annual report 2005 11

corporate information

BOARD OF DIRECTORS

Chairman – Independent Non-Executive Director Dato’ Mohd Sarit Bin Haji Yusoh

Managing Director – Non-Independent Executive Director Kwan Ngen Chung

Non-Independent Executive Director Kwan Ngen Wah Kwan Jin Nget Kwan Min Nyet Chong Kan Hiung

Independent Non-Executive Director Datuk Jaswant Singh Kler Ooi Jit Huat

SECRETARIES AUDITORS BANKERS Chong Kan Hiung (MIA 8401) Ernst & Young Malayan Banking Berhad Kwan Chiew Giok (LS 007125) HSBC Bank Berhad AUDIT COMMITTEE Standard Chartered Bank Malaysia Berhad REGISTERED OFFICE Datuk Jaswant Singh Kler (Chairman) United Overseas Bank (M) Berhad 1st Floor, Fordeco Building Kwan Ngen Chung (Member) Bank Perusahaan Kecil & Sederhana Malaysia Berhad Jalan Singamata Ooi Jit Huat (Member) (formerly known as Bank Industri & Teknologi 91100 Lahad Datu Malaysia Berhad)

Tel no : 089-881188 REGISTRARS Bumiputra - Commerce Bank Berhad Fax no : 089-883333 Symphony Share Registrars Sdn Bhd China Construction Bank Level 26, Menara Multi-Purpose The Hongkong and Shanghai Banking Corporation Ltd SOLICITORS Capital Square Agricultural Bank of China Cheu, Adnan & Razi No. 8, Jalan Munshi Abdullah Shenzhen Development Bank Co Ltd Chin, Mirdin & Co 50100 Yap & Chin Tel no : 03-27212222 STOCK EXCHANGE LISTING Lind, Willie, Wong & Chin Fax no : 03-27212530/1 Main Board of Bursa Malaysia Securities Berhad Wong & Shim

annual report 2005 13

directors’ profile

4 8 3 6

2 5 1 7

1. DATO’ MOHD SARIT BIN HAJI YUSOH Chairman Independent Non-Executive Director

2. KWAN NGEN CHUNG Managing Director cum Chief Executive Officer Non-Independent Executive Director

3. KWAN NGEN WAH Non-Independent Executive Director

4. CHONG KAN HIUNG Non-Independent Executive Director

5. KWAN JIN NGET Non-Independent Executive Director

6. KWAN MIN NYET Non-Independent Executive Director

7. DATUK JASWANT SINGH KLER Independent Non-Executive Director

8. OOI JIT HUAT Independent Non-Executive Director 14 kwantas corporation berhad 356602-W

directors’ profile (cont’d)

DATO’ MOHD SARIT BIN HAJI YUSOH KWAN NGEN CHUNG Chairman (Independent Non-Executive Director) Managing Director cum Chief Executive Officer (Non-Independent Executive Director) Dato’ Mohd Sarit Bin Haji Yusoh, D.I.M.P., A.M.P., a Malaysian, aged 54, is the Chairman of the Company. He was appointed Kwan Ngen Chung, a Malaysian, aged 45, is one of the co- to the Board on 23 August 1996. He graduated with a founder directors of the Company and is currently the Bachelor of Arts (Economics) (Hon) Degree from University of Company Managing Director cum Chief Executive Officer. He Malaya in 1975 and Master of Arts (Economics) Degree from holds a degree of Master of Business Administration from University of Philippines in 1977. Wisconsin International University, USA. Prior to the founding of the Company, Kwan Ngen Chung has been principally Dato’ Sarit is a Director of several public listed companies, involved in the oil palm industry. He also has substantial private companies and voluntary organizations. He has had a experience in stone quarry operation, road construction and distinguished career with the government sector primarily in property development. Using his vast knowledge and the fields of finance and education. He had served as an experience obtained in the past 20 years, he and his brother, Officer to the Ministry of Finance in 1975 before joining Kwan Ngen Wah established Kwantas Corporation Berhad in PETRONAS as Marketing Executive from 1977 to 1981. He 1996. was the General Manager of PERNAS from 1981 to 1984. He served as Political Secretary to the Education Minister, Kwan Ngen Chung holds 47,094,316 shares in Kwantas Ministry of Education from 1986 to 1990. He was the Executive Corporation Berhad. He is the brother of Kwan Ngen Wah, Chairman of Wembley Industries Holdings Berhad from 1991 Kwan Jin Nget and Kwan Min Nyet. Except for certain recurrent to 1993, Kentucky Fried Chicken Holdings (M) Berhad from related party transactions of revenue and expenditure nature 1993 to 1999 and Ayamas Food Corporation Berhad from which are necessary for day-to-day operations of the Company 1994 to 1999. Currently, he is also the Chairman of Khee San and its subsidiaries and for which he is deemed to be Berhad and Kurnia Setia Berhad. His other directorships are interested as disclosed on pages 88 and 89 of the Annual Goh Ban Huat Berhad and Liqua Health Corporation Berhad. Report, there are no other business arrangements with the Company in which he has personal interests. He has not been Dato’ was the State Assemblyman for the Semantan convicted for any offences within the past 10 years other than Constituency from 1990 to 1999 and is currently the member traffic offences. of Parliament for Temerloh, Pahang Darul Makmur and has been elected into office since 1999. Kwan Ngen Chung is the member of Audit and Remuneration Committee of the Company. Dato’ holds nil shares in Kwantas Corporation Berhad and does not have any family relationship with any other Directors Kwan Ngen Chung attended 4 out of the 4 Board Meetings of the and/or other major shareholders of the Company and has no Company held during the financial year ended 30 June 2005. conflict of interest with the Company. Dato’ has not been convicted for any offences within the past 10 years other than traffic offences. KWAN JIN NGET Non-Independent Executive Director Dato’ is the Chairman of Nomination Committee of the Company. Kwan Jin Nget, a Malaysian, aged 38, graduated with a Dato’ attended 2 out of the 4 Board Meetings of the Company Bachelor Degree of Business Administration from University of held during the financial year ended 30 June 2005. Iowa, USA in 1989. She has been a Director since the Company was incorporated.

annual report 2005 15

directors’ profile (cont’d)

Kwan Jin Nget is currently the Director of Administration/ interests. He has not been convicted for any offences within Plantation of the Company. Her responsibilities include the past 10 years other than traffic offences. the coordination for the efficient operations of the Company and overseeing human resources management, general Kwan Ngen Wah attended 3 out of the 4 Board Meetings of the administration and oil palm plantations. Company held during the financial year ended 30 June 2005.

Kwan Jin Nget holds 90,000 shares in Kwantas Corporation Berhad. She is the sister of Kwan Ngen Wah, Kwan Ngen KWAN MIN NYET Chung and Kwan Min Nyet. Except for certain recurrent Non-Independent Executive Director related party transactions of revenue and expenditure natures Kwan Min Nyet, a Malaysian, aged 36, graduated with a which are necessary for day-to-day operations of the Bachelor Degree of Business Administration from University of Company and its subsidiaries and for which she is deemed to Iowa, USA in 1989. She has been a Director since the be interested as disclosed on pages 88 and 89 of the Annual Company was incorporated. Report, there are no other business arrangements with the Company in which she has personal interests. She has not Kwan Min Nyet is responsible for the finance and the been convicted for any offences within the past 10 years other marketing functions of the Company’s oil mill operations. than traffic offences. Kwan Min Nyet holds 119,000 shares in Kwantas Corporation Kwan Jin Nget attended 3 out of the 4 Board Meetings of the Berhad. She is the sister of Kwan Ngen Wah, Kwan Ngen Company held during the financial year ended 30 June 2005. Chung and Kwan Jin Nget. Except for certain recurrent related party transactions of revenue and expenditure natures which are necessary for day-to-day operations of the KWAN NGEN WAH Company and its subsidiaries and for which she is deemed to Non-Independent Executive Director be interested as disclosed on pages 88 and 89 of the Annual Report, there are no other business arrangements with the Kwan Ngen Wah, a Malaysian, aged 47, is one of the co- Company in which she has personal interests. She has not founder directors of the Company and is currently an Executive been convicted for any offences within the past 10 years other Director. He received his tertiary education in the UK. than traffic offences.

Kwan Ngen Wah has been actively involved in the oil palm Kwan Min Nyet attended 3 out of the 4 Board Meetings industry, stone quarry operation, road construction and of the Company held during the financial year ended property development projects for the past 20 years and 30 June 2005. gained substantial knowledge and experience in these industries. The accumulated experience coupled with the close relationship with customers and suppliers provide CHONG KAN HIUNG adequate impetus for him to efficiently steer the Company to Non-Independent Executive Director greater success. Chong Kan Hiung, a Malaysian, aged 41, is a Chartered Kwan Ngen Wah holds 46,594,316 shares in Kwantas Accountant of the Malaysian Institute of Accountants and a Corporation Berhad. He is the elder brother of Kwan Ngen fellow of the Chartered Association of Certified Accountant in Chung, Kwan Jin Nget and Kwan Min Nyet. Except for certain the UK and also a member of the Malaysian Institute of recurrent related party transactions of revenue and Taxation. He was appointed as a Non-Independent Executive expenditure natures which are necessary for day-to-day Director on 12 November 2001. operations of the Company and its subsidiaries and for which he is deemed to be interested as disclosed on pages 88 and Chong Kan Hiung is responsible for the financial functions of 89 of the Annual Report, there are no other business the Group, he has been with the Group for the past 10 years arrangements with the Company in which he has personal and is also the joint Company Secretary for the Company. 16 kwantas corporation berhad 356602-W

directors’ profile (cont’d)

Prior to joining the Kwantas Group in 1996, he was attached to Ooi Jit Huat is a member of Audit, Nomination and an international Public Accountant firm for 10 years. He has Remuneration Committee of the Company. considerable experience in corporate finance and general management. Chong Kan Hiung is also a certified member of Ooi Jit Huat attended 3 out of the 4 Board Meetings of the the Financial Planning Association of Malaysia. Company held during the financial year ended 30 June 2005.

Chong Kan Hiung holds 300,000 shares in Kwantas Corporation Berhad. He does not have any family relationship DATUK JASWANT SINGH KLER with any other Directors and/or other major shareholders of Independent Non-Executive Director the Company and has no conflict of interest with the Company. He has not been convicted for any offences within Datuk Jaswant Singh Kler, a Malaysian, aged 65, is a the past 10 years other than traffic offences. Plantation Consultant who was appointed as an Independent Non-Executive Director on 17 February 2000. Chong Kan Hiung attended 4 out of the 4 Board Meetings of the Company held during the financial year ended Datuk has been actively involved in the plantation sector for 30 June 2005. the past 40 years as well as other trade and non-trade organization. He was also the Chairman of the East Malaysian Planters Association (EMPA) from 1985 to 2000 and since OOI JIT HUAT then has been appointed as adviser to EMPA. He sits on the Independent Non-Executive Director Board of Malaysian Cocoa Board. Other positions currently held by Datuk include Council Member of BIMP-EAGA, Ooi Jit Huat, a Malaysian, aged 54, is a Certified Public Committee Member of Malaysia International Chamber of Accountants and the managing partner of public accounting Commerce and Industry (Sabah Branch) and Council firm, Russ Ooi & Associates since 1985. He is also the Member for Sabah Business Council. Datuk also sits on the member of Malaysian Institute of Accountants and Malaysian Board of TSH Resources Berhad and has been appointed as Institute of Taxation. He was appointed as an Independent Director of the Institute of Development Studies (Sabah). Non-Executive Director on 9 March 2000. Datuk holds nil shares in Kwantas Corporation Berhad and Ooi Jit Huat was trained as an auditor with, the then KPMG does not have any family relationship with any other Directors Peat Marwick, Mitchell, and he was instrumental in setting up and/or other major shareholders of the Company and has no the consultancy arm for the firm. He has over 20 years of conflict of interest with the Company. He has not been experience in the financial industry having carved areas of convicted for any offences within the past 10 years other than expertise in corporate consultancy, financial management, traffic offences. management information systems and auditing and investigations. His professional assignments covered Datuk Jaswant Singh Kler is the Chairman of Audit and floatation exercises, investigations and due diligence Remuneration Committee of the Company. reporting and the reverse take-over of several companies on Datuk Jaswant Singh Kler attended 4 out of the 4 Board the Bursa Malaysia Securities Berhad. He sits on the Board of Meetings of the Company held during the financial year Priceworth Wood Products Berhad. ended 30 June 2005. Ooi Jit Huat holds nil shares in Kwantas Corporation Berhad. He does not have any family relationship with any other Directors and/or other major shareholders of the Company and has no conflict of interest with the Company. He has not been convicted for any offences within the past 10 years other than traffic offences.

annual report 2005 17

chairman’s statement

To Our Valued Shareholders,

On behalf of the Board of Directors of Kwantas Corporation Berhad, I have the distinct privilege to present the Annual Report and Audited Financial Statements of the Group for the financial year ended 30 June 2005.

We close the financial year with a significant milestone befitting the 10th year of the Group since its incorporation in 1995 and subsequent listing on the Main Board of Bursa Malaysia Securities Berhad in 1996. For the third year in a row, Group revenue has surpassed the RM1 billion mark as a testament to the collective experience and strength of the organisation.

Globally, the year 2005 has been dealt with successive blows which included a 9.0 magnitude earthquake off the coast of the Indonesian Island of Sumatra right at the end of 2004. This triggered a tsunami of ambiguity in the global marketplace; compounded by fluctuations in world crude oil prices which hit record highs; the continuing unrest in Iraq; concerns about avian flu. The Kwantas Group has performed well despite despondent market conditions owing to the prudence of its business principles and the power of its corporate commitment for growth that is all set to meet and transcend all challenges.

The world is in a constant state of flux. The business and economic environment is moving forth towards a state of balance, of equilibrium. This inspires in Kwantas an ongoing process of transformation and betterment driven by a dogged determination to transcend established frontiers and achieve new milestones.

18 kwantas corporation berhad 356602-W

Financial Results

It is this universal principle of dynamics that has been the driving force behind Kwantas since its humble beginnings as a single company about 30 years ago. For the financial year ended 30 June 2005, I am pleased to report significant positive results with the Group posting revenue of RM1.207 billion representing an increase of 1.40% over the previous financial year’s RM1.190 billion turnover.

Behind its resilience lies the careful, disciplined and profit-driven management of Kwantas, which has secured for it a profit after taxation of RM37.6 million for the financial year under review. Earnings per share (EPS) for the year ended 30 June 2005 stood at 26.52 sen.

The operations in China have generated revenues of RM108 million for the Group in the financial year which is an increase of RM97 million over the previous year. Kwantas is confident that the China facilities will continue to contribute significantly to the Group as more activities come onstream and the companies in China establish their presence there.

This positive performance attests to the fact that Kwantas has remained a consistent resource for its shareholders by securing its place in the corporate arena time and again.

Corporate Development

The Kwantas Group will be seeing increased palm oil based activities with the acquisition of new oil palm plantations.

The Group has, on 30 June 2005, acquired the entire equity interest in Kwantas Land Development Sdn. Bhd. (“KLDSB”) and Kwantas Oleo Sdn. Bhd. (“KOLEO”) presently engaged in the operations of oil palm plantations. The plantations are already planted with trees that are bearing fruit and therefore there will be immediate contribution to the Group’s production levels.

Since 2002, Kwantas Group has also recognised the growing economy and vast population of China and its growing demand for palm oil products.

Expanding further from its bulking and manufacturing operations in Guangzhou, Kwantas’ first venture into China, the Group has set up a 51% owned subsidiary, Dong Ma (Guangzhou Free Trade Zone) Oleochemicals Co. Ltd. ("DMO") for a total cash investment of RM6,840,000 on 22nd June 2005. Primarily involved in the manufacture and trading of soap noodle and glycerine, these are used in the making of raw materials which are supplied to local and regional manufacturers.

Similar processing facilities are currently being set up in Zhangjiagang for the manufacture and trading of soap noodle and oleochemical products. The company established for the purpose is a 100% subsidiary, Dong Ma Palm Industries (Zhangjiagang) Co. Ltd. ("DMPI") for a total cash investment of RM9,724,985.88 on 22nd June 2005.

Guangzhou and Zhangjiagang were selected as they are the fastest growing economy in China with a large population base in the surrounding regions, ensuring continued high demand for palm oil products.

annual report 2005 19

chairman’s statement (cont’d)

Industry Outlook & Prospects

Economic growth has slowed down in Asia in 2005 as high oil prices and rising interest rates in the United States curb consumer spending in the region's largest overseas markets, hurting demand for Asian goods. The Malaysian economy is expected to have only a 5.3 percent growth estimate for 2006 as record oil prices hurt demand for its exports. Higher oil prices continue to be a major drag to the global economy.

Regardless of market conditions, the overall performance of the Group will continue to be strong, particularly on the contribution from the acquisitions of new oil palm plantations and current palm products processing segments. The Group’s earning base is also expected to rise with its increased land bank.

The demand for Crude Palm Oil (CPO) remains strong due to lower production of competitive products which will see the continuing strength of the price of CPO in the foreseeable future.

As a progressive player in the industry, Kwantas will continue to enhance its competitive edge through its expansion programmes in the global marketplace. The Group’s optimised operations, internal efficiencies and increased employee productivity further leverage on the company’s integrated resources as a world-class palm oil producer. Through prudent management, Kwantas will consistently turn in creditable performances to keep its operations on a formidable footing.

The Group’s latest China investment, consisting of the Refinery, Shortening and Margarine Plants, are at its pioneer run and are expected to show marginal improvement. The performance of these divisions will remain to be seen as the new products are just entering the market. The Soap Noodle and Oleochemical Plants are currently in the construction stage. All these operations are expected to contribute significantly to the Group’s revenues in the future.

Dividend

With due recognition to Kwantas’ shareholders’ support, the Board of Directors is pleased to propose a first and final tax exempt dividend of 10 sen per ordinary share for the year ended 30 June 2005. The dividend payment will be made in year 2006 subject to shareholders’ approval at the forthcoming Annual General Meeting. 20 kwantas corporation berhad 356602-W

chairman’s statement (cont’d)

Corporate Governance

The Board of Directors is committed to the highest standards of corporate governance as set out in the Code on Corporate Governance in this Annual Report, as well as in the Statement on Internal Control herein. The Group is dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern it. Its continued success depends upon unswerving adherence to this standard. Integrity and honesty are at the heart of the Kwantas business.

Acknowledgement

The consistent satisfaction of our customers, business partners and shareholders is our top priority and the foundation of our business. This is because without their support, our growth and success would not have been attainable.

Our corporate financial health would likewise not be possible without the dedication of our people, their development and intense effort they give their jobs which is greater than one finds in most other organisations. We believe that they are key to our past and future successes.

The Group’s positive financial performance cannot be its sole promise of future results. Each turn of the markets requires us to work together to nurture our continued growth and consolidate our position as a world-class fully integrated palm oil company.