,247 (57,821) 157,426 506,284 (233,819) 272,465 13,600 (17,121) (57,160) (19,038) 192,746 3,389 (119) 196,016 (48,822) 147,194 Company 2012 2011 RM000 RM000 238,070 (80,050) 158,020 3,228 (11,033) (8,102) (2,759) 139,354 139,354 (22,965) 116,389 354,692 (67,591) 287,101 15,746 (63,547) (6,786) (2,489) 230,025 230,025 (19,746) 210,279
Gross profit Other income 6 Other expenses Selling and distribution expenses Administrative expenses Operating profit Finance costs 7 Share of profits of an associate Share of losses of jointly controlled entity Profit before tax Income tax expense 8 11
Net profit for the financial year Other comprehensive income: Currency translation differences arising from translation of net investments in subsidiaries and jointly controlled entity Realisation of exchange differences upon disposal of a jointly controlled entity Total comprehensive income for the financial year Net profit attributable to: Owners of the Company Non-controlling interests Net profit for the financial year Total comprehensive income attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the financial year Earnings per share for net profit attributable to ordinary owners of the Company (sen): - Basic - Diluted
(16,416) 141,010
(5,348) 752 142,598
116,389
210,279
157,313 113 157,426 141,017 (7) 141,010
147,193 1 147,194 142,642 (44) 142,598
116,389 116,389 116,389 116,389
210,279 210,279 210,279 210,279
12(a) 12(b)
19.62 19.41
18.37 18.22
Annual Report 2012
65
BALANCE SHEETS
as at 31 March 2012
Note ASSETS NON-CURRENT ASSETS Property, plant and equipment Leasehold land and land use rights Plantation expenditure Interests in subsidiaries Other receivables Deferred tax assets 14 15 16 17 19(b) 24 608,720 80,588 685,694 49,251 771 1,425,024 494,093 84,959 592,679 33,418 1,717 1,206,866 135,049 16,121 252,487 684,795 3,876 1,092,328 136,153 16,663 251,631 444,588 5,660 854,695 Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000
CURRENT ASSETS Inventories 18 Amounts due from subsidiaries 19(a) Trade and other receivables 19(b) Tax recoverable Deposits, cash and bank balances 20 TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves attributable to owners of the Company Share capital 21 Share premium Other reserves 22 Retained profits 23 Non-controlling interests Total equity
66,700 33,162 1,852 315,530 417,244 1,842,268
62,332 30,559 1,173 203,352 297,416 1,504,282
4,690 35,988 3,648 665 58,060 103,051 1,195,379
5,771 141,478 2,740 734 100,279 251,002 1,105,697
400,857 278,766 69,922 634,316 1,383,861 4,227 1,388,088
400,673 277,817 86,480 541,047 1,306,017 2,309 1,308,326
400,857 278,766 41,571 382,487 1,103,681 1,103,681
400,673 277,817 41,740 330,235 1,050,465 1,050,465
66
BALANCE SHEETS (contd)

as at 31 March 2012
Note NON-CURRENT LIABILITIES Deferred tax liabilities Retirement benefits Term loans Other payables 24 25 26 27(b)
Group 2012 2011 RM000 RM000 154,876 756 218,484 374,116 150,146 229 150,375
Company 2012 2011 RM000 RM000 34,243 2,407 36,650 33,581 33,581
CURRENT LIABILITIES Amounts due to subsidiaries 27(a) Trade and other payables 27(b) Current tax liabilities Total liabilities TOTAL EQUITY AND LIABILITIES Net assets per ordinary share (RM) 12(c)
78,728 1,336 80,064 454,180 1,842,268 1.73
44,578 1,003 45,581 195,956 1,504,282 1.63
22,482 32,566 55,048 91,698 1,195,379 1.38
6,885 14,766 21,651 55,232 1,105,697 1.31
Annual Report 2012
67
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Note At 1 April 2011 Comprehensive income: Net profit for the financial year Other comprehensive income: Currency translation differences arising from translation of net investments in subsidiaries Attributable to owners of the Company Non-Distributable Distributable Share Other Retained Non Capital Share Reserves Profits Controlling (Note 21) Premium (Note 22) (Note 23) Total Interests RM000 RM000 RM000 RM000 RM000 RM000 400,673 277,817 86,480 541,047 1,306,017
Total Equity RM000
2,309 1,308,326
157,313
157,313
113
157,426
22
(16,296)
(16,296)
(120)
(16,416)
Total comprehensive income for the financial year Dividends 13
(16,296)
157,313 (64,137)
141,017 (64,137)
(7)
141,010 (64,137)
Issuance of ordinary shares pursuant to exercise of Warrants 2009/2014 21 Issuance of shares to non-controlling interests Realisation of revaluation reserves 22 At 31 March 2012
184 400,857
949 278,766
(169) (93) 69,922
93
964
1,925
964 1,925
634,316 1,383,861
4,227 1,388,088
68
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (contd)

Note At 1 April 2010 Comprehensive income: Net profit for the financial year Other comprehensive income: Currency translation differences arising from translation of net investments in: Subsidiaries and jointly controlled entity Realisation of exchange differences upon disposal of a jointly controlled entity
Attributable to owners of the Company Non-Distributable Distributable Share Other Retained Non Capital Share Reserves Profits Controlling (Note 21) Premium (Note 22) (Note 23) Total Interests RM000 RM000 RM000 RM000 RM000 RM000 400,671 277,806 92,204 433,246 1,203,927
Total Equity RM000
1,637 1,205,564
147,193
147,193
147,194
22
(5,303)
(5,303)
(45)
(5,348)
22
752 (4,551)
752 (4,551)
(45)
752 (4,596)
Total comprehensive income for the financial year Tax on dividends Dividends 13
(4,551)
147,193 (496) (40,067)
142,642 (496) (40,067)
(44)
142,598 (496) (40,067)
Issuance of ordinary shares pursuant to exercise of Warrants 2009/2014 21 Acquisition of subsidiaries 17(g) Realisation of reserves upon disposal of an associate Realisation of revaluation reserves 22 At 31 March 2011
11
(2)
11
716
11 716
400,673
277,817
(1,061) (110) 86,480
1,061 110
541,047 1,306,017
2,309 1,308,326
Annual Report 2012
69
COMPANY STATEMENT OF CHANGES IN EQUITY

Note At 1 April 2011 Total comprehensive income for the financial year Transactions with owners: Dividends Issuance of ordinary shares pursuant to exercise of Warrants 2009/2014 13 Non-Distributable Distributable Share Other Retained Capital Share Reserves Profits (Note 21) Premium (Note 22) (Note 23) RM000 RM000 RM000 RM000 400,673 277,817 41,740
Total Equity RM000
330,235 1,050,465 116,389 (64,137) 116,389 (64,137)
21
184 184 400,857 400,671
949 949 278,766 277,806
(169) (169) 41,571 41,742
(64,137) 382,487 160,023 210,279 (40,067)
964 (63,173) 1,103,681 880,242 210,279 (40,067)
Total transactions with owners At 31 March 2012 At 1 April 2010 Total comprehensive income for the financial year Transactions with owners: Dividends Issuance of ordinary shares pursuant to exercise of Warrants 2009/2014 13
21
2 2 400,673
11 11 277,817
(2) (2) 41,740
(40,067) 330,235
11 (40,056) 1,050,465
Total transactions with owners At 31 March 2011
70
STATEMENTS OF CASH FLOWS

Note OPERATING ACTIVITIES Receipts from customers Payments to contractors, suppliers and employees Interest paid Income tax paid Net cash flows generated from operating activities INVESTING ACTIVITIES Redemption of preference shares in a subsidiary Subscription of additional shares in subsidiaries Acquisition of subsidiaries, net of cash and cash equivalents 17 Net advances to subsidiaries Additions to property, plant and equipment Additions to leasehold land and land use rights Additions to plantation expenditure Finance costs capitalised under plantation expenditure Partial proceeds received from disposal of an associate Proceeds from disposal of a jointly controlled entity Proceeds from disposal of property, plant and equipment Net dividends received Interest received Net cash flows used in investing activities (162,148) (89,757) (316) 1,871 7 8,111 (242,232) 10,377 (93,813) (13,536) (85,847) 3,333 9,765 139 5,010 4,855 (159,717) (40,000) (26,597) (7,240) (753) 1,871 641 1,954 (70,124) 2,600 (71,226) (55,851) (11,759) (1,738) (1,221) 3,333 171 5,713 3,799 (126,179) 583,151 (329,172) (1,227) (52,458) 200,294 503,949 (281,779) (33,306) 188,864 174,458 (61,146) (22,234) 91,078 154,263 (59,849) (16,637) 77,777 Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000
Annual Report 2012
71
Note FINANCING ACTIVITIES Issuance of ordinary shares Drawdown of term loans Dividends paid by the Company Net cash flows generated from/ (used in) financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS FOREIGN EXCHANGE DIFFERENCES ON OPENING BALANCE CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR
Group 2012 2011 RM000 RM000
Company 2012 2011 RM000 RM000
964 217,707 (64,137) 154,534
11 (40,067) (40,056)
964 (64,137) (63,173)
11 (40,067) (40,056)
112,596
(10,909)
(42,219)
(88,458)
(418)
(188)
203,352
214,449
100,279
188,737
20
315,530
203,352
58,060
100,279
72
NOTES TO THE FINANCIAL STATEMENTS

1

GENERAL INFORMATION
The principal activities of the Company are cultivation of oil palm, investment holding, trading of crude palm oil and provision of management services to the subsidiaries. The principal activities of the subsidiaries are stated in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad (Bursa Securities). The registered office of the Company is located at 2nd Floor, Wisma IJM, Jalan Yong Shook Lin, 46050 Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at Wisma IJM Plantations, Lot 1, Jalan Bandar Utama, Batu 6, Jalan Utara, 90000 Sandakan, Sabah. The ultimate holding company is IJM Corporation Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 29 May 2012.
SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies have been applied consistently to all the years presented in dealing with items which are considered material in relation to the financial statements, unless otherwise stated. 2.1 BASIS OF PREPARATION The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards, the Malaysian Accounting Standards Board (MASB) Approved Accounting Standards in Malaysia for Entities Other than Private Entities. The financial statements have been prepared under the historical cost convention, unless otherwise indicated in this summary of significant accounting policies. The preparation of financial statements in conformity with the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Companys accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3 to the financial statements. (a) Standards, amendments to published standards and interpretations that are effective The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the Groups and the Companys financial year beginning on or after 1 April 2011 and are applicable to the Group and the Company are as follows: Revised FRS 3 Business combinations Revised FRS 127 Consolidated and separate financial statements Amendment to FRS 2 Share-based payment - Group cash-settled share-based payment transactions Amendment to FRS 7 Financial instruments: Disclosures - improving disclosures about financial instruments
Annual Report 2012
73
SIGNIFICANT ACCOUNTING POLICIES (contd)

2.1 BASIS OF PREPARATION (contd) (a) Standards, amendments to published standards and interpretations that are effective (contd) The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the Groups and the Companys financial year beginning on or after 1 April 2011 and are applicable to the Group and the Company are as follows: (contd) Amendments to IC Interpretation 9 Reassessment of embedded derivatives Amendment to FRS 132 Financial instruments: Presentation Classification of rights issues IC Interpretation 4 Determining whether an arrangement contains a lease IC Interpretation 12 Service concession arrangements IC Interpretation 16 Hedges of a net investment in a foreign operation IC Interpretation 17 Distribution of non-cash assets to owners IC Interpretation 18 Transfers of assets from customers Improvements to FRSs (2010) All changes in accounting policies have been made in accordance with the transition provisions in the respective standards, amendments to published standards and interpretations. The adoption of these new accounting standards, amendments to published standards and interpretations do not have a material impact on the financial statements of the Group and of the Company.
(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group, but are not yet effective and have not been early adopted (i) In the financial year beginning on 1 April 2012, the Group will continue to apply the Financial Reporting Standards Framework. The new standards, amendments to published standards and interpretations that are mandatory for the Groups financial year beginning on or after 1 April 2012 or later periods, and the Group has not early adopted, are as follows: The revised FRS 124 Related party disclosures (effective from 1 January 2012) removes the exemption to disclose transactions between government-related entities and the government, and all other government-related entities. The following new disclosures are now required for government related entities: - The name of the government and the nature of their relationship; - The nature and amount of each individually significant transactions; and - The extent of any collectively significant transactions, qualitatively or quantitatively. Amendment to FRS 112 Income taxes (effective from 1 January 2012) introduces an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. FRS 112 currently requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in FRS 140 Investment property. As a result of the amendments, IC Interpretation 121 Income taxes - recovery of revalued non-depreciable assets will no longer apply to investment properties carried at fair value. The amendments also incorporate into FRS 112 the remaining guidance previously contained in IC Interpretation 121 which is withdrawn.
74
NOTES TO THE FINANCIAL STATEMENTS (contd)


2.1 BASIS OF PREPARATION (contd) (b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group, but are not yet effective and have not been early adopted (contd) (i) In the financial year beginning on 1 April 2012, the Group will continue to apply the Financial Reporting Standards Framework. The new standards, amendments to published standards and interpretations that are mandatory for the Groups financial year beginning on or after 1 April 2012 or later periods, and the Group has not early adopted, are as follows: (contd) IC Interpretation 19 Extinguishing financial liabilities with equity instruments (effective from 1 July 2011) provides clarification when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entitys shares or other equity instruments to settle the financial liability fully or partially. A gain or loss, being the difference between the carrying value of the financial liability and the fair value of the equity instruments issued, shall be recognised in profit or loss. Entities are no longer permitted to reclassify the carrying value of the existing financial liability into equity with no gain or loss recognised in profit or loss. Amendment to FRS 7 Financial instruments: Disclosures on transfers of financial assets (effective from 1 July 2011) promotes transparency in the reporting of transfer transactions and improve users understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entitys financial position, particularly those involving securitisation of financial assets. (ii) In the financial year beginning on or after 1 April 2013, the Group will be adopting the new IFRS-compliant framework, Malaysian Financial Reporting Standards (MFRS). In November 2011, the MASB Board issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS) in conjunction with the Boards plan to converge with International Financial Reporting Standards in 2012. 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 and IC Interpretation 15 Agreements for the Construction of Real Estate, including its parent, significant investor and venturer (herewith called Transitioning Entities). Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2013. The Group is categorised under Transitioning Entities and will adopt the MFRS Framework for the financial year beginning on 1 April 2013. MFRS 1 First-time adoption of MFRS provides for certain optional exemptions and certain mandatory exceptions for first-time MFRS adopters. The Group is in the process of making an assessment of the potential impact of this standard on the financial statements. The new standards, amendments to published standards and interpretations that are mandatory for the Groups financial year beginning on or after 1 April 2013 or later periods, and the Group has not early adopted, are as follows: MFRS 141 Agriculture (effective from 1 January 2012) requires biological assets and agricultural produce at the point of harvest to be measured at fair value less costs to sell. The change in fair value less costs to sell of a biological asset shall be included in profit or loss for the period in which it arises.
Annual Report 2012
75

2.1 BASIS OF PREPARATION (contd) (b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group, but are not yet effective and have not been early adopted (contd) (ii) The new standards, amendments to published standards and interpretations that are mandatory for the Groups financial year beginning on or after 1 April 2013 or later periods, and the Group has not early adopted, are as follows: (contd) MFRS 9 Financial instruments - classification and measurement of financial assets and financial liabilities (effective from 1 January 2015) replaces the multiple classification and measurement models in MFRS 139 with a single model that has only two classification categories: amortised cost and fair value. The basis of classification depends on the entitys business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. The accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (FVTPL). Entities with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in the liabilitys credit risk directly in other comprehensive income (OCI). There is no subsequent recycling of the amounts in OCI to profit or loss, but accumulated gains or losses may be transferred within equity. The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply. MFRS 7 requires disclosures on transition from MFRS 139 to MFRS 9. MFRS 10 Consolidated financial statements (effective from 1 January 2013) changes the definition of control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. It replaces all the guidance on control and consolidation in MFRS 127 Consolidated and separate financial statements and IC Interpretation 112 Consolidation special purpose entities. MFRS 12 Disclosures of interests in other entities (effective from 1 January 2013) sets out the required disclosures for entities reporting under the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements currently found in MFRS 128 Investments in associates. It requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entitys interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. MFRS 13 Fair value measurement (effective from 1 January 2013) aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7 Financial instruments: Disclosures, but apply to all assets and liabilities measured at fair value, not just financial ones. The revised MFRS 127 Separate financial statements (effective from 1 January 2013) includes the provisions on separate financial statements that remain in MFRS 127 after the control provisions of MFRS 127 have been included in the new MFRS 10.
76


2.1 BASIS OF PREPARATION (contd) (b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group, but are not yet effective and have not been early adopted (contd) (ii) The new standards, amendments to published standards and interpretations that are mandatory for the Groups financial year beginning on or after 1 April 2013 or later periods, and the Group has not early adopted, are as follows: (contd) MFRS 11 Joint arrangements (effective from 1 January 2013) requires a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement, rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. The revised MFRS 128 Investments in associates and joint ventures (effective from 1 January 2013) includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of MFRS 11. Amendment to MFRS 101 Presentation of items of other comprehensive income (effective from 1 July 2012) requires entities to separate items presented in other comprehensive income (OCI) in the statement of comprehensive income into two groups, based on whether or not they may be recycled to profit or loss in the future. The amendments do not address which items are presented in OCI. Amendment to MFRS 119 Employee benefits (effective from 1 January 2013) makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. Actuarial gains and losses will no longer be deferred using the corridor approach. MFRS 119 shall be withdrawn on application of this amendment. Amendment to MFRS 7 Financial instruments: Disclosures (effective from 1 January 2013) requires more extensive disclosures focusing on quantitative information about recognised financial instruments that are offset in the balance sheet and those that are subject to master netting or similar arrangements irrespective of whether they are offset. Amendment to MFRS 132 Financial instruments: Presentation (effective from 1 January 2014) does not change the current offsetting model in MFRS 132. It clarifies the meaning of currently has a legally enforceable right of set-off that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria. Unless otherwise disclosed, the above standards, amendments to published standards and interpretations are not anticipated to have any significant impact on the financial statements of the Group and of the Company in the year of initial application.
Annual Report 2012
77

2.2 ECONOMIC ENTITIES IN THE GROUP (a) Subsidiaries Subsidiaries are those corporations, partnerships or other entities (including special purpose entities) in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. In assessing whether potential voting rights contribute to control, the Group examines all facts and circumstances (including the terms of exercise of the potential voting rights and any other contractual arrangements whether considered individually or in combination) that affect potential voting rights. Subsidiaries are consolidated using the acquisition method of accounting, except for business combinations involving entities or businesses under common control with agreement dates on or after 1 January 2006, which are accounted for using the merger method of accounting. Under the acquisition method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The cost of acquisition includes the fair value of any asset or liability resulting from a contingent consideration arrangement. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition and the amount of any non-controlling interest in the acquiree over the fair value of the Groups share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill See accounting policy 2.5 on goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the subsidiary acquired, the gain is recognised directly in profit or loss. Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiarys identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation. Non-controlling interest represents that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Company. It is measured at the minorities share of the fair value of the subsidiaries identifiable assets and liabilities at the date of acquisition and the minorities share of changes in the subsidiaries equity since that date. All earnings and losses of the subsidiary are attributed to the owners of the company and the non-controlling interests, even if the attribution of losses to the non-controlling interests results in a debit balance in the total equity. Profit or loss attributable to non-controlling interests for prior years is not restated. Under the merger method of accounting, the results of subsidiaries are presented as if the merger had been effected throughout the current and previous years. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with the values of the shares received. Any resulting credit difference is classified as equity and regarded as a reserve. Any resulting debit difference is adjusted against reserve. Any share premium, capital redemption reserve and any other reserves which are attributable to share capital of the merged enterprises, to the extent that they have not been capitalised by a debit difference, are reclassified and presented as movement in other reserves.
78


2.2 ECONOMIC ENTITIES IN THE GROUP (contd) (a) Subsidiaries (contd) All inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated except for contracted finished goods which are stated at net realisable value. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. The gain or loss on disposal of a subsidiary, which is the difference between net disposal proceeds and the Groups share of its net assets as of the date of disposal, including the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the profit or loss attributable to the owners of the Company. Transactions with non-controlling interests The Group applies a policy of treating transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired is deducted from equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. For disposals to non-controlling interests, differences between any proceeds received and the relevant share of non-controlling interests are also recorded in equity.
(b)
(c) Associates Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but which it does not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Groups investment in associate includes goodwill identified on acquisition, net of any accumulated impairment. The Groups share of its associates post-acquisition profits or losses is recognised in the profit and loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Groups share of losses in an associate equals or exceeds its interest in the associate, including any other long term unsecured receivables, the Groups interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groups interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group. Dilution gains and losses in associates are recognised in the profit or loss. For incremental interest in an associate, the date of acquisition is the purchase date at each stage and goodwill is calculated at each purchase date based on the fair value of assets and liabilities identified. There is no step up to fair value of net assets of the previously acquired stake and the share of profits and equity movements for the previously acquired stake is recorded directly through equity.
Annual Report 2012
79

2.2 ECONOMIC ENTITIES IN THE GROUP (contd) (d) Jointly controlled entities Jointly controlled entities are corporations, partnerships, or other entities over which there is contractually agreed sharing of control by the Group with one or more parties where the strategic financial and operating decisions relating to the entities require unanimous consent of the parties sharing control. The Groups interest in jointly controlled entities is accounted for in the consolidated financial statements using the equity method of accounting. Equity accounting involves recognising the Groups share of the post-acquisition results of jointly controlled entities in the profit or loss and its share of post-acquisition movements of reserves in other comprehensive income. The cumulative post-acquisition movements are adjusted against the cost of the investment and includes goodwill on acquisition (net of accumulated impairment). When the Groups share of losses in a jointly controlled entity equals or exceeds its interest in the jointly controlled entity, the Groups interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the jointly controlled entity. Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the Groups interest in the jointly controlled entities; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the assets transferred. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment. Where necessary, adjustments are made to the financial statements of jointly controlled entities to ensure consistency of accounting policies with the Group.
2.3 PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION All property, plant and equipment are stated at cost or at valuation less accumulated depreciation and accumulated impairment except for freehold land and capital work-in-progress which are not depreciated. Freehold land is not depreciated as it has an infinite life. Depreciation on capital work-in-progress commences when the assets are ready for their intended use. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when 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. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised in profit or loss during the financial period in which they are incurred.
80


2.3 PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (contd) The Group amortises plantation infrastructure development expenditure in equal annual instalments over the period of the respective leases ranging from 21 to 81 years. Leasehold land classified as finance lease is amortised in equal instalments over the period of the respective leases that range from 73 to 884 years. Other property, plant and equipment are depreciated on a straight-line basis to write-off the cost of the assets, or their revalued amounts, to their residual values over their estimated useful lives. The annual rates of depreciation are: Buildings Plant, machinery and equipment Motor vehicles Office equipment, furniture and fittings and renovations 2 to 20% 4 to 20% 10 to 20% 10 to 33.3%
The Directors have applied the transitional provisions of International Accounting Standards (IAS) 16 Property, Plant and Equipment, which has been adopted by the MASB, which allows the assets to be stated at their last revalued amounts less accumulated depreciation and accumulated impairment. Accordingly, these valuations have not been updated. When an assets carrying amount is increased as a result of a revaluation, the increase is recognised in other comprehensive income as a revaluation surplus reserve. When the assets carrying amount is decreased as a result of a revaluation, the decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus reserve of that asset; all other decreases are recognised in profit or loss. The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision of the residual values and useful lives are included in the profit or loss for the financial year in which the changes arise. At each balance sheet date, the Group assesses whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to its recoverable amount. See Note 2.7 on impairment of non-financial assets. Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in the profit or loss. On disposal of revalued assets, amounts in the revaluation reserve relating to those assets are transferred to retained profits. Where applicable, the fair value of property, plant and equipment at the date of acquisition of subsidiaries is carried forward in place of cost.
2.4 PLANTATION EXPENDITURE Plantation expenditure comprises new planting expenditure, estate administration, finance cost and upkeep of plantation up to its maturity and are stated at cost or valuation. All expenditure incurred subsequent to maturity, replanting expenditure and upkeep and maintenance expenditure including fertilising costs are charged to the profit or loss when incurred. Certain plantation expenditure of the Company and certain subsidiaries has been revalued in 1997. The Directors have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded.
2.5 GOODWILL Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities and associates over the fair value of the Groups share of the identifiable net assets at the date of acquisition. Goodwill on acquisition of subsidiaries is included in the balance sheet as intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment. Impairment on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Annual Report 2012
81

2.5 GOODWILL (contd) Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in each country in which it operates. See Note 2.7 on impairment of non-financial assets. Goodwill on acquisitions of jointly controlled entities and associates is included in investments in jointly controlled entities and associates respectively. Such goodwill is tested for impairment as part of the overall balance.
2.6 INVESTMENTS Investments in subsidiaries, jointly controlled entities and associates are shown at cost less accumulated impairment. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See Note 2.7 on impairment of non-financial assets.
2.7 IMPAIRMENT OF NON-FINANCIAL ASSETS Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment is recognised for the amount by which the carrying value of the asset exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units). Non-financial assets, other than goodwill, that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The impairment is charged to the profit or loss unless it reverses a previous revaluation, in which case it is charged to the revaluation surplus. Impairment on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in the profit or loss unless it reverses an impairment of a revalued asset, in which case it is taken to revaluation surplus reserve.
2.8 LEASES A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time. (a) Accounting as lessee Finance leases Leases of property, plant and equipment where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the estimated present value of the underlying lease payments at the date of inception. Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the lease principal outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance lease contracts is depreciated over the useful life of the asset. If there is no reasonable certainty that the ownership will be transferred to the Group, the asset is depreciated over the shorter of the lease term and its useful life. Operating leases Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss over the lease period.
82


2.8 LEASES (contd) (b) Accounting as lessor Finance leases Leases of assets where the lessee assumes substantially all the risks and rewards of ownership are classified as finance leases. When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method so as to reflect a constant periodic rate of interest on the balance outstanding. Operating leases Assets leased out under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over their useful lives on bases consistent with similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term.
2.9 LEASEHOLD LAND AND LAND USE RIGHTS Leasehold land and land use rights that normally has a definite economic life and title is not expected to pass to the lessee by end of the lease term is treated as an operating lease. Leasehold land and land use rights are carried at cost or surrogate carrying amount and are amortised on a straight line basis over the lease terms in accordance with the pattern of benefits provided. Leasehold land and land use rights are amortised over the remaining period of the respective leases ranging from 21 to 99 years.
2.10 INVENTORIES Inventories are stated at the lower of cost and net realisable value, other than for contracted crude palm oil/ crude palm kernel oil which are stated at net realisable value. Cost comprises the original cost of purchase plus the cost of bringing the inventories to their intended location and condition. The costs are determined at weighted average basis and include the cost of raw materials, direct labour and a portion of production overhead. 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.
2.11 RECEIVABLES (a) Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business, if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
(b) Advances for plasma schemes represent accumulated plantation development cost including borrowing costs and indirect overheads less repayments todate and provisions for impairment, which are recoverable from plasma farmers. See Note 19(b)(iii) on receivables. In the event the Group or the Company gives corporate guarantee to the plasma schemes for obtaining loan from financial institutions, it will be accounted for as a financial guarantee contract. See Note 2.23 on financial guarantee contracts.
See Note 2.20(d) on impairment of financial assets.
Annual Report 2012
83

2.12 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short term, highly liquid investments with original maturities of twelve months or less, and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet.
2.13 SHARE CAPITAL (i) (ii) (iii) (iv) Classification Ordinary shares are classified as equity. Share issue costs External costs directly attributable to the issue of new shares are shown as a deduction from the share premium account. In other cases, they are charged to the profit or loss when incurred. Dividends Interim dividends on ordinary shares are recognised as liabilities when declared. Proposed final dividends are accrued as liabilities only after approval by shareholders. Warrant reserve Proceeds from the issuance of warrants, net of issue costs, are credited to warrants reserve which is non-distributable. Warrants reserve is transferred to the share premium account upon the exercise of warrants and the warrant reserve in relation to unexercised warrants at the expiry of the warrants period will be transferred to retained profits.
2.14 BORROWINGS (a) Classification Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method, except for borrowing costs incurred for the construction of any qualifying assets. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months at the balance sheet date.
(b) Capitalisation of borrowings cost Borrowing costs directly attributable to the acquisition and construction of property, plant and equipment and plantation expenditure are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or the plantations are mature. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.15 INCOME TAXES The income tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary, associate or jointly controlled entity on distributions of retained profits to companies in the Group. Deferred tax is recognised in full, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or unused tax losses can be utilised.
84


2.15 INCOME TAXES (contd) Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and jointly controlled entities, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill. Deferred tax assets and liabilities are offset when the enterprise has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
2.16 EMPLOYEE BENEFITS (a) Short term employee benefits The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the owners of the Company after certain adjustments. The Group recognises a provision where there is a contractual obligation or where there is a past practice that has created a constructive obligation. Wages, salaries, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group. Post-employment benefits The Group has various post-employment benefit schemes in accordance with local conditions and practices in the countries in which it operates. These benefit plans are either defined contribution or defined benefit plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. (i) Defined contribution plan The Groups contributions to defined contribution plan are charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund (EPF), a defined contribution plan.
(b)
Annual Report 2012
85

2.16 EMPLOYEE BENEFITS (contd) (b) Post-employment benefits (contd) (ii) Unfunded defined benefit plan The liability in respect of a defined benefit plan is the present value of the defined benefit obligation at the balance sheet date minus the fair value of plan assets, together with adjustments for actuarial gains/losses and past service cost. The Group determines the present value of the defined benefit obligation and the fair value of any plan assets with sufficient regularity such that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the balance sheet date. The defined benefit obligation, calculated using the projected unit credit method, is determined by independent actuaries, considering the estimated future cash outflows using market yields at balance sheet date on government securities that have maturity dates approximating the terms of the related liability. Actuarial gains and losses arise mainly from the changes in actuarial assumptions and experience adjustments. Such gains and losses are credited or charged to the profit or loss over the expected average remaining working lives of the employees participating in the plan.
2.17 CONTINGENT LIABILITIES The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. Contingent liabilities do not include financial guarantee contracts. See Note 2.23 on financial guarantee contracts. In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions and the information about the contingent liabilities acquired are disclosed in the notes to the financial statements. Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of FRS 1372004 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with FRS 1182004 Revenue.
86


2.18 REVENUE RECOGNITION Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Groups activities. Revenue is shown net of sales taxes and discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Groups activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. (i) Sale of goods Revenue is recognised upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. Sales are recognised upon delivery of products and customer acceptance, net of sales taxes and discounts and after eliminating sales within the Group. Dividend income Dividend income is recognised when the shareholders right to receive payment is established. Plantation advisory and management services Revenue for services rendered is recognised net of sales tax upon performance of services. Interest income Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, unless collectability is in doubt, in which case it is recognised on a cash receipt basis.
(ii) (iii) (iv)
2.19 FOREIGN CURRENCIES (a) Functional and presentation currency Items included in the financial statements of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in Ringgit Malaysia, which is the Companys functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the transaction dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
(b)
Annual Report 2012
87

2.19 FOREIGN CURRENCIES (contd) (c) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; Income and expenses for each statement of comprehensive income are translated at the average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and All resulting exchange differences are recognised as a separate component of other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to other comprehensive income. When a foreign entity is partially disposed of or sold, a proportionate share of such exchange differences is reclassified to profit or loss as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate at the date of the balance sheet.
2.20 FINANCIAL INSTRUMENTS Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. (a) Classification The Group classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the nature of the asset and the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired or incurred principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. The Groups loans and receivables comprise trade and other receivables (other than prepayments and advances for land acquisition and plantation development expenditure) and deposits, cash and bank balances in the balance sheet.
(ii)
88


2.20 FINANCIAL INSTRUMENTS (contd) (b) Recognition and initial measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are expensed in profit or loss. Subsequent measurement gains and losses Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interests and dividend income, are recognised in profit or loss in the period in which the changes arise. Subsequent measurement impairment of financial assets The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. A financial asset or a group of financial assets is impaired and impairment are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If any such evidence exists, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets original effective interest rate. The assets carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. The carrying amount of the financial assets is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. In a subsequent period, if 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. Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired. When a receivable is uncollectible, it is written off against the related allowance account. Such receivables written off after all the necessary procedures have been completed and the amount of the loss has been determined. If loans and receivables has a variable interest rate, the discount rate for measuring any impairment is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instruments fair value using an observable market price. If, in a subsequent period, the amount of the impairment decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment is recognised in profit or loss.
(c)
(d)
Annual Report 2012
89

2.20 FINANCIAL INSTRUMENTS (contd) (e) Derecognition Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities The Group classifies its financial liabilities as other financial liabilities. The classification depends on the nature of the liability and the purpose for which the financial liabilities were acquired. Management determines the classification at initial recognition. Other financial liabilities Other financial liabilities of the Group comprise trade and other payables. When other financial liabilities are recognised initially, they are measured at fair value plus directly attributable transaction costs. Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in statement of comprehensive income when the other financial liabilities are derecognised, and through the amortisation process. Financial liabilities are derecognised when the obligation specified in the contract is discharged or cancelled or expired. Fair value estimation for disclosure purposes The fair value of publicly traded derivatives and securities is based on quoted market prices at the balance sheet date. The fair value of crude palm oil pricing swap contracts is based on quoted market prices at the balance sheet date. There were no outstanding crude palm oil swap contracts at the balance sheet date. In assessing the fair value of non-traded derivatives and financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for the specific or similar instruments are used for long term debt. Other techniques and bases, such as discounted value of future cash flows and the underlying net asset base of the instrument, are used to determine fair value for the remaining financial instruments. In particular, the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments. The carrying values of financial assets and financial liabilities with a maturity period of less than one year are assumed to approximate their fair values. Offsetting financial instruments Financial assets and liabilities are offset and the net amount presented on the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
(f)
(g)
(h)
2.21 TRADE AND OTHER PAYABLES Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method. Trade and other payables are classified as current liabilities if payment is due within one year, or in the normal operating cycle of the business if longer. If not, they are presented as non-current liabilities.
90


2.22 PROVISIONS Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate of the amount can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost.
2.23 FINANCIAL GUARANTEE CONTRACTS Financial guarantee contracts are contracts that required the Group or Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, in accordance with the terms of the debt instrument. Financial guarantee contracts are recognised as financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with FRS 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less accumulative amortisation, where appropriate. The fair value of financial guarantee is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. When financial guarantees in relation to loans or payables of subsidiaries are provided by the Company for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.
2.24 SEGMENTAL INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Management Committee (MC) that makes strategic decisions. Segment reporting is presented for enhanced assessment of the Groups risks and returns as each business or geographical segment is subject to risks and returns that are different from the other business or geographical segments. Segment revenue, expenses, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expenses, assets and liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process.
Annual Report 2012
91
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. (a) Depreciation of property, plant and equipment The cost of plant and machinery is depreciated on a straight-line basis over the assets useful lives. Management estimates the useful lives of these plant and machinery to be within 5 to 25 years. These are common life expectancies applied in the plantation industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. Impairment of non-financial assets The Group determines whether an asset is impaired by evaluating the extent to which the recoverable amount of an asset is less than its cost. This evaluation is subject to changes such as market performance, economic and political situation of the country. A variety of methods is used to determine the recoverable amount, such as valuation report and discounted cash flow. For discounted cash flow, this involves the use of estimated future results and a set of assumptions to reflect its income and cash flow. Judgement has been used to determine the discount rate for the cash flow and the future growth of the business. During the financial year, the Group recognised an impairment in respect of a co-generation plant of a loss-making subsidiary. The Group carried out the impairment test by estimating the value-in-use of the plant. Estimating the value-in-use requires the Group to make estimate of the expected future cash flows from the plant and to choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the impairment recognised for the co-generation plant are disclosed in Note 14.
(b)
(c) Income taxes The Group is subject to income taxes in numerous jurisdictions. Due to the complexity of transactions entered into by the Group, significant judgement is required in determining capital allowances, deductibility of certain expenses and the chargeability of certain income during the estimation of the provision for income taxes. In determining the tax treatment, the Directors have relied upon industry practice and experts opinion. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.
92

REVENUE
Group 2012 2011 RM000 RM000 504,229 69,134 5,898 494 10,278 150 251 590,434 430,606 67,998 5,763 256 1,359 302 506,284 Company 2012 2011 RM000 RM000 604 165,632 251 11,456 60,127 238,070 1,457 138,066 286 10,336 198,834 703 5,010 354,692
Sale of: - Crude palm oil - Crude palm kernel oil - Palm kernel expellers - Oil palm seeds - Fresh fruit bunches - Palm kernel and other by-products Plantation advisory fee Management fees from subsidiaries Dividend income from subsidiaries: - Single tier dividend - Tax exempt dividend Single tier dividend income from an associate
The single tier dividend income from subsidiaries are non-cash transactions to offset against advances from subsidiaries during the financial year. Supplementary information on operating revenue of the Group inclusive of the Groups share of revenue of associate and jointly controlled entity are as follows: 2012 RM000 590,434 590,434 2011 RM000 506,284 31,430 546 538,260
Operating revenue of the Group Share of operating revenue of: - Associate - Jointly controlled entity
COST OF SALES
Group 2012 2011 RM000 RM000 280,649 158 280,807 233,790 29 233,819 Company 2012 2011 RM000 RM000 67,854 12,196 80,050 54,335 13,256 67,591
Cost of: - Inventories sold - Services rendered
Annual Report 2012
93
OTHER INCOME
Group 2012 2011 RM000 RM000 8,111 182 62 107 729 7 1,064 10,262 4,855 165 67 509 56 109 4,684 2,269 886 13,600 Company 2012 2011 RM000 RM000 1,954 204 39 7 1,024 3,228 3,799 189 67 27 5,672 3,300 2,269 423 15,746
Interest income Rental income Insurance claims Realised foreign exchange gains Unrealised foreign exchange gains Gain on disposal of property, plant and equipment Gain on disposal of investments in: - Jointly controlled entity - Associate (Note 8(c)) Reversal of impairment of: - Advances to a subsidiary - Amount due from a jointly controlled entity Others
FINANCE COSTS
Group 2012 2011 RM000 RM000 1,543 (316) 1,227 Company 2012 2011 RM000 RM000
Interest expense on: Term loan Less: Interest capitalised in plantation expenditure (Note 16(b)) Recognised in statement of comprehensive income
94

PROFIT BEFORE TAX

(a) The following amounts have been included in arriving at profit before tax: Group 2012 2011 RM000 RM000 67,864 538 350 25 1,486 27,792 203 17 11,000 5,094 209 56,263 458 194 1,164 26,837 112 17 958 12,079 2,775 56 1,253 Company 2012 2011 RM000 RM000 34,665 538 120 20 527 7,589 33 17 11,000 30,376 458 80 504 7,669 70 17 61,920 980 43 534
Employee benefits expense (Note 9) Non-Executive Directors remuneration (Note 10) Auditors remuneration (Note 8(b)) - Current year - Under accrual in respect of prior year Amortisation of leasehold land and land use rights (Note 15) Depreciation of property, plant and equipment (Note 14) Property, plant and equipment scrapped Rental of premises Impairment of investments in subsidiaries Impairment of goodwill (Note 17(f)) Impairment of advance to a subsidiary (Note 19(a)) Impairment of property, plant and equipment (Note 14) Fair value losses on crude palm oil pricing swaps Loss on disposal of investment in an associate (Note 8(c)) Write off of amounts due from subsidiaries Foreign exchange losses: - Unrealised - Realised (b) Auditors remuneration statutory audit PricewaterhouseCoopers Malaysia Other auditors of subsidiaries
Group 2012 2011 RM000 RM000 226 149 375 155 39 194
Company 2012 2011 RM000 RM000 140 140 80 80
(c) Loss on disposal of investment in an associate
In the previous financial year, the Company disposed of its entire 50% equity interest in an associate. Details of the disposal were as follows: RM000 Net disposal proceeds Less: Cost of investment Gain on disposal to the Company (Note 6) Less: Share of post-acquisition reserves Loss on disposal to the Group (Note 8(a)) 8,447 (2,775) 5,672 (8,447) (2,775)
Annual Report 2012
95
EMPLOYEE BENEFITS EXPENSE

Group 2012 2011 RM000 RM000 82,909 3,929 321 87,159 (19,295) 67,864 61,688 3,024 229 64,941 (8,678) 56,263 Company 2012 2011 RM000 RM000 32,260 2,483 119 34,862 (197) 34,665 28,664 1,922 114 30,700 (324) 30,376
Salaries and wages Contributions to defined contribution plan Social security contributions
Less: Expenses capitalised in plantation expenditure (Note 16(b)) Recognised in statement of comprehensive income (Note 8)
Included in employee benefits expense of the Group and of the Company are Executive Directors remuneration amounting to RM3,120,000 (2011: RM1,685,000) and RM1,363,000 (2011: RM1,263,000) respectively as further disclosed in Note 10.
10 DIRECTORS REMUNERATION
Executive: Salaries and other emoluments Contributions to defined contribution plan Group 2012 2011 RM000 RM000 2,729 391 3,120 1,478 207 1,685 Company 2012 2011 RM000 RM000 1,185 178 1,363 1,098 165 1,263
Non-Executive: Fees (Note 8) Other emoluments
538 52 590 3,710 48 3,758
458 - 458 2,143 61 2,204
538 52 590 1,953 48 2,001
458 458 1,721 61 1,782
Total Directors remuneration Benefits-in-kind Total Directors remuneration including benefits-in-kind
96

11 INCOME TAX EXPENSE

Current tax: - Current year - Under/(over) accrual in prior years Group 2012 2011 RM000 RM000 51,944 168 52,112 37,311 (287) 37,024 Company 2012 2011 RM000 RM000 22,135 168 22,303 17,959 (276) 17,683
Deferred tax (Note 24): - Relating to origination and reversal of temporary differences - Under/(over) accrual in prior years
4,293 1,416 5,709 57,821
11,711 87 11,798 48,822
1,265 (603) 662 22,965
2,021 42 2,063 19,746
Total income tax expense
A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: Group 2012 2011 RM000 RM000 215,247 196,016 Company 2012 2011 RM000 RM000 139,354 230,025
Profit before tax Tax calculated at the Malaysian tax rate of 25% (2011: 25%) Tax effects of: - Different tax rate in other countries - Effects of share of results of: - Associate - Jointly controlled entities - Income not subject to tax - Utilisation of reinvestment allowance - Expenses not deductible for tax purposes - Under/(over) accrual of current tax in prior years - Under/(over) accrual of deferred tax in prior years Income tax expense
53,812 (1,099) (970) 4,494 168 1,416 57,821
49,004 46 (847) 30 (1,738) 2,527 (287) 87 48,822
34,839 (15,179) 3,740 168 (603) 22,965
57,506 (54,115) 16,589 (276) 42 19,746
Annual Report 2012
97
12 EARNINGS PER SHARE AND NET ASSETS PER ORDINARY SHARE

(a) Basic earnings per share The basic earnings per share for the financial year is calculated by dividing the Groups net profit attributable to owners of the Company for the financial year and the weighted average number of ordinary shares in issue during the financial year. The weighted average number of ordinary shares in issue was derived at after taking into account the exercise of Warrants 2009/2014. Group 2012 157,313 801,639 19.62 2011 147,193 801,346 18.37
Net profit attributable to owners of the Company (RM000) Weighted average number of ordinary shares in issue (000) Basic earnings per share (sen)
(b) Diluted earnings per share The diluted earnings per share of the Group is calculated by dividing the Groups net profit attributable to owners of the Company for the financial year by the weighted average number of ordinary shares in issue, adjusted to assume the conversion of all dilutive potential ordinary shares, i.e. Warrants 2009/2014. A calculation is done to determine the number of shares that could have been acquired at market price (determined as the weighted average annual share price of the Companys shares) based on the monetary value of the subscription rights attached to the outstanding Warrants 2009/2014. This calculation serves to determine the bonus element to the ordinary shares outstanding for the purpose of computing the dilution. No adjustment is made to the net profit for the calculation. Group 2012 157,313 801,639 8,923 810,562 19.41 2011 147,193 801,346 6,724 808,070 18.22
Net profit attributable to owners of the Company (RM000) Weighted average number of ordinary shares in issue (000) Adjustments for Warrants 2009/2014 Weighted average number of ordinary shares for diluted earnings (000) Diluted earnings per share (sen)
(c) Net assets per ordinary share The net assets per ordinary share of the Group and of the Company is calculated by dividing the Groups and Companys net assets attributable to owners of the Company at the balance sheet date by the number of ordinary shares in issue. Group 2012 1,383,861 801,714 1.73 2011 Company 2012 1,103,681 801,714 1.38 2011
Net assets attributable to ordinary equity holders (RM000) Number of ordinary shares in issue (000) Net assets per ordinary share (RM)
1,306,017 801,346 1.63
1,050,465 801,346 1.31
98

13 DIVIDENDS
Company 2012 2011 Gross Gross dividend Amount of dividend Amount of per share dividend per share dividend Sen RM000 Sen RM000 In respect of financial year ended 31 March 2011: - Single tier interim dividend on 801,713,437 ordinary shares 8 64,137 In respect of financial year ended 31 March 2010: - Single tier interim dividend on 801,345,714 ordinary shares
64,137
5 5
40,067 40,067
On 29 May 2012, the Directors declared a single tier interim dividend amounting to 10 sen per share in respect of the financial year ended 31 March 2012. The single tier interim dividend will be paid on 3 July 2012 to every member who is entitled to receive the dividend as at 5.00 p.m. on 15 June 2012. The interim dividend has not been recognised in the statement of changes in equity as it was declared subsequent to the financial year end. The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2012 (2011: Nil).
14 PROPERTY, PLANT AND EQUIPMENT

Office Plant, equipment, machinery, furniture and Capital Leasehold Plantation equipment fittings and work-inGroup land infrastructure Buildings and vehicles renovations progress Total RM000 RM000 RM000 RM000 RM000 RM000 RM000 At 31 March 2012 Cost or valuation At 1 April 2011 At cost At valuation
56,705 30,141 86,846 86,846
189,302 189,302 (1,291) 47,084 235,095
110,137 4,802 114,939 (397) 2,977 (984) 9,708 126,243
290,231 3,668 293,899 (602) 13,195 * (849) 4,827 310,470
18,173 18,173 (67) 1,752 * (211) 13 19,660
23,838 688,386 38,611 23,838 726,997 (515) (2,872) 97,140 162,148 * (2,044) (14,548) 105,915 848,229
Exchange differences Additions Disposals Scrapped Reclassifications At 31 March 2012 Representing: At cost At valuation At 31 March 2012 * Below RM1,000
56,705 30,141 86,846
235,095 235,095
121,441 4,802 126,243
306,802 3,668 310,470
19,660 19,660
105,915 845,618 38,611 105,915 884,229
Annual Report 2012
99
14 PROPERTY, PLANT AND EQUIPMENT (contd)

Office Plant, equipment, machinery, furniture and Capital Leasehold Plantation equipment fittings and work-inGroup Note land infrastructure Buildings and vehicles renovations progress Total RM000 RM000 RM000 RM000 RM000 RM000 RM000 At 31 March 2012 Accumulated depreciation At 1 April 2011 Exchange differences Depreciation charge for the financial year Recognised in statement of comprehensive income 8 Capitalised in plantation expenditure 16(b) Disposals Scrapped At 31 March 2012 Accumulated impairment At 1 April 2011 Impairment recognised in statement of comprehensive income 8 At 31 March 2012 Net carrying amount At cost At valuation At 31 March 2012 * Below RM1,000
8,442 866
14,631 (20) 3,332
47,134 (25) 7,334
149,065 (187) 20,991
13,632 (18) 1,173
232,904 (250) 33,696
862
2,762
6,597
16,813
758
27,792
4 9,308
570 17,943
737 (941) 53,502
4,178 * (699) 169,170
415 * (201) 14,586
5,904 * (1,841)
264,509
11,000 11,000
11,000 11,000
50,407 27,131 77,538
217,152 217,152
72,330 411 72,741
130,161 139 130,300
5,074 5,074
105,915 581,039 27,681 105,915 608,720
100


Office Plant, equipment, machinery, furniture and Capital Leasehold Plantation equipment fittings and work-inGroup Note land infrastructure Buildings and vehicles renovations progress Total RM000 RM000 RM000 RM000 RM000 RM000 RM000 At 31 March 2011 Cost or valuation At 1 April 2010 At cost At valuation
56,705 30,141 86,846 86,846
146,925 146,925 (390) 6,996 35,771 189,302
82,544 4,802 87,346 (188) 4,525 (117) 23,373 114,939
270,539 3,668 274,207 (273) 16,143 (1,443) (892) 6,157 293,899
15,985 15,985 (31) 2,164 (98) 153 18,173
6,673 579,371 38,611 6,673 617,982 (62) (944) 11,700 18,696 35,210 93,813 (1,443) (1,107) (29,683) 23,838 726,997
Exchange differences Acquisition of subsidiaries 17 Additions Disposals Scrapped Reclassifications At 31 March 2011 Representing: At cost At valuation At 31 March 2011 Accumulated depreciation At 1 April 2010 Exchange differences Depreciation charge for the financial year Recognised in statement of comprehensive income 8 Capitalised in plantation expenditure 16(b) Disposals Scrapped At 31 March 2011 Net carrying amount At cost At valuation At 31 March 2011
56,705 30,141 86,846
189,302 189,302
110,137 4,802 114,939
290,231 3,668 293,899
18,173 18,173
23,838 688,386 38,611 23,838 726,997
7,576 866
12,183 2,448
40,737 (6) 6,505
131,906 (51) 19,425
12,461 (4) 1,266
204,863 (61) 30,510
859
2,371
5,970
16,681
956
26,837
7 8,442
77 14,631
535 (102) 47,134
2,744 (1,413) (802) 149,065
310 (91) 13,632
3,673 (1,413) (995)
232,904
50,904 27,500 78,404
174,671 174,671
67,255 550 67,805
144,489 345 144,834
4,541 4,541
23,838 465,698 28,395 23,838 494,093
Annual Report 2012
101

Office Plant, equipment, machinery, furniture and Capital Leasehold Plantation equipment fittings and work-inCompany Note land infrastructure Buildings and vehicles renovations progress Total RM000 RM000 RM000 RM000 RM000 RM000 RM000 At 31 March 2012 Cost or valuation At 1 April 2011 At cost At valuation
46,778 4,521 51,299 51,299
55,392 55,392 1,763 57,155
49,060 49,060 1,308 (756) 3,218 52,830
13,882 13,882 1,665 (1,791) (38) 13,718
11,149 11,149 466 * (86) 11,529
2,856 179,117 4,521 2,856 183,638 2,038 7,240 (1,791) (880) (3,218) 1,676 188,207
Additions Disposals Scrapped Reclassifications At 31 March 2012 Representing: At cost At valuation At 31 March 2012 Accumulated depreciation At 1 April 2011 Depreciation charge for the financial year Recognised in statement of comprehensive income 8 Capitalised in plantation expenditure 16(b) Disposals Scrapped At 31 March 2012 Net carrying amount At cost At valuation At 31 March 2012 * Below RM1,000
46,778 4,521 51,299
57,155 57,155
52,830 52,830
13,718 13,718
11,529 11,529
1,676 183,686 4,521 1,676 188,207
1,972
6,130
22,053
7,817
9,513
47,485
416
1,572
3,860
1,354
475
7,677
412
1,524
3,832
1,348
473
7,589
4 2,388
48 7,702
28 (728) 25,185
6 (1,157) (37) 7,977
2 * (82) 9,906
88 (1,157) (847) 53,158
44,975 3,936 48,911
49,453 49,453
27,645 27,645
5,741 5,741
1,623 1,623
1,676 131,113 3,936 1,676 135,049
102


Office Plant, equipment, machinery, furniture and Capital Leasehold Plantation equipment fittings and work-inCompany Note land infrastructure Buildings and vehicles renovations progress Total RM000 RM000 RM000 RM000 RM000 RM000 RM000 At 31 March 2011 Cost or valuation At 1 April 2010 At cost At valuation
46,778 4,521 51,299 51,299
52,290 52,290 3,102 55,392
44,434 44,434 1,500 (38) 3,164 49,060
12,803 12,803 1,268 (1,036) (233) 1,080 13,882
10,395 10,395 795 (37) (4) 11,149
2,002 168,702 4,521 2,002 173,223 5,094 11,759 (1,036) (308) (4,240) 2,856 183,638
Additions Disposals Scrapped Reclassifications At 31 March 2011 Representing: At cost At valuation At 31 March 2011 Accumulated depreciation At 1 April 2010 Depreciation charge for the financial year Recognised in statement of comprehensive income 8 Capitalised in plantation expenditure 16(b) Disposals Scrapped At 31 March 2011 Net carrying amount At cost At valuation At 31 March 2011
46,778 4,521 51,299
55,392 55,392
49,060 49,060
13,882 13,882
11,149 11,149
2,856 179,117 4,521 2,856 183,638
1,556 416
4,675 1,455
18,132 3,951
7,621 1,261
8,821 727
40,805 7,810
409
1,379
3,906
1,250
725
7,669
7 1,972
76 6,130
45 (30) 22,053
11 (892) (173) 7,817
2 (35) 9,513
141 (892) (238) 47,485
45,339 3,988 49,327
49,262 49,262
27,007 27,007
6,065 6,065
1,636 1,636
2,856 132,165 3,988 2,856 136,153
Annual Report 2012
103

Property, plant and equipment of the Group and Company include leasehold land, buildings and plant which were last revalued in 1997 based on an open market value basis by firms of independent valuers. The Directors have applied the transitional provisions of International Accounting Standards (IAS) 16 Property, Plant and Equipment, which has been adopted by the MASB, which allows these assets to be stated at their last revalued amounts less accumulated depreciation. Accordingly, these valuations have not been updated. Had the revalued property, plant and equipment been carried at the historical cost model, the carrying amounts would have been as follows: Group 2012 2011 RM000 RM000 19,844 177 123 20,144 20,008 236 300 20,544 Company 2012 2011 RM000 RM000 4,437 4,437 4,507 4,507
Leasehold land Buildings Plant
During the financial year, an impairment assessment was performed on the co-generation plant of a loss-making subsidiary, using value-in-use calculations. These calculations used pre-tax cash flow projections based on financial budgets prepared by management covering the remaining useful life based on expectations of market development at a pre-tax discount rate of 11.7%. Based on the assessment, the carrying amount of the co-generation plant exceeded the recoverable amount. Accordingly, an impairment of RM11,000,000 has been recognised and included in other expenses in the statement of comprehensive income during the financial year. Any reasonable change in the key assumptions used will not result in any significant change in the recoverable amount.
15 LEASEHOLD LAND AND LAND USE RIGHTS

Cost At 1 April Acquisition of subsidiaries (Note 17(g)) Additions Exchange differences At 31 March Accumulated amortisation At 1 April Exchange differences Amortisation for the financial year Recognised in statement of comprehensive income (Note 8) Capitalised in plantation expenditure (Note 16(b)) At 31 March Net carrying amount At 31 March Analysed as: Short term leasehold land Land use rights Group 2012 2011 RM000 RM000 95,701 (1,300) 94,401 10,742 (66) 3,137 1,486 1,651 13,813 80,588 3,019 77,569 80,588 67,746 14,958 13,536 (539) 95,701 8,920 (16) 1,838 1,164 674 10,742 84,959 3,116 81,843 84,959 Company 2012 2011 RM000 RM000 20,492 20,492 3,829 542 527 15 4,371 16,121 435 15,686 16,121 18,754 1,738 20,492 3,301 528 504 24 3,829 16,663 453 16,210 16,663
104

16 PLANTATION EXPENDITURE
Cost or valuation At 1 April At cost At valuation Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000
423,946 168,733 592,679 (4,613) 97,628 685,694
305,525 168,733 474,258 29,463 (1,236) 90,194 592,679
231,733 19,898 251,631 856 252,487
230,347 19,898 250,245 1,386 251,631
Acquisition of subsidiaries (Note 17(g)) Exchange differences Additions during the financial year At 31 March Representing: At cost At valuation
516,961 168,733 685,694
423,946 168,733 592,679
232,589 19,898 252,487
231,733 19,898 251,631
(a)
Certain plantation expenditure of the Company and certain subsidiaries were last revalued in 1997 based on an open market value basis by firms of independent professional valuers. Had the revalued plantation expenditure of the Group and of the Company been carried under the cost model, the carrying amount would have been RM64,117,000 (2011: RM64,117,000) and RM12,864,000 (2011: RM12,864,000) respectively. Plantation expenditure capitalised during the financial year include the following: Group 2012 2011 RM000 RM000 1,651 5,904 316 19,295 482 674 3,673 8,678 85 Company 2012 2011 RM000 RM000 15 88 197 24 141 324
(b)
Amortisation of leasehold land and land use rights (Note 15) Depreciation of property, plant and equipment (Note 14) Finance costs (Note 7) Employee benefits expense (Note 9) Retirement benefits (Note 25)
Annual Report 2012
105
17 INTERESTS IN SUBSIDIARIES
Company 2012 2011 RM000 RM000 755,308 * 755,308 (72,920) 682,388 2,407 684,795 509,158 * 509,158 (64,570) 444,588 444,588
Investments in subsidiaries, at cost: - Unquoted shares in Malaysia - Unquoted shares outside Malaysia
Less: Accumulated impairment - Unquoted shares in Malaysia Financial guarantee extended to subsidiaries (Note 27(b)) * Below RM1,000
During the financial year, an impairment assessment was performed for an investment in a loss-making subsidiary using value-in-use calculations. These calculations used pre-tax cash flow projections based on financial budgets prepared by management at a pre-tax discount rate of 12.4%. Based on the assessment, the carrying amount of the investment in the loss-making subsidiary exceeded the recoverable amount. Accordingly, an impairment of RM11,000,000 has been recognised and included in other expenses in the statement of comprehensive income of the Company during the financial year. (a) Details of subsidiaries are as follows: Country of Name of subsidiaries incorporation Principal activities Held by the Company: Berakan Maju Sdn. Bhd. Desa Talisai Sdn. Bhd. Dynasive Enterprise Sdn. Bhd. Excellent Challenger (M) Sdn. Bhd. Gunaria Sdn. Bhd. IJM Edible Oils Sdn. Bhd. IJM Biofuel Sdn. Bhd. Minat Teguh Sdn. Bhd. Rakanan Jaya Sdn. Bhd. Akrab Perkasa Sdn. Bhd. Ratus Sempurna Sdn. Bhd. Sabang Mills Sdn. Bhd. Sijas Plantations Sdn. Bhd. IJM Agri Services Sdn. Bhd. Ampas Maju Sdn. Bhd. Gapas Mewah Sdn. Bhd. Golden Grip Sdn. Bhd. Kulim Mewah Sdn. Bhd. Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Cultivation of oil palm Investment holding Investment holding Cultivation of oil palm Investment holding Palm kernel milling Dormant Investment holding Cultivation of oil palm Palm oil milling Palm oil milling Property holding Palm oil milling Investment holding Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Effective equity interest 2012 2011 % %
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Desa Talisai Palm Oil Mill Sdn. Bhd. Malaysia
106

17 INTERESTS IN SUBSIDIARIES (contd)

(a) Details of subsidiaries are as follows: (contd) Country of Name of subsidiaries incorporation Principal activities Held by the Company: (contd) Laserline Sdn. Bhd. Macmillion Group Sdn. Bhd. Mowtas Bulkers Sdn. Bhd. Rantajasa Sdn. Bhd. Sri Kilau Sdn. Bhd. Isu Mutiara Sdn. Bhd. Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation Investment holding 100 100 100 100 100 100 100 100 100 100 100 100 Effective equity interest 2012 2011 % %
IJMP Investments (M) Limited* Republic of Mauritius Held by Desa Talisai Sdn. Bhd.: Cahaya Adil Sdn. Bhd. Firdana Corporation Sdn. Bhd. Gerbang Selasih Sdn. Bhd. Sihat Maju Sdn. Bhd. Held by IJMP Investments (M) Limited: IJM Plantations (Mauritius) Limited* Republic of Mauritius Held by Minat Teguh Sdn. Bhd.: PT Primabahagia Permai* Held by PT Primabahagia Permai: PT Prima Alumga* Indonesia Indonesia Malaysia Malaysia Malaysia Malaysia
100 100
Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation Under members voluntary liquidation
100 100 100 100 100 100 100 100
Under members voluntary liquidation
100 100
Cultivation of oil palm Cultivation of oil palm
95 95 90
95 95 90
PT Indonesia Plantation Synergy* Indonesia Cultivation of oil palm and processing Held by Gunaria Sdn. Bhd.: PT Sinergi Agro Industri* Indonesia Cultivation of oil palm
95
95
* Audited by a firm other than PricewaterhouseCoopers, Malaysia. (b) On 21 February 2012, a wholly-owned subsidiary of the Company, Gunaria Sdn. Bhd. (GSB) issued a total of 110,000 new preference shares of RM1.00 each to the Company, at a premium of RM999 per share, for a total consideration of RM110,000,000 of which RM21,000,000 is settled via cash and the remaining balance of RM89,000,000 is through set off against amount due from GSB.
(c) On 21 February 2012, a wholly-owned subsidiary of the Company, Minat Teguh Sdn. Bhd. (MTSB) issued a total of 100,000 new preference shares of RM1.00 each to the Company, at a premium of RM999 per share, for a total consideration of RM100,000,000 of which RM13,000,000 is settled via cash and the remaining balance of RM87,000,000 is through set off against amount due from MTSB.
Annual Report 2012
107

(d) On 21 February 2012, a wholly-owned subsidiary of the Company, Sabang Mills Sdn. Bhd. (SMSB) issued a total of 40,000 new preference shares of RM1.00 each to the Company, at a premium of RM999 per share, for a total consideration of RM40,000,000 of which RM6,000,000 is settled via cash and the remaining balance of RM34,000,000 is through set off against amount due from SMSB. (e) On 5 December 2011, the Company announced that IJM Plantations (Mauritius) Limited, a wholly-owned dormant subsidiary of IJMP Investments (M) Limited, which in turn is a wholly-owned subsidiary of the Company, is being wound-up by way of members voluntary winding-up pursuant to Section 137 of the Insolvency Act 2009, Mauritius. This has no significant effect on the financial results of the Group in the current financial year and the financial position of the Group as at the end of the financial year. In the previous financial year, the Company entered into a Sale and Purchase Agreement with its joint venture partner, CTI Biofuels LLC, to acquire the remaining 1,000,000 ordinary shares of RM1 each, representing 40% of the issued and paid up share capital of IJM Biofuel Sdn Bhd (IJMBF), for a total cash consideration of RM1. With the acquisition, IJMBF became a wholly-owned subsidiary of the Company. The assets and liabilities arising from the acquisition were as follows: Fair value recognised on acquisition RM000 11,700 55 (12,713) (958) 958 *
(f)
Acquirees carrying amount RM000 Property, plant and equipment Cash and bank balances Payables Identified net liabilities acquired 11,700 55 (12,713) (958)
Goodwill on acquisition Purchase consideration The cash outflow on acquisition was as follows: Purchase consideration satisfied by cash Cash and cash equivalents of subsidiary acquired Net cash inflow to the Group on acquisition * Below RM1,000 The goodwill on acquisition of RM958,000 was fully impaired as of 31 March 2011.
* 55 55
108


(g) In the previous financial year, the subsidiary of the Company, PT Primabahagia Permai assumed control over PT Prima Alumga and PT Indonesia Plantation Synergy. As a result, these companies were consolidated as subsidiaries of the Company as of 31 March 2011. The assets and liabilities arising from the acquisition were as follows: Fair value recognised on acquisition RM000 14,958 6,996 29,463 151 28,008 14,728 10,322 (93,944) 10,682 (716) 9,966
Acquirees carrying amount RM000 Land use rights Property, plant and equipment Plantation expenditure Deferred tax assets Receivables Inventories Cash and bank balances Payables Net assets 14,958 6,432 29,463 151 28,008 14,728 10,322 (93,944) 10,118
Less: Fair value of the net assets held by non-controlling interests Identified net assets acquired The cash inflow on acquisition was as follows: Cash and cash equivalents of subsidiaries acquired
10,322
(h) In the previous financial year, a wholly-owned subsidiary of the Company, Minat Teguh Sdn. Bhd. (MTSB) issued a total of 200,000 new preference shares of RM1.00 each to the Company, at a premium of RM999 per share, for a total consideration of RM200,000,000 of which RM71,200,000 was settled via cash and the remaining balance of RM128,800,000 was through set off against amount due from MTSB. (i) In the previous financial year, a wholly-owned subsidiary of the Company, IJM Edible Oils Sdn. Bhd. (IJMEOSB) issued a total of 50,000 new preference shares of RM1.00 each to the Company, at a premium of RM999 per share, for a total consideration of RM50,000,000 and was through set off against the amount due from IJMEOSB. In the previous financial year, a wholly-owned subsidiary of the Company, Ratus Sempurna Sdn. Bhd., issued a total of 26,000 new ordinary shares of RM1.00 each to the Company and at the same time, redeemed from the Company a total of 2,600,000 preference shares of RM0.01 each at a redeemable price of RM1.00 per share amounting to RM2,600,000. The redemption was made out of the proceeds of the issuance of 26,000 new ordinary shares at par value of RM1.00 per share to the Company.
(j)
Annual Report 2012
109
18 INVENTORIES
Cost: Finished goods: Compost Palm kernels and palm kernel expellers Fertilisers and chemicals Oil palm nurseries Oil palm seeds Stores and spares Net realisable value: Finished goods: Crude palm oil Crude palm kernel oil Palm kernel expellers Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000
386 2,297 1,478 15,497 25,143 44,801
252 3,940 647 20,318 1,722 18,079 44,958

1,054 729 2,907 4,690
342 483 1,722 3,224 5,771
20,931 405 563 21,899 66,700
17,111 263 17,374 62,332
4,690
5,771
19 RECEIVABLES
(a) Amounts due from subsidiaries Company 2012 2011 RM000 RM000 5,697 31,271 (980) 30,291 35,988 2,300 140,158 (980) 139,178 141,478 Trade Non-interest bearing advances Less: Impairment of amounts due from subsidiaries
The amounts due from subsidiaries are denominated in Ringgit Malaysia, unsecured, interest free and repayable on demand.
110

19 RECEIVABLES (contd)
(b) Trade and other receivables Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000 Current Trade receivables Third parties Other receivables Advances to workers Deposits Prepayments Other receivables Less: Impairment of other receivables 16,923 1,770 2,006 2,512 10,085 (134) 9,951 16,239 33,162 9,640 2,947 197 12,525 5,384 (134) 5,250 20,919 30,559 112 601 59 743 2,267 (134) 2,133 3,536 3,648 24 335 24 394 2,097 (134) 1,963 2,716 2,740
Non-current
Other receivables Other receivables Advances for land acquisition and plantation development expenditure Advances for plasma schemes Total trade and other receivables
1,851 35,083 12,317 49,251 82,413
3,656 29,762 33,418 63,977
1,851 2,025 3,876 7,524
3,656 2,004 5,660 8,400
Trade and other receivables (excluding deposits, prepayments, and advances for land acquisition and plantation development expenditure) is further analysed as follows: Group 2012 2011 RM000 RM000 42,812 134 42,946 21,493 134 21,627 Company 2012 2011 RM000 RM000 4,697 134 4,831 5,978 134 6,112
Note Neither past due nor impaired Impaired (i) (ii)
(i)
Trade and other receivables that are neither past due nor impaired The Groups trading terms with its customers are mainly on credit ranging from 5 to 30 days (2011: 5 to 30 days). Trade and other receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group and the Company. Based on past experience, management believes that no impairment is necessary in respect of these balances as they are fully recoverable. Trade and other receivables that are impaired As at 31 March 2012, other receivables of RM134,000 (2011: RM134,000) were impaired and provided for. The receivable was individually impaired because of significant delay in collection period.
(ii)
Annual Report 2012
111
19 RECEIVABLES (contd)
(b) Trade and other receivables (contd) (iii) Advances for plasma schemes Group 2012 2011 RM000 RM000 12,317 12,317
At 1 April Additions
At 31 March
The Government of Republic of Indonesia requires companies involved in plantation development to provide support to local communities in oil palm plantation as part of their social obligation which is known as Plasma schemes. In line with this requirement, the Groups subsidiaries are involved in several cooperative programs for the development and cultivation of oil palm land for local communities. The Groups subsidiaries supervise and manage the plasma schemes. Advances made by the Groups subsidiaries to the plasma schemes in the form of plantation development costs are recoverable upon the completion of the plasma development projects through the purchase of their fresh fruit bunch at price regulated by the authorities.
There is no significant concentration of credit risk. The Group has carried out an assessment on the recoverability of its trade and other receivables balances and management believes that the impairment is adequate. Included in non-current other receivables of the Group are advances for land acquisition and planting activities mainly in Indonesia and balance of the proceeds from disposal of an associate in previous financial year, which is repayable over 2 years and bears interest at 4% per annum listed as follows: Principal RM000 1,667 1,780 3,447 Interest RM000 138 71 209 Total RM000 1,805 1,851 3,656
As at 31 March 2012 Receivable within 1 year Receivable between 1 and 2 years
As at 31 March 2011 Receivable within 1 year Receivable between 1 and 2 years Receivable between 2 and 3 years
1,667 1,667 1,780 5,114
204 138 71 413
1,871 1,805 1,851 5,527
112

20 DEPOSITS, CASH AND BANK BALANCES

Cash and bank balances Deposits with licensed banks Group 2012 2011 RM000 RM000 46,149 269,381 315,530 16,859 186,493 203,352 Company 2012 2011 RM000 RM000 610 57,450 58,060 560 99,719 100,279
The effective interest rates of deposits with licensed banks per annum as at the end of the financial year for the Group and the Company are as follows: Group 2012 % 2011 % Company 2012 % 2011 %
Deposits with licensed banks: Ringgit Malaysia Indonesian Rupiah US Dollar
2.3 3.2 6.5 8.5 2.75
2.6
2.3 3.2
2.4
Deposits with licensed banks of the Group and of the Company have a maturity period ranging from 3 to 190 days (2011: 1 to 28 days) and 3 to 60 days (2011: 1 to 28 days) respectively. Bank balances are deposits held at call with banks and earn no interest.
21 SHARE CAPITAL
Company Number of ordinary Nominal shares of RM0.50 each value 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Authorised: At beginning and end of financial year Issued and fully paid: At beginning of financial year Issuance of shares: - Exercise of Warrants 2009/2014 At end of financial year (a) 2,000,000 2,000,000 1,000,000 1,000,000
801,346 368 801,714
801,342 4 801,346
400,673 184 400,857
400,671 2 400,673
During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM400,673,488 to RM400,857,381 by way of the issuance of 367,786 new ordinary shares of RM0.50 each arising from the exercise of Warrants 2009/2014 at the exercise price of RM2.62 per share. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.
Annual Report 2012
113
21 SHARE CAPITAL (contd)

(b) Warrants 2009/2014 The Warrants 2009/2014 are constituted by a Deed Poll dated 30 September 2009. On 9 November 2009, the Company allotted 160,268,583 Rights Shares together with 80,134,149 Warrants at an issue price of RM2.10 per Rights Share, on a renounceable basis of two (2) Rights Shares and one (1) Warrant for every eight (8) existing ordinary shares held on 15 October 2009. Each Warrant 2009/2014 entitles the registered holder to subscribe for one (1) new ordinary share in the Company at any time on or after 9 November 2009 up to the date of expiry on 7 November 2014, at an exercise price of RM2.62 in accordance with the Deed Poll dated 30 September 2009. Any Warrants 2009/2014 not exercised at the date of maturity will lapse and cease to be valid for any purpose. The Warrants 2009/2014 is listed on the Main Market of Bursa Malaysia Securities Berhad with effect from 13 November 2009. The ordinary shares issued from the exercise of Warrants 2009/2014 shall rank pari passu in all respects with the existing issued ordinary shares of the Company except that they shall not be entitled any dividends, distributions or rights, the entitlement date of which is prior to the date of the allotment of the new shares arising from the exercise of Warrants 2009/2014. As at the balance sheet date, 79,762,301 Warrants 2009/2014 remained unexercised.
22 OTHER RESERVES (NON-DISTRIBUTABLE)

Capital Revaluation Warrant reserve reserve reserve RM000 RM000 RM000 Group 750 53,542 36,862 1,050 92,204 Foreign currency translation reserve RM000
Total RM000
At 1 April 2010 Exchange differences arising from translation of net investments in: - Subsidiaries - Jointly controlled entity Transferred to share premium upon exercise of Warrants 2009/2014 Realised during the financial year Realisation of reserve upon disposal of: - Associate - Jointly controlled entity At 31 March 2011 Exchange differences arising from translation of net investments in subsidiaries Transferred to share premium upon exercise of Warrants 2009/2014 Realised during the financial year At 31 March 2012
(750)
(110) (311) 53,121
(2) 36,860
(5,052) (251) 752 (3,501)
(5,052) (251) (2) (110) (1,061) 752 86,480
(93) 53,028
(169) 36,691
(16,296) (19,797)
(16,296) (169) (93) 69,922
114

22 OTHER RESERVES (NON-DISTRIBUTABLE) (contd)

Revaluation reserve RM000 Company At 1 April 2010 Transferred to share premium upon exercise of Warrants 2009/2014 At 31 March 2011 Transferred to share premium upon exercise of Warrants 2009/2014 At 31 March 2012 The nature and purpose of each category of reserve are as follows: (a) Capital reserve This represented bonus issue received from a former associate which had been transferred to retained profits upon disposal of the associate. 4,880 4,880 4,880 36,862 (2) 36,860 (169) 36,691 41,742 (2) 41,740 (169) 41,571 Warrant reserve RM000
Total RM000
(b) Revaluation reserve This represented the surplus on revaluation of plant, buildings, long leasehold land and plantation expenditure.
(c) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign entities whose functional currencies are different from that of the Groups presentation currency. It is used to record the exchange differences arising from monetary items which forms part of the Groups net investment in foreign entities, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign entities. Warrant reserve Proceeds from the issuance of warrants, net of issue costs, are credited to warrant reserve which is non-distributable. Warrant reserve is transferred to the share premium account upon the exercise of warrants and the warrant reserve in relation to unexercised warrants at the expiry, will be transferred to retained profits.
(d)
23 RETAINED PROFITS
Under the single-tier tax system which came into effect from the year of assessment 2008, companies are not required to have tax credits under Section 108 of the Income Tax Act, 1967 for dividend payment purposes. Dividends paid under this system are tax exempt in the hands of shareholders. Companies with Section 108 credits as at 31 March 2008 may continue to pay franked dividends until the Section 108 credits are exhausted or 31 December 2013, whichever is earlier, unless they opt to disregard the Section 108 credits to pay single-tier dividends under the special transitional provision of the Finance Act, 2007. The Company has elected for the irrevocable option to disregard the Section 108 credits. Hence, the Company will be able to distribute dividends out of its entire retained profits as at 31 March 2012 under the single-tier tax system. Subject to the agreement by the Inland Revenue Board, the Company has tax exempt income to frank the payment of tax exempt dividends up to RM6,411,956 (2011: RM6,411,956).
Annual Report 2012
115
24 DEFERRED TAXATION
Deferred tax assets and liabilities are offset when there is legally enforceable right to set off current tax assets and current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the balance sheet: Group 2012 2011 RM000 RM000 771 (154,876) (154,105) (148,429) 1,717 (150,146) (148,429) (136,769) Company 2012 2011 RM000 RM000 (34,243) (34,243) (33,581) (33,581) (33,581) (31,518)
Deferred tax assets Deferred tax liabilities
At the beginning of financial year (Charged)/credited to statement of comprehensive income (Note 11): - Deductible temporary differences on property, plant and equipment - Property, plant and equipment - Plantation expenditure - Unutilised tax losses - Revaluation of long leasehold land and property, plant and equipment
(1,988) (1,538) (15,324) 12,974 167 (5,709) 33 (154,105)
4,298 (8,088) (295) (7,810) 97 (11,798) 151 (13) (148,429)
(459) 54 (257) (662) (34,243)
265 (2,065) (263) (2,063) (33,581)
Acquisition of subsidiaries (Note 17(g)) Exchange differences At end of financial year Subject to income tax: Deferred tax assets (before offsetting): - Deductible temporary differences on property, plant and equipment - Revaluation of long leasehold land - Unutilised tax losses
10,423 14,801 25,224 (24,453) 771
12,411 1,794 14,205 (12,488) 1,717
947 130 1,077 (1,077)
1,406 130 1,536 (1,536)
Offsetting Deferred tax assets (after offsetting) Deferred tax liabilities (before offsetting): - Property, plant and equipment - Plantation expenditure - Revaluation of plantation expenditure - Revaluation of long leasehold land and property, plant and equipment
(52,479) (98,746) (26,156) (1,948) (179,329) 24,453 (154,876)
(50,941) (83,422) (26,156) (2,115) (162,634) 12,488 (150,146)
(11,755) (21,806) (1,759) (35,320) 1,077 (34,243)
(11,809) (21,549) (1,759) (35,117) 1,536 (33,581)
Offsetting Deferred tax liabilities (after offsetting)
116

24 DEFERRED TAXATION (contd)

The following amount of deductible temporary differences on plantation expenditure and unutilised tax losses for which no deferred tax asset is recognised in the balance sheet in respect of certain subsidiaries where it is not probable that these subsidiaries will have future profitable operations. Group 2012 2011 RM000 RM000 343 733 1,076 269 1,055 2,095 3,150 788 Company 2012 2011 RM000 RM000
Deductible temporary differences on plantation expenditure Unutilised tax losses
Deferred tax assets not recognised
Under the revised FRS 112 Income Taxes, companies may recognise deferred tax asset on its unutilised reinvestment allowances or other tax allowances including Investment Tax Allowances (ITA). In respect of the Groups unutilised reinvestment allowances and ITA, the Group will continue to recognise in the statement of comprehensive income, the tax impact arising from the reinvestment allowances and ITA as and when it is utilised. The amount of unutilised reinvestment allowances and ITA as at the balance sheet date are as follows: Group 2012 2011 RM000 RM000 10,411 9,622 20,033 14,293 9,622 23,915 Company 2012 2011 RM000 RM000
Unutilised reinvestment allowances Unutilised investment tax allowances
25 RETIREMENT BENEFITS
The subsidiaries in Indonesia operate an unfunded defined benefit scheme for qualified permanent employees in accordance with Indonesia Labour Law No. 13 Year 2003 and PSAK No. 24 (revised 2004). The latest actuarial valuations of the plans in Indonesia were carried out on 31 March 2012. The movements during the financial year in the amounts recognised in the consolidated balance sheet are as follows: Group 2012 2011 RM000 RM000 229 52 482 (7) 756 41 85 * 103 229
At beginning of financial year Recognised in statement of comprehensive income Capitalised in plantation expenditure (Note 16(b)) Exchange differences Acquisition of subsidiaries At end of financial year * Below RM1,000
Annual Report 2012
117
25 RETIREMENT BENEFITS (contd)

The amount of unfunded defined benefit recognised in the balance sheet are determined as follows: Group 2012 2011 RM000 RM000 911 (155) 756 229 229
Present value of unfunded defined benefit obligation Unrecognised actuarial loss Liability in the balance sheet Analysed as: Non-current The amounts recognised in the statement of comprehensive income are as follows:
756
229
Group 2012 2011 RM000 RM000 49 3 52
Current service cost Interest cost Total unfunded defined benefit plan
The expenses capitalised in plantation expenditure during the financial year were analysed as follows: Group 2012 2011 RM000 RM000 461 21 482 82 3 85
Current service cost Interest cost Total unfunded defined benefit plan
The principal assumptions used in respect of the Groups unfunded defined benefit plan were as follows: Group 2012 % 7 8 2011 % 10 8
Discount rate Expected rate of salary increases
118

26 TERM LOANS
Group 2012 2011 RM000 RM000 218,484
Non-current Unsecured
The Groups term loans are denominated in US Dollar (USD) and are secured by way of corporate guarantee by the Company. On 12 October 2011, PT Primabahagia Permai and PT Sinergi Agro Industri, subsidiaries of the Company have entered into a Facility Agreement for the acceptance of USD35 million term loan each which will be used to finance plantation development costs in Indonesia and general working capital. The term loan is repayable by semi-annual principal instalments commencing from third anniversary and will be matured at seventh anniversary from the date of first drawdown. This facility contains covenants which require these subsidiaries to maintain at all times the Debt Service Reserve Account a minimum sum equivalent to six months of interest obligations under the term loan. As at 31 March 2012, these subsidiaries have complied with all the covenants of the term loan. The net exposure of term loans to interest rate cash flow risk and the periods in which the borrowings mature are as follows: Effective Floating interest rate interest rate as at year end Total per carrying <1 1-2 2-3 3-5 4-5 >5 annum amount year years years years years years % RM000 RM000 RM000 RM000 RM000 RM000 RM000 1.46571 218,484 21,848 21,848 21,848 152,940
Group At 31 March 2012 Term loans
The carrying value of term loans of the Group at the balance sheet date approximated its fair value.
27 PAYABLES
(a) Amounts due to subsidiaries Company 2012 2011 RM000 RM000 22,482 6,885 Current Non-interest bearing
The amounts due to subsidiaries are denominated in Ringgit Malaysia, unsecured, interest free and repayable on demand.
Annual Report 2012
119
27 PAYABLES (contd)
(b) Trade and other payables Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000 Current Trade payables Third parties Other payables Fellow subsidiary Accruals Other payables 45,126 185 15,189 18,228 33,602 78,728 16,615 250 13,044 14,669 27,963 44,578 20,814 185 9,995 1,572 11,752 32,566 6,856 250 7,226 434 7,910 14,766
Non-current Other payables Financial guarantee contract (Note 17)
78,728
44,578
2,407 2,407 34,973
14,766
Total trade and other payables (i) (ii) Trade and other payables
Trade and other payables are non-interest bearing and the normal trade credit terms granted to the Group and the Company range from 45 to 60 days (2011: 45 to 60 days). Amount due to a fellow subsidiary The amount due to a fellow subsidiary is denominated in Ringgit Malaysia, interest free, unsecured and repayable on demand.
(iii) Financial guarantee contract At 1 April Additions At 31 March Company 2012 2011 RM000 RM000 2,407 2,407
The financial guarantee contract represents the fair value of corporate guarantee extended by the Company to its subsidiaries on their term loan financing.
120

28 CAPITAL COMMITMENTS
Property, plant and equipment, leasehold land and land use rights and plantation expenditure Approved and contracted for Approved but not contracted for 134,853 467,334 602,187 110,832 443,481 554,313 6,168 12,544 18,712 2,087 11,957 14,044 Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000
An amount of RM575.68 million has been incurred up to 31 March 2012 for developing the oil palm plantations in Indonesia. A further sum of RM543.69 million in respect of the Indonesian operation has been included in the capital commitments above. The Board of Directors will review and approve the development programme and cost annually.
29 SIGNIFICANT RELATED PARTY DISCLOSURES

(a) In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions and balances. The following transactions with related parties were carried out under terms and conditions negotiated amongst the related parties: Related party IJM Corporation Berhad IJM Properties Sdn Bhd Relationship Ultimate holding company A subsidiary of the ultimate holding company Group 2012 2011 RM000 RM000 263 173 Company 2012 2011 RM000 RM000 194 68
Ultimate holding company: - Secretarial and internal audit fees
Subsidiaries of the ultimate holding company: - Rental income - Progress billings for the purchase of properties Associate: - Dividend income - Purchase of fertilisers and chemicals Jointly controlled entity: - Purchase of property, plant and equipment
83 384
83 1,099
83 384
83 1,099
16,570
5,010 6,400
11,700
Annual Report 2012
121
29 SIGNIFICANT RELATED PARTY DISCLOSURES (contd)

(a) In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions and balances. The following transactions with related parties were carried out under terms and conditions negotiated amongst the related parties: (contd) Company 2012 2011 RM000 RM000 165,632 110 11,456 634 175 61 25 138,066 1,200 10,336 144 80 61 25
Subsidiaries: - Sale of fresh fruit bunches - Sale of oil palm seeds - Management fees income - Sale of property, plant and equipment - Purchase of property, plant and equipment - Purchase of compost - Rental income
(b) Key management compensation during the financial year Key management personnel comprises the Directors and management personnel of the Group, having authority and responsibility for planning, directing and controlling the activities of the Group entities directly or indirectly. Group 2012 2011 RM000 RM000 2,729 391 48 3,168 2,451 350 75 2,876 Company 2012 2011 RM000 RM000 1,185 178 48 1,411 2,071 308 75 2,454
Wages, salaries and bonus Defined contribution plan Other employee benefits
Included in the total key management compensation are: Directors remuneration including benefits-in-kind
3,168
1,746
1,411
1,324
30 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Groups financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Groups businesses whilst managing its interest rate risks (both fair value and cash flow), foreign currency exchange risk, commodity price risk, liquidity risk and credit risk. The Board of Directors has set the policies to manage each of the financial risks and reviewed them regularly throughout the financial year. The Groups financial risk management policies are summarised as follows: (a) Market risk (i) Interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Groups income and operating cash flows are substantially independent of changes in market interest rates. The Groups interest-bearing financial assets are mainly short-term in nature and have been mostly placed in fixed deposits.
122

30 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (contd)

(a) Market risk (contd) (i) Interest rate risk (contd) The Groups interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by monitoring closely the interest rate movement and maintaining the option to swap its floating rates borrowing to fixed rates. Interest on financial instruments at fixed rates is fixed until the maturity of the instrument. Foreign currency exchange risk The investments in subsidiaries are exposed to exchange rate fluctuation because certain subsidiaries are foreign entities. The Group will closely and consistently monitor the movement of foreign exchange rate and would take appropriate actions to minimise the adverse impact on foreign exchange exposure to the Group. Entities in the Group primarily transact in currencies of their respective functional currencies except for certain borrowings which were denominated in currencies other than their respective functional currencies (i.e. US Dollar borrowings). The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. Currency risks as defined by FRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency. As at balance sheet date, the Groups Indonesian Rupiah (IDR) functional entities had US Dollar (USD) denominated net monetary liabilities, as well as the effects to the Groups profit before tax if the USD had strengthened/weakened by 5% against IDR are as follows: Group 2012 2011 RM000 RM000 218,484
(ii)
Net monetary liabilities denominated in USD
Effects to profit before tax if the USD had strengthened/weakened against IDR: - strengthened - weakened
(11,246) 11,246
As at balance sheet date, there are no other significant monetary balances held by the Group and the Company that are denominated in non-functional currency. Differences resulting from the translation of financial statements into the Groups presentation currency are not taken into consideration.
(iii) Commodity price risk The Group is exposed to the price volatility risk due to fluctuation in palm products commodity market. To manage and mitigate the risk on price volatility, the Group monitors the fluctuation of crude palm oil price daily and enters into physical forward selling commodity contracts or crude palm oil pricing swap arrangement in accordance with the guideline set by the Board of Directors.
Annual Report 2012
123

(b) Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises from deposits, cash and bank balances with financial institutions, derivative financial instruments, as well as credit exposures to customers, including outstanding receivables. The Groups credit risk is primarily attributable to trade receivables and advances for plasma schemes. For trade receivables, the Group trades only with creditworthy third parties. It is the Groups policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The advances for plasma schemes are recoverable from the plasma farmers through purchase of their fresh fruit bunch at the price regulated by the authorities. In addition, receivable balances are monitored on an ongoing basis. The Groups exposure to bad debts is not significant. The credit risk of the Groups other financial assets, which comprise cash and cash equivalents, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets. However, the Group adopts the policy of dealing only with counterparties of high credibility (i.e. banks and financial institutions). The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial assets. The maximum exposure to credit risk for trade and other receivables is disclosed in Note 19 to the financial statements. (i) Financial assets that are neither past due nor impaired Deposits, cash and bank balances that are neither past due nor impaired are mainly deposits with banks with high credit-ratings. Trade and other receivables that are neither past due nor impaired are substantially companies with no history of default with the Group. Financial assets that are past due and/or impaired There is no other class of financial assets that is past due and/or impaired except for trade and other receivables as disclosed in Note 19 to the financial statements.
(ii)
(c) Liquidity risk The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall financial position. The Groups treasury function is centralised in which payments and receipts are managed by the Company on behalf of its subsidiaries. The table below analyses the financial liabilities of the Group and the Company into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
124


(c) Liquidity risk (contd) Group At 31 March 2012 Term loans Trade and other payables 3,284 78,728 82,012 77,202 77,202 155,731 155,731 Less than 1 year RM000 Between 1 and 5 years RM000 Over 5 years RM000
At 31 March 2011 Trade and other payables Company At 31 March 2012 Amounts due to subsidiaries Trade and other payables Financial guarantee contract
44,578
22,482 32,566 3,284 58,332
77,202 77,202
155,731 155,731
At 31 March 2011 Amounts due to subsidiaries Trade and other payables
6,885 14,766 21,651
The Company has guaranteed the term loans for certain subsidiaries under the terms of the financial guarantee contracts. Under the terms of the financial guarantee contracts, the Company will fulfil all the repayment obligations on behalf of the guaranteed subsidiaries to the lender upon failure of guaranteed subsidiaries to make payment when it becomes due. The credit terms of financial liabilities are disclosed in Note 26 and Note 27 to the financial statements.
(d) Capital risk The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new financing facilities or dispose assets to reduce borrowings. The Group is not subject to any externally imposed capital requirements.
Annual Report 2012
125
31 FINANCIAL INSTRUMENTS BY CATEGORY

Group: Assets as per balance sheet: Trade and other receivables (excluding prepayments and advances for land acquisition and plantation development expenditure) Deposits, cash and bank balances Note Loans and receivables 2012 2011 RM000 RM000
19(b) 20
44,818 315,530 360,348
21,690 203,352 225,042
Total
Liabilities as per balance sheet: Trade and other payables Term loans
27(b) 26
Other financial liabilities at amortised cost 2012 2011 RM000 RM000 78,728 218,484 297,212 44,578 44,578
Total
Company: Assets as per balance sheet: Amounts due from subsidiaries Trade and other receivables (excluding prepayments and advances for land acquisition and plantation development expenditure) Deposits, cash and bank balances 19(a)
Loans and receivables 2012 2011 RM000 RM000
35,988
141,478
19(b) 20
4,756 58,060 98,804
6,002 100,279 247,759
Total Financial guarantee contracts 2012 2011 RM000 RM000
Note Liabilities as per balance sheet: Amounts due to subsidiaries Trade and other payables 27(a) 27(b)
Other financial liabilities at amortised cost 2012 2011 RM000 RM000
2,407 2,407
22,482 32,566 55,048
6,885 14,766 21,651
Total
The carrying values of financial assets and financial liabilities of the Group and of the Company at the balance sheet date approximated their fair values.
126

32 SEGMENTAL REPORTING
Management has determined the operating segments based on the reports reviewed by the Management Committee (MC) that are used to make strategic decisions. The Group principally operates oil palm cultivation and milling of fresh fruit bunches which is geographically located in Malaysia and Indonesia. Therefore, the MC considers the business from geographical segment perspective and assesses the performance of the operating segments based on a measure of profit before tax. Others comprise investment holding in other countries which is not significant to the Group. The segment information provided to the MC for the reportable segments is as follows: Malaysia RM000 Indonesia RM000 Others RM000 Group RM000
Note 2012 Revenue Total revenue
580,156
10,278
590,434
Results Profit before tax 213,363 1,965 (81) Income tax expense Net profit for the financial year Assets Segment assets 1,080,096 759,482 67 Unallocated assets: - Deferred tax assets - Tax recoverable Total assets Liabilities Segment liabilities 49,814 248,154 Unallocated liabilities: - Deferred tax liabilities - Current tax liabilities Total liabilities Other information Capital expenditure: - property, plant and equipment - plantation expenditure Depreciation of property, plant and equipment charged to statement of comprehensive income Impairment of property, plant and equipment Amortisation of leasehold land and land use rights charged to statement of comprehensive income 14 16 21,755 889 140,393 96,739
215,247 (57,821) 157,426
1,839,645 771 1,852 1,842,268
297,968 154,876 1,336 454,180
162,148 97,628
14 14
27,301 11,000
491
27,792 11,000
15
1,189
297
1,486
Annual Report 2012
127
32 SEGMENTAL REPORTING (contd)

The segment information provided to the MC for the reportable segments is as follows: (contd) Malaysia RM000 Indonesia RM000 Others RM000 Group RM000 Note 2011 Revenue Total revenue Results Segment results Share of profits of an associate Share of losses of jointly controlled entity 506,284 506,284
188,007 3,389
55
4,684 (119)
192,746 3,389 (119) 196,016 (48,822) 147,194
Profit before tax 191,396 55 4,565 Income tax expense Net profit for the financial year Assets Segment assets 1,114,506 386,728 158 Unallocated assets: - Deferred tax assets - Tax recoverable Total assets Liabilities Segment liabilities 33,482 11,314 11 Unallocated liabilities: - Deferred tax liabilities - Current tax liabilities Total liabilities Other information Capital expenditure: - property, plant and equipment - leasehold land and land use rights - plantation expenditure Depreciation of property, plant and equipment charged to statement of comprehensive income Amortisation of leasehold land and land use rights charged to statement of comprehensive income 14 15 16 32,857 1,835 1,472 60,956 11,701 88,722
1,501,392 1,717 1,173 1,504,282
44,807 150,146 1,003 195,956
93,813 13,536 90,194
14
26,837
26,837
15
1,164
1,164
128

32 SEGMENTAL REPORTING (contd)

Revenue from external customers reported to the MC is measured in a manner consistent with that in the statement of comprehensive income. Revenue from operating segments is disclosed in Note 4 to the financial statements. The amounts provided to the MC with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements. These assets and liabilities are allocated based on the geographical operations of the segment. - - Segment assets comprise property, plant and equipment, leasehold land and land use rights, plantation expenditure, receivables, deposits, cash and bank balances. Segment liabilities comprise payables, term loans and retirement benefits.
33 DISCLOSURE OF REALISED AND UNREALISED RETAINED PROFITS/(ACCUMULATED LOSSES)

The following analysis is prepared 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. Group 2012 2011 RM000 RM000 Company 2012 2011 RM000 RM000
Total retained profits/(accumulated losses) of the Company and its subsidiaries: - Realised - Unrealised (Note 1) Less: Consolidation adjustments (Note 2) Total retained profits
890,251 (126,671) (129,264) 634,316
795,702 (99,483) (155,172) 541,047
415,101 (32,614) 382,487
362,188 (31,953) 330,235
Note 1 The unrealised retained profits/(accumulated losses) are mainly deferred tax provision, and translation gains or losses of monetary items denominated in a currency other than the functional currency. Note 2 Consolidation adjustments are mainly elimination of pre-acquisition profits or losses, fair value adjustments arising from business combinations and non-controlling interests share of retained profits or accumulated losses.
Annual Report 2012
129
STATUTORY DECLARATION
pursuant to Section 169(16) of the Companies Act, 1965

I, Purushothaman a/l Kumaran, being the Director primarily responsible for the financial management of IJM Plantations Berhad, do solemnly and sincerely declare that, to the best of my knowledge and belief, the financial statements set out on pages 64 to 128 are 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.
PURUSHOTHAMAN A/L KUMARAN Subscribed and solemnly declared at Petaling Jaya on 29 May 2012.
130
INDEPENDENT AUDITORS REPORT

to the members of IJM Plantations Berhad
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of IJM Plantations Berhad on pages 64 to 128 which comprise the balance sheets as at 31 March 2012 of the Group and of the Company, and the statements of comprehensive income, changes in equity and 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 Notes 1 to 32. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards in Malaysia and the Companies Act, 1965, and for such internal control as the Directors determine are 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 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 Companys 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 Companys internal control. An audit also includes evaluating the appropriateness of 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 have been properly drawn up in accordance with Financial Reporting Standards in Malaysia and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2012 and of their financial performance and cash flows for the year then ended.
PricewaterhouseCoopers (AF 1146), Chartered Accountants, Level 10, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, P. O. Box 10192, 50706 Kuala Lumpur, Malaysia T: +60 (3) 2173 1188, F: +60 (3) 2173 1288, www.pwc.com/my
Annual Report 2012
131
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. 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 17 to the financial statements.
(b)
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Companys financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. (d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. OTHER REPORTING RESPONSIBILITIES The supplementary information set out in Note 33 on page 128 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 member 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.
PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants
LOH LAY CHOON (No. 2497/03/14 (J)) Chartered Accountant
Kuala Lumpur 29 May 2012
132
LIST OF PROPERTIES
as at 31 March 2012
Approx. Age of Buildings (Years) Net Book Value (RM000)
Location SABAH 1. Desa Talisai North & South Estate Beluran Minat Teguh Estate Sandakan Meliau Estate Beluran Sijas Estate Labuk/Sugut
Description
Area (Hectares)
Type
Year of Expiry
Year of Revaluation (R)/ Acquisition (A)
Oil Palm Estate and Palm Oil Mill Oil Palm Estate and Palm Oil Mill Oil Palm Estate
4,072
Leasehold
2082
R: 1997 A: 2002 R: 1997 A: 2000, 2004 R: 1997 A: 1998, 2000, 2002 R: 1997 A: 2002
21
104,625
2. 3.
2,834 2,257
Leasehold Leasehold
2031 to 2887 2032, 2087 2094, 2097 2087
13
83,250 50,557
4.
Oil Palm Estate and Seed Production, Training & Research Centre Oil Palm Estate Oil Palm Estate and Palm Oil Mill Oil Palm Estate
1,011
Leasehold
10
26,666
5. 6. 7.
Berakan Maju Estate Labuk/Sugut Sabang Estate Labuk/Sugut Rakanan Jaya North & South Estate Labuk/Sugut Excellent Challenger I & II Estate Labuk/Sugut
3,006 5,988 4,833
Leasehold Leasehold Leasehold
2030 to 2098 2030 to 2098 2030 to 2099 2030 to 2098
A: 1999 A: 1999, 2002 A: 1999, 2001 10
71,258 128,020 110,171
8.
Oil Palm Estate and Palm Oil Mill
5,060
Leasehold
A: 1997, 2008
168,541
INDONESIA 9. Bulungan East Kalimantan Oil Palm Estate 22,488 Leasehold/ Location Permit Leasehold/ Location Permit Leasehold/ Location Permit 2043 & 2045 2044 A: 2008 61,731
10. Kutai Timur East Kalimantan 11. Lampung Sumatra OTHER PROPERTIES OWNED 12. Wisma IJM Plantations Sandakan, Sabah 13. IJM Edible Oil Sungai Mowtas Sandakan
Oil Palm Estate
16,024
A: 2008
163,146
Oil Palm Estate
10,543
2021 & 2029
A: 2010
90,413
Office building
5,755 m2
Leasehold
2081
A: 2000
12
5,155
Kernel Crushing Plant and Vacant Lands for Future Development
22
Leasehold
2034, 2038 to 2095, 2100
A: 1996, 1997, 2002 & 2003
27,017
Note: Oil Palm Estate includes land, plantation expenditure, infrastructure and buildings.
Annual Report 2012
133
ANALYSIS OF SHAREHOLDINGS AND WARRANTHOLDINGS

ANALYSIS OF SHAREHOLDINGS AS AT 30 JUNE 2012
Authorised Share Capital Issued and paid-up Capital Class of Shares Voting Rights On show of hands On a poll : : : : : RM1,000,000,000 RM400,858,431 Ordinary Shares of RM0.50 each 1 vote 1 vote for each share held
REGISTER OF SUBSTANTIAL SHAREHOLDERS

Employees Provident Fund Board IJM Corporation Berhad Number of Shares Direct Indirect 110,328,837 441,832,715 - - Percentage of Issued Capital 13.76% 55.11%
DISTRIBUTION OF SHAREHOLDINGS
Range of Shareholdings Less than 100 100 to 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares Number of Shareholders 10,504 4,415 3,988 969 189 2 20,067 Number of Shares 396,423 1,678,833 15,277,427 27,392,234 219,886,468 537,085,477 801,716,862 Percentage of Issued Capital 0.05% 0.21% 1.90% 3.42% 27.43% 66.99% 100.00%
THIRTY LARGEST SHAREHOLDERS

1. 2. 3. 4. 5. 6. 7. IJM Corporation Berhad Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board Desa Plus Sdn Bhd SG Plantations (Sabah) Sdn Bhd Sakilan Desa Sdn Bhd HSBC Nominees (Asing) Sdn Bhd Exempt An For J.P. Morgan Bank Luxembourg S.A. AMSEC Nominees (Tempatan) Sdn Bhd Lembaga Kemajuan Tanah Negeri Sabah (Sabah Land Development Board) (8317-1101) Amanahraya Trustees Berhad Amanah Saham Wawasan 2020 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (LSF) Number of Shares 441,832,715 95,252,762 37,000,000 19,953,947 17,040,000 16,513,900 Percentage of Issued Capital 55.11% 11.88% 4.62% 2.49% 2.13% 2.06%
6,000,000 5,940,250 5,643,300
0.75% 0.74% 0.70%
8. 9.
134
ANALYSIS OF SHAREHOLDINGS AND WARRANTHOLDINGS (contd)
THIRTY LARGEST SHAREHOLDERS (contd)

10. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (DR) 11. Tokio Marine Life Insurance Malaysia Bhd As Beneficial Owner (PF) 12. Citigroup Nominees (Asing) Sdn Bhd Exempt An For Citibank NA (AEGON BV) 13. HSBC Nominees (Asing) Sdn Bhd Exempt An For HSBC Private Bank (Suisse) S.A. (SPORE TST AC CL) 14. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (HDBS) 15. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (LGF) 16. Amanahraya Trustees Berhad Public Islamic Select Treasures Fund 17. Amanahraya Trustees Berhad Public Islamic Dividend Fund 18. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (LPF) 19. HSBC Nominees (Asing) Sdn Bhd Exempt An For Credit Suisse (SG BR-TST-ASING) 20. Citigroup Nominees (Tempatan) Sdn Bhd Exempt An For Eastspring Investments Berhad 21. Pertubuhan Keselamatan Sosial 22. Citigroup Nominees (Tempatan) Sdn Bhd Kumpulan Wang Persaraan (Diperbadankan) (Libra) 23. Velayuthan A/L Tan Kim Song 24. Amanahraya Trustees Berhad Amanah Saham Didik 25. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (PAR3) 26. Employees Provident Fund Board 27. CIMB Group Nominees (Tempatan) Sdn Bhd Amtrustee Berhad For CIMB Islamic Dali Equity Theme Fund 28. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (NON PAR 1) 29. HSBC Nominees (Asing) Sdn Bhd Exempt An For JPMorgan Chase Bank, National Association (U.S.A.) 30. Citigroup Nominees (Tempatan) Sdn Bhd CBNY For DFA Emerging Markets Small Cap Series Number of Shares 5,389,525 4,800,000 4,737,800 3,600,000 3,555,800 3,536,400 3,077,800 3,075,100 3,006,500 2,680,500 2,641,325 2,454,600 2,453,000 2,097,500 2,070,750 1,878,400 1,875,000 1,668,500 1,574,400 1,280,500 1,252,100 703,882,374 Percentage of Issued Capital 0.67% 0.60% 0.59% 0.45% 0.44% 0.44% 0.38% 0.38% 0.38% 0.33% 0.33% 0.31% 0.31% 0.26% 0.26% 0.23% 0.23% 0.21% 0.20% 0.16% 0.16% 87.80%
Annual Report 2012
135
ANALYSIS OF WARRANTHOLDINGS AS AT 30 JUNE 2012

Warrants 2009/2014 : 79,760,201 outstanding
DISTRIBUTION OF WARRANTHOLDINGS
Number of Number of Range of Warrantholdings Warrantholders Warrants Less than 100 100 to 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to less than 5% of issued warrants 5% and above of issued warrants 959 2,242 999 331 48 1 4,580 40,148 969,110 4,049,779 10,375,343 20,142,550 44,183,271 79,760,201 Percentage of Outstanding Warrants 0.05% 1.21% 5.08% 13.01% 25.25% 55.40% 100.00%
THIRTY LARGEST WARRANTHOLDERS

1. 2. 3. 4. 5. 6. 7. 8. 9. IJM Corporation Berhad Khoo Chin Leng SG Plantations (Sabah) Sdn Bhd ECML Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Koon Yew Yin (002) Sakilan Desa Sdn Bhd Mayban Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad For CIMB-Principal Strategic Bond Fund (290077) HLG Nominee (Tempatan) Sdn Bhd Pledged Securities Account For Koon Yew Yin (M) Goh Tai Meng TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tan Kit Pheng Number of Warrants 44,183,271 2,980,000 1,995,394 1,984,500 1,705,694 807,000 620,800 570,000 550,000 511,700 505,000 460,800 418,662 Percentage of Outstanding Warrants 55.40% 3.74% 2.50% 2.49% 2.14% 1.01% 0.78% 0.71% 0.69% 0.64% 0.63% 0.58% 0.52%
10. Goh Cheah Hong 11. Loo Say Peng 12. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB For Teoh Cheng Cheng (PB) 13. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (DR)
136
THIRTY LARGEST WARRANTHOLDERS (contd)

14. TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Koon Yew Yin 15. Yap Lim Sen 16. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB For Siew Peng Kong (MY0559) 17. Sivamalar Selvam A/P Sivalingam 18. CK Goh Holdings Sdn Bhd 19. Citigroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Fong Soo Nam (472298) 20. SJ Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Chan Sen Tai 21. Goh Chye Keat 22. Choy Wee Chiap 23. Sabri Bin Abd Hamid 24. Wong Wuey Cheng 25. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB Bank For Yap Sung Pang (MY1048) 26. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB Bank For Wilson Wong Chiong King (MK0115) 27. Khoo Thiam Chye 28. Velayuthan A/L Tan Kim Song 29. Lim Chian Peng 30. Koh Tse Ming @ Quek Tse Ming Number of Warrants 381,100 341,700 333,800 289,600 260,000 257,600 251,900 248,600 246,700 233,500 230,700 217,600 215,800 212,550 209,750 200,000 200,000 61,623,721 Percentage of Outstanding Warrants 0.48% 0.43% 0.42% 0.36% 0.33% 0.32% 0.32% 0.31% 0.31% 0.29% 0.29% 0.27% 0.27% 0.27% 0.26% 0.25% 0.25% 77.26%
Annual Report 2012
137
DIRECTORS SHAREHOLDINGS AND WARRANTHOLDINGS IN IJM PLANTATIONS BERHAD AS AT 30 JUNE 2012

Number of Percentage Shares of Issued Name of Directors Direct Indirect Capital Tan Sri Dato Wong See Wah Joseph Tek Choon Yee Purushothaman a/l Kumaran Khoo Khee Ming Datuk Oh Chong Peng M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Note: Through a family member - - 782,500 115,000 100,000 50,000 646,000 - - - - 65,0001 - - 429,9821 - - - 0.098% 0.022% 0.012% 0.006% 0.134% - Number of Warrants Percentage of 2009/2014 Outstanding Direct Indirect Warrants - - 95,000 12,500 10,000 5,000 70,060 - - - - - - - 51,0511 - 0.119% 0.016% 0.013% 0.006% 0.152% -
DIRECTORS SHAREHOLDINGS AND WARRANTHOLDINGS IN IJM CORPORATION BERHAD AS AT 30 JUNE 2012

Number of Percentage Shares of Issued Name of Directors Direct Indirect Capital Purushothaman a/l Kumaran Khoo Khee Ming M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Note: Through a family member 18,000 - 21,000 2,449,180 84,000 - 189,0001 - 445,1361 91,0001 0.001% 0.014% 0.002% 0.209% 0.013% Number of Warrants Percentage of 2009/2014 Outstanding Direct Indirect Warrants 10,000 - 2,100 1,424,348 39,300 - 9,3001 - 1,050,0001 39,8001 0.010% 0.009% 0.002% 2.491% 0.080%
138
DIRECTORS SHAREHOLDINGS AND WARRANTHOLDINGS IN IJM LAND BERHAD AS AT 30 JUNE 2012

Number of Percentage Shares of Issued Name of Directors Direct Indirect Capital Purushothaman a/l Kumaran M. Ramachandran a/l V.D. Nair Tan Sri Dato Tan Boon Seng @ Krishnan Dato Teh Kean Ming Note: Through a family member - 20,000 - - - - 20,0001 - - 0.001% 0.001% - Number of Warrants Percentage of 2009/2014 Outstanding Direct Indirect Warrants 70,000 - 1,248,610 147,000 - - 123,9001 5,2001 0.043% 0.849% 0.094%
Except as disclosed above, none of the Directors had any interest in the securities of the Company and the related companies of the Company.
Annual Report 2012
139
NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 27th Annual General Meeting (AGM) of IJM PLANTATIONS BERHAD (133399-A) will be held at Victorian Ballroom, Level 1, Holiday Villa Hotel & Suites Subang, 9 Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan on Friday, 24 August 2012, at 3.30 p.m. to transact the following matters: 1. To receive the audited financial statements for the year ended 31 March 2012 together with the reports of the Directors and Auditors thereon. 2. To elect retiring Directors as follows: (a) M. Ramachandran A/L V. D. Nair (b) Purushothaman a/l Kumaran 3. To appoint PricewaterhouseCoopers as Auditors and to authorise the Directors to fix their remuneration. 4. As special business to consider and pass the following resolutions: (a) DIRECTORS FEES That the Directors fees of RM538,000 for the year ended 31 March 2012 be approved to be divided amongst the Directors in such manner as they may determine. (b) PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY THAT, further to the mandate granted at the Extraordinary General Meeting on 22 August 2011, the Directors be and are hereby authorised to purchase the ordinary shares of the Company through the stock exchange of Bursa Malaysia Securities Berhad at any time upon such terms and conditions as the Directors in their absolute discretion deem fit provided that: (i) the aggregate number of shares purchased (which are to be treated as treasury shares) does not exceed ten per cent (10%) of the issued capital of the Company; and (ii) the funds allocated for the purchase of shares shall not exceed its retained profits and share premium account; AND THAT the Directors be and are hereby further authorised to deal with the treasury shares in their absolute discretion (which may be distributed as dividends, resold and/or cancelled) AND THAT such authority shall continue to be in force until: (a) the conclusion of the next Annual General Meeting (AGM); (b) the expiration of the period within which the next AGM is required by law to be held; or (c) revoked or varied in a general meeting; whichever occurs first. (c) Special Resolution PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION AND ADOPTION OF NEW ARTICLES OF ASSOCIATION THAT the alteration, modification and/or addition to the Articles of Association as set out in Appendix I of the Circular to Shareholders dated 30 July 2012 be and are hereby approved and that the altered Articles of Association, signed by the Chairman of this meeting for purpose of identification, be and is hereby adopted as the new Articles of Association in substitution for and to supersede all the existing Articles of Association of the Company. By Order of the Board Ng Yoke Kian Jeremie Ting Keng Fui Company Secretaries Petaling Jaya 30 July 2012 (Resolution 6) (Resolution 5) (Resolution 4) (Resolution 1) (Resolution 2) (Resolution 3)
140
NOTICE OF ANNUAL GENERAL MEETING (contd)
Notes: 1. RETIREMENT OF DIRECTOR The Resolution 1, if approved, will authorise the continuity in office of the Director (who is over the age of 70 years) until the next AGM pursuant to Section 129 (6) of the Companies Act, 1965 (the Act). Pursuant to Section 129(7) of the Act, the Resolution 1 will be put to vote by poll. 2. DIRECTORS FEES The Resolution 4, if approved, will authorise the payment of Directors fees pursuant to Article 91 of the Articles of Association. 3. SHARE BUY-BACK AUTHORITY The details of the proposal are set out in the Circular to Shareholders dated 30 July 2012, which is dispatched together with the Annual Report 2012. 4. AMENDMENTS OF ARTICLES OF ASSOCIATION The Resolution 6, if approved, will bring the Companys Articles of Association in line with the amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, as set out in the Circular to Shareholders dated 30 July 2012. 5. APPOINTMENT OF PROXY (i) a proxy may but need not be a member; (ii) a member, other than an exempt authorised nominee, is entitled to appoint up to two (2) proxies; (iii) a member, who is an authorised nominee, may appoint up to two (2) proxies in respect of each Securities Account held; whereas, an exempt authorised nominee may appoint multiple proxies in respect of each Securities Account held; (iv) a member who appoints a proxy must duly execute the Form of Proxy, and if more than one (1) proxy is appointed, the number of shares to be represented by each proxy must be clearly indicated; (v) a corporate member who appoints a proxy must execute the Form of Proxy under seal or the hand of its officer or attorney duly authorised; (vi) the duly executed Form of Proxy must be deposited at the Registered Office not less than forty-eight (48) hours before the time set for holding the meeting or adjourned meeting; (vii) only members whose names appear in the Record of Depositors as at 15 August 2012 will be entitled to attend and vote at the meeting; and (viii) the Annual Report, Circular to Shareholders, and Form of Proxy are available for download at www.ijm.com. 6. POLL VOTING The Resolutions 1 and 5 will be put to vote by poll and for expediency, will be tabled first before Agenda 1. All other Resolutions will be put to vote by a show of hands unless a poll is demanded. Besides the Chairman, a poll may be demanded by at least three (3) members present in person or by proxy; or by any member or members present in person or by proxy holding not less than 10% of the total voting rights.
FORM OF PROXY
I/We ______________________________________________________________________________________________________ NRIC/Passport/Company No.: ___________________________________ Mobile Phone No.: __________________________ CDS Account No.: _____________________________________________ Number of Shares Held: ______________________ Address: ____________________________________________________________________________________________________ __________________________________________________________________________________________________________ being a member of IJM PLANTATIONS BERHAD (133399-A), hereby appoint: (1) Name of proxy: ____________________________________________ NRIC No.: __________________________________ Address: _______________________________________________________________________________________________ ______________________________________________________________________________________________________ __________________________________________________________ Number of Shares Represented: _______________ (2) Name of proxy: ____________________________________________ NRIC No.: __________________________________ Address: _______________________________________________________________________________________________ ______________________________________________________________________________________________________ __________________________________________________________ Number of Shares Represented: _______________ or failing him/her, the Chairman of the meeting, as my/our proxy to vote for me/us and on my/our behalf at the 27th Annual General Meeting (AGM) of IJM PLANTATIONS BERHAD to be held at Victorian Ballroom, Level 1, Holiday Villa Hotel & Suites Subang, 9 Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia on Friday, 24 August 2012, at 3.30 p.m., and at any adjournment thereof, in the manner indicated below: NO. 1. 2. 3. 4. 5. 6. RESOLUTIONS To reappoint M. Ramachandran A/L V. D. Nair as Director to hold office until the next AGM To reappoint Purushothaman a/l Kumaran as Director To reappoint PricewaterhouseCoopers as Auditors and to authorise the Directors to fix their remuneration To approve the payment of Directors fees of RM538,000 To approve the Proposed Renewal of Share Buy-Back Authority To approve the Proposed Amendments to Articles of Association FOR AGAINST
Please indicate with X how you wish your vote to be cast. In the absence of specific instruction, your Proxy will vote or abstain as he/she thinks fit. Signed (and sealed) this __________________ day of __________________ 2012
Signature(s): _______________________________________________________
Notes: (i) a proxy may but need not be a member; (ii) a member, other than an exempt authorised nominee, is entitled to appoint up to two (2) proxies; (iii) a member, who is an authorised nominee, may appoint up to two (2) proxies in respect of each Securities Account held; whereas, an exempt authorised nominee may appoint multiple proxies in respect of each Securities Account held; (iv) a member who appoints a proxy must duly execute the Form of Proxy, and if more than one (1) proxy is appointed, the number of shares to be represented by each proxy must be clearly indicated; (v) a corporate member who appoints a proxy must execute the Form of Proxy under seal or the hand of its officer or attorney duly authorised; (vi) the duly executed Form of Proxy must be deposited at the Registered Office not less than forty-eight (48) hours before the time set for holding the meeting or adjourned meeting; (vii) only members whose names appear in the Record of Depositors as at 15 August 2012 will be entitled to attend and vote at the meeting; and (viii) the Annual Report, Circular to Shareholders and Form of Proxy are available for access and download at www.ijm.com.
stamp
The Company Secretary
IJM PLANTATIONS BERHAD (133399-A)

2nd Floor, Wisma IJM Jalan Yong Shook Lin 46050 Petaling Jaya Selangor Darul Ehsan Malaysia
CORPORATE INFORMATION
HEAD OFFICE
Wisma IJM Plantations Lot 1, Jalan Bandar Utama Mile 6, Jalan Utara 90000 Sandakan, Sabah Malaysia Tel +6089 667721 Fax +6089 667728 E-mail ijmplt@ijm.com Website www.ijm.com/plantation
(133399-A)
REGISTERED OFFICE
2nd Floor, Wisma IJM Jalan Yong Shook Lin 46050 Petaling Jaya Selangor Darul Ehsan Malaysia Tel +603 79858288 Fax +603 79521200 E-mail csa@ijm.com Website www.ijm.com
STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad since 2 July 2003 BMSB Code 2216 Reuters Code IJMP.KL Bloomberg Code IJMP MK
PRINCIPAL BANKERS
1. 2. 3. 4. 5. HSBC Bank Malaysia Berhad Malayan Banking Berhad United Overseas Bank (Malaysia) Berhad PT. Bank Mandiri (Persero), Tbk PT. Bank Danamon, Tbk
SHARE REGISTRARS
IGB Corporation Berhad (Share Registration Department) Level 32, The Gardens South Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia Tel +603 22898989 Fax +603 22898802 E-mail corporate-enquiry@igbcorp.com Website www.igbcorp.com
AUDITORS
PricewaterhouseCoopers (No. AF: 1146) Chartered Accountants Level 10, 1 Sentral Jalan Travers Kuala Lumpur Sentral 50706 Kuala Lumpur Malaysia Tel +603 21731188 Fax +603 21731288 Website www.pwc.com/my

(133399-A)
Wisma IJM Plantations Lot 1, Jalan Bandar Utama, Mile 6, Jalan Utara 90000 Sandakan, Sabah, Malaysia T +6089 667721 F +6089 667728 E ijmplt@ijm.com
www.ijm.com/plantation

Arc Plantation Annual Report 2012

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Arc Plantation Annual Report 2012

Uploaded by

Copyright:

Available Formats

annual report 2012

General th Annual Meeting

IJM PLANTATIONS BERHAD (133399-A)

TARAKAN TANJUNG SELOR

Annual Report 2012

IJM PLANTATIONS BERHAD

GROUP CORPORATE STRUCTURE AS AT 30 JUNE 2012

GROUP ORGANISATION CHART

Securities & Options Committee

Nomination & Remuneration Committee

CEO & Managing Director

CEO Indonesia Project

CFO & Executive Director

Group Support Services

Annual Report 2012

IJM PLANTATIONS BERHAD

PROFIT BEFORE TAX

Financial year ended

Financial year ended

Financial year ended

SHARE & WARRANT PERFORMANCE

WARRANT PERFORMANCE (RM)

5-YEAR GROUP PLANTATION STATISTICS

hectare hectare hectare hectare

2,938 19,464 2,135 904 25,441

1,980 19,694 2,600 925 25,199

705 17,380 5,505 1,632 25,222

900 14,447 7,764 2,136 25,247

15,600 7,040 2,653 25,293

Indonesia Operation Mature-Prime (8 20 Years) Mature-Young (4 7 Years) Immature (1 3 Years)

hectare hectare hectare

726 826 19,768 21,320 46,761

563 13,043 13,606 38,805

5,306 5,306 30,528

308 308 25,555

Total Planted Area FFB Production Malaysia Indonesia

648,853 21,980 670,833

Total Yield Per Mature Hectare Malaysia Indonesia

26.4 14.2 25.7

Total M I LLS FFB Processed Own Outside

648,853 156,846 805,699

575,210 133,312 708,522

604,663 152,207 756,870

577,066 173,526 750,592

554,968 169,393 724,361

Total Palm Kernels Processed Own Outside

29,175 11,530 40,705

33,777 19,177 52,954

tonne tonne tonne tonne

166,171 37,340 16,908 18,509

151,096 32,574 14,941 16,457

163,452 33,897 15,147 17,092

157,376 35,022 17,721 20,922

154,174 34,269 23,042 27,717

Annual Report 2012

IJM PLANTATIONS BERHAD

RM/tonne RM/tonne RM/tonne RM/tonne

3,049 1,854 4,102 326

2,760 1,927 4,259 377

2,246 1,116 2,555 195

2,641 1,180 3,107 358

2,544 1,481 3,251 381

RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000