ANNUAL REPORT 2012
On the right path
(6265-P) OUR CORE BUSINESSES
Plantation Healthcare
Table of Contents
1 2012 Key Highlights 40 Corporate Events 2012 97 Financial Statements 2 Company’s Profile 46 TDM in the News 197 Statistics on Shareholdings 2 Our Vision and Mission 50 Board of Directors 200 Group Plantation Hectarage Statement 3 Our Tools 52 Board of Directors’ Profile 201 5-Year Group Plantation Statistics 6 Chairman’s Statement 12 Chief Executive Officer’s 59 Chief Executive Officer’s Profile 202 List of Properties Review of Operations 60 Management Team 206 Group Directory 26 Financial Highlights 64 Corporate Responsibility 208 Notice of Annual General Meeting 29 Financial Calendar 76 Statement on Corporate Governance 212 Statement Accompanying Notice 32 Corporate Structure 85 Code of Business Ethics of Annual General Meeting 33 Corporate Information 88 Audit Committee’s Report 34 Milestones and Achievements 36 Awards and Industry Accolades 93 Statement on Risk Management • Proxy Form 38 Policies and Internal Control • Profit Distribution Policy 96 Additional Compliance Statement • Dividend Policy • Whistleblower Policy • Philanthropy Policy
On the right path
• TDM has the √ strategic direction to ensure sustainable above average return on investment (ROI) and enhance operational efficiency to improve yield, quality and cost. • TDM has the √ brand of Corporate Responsibility (CR), based on the 3P Philosophy of ‘People, Planet and Profit’ which emphasises on the firm commitment to grow shareholders’ wealth through good corporate governance, reduced agency cost without exploiting people or the planet. • TDM has the √ growth track record coupled with excellent financial performance and balanced with the distribution of dividend pay-out, acquisition of growth and improvement to cash reserve.
48th Annual general meeting
Date: 23 May 2013, Thursday Time: 11.00 a.m.
Venue: Gamelan 3, Level 3, Primula Beach Hotel, Jalan Persinggahan, 20400 Kuala Terengganu, Terengganu 2012 key highlights
Manages Revenue
40,518 RM455.3 m hectares of Profit Before Tax oil palm plantations Owns two palm oil mills RM149.0 m
Operates Nett Assets Per Share 4 up 15 sen specialist hospitals RM5.12 Leading Earnings Per Share private healthcare provider in the East Coast 41.67 sen
Dividend • highest pay-out Production of Fresh • represents 53% of PATAMI Fruit Bunches (FFB) • exceeds the Dividend Policy of at least 30% of PATAMI 558,583 metric tonnes 22 sen
Annual Report 2012 TDM Berhad (6265-P) 1 Company’s Profile
About TDM Berhad
Incorporated on 1 December 1965, TDM Berhad (TDM or the Group) was listed on the Main Market of Bursa Malaysia Securities Berhad (formerly known as the Kuala Lumpur Stock Exchange) under the Plantations Sector in 1970. Following a successful restructuring exercise and new strategic direction in 2004, TDM has grown into a leading player in the oil palm plantation and healthcare sectors.
Plantation Division
TDM develops and manages 12 estates at the following The plant has reduced the Group’s dependency on locations: chemical fertilisers and has contributed towards • Sungai Tong Complex – Estates: Jaya, Fikri, Tayor and managing waste in a more sustainable manner. Pelung The construction work for the second • Bukit Besi Complex – Estates: Gajah Mati, Majlis Agama bio-composting plant in Kemaman, Terengganu Islam, Pinang Emas and Jerangau has started and is expected to be completed in • Kemaman Complex – Estates: Air Putih, Tebak, Jernih and September 2013. The new plant is expected to Pelantoh produce up to 24,000 metric tonnes of fertiliser annually. Currently, this would be sufficient for In 2007, TDM expanded its Plantation Division to internal consumption to further reduce fertiliser Kalimantan, Indonesia. Currently, the Group has a total of and production costs. 40,518 hectares of planted oil palm land for both its plantations in Terengganu, Malaysia and Kalimantan, Indonesia.
The Group also operates two palm oil mills, which are located in Sungai Tong and Kemaman in Terengganu.
In 2011, the Group operated the first bio-composting plant to convert empty fruit bunches and other mill waste into bio-organic fertiliser for use in its estates. The plant, which is located in Sungai Tong, Terengganu is able to produce 18,000 metric tonnes of fertiliser per annum.
Artist’s impression of the new bio-organic fertiliser mill in Kemaman, Terengganu.
our vision Inspiring our people to build a brighter future.
The vision reflects TDM’s commitment to: • Be a role model (for corporate management) and inspire people to contribute to a better world (3P); and • Invest for the future; towards achieving sustainable above average profitability. our mission TDM shall endeavour to be a model corporate citizen and enhancer of wealth for its shareholders.
Annual Report 2012 TDM Berhad (6265-P) 2 company’s profile (continued)
Healthcare Division
TDM owns four community specialist hospitals, which provide quality and affordable secondary healthcare services. The hospitals are: • Kelana Jaya Medical Centre (KJMC) in Petaling Jaya, Selangor • Kuantan Medical Centre (KMC) in Kuantan, Pahang • Kuala Terengganu Specialist Hospital (KTS) in Kuala Terengganu, Terengganu • TDMC Hospital in Kuala Lumpur
The services offered at all its hospitals cover almost all In December 2012, the Group started key disciplines such as general medicine, paediatrics, construction work for a new hospital in orthopaedics, general surgery, radiology, obstetrics and Batu Burok, Kuala Terengganu to replace the gynaecology, ear, nose & throat (ENT), physiotherapy and existing KTS. The new hospital will provide psychiatry. more comprehensive healthcare facilities, accommodate more in-patients, offer more In 2011, TDM started construction work on the new KMC specialist clinics and other quality healthcare hospital, which is located in Indera Mahkota, Pahang. Upon services with 130 beds, five operating theatres completion of the hospital, which is expected in mid 2013, and a 12-bedded intensive care unit (ICU). the new facility will have 150 beds, a 12-bedded intensive care unit and five operating theatres. The two hospitals, which have been identified as the Group’s premier hospitals, will be designed and built in accordance with the Joint Commission International (JCI) requirements, a quality standard that is required for hospitals in North America and Europe.
Please visit our website www.tdmberhad.com.my for further details.
TDM’s community specialist hospitals provide affordable yet high quality standards of secondary healthcare services.
Transparency The Aspiration We commit to being our tools Passion These virtues shall form open, honest, timely the basis with which We are passionate the TDM Group shall and accountable in about our business and excel in its mission to all of our transactions. the desire to be the be the best in both of its Our team will provide best. We show pride commercial and social Integrity clear and responsible roles for the benefit and enthusiasm in our Care At TDM, we believe that reporting. Professionalism work, our company and of the shareholders, each person is accountable to Our culture is built on employees and the Diligence each other. nation. deliver on the highest standards Each of us is fully respect for ‘People, Planet of behaviour. Respect, We will work with accountable for our work & Profit’. We honour our honesty, trustworthiness and urgency and commitment and for delivering it in a relationships with all teamwork are the foundation to be successful. We will professional and friendly whom we interact with and to our relationships with our strive for excellence and manner. We take pride and seek ways to protect and customers, shareholders, quality in everything ownership in all that we nourish those relationships vendors, the community we do and support each do and say and commit as well as achieve and each other. other to achieve our to improving on our own sustainable results for our results. performance. shareholders.
Annual Report 2012 TDM Berhad (6265-P) 3 “I have been working as a harvester with TDM Plantation Sdn Bhd for eight years now. My job involves carrying oil palm fruit bunches, weighing an average between 10 kg to 30 kg. In order to perform well, I have to be healthy as this job requires mental strength and physical endurance.
Although the job is tough, the working environment is pleasant. I hope to continue working for TDM Plantation Sdn Bhd as long as my service is needed.
This may be a menial job but I have been told by my superiors that a harvester’s job contributes towards the company’s success. I am honoured and take pride in the fact that I have indeed contributed towards the growth of the company.”
Azali Mazuki Harvester Jernih Estate The right time Datuk Haji Roslan Awang Chik Chairman Dear Valued Shareholders,
I am pleased to announce that TDM Berhad (TDM or The Group) achieved a commendable performance for Financial Year 2012 (FY2012) to stay on the right path towards ensuring sustainable growth and meeting our business aspirations.
Annual Report 2012 TDM Berhad (6265-P) 6 chairman’s statement
On all accounts, the Group persevered and prevailed under generally unfavourable market conditions for crude palm oil (CPO) with global prices taking a dip in the second half of FY2012 due to surplus inventory in the world’s two largest producers of Indonesia and Malaysia. Nevertheless, we managed to mitigate and offset these external circumstances through a combination of prognostic thinking and predictive actions, resulting in our sales fetching above market prices for our CPO stocks.
The Plantation Division’s lower performance was also tempered by sustained growth in our Healthcare Division. Our brand of patient-focused, no-frills secondary care medical services for the community is gaining ground in the market, providing the Group with a stable and sizeable revenue stream to complement our plantation business.
Going forward, TDM is set for a growth path with long- term potential in both the Plantation and Healthcare Group Revenue Divisions. The palm oil business continues to expand as Year we proceed with plans to plant at least 5,000 hectares annually at our substantial land bank in Kalimantan 2012 455.3 while also replanting at a rate of 5% each year at our planted areas in Terengganu. Currently, we are the leading 2011 515.5 private healthcare provider in the East Coast and strategic RM measures are in place to position TDM as one of the largest Million 200 400 listed healthcare companies in Malaysia within the next three to five years.
With this, it is my privilege on behalf of the Board of Directors to present the financial results of TDM for the year ended 31 December, 2012. Percentage of Business Contribution to the Group Financial Results
Healthcare Plantation The Group achieved revenue of RM455.3 million in 23% 77% FY2012 compared with RM515.5 million in FY2011, representing a negative growth of 12%. Group revenue was impacted by an 18% drop in turnover from the Plantation Division, which was adversely affected by depressed CPO prices and lower yield. The Group performance was, however, boosted by an 18% increase in revenue from the Healthcare Division, which recorded a 9% rise in the number of patients.
The Plantation Division registered lower revenue of “Going forward, TDM is set for RM348.6 million against RM425.2 million the previous year while the Healthcare Division posted higher revenue a growth path with long-term of RM106.7 million compared with RM90.3 million in potential in both the Plantation FY2011. For the year under review, the Plantation business contributed 77% of Group revenue and the Healthcare and Healthcare Divisions.” business 23%.
Annual Report 2012 TDM Berhad (6265-P) 7 chairman’s statement (continued)
The Group posted a profit before tax (PBT) of Compared with the previous eight years of sustained growth, RM149.0 million against RM220.6 million the the year under review represents an anomaly caused by year before, a decrease of 32%. This included external factors. It should be noted that the performance of our payables written back of RM17.2 million less Plantation business is broadly in line with that of the industry RM5.0 million in losses incurred from the in 2012. Nonetheless, the Board of Directors is confident that voluntary winding down of nine dormant our current Strategic Direction, on-going drive for greater companies under the Group. Taking these Operational Efficiency and enduring emphasis on Corporate extraordinary items out of the equation, the Responsibility (CR) will take us on the road to achieving the Group operating PBT amounted to RM136.8 Group’s 3P Philosophy of ‘People, Planet and Profit’. million, representing a 38% decrease compared with FY2011. Dividend
Operating PBT from the Plantation Division In 2009, the Board of Directors introduced a policy to was RM139.3 million, 34% lower than apportion at least 30% of our consolidated annual nett the RM209.6 million for FY2011 while the profit after tax and minority interest (PATAMI) as dividend to Healthcare Division registered a decrease shareholders. This is part of our commitment to optimise profit of 6% from a PBT of RM10.0 million against in order to maximise shareholders’ wealth. We have been RM10.6 million the previous year. paying growing annual dividend since our maiden payment in 2007. Group PBT For FY2012, the Board of Directors is pleased to announce Year that we will continue with this practice and hereby proposes 2012 149.0 a first and final dividend of 22 sen per share, an increase of 0.5 sen over the previous year. This is the Group’s highest 2011 220.6 dividend payout so far and represents 53% of PATAMI. RM Million 100 150 The proposed dividend payout amounts to RM54 million, representing a rise of 3% compared with FY2011 (RM52 For the Group, earnings per share (EPS) fell to million). This marks the seventh year we have increased the 41.67 sen from 68.06 sen in FY2011, a drop dividend, starting from FY2006 (2.0 sen), FY2007 (5.5 sen), of 39% year-on-year. However, there was FY2008 (10.5 sen), FY2009 (12.0 sen), FY2010 (13.5 sen) and an increase in nett assets per share (NAPS), FY2011 (21.5 sen). up by RM0.15 (restated 2011: RM4.97, 2012: RM5.12). We will continue with this dividend policy for the foreseeable future as an appreciation for the trust and support from shareholders, and also as an incentive for continuous Earnings Per Share improvement in our operations and sustained growth of our
Year business. Dividend Per Share 2012 41.67 Year 2011 68.06 2012 22.0 Sen 20 40 60 2011 21.5
Sen 5 10 15 20
Annual Report 2012 TDM Berhad (6265-P) 8 chairman’s statement (continued)
We employ stringent quality control at all stages of our palm oil operations to ensure the high standards at our plantations are maintained.
Plantation Sector: Taking Pre-emptive Action to Achieve Better Results
A glut of palm oil stock in Indonesia and Malaysia, which collectively accounts for 85% of world production, precipitated a slide in CPO prices in the second half of 2012. Palm oil prices slumped by a margin of 44% due to the economic slowdown in China and lower demand from the Eurozone, pushing inventories to an all-time high in Malaysia, the second largest producer. From a peak of RM3,550 per metric tonne in April, the price dropped to a low of RM2,000 per metric tonne by December. On average, CPO prices in 2012 (RM2,764 per metric tonne) were 14% lower than in 2011 (RM3,219 per metric tonne).
Nevertheless, we performed significantly better than the Similarly, we also achieved a higher Malaysian Palm Oil Board (MPOB) by achieving a higher average price of RM1,677 per metric average selling price of RM2,946 per metric tonne for our CPO tonne for palm kernel (PK) compared compared with the MPOB’s average price of RM2,764. The with the MPOB’s price of RM1,522 per price difference of RM182 per metric tonne represents a record metric tonne (difference: RM155 per price above industry for TDM. metric tonne). As a result, the Group generated RM25 million in additional Our superior performance in this area is a reflection of the income from the higher selling prices of better fundamentals inherent in the Plantation Division. Firstly, our CPO and PK. we have a policy of nurturing a strong network of 10 quality buyers, which is based on long-term reciprocal relationships. The outlook for the CPO market for 2013 Secondly, the forward sale policy for a significant portion of is expected to recover on the back of our future CPO stock ensured uninterrupted placement of improved demand. Meanwhile, the cost products (in this case, a higher price before the market slump). of production remains relatively low, Consequently, our inventory was at only 20% capacity when providing a considerable margin even at the glut in CPO occurred, and thus, we managed to avoid the current low prices. In the long-term, sales at depressed prices. Lastly, we had the option of holding demand is expected to outstrip supply onto our stock when prices were low due to the strength of our given the growing world population firm and lasting relationships with the buyers who eventually and rising GDP set against the limited honoured all their contracts in FY2012. availability of plantable land.
Annual Report 2012 TDM Berhad (6265-P) 9 chairman’s statement (continued)
Kelana Jaya Medical Centre Kuantan Medical Centre
*Kuala Terengganu Specialist Hospital *TDMC Hospital
All the four hospitals, which are managed by TDM are currently being expanded to serve the community better. *Artist’s impression.
Healthcare: Expanding Our Footprint to Meet Future Demand
FY2012 was a year of consolidation for TDM’s Healthcare The substantial investment and losses at Division with the focus on expanding both the capacity TDMC due to the renovations resulted in and capability of our medical facilities to cater to the rising the lower PBT for the Division compared demand for our niche brand of healthcare services. The with FY2011 despite the growth in revenue current premises in use for the KMC, KTS, KJMC and TDMC year-on-year. Hospital are at close to optimum capacity with average occupancy rates between 70% and 80%. As a result, the The completion of KMC’s new facility and scope to grow future revenue and sustain profits is limited. re-launch of TDMC, coupled with the start of construction for KTS’ new premises and During the year under review, the Group invested RM43.3 purchase of a new building for KJMC in million for the construction of a new building for KMC, 2013 are set to strengthen TDM’s position renovations to TDMC, and the purchase of modern medical as the premier healthcare provider in the equipment and cutting-edge technologies for all four facilities. East Coast and one of the larger players in Malaysia.
Annual Report 2012 TDM Berhad (6265-P) 10 chairman’s statement (continued)
The plantation in Nanga Pinoh in West Kalimantan, Indonesia is poised to contribute positively to the Group’s future revenue.
Future Prospects: Appreciation Anticipating Exponential Growth The journey ahead needs to be one of synergy. The fundamentals are in place for TDM to meet Success is not guaranteed. Rather, it is earned day by the targets set for the rest of this decade. By 2018, day by paying attention to the basics and by creating the Group aspires to double its plantation business new opportunities. At this juncture, I wish to record and triple its healthcare business. If these goals are my appreciation to my fellow board members for reached, we are confident that market sentiment their wise counsel and invaluable contributions. I would boost and maintain our market capitalisation would like to express my gratitude to our dedicated above RM1 billion. and committed management team, helmed by Encik Badrul Hisham Mahari, the Group’s Chief Executive For the Plantation Division, the Indonesian operations Officer, for their drive and enthusiasm in steering the in Nanga Pinoh, West Kalimantan are poised to drive Group forward. growth from 2015 when the bulk of the oil palm trees reach maturity. We intend to maintain a steady rate in My sincere thanks go out to all our clients, business planting all 40,000 hectares once final approval for partners, Government agencies, bankers, analysts our land bank is granted by the Indonesian authorities. and the media for their support. This will ensure increasing production of CPO for the Group in the years to come. I also take this opportunity to thank each and every one of our employees for their loyalty and In Healthcare, we anticipate an increase in business perseverance in overcoming all challenges. You have once all four medical facilities are operating from inspired us to scale further in our quest for excellence. new or renovated buildings. To further strengthen our market position as the leading private healthcare To our shareholders, your confidence and trust in provider in the East Coast, we are looking at new TDM is invaluable. Our potential for growth is markets such as Kota Bharu, Kelantan. limitless. Together, we will continue with our journey to even greater success. Achieving these goals will require a blend of vision and inspiration from the Board of Directors, commitment and determination from the management and staff, Datuk Haji Roslan Awang Chik and the support and confidence of the shareholders Chairman and other stakeholders.
Annual Report 2012 TDM Berhad (6265-P) 11 Badrul Hisham Mahari Chief Executive Officer
In the last nine years, we have mapped out and implemented strategies, which have effectively transformed and shaped TDM Berhad into the formidable entity it is today. Undertaken since the present management took over in 2004, the process was underpinned by a far-reaching turnaround plan, which was to divest the non-core businesses and focus on the Group’s forte in oil palm plantations and healthcare.
Annual Report 2012 TDM Berhad (6265-P) 12 Chief executive officer’s review of operations
The experience, expertise and Our unique strategy pivots on an axis of three inter-related and knowledge accumulated over inter-dependent factors represented by the resources we have; the the years since TDM’s foray into products and services we offer to our target markets; and the role of plantation-related activities in innovation as a force to bring about incremental and transformational 1965 has enabled the Group to changes at each level of our operations. The interplay and interaction achieve a combination of large between these ‘loci of strategy’ provide us with a distinct differentiation volume and high margin, which is in our business offerings and outline a clear vision of our road ahead. difficult to find in other industries. Meanwhile, due to rising demand Refer to the graphic illustration below for an explanation and elaboration for private healthcare in the of our TDM Group Strategy. country, TDM is on an expansion drive to triple the size of its As a result of our strategic decisions, TDM is a higher performing healthcare portfolio within the enterprise today than it was a decade ago. Our business model has next five years to become the third become more sustainable and we have generated better earnings and largest listed healthcare company cash. In turn, this has enabled us to invest in future sources of growth to in Malaysia. improve the sustainable returns to shareholders and other stakeholders.
TDM’s Strategy Internal 3 loci of strategy External
What we choose to do What we choose to do outside inside our Company the Company • How we accumulate our Temporal • Which industry? What market asset stock position? • What segment? What product What we do over time position? • How we innovate as time passes by Resource • Choice of industries: Market/Product Positioning - Palm Oil Positioning - Healthcare
Innovation • Palm Oil: Hierarchy of positioning - Only operate in Hierarchy of positioning Positioning planting and milling segments • Choice of competencies Palm Oil Healthcare we want to develop - - Emphasis on CR CR knowledge, skills, assets & • Innovation - new way of sustainability other intangibles doing things and CR
CR CR • Must be developed as • It is critical to our • Healthcare: Palm Oil Healthcare cannot be acquired strategy - Focus on East externally Coast and Klang Plantations East Coast • Innovation enables us to Valley markets Plantations East Coast & mills & mills enhance the - No frills, secondary compatibility of our care, community Multi- Secondary Multi- Secondary Competency with our services domestics Community Value Proposition domestics Community approach Hospital approach Hospital
Our choice of Resource Our choice of Product/ Sustainable No-frills Positioning gives us our Market Positioning gives us Sustainable No-frills plantation mid-pricing plantation mid-pricing unique: our unique: Innovation
Competency/ Value Matching these factors Capability Proposition These interactions provide us with a distinct differentiation that sets TDM apart from others
Annual Report 2012 TDM Berhad (6265-P) 13 chief executive officer’s review of operations (continued)
Careful management and strict operational procedures at our plantations are essential to ensure long-term sustainable growth.
Performance Review Transitioning into a New Phase of Growth
The Group is moving beyond the phase of productivity- In FY2012, we prioritised on investment to driven growth and is now on the cusp of a new era where broaden our infrastructure, while at the same time growth will be anchored on expansion. Although our maintaining the drive towards higher operational financial performance in Financial Year 2012 (FY2012) efficiency in production and service delivery. saw a decrease from FY2011 results, we weathered Our combined investment during the year under the challenges to deliver strong business results. The review amounted to RM125.8 million, with strength of our core businesses and resourcefulness of RM82.5 million for the Plantation Division and our people allowed us to pursue the goal of delivering RM43.3 million for the Healthcare Division. We sustainable solutions across all our business channels. will further ramp up investment in 2013 with a substantial budget allocation of RM415 million, As we continue to grow and evolve our business, we of which 60% has been earmarked for the remain committed to the disciplined execution of our Plantation Division and the remaining 40% for growth strategy and a business model that emphasises the Healthcare Division. the delivery of world-class levels of service to our clients and professional development of our employees. These The Board of Directors and the Management efforts are poised to crystallise within the next few years Team are confident that our long-term vision and propel the Group into the major leagues of both the will spur and generate sustained growth, as it plantation and healthcare sectors. has accomplished so emphatically in the past few years.
Annual Report 2012 TDM Berhad (6265-P) 14 chief executive officer’s review of operations (continued)
Our ongoing improvement efforts in the Healthcare Division are aimed at achieving a more efficient and equitable healthcare system to promote a better quality of life for the nation.
Shareholders’ Wealth An Impressive Track Record of Growth
Since 2004, TDM has performed exceptionally in growing the wealth of our shareholders by increasing the value of their shareholdings. Our market capitalisation has grown at least four fold during this period, reaching RM825 million at the end of December 2012 against RM194 million at the close of 2004. The aggregated increase of 325% in shareholding value is more than four times the combined average of other listed companies on Bursa Malaysia, as represented by the 85% expansion of the Kuala Lumpur Composite Index (KLCI) over the same period. It is worth noting that the Group’s market capitalisation reached a high of RM1.13 billion in April 2012. Our target is to exceed RM2 billion by 2020 and place us in a likely position of joining the ranks of the top 100 largest companies on the local bourse.
Since 2007, we have paid out RM150 million to shareholders. The Group holds an impressive record of having increased its dividend over the past seven years inclusive of the proposed rate for FY2012 of 22 sen per share. This is the Group’s highest dividend payout so far and represents 53% of PATAMI. We aspire to maintain this increase with the target of almost doubling the dividend rate by 2018.
An additional objective for the future is our return on equity (ROE). We will work towards augmenting our present ROE from 8% to a respectable benchmark of more than 20%.
Aspires to be among Market Capitalisation RM150 RM825 100 million million largest companies listed paid out to as at on Bursa Securities shareholders since 31 December 2012 Malaysia Berhad 2007
Annual Report 2012 TDM Berhad (6265-P) 15 Annual Report 2012 TDM Berhad (6265-P) 16 chief executive officer’s review of operations (continued)
The Promise of Kalimantan
The Plantation Division’s growth potential lies in Kalimantan, where we are working towards planting 40,000 hectares of high yield oil palm trees from the fertile soil, suitable terrain and conducive climate. Of this area, a total of 10,803 hectares have been planted by the end of the first quarter of 2013. We target to plant a total of 4,197 hectares by the end of 2013.
The planted estates in Nanga Pinoh are In 2012, our matured planted area in Terengganu was expected to generate significant production cut by 5.0% to 30,574 hectares from 32,195 hectares by 2015, after which we will begin to reap the previous year. Conversely, the immature planted area the harvest of our Indonesian operations. covered 1,863 hectares compared with 264 hectares Capitalising on the maturation of these oil in 2011. palm trees, we are set to construct a 60-tonne palm oil mill costing RM80 million by 2015 to Malaysia correspond with the first harvest. Planted Area (hectares)
The unique feature of the mill will be its new- 2012 2011 variance (%) age ‘green’ technology with emphasis on Mature 30,574 32,195 -5.0 environmental conservation and preservation Immature 1,863 264 605 of natural resources. Our future ‘green’ mill Total 32,437 32,459 -0.1 will come with zero discharge of waste, which in this case will be used to generate clean water and electricity supply to the local community The lower production of CPO in FY2012 is in line with in the nearby housing estates. the drop in industry production. As such, it should not be regarded as an issue of great concern. More importantly, When fully planted and matured, the our yield of Fresh Fruit Bunches (FFB) and production Kalimantan estates will double the size of our of Crude Palm Oil (CPO) has grown 20% and 21% plantation business and more than double the respectively over time (2004-2012) while we achieved our revenue from the Division. highest Oil Extraction Rate (OER) in recent years. These are the tangible indicators of the progress we have made Moderating the Impact of the since the introduction of our estate and mill rehabilitation Down Cycle programme in 2004.
The plantation business is cyclical in nature Our down cycle in FY2012 coincided with the fall in CPO with yield dependent on the age profile of prices, resulting in lower revenue from the Division. Our the oil palm trees. To ensure sustainability Chairman has outlined how we succeeded in offsetting and consistency in production, the Plantation the drop in prices through improved fundamentals in how Division maintains a 5% replanting policy to we manage our sales. Additionally, we also managed to achieve a balance between young (0–4 years), moderate the impact of the lower yield by improving our prime (5-15 years) and aged trees (16-25 years). OER from the FFB.
Annual Report 2012 TDM Berhad (6265-P) 17 chief executive officer’s review of operations (continued)
Production of FFB fell by 11% from 625,765 metric tonnes in FY2011 to 558,583 metric tonnes during the year under review, while yield per hectare dropped 6%, to 18.27 metric tonnes from 19.44 metric tonnes the previous year. Nevertheless, our productivity remains markedly higher than the average 15.35 metric tonnes in yield per hectare achieved by all plantations in Terengganu.
Based on track record, our estates tend to undergo a downtrend in yield per hectare every third year of the cycle. A lower yield per hectare was also recorded for 2006 and 2009.
FFB Yield (metric tonnes) per Hectare
Metric Tonnes
20.0 19.44 15.0 19.21 18.27 17.32 17.00 16.63 16.48 15.33 15.18 10.0
5.0
Our well-managed nurseries provide a reliable Year supply of quality seedlings for field planting. 2004 2005 2006 2007 2008 2009 2010 2011 2012
Production of CPO in 2012 was 2012 2011 variance (%) 8% lower at 112,905 metric tonnes against 122,531 metric tonnes the year FFB (metric tonnes) 558,583 625,765 -11.0 before. Nevertheless, we achieved CPO (metric tonnes) 112,905 122,531 -8.0 a better OER of 20.26% compared PK (metric tonnes) 29,714 31,488 5.6 with 19.58% in 2011, representing a OER (%) 20.26 19.58 3.4 year-on-year improvement of 3.4%. KER (%) 5.34 5.05 5.7 More importantly, our OER is now on par with other plantation operators where previously we lagged behind. Overall, production of CPO in Malaysia fell to 18.79 million metric Plantations in Terengganu achieved a tonnes in 2012 from 18.91 million metric tonnes the previous year. combined OER of 20.49%, Peninsular Likewise, Malaysian exports of palm oil also declined by 2.4% to Malaysia 19.98%, Sabah 21.02% and 17.56 million metric tonnes from 18.00 million metric tonnes Sarawak 20.43%. in 2011.
Annual Report 2012 TDM Berhad (6265-P) 18 chief executive officer’s review of operations (continued)
Raising Efficiency and Productivity through Good Agricultural Practices (GAP)
The Plantation Division’s gains in yield and OER in comparison with other operators have been achieved through our concerted efforts to improve efficiency and increase productivity based on GAP. It is pertinent to point out that A 5% replanting policy is in place as part of the Plantation Division’s we have succeeded in these areas by trimming best management practices. rather than expanding our operational size, as indicated by the marginal 1% dip in employee Reducing production costs to increase margin strength during FY2012. We have clearly identified our objectives and targets to Since 2004 when we launched our rehabilitation increase productivity and a critical aspect of this plan programme of our estates, we focused on the are our initiatives to reduce the cost of production with following measures: emphasis on value creation activities. In 2012, we met 40% of our bio-organic fertiliser requirements with an • Improvement in nutrition management and average per annum output of 18,000 metric tonnes of better planting material; organic compost from our Sungai Tong bio-composting • Improvement in evacuation management plant, which has been awarded with pioneer status by the by providing better access in the form of Ministry of International Trade and Industry (MITI) for roads, bridges, mechanical buffaloes and five years (2011 to 2016). labour management; • Improvement in human capital management We expect to generate all our bio-organic fertiliser through good bonus, quality training and needs internally once our second facility starts operating improved living conditions in estates; and in September 2013. With two plants, we will save an • Improvement in the management of assets estimated RM6 million a year in inorganic fertiliser with RM420 million spent since 2004. cost, which accounts for about 22% of our total plantation expenditure. Through GAP, we are already certified with the Code of Good Agricultural Practices (CoGAP) Refer to PLANET: Conserving Resources, Preserving by the Malaysian Palm Oil Board (MPOB) for Environment on page 72 of this annual report. sustainable practices in plantation. Currently, we are aggressively taking measures to achieve the Roundtable on Sustainable Palm Oil (RSPO) Future Outlook certification, which is a global standard for plantation operations. We expect to be certified The Plantation Division has set targets to increase by June 2013. FFB yield by 7% and OER by 1% for 2013. We also expect to plant another 4,197 hectares in Further details on the RSPO certification are Kalimantan, bringing the total by the end of the outlined under PLANET: Benchmarking Against year to 15,000 hectares or more than a third of the the Highest Standards on page 70 of this plantable land at our Indonesian operations. annual report.
Annual Report 2012 TDM Berhad (6265-P) 19 Annual Report 2012 TDM Berhad (6265-P) 20 chief executive officer’s review of operations (continued)
Securing Our Niche Market
TDM has entered a critical phase in the development of its niche market in healthcare based on a ‘patient-focused no-frills’ secondary care for the community concept. We are currently engaged in the essential task of extending the size and scope of our medical facilities to cater to the projected demand and consolidate our leading position in this market segment.
Number of Patients The existing medical centres have effectively reached critical mass, Number of Patients given the rapid upsurge of patients
200,000 during the past nine years. The number of patients has grown by a Compound Annual Growth Rate 150,000 (CAGR) of 14%, from 59,369 in 2004
165,622 to 165,622 in FY2012. We expect an
152,634 even higher CAGR of 21% over the 100,000 next five years with the projected
122,289 number of patients reaching almost 117,192 103,094 50,000 434,000 by 2017. 85,866 67,985 61,249 In terms of PBT, the growth rates are 59,369 Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 equally if not more impressive. We achieved a CAGR of 50% between 2004 and 2012 and are targeting a CAGR of 35% for the next five-year period up till 2017, when our PBT is projected to reach RM44.1 million, Profit Before Tax nearly a 350% increase over the
RM Million RM10.0 million in FY2012. 15.0 The patient count in FY2012 represents an average occupancy 10.0 rate of 70% to 80% at our four 10.70 10.61 9.99 facilities of KMC, KTS, KJMC and 8.33 5.0 TDMC Hospital. The four facilities 6.11 collectively offer only 204 beds, -4.15 -0.93 -0.94 0.0 3.03 Year a total bed count that needs to be increased to cater to future demand. -5.0 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual Report 2012 TDM Berhad (6265-P) 21 chief executive officer’s review of operations (continued)
Number of Beds KMC KTS KJMC TDMC 84 33 42 48
Responding to Growing Demand
For this reason, we are expanding and upgrading our medical facilities by building new premises and renovating existing ones while at the same time acquiring the latest medical equipment, and attracting and recruiting consultants and doctors to offer their services at our hospitals.
The Group invested RM43.3 million in FY2012, of which RM31 million was spent to equip the new building for KMC. All in, the total investment for the four medical facilities, The hospitals operated by the Group feature the latest advancements in healthcare technology inclusive of equipment is estimated at RM422 million spread and services. over five years between 2011 and 2015.
• KMC – Total cost: RM137 million The new building is scheduled for completion in Quarter 2, 2013 with operations expected to commence by Quarter 1, 2014. This 150-bedded facility will not only serve more patients, but will also serve them better with the latest medical equipment.
• KTS – Total cost: RM195 million Construction of the new 130-bedded premises took off in January, 2013 with commissioning estimated in 2015. Similarly with KMC, the new KTS is set to elevate the level of quality healthcare we provide to the community.
• TDMC – RM40 million for the purchase, renovation and upgrading of equipment Renovations and refurbishment are expected to be completed in 2013, with the launch expected in January 2014.
• KJMC – RM50 million for the purchase of a new building We expect to find a suitable location to replace the current one in 2013. At this stage, we are confident of launching the new facilities by 2014.
Annual Report 2012 TDM Berhad (6265-P) 22 chief executive officer’s review of operations (continued)
Enhancing Service Delivery
Our plans for expansion are complemented by on-going efforts to enhance the quality, reliability and consistency in the provision of medical services. We continue to strengthen our market positioning by pursuing accreditation with internationally-recognised standards bodies.
KMC and KTS received their ISO 9001:2008 certification in December 2012 while the other two hospitals, KJMC and TDMC Hospital, are expected to be certified in 2013. Following the ISO certification, we will undertake the costly and stringent task to qualify for the prestigious Joint Commission International (JCI) accreditation. The ISO certification involves standard operating procedures (SOPs), which a medical facility must have while JCI revolves around standards for patient care. Achieving the JCI accreditation would elevate us to the top tier of healthcare providers in terms of quality.
Refer to PLANET: Benchmarking Against the Highest Standards on Page 70 for more details on this. KTS received the ISO 9001:2008 certification in December 2012.
We also made the critical decision of creating a new position to spearhead our healthcare operations, with the objective of promoting and propagating improvement at every level. We were meticulous and judicious in our search for the most suitable candidate with the necessary expertise and experience to fill this post.
On 1 September 2012, we appointed Bryan Lin Boon Diann as the Group Chief Executive Officer of the Division. Lin brings with him more than 20 years’ experience in the industry and holds a Degree in Business Administration and a Masters in Healthcare Management from the University of Nebraska in the United States of America. We are confident and optimistic that he will drive the Division to the next level by establishing a centre of excellence for each hospital under our stable. Lin will be responsible to lead the Healthcare Division’s goal to strengthen its footprint in the East Coast region.
Annual Report 2012 TDM Berhad (6265-P) 23 chief executive officer’s review of operations (continued)
2013 and Beyond
The immediate goal for 2013 is to increase the number of beds at our facilities by 21% to meet the targeted 12% rise in the number of patients. We expect to triple our healthcare business within the next five years through our existing as well as future expansion programmes. These include the search for new markets, particularly in the untapped region of Kelantan where we are looking to either acquire or construct a new medical centre in Kota Bharu, Kelantan.
All of our future facilities will offer a capacity of 80 to150 beds, which is the ideal model for secondary care medical centres. Future acquisitions or construction of facilities will also move away from the shop lot concept towards the more conventional structure for medical centres so as to meet JCI specifications such as the safe and efficient movement of patients and visitors.
Moving Towards Public Listing
TDM’s dominant position in its niche market and our sustained growth patterns have provided the impetus for the Group to float our Healthcare Division. We are currently engaged in preliminary talks with banks to pave the way for the eventual listing within the next two to three years.
In the interim period, we will continue to consolidate our market segment in which we have the following advantages: • By focussing on the niche area of healthcare, we differentiate ourselves from our competitors; • Niche market remains relatively untapped, especially in the East Coast, and; • Advantage of being the pioneer in this niche.
Continuous improvement in patient care at our hospitals essentially benefits both patients and employees in the long-term.
Annual Report 2012 TDM Berhad (6265-P) 24 chief executive officer’s review of operations (continued)
Construction site for the second Bio-Composting Plant at Kemaman.
Our Differentation The TDM Way of Doing Business
Since our incorporation, TDM has always placed utmost Numerous other incremental innovations importance on the interests of our customers and the community have been implemented and they have alongside our aspirations for financial performance. As such, brought about many positive changes to the Group views Corporate Responsibility (CR) as an organic the Group and our operations. component of our planning and operations. Today, we continue to pay as much attention to the betterment of the community as We will continue to focus on the we do our bottom line. Our 3P Philosophy of ‘People, Planet and plantation and healthcare sectors, where Profit’ is an embodiment of the way we lay the foundation for we have entrenched ourselves as key our respective communities to uplift themselves economically, players and in which there is still plenty of socially and also environmentally. scope for growth. The Group is steadfast in its determination to improve the Innovation is another critical feature of our corporate and fundamentals for the long-term in tandem operational culture as we seek to move the Group in the with considerations for the short-term. right business direction: towards lateral expansion, greater operational efficiency and higher returns for all our stakeholders. We hope that our ability to grow while At TDM Berhad, we believe innovation is not exclusive to becoming leaner as an organisation technology, but instead applies to renewing, changing or will set us apart from others; while our creating more effective processes, products or ways of doing commitment to transformation in the spirit things to create value. We are now reaping the benefits of the of ‘People, Planet and Profit’, will make us innovative measures introduced in past years such as: the role model for corporate management • the recyclable polybag and biodegradable bag, which and an inspiration for a better world. ensures uniformity in nutrition for the oil palm trees; • barn owls to control the rat population so we would not have to use poison, which could also destroy other organisms in the eco-system; and Badrul Hisham Mahari Chief Executive Officer • buffaloes for harvesting in hilly terrain and other areas unsuitable to mechanised vehicles.
Annual Report 2012 TDM Berhad (6265-P) 25 financial highlights
Growing Annual Dividend Progress of EPS Nett Dividend Per Share Earnings Per Share Sen Sen 80 25.0
20.0 60 68.06 22.00
15.0 21.50 40 10.0 45.37 41.67 41.36 13.50
12.00 20 5.0 10.50 25.03 Year Year 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
Income Statement 2008 2009 2010 2011 2012
Revenue (RM‘000) 405,064 335,593 392,763 515,519 455,258 Profit before tax (RM‘000) 140,686 77,487 130,233 220,579 149,025 Profit after tax (RM‘000) 100,300 55,947 94,544 162,681 103,356
Statement of Financial Position
Total assets (RM‘000) 861,966 838,660 928,562 1,459,516 1,515,180 Total liabilities (RM‘000) 247,616 190,792 201,483 277,438 255,722 Shareholders’ equity (RM‘000) 597,965 631,027 708,860 1,157,210 1,234,267 Total equity (RM’000) 613,746 647,868 727,079 1,182,078 1,259,458
Key Financial Indicators
PBT margin (%) 34.73 23.09 33.16 42.79 32.73 Return on average shareholders’ equity (%) 18.26 9.10 14.11 17.44 8.64 Earnings per share (sen) 45.37 25.03 41.36 68.06 41.67 Nett assets per share (RM) 2.80 2.96 3.22 4.97 5.12 Nett dividends per share (sen) 10.50 12.00 13.50 21.50 22.00* Gearing ratio (times) 0.01 0.01 0.01 0.01 0.02 Current ratio (times) 1.18 1.39 1.65 1.95 2.34 Price to earning ratio (times) 2.53 6.35 7.66 5.52 8.06 Price to book ratio (times) 0.42 0.55 1.00 0.76 0.66
*Subject to approval of shareholders at the 48th Annual General Meeting.
Annual Report 2012 TDM Berhad (6265-P) 26 financial highlights (continued)
Progress of Market Capitalisation
RM Million
1000
800
600 895.05 825.78
400 717.32
200 348.02 251.71 Year 2008 2009 2010 2011 2012
Segmental Performance – Profit Before Tax
6.7% 4.8% 0.2%
93.5% 95% 2012 2011
Plantation Healthcare Others
2012 2011 Profit Before Tax Profit Before Tax RM’000 RM’000
Plantation 139,267 93.5% Plantation 209,613 95.0% Healthcare 9,991 6.7% Healthcare 10,606 4.8% Others (233) -0.2% Others 360 0.2% 149,025 100% 220,579 100%
Annual Report 2012 TDM Berhad (6265-P) 27 financial highlights (continued)
Statement of Value Added 13% 11%
40% 18% 40% 18%
2012 2011
12%
18% 1% 11% 51% 7%
To Employees - Employee cost To Shareholders - Dividend Retained for re-investment - Depreciation/Amortisation To Government - Taxation To Shareholders - Minority Interest Retained for future growth - Retained profit
Distribution 2012 2011 RM’000 RM’000 Revenue 455,258 515,519 Purchases of goods and services (226,330) (219,030) Value added by the group 228,928 296,489 Other income 31,289 14,831 Finance expenses (92) (324) Value added available for distribution 260,125 310,996
Distribution 2012 2011 2012 2011 RM’000 RM’000 % % To Employees Employee cost 34,594 33,087 13.30 10.64 To Government Taxation 45,669 57,898 17.56 18.62 To Shareholders Dividend 45,376 38,268 17.44 12.30 Minority Interest 948 2,268 0.36 0.73 Retained for re-investment Depreciation/Amortisation 28,375 21,947 10.91 7.06 Retained for future growth Retained profit 105,163 157,528 40.43 50.65
Total distribution 260,125 310,996 100 100
Annual Report 2012 TDM Berhad (6265-P) 28 financial calendar
Announcement on Quarterly Results Dividend (Final Dividend)
15 May 2012 27 March 2012 Announcement of the unaudited consolidated Announcement of the final dividend of results for the 1st quarter ended 31 March 2012. 18.50 sen per ordinary share, tax exempt under the single-tier system for the financial year ended 31 December 2011. 9 August 2012 Announcement of the unaudited consolidated results for the 2nd quarter and half year ended 27 April 2012 30 June 2012. Announcement of Notice of Book Closure.
29 November 2012 25 May 2012 Announcement of the unaudited consolidated Date of entitlement. results for the 3rd quarter ended 30 September 2012. 8 June 2012 Date of payment. 26 February 2013 Announcement of the unaudited consolidated results for the 4th quarter ended 31 December 9 April 2013 2012. Announcement of the first and final dividend of 22 sen per ordinary share, tax exempt under the single-tier system in respect of the financial year ended Annual General Meeting 31 December 2012.
30 April 2013 Date of notice of 48th Annual General Meeting 29 May 2013 Date of entitlement. (AGM) and date of issuance of the 2012 Annual Report. 7 June 2013 Date of payment. 23 May 2013 48th Annual General Meeting.
Annual Report 2012 TDM Berhad (6265-P) 29 “KTS has been my ‘second home’ since 2006 and I thoroughly enjoy the good working environment. Teamwork is crucial between my colleagues and I, which has given us the opportunity to foster a closer rapport with the hospital management.
The employee benefits are excellent and we are constantly encouraged to improve ourselves through the various courses and training programmes offered throughout the year.
I have been recognised and rewarded accordingly for my contribution towards the hospital and am duly honoured. This makes me proud to be part of the TDM Group.”
Cheah Bee Sim Assistant Nursing Manager KTS Hospital The right way Corporate structure
(6265-P)(6265-P)
plantation healthcare
Kumpulan Mediiman 100% TDM Plantation Sdn Bhd 90.49% Sdn Bhd Kuala Terengganu Kumpulan Kuala Terengganu 18.61% Specialist 100% Ladang-Ladang 81.39% Specialist Hospital Hospital Sdn Bhd Trengganu Sdn Bhd Sdn Bhd
100% 100% KLLT Fibres TDM Trading Sdn Bhd Kuantan Medical Kuantan Medical 6.42% 85.91% in MVWU Sdn Bhd Centre Sdn Bhd Centre Sdn Bhd TRP 90% TDM Capital Sdn Bhd Kelana Jaya 100% Kelana Jaya Medical Industries 25.71% Medical Centre 73.59% in MVWU Sdn Bhd Sdn Bhd Centre Sdn Bhd 93.75% PT. Rafi Kamajaya Abadi (Incorporated in Indonesia) Trengganu 100% Medi Air Sdn Bhd TDMC Hospital 100% Rubber 99.99% Sdn Bhd Processing 95% PT. Rafi Sawit Lestari in MVWU (Incorporated in Indonesia) 100% HMMC (Ampang) Sdn Bhd Sdn Bhd in MVWU
other activities
Indah Sari Travel & 70% Tours Sdn Bhd
100% TDM Properties Bhd in MVWU
TD Permatang 100% 100% TDM Helling Sdn Bhd Sdn Bhd in MVWU in MVWU
Active 100% TD Ijarah Dormant in MVWU Sdn Bhd
in MVWU : in Members’ TD Gabongan 51% Voluntary Winding Up Sdn Bhd
Annual Report 2012 TDM Berhad (6265-P) 32 Corporate information
BOARD OF DIRECTORS COMPANY SECRETARIES Registrar Yeap Kok Leong Tricor Investor Services Sdn Bhd Datuk Haji Roslan Awang Chik (MAICSA No. 0862549) Level 17, The Gardens North Tower Chairman, Mid Valley City, Lingkaran Syed Putra Non-Independent Wong Wai Foong 59200 Kuala Lumpur Non-Executive Director (MAICSA No. 7001358) Telephone No : (603) 2264 3883 Dato’ Haji Abdul Razak Ismail Facsimile No : (603) 2282 1886 Non-Independent AUDITORS Non-Executive Director Messrs. Ernst & Young Stock Exchange Listing Dato’ Haji Mat Razali Kassim Messrs. Kosasih, Nurdiyaman, Non-Independent Tjahjo & Rekan Main Market of Bursa Malaysia Non-Executive Director Securities Berhad
Haji Long A. Rahman Principal Bankers Non-Independent Bank Islam Malaysia Berhad Plantation Division Non-Executive Director CIMB Bank Berhad Aras 3, Bangunan UMNO Terengganu Haji Zakaria K C Ahammu Maybank Berhad Lot 3224, Jalan Masjid Abidin Senior Independent RHB Investment Bank Berhad 20100 Kuala Terengganu Non-Executive Director Terengganu Darul Iman Telephone No : (609) 622 8000 / Wong Shew Yong SOLICITORS (609) 620 4800 Non-Independent Non-Executive Director Messrs. Abu Talib Shahrom Facsimile No : (609) 620 4805 Messrs. Azmi & Associates Abdul Mutalip Sulaiman Messrs. Hutabarat Halim & Rekan Independent Healthcare Division Non-Executive Director Aras 5, Bangunan UMNO Terengganu REGISTERED OFFICE Lot 3224, Jalan Masjid Abidin Aras 5, Bangunan UMNO Terengganu 20100 Kuala Terengganu Audit Committee Lot 3224, Jalan Masjid Abidin Terengganu Darul Iman Abdul Mutalip Sulaiman 20100 Kuala Terengganu Telephone No : (609) 620 4800 Chairman Terengganu Darul Iman Facsimile No : (609) 620 4803 Haji Zakaria K C Ahammu Telephone No : (609) 620 4800 Dato’ Haji Abdul Razak Ismail Facsimile No : (609) 620 4803 Commodities Trading 25th Floor, Menara KH Nomination and Jalan Sultan Ismail Remuneration Committee 50250 Kuala Lumpur Haji Zakaria K C Ahammu Telephone No : (603) 2148 0811 Chairman Facsimile No : (603) 2148 9900 Haji Long A. Rahman Abdul Mutalip Sulaiman
Annual Report 2012 TDM Berhad (6265-P) 33 milestones and achievements
1965 1965 – TDM Berhad was incorporated.
1970
TDM Berhad was listed under the Plantation Sector on the Main Market of 1996 the Kuala Lumpur 2006 Stock Exchange. November • KJMC was established. Corporate • First Financial Year December dividend declared to • Official opening of KMC. shareholders.
Healthcare • KTS was established.
Before 2004 2007 Plantation Plantation Other Businesses • Acquisition of 10,000 • Total area planted : • Fast-food/ hectares of land in 33,527 hectares Restaurant: A&W Kalimantan, Indonesia. restaurants Healthcare • Property • Number of hospitals : 2 • Poultry • Number of beds : 71 • Air Ambulance • Number of clinics : 3 • Rubber Processing • Transportation • Travel Agency • Hotel • Fiber Mattress
Annual Report 2012 TDM Berhad (6265-P) 34 milestones and achievements (continued) 2012
2011
Plantation • Total area planted : 39,034 hectares • Highest FFB production for the past 10 years. March 2008 • First bio-composting plant started Plantation operations in Sungai Tong, Terengganu. • Additional acquisition of 30,000 hectares of land in Healthcare Kalimantan, Indonesia. • Number of hospitals : 4 • Number of beds : 204 April 2010 • Acquisition of TDMC Hospital, Kuala Lumpur. Plantation November • Total area planted : • Construction work started on the new 33,374 hectares KMC. 20122012
Plantation • Total area planted : 40,518 hectares 2009 August • Construction work started on the Plantation second bio-composting plant at • Total area planted : Kemaman. 33,222 hectares Healthcare Healthcare July • Number of hospitals : 3 • Ground breaking ceremony of • Number of beds : 136 KTS. Construction work started in December. Other Businesses • Poultry • Hotel
Annual Report 2012 TDM Berhad (6265-P) 35 awards and industry accolades
2012 1. The Federation of Public Listed Companies (FPLC) Bhd. • TDM Berhad became a member of the FPLC in 1987. • Conferred the Longest Loyal Members Recognition Award.
2. The EDGE Billion Ringgit Club. • Exclusive club for public listed companies with a stock market capitalisation of at least RM1 billion as at 31 March 2012. • Ranked among the top 150 public listed companies by market capitalisation.
3. ISO 9001:2008 Certification for the Provision of Healthcare Services : Kuantan Medical Centre (KMC) • Lloyd’s Register Quality Assurance
4. ISO 9001:2008 Certification for the Provision of Healthcare Services : Kuala Terengganu Specialist Hospital (KTS) • Moody International Certification (Malaysia) Sdn Bhd and Moody International Certification Ltd.
2011
1. TDM was given a pioneer status for five years (2011 to 2016) by the Ministry of International Trade and Industry Malaysia (MITI) for the bio-composting mill in Sungai Tong, Setiu, Terengganu, which entitles the company to 100% tax exemption on statutory income for five years.
2. TDM was ranked 118 out of 820 public listed companies in the Malaysian Corporate Governance Report, which was published by the Minority Shareholder Watchdog Group (MSWG).
3. TDM received the certificate of the Code of Good Agricultural Practices for Palm Oil Estates (CoGAP) from the Malaysian Palm Oil Board (MPOB).
4. TDM received the certificate of the Code of Good Milling Practices for Palm Oil Mills (CoGMP) from the Malaysian Palm Oil Board (MPOB).
2008
1. Malaysian Corporate Governance Report - Published by Minority Shareholder Watchdog Group (MSWG) and The University of Nottingham-Malaysian Campus 2. TDM was ranked 87 for the KPMG/The EDGE Shareholder Value Award. The top 100 ranking companies were based on the percentage returns as calculated by Economic Profit/Invested Capital.
2005
TDM Plantation Sdn Bhd was awarded the Most Preferred CPO Supplier by Cargill Palm Products Sdn Bhd.
2004
TDM Plantation Sdn Bhd was awarded the Most Preferred CPO Supplier by Cargill Palm Products Sdn Bhd.
2002
TDM Plantation Sdn Bhd was awarded the Best Crude Palm Oil (CPO) Supplier in Kuantan by Cargill Palm Products Sdn Bhd.
Annual Report 2012 TDM Berhad (6265-P) 36 awards and industry accolades (continued)
1 2 3 4
2012
1 2 3 4 2011
1 2 2008 2005
2004 2002
Annual Report 2012 TDM Berhad (6265-P) 37 policies
Profit Distribution Policy
TDM Group’s annual consolidated distributable profits shall be appropriated as follows:
(i) one third for dividend to shareholders; (ii) one third for capital expenditure of the Group; and (iii) one third for the reserves of the Group.
This policy was approved by the Board of Directors of TDM Berhad on 13 August 2009.
Dividend Policy
TDM Berhad will endeavour to pay out dividends of at least 30% of its consolidated annual nett profit after taxation and minority interest annually, subject to availability of distributable reserves.
Dividend will only be paid if approved by the Board of Directors and the shareholders of the Company.
The actual amount and timing of dividend payments will be dependent upon TDM Berhad’s cash flow position, returns from operations, business prospects, current and expected obligations, funding needs for future growth, maintenance of an efficient capital structure and such other factors which the Board of Directors of TDM Berhad may deem relevant. The Company will take every effort to grow its businesses and it should be reflected in growth in the dividend rate.
The objective of this dividend policy is to provide sustainable dividend to shareholders consistent with the Company’s earnings growth.
This policy was approved by the Board of Directors of TDM Berhad on 12 April 2009.
Annual Report 2012 TDM Berhad (6265-P) 38 policies (continued)
Whistleblower Policy Philanthropy Policy
1. TDM Whistleblower policy statement: Background TDM Berhad is committed to sustaining • It is part of TDM’s CR philosophy to be a positive and a high standard of good Corporate active participant in the communities where we are Governance and adhering to our Code present. of Business Ethics. Whistleblower policy acts to support the said values • This calls for our response and assistance in critical by ensuring that stakeholders can raise social issues as well as in sports and economic concerns on improprieties without fear development. of reprisals if acting in good faith. Rationale The policy, through its procedures, • In implementing the CR activities, TDM is committed aims to provide a transparent and to good corporate governance that encourages confidential process when dealing with transparency. such raised concerns. This policy and the procedures are applicable to all companies within the group. “There were cases where minority shareholders watchdog group raised issues regarding the non- 2. Whistleblower disclosure of CSR policies at company AGMs, Whistleblower is a specific means particularly where contributions for CSR purposes by which a stakeholder can report were deemed exceptionally high and could have or disclose through an established been detrimental to minority shareholders’ interest.” channel, improprieties including Malaysia Corporate Governance Report 2010 fraud, criminal offences, miscarriages of justice, ethical wrongdoings and corruption, bribery and blackmail. TDM’s Philanthropy Policy 3. Ombudsperson “TDM Group will contribute 2% of its consolidated All complaints and/or concerns should annual nett profit after taxation, minority interest be raised and directed to the Company’s and dividend payments to approved organisations Ombudsperson. The Ombudsperson in Terengganu that support social causes, sports and for TDM is the chairman of the Audit economic development.” Committee. The Ombudsperson can be contacted as follows:- This policy was approved by shareholders at the Annual General Meeting on 17 May 2012. TDM Berhad Aras 5, Bangunan UMNO Terengganu Notes: Lot 3224, Jalan Masjid Abidin 1. Approved organisations = organisations that qualify for tax 20100 Kuala Terengganu deduction by IRB. Terengganu, Malaysia 2. The 2% comes from the “for-cash reserved budget” and not from profit to be distributed to the shareholders.
Annual Report 2012 TDM Berhad (6265-P) 39 corporate events 2012
5 January 2012
Datuk Roslan Awang Chik, Chairman of TDM Berhad (left) hands over the Code of Good Agricultural Practice (CoGAP) for Oil Palm Estates and Smallholdings accreditation from the Malaysian Palm Oil Board (MPOB) to Dato’ Jidin Shafee, Chairman of TDM Plantation (centre), while Haji Ab Halim Yusof, Chief Executive Officer of TDM Plantation, (right) looks on. Valid for three years, this accreditation is in recognition of the company’s continuous improvement in yield and productivity.
5 January 2012
A total of 22 trainees, most of whom are children of the company’s estate workers were selected to undergo the Field Assistant (FA) Training Programme. The six-month programme enables the trainees to gain exposure to the various aspects of palm oil estate management. Introduced in 2007, the programme forms part of the Group’s corporate responsibility to enhance the life of estate workers and eradicate poverty among the communities. Dato’ Jidin Shafee, Chairman of TDM Plantation, (in batik) handed out the training certificates and offer letters to the trainees during the launch of the programme.
26 January 2012
The KTS launched its CxP Programme to instill a ‘service mindset’ among its employees, which is aligned to the Group’s corporate values. Zawiah Shariff, Chief Executive Officer of KTS, launched the programme, which was also attended by Datuk Hajjah Fatimah Hamat, Chairman of KTS (middle). The programme focuses on training and coaching for employees to gain an insight into patients’ experiences at the hospital. The other hospitals that launched the CxP Programme were KMC on 2 February, KJMC on 10 February and TDMC Hospital on 10 February.
Annual Report 2012 TDM Berhad (6265-P) 40 corporate events 2012 (continued)
5 April 2012
Datuk Roslan Awang Chik, Chairman of TDM Berhad (fourth from left) announced TDM’s plans to extend and upgrade the KTS during the Extraordinary General Meeting (EGM) held on 5 April 2012. This forms part of the company’s strategic plan to expand the Healthcare Division. The new 130-bedded hospital features five operating theatres and a 12-bedded intensive care unit (ICU).
17 May 2012
The 47th Annual General Meeting (AGM) of TDM Berhad was held on 17 May 2012 on a positive note as the Group achieved record production, record revenue and record profit for the financial year ended 31 December 2011. Group revenue surged 28% to RM503.2 million while Profit Before Tax (PBT) grew by 65% to RM214.9 million against RM392.8 million and RM130.2 million respectively the previous year. A media conference was held after the AGM, which was helmed by Badrul Hisham Mahari, Chief Executive Officer (left), Datuk Roslan Awang Chik, Chairman (middle) and Amir Mohd Hafiz Amir Khalid, Chief Financial Officer (right).
Annual Report 2012 TDM Berhad (6265-P) 41 corporate events 2012 (continued)
16 June 2012
Datuk Roslan Awang Chik, Chairman of TDM Berhad (extreme right) presented a mock cheque for RM29,029,148.83 to Datuk Seri Ahmad Said, Mentri Besar Terengganu (second from left) as dividend payment to State Government agencies for the Financial Year ended 31 December 2011. Badrul Hisham Mahari, Chief Executive Officer of TDM Berhad (second from right), and Datuk Abdul Razak Ismail, State Finance Officer (extreme left), were also present at the ceremony.
16 June 2012
Amir Mohd Hafiz Amir Khalid, Chief Financial Officer of TDM Berhad, received the Longest Loyal Member Recognition Award on behalf of TDM Berhad. The Federation of Public Listed Companies Bhd conferred the award to TDM Berhad, which has been a member since 1987.
12 July 2012
Tuanku Mizan Zainal Abidin ibni Almarhum Sultan Mahmud Billah, DYMM Sultan of Terengganu graced the ground breaking ceremony of the new KTS. Datuk Roslan Awang Chik, Chairman of TDM Berhad, briefed the Sultan on the progress of the hospital. The event was also attended by Datuk Seri Ahmad Said, Mentri Besar Terengganu (third from right) and Datuk Hajjah Fatimah Hamat, Chairman, KTS (third from left).
Annual Report 2012 TDM Berhad (6265-P) 42 corporate events 2012 (continued)
16 July 2012
Badrul Hisham Mahari, Chief Executive Officer of TDM Berhad, received the plaque accepting TDM as a member of The Edge Billion Ringgit Club (BRC), an exclusive grouping of public listed companies with a market capitalisation of at least RM1 billion as at 31 March 2012. The achievement elevated TDM into the top 150 companies listed on Bursa Malaysia by market capitalisation. With this award, TDM qualifies for The Edge–BRC Corporate Awards to honour the country’s biggest and best-performing companies.
31 August 2012
The TDM Berhad contingent, which included employees from the head office and its subsidiaries, participated in the State National Day Parade held at Stadium Ismail Nasiruddin Shah.
9 September 2012 19 September 2012
More than 1,000 guests, which Badrul Hisham Mahari, Chief Executive Officer, shared TDM comprised employees and their families Berhad’s investment merits at the Investor Relations (IR) Day as well as members of the local at Bursa Malaysia. Organised by the Malaysian Investor community, attended the TDM Hari Relations Association (MIRA), the event was attended by 32 Raya Open House. The event was held buy and sell-side members from 13 organisations. at Rumah Tamu, Kompleks Sungai Tong.
Annual Report 2012 TDM Berhad (6265-P) 43 corporate events 2012 (continued)
6 October 2012
In conjunction with the World Osteoporosis Day, the KJMC in collaboration with MSD Malaysia, a leading pharmaceutical supplier, organised free bone screenings for the public. Almost 80 people took the opportunity to undergo the screenings and to learn more about osteoporosis and its related risks.
2 November 2012
TDMC Hospital became the first hospital under the Group to go online with its Customer Relationship Management (CRM). The CRM serves to improve the flow of business operations and customer service in the hospital. Subsequently, the hospital used the data to run their first campaign by their newly set-up Call Centre. The KTS was the next hospital to have the CRM system online on 13 December 2012.
10 November 2012
Datuk Seri Ahmad Said, Mentri Besar Terengganu, was the guest of honour at the Majlis Khatan Beramai-ramai organised by DUN Kijal. 119 schoolchildren, including children of TDM Plantation’s Kemaman Complex employees, participated in the ceremony.
Annual Report 2012 TDM Berhad (6265-P) 44 corporate events 2012 (continued)
26 November 2012
KMC was the first hospital in the Group to achieve the ISO 9001:2008 certification. Prior to achieving the certification, Nik Zainon Yussoff, Chief Executive Officer held a briefing session with the employees before embarking on the auditing process. The KTS was next to receive the certification on 21 December 2012.
14 December 2012
Asfani Mahmood of TDM Trading Sdn Bhd was named Best Presenter at the 3rd Annual Innovation Convention in Bandung, Indonesia. His innovation project, SIMS (Supply Chain Information Management System), entitled ‘From Terengganu to New York City’, outlined the journey of the company’s palm kernel from Terengganu to New York City. Datuk Roslan Awang Chik, Chairman of TDM Berhad gave away the prize at the award ceremony, which was also attended by Badrul Hisham Mahari, Chief Executive Officer.
24-26 December 2012
TDM Plantation employees rendered their assistance when floods hit the Padang Kubu area where three estates, Pelantoh, Tebak and Jernih, were badly affected. The Pelantoh Estate office was turned into the flood operations room. The security personnel, officers from the estate and the Kemaman Palm Oil Mill (KPOM) together with the police, took turns to run the operation room. A total of 388 people, including 77 Indonesian workers (TKI) from the Pelantoh Estate were evacuated.
Annual Report 2012 TDM Berhad (6265-P) 45 tdm in the news
Plantation News
Healthcare News
Annual Report 2012 TDM Berhad (6265-P) 46 tdm in the news (continued)
Corporate News
Annual Report 2012 TDM Berhad (6265-P) 47 The right attitude “I have been contracted to transport fresh fruit bunches for TDM Plantation Sdn Bhd since 1986 and I am very happy to be of service to this company.
As the company’s business grows, so do business suppliers such as myself. Initially, at the beginning of the contract, I owned two lorries. Today, I own four lorries.
It is a tedious job to transport the fresh fruit bunches but I value the partnership with TDM as our business relationship is based on mutual respect and understanding.”
Kamarudin Mohd Hassan Koperasi Ladang Sungai Tong Berhad Transportation Provider board of directors
4 3 2 1
1. Datuk Haji Roslan Awang Chik 3. Haji Long A. Rahman Chairman/Non-Independent Non-Executive Director Non-Independent Non-Executive Director 2. Dato’ Haji Abdul Razak Ismail 4. Abdul Mutalip Sulaiman Non-Independent Non-Executive Director Independent Non-Executive Director
Annual Report 2012 TDM Berhad (6265-P) 50 board of directors (continued)
5 6 7
5. Dato’ Haji Mat Razali Kassim 7. Wong Shew Yong Non-Independent Non-Executive Director Non-Independent Non-Executive Director 6. Haji Zakaria K C Ahammu Senior Independent Non-Executive Director
Annual Report 2012 TDM Berhad (6265-P) 51 BOARD OF DIRECTORS’ profile
Datuk Haji Roslan Awang Chik Malaysian Age: 62 Non-Independent Non-Executive Director
Directorship
Appointed as Chairman: 13 January 2009
Qualifications
• 1973-1976: Diploma in Applied Sciences, Universiti Teknologi MARA (UiTM).
• 2000-2002: Master of Business Administration, Southern California University for Professional Studies.
Directorship of Public Companies (if any)
NIL
No. of Board Meetings Attended
12/12
Annual Report 2012 TDM Berhad (6265-P) 52 board of directors’ profile (continued)
dato’ haji abdul razak ismail Malaysian Age: 59 Non-Independent Non-Executive Director
Directorship
• Appointed as Director: 16 October 2008
• Appointed as Audit Committee Member: 13 December 2010
Qualifications
• Bachelor of Social Sciences (Honours), Universiti Sains Malaysia (USM).
Directorship of Public Companies (if any)
NIL
No. of Board Meetings Attended
10/12
Annual Report 2012 TDM Berhad (6265-P) 53 board of directors’ profile (continued)
Haji long a. rahman Malaysian Age: 70 Non-Independent Non-Executive Director
Directorship
• Appointed as Director: 13 January 2009
• Member of Nomination & Remuneration Committee
Qualifications
Federal Certificate of Malaysia.
Directorship of Public Companies (if any)
NIL
No. of Board Meetings Attended
11/12
Annual Report 2012 TDM Berhad (6265-P) 54 board of directors’ profile (continued)
abdul mutalip sulaiman Malaysian Age: 57 Independent Non-Executive Director
Directorship
• Appointed as Director: 18 May 2010
• Appointed as Chairman of Audit Committee: 18 May 2010
• Member of Nomination & Remuneration Committee
Qualifications
• 1977: Diploma in Accountancy, Universiti Teknologi MARA (UiTM).
• 1980: Chartered Association of CertifiedAccountants.
• 2002: Certified Financial Planner.
[Fellow of the Association of Chartered Certified Accountants (ACCA) & Chartered Accountant with the Malaysian Institute of Accountants (MIA)].
Directorship of Public Companies (if any)
NIL
No. of Board Meetings Attended
11/12
Annual Report 2012 TDM Berhad (6265-P) 55 board of directors’ profile (continued)
dato’ haji mat razali kassim Malaysian Age: 58 Non-Independent Non-Executive Director
Directorship
Appointed as Director: 16 January 2012
Qualifications
• Bachelors (Honours) Degree in Economics, Universiti Kebangsaan Malaysia (UKM).
Directorship of Public Companies (if any)
NIL
No. of Board Meetings Attended
11/12
Annual Report 2012 TDM Berhad (6265-P) 56 board of directors’ profile (continued)
haji zakaria k c ahammu Malaysian Age: 52 Senior Independent Non-Executive Director
Directorship
• Appointed as Director: 16 October 2008
• Appointed as Member of Audit Committee Meeting: 16 October 2008
• Chairman of Nomination & Remuneration Committee
Qualifications
Diploma in Agriculture, Universiti Pertanian Malaysia (UPM).
Directorship of Public Companies (if any)
NIL
No. of Board Meetings Attended
12/12
Annual Report 2012 TDM Berhad (6265-P) 57 board of directors’ profile (continued)
wong shew yong Malaysian Age: 62 Non-Independent Non-Executive Director
Directorship
• Appointed as Director: 16 October 2008
Qualifications
• Degree in Business Commerce, Nanyang University, Singapore.
• FCPA (Singapore).
• FACCA (U.K.).
Directorship of Public Companies (if any)
Golden Pharos Berhad
No. of Board Meetings Attended
11/12
NOTES: 1. Full profile of Directors can be viewed at www.tdmberhad.com.my (Section: Corporate Information). 2. family relationship with any Director and or Major Shareholder of the Company: None of the Directors has any family relationship with any Director and/or substantial shareholder of the Company. 3. Conflict of interest with the Company: None of the Directors has any conflict of interest with the Company or its subsidiary companies. 4. Conviction for offences: None of the Directors has been convicted for offences within the past 10 years other than traffic offences, if any. 5. The shareholdings of the Directors are disclosed on page 199 of this Annual Report.
Annual Report 2012 TDM Berhad (6265-P) 58 Chief executive officer’s Profile
badrul hisham mahari Malaysian, 54
Appointed as CEO: 1 July 2008 Qualifications • Bachelor of Science Degree in Chemistry, Indiana University, Bloomington, USA. • MBA, Drake University, USA. • Graduate Certificate in Business Research, Newcastle University, Australia. Experience • 1984: Corporate Planning Officer, Kwong Yik Bank Berhad. • 1986-1989: Productivity Consultant, Alexander Proudfoot. • 1990: Joined UEM Group Berhad. Appointed as Deputy Regional Manager, PLUS Expressways Berhad. • 1995: General Manager, Operations, PLUS Expressways Berhad. • 1996: Founded Rangkaian Segar Sdn Bhd (operator of the Touch ‘n Go smart card electronic payment system). Subsequently was appointed as Chief Operating Officer of Rangkaian Segar Sdn Bhd. • 2000: Chief Executive Officer, subsidiary company of Multimedia Development Corporation (MDC). • 2004: Group General Manager, TDM Group Berhad. Achievements - was instrumental for achieving the awards and recognitions below • Prime Minister’s Award for quality services and products, PLUS Expressways Berhad. • International Bridge, Tunnel and Turnpikes Award, New York, USA for PLUS Expressways Berhad. • Founded MSC Trustgate, a successful National Certification Authority that delivers Public Key Infrastructure (PKI), one of the key components in internet security.
He is not a director of any other public listed company nor does he have any family relationship with any director and/or substantial shareholders of the company. He has no personal interest in any business arrangements involving TDM Berhad or its subsidiaries and has not been convicted of any offence. As at 2 April 2013, he holds 265,000 unit of shares in TDM Berhad. Annual Report 2012 TDM Berhad (6265-P) 59 management team
From Left:
1. Amir Mohd Hafiz Amir Khalid 3. Mat Yula Kasim Chief Financial Officer Senior Group Manager, Human Resource 2. Mohd Azlisham Jaffar 4. Badrul Hisham Mahari Group Manager, Legal & Secretarial Chief Executive Officer
From Left:
1. Mohammad Azrain Mohd Kassim 3. Jalaini Che Kar Manager, TDM Trading Sdn Bhd Plantation Coordinator, TDM Plantation Sdn Bhd 2. Haji Ab Halim Yusof 4. Murad Jusoh Chief Executive Officer,TDM Plantation Sdn Bhd President Director, PT. Rafi Kamajaya Abadi
Annual Report 2012 TDM Berhad (6265-P) 60 management team (continued)
1. Azlan Mokhtar 1. Abel Ahing Group Manager, Productivity and Quality Group Manager, Management Information System 2. Zahidah Shikh Anuar 2. Alawiyah Hj Yussof Head, Internal Audit Head, Corporate Communications
From Left:
Zawiah Sharif Chief Executive Officer, Kuala Terengganu Specialist Hospital
Bryan Lin Boon Diann Chief Executive Officer, Group Healthcare Division
Adli Muhammad General Manager, Kelana Jaya Medical Centre
Nik Zainon Yussoff Chief Executive Officer, Kuantan Medical Centre
Annual Report 2012 TDM Berhad (6265-P) 61 Innovation for value creation
As a force for positive change within the Group, innovation plays an integral role in providing a safe and secure environment for the treatment and recovery of patients and visitors to TDM’s healthcare facilities. Innovation is a defining feature in our medical technologies and the way we use them for the benefit of our community. The right choice Corporate Responsibility The essence of ‘People, Planet and Profit’
As a leading plantation and healthcare services group in the country, TDM Berhad (TDM) focuses not only on tapping into growth opportunities for these two segments, but also on developing cohesive and coordinated Corporate Responsibility (CR) programmes aligned to our employees, community and environmental targets.
Employee welfare is high on our priorities. We provide suitable accommodation for our estate workers for their safety and comfort.
Our commitment to CR centres on the 3P Philosophy of ‘People, Planet and Profit’ and is embedded in many aspects of the Group. Our risk management, strategies and sustainability are intrinsically linked as we integrate sustainable CR into our core business operations. For our employees, we focus on how to improve the diversity of talent within TDM and also ensure that we give everyone the opportunity to develop a meaningful career.
For the community, our ardent support towards the development of local vendors has nurtured the growth of several small and medium enterprises, which has enabled them to start and develop their respective businesses to support TDM’s Plantation and Healthcare Divisions.
Sustainability at TDM means to observe the principles of good governance and to conduct business ethically where ‘Profits’ are derived to hone the skills and support ‘People’ while ensuring careful sustainable environmental practices to preserve the ‘Planet’.
Annual Report 2012 TDM Berhad (6265-P) 64 corporate responsibility (continued)
People
Enhancing Performance in the Workplace
With plans to double the size of its plantations and triple that of its hospitals within the next six years, TDM is certain to grow its ranks from the current employee complement of almost 4,200. Yet, it is not the headcount, but the talent that counts in our search to attract high-calibre recruits and to retain and nurture human resource. A key priority is to strengthen employee relations Our security personnel strive each day to keep the peace and ensure the as it significantly impacts the growth, safety at our plantations and mills. productivity and profitability of the Group. These were divided into three categories, which comprised At TDM, we adopt a two-pronged structured training, public programmes and in-house approach: the first being the recruitment of programmes as follows: a diversity of talent and the second being the development of existing human capital. • Structured Training On the first, we are meticulous as well as • Balanced Scorecard judicious in our selection of prospective • Customer Experience (CxP) Programme recruits, with the priority on people who can • Certified Coaching and Mentoring Professional add to our existing base of skills, knowledge Programme and experience. At the same time, we have • Customer Relationship Management (CRM) a structured process to identify, train and • ISO elevate talents from within. This succession • Public Programmes plan is applied vertically at every level in the • INSEAD Group. • Harvard Management Programme • Advanced Management Programme at the National In 2012, the Group allocated a considerable University of Singapore (NUS) budget of RM1 million for training, which • In–House Programmes emphasised on the cultivation of leadership • Scholarship for MBA Programme skills, entrepreneurship, critical thinking, • Any courses related to work requirements such as management proficiency and technical Microsoft Excel: Intermediate and Advanced know-how.
Annual Report 2012 TDM Berhad (6265-P) 65 corporate responsibility (continued)
To date, TDM is the only Government Linked Company (GLC) in the State of Terengganu to have introduced a Management Trainee Programme to drive succession planning. This programme was introduced in 2011 and to date, there are a total of four trainees within the Group where three trainees were inducted into the programme in 2012.
Retention of human capital is another key factor As part of our efforts to continuously improve our behind the sustained success of the Group. We operations, services and product offerings, we hold an provide financial, living and environmental incentives Innovation Convention annually. The purpose of this in the form of attractive remuneration, bonuses, convention is to encourage and cultivate creativity opportunities for career advancement and a healthy besides sharing of knowledge among employees. At and productive working environment. These are the the convention, participants are required to present virtues, which have made us a preferred employer not updates on the previous year’s projects and are also only within our business sectors but also across every given the opportunity to present new ideas. Innovation other industry. We believe that this is the strategy, has become a necessity in today’s global business which can inspire our people to build a brighter future setting regardless of a company’s market scope. for themselves, the Company and the community they serve.
TDM Berhad and Subsidiaries Breakdown of Employees as at 31 December 2012
10% (402) Malaysian 33% 67% 48% Executive (23) (46) (1,969) 42% Non-Executive Total: Total: (1,734) 69 4,105 Non-Malaysian Executive Non-Executive TDM Berhad Subsidiaries
2% 11% (4) (448) 16% (27)
47% Total: 82% Total: (1,969) 4,174 (136) 167
42% (1,757)
Group PT. Rafi Kamajaya Abadi
Annual Report 2012 TDM Berhad (6265-P) 66 corporate responsibility (continued)
We adhere to Good Agricultural Practices (GAP), which include a ban on open burning and non-encroachment into forest areas.
The Management of TDM recognised the importance of this Additionally, we have installed WiFi (wireless at an early stage and the innovative projects and programmes internet service) in all our Malaysian estates introduced over the years have contributed towards better to improve access to information and yield, improved productivity and hence, increased revenue. communications for the locals.
Sustainable Livelihood In Kalimantan, we are fully supportive of the Indonesian Government’s policy for ‘Helping others to help themselves’, as opposed to merely plantation companies to cultivate land for ‘helping others’, is a far more effective and efficient approach the benefit of the local community in tandem to support social and community causes. In this regard, the with the development of the company’s own essence of our CR is to create opportunities for others to build plantation estates. This is called ‘PLASMA’ and better lives for themselves and contribute to the protection of ‘INTI’ respectively whereby 20,000 hectares the environment. of ‘PLASMA’ are to be developed out of every 80,000 hectares. Under this arrangement, We introduced a Field Assistant Programme (FAP) in 2007 TDM manages the ‘PLASMA’ estates with to eradicate poverty and enhance the lives of the families of the community cooperatives bearing the cost our estate workers. In 2012, 22 children of estate employees of development. The merits of this policy were given training and exposure to the various aspects of mirror our approach to CR, which is to grow plantation operations under this programme, with the ultimate in concert with the communities where we aim of eventually absorbing them into our workforce. operate in.
Annual Report 2012 TDM Berhad (6265-P) 67 corporate responsibility (continued)
Supporting Education
At TDM, we recognise the crucial role of higher education in the development of high-calibre human capital. We are committed towards fulfilling the national agenda of Malaysia to achieve high-income nation status by 2020 and as such through collaborations with educational institutions, we support various local agencies and institutions of higher learning by providing undergraduates and graduates with valuable training and practical exposure. This provides aspiring graduates with the necessary skills and experience for better future employment opportunities.
Healthcare Services for the People
The spirit of CR is also embedded in our provision of healthcare services, where the emphasis is on the quality, accessibility and affordability of our total patient care. Here, we dispense with non-essential ‘frills’ in favour of greater focus on the diagnostic and curative aspects of healthcare.
In 2012, the hospitals under our purview organised a total of 150 healthcare We are committed to create a conducive workplace environment for our related programmes and events, which employees to encourage personal development, which contributes positively to the Company’s growth. included blood donation drives, health screenings and other related activities aimed at building awareness on leading a healthy lifestyle.
These efforts have allowed us to foster closer relationships with people and have made a difference in our endeavour to promote better health in the communities where we operate.
Our efforts to provide affordable and quality healthcare have contributed towards better health of the communities where we operate in.
Annual Report 2012 TDM Berhad (6265-P) 68 corporate responsibility (continued)
Objectives in CR • Achieving an ‘A’ rating in Malaysia’s Corporate Governance Index. • Maintaining lowest cost in industry, but with high-income employees. • Attaining RSPO certification for mills and estates. • Gaining recognition as a leading centre for the development of talent in the East Coast. • Providing accessibility to quality and affordable healthcare. • Giving back to the community by creating jobs and opportunities for local vendors.
Supporting Local Business
The concept of helping others help themselves extends to local businesses. The Group has always endeavoured to generate opportunities for small and medium-sized enterprises (SMEs). We support their business expansion through our own growth since any increase in palm oil production or the number of patients would, for example, require more transporters and additional meals respectively.
Selected vendors undergo training programmes while mentoring and auditing are also undertaken to build a stable pool of high quality suppliers. Vendors including those who provide transportation ensure that their vehicles and equipment are well maintained to offer uninterrupted services.
Annual Report 2012 TDM Berhad (6265-P) 69 corporate responsibility (continued)
Planet
Benchmarking Against the Highest Standards
Quality is a relative measure that has tangible value only when The certification is valid for it is benchmarked against the highest standards. We subscribe to five years with validation every this interpretation at TDM with our relentless pursuit of top tier second year. international certification and accreditation for our business operations. In plantations, we reference ourselves against the For TDM, the stepping stone Roundtable on Sustainable Palm Oil (RSPO) certification while the to RSPO was its benchmarking Joint Commission International (JCI) accreditation is our yardstick for against best agricultural and the Healthcare Division. milling practices. In 2011, our two mills and the nine estates RSPO calls for sustainability practices in the production of palm oil. under them were awarded the Among others, it requires plantation and mill operators to: Code of Good Agricultural • assume responsibility for the socio-economic welfare of the Practices (CoGAP) for oil palm community, estates certificate and the • ensure occupational health and safety, and Code of Good Milling Practice Certificate by the Malaysian • display sensitivity towards the environmental equilibrium of the Palm Oil Board (MPOB). biodiversity.
Biodiversity principles are incorporated into the management of our plantations to protect the natural areas from depletion.
Annual Report 2012 TDM Berhad (6265-P) 70 corporate responsibility (continued)
Our journey towards the RSPO certification is on the final stretch with the entire Malaysian operations expected to be certified in June 2013. The Kemaman Palm Oil Mill underwent the final audit in December 2012 while the Sungai Tong facility is scheduled for a similar exercise in May 2013. The certification applies to the mills and the estates that supply them with the Fresh Fruit Bunches (FFB) as well as the respective nurseries for oil palm trees.
The JCI is the healthcare equivalent of the RSPO In the year under review, KMC and KTS received their as the global standards bearer. The JCI focuses on ISO 9001:2008 certification in December, while TDMC the quality, safety and efficiency of patient care Hospital and KJMC are expected to be certified in by providing quantifiable metrics for continuous 2013. The SOPs provided under ISO 9001 would then improvements to the clinical and managerial be leveraged to achieve the JCI accreditation, which is aspects of looking after patients. expected to begin towards the end of 2013.
The healthcare’s drive towards JCI accreditation Although the accreditation process for both the RSPO is underpinned by ISO certification as the and JCI are costly, TDM Berhad’s commitment to foundation. Whereas JCI concerns patient quality as the fulcrum of our operations requires that we care, ISO 9001:2008 relates to the standard spare no expense to stay on this path. operating procedures (SOPs) of a hospital or medical facility.
The Kemaman Palm Oil Mill has been RSPO-certified. Next step for the Group’s hospitals is the JCI accreditation.
Annual Report 2012 TDM Berhad (6265-P) 71 corporate responsibility (continued)
Equipment and machinery are provided with dedicated parking spaces at the workshops located at our plantations and mills.
Roundtable on Sustainable Palm Oil (RSPO) • RSPO certification covers oil palm growers, processors and traders and consumer goods manufacturers. • 14% of global palm oil are RSPO-certified (December 2012). • 37 companies operating plantations and 175 mills have RSPO certification (December 2012) • The EU is committed to RSPO-certified palm oil. The US, China, India and Australia are moving towards this commitment. • In Malaysia, 188 of oil palm companies and plantations are RSPO-certified. Source: www.rspo.org
Joint Commission International (JCI) • As listed on the JCI website (www.jointcommissioninternational.org) in June 2012, a total of 375 hospitals in 47 countries have been accredited by JCI. • As at August 2012, Malaysia has nine JCI-accredited hospitals. Source: Frost & Sullivan
Conserving Resources, Preserving Environment
Sustainable development is a way of life at TDM where our modus operandi revolves around the conservation of natural resources and the preservation of the environment. This critical protocol is an enduring feature of our corporate tradition as well as operational culture to cultivate sustainability in every aspect of business operations.
Annual Report 2012 TDM Berhad (6265-P) 72 corporate responsibility (continued)
We promote environmental awareness and values among our employees as we strive for better health and safety of our employees.
At the heart of this practice is our effort to maximise our As part of our Clean Waste Management resources and minimise wastage at the same time. A Practice, the balance of by-products not bio-composting plant in Sungai Tong was constructed to needed for conversion is sold to global food convert by-products from the harvest, which include empty and agriculture producers for their bio-diesel fruit bunches (EFB) and palm oil mill effluent (POME), production. into organic fertiliser for use in our plantations. Since coming on line in May 2010, the facility has significantly The Plantation Division’s current efforts to reduced our dependence on external sources of fertiliser, achieve the RSPO certification have further in the process generating cost-savings to production and enhanced our Good Agricultural Practices managing the accumulation of waste. In 2012, the plant (GAP) towards sustainability. Among the achieved a monthly output of about 16,000 metric tonnes environmentally sustainable practices already of bio-organic compost to meet 40% of our plantations’ in place are: fertiliser requirement. • ban on open burning; • non-encroachment into forest areas; A second bio-organic plant in Kemaman is expected to • proper waste management; be commissioned by September 2013. Costing RM11.7 • management in the usage of chemicals; million, the new composting facility will produce about and 24,000 metric tonnes per annum to meet our objective of • prevention of contamination. achieving total organic fertiliser independence. In addition to the compost produced in-house, we procured another At TDM, our focus on sustainable development 29,000 metric tonnes of inorganic chemical fertilisers in is ultimately driven by the responsibility to 2012 for the 12 estates in Terengganu. It is estimated that leave a better world and brighter future for the once operational, both plants could cut total manuring generations to come. costs by 10% to 12%.
Annual Report 2012 TDM Berhad (6265-P) 73 corporate responsibility (continued)
Profit
Sharing Wealth and Spreading Prospects
As a responsible corporate citizen, the Group is The Group remains committed to the interests of our a staunch supporter of fair competition. In this shareholders. Our dividend policy is a reflection of this regard, we strive to ensure transparency in all our as it sets aside at least 30% of our consolidated nett Profit dealings with stakeholders, internal and external. After Tax (PAT) in the form of shareholder dividend.
A prime example is our procurement process, Although our approach to CR transcends straightforward which favours vendors who have a good track philanthropy, nevertheless, in 2012 we introduced record in: a policy to set aside 2% of our PAT for philanthropic • the quality of the goods or services, purposes and intentions. Another commitment during • the ability to meet all our requirements, and the year under review was our pledge of an annual RM1 • fair pricing. million towards the development of social, sports and education in the State of Terengganu. This largess is over As an effort to further enhance transparency, we and above any dividend paid to the State Government. had introduced an e-Procurement and e-Bidding process to promote fair competition. Through By viewing CR as a business innovation instead of a such electronic means, we have precluded any corporate obligation, we are moving towards the desired human intervention from the entire exercise, goal of being to the State Government what Petronas is leading to greater trust and confidence among to the Federal Government. our current and potential suppliers.
A half-day briefing and presentation session was organised on 5 April 2012 for the e-Bidding Awareness Campaign Programme. Syahirah Aimi Zulkifli, Mohd Shafiq Izzat Mohd Sabri and Wan Rozlan Wan Abd Ghani (seated from left to right) from the Procurement and Finance Department were on hand to demonstrate the e-Bidding procedure. The innovative e-Bidding was introduced to save cost and will further allow more transparency and faster processing for the Group’s tender process.
Annual Report 2012 TDM Berhad (6265-P) 74 Transparency
Statement on Corporate Governance 76 Code of Business Ethics 85 Audit Committee’s Report 88 Statement on Risk Management and Internal Control 93 Additional Compliance Statement 96 statement on corporate governance
The Board of Directors (Board) of TDM Berhad acknowledges the importance of implanting good corporate governance into the Company’s business dealings and culture. Corporate governance is embedded in the process of directing and managing the business of the Company towards enhancing the business profitability and accountability with the ultimate objective of growing sustainable shareholders’ value, whilst protecting the interests of other stakeholders.
Hence, the Board is committed to continuously improve the level of governance in the Company towards corporate governance excellence by supporting the principles and recommendations prescribed by the following: • Malaysian Code on Corporate Governance 2012 (Code) • Bursa Malaysia Securities Berhad’s (Bursa Securities) Practice Note 9 • Bursa Securities’ Main Market Listing Requirements (Main Market LR) and • Bursa Securities’ Corporate Governance Guide : Towards Boardroom Excellence (CG Guide)
Besides the above, the Company is supporting corruption prevention initiatives by the Malaysian Government and Malaysian Anti-Corruption Commission (MACC). Therefore, during the financial year, the Company signed the Corporate Integrity Pledge with the MACC, marking our commitment towards the initiatives.
In relation to the above, the Board is pleased to report the manner in which the Company has applied the principles and the recommendations of the Code and the extent of compliance with the Best Practices provisions.
1. Board of Directors
a. Roles and Responsibilities of the Board
The Board is aware and understand its roles and responsibilities in leading and controlling the Company. In order to deliver both fiduciary and leadership functions, the Board, amongst others, assumes the following key responsibilities as per Recommendation of the Code: • Review and adopt the strategic plan for the Company. • Oversee the conduct of the Company’s Business. • Identify principle risks and ensure the implementation of the appropriate internal controls and mitigation measures. • Review and monitor the succession planning of the senior management. • Oversee the development and implementation of a shareholder communications policy for the company. • Review the adequacy and the integrity of the management information and internal controls system of the Company.
The Company is in the midst of reviewing and establishing the Board Charter in the year 2013. Once completed, the approved Board Charter will be published on the Company’s corporate website.
In delivering the above duties and responsibilities, the Board is supported by suitably qualified and competent company secretaries who are members of the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA).
b. Composition of the Board
The Company is headed by an experienced Board with diverse backgrounds and expertise, primarily in business administration, economics, finance and plantation in both the public and private sectors. The knowledge and expertise in various fields of the individual directors contribute to the enhancement of the effectiveness of the Board. Details of each individual director’s skills and experiences are presented in the Board of Directors’ Profile set out on pages 52 to 58 of this Annual Report.
Annual Report 2012 TDM Berhad (6265-P) 76 statement on corporate governance (continued)
The Board, as at the date of this statement, consists of seven members, all of whom are non-executive directors, including the chairman. Two of the directors are independent.
The presence of independent non-executive directors provides a pivotal role in corporate accountability. The role of the independent non-executive directors is particularly important as they provide independent and objective views, advice and judgement and ensure strategies proposed by the management are thoroughly discussed and evaluated, and that the long-term interests of stakeholders are considered.
The independent non-executive directors do not participate in the operation of the Company and have served the Company for no more than nine years in order to uphold their objectivity and fulfil their responsibility to provide check and balance to the Board.
In relation to the recommendation of the Code that the Board must comprise a majority of independent directors where the chairman of the Board is not an independent director, the Board is in the opinion that current number of independent directors is sufficient to ensure balance of power and authority onthe Board.
All of the Board members serve as directors in not more than five Boards of listed companies, to ensure they devote sufficient time to carry out their responsibilities.
The Board is in the opinion that the current size and composition of members are appropriate to commensurate the complexity of the Group’s businesses and conducive for effective conduct of Board decision making.
The Board is also satisfied with the Board’s composition in respect of representation of minority shareholders by the independent non-executive directors.
c. Roles of the Chairman, Chief Executive Officer and Senior Independent Non-Executive Director
The roles and responsibilities of the chairman and the chief executive officer are clearly separated. This is in line with the recommendation of the Code, which requires the Board to establish clear functions reserved for the Board and those delegated to the management.
The chairman is responsible for ensuring Board effectiveness and conduct, which includes promoting sustainable business strategies. The chief executive officer has overall responsibility over the operating units, organisational effectiveness and implementation of Board policies and decisions within the delegated authority limit approved by the Board.
The segregation of duties between the chairman and the chief executive officer facilitates an appropriate balance of role, responsibility and accountability and promotes appropriate supervision of the management. Furthermore, the chairman is neither previously a chief executive officer nor a management member of the Company.
The senior independent non-executive director is responsible to ensure the views of each non-executive directors are given due consideration. The senior independent non-executive director also provides an additional communication channel between the non-executive directors and the shareholders. Haji Zakaria K C Ahammu is the Senior Independent Non-Executive Director of the Board to whom the shareholders and other stakeholders can convey their concerns. All concerns relating to the Company can be channelled to his email address; [email protected], which is also published on the Company’s website.
Annual Report 2012 TDM Berhad (6265-P) 77 statement on corporate governance (continued)
d. Board Appointment
The Nomination & Remuneration Committee (NRC) established by the Board is responsible for assessing the nominee(s) for directorship and Board Committee membership and there upon, convey their recommendations to the Board.
The Board is entitled to the services of the Company Secretaries who will ensure that all appointments are made in a proper manner and that all relevant information is obtained and all legal and regulatory requirements are met.
e. Re-election of Directors
In accordance with the Company’s Articles of Association, all directors who are appointed by the Board are subject to re-election by shareholders at the next Annual General Meeting (AGM) after their appointment. Also, at least one third of the remaining directors are required to submit themselves for re-election at least once in every three years at the AGM.
f. Board Effectiveness Evaluation
Individual director’s assessment was conducted with the objective to improve the Board effectiveness and to enhance the director’s awareness on the key areas that need to be addressed. The performance indicators for individual director include their interactive contributions, quality of input and understanding of their roles. Board and Board Committee Questionnaires, Self-Assessment Questionnaires and Individual Director Peer Evaluation Questionnaires are completed by the directors and the summary report on the evaluation results is tabled to the Board to deliberate areas for improvement.
g. Board Meetings and Supply of Information
The Company prepares the meeting calendar for the full year for the Board and board committees. The meeting calendar for the ensuing financial year is prepared before the end of the current financial year, taking into consideration both the management’s business planning and reporting requirements. This enables the members of the Board and the board committees to plan and allocate the required time in their respective schedules.
Apart from the scheduled meetings, the Board meets as and when necessary to consider urgent proposals or matters, which require the Board’s expeditious review or consideration.
To facilitate productive and meaningful deliberations, the proceedings of the meetings are conducted in accordance to a structured agenda. The Board papers are prepared and presented in a manner to facilitate the deliberation and decision making process by the Board.
As an initiative to leverage on the advancements in technology, the use of paperless Board papers was introduced during the year. The agenda together with the board papers are disseminated to the Board via email prior to the meetings to enable directors to study matters, which require their decisions or opinions.
Regular information supplied to the Board includes: • Annual Business Plan and Budget; • Quarterly performance report of the Group; • Quarterly financial statements to Bursa Malaysia Securities Berhad; and • Major operational, financial and corporate proposals or issues.
Annual Report 2012 TDM Berhad (6265-P) 78 statement on corporate governance (continued)
The directors’ attendance for the twelve Board meetings held during the financial year ended 31 December 2012 are as follows:
No. of Meetings Members % Attended
Datuk Haji Roslan Awang Chik (Chairman) 12/12 100 Dato’ Haji Abdul Razak Ismail 10/12 83 Dato’ Haji Razali Kassim 11/12 92 Haji Long A. Rahman 11/12 92 Haji Zakaria K C Ahammu 12/12 100 Abdul Mutalip Sulaiman 11/12 92 Wong Shew Yong 11/12 92
The Company Secretaries were entrusted to record the Board’s deliberations, in terms of issues discussed, and the conclusions and the minutes of the previous Board meeting is distributed to the directors prior to the Board meeting for their perusal before confirmation of the minutes at the commencement ofthe following Board meeting. The directors may comment or request clarification before the minutes are tabled for confirmation and signed by the chairman of the meeting as a correct record of the proceedings of the meeting.
All directors have direct access to the advice and services of the Company Secretaries whether as a full Board or in their individual capacity, in discharging their duties. The directors are regularly updated on new statutory as well as regulatory requirements relating to the duties and responsibilities of directors. Directors, whether acting as a full Board member or in their individual capacity, in the furtherance of their duties, may obtain independent professional advice at the Company’s expense, which the application and appointment process for the services is as per established internal procedures.
2. Board of Committees
In order to effectively discharge its duties, the Board has established the following Board Committees: • Audit Committee. • Nomination & Remuneration Committee. • Employees’ Shares Option Scheme Committee.
All Board committees have written terms of reference to outline their duties, responsibilities and authorities.
a. Audit Committee
The Audit Committee comprises three non-executive directors, of whom two are independent non-executive directors. The chairman of the Audit Committee is a Fellow of the Association of Chartered Certified Accountants (ACCA) and a Chartered Accountant with the Malaysian Institute of Accountants (MIA).
The Audit Committee report detailing the committee membership and meetings, terms of reference and activities during the year, is presented on pages 88 to 92 of this Annual Report.
Annual Report 2012 TDM Berhad (6265-P) 79 statement on corporate governance (continued)
b. Nomination & Remuneration Committee (NRC)
The committee consists of three non-executive directors of whom two are independent non-executive directors. The primary functions of the NRC, among others, includes the following i.e. to • determine the criteria for Board membership; • review annually and recommend to the Board with regards to the structure, size, balance and composition of the Board and committees; • propose to the Board the responsibilities of the non-executive directors, which includes membership and chairmanship of Board committees; • evaluate annually the effectiveness of the Board and committees; • recommend to the Board on the re-election of retiring Board members; • establish and recommend the remuneration structure and policy for the Board members and senior management personnel, where applicable. In 2012, the committee held six meetings. The attendance of members is reflected as follows:
No. of Meetings Members % Attended Haji Zakaria K C Ahammu (Chairman) 6/6 100 Haji Long A. Rahman 6/6 100 Abdul Mutalip Sulaiman 6/6 100
The main activities of the NRC during the year are listed below: • Considered and made recommendations to the Board on the re-appointment and re-election of directors at the AGM. • Considered and made recommendations to the Board on the remuneration and benefits for the Board of Directors. • Reviewed and considered the remuneration package for overseas postings for management personnel. • Considered and made recommendations to the Board on the appointment of senior management personnel.
In recommending the Board membership, NRC assesses the candidates’ background and expertise, experience and skills possessed as required by the Board. The Company believes that the individual director from various fields could contribute to the effectiveness and improvement of the Board functions and decision making.
The NRC is responsible to assess the individual directors’ performance and Board Committee as well. The assessment has been done annually vide Directors’ Performance Evaluation on interaction contributed, input quality and understanding of role. Other than that, the independent assessment has also been done by independent directors in accordance with Main Market LR.
The Chairmanship of NRC remains unchanged as the Board believed that NRC has performed effectively and satisfactorily based on Directors’ Performance Evaluation results. The Chairman was selected based on agreed processes taking into consideration the skills and experiences required. Furthermore, the NRC presents their recommendations to the Board for final decision, and such proper checks and balance are in place.
The NRC and the Board acknowledge the need for gender diversify to enhance the efficient functioning of the Board and shows good governance practices. The Board believes the appointment of new member is guided by the skills, experience, competency and knowledge of the individual candidate.
Annual Report 2012 TDM Berhad (6265-P) 80 statement on corporate governance (continued)
c. Employees’ Shares Option Scheme (ESOS) Committee
Employees’ Shares Option Scheme (ESOS) Committee was established with the objective of administering the ESOS. The Committee will meet as and when required.
The following are the members of the ESOS Committee as at the date of this statement: • Datuk Haji Roslan Awang Chik (Chairman) • Dato’ Haji Abdul Razak Ismail • Haji Long A. Rahman
All the above mentioned committees have the authority to examine particular issues and report to the Board with their recommendations. The ultimate responsibility and the final decision on all matters however lies entirely with the Board. 3. Directors’ Remuneration
The level and Make Up of Remuneration The remuneration of all directors is reviewed by the NRC. The NRC has a structured procedure for the Board to approve the remuneration of all non-executive directors, based on their experience and expertise and the level of responsibilities of the directors concerned as well as the condition of the industry.
Procedure The NRC recommends the remuneration framework and package of all directors. Directors do not participate in decisions regarding their own remuneration packages. The directors’ fees are approved at the AGM by shareholders.
Disclosure The details of the remuneration of the directors of the Company for the financial year ended 31 December 2012, are as follows:
Group Company RM’000 RM’000 Executive Directors Fees and other emoluments 276 - Share option granted under ESOS 6 - Non-Executive Directors Fees and other emoluments 2,064 950 Share option granted under ESOS 170 84 Benefits in kind 137 25 Total 2,653 1,059
The number of directors of the Company whose total remuneration during the year as analysed, is shown below:
Non- Executive Directors Number of Directors
RM 50,001 – RM 100,000 6 RM 250,001 – RM 300,000 1
Annual Report 2012 TDM Berhad (6265-P) 81 statement on corporate governance (continued)
4. Board Conduct
The Company’s Code of Business Ethics sets forth the guidelines and ethical standards of conduct required of the Board, the management and other employees of the Company. The details on the Code of Business Ethics are set out on page 85 to 87 of this Annual Report.
5. Directors’ Training
All directors have completed the Mandatory Accreditation Programme (MAP) prescribed by Bursa Securities within four months of their appointment. Induction briefings on information including Group corporate profile and activities as well as business plan and performance are organised for newly appointed director(s).
All members of the Board are encouraged to enrol in relevant continuous education programmes to keep abreast with industry developments as well as current changes in laws and regulations. Conferences, seminars and training programmes attended by directors in 2012 are as follows:- • Competitive Strategy Seminar. • Corporate Governance Blueprint 2011 – Key Amendments of Listing Requirements and Corporate Disclosure Guide. • Mandatory Accreditation Programme for Directors of Listed Company. • The 2012 IFRS Conference. • Malaysian Tax Conference 2012 – Transformation and Tax Reform.
6. Relationship and Communication with Shareholders and Investors
The Company recognises the importance of timely dissemination of information to shareholders and other stakeholders. The Company adheres strictly to the disclosure requirements under the Main Market Listing Requirements of Bursa Securities.
All major developments of the Company and other information are communicated to shareholders and investors through the following: (i) Annual Report; (ii) Quarterly financial results with an overview of the Group’s performance and operations; (iii) Various announcements and disclosures made to Bursa Securities; (iv) The Company’s website (http://www.tdmberhad.com.my) and (v) Various announcements which can be accessed at any time through the Bursa Securities’ website at (http://www.bursamalaysia.com)
The Company’s website publishes the name(s), email address(es) and contact number(s) of designated person(s) to enable the shareholders and other stakeholders to forward their queries to the Company.
The Company Profit Distribution Policy and Dividend Policy are published in the Company’s website and presented on page 38 of this Annual Report.
Annual General Meeting (AGM) The AGM is another key channel of communication between the Company and its shareholders. It gives an opportunity to all shareholders to have direct access to the Board and to raise questions on resolutions being proposed. Shareholders are encouraged to attend the AGM and actively participate in the proceedings.
Annual Report 2012 TDM Berhad (6265-P) 82 statement on corporate governance (continued)
During the AGM, the chairman, directors and senior management personnel are available to respond to shareholders’ questions on the business and performance of the Company. Responses to queries raised by the Minority Shareholders Watchdog Group (MSWG) before the AGM are shared with the shareholders during the meeting, assuring the shareholders that pertinent issues and queries pertaining to the business of the Company are adequately addressed.
As and when necessary, a press conference is held immediately after the AGM and the chairman will explain to members of the media on any resolutions passed and to answer any question in relation to the development and operations of the Company.
The Board will consider adopting electronic voting to facilitate greater shareholder participation at general meetings, and to ensure accurate and efficient outcomes of the voting process. To promote poll voting, the Company will be seeking shareholders’ approval to amend its Articles of Association to include the use of ballot or voting papers or tickets or electronically using various forms of electronic devices. Shareholders’ approval is being sought under Special Resolution as set out in the Notice of the 48th AGM. 7. Accountability and Audit
a. Financial Reporting
The Board is responsible to ensure that the accounting records are properly kept and that the financial statements are prepared in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.
The Board, with the assistance of the Audit Committee, oversees the financial reporting process in order to ensure completeness, accuracy and adequacy of financial disclosures in a timely manner.
b. Directors’ Responsibility Statement
The Board of Directors is responsible to ensure that the financial statements of the Group and Company give a true and fair view of the state of affairs of the Group and Company at the end of the financial year, which includes the results and cash flow for the financialear. y
The Statement of Directors pursuant to Section 169 (15) of the Companies Act, 1965 signed by the Datuk Haji Roslan Awang Chik and Abdul Mutalip Sulaiman is set out on page 102 of this Annual Report.
c. Internal Control
The Board acknowledges its responsibilities for the Company’s system of internal controls, which is to maintain a sound system of internal controls to safeguard shareholders’ investments and the Group’s assets. The system involves key management personnel from each business segment and is designed to meet the Group’s particular needs and to manage the risks which it is exposed to.
The Statement on Risk Management and Internal Control, which provides an overview of the Group’s risk management framework and the state of internal controls within the Company and the Group is set out on page 93 to 95 of this Annual Report.
d. Compliance and Internal Disclosure Controls
The Board has appointed the Group Manager, Legal and Secretarial of the Company, Mohd Azlisham Jaffar as the designated person to take overall responsibility for ensuring compliance with the disclosure obligation under the Main Market LR (designated person). He is a lawyer by profession and has seven years’ experience as a law practitioner before joining TDM in 2007. The alternate designated person is the Chief Financial Officer of the Company; Amir Mohd HafizAmir Khalid.
Annual Report 2012 TDM Berhad (6265-P) 83 statement on corporate governance (continued)
Other than ensuring compliance with the disclosure obligation under the Main Market LR, the appointment of the designated person is in line with the objective of the recommendation of the Code which is to establish corporate disclosure policies and procedure to ensure comprehensive, accurate and timely disclosure.
e. Relationship with Auditors
The Board maintains a transparent and appropriate relationship with the Company’s auditors, both external and internal, in seeking their professional advice towards ensuring compliance with applicable accounting standards and all statutory requirements.
As and when necessary, the Audit Committee meets with the external auditors without the presence of the management personnel to table and discuss their audit plan, audit findings and the financial statements. External auditors are also invited to attend the Company’s AGM and are available to answer shareholders’ questions on the content of their audit report.
The Audit Committee is aware on the recommendation of the Code to have policies and procedures to assess the suitability and independence of external auditors. Considering the expertise and existing business knowledge of the current external auditors and the location of the Company and its subsidiaries, the Audit Committee is in the opinion that the current external auditors are still suitable for re-appointment. While assessing the independence of the external auditors, the Audit Committee is satisfied and agreed with the representation by the external auditors in their Audit Planning Memorandum for the audit of the financial year ended 31 December 2012, that they are independent in accordance with the By-laws (on Professional Ethics, Conduct and Practise) of the Malaysian Institute of Accountants. Furthermore, during the financial year ended 31 December 2012, the external auditors were not engaged for any other significant services other than the statutory audit.
8. Whistleblowing
The Board and the management acknowledge their responsibilities in dealing with fraud risk. A policy on whistleblowing was established as part of internal procedures to allow the Board, the management and other employees and stakeholders to report possible wrongdoing. Establishment of the Whistle-blowing Policy demonstrated the attitude of the Board and the management towards fraud and illegal acts. Details of the whistleblowing policy are set out on page 39 of this Annual Report.
9. Conflict of Interest and Related Party Transactions
The directors are responsible at all times to determine whether they have a potential or actual conflict of interest in relation to any matter, which comes before the Board. All directors are required to make declarations on whether they have any interest in transactions tabled at Board meetings.
The directors acknowledge that they must declare any interest they have in the Company and its subsidiaries and abstain from deliberation and voting on the related resolutions at the Board or any general meetings convened to consider the matter.
In the event that a corporate proposal is required to be approved by shareholders, interested directors will abstain from voting in respect of their shareholdings in TDM on the resolution related to the corporate proposal, and will further ensure that persons related to them also refrain from voting on the resolution.
The statement is made in accordance with a resolution of the Board of Directors dated 26 February 2013.
Annual Report 2012 TDM Berhad (6265-P) 84 Code of business ethics
The Code of Business Ethics (the Code) describes and reinforces TDM Berhad’s (TDM) guiding values and commitment in line with our policies and practices. It is essential to TDM’s legal and regulatory compliance obligations. We strive to perform responsibly, ethically and in a sustainable manner in all our business activities. We believe in applying the principles of our code of business ethics to every transaction which affects our employees, our customers and all other stakeholders.
The Code is based on integrity, mutual trust and respect, which are essential to long-term, mutually beneficial relationships with all our stakeholders.
This Code sets forth the guidelines and ethical standards of conduct required of the Board of Directors, Chairman, Chief Executive Officer, Heads of Departments, managers, executive officers and all other employees of TDM.
The Code, as well as its intent, is intended to define the conduct of all group activities in accordance with high standards of integrity and in compliance with all applicable laws and regulations; and applies to the Group, all its subsidiaries and other business entities controlled by the Group.
Our commitment to the Code and conduct prescribed extends to all our stakeholders who encompass everyone and every organisation which has an interest in the operations of TDM, including: • Customers • Employees and their families • Shareholders and owners • The Board and Board Committee members • Vendors and suppliers • Industry affiliates • The community
Compliance with Laws, Rules and Regulations
TDM will comply with all relevant laws, regulations and by-laws as a prerequisite for maintaining ethical behaviour and expects the same compliance from our business associates in the course of all related transactions.
All employees, executive officers and board members are also required to comply with all laws, rules and regulations, which apply to the Group in all areas of business.
While it is the Group’s philosophy to address matters internally, the Code takes precedence in not preventing or discouraging any party from reporting any illegal activity including the violation of any Federal, State or International laws, rules or regulations to the appropriate authorities.
The purpose of the Code is to promote ethical practices and in doing so, should not be an obstacle to any party to testify, participate or assist in any legal proceedings or investigations, and in upholding the intent. No employee, executive officer or board member shall discharge, demote, suspend, threaten, harass or in any manner discriminate against an employee for reporting any violation in good faith.
Annual Report 2012 TDM Berhad (6265-P) 85 code of business ethics (continued)
Professionalism
Having committed to maintaining the highest standards of professionalism to meet and exceed the expectations of our customers, the Group strives to develop high standards of employee competency to produce high quality products and services.
Results will be achieved by showing respect and acting responsibly, which is the principle by which TDM conducts itself when dealing with people, customers, employees and the environment. In doing so, all parties are to be treated with dignity and courtesy to protect and improve the work environment, while abiding by the laws, rules and legislation which exist to add value to how we do business.
We shall also act responsibly towards our customers, co-workers and organisations by providing timely delivery of consistently high quality goods and services as we work together to add value to the business.
With results being essential to our investors and the business, the Code shall be an essential guide to the attainment of our goals, which will be achieved by behaving ethically, legally and morally.
Conflict of Interest
When dealing with business associates, any actual or apparent conflicts between personal and professional interests are to be avoided and managed in an honest and ethical manner. As such, employees, executive officers and board members are to act in the best interests of the Group and its stakeholders as personal interests must not impede with or harm the interests of the organisation.
Certain relationships or transactions, despite their appearance, may be approved following a transparent and ethical process of disclosure, discussion and consultation if they are deemed not harmful or improper to the Group. However, any conflict of interest or appearance thereof, even if harmless to the Group, is prohibited from the outset unless it has undergone a due process of disclosure, consultation and approval.
Our Moral Standards of Honesty, Integrity and Fair Dealing
In our relationships with partners, customers and suppliers, we shall treat them fairly and conduct business in a manner consistent with the essential values of TDM, which include the highest standards of integrity, openness, fairness and reliability.
The Group’s suppliers, customers, competitors and employees are to be dealt with honestly, ethically and fairly by each employee, executive officer and board member and in doing so, statements regarding the Group’s products and services should not be untrue, misleading, deceptive or fraudulent. No individual is to be taken unfair advantage of by an act amounting to manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other practice of unfair dealing.
Ethical practices are also incorporated into the selection process by recruiting and promoting individuals who demonstrate a commitment to the ethics and principles by which TDM operates. This will be an unequivocal message to anyone whose performance of the highest integrity is a prerequisite to continued employment and advancement within the Group.
Annual Report 2012 TDM Berhad (6265-P) 86 code of business ethics (continued)
Our partners are selected carefully and we will only work with vendors and suppliers who can share and align themselves with our principles and commitment. Business Practices as to how they operate reflects on our growth effectiveness and reputation.
Occupational Safety and Health
TDM is committed to ensuring the safety and health of all our employees and customers, which is demonstrated by our endeavour to integrate occupational safety and health (OSH) practices into the business practices and strategy at all times. This transcends the Group’s statutory duty to ensure full compliance with all relevant legislation as well as to create and sustain a work culture and environment where safety and health are the priority.
Sexual Harassment Policy
In our commitment to maintain a workplace and environment that is free of harassment in any form, including ethnicity, religion, gender, national origin, ancestry, non-disqualifying physical or mental disability, marital status, sexual orientation or gender identity. All employees have the right to work in an environment which is free of any form of discrimination and conduct that could be considered harassing, coercive or disruptive and this includes sexual harassment.
No employee of any gender should be subjected verbally or physically to unsolicited, inappropriate and unwelcome sexual overtures or conduct.
TDM will initiate immediate action to address harassment of employees by managers, co-workers or non-employees regardless of whether the incident in question occurs in the workplace or in the course of an employee’s work to promote a work environment in which all employees are treated with courtesy, dignity and respect.
Annual Report 2012 TDM Berhad (6265-P) 87 audit committee’s report
The Board of Directors of TDM Berhad is pleased to present the report of the Audit Committee for the year ended 31 December 2012.
1.0 Membership
The Audit Committee (AC) comprises three non-executive directors, two of them are independent non-executive directors. They are as follows: • Abdul Mutalip Sulaiman (Chairman) Independent Non-Executive Director • Dato’ Haji Abdul Razak Ismail Non-Independent Non-Executive Director • Haji Zakaria K C Ahammu Senior Independent Non-Executive Director
All of the members of the AC are financially literate and the chairman of the Audit Committee is a Fellow of the Association of Chartered Certified Accountants (ACCA) and a Chartered Accountant with the Malaysian Institute of Accountants (MIA).
2.0 Meetings and Attendance
During the financial eary 2012, the AC had eight meetings. The details of the attendance of each member are as follows:
Number of AC Meeting AC Member Attended/Held % Abdul Mutalip Sulaiman 8/8 100 Dato’ Haji Abdul Razak Ismail 8/8 100 Haji Zakaria K C Ahammu 8/8 100
The AC meetings were also attended by the chief executive officer, head of internal audit and, upon invitation, chief financial officer, other management members and representative(s) from external auditors to brief the AC on the related issues.
Besides the quarterly Audit Committee meetings, the Audit Committee also hold meeting with external auditors without the presence of the management to discuss and exchange views on relevant audit matters.
Minutes of the AC meetings were circulated to all AC members. Significant matters requiring the Board’s approval were tabled at TDM Berhad Board meetings. The chairman of the AC provides reports on recommendation and decision of the AC to the Board.
3.0 Summary of the Term of Reference
The Terms of Reference of the AC is in line with the Main Market Listing Requirement and best practices promulgated by the Corporate Governance Guide: Towards Boardroom Excellence of Bursa Malaysia.
Annual Report 2012 TDM Berhad (6265-P) 88 audit committee’s report (continued)
3.1 Membership
3.1.1 The AC shall be appointed by the Board of Directors amongst the directors of the Company which fulfills the following requirements:-
(a) AC shall consist of no fewer than three members comprising non-executive directors, of whom the majorities are independent directors.
(b) At least one member of the AC shall fulfill the following requirements:-
(i) is a member of the Malaysian Institute of Accountants; or
(ii) has at least three years’ working experience and: • passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or • be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967 or fulfills such other requirements as prescribed or approved by the Exchange.
3.1.2 The chairman of the AC shall be an independent director.
3.1.3 No alternate director should be appointed as a member of the AC.
3.1.4 The terms of office and performance of the AC and each of its members must be reviewed by the Board of Directors at least once every 3 years to determine whether the AC and its members have carried out their duties in accordance with their terms of reference.
3.2 Meetings
3.2.1 Meeting shall be held at least four times a year with the attendance of a majority of independent directors to form quorum.
3.2.2 The Company Secretary shall be the secretary for the AC.
3.3 Rights and Authorities
The AC in performing its duties shall in accordance with a procedure to be determined by the Board of Directors:
(a) have authority to investigate any matter within its terms of reference; (b) have the resources which are required to perform its duties; (c) have full and unrestricted access to any information pertaining to the Company; (d) have direct communication channels with the external auditor and person(s) carrying out the internal audit function or activity (if any); (e) be able to obtain independent professional or other advice; and (f) be able to convene meetings with external auditors, excluding the attendance of the management, whenever deemed necessary.
Annual Report 2012 TDM Berhad (6265-P) 89 audit committee’s report (continued)
3.4 Duties and Responsibilities
3.4.1 The following is a summary of the main duties and responsibilities of the AC:
(a) Review the quarterly results and year-end financial statements, prior to the approval by the Board of Directors.
(b) Review any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of management integrity.
(c) With the external auditors; (i) In relation to the audit, discuss the audit plan and their evaluation of the systems of internal controls. (ii) In relation to the appointment of the external auditors, review whether there is reason to believe the external auditors are not suitable for reappointment.
(d) Monitor the management’s risk management practices and procedures.
(e) In respect of the internal audit function: (i) Review the adequacy of the scope, functions, resources and the adequacy of the competency of the internal audit function and that it has the necessary authority to carry out its work; (ii) Review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;
(f) To promptly report such matter to the Exchange if the AC is of the view that the matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements.
(g) To carry out such other functions as may be agreed to by the AC and the Board of Directors.
4.0 Summary of Activities During the Financial Year 2012, the principal activities carried out by the AC were as follows:
4.1 Financial Reporting
(a) Reviewed the quarterly Unaudited Financial Statements of the Company and the Group before recommending to the Board of Directors for approval.
(b) Reviewed the annual Audited Financial Statements of the Company and the Group with the external auditors prior to submission to the Board of Directors for their approval. The review was to ensure the Financial Statements prepared are in compliance with the Provisions of the Companies Act, 1965 and Financial Reporting Standards.
Annual Report 2012 TDM Berhad (6265-P) 90 audit committee’s report (continued)
4.2 Internal Audit
(a) Reviewed Annual Internal Audit Plan to ensure adequate scope and comprehensive coverage of the Group’s activities and principal risk areas were identified and adequately covered. (b) Reviewed the adequacy of resources and competency of the Internal Audit function to ensure it has appropriate expertise in discharging its duties. (c) Assessed performance and effectiveness of the Internal Audit Function and reviewed the skills and the core competencies requirement of the internal auditors. (d) Reviewed and deliberated the Internal Audit Reports tabled during the year, the audit recommendations and the management response to the internal audit findings and recommendations. (e) Held private meetings and discussions with the head, internal audit on key internal controls and internal audit related matters.
4.3 External Audit
(a) Reviewed with external auditors the audit plan, nature and scope of the audit, including the terms detailed in the external auditors’ engagement letter. (b) Reviewed the result of the annual audit, the audit report and the management letter together with the management responses to the findings of the external auditors. (c) Evaluated the performance of the external auditors and made recommendation to the Board of Directors on their appointment and remuneration. (d) Held private meetings with the external auditors to ensure there were no restrictions on the audit scope and to discuss any items that the auditors did not wish to raise in the presence of management.
4.4 Related Party Transactions
Reviewed related party transactions to ensure the appropriateness of the transaction and in the best interest of the Company. The details of the related parties transactions are presented on page 84 of this Annual Report.
4.5 Employees’ Share Option Scheme (ESOS)
Reviewed the allocation of option granted and exercised during the financial year to ensure it was in accordance to the provisions of the ESOS-By Laws.
5.0 Training
During the year, the AC members attended training and development programmes listed below:
• Corporate Governance Blueprint 2011 – Key Amendments of Listing Requirements and Corporate Disclosure Guide. • The 2012 IFRS Conference. • Malaysian Tax Conference 2012 – Transformation and Tax Reform.
Annual Report 2012 TDM Berhad (6265-P) 91 audit committee’s report (continued)
6.0 Internal Audit Function
The internal audit function of TDM Berhad is managed in-house. One of the main functions of the Internal Audit Department (IAD) is to provide independent, reasonable objective assurance on the adequacy and effectiveness of the Group’s internal controls system. The purpose, authority and responsibility of the IAD were listed in the Internal Audit Charter, reviewed and approved by the AC.
6.1 Independence and objectivity
In order to ensure independence and objectivity, the head internal audit reports directly to AC. The internal audit activities including the audit scope, procedures, frequency and the content of the reports remain free from any interference. IAD has no direct operational responsibility or authority over the areas audited. Therefore, IAD does not involve in the implementation of controls, development of procedures or engage in any activities that may impair the judgments of the internal auditors.
6.2 Summary of activities
The IAD used risk-based audit methodology in order to align the scope of the audit with the primary risk faced by the Group and its main strategic initiatives. The IAD also implemented flexible and dynamic audit approach to address current emerging risks and potential future risks. Internal Audit Plan was formulated in a way that fosters continuous improvement in both internal controls and operational efficiency.
Key audited areas for the year 2012 were as follows:
(a) Management Information System - Review of the implementation of key information technology infrastructure.
(b) Plantation Division - Review of the quality of the fresh fruit bunch. - Review of the harvesting procedures. - Review of the nursery management.
(c) Healthcare Division - Review of the inventory management.
Besides audit areas identified for the year, IAD on annual basis also performed follow – up reviews on the previously audited areas to assess the implementation of previous recommendation and management action plans. The status of the implementation was accordingly reported to the AC. In addition to the planned audit for the year, IAD also conducted special reviews requested by the AC and/or management.
6.3 Resources
The total cost incurred for the internal audit activities in 2012 was RM682,000.
The Audit Committee Report was made in accordance with the resolution of the Board of Directors duly passed on 25 February 2013.
Abdul Mutalip Sulaiman Chairman, Audit Committee
Annual Report 2012 TDM Berhad (6265-P) 92 statement on risk management and internal control
Introduction
The Statement on Risk Management and Internal Control (Statement) is made pursuant to the Bursa Malaysia Securities Berhad (Bursa Malaysia) Listing Requirements, which requires the Board of Directors (Board) to include in the Company’s Annual Report a statement about the state of its internal control.
Accordingly, the Board of TDM Berhad is pleased to present the statement, which has been prepared in accordance to the “Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers” by Bursa Malaysia.
Roles and Responsibilities
In TDM, the Board, the management and the internal audit work together to achieve its businesses objectives and sustainable successes of the Group. Therefore, each party continuously contributes towards a sound Risk Management and Internal Control Framework.
The Board oversees the Risk Management and Internal Control System of the Company by ensuring that Risk Management is embedded in the Company’s operation. The Board continuously reviews the risk management framework, processes, and responsibilities with a view to ensure effective management of potential opportunities while reducing or avoiding adverse effects. The Board is assisted by the Management in delivering the above roles and responsibilities, particularly in identifying the relevant risks and designing, implementing and monitoring the Risk Management Framework. The Management is responsible to establish the Risk Management Framework, which is in line with the Group’s strategic vision and risk appetite acceptable by the Board. The Management takes appropriate actions on any changes to the identified risks or emerging risks and the Board is duly informed in a timely manner.
The internal audit function which directly reports to the Audit Committee provides an independent, objective assurance and consulting activities which is designed to add value and improve the Group’s operations. The Internal Audit Committee provides assessment as to whether risks, which may hinder the Group from achieving its objectives, are adequately evaluated, managed and controlled.
Key Elements of Risk Management and Internal Control Framework
The Board recognises that Risk Management and Internal Control is an on-going process and an integral part of the Group’s business operations which is important for the achievement of the business objectives. This process is regularly reviewed by the Board, taking into consideration changes in the business environment and the conditions of the Internal Controls. The review is to determine the effectiveness of the Risk Management and the Internal Control system.
The Board reviews the effectiveness of the Risk Management and Internal Control system by considering the following key elements of Internal Control:
1. Enterprise Wide Risk Management
Enterprise Wide Risk Management is managed by the Group Risk Management Committee led by the chief executive officer. The committee was established to oversee the overall management of the principal risk areas of the Group.
Annual Report 2012 TDM Berhad (6265-P) 93 statement on risk management and internal control (continued)
The key features of the Enterprise Wide Risk Management are as follows: • Management at each business unit reviews the Group’s key risks and establishes the Group’s risk register. The Group’s risk register describes the risks, its owners and mitigation strategies. The risks register is updated annually and is reviewed by the Audit Committee before being approved by the Board. Should any significant improvement area be identified during the review, necessary actions will be taken to rectify it.
• The Group Risk Management Committee and the Audit Committee, on behalf of the Board, deliberate the effectiveness of the Group’s risk management process.
2. Organisation and Management Structure
The Group has established an organisation structure that clearly defines the lines of responsibility and authority to ensure proper identification of accountability and segregation of duties.
Employees are hired based on the stipulated guidelines and they are given continuous training in areas relevant to their job functions so that their knowledge and competencies remain pertinent in carrying out their duties and responsibilities. Thus, it ensures that they are able to deliver their duties more effectively and efficiently. Employees are remunerated based on their performance and length of service according to an approved appraisal system.
3. Assignment of Authority Limit and Responsibility
The Group has established a Delegated Authority Limit (DAL) approved by the Board. The DAL outlines management limits and approval authority for various key business processes.
4. Code of Business Ethics
The Company has established a Code of Business Ethics to set forth the guidelines and ethical standards of conduct required of the Board, Management and other employees. The Code of Business Ethics describes and reinforces TDM Berhad‘s guiding values and commitments to doing business responsibly, ethically and in a sustainable manner.
5. Annual Business Plan
Annual Business Plans are prepared by the Company and its operating subsidiaries. The subsidiaries’ business plans are deliberated thoroughly by the Management at head office before submission for review, consideration and approval by the respective Boards. The subsidiaries’ approved business plans are subsequently reviewed and approved by the Board of TDM Berhad.
6. Business Performance Review
Business performance is reviewed during meetings held at operational and management level. These include periodic operational meetings at Group level, which are chaired by the Company’s chief executive officer.
The Management monitors the financial performance against the budget and follow up on critical operational issues to ensure appropriate actions have been taken in accordance to the agreed plan.
Annual Report 2012 TDM Berhad (6265-P) 94 statement on risk management and internal control (continued)
The Management provides quarterly reports to the Board, which covers the financial performance and production statistics and also includes the actual results comparison against the approved annual budget.
Detailed analysis of financial results is reviewed by the Audit Committee before making recommendations to the Board prior to submission to Bursa Malaysia.
7. Internal Audit Function
The Audit Committee with the assistance of the Internal Audit Department provides an independent assessment on the adequacy, efficiency and effectiveness of the Group’s Internal Control System and advises the Management on areas which require improvements.
During the financial eary under review, the internal auditors conducted independent reviews on the key activities within the Group’s operating units based on the Annual Audit Plan approved by the Audit Committee. The internal auditors also reviewed the extent to which their recommendations were accepted and implemented by the Management. Internal audit reports are tabled to the Audit Committee who in turn reports to the Board its assessments and recommendations.
The States of the Risk Management and Internal Control System
The Board acknowledges that the system of internal controls is designed to manage rather than to eliminate risks that hinder the Group from achieving its goals and objectives. Hence, it provides reasonable assurance rather than absolute assurance against material misstatements, losses or frauds.
The Board received assurance from the chief executive officer and chief financial officer on the adequacy and effectiveness of the Company’s and the Group’s Risk Management and Internal Control System for the year ended 31 December 2012 and as at the date of this report.
Therefore, the Board regards the current Risk Management Framework and Internal Control System, which is in place within the Group for the year ended 31 December 2012 and up to the date of this Annual Report, as adequate for the Group’s current business environment. In order to ensure the Group’s effectiveness in emerging business environments, continuous initiatives to strengthen the Risk Management and Internal Control system are undertaken.
Review of the Statement by the External Auditors
The external auditors have reviewed this Statement and reported to the Board that nothing has come to their attention that caused them to believe that the Statement on Risk Management and Internal Control intended to be included in the Annual Report is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the Group’s Internal Control System.
This statement was made in accordance with a Board of Directors’ resolution dated on 26 February 2013.
Annual Report 2012 TDM Berhad (6265-P) 95 additional compliance statement
The following information is in compliance with Appendix 9C of the Main market Listing Requirement of Bursa Malaysia Securities Berhad.
Imposition of Sanction/Penalties Options, Warrants or Convertible Securities There were no public sanction and/or penalties imposed on During the financial year, there were no warrants or the Company and its subsidiaries, Directors or management convertible securities issued by the Company other than by the relevant regulatory bodies during the financial year. shares or options issued pursuant to the Employee Share Options Scheme (ESOS) as disclosed in Directors’ Interest Material Contract and Note 29 (b) to the financial statements. During the financial year under review, save as disclosed According to the register of the ESOS options, the interests of in the sections under significant related party transactions the Chief Executive Officer in the Company’s options during set out in Note 31 to the financial statement, there were the financial year 2012 were as follows: no other material contracts entered into by the Company and/or its subsidiaries which involved Directors’ and major As at No. of No. of As at 31 shareholders’ interests, either still subsisting at the end of the 1 January options options December 2012 Granted Exercised 2012 financial year 2012 or which were entered into since the end Badrul Hisham 155,000 – (155,000) – of the previous financial year. Mahari
Share Buybacks The aggregate maximum allowable allocation and the actual ESOS allocation to the Group directors and management There were no share buybacks during the financial year. personnel are as follows: American Depository Receipt (ADR) or Global Since the Commencement of the ESOS Maximum Depository Receipt (GDR) Programme Allowable Allocation The Company did not sponsor any ADR or GDR programme Directors 15% during the financial year. Management Personnel 35% TDM ESOS 2008 Profit Guarantee Options Maximum percentage of options exercisable The Company did not have any profits guarantees during the in each year commencing from the offer date financial year. Year 2008 2009 2010 2011 2012 Directors 20% 20% 20% 20% 20% (100,000 and above) List of Properties Management personnel 40% 30% 30% – – (from 20,000 up to 100,000) The list of properties is stated on page 202 to 205 of the Annual Report. TDM ESOS 2010
Options Maximum percentage of options exercisable Non-Audit Fees in each year commencing from the offer date The amount of non-audit fees incurred for services rendered Year 2010 2011 2012 Directors and management 40% 30% 30% to the Company and its subsidiaries for the financial year by personnel (Above 20,000) the Company’s auditors amounted to RM9,000. Further, the Company has been granted exemption by the Revaluation Policy Companies Commission of Malaysia from having to disclose in the financial statements for the financial year 2012, the The Group’s policy on revaluation is disclosed in Note 2.7 to names of option holders with less than 245,000 options, the financial statements. other than directors, whom options have been granted during the year and details of their holdings.
Variation in Results The Company did not make any release on the profit estimate, forecast or projection for the financial year. There is no significant variance between the results for the financial year and the unaudited results previously released by the Company.
Annual Report 2012 TDM Berhad (6265-P) 96 Financial Statements
Directors’ Report 98 Statement by Directors 102 Statutory Declaration 102 Independent Auditors’ Report to the Members 103 Statements of Comprehensive Income 105 Consolidated Statements of Financial Position 107 Company’s Statements of Financial Position 109 Consolidated Statements of Changes in Equity 111 Company’s Statements of Changes in Equity 113 Statements of Cash Flows 115 Notes to the Financial Statements 118 Supplementary Information 196 directors’ report
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012.
Principal Activities
The principal activities of the Company are investment holding, provision of management services and cultivation of oil palms.
The principal activities of its subsidiaries are described in Note 17 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year, except for the discontinuance of integrated poultry farming activities as disclosed in Note 17 to the financial statements.
Results
Group Company RM’000 RM’000
Profit for the year, net of tax 103,356 81,046
Profit attributable to: Owners of the parent 102,408 81,046 Non-controlling interests 948 -
103,356 81,046
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.
Dividends
The amount of dividends paid by the Company since 31 December 2011 were as follows:
RM’000
In respect of the financial year ended 31 December 2011: A final dividend of 18.50 sen dividend per share, tax exempt under the single-tier system on 245,275,490 ordinary shares declared on 27 March 2012 and paid on 8 June 2012. 45,376
At the forthcoming Annual General Meeting (AGM), a first and final dividend in respect of the financial year ended 31 December 2012 of 22 sen dividend per share, tax exempt under the single-tier system on 245,766,781 ordinary shares, amounting to RM54,068,692 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013.
Annual Report 2012 TDM Berhad (6265-P) 98 directors’ report (continued)
Directors
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Datuk Haji Roslan Awang Chik Dato’ Haji Abdul Razak Ismail Dato’ Haji Mat Razali Kassim Haji Long A. Rahman Haji Zakaria K C Ahammu Wong Shew Yong Abdul Mutalip Sulaiman
Directors’ Benefits
Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangement, to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under Employee Share Option Scheme (ESOS).
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 8 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except as disclosed in Note 31 to the financial statements.
Directors’ Interests
According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares and options over shares in the Company and its related corporations during the financial year were as follows:
Number of ordinary shares of RM1 each 1 January 31 December 2012 Acquired Sold 2012
Datuk Haji Roslan Awang Chik 350,000 150,000 - 500,000 Wong Shew Yong 231,000 - - 231,000
Number of options over ordinary shares of RM1 each 1 January 31 December 2012 Granted Exercised 2012
Datuk Haji Roslan Awang Chik 150,000 - (150,000) - Dato’ Haji Abdul Razak Ismail 330,000 - - 330,000 Haji Long A. Rahman 99,000 - - 99,000 Wong Shew Yong 99,000 - - 99,000
Annual Report 2012 TDM Berhad (6265-P) 99 directors’ report (continued)
Directors’ Interests (Cont’d.)
None of the other directors in office at the end of the financial year had any interest in shares or options over shares in the Company or its related corporations during the financial year.
Issue of Shares
During the financial year, the Company increased its issued and paid-up ordinary share capital from 238,046,617 to 245,766,781 by way of: - Issuance of 3,870,750 ordinary shares of RM1 each for cash pursuant to the Company’s ESOS at an average exercise price of RM1.76 per ordinary share. - Issuance of 3,557,895 ordinary shares of RM1 each at an issue price of RM4.75 per ordinary share as partial discharge of purchase consideration for the acquisition of an asset. - Issuance of 291,519 ordinary shares of RM1 each at an issue price of RM2.83 per ordinary share as completion of purchase consideration for the acquisition of a subsidiary.
The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.
Employee Share Option Scheme (ESOS)
The TDM Berhad ESOS is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 19 February 2008. The ESOS was implemented on 17 March 2008 for a period of 5 years from the date of implementation.
The salient features and other terms of the ESOS are disclosed in Note 29(b) to the financial statements.
The Company has been granted exemption by the Companies Commission of Malaysia (CCM) from having to disclose the names of option holders, other than directors, to whom options have been granted during the year and details of their holdings. This information has been separately filed with the CCM.
Other Statutory Information
(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and (ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render: (i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and Company inadequate to any substantial extent; and (ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.
Annual Report 2012 TDM Berhad (6265-P) 100 directors’ report (continued)
Other Statutory Information (Cont’d.)
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or (ii) any contingent liability in respect of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and (ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
Significant Events
Details of significant events are disclosed in Notes 17(a), 17(b), 17(c) and 17 (d) to the financial statements.
Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 9 April 2013.
Datuk Haji Roslan Awang Chik Abdul Mutalip Sulaiman
Annual Report 2012 TDM Berhad (6265-P) 101 Statement by directors Pursuant to Section 169(15) of the Companies Act 1965
We, Datuk Haji Roslan Awang Chik and Abdul Mutalip Sulaiman, being two of the directors of TDM Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 105 to 195 are drawn up in accordance with Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and the cash flows for the year then ended.
The information set out in Note 39 to the financial statements have been prepared in accordance with the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board in accordance with a resolution of the directors dated 9 April 2013.
Datuk Haji Roslan Awang Chik Abdul Mutalip Sulaiman
statutory declaration Pursuant to Section 169(16) of the Companies Act 1965
I, Amir Mohd Hafiz Amir Khalid, being the officer primarily responsible for the financial management of TDM Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 105 to 196 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.
Subscribed and solemnly declared by the abovenamed, Amir Mohd Hafiz Amir Khalid at Kuala Terengganu in the state of Terengganu Darul Iman on 9 April 2013 Amir Mohd Hafiz Amir Khalid
Before me,
Annual Report 2012 TDM Berhad (6265-P) 102 independent auditors’ report to the members of TDM Berhad (Incorporated in Malaysia)
Report on the Financial Statements
We have audited the financial statements of TDM Berhad, which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 105 to 195.
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 and the requirements of the Companies Act 1965 in Malaysia, 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 about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the requirement of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the year then ended.
Annual Report 2012 TDM Berhad (6265-P) 103 independent auditors’ report (continued) to the members of TDM Berhad (Incorporated in Malaysia
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the financial statements and the auditors’ reports of subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the financial statements, being financial statements that have been included in the consolidated financial statements.
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.
(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act, other than as disclosed in Note 17 to the financial statements.
Other Matters
The supplementary information set out in Note 39 on page 196 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. 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.
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Ernst & Young Sandra Segaran a/l Muniandy@Krishnan AF: 0039 No. 2882/01/15 (J) Chartered Accountants Chartered Accountant
Kuala Terengganu, Terengganu Darul Iman, Malaysia 9 April 2013
Annual Report 2012 TDM Berhad (6265-P) 104 statements of comprehensive income For the financial year ended 31 December 2012
Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Continuing operations Revenue 4 455,258 515,519 121,200 145,442 Cost of sales (226,330) (219,030) (22,707) (24,083)
Gross profit 228,928 296,489 98,493 121,359
Other items of income Interest income 5,117 4,734 469 452 Other income 26,172 10,097 25,724 443
Other items of expense Distribution costs (7,934) (8,514) (1,498) (1,794) Administrative expenses (95,932) (76,752) (24,996) (30,283) Other expenses (7,234) (5,151) (3,305) (4,805) Finance costs 5 (92) (324) (1) (2)
Profit before tax from continuing operations 6 149,025 220,579 94,886 85,370
Income tax expense 9 (45,669) (57,898) (13,840) (15,372)
Profit from continuing operations, nett of tax 103,356 162,681 81,046 69,998
Discontinued operation Profit from discontinued operation, nett of tax 10 - 560 - -
Profit for the year, nett of tax 103,356 163,241 81,046 69,998
Other comprehensive income: Available for sale investments’ fair value movement (56) 4 - - Revaluation of land, buildings, plant and machinery and plantation development expenditure 27 9,587 332,132 - 4,095 Deferred tax impact on revaluation 9 - (46,965) - (202) Foreign currency translation (13,633) 718 - -
Other comprehensive (loss)/ income for the year, nett of tax (4,102) 285,889 - 3,893
Total comprehensive income for the year 99,254 449,130 81,046 73,891
Annual Report 2012 TDM Berhad (6265-P) 105 statements of comprehensive income (continued) For the financial year ended 31 December 2012
Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Profit attributable to: Owners of the parent 102,408 160,979 81,046 69,998 Non-controlling interests 948 2,262 - -
103,356 163,241 81,046 69,998
Total comprehensive income attributable to: Owners of the parent 98,306 443,739 81,046 73,891 Non-controlling interests 948 5,391 - -
99,254 449,130 81,046 73,891
Earnings per share attributable to owners of the parent (sen per share): Basic 11 41.67 68.06 Diluted 11 41.53 65.70
Earnings per share from continuing operations attributable to owners of the parent (sen per share) Basic 11 41.67 67.82 Diluted 11 41.53 65.48
Earnings per share from discontinued operation attributable to owners of the parent (sen per share) Basic 11 - 0.24 Diluted 11 - 0.23
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2012 TDM Berhad (6265-P) 106 consolidated statements of financial position As at 31 December 2012
Group Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Restated Restated
Assets Non-current assets Property, plant and equipment 13 630,575 569,378 296,458 Biological assets 14 541,423 501,803 368,168 Investment property 15 11,000 11,000 - Goodwill 16 9,959 8,571 1,468 Other investments 18 4,700 4,700 4,700 Investment securities 19 95 151 148
1,197,752 1,095,603 670,942
Current assets Property development costs 20 - - - Inventories 21 33,982 23,151 14,914 Trade and other receivables 22 66,558 102,607 82,472 Prepayments 1,029 1,392 5,048 Tax recoverable 3,305 297 56 Cash and bank balances 23 212,554 224,524 176,702
317,428 351,971 279,192
Assets of disposal group classified as held for sale 10 - 11,942 -
317,428 363,913 279,192
Total assets 1,515,180 1,459,516 950,134
Equity and liabilities Current liabilities Retirement benefit obligations 29 - - 160 Borrowings 24 339 926 3,245 Trade and other payables 25 123,528 167,781 147,253 Tax payable 11,714 11,858 11,340
135,581 180,565 161,998
Liabilities of disposal group classified as held for sale 10 - 5,616 -
135,581 186,181 161,998
Nett current assets 181,847 165,790 117,194
Annual Report 2012 TDM Berhad (6265-P) 107 consolidated statements of financial position (continued) As at 31 December 2012
Group Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Restated Restated
Non-current liabilities Retirement benefit obligations 29 1,308 1,142 833 Borrowings 24 30,074 564 1,520 Deferred tax liabilities 30 88,759 89,551 42,489
120,141 91,257 44,842
Total liabilities 255,722 277,438 206,840
Nett assets 1,259,458 1,182,078 743,294
Equity attributable to owners of the parent
Share capital 26 245,767 238,046 225,572 Share premium 26 80,908 64,069 45,945 Retained earnings 28 424,536 367,504 245,211 Other reserves 27 483,056 487,591 208,347
1,234,267 1,157,210 725,075
Non-controlling interests 25,191 24,868 18,219
Total equity 1,259,458 1,182,078 743,294
Total equity and liabilities 1,515,180 1,459,516 950,134
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2012 TDM Berhad (6265-P) 108 company’s statements of financial position As at 31 December 2012
Company Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Restated Restated
Assets Non-current assets Property, plant and equipment 13 40,826 21,557 30,566 Biological assets 14 23,638 23,638 23,638 Investment property 15 11,000 11,000 - Investments in subsidiaries 17 235,139 220,713 187,718 Other investments 18 - - -
310,603 276,908 241,922
Current assets Inventories 21 1,923 603 418 Trade and other receivables 22 241,316 154,212 53,349 Prepayments 24 24 33 Cash and bank balances 23 1,725 2,505 46,888
244,988 157,344 100,688
Assets of disposal group classified as held for sale 10 - 4,078 -
244,988 161,422 100,688
Total assets 555,591 438,330 342,610
Equity and liabilities Current liabilities Retirement benefit obligations 29 - - 77 Borrowings 24 2 65 82 Trade and other payables 25 131,249 72,615 41,439 Tax payable 1,625 3,232 1,131
132,876 75,912 42,729
Nett current assets 112,112 85,510 57,959
Annual Report 2012 TDM Berhad (6265-P) 109 company’s statements of financial position (continued) As at 31 December 2012
Company Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Restated Restated
Non-current liabilities Retirement benefit obligations 29 128 186 89 Borrowings 24 - - 76 Deferred tax liabilities 30 10,270 9,712 9,901
10,398 9,898 10,066
Total liabilities 143,274 85,810 52,795
Nett assets 412,317 352,520 289,815
Equity attributable to owners of the parent
Share capital 26 245,767 238,046 225,572 Share premium 26 80,908 64,069 45,945 Retained earnings/(accumulated losses) 28 46,410 10,740 (20,990) Other reserves 27 39,232 39,665 39,288
Total equity 412,317 352,520 289,815
Total equity and liabilities 555,591 438,330 342,610
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2012 TDM Berhad (6265-P) 110 consolidated statements of changes in equity For the financial year ended 31 December 2012 ------RM’000 interests 25,191 948
(625)
148 (773)
24,868 24,868
controlling Non-
------
27)
value
reserve reserve RM’000 - - - (Note
(19)
(56) 37 37
Fair adjustment
27)
reserve reserve RM’000 677 - 1,110 1,110 (Note
(433) - (436) - - - (513) - 516 -
Share option
------27)
Non-distributable reserve reserve Foreign RM’000 - (Note
(14,752)
(13,633) (1,119) (1,119)
currency translation
------27)
reserve reserve RM’000
9,587 (12,872)
497,150
487,563 500,435
Asset revaluation
total
(12,872) RM’000
(433) - (Note
483,056 - (436) - - (513) - 487,591 (4,102) 516 500,463
reserves,
Other
ttributable to owners of the parent ttributable to owners 28)
A RM’000 earnings (Note
424,536 (45,376) - (45,376) - - - - - 367,504 102,408 - 347,161 20,343
Retained Distributable
26)
RM’000 premium (Note
80,908 16,839 - - - 533 1,388 3,639 11,279 64,069 - - 64,069 -
Share
26)
Non-distributable capital RM’000 (Note 7,721 - -
245,767 - 292 - 3,871 3,558 238,046 - - 238,046 -
Share
- of
total Equity parent,
RM’000 owners
attributable (21,249) (436) (45,376)
1,234,267
825 1,388 6,997 14,837 1,157,210 98,306 516 1,149,739 7,471
the
to
, 148 825 516 (436) total 1,388 6,997 7,471 Equity 14,837 99,254 (21,874) (46,149) RM’000 1,259,458 1,182,078 1,174,607
(restated)
ve income ve 2012
stated
2012
ansactions with owners ansactions with owners December
January
previously 31 1
ansactions with owners (Note 12) of a subsidiary combination for acquisition of a subsidiary subsidiary of an asset At
Dividends on ordinary shares Dividends Lapse of ESOS pursuant to disposal tr Total
Adjustment on cost of business Acquisition of new subsidiary Shares issued for acquisition of a
Shares issued for acquisition Exercise of ESOS Exercise Total comprehensi Total Share options granted under ESOS Share options granted At Tr Opening balance at 1 January 2012 Opening balance at 1 January As Prior year adjustments (Note 37) Prior year Group 2012
Annual Report 2012 TDM Berhad (6265-P) 111 consolidated statements of changes in equity (continued) For the financial year ended 31 December 2012 - - - - (92) 932 418 1,258 5,391 24,868 18,219 18,219 RM’000 interests
controlling Non-
------4 37 33 33 27)
value
reserve reserve RM’000 (Note
adjustment Fair
------27)
1,110 1,543 4,626 4,626 (3,516) (5,059) reserve reserve RM’000 (Note
option Share
------27)
674 Non-distributable (1,119) (1,793) (1,793) reserve reserve Foreign RM’000 (Note
translation currency
------27)
reserve reserve RM’000 487,563 282,082 205,481 205,481
revaluation Asset
- - - - - total 1,543
(3,516) (5,059)
RM’000 487,591 282,760 208,347 208,347 (Note
reserves,
Other - - - - Attributable to owners of the parent Attributable to owners 28)
(418) 16,215 (38,686) (38,268) RM’000 367,504 160,979 245,211 228,996 earnings (Note Distributable
Retained
------26)
6,402 64,069 18,124 11,722 45,945 45,945 RM’000 premium (Note
Share
------26)
3,498 8,976 Non-distributable capital 12,474 RM’000 238,046 225,572 225,572
(Note
Share
- of
(418) total 9,900 1,543 Equity 15,639 16,215 parent, (11,604) (38,268)
RM’000 443,739 725,075 708,860 owners 1,157,210
attributable
the
to
, - 932 total 9,900 1,543 Equity 15,639 16,215 (10,346) (38,360) RM’000 449,130 743,294 727,079 1,182,078
(restated)
anted under ESOS 2011
January
1
(Note 12) subsidiary subsidiary At 31 December 2011 Total transactions with owners with owners transactions Total Dividends on ordinary shares Dividends Issuance of new ordinary shares in a
Loss on accretion interest
Shares issued for acquisition of a Exercise of ESOS Exercise Transactions with owners Transactions Share options gr Total comprehensive income comprehensive Total At Prior year adjustments (Note 37) Prior year Opening balance at 1 January 2011 Opening balance at 1 January As previously stated Group 2011 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. accounting policies and explanatory notes form an integral accompanying The
Annual Report 2012 TDM Berhad (6265-P) 112 company’s statements of changes in equity For the financial year ended 31 December 2012
Non-distributable Distributable Non-distributable
Other Asset Share Equity, Share Share Retained reserves, revaluation Capital option total capital premium earnings total reserve reserve reserve 2012 (Note 26) (Note 26) (Note 28) (Note 27) (Note 27) (Note 27) Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Opening balance at 1 January 2012 As previously stated 351,065 238,046 64,069 9,285 39,665 35,819 2,736 1,110 Prior year adjustments (Note 37) 1,455 - - 1,455 - - - -
At 1 January 2012 (restated) 352,520 238,046 64,069 10,740 39,665 35,819 2,736 1,110 Total comprehensive income 81,046 - - 81,046 - - - -
Transaction with owners Share options granted under ESOS 516 - - - 516 - - 516 Exercise of ESOS 6,997 3,871 3,639 - (513) - - (513) Dividends on ordinary shares (Note 12) (45,376) - - (45,376) - - - - Lapse of ESOS pursuant to disposal of a subsidiary (436) - - - (436) - - (436) Shares issued for acquisition of an asset 14,837 3,558 11,279 - - - - - Shares issued for acquisition of a subsidiary 825 292 533 - - - - - Adjustment on cost of business combination for acquisition of a subsidiary 1,388 - 1,388 - - - - - Total transactions with owners (21,249) 7 ,721 16,839 (45,376) (433) - - (433) Closing balance at 31 December 2012 412,317 245,767 80,908 46,410 39,232 35,819 2,736 677
Annual Report 2012 TDM Berhad (6265-P) 113 company’s statements of changes in equity (continued) For the financial year ended 31 December 2012
Non-distributable Distributable Non-distributable
Other Asset Share Equity, Share Share Retained reserves, revaluation Capital option total capital premium earnings total reserve reserve reserve 2011 (Note 26) (Note 26) (Note 28) (Note 27) (Note 27) (Note 27) Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Opening balance at 1 January 2011 As previously stated 288,881 225,572 45,945 (21,924) 39,288 31,926 2,736 4,626 Prior year adjustments (Note 37) 934 - - 934 - - - -
At 1 January 2011 (restated) 289,815 225,572 45,945 (20,990) 39,288 31,926 2,736 4,626 Total comprehensive income 73,891 - - 69,998 3,893 3,893 - -
Transactions with owners Share options granted under ESOS 1,543 - - - 1,543 - - 1,543 Exercise of ESOS 15,639 8 ,976 11,722 - (5,059) - - (5,059) Dividends on ordinary shares (Note 12) (38,268) - - (38,268) - - - - Shares issued for acquisition of a subsidiary 9,900 3,498 6,402 - - - - -
Total transactions with owners (11,186) 12,474 18,124 (38,268) (3,516) - - (3,516) Closing balance at 31 December 2011 352,520 238,046 64,069 10,740 39,665 35,819 2,736 1,110
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2012 TDM Berhad (6265-P) 114 statements of cash flows For the financial year ended 31 December 2012
Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Operating activities Profit before tax from continuing operations 149,025 220,579 94,886 85,370 Profit before tax from discontinued operation - 558 - -
Profit before tax, total 149,025 221,137 94,886 85,370
Adjustments for: Interest expense - Continuing operations 5 92 324 1 2 - Discontinued operation 10 - 80 - - Depreciation of property, plant and equipment 6 28,375 21,455 1,472 2,697 Property, plant and equipment written off 6 5 310 - 85 Amortisation of livestocks 6 - 492 - - Inventories written off 6 37 - - - Gain on disposal of property, plant and equipment 6 - (223) - - Impairment loss on trade receivables 6 473 1,730 - - Impairment loss on other receivables 6 - 624 27 5 Reversal of impairment loss on trade receivables 6 (17) (173) - - Reversal of impairment loss on other receivables 6 - (67) - - Bad debts written off 6 1,782 24 61 - Payables written back 6 (1,637) (2,771) - (54) Waiver of amount due to a subsidiary 6 - - (9,151) - Write back of interest payable to a related corporation 6 (15,559) - (15,559) - Provision for impairment of investments in subsidiaries 6 - - - 8,900 Dividend income 6 (2,053) (942) (46,457) (52,697) Gain on disposal of subsidiaries 6 (744) - (404) - Loss/(gain) on voluntary winding up of subsidiaries 6 5 ,045 (152) - -
Annual Report 2012 TDM Berhad (6265-P) 115 statements of cash flows (continued) For the financial year ended 31 December
Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Operating activities (cont’d.) Interest income 6 (5,117) (4,734) (469) (452) (Reversal of)/provision for short-term accumulating compensated absences 7 (25) 124 - 9 Provision for retirement benefit obligations 7 245 238 20 20 Share options granted under ESOS 7,8 516 1,543 218 558
Total adjustments 11,418 17,882 (70,241) (40,927)
Operating cash flows before changes in working capital 160,443 239,019 24,645 44,443
Changes in working capital Increase in inventories (10,868) (9,302) (1,320) (185) Decrease/(increase) in receivables 26,812 (17,939) (8,893) (83,060) (Decrease)/increase in payables and deferred revenue (18,391) 12,337 (1,359) 30,395
Total changes in working capital (2,447) (14,904) (11,572) (52,850)
Cash flows from/(used in) operations 157,996 224,115 13,073 (8,407) Interest paid (92) (404) (1) (2) Interest received 5 ,117 4,734 469 452 Taxes paid (56,638) (54,891) (12,096) (9,546) Tax refund - 159 - 159 Retirement benefits paid 29 (79) (89) (78) -
Nett cash flows from/(used in) operating activities 106,304 173,624 1,367 (17,344)
Investing activities
Purchase of property, plant and equipment 13(b) (86,224) (51,895) (20,741) (678) Addition of livestocks 14 - (881) - - Addition of plantation development expenditure 14 (39,620) (40,059) - -
Annual Report 2012 TDM Berhad (6265-P) 116 statements of cash flows (continued) For the financial year ended 31 December
Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Investing activities (cont’d.) Purchase of additional shares in subsidiaries - - - (9,448) Dividend received 2,053 942 43,664 10,442 Proceeds from disposal of property, plant and equipment - 363 - - Nett cash outflow on acquisition of a subsidiary 17(a) - (9,501) (2,795) (4,633) Nett cash inflow on disposal of a subsidiary 17(d) 1,329 - 1,329 - Nett cash outflow from members voluntary winding up of subsidiaries (1,093) - - - Proceeds from liquidation of a subsidiary - 152 - -
Nett cash flows (used in)/from investing activities (123,555) (100,879) 21,457 (4,317)
Financing activities
Drawdown of term loan 29,834 5,648 - - Repayments of trust receipts and bankers’ acceptances - (5,463) - - Proceeds from issuance of ordinary shares 21,834 16,571 21,834 15,639 Repayments of term loans (187) (1,692) - - Repayments of hire purchase facilities (724) (1,125) (62) (93) Dividends paid to shareholders (45,376) (38,360) (45,376) (38,268)
Nett cash flows from/(used in) financing activities 5,381 (24,421) (23,604) (22,722)
Nett (decrease)/increase in cash and cash equivalents (11,870) 48,324 (780) (44,383) Cash and cash equivalents at 1 January 224,424 176,100 2,505 46,888
Cash and cash equivalents at 31 December 23 212,554 224,424 1,725 2,505
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2012 TDM Berhad (6265-P) 117 notes to the financial statements For the financial year ended 31 December 2012
1. Corporate Information
The principal activities of the Company are investment holding, provision of management services and cultivation of oil palms. The principal activities of the subsidiaries are as disclosed in Note 17 to the financial statements.
There have been no significant changes in the nature of the principal activities during the year, except for the discontinuance of integrated poultry farming activities as disclosed in Note 17 to the financial statements.
The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of the Bursa Malaysia Securities Berhad. The registered office of the Company is located at Aras 5, Bangunan UMNO Terengganu, Lot 3224, Jalan Masjid Abidin, 20100 Kuala Terengganu, Terengganu Darul Iman.
2. Summary of Significant Accounting Policies
2.1 Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (FRS) and the Companies Act 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 July 2011 and 1 January 2012 as described fully in Note 2.2.
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2012, the Group and the Company adopted the following new and amended FRS and IC Interpretation mandatory for annual financial periods beginning on or after 1 July 2011 and 1 January 2012.
Description Effective for annual periods beginning on or after
IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2011 Amendments to IC Interpretation 14 Prepayments of a Minimum Funding Requirement 1 July 2011 Amendments to FRS 1 Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters 1 January 2012 Amendments to FRS 7 Transfers of Financial Assets 1 January 2012 Amendments to FRS 112 Deferred Tax: Recovery of Underlying Assets 1 January 2012 FRS 124 Related Party Disclosures 1 January 2012
Annual Report 2012 TDM Berhad (6265-P) 118 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.2 Changes in accounting policies (cont’d.)
Adoption of the above standards and interpretation did not have any significant effect on the financial performance and position of the Group and of the Company except for those discussed below:
Amendments to FRS 7 Transfers of Financial Assets The amendments require additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Group’s financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendments require disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognised assets. The amendments affect disclosure only and have no impact on the Group’s financial position or performance.
Amendments to FRS 112 Deferred Tax: Recovery of Underlying Assets The amendments clarified the determination of deferred tax on investment property measured at fair value. The amendments introduce a rebuttable presumption that deferred tax on investment property measured using the fair value model in FRS 140 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, they introduce the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in FRS 116 to be always measured on a sale basis of that asset.
2.3 Standards issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
Description Effective for annual periods beginning on or after
Amendments to FRS 101 Presentation of Items of Other Comprehensive Income 1 July 2012 Amendments to FRS 101 Presentation of Financial Statement (Improvement to FRS(2012)) 1 January 2013 FRS 10 Consolidated Financial Statements 1 January 2013 FRS 11 Joint Arrangements 1 January 2013 FRS 12 Disclosure of Interests in Other Entities 1 January 2013 FRS 13 Fair Value Measurement 1 January 2013 FRS 119 Employee Benefits 1 January 2013 FRS 127 Separate Financial Statements 1 January 2013 FRS 128 Investment in Associate and Joint Ventures 1 January 2013 IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013
Annual Report 2012 TDM Berhad (6265-P) 119 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.3 Standards issued but not yet effective (cont’d.)
Description Effective for annual periods beginning on or after
Amendment to IC Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments (Improvements to FRS (2012)) 1 January 2013 Amendments to FRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities 1 January 2013 Amendments to FRS 1: First-time Adoption of Malaysian Financial Reporting Standards – Government Loans 1 January 2013 Amendments to FRS 1: First-time Adoption of Malaysian Financial Reporting Standards (Improvements to FRS (2012)) 1 January 2013 Amendments to FRS 116: Property, Plant and Equipment (Improvements to FRS (2012)) 1 January 2013 Amendments to FRS 132: Financial Instruments: Presentation (Improvements to FRS (2012)) 1 January 2013 Amendments to FRS 134: Interim Financial Reporting (Improvements to FRS (2012)) 1 January 2013 Amendments to FRS 10: Consolidated Financial Statements: Transition Guidance 1 January 2013 Amendments to FRS 11: Joint Arrangements: Transition Guidance 1 January 2013 Amendments to FRS 12: Disclosure of Interests in Other Entities: Transition Guidance 1 January 2013 Amendments to FRS 132 Offsetting Financial Assets and Financial Liabilities 1 January 2014 Amendments to FRS 10, FRS 12 and FRS 127: Investment Entities 1 January 2014 FRS 9 Financial Instruments 1 January 2015
The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application, except as disclosed below:
Amendments to FRS 101 Presentation of Items of Other Comprehensive Income The amendments to FRS 101 change the grouping of items presented in Other Comprehensive Income. Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendments affect presentation only and have no impact on the Group’s financial position or performance.
FRS 9 Financial Instruments FRS 9 reflects the first phase of work on the replacement of FRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in FRS 139. The adoption of this first phase of FRS 9 will have an effect on the classification and measurement of the Group’s financial assets but will potentially have no impact on classification and measurement of financial liabilities.
Annual Report 2012 TDM Berhad (6265-P) 120 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.3 Standards issued but not yet effective (cont’d.)
FRS 10 Consolidated financial statements FRS 10 replaces the portion of FRS 127 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. FRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in FRS 127.
FRS 11 Joint Arrangements FRS 11 replaces FRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly Controlled Entities – Non-monetary Contributions by Venturers.
FRS 11 removes the option to account for Jointly Controlled Entities (JCE) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.
FRS 12 Disclosure of Interests in Other Entities FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.
FRS 13 Fair Value Measurement FRS 13 establishes a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted.
FRS 127 Separate Financial Statements As a consequence of the new FRS 10 and FRS 12, FRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.
FRS 128 Investments in Associates and Joint Ventures As a consequence of the new FRS 11 and FRS 12, FRS 128 is renamed as FRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.
Amendments to FRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities The amendments require additional information to be disclosed to enable users of financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. The amendments affect disclosure only and have no impact on the Group’s financial position or performance.
Amendments to FRS 132 Offsetting Financial Assets and Financial Liabilities The amendments to FRS 132 clarified that a legally enforceable right to set off is a right of set off that must not be contingent on a future event; and must be legally enforceable in the normal course of business, the event of default and the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendments further clarified that an entity will meet the nett settlement criterion as provided in FRS 132 if the entity can settle amounts in a manner that the outcome is, in effect, equivalent to nett settlement.
Annual Report 2012 TDM Berhad (6265-P) 121 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.3 Standards issued but not yet effective (cont’d.)
Malaysian Financial Reporting Standards (MFRS Framework)
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).
Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional two years. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2014.
The Group falls within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 December 2014. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.
The Group has not completed its assessment of the financial effects of the differences between FRS and accounting standards under the MFRS Framework. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2012 could be different if prepared under the MFRS Framework.
2.4 Basis of consolidation
The consolidated financialstatements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation ofthe consolidated financial statements are prepared for the same reporting date as of the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination. Any excess of the cost of business combination over the Group’s share in the nett fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statement of financial position. The accounting policy for goodwill is set out in Note 2.10.
Annual Report 2012 TDM Berhad (6265-P) 122 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.4 Basis of consolidation (cont’d.)
Any excess of the Group’s share in the nett fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
2.5 Transactions with minority interests
Minority interests represent the portion of profit or loss and nett assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statement of financial position, separately from parent shareholders’ equity. Transactions with minority interests are accounted for using the entity concept method, whereby, transactions with minority interests are accounted for as transactions with owners. On acquisition of minority interests, the difference between the consideration and book value of the share of the nett assets acquired is recognised directly in equity. Gain or loss on disposal to minority interests is recognised directly in equity.
2.6 Foreign currency
(a) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements arepresented in Ringgit Malaysia (RM), which is also the Company’s functional currency.
(b) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s nett investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
Annual Report 2012 TDM Berhad (6265-P) 123 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.6 Foreign currency (cont’d.)
(b) Foreign currency transactions (cont’d.)
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.
(c) Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.
2.7 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment except for buildings, plant and machinery, leasehold land and freehold land included within property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Certain buildings, plant and machinery, leasehold land and freehold land included within property, plant and equipment are stated at revalued amount, which is the fair value at the date of the revaluation less any accumulated impairment losses. Fair value is determined from market-based evidence by appraisal that is undertaken by professionally qualified valuers.
Revaluations are performed at a regular interval of at least once every five (5) years to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the statement of financial position date. Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.
Annual Report 2012 TDM Berhad (6265-P) 124 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.7 Property, plant and equipment (cont’d.)
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the nett amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.
Freehold land has an unlimited useful life and therefore is not depreciated. Work-in progress is also not depreciated as this asset is not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful lives of the assets, at the following annual rates:
Leasehold land 33 - 88 years Buildings 5% - 10% Plant, machinery, equipment, vehicles and renovation 5% - 20% Livestock pen and cages 10% - 33.3%
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.
2.8 Biological assets
(a) Plantation development expenditure
Plantation development expenditure consists of pre-cropping costs incurred from the commencement of development to the date of maturity of the rootstock. Subsequent to recognition, plantation development expenditure is stated at revalued amount, which is the fair value at the date of the revaluation less any accumulated impairment losses. Fair value is determined from market-based evidence by appraisal that is undertaken by professionally qualified valuers. Revaluations are performed at least once in every five (5) years to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the statement of financial position date.
Any revaluation surplus is credited to the revaluation reserve included within equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in income statement, in which case the increase is recognised in income statement to the extent of the decrease previously recognised. A revaluation deficit is first offset against unutilised previously recognised revaluation surplus in respect of the same asset and the balance is thereafter recognised in income statement. Upon disposal or retirement of an asset, any revaluation reserve relating to the particular asset is transferred directly to retained earnings.
Annual Report 2012 TDM Berhad (6265-P) 125 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.8 Biological assets (cont’d.)
(a) Plantation development expenditure (cont’d.)
Expenditure incurred in respect of newly planted areas up to the time of maturity is capitalised as plantation development expenditure. Replanting expenditure is charged to the income statement as and when it is incurred. Replanting expenditure in the existing land with other crops other than the one previously planted is not being capitalised but expensed off in the income statement.
(b) Livestocks
Livestocks represent deferred expenditure incurred on the breeder stock up to their maturity. This deferred expenditure will be amortised over the average production cycle of the breeders.
Deferred expenditure on the breeder stock is carried at the lower of amortised cost and market value, determined on an aggregate basis. Cost is determined on the weighted average basis while the market value is determined on the current nett selling prices. On disposal of livestocks, the difference between nett disposal proceeds and the carrying amount is recognised in income statement.
2.9 Investment properties
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.
A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.7 up to the date of change in use.
Annual Report 2012 TDM Berhad (6265-P) 126 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.10 Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.
2.11 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (CGU)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
Annual Report 2012 TDM Berhad (6265-P) 127 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.11 Impairment of non-financial assets (cont’d.)
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, nett of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
2.12 Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
2.13 Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
When financial assets arerecognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include loans and receivables and available-for-sale financial assets.
(a) Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.
Annual Report 2012 TDM Berhad (6265-P) 128 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.13 Financial assets (cont’d.)
(b) Available-for-sale financial assets
Available-for-sale are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.
A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.
2.14 Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties theof debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
Annual Report 2012 TDM Berhad (6265-P) 129 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.14 Impairment of financial assets (cont’d.)
(a) Trade and other receivables and other financial assets carried at amortised cost (cont’d.)
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced 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.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.
(b) Available-for-sale financial assets
Significant or prolonged declinein fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (nett of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profitor loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.
2.15 Property development costs
Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.
When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.
Where the financial outcomeof a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred.
Annual Report 2012 TDM Berhad (6265-P) 130 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.15 Property development costs (cont’d.)
Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately. Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and nett realisable value.
The excess of revenue recognised in the income statement over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in the income statement is classified as progress billings within trade payables.
2.16 Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and in hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.
2.17 Inventories
Inventories are stated at the lower of cost and nett realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:
- Raw materials: purchase costs on a first-in first-out basis. - Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a first-in first-out basis.
Nett realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.
2.18 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.19 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as other financial liabilities.
Annual Report 2012 TDM Berhad (6265-P) 131 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.19 Financial liabilities (cont’d.)
The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.
The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, nett of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
2.20 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
2.21 Employee benefits
(a) Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.
Annual Report 2012 TDM Berhad (6265-P) 132 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.21 Employee benefits (cont’d.)
(b) Defined benefit plan
The Group operates a funded, defined benefit Retirement Benefit Scheme (the Scheme) for its eligible employees. The Group’s obligations under the Scheme are determined based on triennial actuarial valuation where the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted using the Projected Unit Credit Method in order to determine its present value.
Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the amended benefits become vested.
The amount recognised in the statements of financial position represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the nett total of any unrecognised actuarial losses and past service cost, and the present value of any economic benefits in the form of refunds or reductions in future contributions to the plan.
(c) Employee share option plans
Employees of the Group receive remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in profit or loss, with a corresponding increase in the employee share option reserve over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised at the beginning and end of that period.
No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the reissuance of treasury shares.
Annual Report 2012 TDM Berhad (6265-P) 133 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.22 Leases
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
2.23 Discontinued operation
A component of the Group is classified as a “discontinued operation” when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations or is part of a single coordinated major line of business or geographical area of operations. A component is deemed to be held for sale if its carrying amounts will be recovered principally through a sale transaction rather than through continuing use.
Upon classification as held for sale, non-current assets and disposal groups are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.
2.24 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.
(i) Sale of goods
Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customer. 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.
(ii) Rendering of services
Revenue from services rendered is recognised nett of service taxes and discounts as and when the services are performed.
Annual Report 2012 TDM Berhad (6265-P) 134 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.24 Revenue (cont’d.)
(iii) Interest income
Interest income is recognised using the effective interest method.
(iv) Dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
(v) Management fees
Management fees are recognised when services are rendered.
(vi) Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.
2.25 Income taxes
(a) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Annual Report 2012 TDM Berhad (6265-P) 135 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.24 Revenue (cont’d.)
(b) Deferred tax (cont’d.)
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
2.26 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 36, including the factors used to identify the reportable segments and the measurement basis of segment information.
Annual Report 2012 TDM Berhad (6265-P) 136 notes to the financial statements (continued) For the financial year ended 31 December 2012
2. Summary of Significant Accounting Policies (Cont’d.)
2.27 Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, nett of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
3. Significant Accounting Judgements and Estimates
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
3.1 Judgements made in applying accounting policies
There were no significant judgements made by management in the process of applying the Group’s accounting policies.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Useful lives of plant and equipment
The cost of plant and equipment for the plantation industry and medical equipment for healthcare is depreciated on a straight-line basis over the assets’ estimated economic useful lives. Management estimates the useful lives of these plant and equipment to be within 5 to 20 years. 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.
(b) Impairment of goodwill
Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.
When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are given in Note 16.
Annual Report 2012 TDM Berhad (6265-P) 137 notes to the financial statements (continued) For the financial year ended 31 December 2012
3. Significant Accounting Judgements and Estimates (Cont’d.)
(c) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and reinvestment allowances to the extent that it is probable that taxableprofit will be available against which the losses, capital allowances and reinvestment allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
(d) Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the reporting date is disclosed in Note 22.
(e) Defined benefit plan
The cost of defined benefit plan is determined using actuarial assumptions. The principal assumptions used to determine the present value of defined benefit obligation are discount rate, long-term rate of return on assets and future salary increases. The carrying amount on the Group’s defined benefit plan at the reporting date is disclosed in Note 29(a).
Annual Report 2012 TDM Berhad (6265-P) 138 notes to the financial statements (continued) For the financial year ended 31 December 2012
4. Revenue
Revenue of the Group and of the Company consists of the following:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Sale of goods 351,981 435,553 45,709 59,550 Rendering of services 101,353 76,400 - - Dividend income from subsidiaries - - 46,457 52,697 Management fees from subsidiaries - - 29,034 33,195 Management fee from Terengganu Oil Palm Development - Sublessees Scheme 1,924 3,566 - -
455,258 515,519 121,200 145,442
Revenue for the Group represents invoiced amount for sale of goods and services rendered after allowing for sales discounts and returns and excludes intra-group transactions.
5. Finance Costs
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Interest expense on: - bank overdrafts - 152 - - - term loans 67 101 - - - hire purchase and finance lease liabilities 25 71 1 2
92 324 1 2
Annual Report 2012 TDM Berhad (6265-P) 139 notes to the financial statements (continued) For the financial year ended 31 December 2012
6. Profit Before Tax from Continuing Operations
The following items have been included in arriving at profit before tax from continuing operations:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Auditors’ remuneration: - statutory audits 258 283 58 58 - Continuing 258 265 58 58 - Discontinued - 18 - - - other services 9 5 8 5 Employee benefits expense (Note 7) 63,273 52,253 11,496 10,148 - Continuing 63,273 50,314 11,496 10,148 - Discontinued - 1,939 - - Non-executive directors’ remuneration (Note 8) 2,234 1,932 1,034 894 - Continuing 2,234 1,842 1,034 894 - Discontinued - 90 - - Depreciation of property, plant and equipment (Note 13) 28,375 21,455 1,472 2,697 - Continuing 28,375 20,711 1,472 2,697 - Discontinued - 744 - - Property, plant and equipment written off (Note 13) 5 310 - 85 - Continuing 5 309 - 85 - Discontinued - 1 - - Amortisation of livestocks - Discontinued - 492 - - Rental of premises 3,327 3,337 735 600 Rental of equipment 62 48 6 1 - Continuing 62 46 6 1 - Discontinued - 2 - - Rental of land 144 144 142 142 Rental of parking space 100 103 57 30 Rental of chicken pen - discontinued - 31 - - Gain on disposal of property, plant and equipment - (223) - - Inventories written off 37 - - - Bad debts written off 1,782 24 61 -
Annual Report 2012 TDM Berhad (6265-P) 140 notes to the financial statements (continued) For the financial year ended 31 December 2012
6. Profit Before Tax from Continuing Operations (Cont’d.)
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Impairment loss on trade receivables 473 1,730 - - - Continuing (Note 22 (a)) 473 865 - - - Discontinued - 865 - - Impairment loss on other receivables - 624 27 5 Reversal of impairment loss on trade receivables (Note 22 (a)) (17) (173) - - - Continuing (17) (155) - - - Discontinued - (18) - - Reversal of impairment loss on other receivables - (67) - - Payables written back (1,637) (2,771) - (54) Waiver of amount due to a subsidiary - - (9,151) - Write back of interest payable to a related corporation (Note 31(c)) (15,559) - (15,559) - Royalty 422 553 - - Share of profits from estates payable to Lembaga Tabung Amanah Warisan Negeri Terengganu 2,337 3,873 2,337 3,873 Share of profits from estates payable to Majlis Agama Islam dan Adat Melayu Terengganu 669 933 669 933 Provision for impairment of investments in subsidiaries - - - 8,900 Replanting expenditure 4,228 196 298 - Gain on disposal of subsidiaries (744) - (404) - Loss/(gain) on voluntary winding up of subsidiaries 5,045 (152) - - Dividend Income (2,053) (942) (46,457) (52,697) Interest income (5,117) (4,734) (469) (452) Rental income (488) (766) - - Profit distribution from Terengganu Oil Palm Development - Sublessees Scheme (48,784) (50,905) (10,108) (16,147) Insurance compensation received - (62) - - Management fees charged to subsidiaries - - (29,034) (33,195)
Annual Report 2012 TDM Berhad (6265-P) 141 notes to the financial statements (continued) For the financial year ended 31 December 2012
7. Employee Benefits Expense Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Salaries, wages and allowances 28,242 27,225 3,894 3,696 Defined contribution benefits 5,726 5,259 650 710 Social security costs 626 603 34 64 Provision for retirement benefit obligations (Note 29 (a)) 245 238 20 20 (Reversal of)/provision for short-term accumulating compensated absences (25) 124 - 9 Share options granted under ESOS 346 1,208 134 321 Other benefits 28,113 17,596 6,764 5,328
63,273 52,253 11,496 10,148
Included in employee benefits expense of the Group is executive directors’ remuneration amounting to RM282,000 (2011: RM344,000) as further disclosed in Note 8.
8. Directors’ Remuneration
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Executive directors’ remuneration (Note 7): Fees and other emoluments 276 329 - - Share options granted under ESOS 6 15 - -
282 344 - -
Non-executive directors’ remuneration (Note 6): Fees and other emoluments 2,064 1,597 950 657 Share options granted under ESOS 170 335 84 237
2,234 1,932 1,034 894
Total directors’ remuneration 2,516 2,276 1,034 894 Estimated money value of benefits-in-kind 137 469 25 244
Total directors’ remuneration including benefits-in-kind 2,653 2,745 1,059 1,138
Annual Report 2012 TDM Berhad (6265-P) 142 notes to the financial statements (continued) For the financial year ended 31 December 2012
8. Directors’ Remuneration (Cont’d.)
The number of directors of the Company whose total remuneration during the year falling within the following bands is analysed below:
Number of directors 2012 2011
Non-executive directors: RM50,001 - RM100,000 6 6 RM250,001 - RM300,000 1 1
9. Income Tax Expense
The major components of income tax expense for the years ended 31 December 2012 and 2011 are:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Statements of comprehensive income: Current income tax - continuing operations - Malaysian income tax 45,905 59,009 13,385 15,788 - Under/(over) provision of income tax in prior year 556 (1,206) (103) (25)
46,461 57,803 13,282 15,763
Deferred tax - continuing operations (Note 30): Relating to origination and reversal of temporary differences (555) 1,168 18 (327) (Over)/under provision in prior year (237) (1,071) 540 (64)
(792) 97 558 (391)
Income tax attributable to continuing operations 45,669 57,900 13,840 15,372 Income tax attributable to discontinued operation - (2) - -
Income tax expense recognised in profit or loss 45,669 57,898 13,840 15,372
Annual Report 2012 TDM Berhad (6265-P) 143 notes to the financial statements (continued) For the financial year ended 31 December 2012
9. Income Tax Expense (Cont’d.)
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Deferred income tax related to other comprehensive income:
- Nett surplus on revaluation of land, buildings, plant and machinery and plantation development expenditure - 46,965 - 202
Reconciliation between tax expense and accounting profit
The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2012 and 2011 is as follows:
2012 2011 RM’000 RM’000 Restated
Group
Profit before tax from continuing operations 149,025 220,579 Profit before tax from discontinued operation - 558
Accounting profit before tax 149,025 221,137
Taxation at Malaysian statutory rate of 25% (2011: 25%) 37,256 55,284 Income not subject to tax (127) (270) Expenses not deductible for tax purposes 7,906 2,911 Utilisation of previously unrecognised tax losses and unabsorbed capital allowances - (469) Deferred tax assets recognised during the year (74) (204) Deferred tax assets not recognised during the year 389 2,925 Over provision of deferred tax in prior year (237) (1,071) Under / (over) provision of income tax in prior year - Continuing 556 (1,206) - Discontinued - (2)
Tax expense for the year 45,669 57,898
Annual Report 2012 TDM Berhad (6265-P) 144 notes to the financial statements (continued) For the financial year ended 31 December 2012
9. Income Tax Expense (Cont’d.)
2012 2011 RM’000 RM’000 Restated
Company
Profit before tax 94,886 85,370
Taxation at Malaysian statutory rate of 25% (2011: 25%) 23,722 21,343 Income not subject to tax (11,109) (8,900) Expenses not deductible for tax purposes 790 3,018 Under/(over) provision of deferred tax in prior year 540 (64) Overprovision of income tax in prior year (103) (25)
Tax expense for the year 13,840 15,372
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2011: 25%) of the estimated assessable profit for the year.
10. Discontinued Operation and Disposal Group Classified as Held for Sale
The profit from discontinued operation, nett of tax and nett assets directly associated with disposal group classified as held for sale in prior year were related to disposal of TD Poultry Sdn. Bhd. as disclosed in Note 17(d).
11. Earnings Per Share
(a) Continuing operations
Basic earnings per share amounts are calculated by dividing profit for the year from continuing operations, nett of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share amounts are calculated by dividing profit for the year from continuing operations, nett of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Annual Report 2012 TDM Berhad (6265-P) 145 notes to the financial statements (continued) For the financial year ended 31 December 2012
11. Earnings Per Share (Cont’d.)
The following tables reflect the profit and share data used in the computation of basic and diluted earnings per share for the years ended 31 December: 2012 2011 RM’000 RM’000 Restated
Profit nett of tax attributable to owners of the parent 102,408 160,979 Less: Profit from discontinued operation, nett of tax, attributable to owners of the parent - (560)
Profit nett of tax from continuing operations attributable to owners of the parent used in computation of basic earnings and diluted earnings per share 102,408 160,419
No. of No. of shares shares ‘000 ‘000
Weighted average number of ordinary shares in issue for basic earnings per share computation 245,760 236,522 Effects of dilution: - Share options 817 2,557 - Retention shares pursuant to acquisition of a new subsidiary - 276 - Issuance of new shares pursuant to acquisition of land - 5,650
Weighted average number of ordinary shares in issue for diluted earnings per share computation 246,577 245,005
Basic earnings per share (sen per share) - Continuing operations 41.67 67.82 - Discontinued operation - 0.24
41.67 68.06
Diluted earnings per share (sen per share) - Continuing operations 41.53 65.48 - Discontinued operation - 0.23
41.53 65.70
(b) Discontinued operation
The basic and diluted earnings per share from discontinued operation are calculated by dividing the profit from discontinued operation, nett of tax, attributable to owners of the parent by the weighted average number of ordinary shares for basic earnings per share computation and weighted average number of ordinary shares for diluted earnings per share computation respectively. These earnings and share data are presented in the tables in Note 11(a).
Annual Report 2012 TDM Berhad (6265-P) 146 notes to the financial statements (continued) For the financial year ended 31 December 2012
12. Dividends
Dividends in respect Dividends of year recognised in year 2012 2011 2010 2012 2011 RM’000 RM’000 RM’000 RM’000 RM’000
Recognised in prior year First and final dividend of 13.50 sen dividend per share, tax exempt under the single-tier system on 231,926,852 ordinary shares declared on 31 March 2011 and paid on 9 June 2011. - - 31,310 - 31,310
An interim dividend of 3 sen dividend per share, tax exempt under the single-tier system on 231,926,852 ordinary shares declared on 27 April 2011 and paid on 9 June 2011. - 6,958 - - 6,958
Recognised during the year Final dividend in respect of the financial year ended 31 December 2011 of 18.50 sen dividend per share, tax exempt under the single-tier system on 245,275,490 ordinary shares declared on 27 March 2012 and paid on 8 June 2012. - 45,376 - 45,376 -
Proposed for approval at AGM (not recognised as at 31 December) First and final dividend in respect of the financial year ended 31 December 2012 of 22 sen dividend per share, tax exempt under the single-tier system on 245,766,781 ordinary shares. 54,069 - - - -
54,069 52,334 31,310 45,376 38,268
At the forthcoming Annual General Meeting (AGM), a first and final dividend in respect of the financial year ended 31 December 2012 of 22 sen dividend per share, tax exempt under the single-tier system on 245,766,781 ordinary shares, amounting to RM54,068,692 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013.
Annual Report 2012 TDM Berhad (6265-P) 147 notes to the financial statements (continued) For the financial year ended 31 December 2012
13. Property, Plant and Equipment Plant, machinery, equipment, vehicles Livestock Freehold Leasehold and pen and Work-in land land Buildings renovation cages progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost of valuation : At Valuation At Cost
Group
At 1 January 2011 2,483 209,759 56,774 170,863 654 16,745 457,278
Additions - 8,194 428 24,337 96 19,136 52,191 Disposals - - (290) (175) - - (465) Transfers - - 6,782 3,445 - (10,227) - Reclassifications - - 630 (630) - - - Write offs - (673) (222) (1,310) (1) (70) (2,276) Revaluation surplus - 211,091 10,899 16,897 - - 238,887 Revaluation deficit (800) - - - - - (800) Transfer to investment property (Note 15) - (11,000) - - - - (11,000) Acquisition of a subsidiary (Note 17) 7,200 - 12,945 5,761 - - 25,906 Attributable to discontinued operation - (1,668) (9,630) (8,322) (749) - (20,369) Exchange differences - 682 172 613 - - 1,467 Elimination of accumulated depreciation on revaluation - (31,398) (8,988) (28,848) - - (69,234)
At 31 December 2011 8,883 384,987 69,500 182,631 - 25,584 671,585
At 1 January 2012 As previously stated 8,883 397,859 69,500 182,631 - 25,584 684,457 Prior year adjustment - (12,872) - - - - (12,872)
As restated 8,883 384,987 69,500 182,631 - 25,584 671,585 Additions - 4 ,809 2 ,249 17,934 - 61,232 86,224 Transfers - - 7 ,518 5,280 - (12,798) - Write offs - - - (1,037) - - (1,037) Revaluation surplus - 4 ,022 417 5,148 - - 9,587 Exchange differences - (5,184) (176) (2,703) - - (8,063)
At 31 December 2012 8,883 388,634 79,508 207,253 - 74,018 758,296
Annual Report 2012 TDM Berhad (6265-P) 148 notes to the financial statements (continued) For the financial year ended 31 December 2012
13. Property, Plant and Equipment (Cont’d.)
Plant, machinery, equipment, vehicles Livestock Freehold Leasehold and pen and Work-in land land Buildings renovation cages progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group (cont’d)
Accumulated depreciation and impairment losses At 1 January 2011 - 26,981 33,504 99,248 564 523 160,820 Depreciation charge for the year (Note 6) - 4,482 2,869 14,059 45 - 21,455 Disposals - - (199) (126) - - (325) Write offs - (673) (72) (1,221) - - (1,966) Reclassifications - - 3,398 (3,398) - - - Acquisition of a subsidiary (Note 17) - - - 5,378 - - 5,378 Attributable to discontinued operation - (183) (8,044) (5,614) (609) - (14,450) Exchange differences - 1,275 (19) (727) - - 529 Elimination of accumulated depreciation on revaluation - (31,398) (8,988) (28,848) - - (69,234)
At 31 December 2011 and 1 January 2012 - 484 22,449 78,751 - 523 102,207
Depreciation charge for the year (Note 6) - 6,597 4,041 17,737 - - 28,375 Write offs - - - (1,032) - - (1,032) Exchange differences - (1,811) (2) (16) - - (1,829)
At 31 December 2012 - 5,270 26,488 95,440 - 523 127,721
Net carrying amount At 31 December 2011 8,883 384,503 47,051 103,880 - 25,061 569,378
At 31 December 2012 8,883 383,364 53,020 111,813 - 73,495 630,575
Annual Report 2012 TDM Berhad (6265-P) 149 notes to the financial statements (continued) For the financial year ended 31 December 2012
13. Property, Plant and Equipment (Cont’d.)
Machinery, equipment, Leasehold and Work-in land vehicles progress Renovation Total RM’000 RM’000 RM’000 RM’000 RM’000
At Valuation At Cost
Company
Cost or valuation At 1 January 2011 34,092 4,980 1,239 2,643 42,954 Additions 209 169 300 - 678 Revaluation surplus 4,095 - - - 4,095 Write offs (673) (22) (70) - (765) Transfer to investment property (Note 15) (11,000) - - - (11,000) Transfer - 646 (646) - - Elimination of accumulated depreciation on revaluation (7,554) - - - (7,554)
At 31 December 2011 and 1 January 2012 19,169 5,773 823 2,643 28,408 Additions 19 936 19,786 - 20,741
At 31 December 2012 19,188 6,709 20,609 2,643 49,149
Accumulated depreciation and impairment At 1 January 2011 6,479 2,743 523 2,643 12,388 Depreciation charge for the year (Note 6) 1,748 949 - - 2,697 Write offs (673) (7) - - (680) Elimination of accumulated depreciation on revaluation (7,554) - - - (7,554)
At 31 December 2011 - 3,685 523 2,643 6,851
Depreciation charge for the year (Note 6) 634 838 - - 1,472
At 31 December 2012 634 4,523 523 2,643 8,323
Nett carrying amount At 31 December 2011 19,169 2,088 300 - 21,557
At 31 December 2012 18,554 2,186 20,086 - 40,826
Annual Report 2012 TDM Berhad (6265-P) 150 notes to the financial statements (continued) For the financial year ended 31 December 2012
13. Property, Plant and Equipment (Cont’d.)
(a) Had the revalued property, plant and equipment been carried under cost model, the nett carrying amounts of each class of property, plant and equipment that would have been included in the financial statements of the Group as at 31 December 2012 and 31 December 2011 are as follows:
Group 2012 2011 RM’000 RM’000
Freehold land 6,629 6,629 Leasehold land 103,527 105,549 Buildings 22,462 18,901 Plant and machinery 20,642 22,384
(b) During the financial ear,y the Group and the Company acquired property, plant and equipment at aggregate costs of RM86,224,000 (2011: RM52,191,000) and RM20,741,000 (2011: RM678,000) respectively of which RM Nil (2011: RM296,000) of the Group and the Company were acquired by means of finance leases. Nett carrying amounts of property, plant and equipment held under finance leases are as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Machinery, equipment and motor vehicles - Continuing 1,254 3,066 - 84 - Discontinued - 303 - -
1,254 3,369 - 84
(c) Details of independent professional valuation of properties owned by the Company and its subsidiaries at 31 December 2012 are as follows:
Group Year of Valuation valuation Description of property amount Basis of valuation RM’000
2011 Freehold land 8,800 Open market value 2011 Leasehold land 358,556 Open market value 2011 Buildings 42,522 Open market value 2011 Plant and machinery 44,800 Open market value 2012 Buildings 417 Open market value 2012 Leasehold land 4,022 Open market value 2012 Plant and machinery 5,148 Open market value 464,265
Annual Report 2012 TDM Berhad (6265-P) 151 notes to the financial statements (continued) For the financial year ended 31 December 2012
13. Property, Plant and Equipment (Cont’d.)
(c) Details of independent professional valuation of properties owned by the Company and its subsidiaries at 31 December 2012 are as follows (cont’d):
Company Year of Valuation valuation Description of property amount Basis of valuation RM’000
2011 Leasehold land 19,169 Open market value
(d) Acquisition of an asset
On 22 February 2012, the Company had entered into a conditional sale and purchase agreement with Lembaga Tabung Amanah Warisan Negeri Terengganu for the acquisition of a parcel of leasehold land held under H.S.(D) 9537, Lot No. PT 2407, Mukim Batu Buruk, District of Kuala Terengganu, Terengganu Darul Iman for a total purchase consideration of RM16.90 million to be fully satisfied via the issuance of 3,557,895 new ordinary shares of RM1.00 each at an issue of RM4.75 per TDM Berhad’s ordinary share.
On 16 May 2012, the Company had announced that the sale and purchase agreement dated 22 February 2012 between Lembaga Tabung Amanah Warisan Negeri Terengganu and TDM Berhad for the proposed acquisition of a parcel of leasehold land has been completed.
14. Biological Assets 2012 2011 RM’000 RM’000
Group (a) Plantation development expenditure At valuation: At 1 January 501,803 367,699 Addition 39,620 40,059 Revaluation surplus - 94,045
At 31 December 541,423 501,803
(b) Livestocks At cost: At 1 January - 13,040 Addition - 881 - 13,921 Cumulative amount amortised - (13,063) Attributable to discontinued operation - (858)
At 31 December - -
Total 541,423 501,803
Annual Report 2012 TDM Berhad (6265-P) 152 notes to the financial statements (continued) For the financial year ended 31 December 2012
14. Biological Assets (Cont’d.)
2012 2011 RM’000 RM’000
Company
(a) Plantation development expenditure At cost At 1 January / 31 December 23,638 23,638
(i) Had the revalued biological assets been under cost model, the net carrying amount of each class of biological assets that would have been included in the financial statements of the Group as at 31 December 2012 and 31 December 2011 are as follows:
Group 2012 2011 RM’000 RM’000
Plantation development expenditure 260,174 259,174
(ii) Prior to 1 January 2006, plantation development expenditure was classified as property, plant and equipment and livestocks were classified as deferred expenditure.
(iii) Details of independent professional valuations of biological assets owned by the Company and its subsidiaries at 31 December 2012 are as follows:
Group Year of Valuation valuation Description of property amount Basis of valuation RM’000
2011 Plantation development expenditure 419,336 Open market value
Annual Report 2012 TDM Berhad (6265-P) 153 notes to the financial statements (continued) For the financial year ended 31 December 2012
15. Investment Property Group and Company 2012 2011 RM’000 RM’000
At 1 January 11,000 - Transfer from property, plant and equipment (Note 13) - 11,000
At 31 January 11,000 11,000
Group and Company Year of Valuation valuation Description of property amount Basis of valuation RM’000
2011 Leasehold land 11,000 Open market value
16. Goodwill
Group 2012 2011 RM’000 RM’000
At 1 January 8,571 1,468 Acquisition of a subsidiary (Note 17 (a)(i)) - 7,103 Adjustment on cost of business combination for acquisition of a subsidiary (Note 17 (a)) 1,388 -
At 31 December 9,959 8,571
Impairment testing of goodwill
Goodwill arising from business combinations has been allocated to two individual cash-generating units (CGU) for impairment testing as follows:
- Plantation - Healthcare
Annual Report 2012 TDM Berhad (6265-P) 154 notes to the financial statements (continued) For the financial year ended 31 December 2012
16. Goodwill (Cont’d.)
The carrying amounts of goodwill allocated to each CGU are as follows:
Group 2012 2011 RM’000 RM’000
Plantation 477 477 Healthcare 9,482 8,094
9,959 8,571
The recoverable amounts of the CGUs have been determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period.
The calculations of value in use for the CGUs are most sensitive to the following assumptions:
Budgeted gross margins – The basis used to determine the value assigned to the key assumption is average gross margin achieved in the period immediately before the budget period, increased for expected efficiency improvement.
Growth rates – The management believes that the average growth rates used are consistent with the medium- term average growth rate of the economy.
Pre-tax discount rates – The discount rates are pre-tax and reflect specific risks relating to the relevant activities.
17. Investments in Subsidiaries
Company 2012 2011 RM’000 RM’000
Unquoted shares at cost: - in Malaysia 192,213 186,519 - outside Malaysia 47,146 44,351
239,359 230,870
Less: Accumulated impairment losses (12,006) (17,645)
227,353 213,225 ESOS granted to employees of subsidiaries 7,786 7,488
235,139 220,713
Annual Report 2012 TDM Berhad (6265-P) 155 notes to the financial statements (continued) For the financial year ended 31 December 2012
17. Investments in Subsidiaries (Cont’d.)
Details of the subsidiaries are as follows: Proportion of Country of ownership Names of subsidiaries incorporation Principal activities interest 2012 2011 % %
TDM Plantation Sdn Bhd Malaysia Management of oil palm 100 100 plantation, processing and trading of palm oil and related products. Kumpulan Ladang-Ladang Malaysia Cultivation of oil palms, 100 100 Trengganu Sdn Bhd trading of palm oil and other related products. TDM Trading Sdn Bhd Malaysia Trading of crude palm oil 100 100 and other related products. TDM Capital Sdn Bhd Malaysia Investment holding, trading, 90 90 cultivation of oil palms and other related products. Kumpulan Mediiman Malaysia Investment holding and 90.49 90.49 Sdn Bhd ** provision of consultancy and management services to specialist medical centres. Kuala Terengganu Specialist Malaysia Specialist medical centre. 100 100 Hospital Sdn Bhd PT. Rafi KamajayaAbadi * Indonesia Cultivation of oil palms, 93.80 93.80 trading of palm oil and other related products. PT. Rafi Sawit Lestari * Indonesia Cultivation of oil palms, 95.00 - trading of palm oil and other related products. TDM Properties Bhd # Malaysia Dormant. 100 100 Indah Sari Travel & Tours Malaysia Dormant. 70 70 Sdn Bhd** TD Ijarah Sdn Bhd # Malaysia Dormant. 100 100 TDM Helling Sdn Bhd # Malaysia Dormant. 100 100 Kuantan Medical Centre Malaysia Specialist medical centre. 91.98 91.98 Sdn Bhd Kelana Jaya Medical Centre Malaysia Specialist medical centre. 99.30 99.30 Sdn Bhd TDMC Hospital Sdn Bhd Malaysia Specialist medical centre. 100 100 TD Gabongan Sdn Bhd ##,### Malaysia Dormant. 51 - TD Poultry Sdn Bhd *** Malaysia Integrated poultry farming. - 100
Annual Report 2012 TDM Berhad (6265-P) 156 notes to the financial statements (continued) For the financial year ended 31 December 2012
17. Investments in Subsidiaries (Cont’d.)
Proportion of Country of ownership Names of subsidiaries incorporation Principal activities interest 2012 2011 % %
Held by Kumpulan Ladang- Ladang Trengganu Sdn Bhd TRP Industries Sdn Bhd # Malaysia Dormant. 100 100 KLLT Fibres Sdn Bhd # Malaysia Dormant. 100 100 Trengganu Rubber Processing Malaysia Dormant. 99.99 99.99 Sdn Bhd #
Held by TRP Industries Sdn Bhd World Wide Rubber Marketing Malaysia Dormant. 100 100 Sdn Bhd #
Held by TDM Properties Bhd TD Permatang Sdn Bhd # Malaysia Dormant. 100 100 TD Gabongan Sdn Bhd ## Malaysia Dormant. - 51
Held by Kumpulan Mediiman Sdn Bhd Medi Air Sdn Bhd ** Malaysia Dormant. 100 100 Held by Kuala Terengganu Specialist Hospital Sdn Bhd HMMC (Ampang) Sdn Bhd # Malaysia Dormant. 100 100
* Audited by firms of auditors other than Ernst & oung.Y ** Subsidiaries with auditors’ reports that draw reference to the going concern assumptions and the dependence upon the financial support of the Company. These reports are not qualified. *** Classified as discontinued operation during financial year 2011 (Note 10) and the disposal was completed during current financial year (Note 17(d)). # No consolidation with these subsidiaries as the subsidiaries have been placed under Members’ Voluntary Winding Up (Note 17 (b)). ## The financial statementshave been prepared on a break-up basis. The auditors’ report draw reference to the going concern assumptions. The report is not qualified. ### The ownership interest in this subsidiary of 51% (2011: 51%) has been transferred from TDM Properties Bhd to TDM Berhad during the year.
Annual Report 2012 TDM Berhad (6265-P) 157 notes to the financial statements (continued) For the financial year ended 31 December 2012
17. Investments in Subsidiaries (Cont’d.)
(a) Acquisition of a subsidiary
(i) TDMC Hospital Sdn Bhd
On 1 April 2011, the Company had entered into a conditional Share Sale Agreement with Intercontinental Nominees Sdn Bhd (INSB) and Cekal Teguh Sdn Bhd (CTSB) to acquire 23,691,931 ordinary shares of RM1.00 each, representing 100% of the issued and paid-up share capital in TDMC Hospital Sdn Bhd (TDMCHSB) for a total purchase consideration of RM16,500,000.
On 16 June 2011, the Company executed a Supplemental Letter with INSB and CTSB to vary certain terms in the Share Sale Agreement dated 1 April 2011.
The Share Sale had been completed on 15 July 2011.
The fair values of the identifiable assets and liabilities of TDMCHSB as at the date of acquisition were:
Carrying Fair value value RM’000 RM’000
Property, plant and equipment 20,528 9,949 Inventories 136 136 Trade and other receivables 839 839 Cash and cash equivalents (4,868) (4,868)
16,635 6,056
Trade and other payables (6,872) (6,872) Borrowings (1,508) (1,508)
(8,380) (8,380)
Nett identifiable assets 8,255 (2,324)
Total cost of business combination The total cost of the business combination is as follows:
RM’000
Cash paid 4,633 Retention fund 825 3,498,215 ordinary shares issued at RM2.83 each (Note 26) 9,900
15,358
Annual Report 2012 TDM Berhad (6265-P) 158 notes to the financial statements (continued) For the financial year ended 31 December 2012
17. Investments in Subsidiaries (Cont’d.)
(a) Acquisition of a subsidiary (cont’d.)
(i) TDMC Hospital Sdn. Bhd. (cont’d.)
As part of the cost of business combination, the Company issued 3,498,215 ordinary shares with a fair value of RM2.83 each, being the Company’s published price of the shares at the date of exchange to the vendor.
The effect of the acquisition on cash flows is as follows:
RM’000
Total cost of the business combination 15,358 Less: Non-cash consideration (10,725)
Consideration settled in cash 4,633 Less: Cash and cash equivalents of subsidiary acquired 4,868
Net cash outflow on acquisition 9,501
Goodwill arising on acquisition
RM’000
Group’s interest in fair value of net identifiable assets 8,255 Goodwill on acquisition (Note 16) 7,103
Cost of business combination as previously reported 15,358 Cost of business combination restated 16,746
Additional goodwill during the year (1,388)
The cost of business combination of the acquisition of TDMC Hospital Sdn. Bhd. in the financial year ended 31 December 2011 was provisional as the balance of the purchase consideration payable via issuance of new TDM shares was satisfied during the financial year. The revised cost of business combination has resulted in an increase in goodwill by RM1,388,000 as disclosed in Note 16.
(ii) PT. Rafi Sawit Lestari
On 29 February 2012, the Company subscribed 95% shares in PT. Rafi Sawit Lestari, a company incorporated in Indonesia. Effective that date, PT. Rafi Sawit Lestari becomes a subsidiary of the Company.
The primary objectives of PT. Rafi Sawit Lestari are developing oil palm plantations and operating oil palm businesses in Kabupaten Melawi, West Kalimantan, Indonesia.
Annual Report 2012 TDM Berhad (6265-P) 159 notes to the financial statements (continued) For the financial year ended 31 December 2012
17. Investments in Subsidiaries (Cont’d.)
(b) Subsidiaries placed under member’s voluntary winding up
On 3 October 2012, the Company had announced that the following dormant subsidiaries have been placed under members’ voluntary winding up pursuant to Section 254(1)(b) of the Companies Act, 1965:
1. TDM Properties Bhd; 2. TD Ijarah Sdn Bhd; 3. TDM Helling Sdn Bhd; 4. TRP Industries Sdn Bhd; 5. KLLT Fibres Sdn Bhd; 6. Trengganu Rubber Processing Sdn Bhd; 7. World Wide Rubber Marketing Sdn Bhd; 8. TD Permatang Sdn Bhd; 9. HMMC (Ampang) Sdn Bhd.
Mr Heng Ji Keng and Mr Michael Joseph Monteiro of Ferrier Hodgson MH Sdn Bhd, have been appointed as liquidators of the subsidiaries. The subsidiaries are dormant and there are no future plans to activate these companies. The winding up of the subsidiaries is in line with the Company’s efforts to streamline and rationalise its core businesses. The loss from the liquidation of RM5,045,000 has been recognised in the statement of comprehensive income.
(c) Additional investment in subsidiaries
(i) Kuantan Medical Centre Sdn Bhd
On 31 May 2012, the Company has increased its investment in Kuantan Medical Centre Sdn Bhd (KMC) by way of transfer of shares from a subsidiary being wound-up, TDIjarah Sdn Bhd to the Company amounting to RM7,679,278. The Company has also entered into a Share Sale Agreement with a non-controlling interest dated 1 October 2012 to purchase shares amounting to RM130,000.
(ii) Kelana Jaya Medical Centre Sdn Bhd
On 31 May 2012, the Company has increased its investment in Kelana Jaya Medical Centre Sdn Bhd (KJMC) by way of transfer of shares from a subsidiary being wound-up, TD Ijarah Sdn Bhd to the Company amounting to RM1,480,727.
(d) Disposal of investment
On 20 February 2012, the Company completed the disposal of its wholly-owned subsidiary, TD Poultry Sdn Bhd (TDPSB), which has been classified as discontinued operation (Note 10) as at 31 December 2011, for total consideration of RM4 million.
Annual Report 2012 TDM Berhad (6265-P) 160 notes to the financial statements (continued) For the financial year ended 31 December 2012
17. Investments in Subsidiaries (Cont’d.)
(d) Disposal of investment (cont’d.)
The disposal had the following effects on the financial position of the Group as at the end of the ear:y
2012 RM
Property, plant and equipment 5,919,154 Biological assets 857,550 Inventories 1,200,668 Trade receivables 3,792,221 Other receivables 122,811 Tax recoverable 3,000 Cash and bank balances 45,880 Borrowings (1,990,289) Trade payables (2,596,475) Other payables (3,663,034)
Nett assets disposed 3,691,486 Realisation of post acquisition reserve (435,659)
3,255,827 Total disposal proceed (4,000,000)
Gain on disposal to the Group (744,173)
2012 RM
Disposal proceeds settled by: Cash 1,375,000 Deferred payment 2,625,000
4,000,000
Cash inflow arising from disposal Cash consideration 1,375,000 Cash and cash equivalents of subsidiary disposed (45,880)
Nett cash inflow on disposal 1,329,120
Annual Report 2012 TDM Berhad (6265-P) 161 notes to the financial statements (continued) For the financial year ended 31 December 2012
18. Other Investments
Group Company 2012 2011 2012 2011
Available for sale investments
Unquoted shares, at cost Within Malaysia - shares 9,745 9,745 4,770 4,770 Less: Impairment losses (5,045) (5,045) (4,770) (4,770)
4 ,700 4,700 - -
19. Investment Securities
2012 2011
Market value Market value Carrying of quoted Carrying of quoted amount investments amount investments RM’000 RM’000 RM’000 RM’000
Group Non-current Available for sale investments - Equity instruments (quoted in Malaysia) 95 95 151 151 Other invetments (Note 18) 4,700 - 4,700 -
Total available for sale investments 4,795 4,851
20. Property Development Costs
Group 2012 2011 RM’000 RM’000
Property development, at cost 1,583 1,583 Less: Provision for foreseeable losses (1,583) (1,583)
- -
Annual Report 2012 TDM Berhad (6265-P) 162 notes to the financial statements (continued) For the financial year ended 31 December 2012
21. Inventories
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
At cost
Produced inventories 8,097 3,959 1,923 603 Pharmaceutical products 3,240 2,165 - - Consumables and food stuff 402 1,287 - - Spare parts, equipment and store 9,426 5,125 - - Seedlings 12,817 10,615 - -
33,982 23,151 1,923 603
22. Trade and Other Receivables
Group As at 2012 2011 1 January 2011 RM’000 RM’000 RM’000 Restated Restated
Trade receivables
Third parties 60,527 79,222 71,381 Less: Allowance for impairment Third parties (11,077) (13,015) (19,675)
Trade receivables,net 49,450 66,207 51,706
Other receivables
Sundry receivables 14,907 46,633 39,634 Deposits 14,053 1,673 2,491
28,960 48,306 42,125 Less: Allowance for impairment Third parties (11,852) (11,906) (11,359)
Other receivables,net 17,108 36,400 30,766
Annual Report 2012 TDM Berhad (6265-P) 163 notes to the financial statements (continued) For the financial year ended 31 December 2012
22. Trade and Other Receivables (Cont’d.)
Group As at 2012 2011 1 January 2011 RM’000 RM’000 RM’000 Restated Restated
Total trade and other receivables 66,558 102,607 82,472 Add: Cash and bank balances (Note 23) 212,554 224,524 176,702
Total loans and receivables 279,112 327,131 259,174
Company As at 2012 2011 1 January 2011 RM’000 RM’000 RM’000 Restated Restated
Other receivables
Due from subsidiaries 239,950 168,029 67,096 Sundry receivables 7,103 7,024 7,047 Deposits 2,726 85 130
249,779 175,138 74,273
Less: Allowance for impairment Third parties (7,024) (7,024) (7,024) Subsidiaries (1,439) (13,902) (13,900)
(8,463) (20,926) (20,924)
Other receivables,nett 241,316 154,212 53,349
Total trade and other receivables 241,316 154,212 53,349 Add: Cash and bank balances (Note 23) 1 ,725 2,505 46,888
Total loans and receivables 243,041 156,717 100,237
Included in sundry receivables of the Group is an amount of RM5,000,000 (2011: RM5,000,000) held by a corporate shareholder, Terengganu Incorporated Sdn. Bhd.
Annual Report 2012 TDM Berhad (6265-P) 164 notes to the financial statements (continued) For the financial year ended 31 December 2012
22. Trade and Other Receivables (Cont’d.)
(a) Trade receivables
Trade receivables are non-interest bearing and are generally on 30 to 90 day (2011: 30 to 90 day) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
Ageing analysis of trade receivables Group 2012 2011 RM’000 RM’000
Neither past due nor impaired 30,542 18,407 1 to 30 days past due not impaired 12,094 25,253 31 to 60 days past due not impaired 3,902 9,121 61 to 90 days past due not impaired 2,402 2,408 More than 91 days past due not impaired - 908
18,398 37,690 Impaired 11,587 23,125
60,527 79,222
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.
Receivables that are past due but not impaired
The Group has trade receivables amounting to RM18,398,000 (2011: RM37,690,000) that are past due at the reporting date but not impaired.
Based on past experience and no adverse information to date, the directors of the Group are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.
Annual Report 2012 TDM Berhad (6265-P) 165 notes to the financial statements (continued) For the financial year ended 31 December 2012
22. Trade and Other Receivables (Cont’d.)
(a) Trade receivables (cont’d.)
Receivables that are impaired
The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows: Group individually impaired 2012 2011 RM’000 RM’000
Trade receivables-nominal amounts 11,587 23,125 Less: Allowance for impairment (11,077) (13,015)
510 10,110
Movement in allowance accounts: Group 2012 2011 RM’000 RM’000
At 1 January 13,015 19,675 Charge for the year (Note 6) 473 1,730 - Continuing operations 473 865 - Discontinued operation - 865 Reversal of impairment losses (Note 6) (17) (173) - Continuing operations (17) (155) - Discontinued operation - (18) Written off (2,394) (618) - Continuing operations (2,394) (389) - Discontinued operation - (229) Attributable to discontinued operation - (8,240) Acquisition of a subsidiary - 641
At 31 December 11,077 13,015
Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.
Annual Report 2012 TDM Berhad (6265-P) 166 notes to the financial statements (continued) For the financial year ended 31 December 2012
22. Trade and Other Receivables (Cont’d.)
(b) Related party balances
Amounts due from subsidiaries are unsecured, non-interest bearing and are repayable on demand. The amount due from a corporate shareholder is unsecured, non-interest bearing and is repayable on demand.
(c) Other receivables
Other receivables that are impaired At the reporting date, the Group and the Company have provided an allowance of RM11,852,000 (2011: RM11,906,000) and RM8,463,000 (2011: RM20,926,000) respectively for impairment of other receivables.
The movement of the allowance accounts used to record the impairment are as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
At 1 January 11,906 11,359 20,926 20,924 Charge for the year (Note 6) - 624 27 5 Reversal of impairment losses (Note 6) - (67) - - Written off (54) (10) (12,490) (3)
At 31 December 11,852 11,906 8 ,463 20,926
23. Cash and Cash Equivalents
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Cash at banks and in hand 43,290 5,915 67 159 Short term deposits with: Licensed banks 169,264 218,609 1,658 2,346
Cash and bank balances 212,554 224,524 1,725 2,505
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one month and one year depending on the immediate cash requirements of the Group and of the Company, and earn interests at the respective short-term deposit rates. The weighted average effective interest rates as at 31 December 2012 of the Group and of the Company were 3% (2011: 2.8%) and 3% (2011: 2.8%) respectively.
The Group’s deposits with licensed banks amounting to RM257,000 (2011: RM255,000) are under lien and pledged for certain banking facilities.
Annual Report 2012 TDM Berhad (6265-P) 167 notes to the financial statements (continued) For the financial year ended 31 December 2012
23. Cash and Cash Equivalents (Cont’d.)
For the purpose of the consolidated and Company statements of cash flows, cash and cash equivalents comprise the following at the reporting date:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Cash and short term deposits - Continuing operations 212,554 224,524 1,725 2,505 - Discontinued operation (Note 10) - 46 - - Cash and bank balances 212,554 224,570 1,725 2,505 Bank overdrafts - discontinued operation (Note 10) - (146) - -
Cash and cash equivalents 212,554 224,424 1,725 2,505
24. Borrowings
Group Company 2012 2011 2012 2011 Maturity RM’000 RM’000 RM’000 RM’000
Current
Secured Obligations under finance leases (Note 32 (b)) 2013 152 738 2 65 Bank loan: - 8% per annum fixed rate loan 2013 187 188 - -
339 926 2 65
Non-current
Secured Obligations under finance leases (Note 32 (b)) 2014-2016 68 205 - - Bank loans: - 8% per annum fixed rate loan 2014 172 359 - - - RM loan at Effective Cost of Fund + 1% per annum 2015-2030 29,834 - - -
30,074 564 - -
Total borrowings 30,413 1,490 2 65
Annual Report 2012 TDM Berhad (6265-P) 168 notes to the financial statements (continued) For the financial year ended 31 December 2012
24. Borrowings (Cont’d)
The remaining maturities of the borrowings as at year end are as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
On demand or within one year 339 926 2 65 More than 1 year and less than 2 years 240 335 - - More than 2 years 29,834 229 - -
30,413 1,490 2 65
8% per annum fixed rate loan
The bank loan is secured by a first legal charge over the buildings of a subsidiary. The carrying amount of buildings pledged as securities of RM3,024,000 (2011: RM3,312,000) is mortgaged to secure the bank loan.
RM loan at Effective Cost of Fund + 1 % per annum
This facility secured by fresh first party first legal charge for RM80,000,000 over the piece of commercial land with a hospital building erected thereon at Bandar Indera Mahkota, Kuantan held under land title of PN 7723, Lot 54559, Mukim of Kuala Kuantan, Kuantan, Pahang Darul Makmur. The grace period is 24 months from the first drawdown. During the grace period, interests payments are to be serviced monthly and subjectto yearly review.
25. Trade and Other Payables Group As at 2012 2011 1 January 2011 RM’000 RM’000 RM’000 Restated Restated
Trade payables Third parties 88,150 109,123 85,682
Other payables Sundry payables 7 ,152 35,258 41,773 Accruals 28,226 22,940 19,798 Due to a minority shareholder - 460 -
35,378 58,658 61,571
Total trade and other payables 123,528 167,781 147,253 Add: Borrowings (Note 24) 30,413 1,490 4,765
Total financial liabilities carried at amortised cost 153,941 169,271 152,018
Annual Report 2012 TDM Berhad (6265-P) 169 notes to the financial statements (continued) For the financial year ended 31 December 2012
25. Trade and Other Payables (Cont’d)
Company As at 2012 2011 1 January 2011 RM’000 RM’000 RM’000 Restated Restated
Trade payables Third parties 5 222 79
Other payables Amounts due to subsidiaries 124,011 48,290 16,507 Sundry payables 4,051 22,106 19,445 Accruals 3,182 1,997 5,408
131,244 72,393 41,360
Total trade and other payables 131,249 72,615 41,439 Add: Borrowings (Note 24) 2 65 158
Total financial liabilities carried at amortised cost 131,251 72,680 41,597
(a) Trade payables
Trade payables are non-interest bearing and the normal trade credit terms granted to the Group are up to one month.
(b) Other payables
The amounts due to subsidiaries and a minority shareholder are unsecured, non-interest bearing and are repayable on demand.
Other payables are non-interest bearing. Other payables are normally settled on an average term of 30 days (2011: 30 days).
Annual Report 2012 TDM Berhad (6265-P) 170 notes to the financial statements (continued) For the financial year ended 31 December 2012
26. Share Capital and Share Premium
Group and Company Number of ordinary shares of RM1 each Amount Share capital Share capital (issued and (issued and Share fully paid) fully paid) premium Total RM‘000 RM’000 RM’000 RM’000
At 1 January 2011 225,572 225,572 45,945 271,517 Ordinary shares issued during the year: Pursuant to ESOS (Note 29 (b)) 8,976 8,976 11,722 20,698 Issued for acquisition of a subsidiary (Note 17 (a)) 3,498 3,498 6,402 9,900
At 31 December 2011 and 1 January 2012 238,046 238,046 64,069 302,115 Ordinary shares issued during the year: Pursuant to ESOS (Note 29 (b)) 3,871 3,871 3,639 7,510 Issued for acquisition of asset (Note 13 (d)) 3,558 3,558 11,279 14,837 Issued for acquisition of a subsidiary (Note 17 (a)) 292 292 533 825 Adjustment on cost of business combination for acquisition of a subsidiary - - 1,388 1,388
At 31 December 2012 245,767 245,767 80,908 326,675
Number of ordinary Amount shares of RM1 each 2012 2011 2012 2011 ’000 ’000 RM’000 RM’000
Authorised At 1 January / 31 December 500,000 500,000 500,000 500,000
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.
Annual Report 2012 TDM Berhad (6265-P) 171 notes to the financial statements (continued) For the financial year ended 31 December 2012
27. Other Reserves
Foreign Fair Asset currency Share value revaluation translation option adjustment reserve reserve reserve reserve Total RM’000 RM’000 RM’000 RM’000 RM’000
Group
At 1 January 2011 205,481 (1,793) 4,626 33 208,347
Other comprehensive income: Available for sale investments’ fair value movement - - - 4 4 Foreign currency translation - 718 - - 718 Revaluation of land, buildings, plant and machinery and plantation development expenditure 332,132 - - - 332,132 Deferred tax impact on revaluation (46,965) - - - (46,965) Less: Non-controlling interests (3,085) (44) - - (3,129)
282,082 674 - 4 282,760 Transactions with owners: Share options granted under ESOS - - 1,543 - 1,543 Exercise of ESOS - - (5,059) - (5,059)
- - (3,516) - (3,516)
At 31 December 2011 487,563 (1,119) 1,110 37 487,591
At 1 January 2012 As previously stated 500,435 (1,119) 1,110 37 500,463 Prior year adjustments (12,872) - - - (12,872)
At 1 January 2012 (restated) 487,563 (1,119) 1,110 37 487,591 Other comprehensive income: Available for sale investments’ fair value movement - - - (56) (56) Foreign currency translation - (13,633) - - (13,633) Revaluation of land, buildings, plant and machinery and plantation development expenditure 9,587 - - - 9,587
9,587 (13,633) - (56) (4,102) Transactions with owners: Share options granted under ESOS - - 516 - 516 Lapsed of ESOS pursuant to disposal disposal of a subsidiary - - (436) - (436) Exercise of ESOS - - (513) - (513)
- - (433) - (433)
At 31 December 2012 497,150 (14,752) 677 (19) 483,056
Annual Report 2012 TDM Berhad (6265-P) 172 notes to the financial statements (continued) For the financial year ended 31 December 2012
27. Other Reserves (Cont’d.)
Asset Share revaluation Capital option reserve reserve reserve Total RM’000 RM’000 RM’000 RM’000
Company
At 1 January 2011 31,926 2,736 4,626 39,288
Other comprehensive income: Revaluation of leasehold land 4,095 - - 4,095 Deferred tax impact on revaluation (202) - - (202)
3,893 - - 3,893 Transactions with owners: Share options granted under ESOS - - 1,543 1,543 Exercise of ESOS - - (5,059) (5,059)
At 31 December 2011 and 1 January 2012 35,819 2,736 1,110 39,665
Transactions with owners: Share options granted under ESOS - - 516 516 Lapse of ESOS pursuant to disposal of a subsidiary - - (436) (436) Exercise of ESOS - - (513) (513)
- - (433) (433)
At 31 December 2012 35,819 2,736 677 39,232
The movements in each category of the reserves are disclosed in the statements of changes in equity. The nature and purpose of each category of the reserves are as follows:
(a) Asset revaluation reserve
This reserve represents increases in the fair value of buildings, plant and machinery, leasehold and freehold land and plantation development expenditure, nett of deferred taxation.
(b) Capital reserve
This reserve, which is eliminated on consolidation, relates to the surplus arising from the sale of property, plant and equipment in 1986 to a subsidiary.
Annual Report 2012 TDM Berhad (6265-P) 173 notes to the financial statements (continued) For the financial year ended 31 December 2012
27. Other Reserves (Cont’d.)
(c) Foreign currency translation reserve
The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of a foreign subsidiary as well as the translation of foreign currency loans used to finance investments in the foreign subsidiary.
(d) Share option reserve
Employee share option reserve represents the equity-settled share options granted to employees (Note 29 (b)). The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.
(e) Fair value adjustment reserve
Fair value adjustment reserve represents the cumulative fair value changes, nett of tax, of available-for-sale financial assets until they are disposed of or impaired.
28. Retained Earnings/(Accumulated Losses)
These comprise the cumulative results of the Group and of the Company nett of taxation and minority interests.
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (single-tier system). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single-tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.
The Company has elected for the irrevocable option to disregard the Section 108 balance as at 31 December 2012. Hence, the Company will be able to distribute out its entire profit for the year ended 31 December 2012 under the single-tier system.
Annual Report 2012 TDM Berhad (6265-P) 174 notes to the financial statements (continued) For the financial year ended 31 December 2012
29. Employee Benefits
(a) Retirement benefit obligations
Certain subsidiaries of the Group and the Company operate an unfunded, defined benefit Retirement Benefit Scheme for its employees. All employees who were employed by the Company prior to January 1999 are eligible for the scheme. Benefits are payable based on the last drawn salary of the employee and the number of years of service with the certain subsidiaries of the Group and the Company.
The following tables summarise the components of retirement benefit expense recognised in the statements of comprehensive income and statements of financial position.
The amounts recognised in the statements of comprehensive income are determined as follows:-
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Current service cost 93 90 9 7 Interest cost 104 98 9 10 Nett actuarial loss 48 50 2 3
Total included in employee benefits expense (Note 7) 245 238 20 20
All of the Group’s and Company’s charge for the year has been included in administrative expenses.
The amounts recognised in the statements of financial position are determined as follows:-
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Present value of unfunded defined benefit obligations 1,804 1,744 205 213 Unrecognised nett actuarial loss (496) (602) (77) (27)
Nett liability 1,308 1,142 128 186
Annual Report 2012 TDM Berhad (6265-P) 175 notes to the financial statements (continued) For the financial year ended 31 December 2012
29. Employee Benefits (Cont’d.)
(a) Retirement benefit obligations (cont’d.)
Changes in present value of defined benefit obligations are as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
At 1 January 1,142 993 186 166 Recognised in statements of comprehensive income (Note 7) 245 238 20 20 Payments during the year (79) (89) (78) -
At 31 December 1,308 1,142 128 186
Analysed as: Non current: Later than 1 year 1,308 1,142 128 186
Principal actuarial assumptions used for the defined benefit plans are shown below:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Discount rate 6.25%-7.50% 6.25%-7.50% 6.25% 6.25% Average salary increase 6.00%-7.00% 6.00%-7.00% 6.00% 6.00%
Annual Report 2012 TDM Berhad (6265-P) 176 notes to the financial statements (continued) For the financial year ended 31 December 2012
29. Employee Benefits (Cont’d.)
(a) Retirement benefit obligations (cont’d.)
The Retirement Benefit Scheme was revalued on 24 November 2010. As at that date, the revaluation showed that the Group’s provision for retirement benefits was sufficient to meet the actuarially determined value of vested benefits.
Amounts for the current and previous four periods for the Group and Company are as follows:
Group
2012 2011 2010 2009 2008 RM’000 RM’000 RM’000 RM’000 RM’000
Present value of unfunded defined benefit obligations 1,804 1,744 1,587 1,765 1,723
Company
2012 2011 2010 2009 2008 RM’000 RM’000 RM’000 RM’000 RM’000
Present value of unfunded defined benefit obligations 205 213 195 336 191
Annual Report 2012 TDM Berhad (6265-P) 177 notes to the financial statements (continued) For the financial year ended 31 December 2012
29. Employee Benefits (Cont’d.)
(b) Employee share options scheme (ESOS)
The TDM Berhad ESOS is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 19 February 2008. The ESOS was implemented on 17 March 2008 for a period of 5 years from the date of implementation.
The salient features of the ESOS are as follows:
(i) The ESOS shall be in force for a period of five (5) years commencing from 17 March 2008 (the Option period).
(ii) Only employees and directors of the Group are eligible to participate in the scheme and must have completed a continuous period of employment of at least one (1) year before the date of offer. The selection for participation in the scheme shall be at the discretion of the ESOS Committee.
(iii) The new TDM shares are to be allotted and issued to the Grantee pursuant to the exercise of any option under this scheme.
(iv) In the event of cessation of employment of the Grantee with the Group prior to the full exercise of the Options, such Options shall cease without any claim against the Group provided always that the ESOS Committee in its discretion, by notice in writing, if such cessation occurs by reason.
(v) The total number of new TDM Shares which may be made available under the Scheme shall not exceed fifteen centum (15%) of the total issued and paid-up share capital comprising ordinary shares of the Company at any one time.
(vi) The total number of new TDM Shares allocated, in aggregate, to the directors and/or senior management of the TDM Group shall not exceed fifty per centum (50%) of the total TDM Shares available under the Scheme.
(vii) The number of TDM Shares allocated to any Eligible Person who, either singly or collectively through persons connected with the Eligible Person, holds twenty per centum (20%) or more in the issued and paid-up share capital of the Company, shall not exceed ten per centum (10%) of the total TDM Shares available under the Scheme.
(viii) The weighted average market price of the TDM Shares for the five (5) Market Days immediately preceding the Offer Date less a discount of not more than ten per centum (10%) there from at the ESOS Committees’ discretion.
Annual Report 2012 TDM Berhad (6265-P) 178 notes to the financial statements (continued) For the financial year ended 31 December 2012
29. Employee Benefits (Cont’d.)
(b) Employee share options scheme (ESOS) (cont’d.)
Movement of share options during the financial year.
The following table illustrates the number (No) and weighted average exercise prices (WAEP) of, and movements in, share options during the financial year:
Group 2012 2011 No WAEP No WAEP RM’000 RM’000 RM’000 RM’000 Restated
Outstanding At 1 January 5,302 1.76 14,331 1.76 Granted - - 155 2.55 Exercised (Note 26) (3,871) 2.02 (8,976) 1.76 Lapsed (225) 1.76 (208) 1.76
Outstanding at 31 December 1,206 5 ,302
Exercisable As at 31 December 1,206 5,302
- The weighted average fair value of options granted during the financial year was RM Nil (2011: RM0.5459).
- The weighted average share price at the date of exercise of the options exercised during the financial year was RM4.08 (2011: RM2.99).
- The range of exercise prices for options outstanding at the end of the year was RM1.61 to RM2.55 (2011: RM1.61 to RM2.55). The weighted average remaining contractual life for these options is 0.17 year (2011: 1.17 years).
(i) Fair value of share options granted
The fair value of share options granted during the year was calculated by using the Binomial model, taking into account the terms and conditions upon which the instruments were granted.
Annual Report 2012 TDM Berhad (6265-P) 179 notes to the financial statements (continued) For the financial year ended 31 December 2012
29. Employee Benefits (Cont’d.)
(b) Employee share options scheme (ESOS) (cont’d.)
(i) Fair value of share options granted (cont’d.)
The following table lists the inputs to the option pricing models for the years ended 31 December 2012 and 2011:
2012 2011
Dividend yield (% per annum) 4.03 4.03 Volatility (% per annum) 41.05 41.05 Risk-free interest rate (% per annum) 3.31 3.31 Sub optimal early exercise factor (times) 1.263 1.263 Withdrawal (% per annum) 1.50 1.50
The sub optimal early exercise factor is the assuming of the option holders will early exercise when the share price underlying a vested option reaches a certain multiple of the exercise price, or at the end of the contractual term if this price is not achieved.
30. Deferred Tax
Group Recognised As at Recognised in other As at 31 Recognised As at 31 1 January in profit comprehensive December in profit December 2011 or loss income 2011 or loss 2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Deferred tax liabilities: Property, plant and equipment and biological assets 50,858 1,313 46,965 99,136 (703) 98,433
Deferred tax assets: Provision for liabilities (7,855) (946) - (8,801) (726) (9,527) Other receivables (38) 38 - - - - Other payables (476) (308) - (784) 637 (147)
(8,369) (1,216) - (9,585) (89) (9,674)
42,489 97 46,965 89,551 (792) 88,759
Annual Report 2012 TDM Berhad (6265-P) 180 notes to the financial statements (continued) For the financial year ended 31 December 2012
30. Deferred Tax
Company Recognised As at Recognised in other As at 31 Recognised As at 31 1 January in profit comprehensive December in profit December 2011 or loss income 2011 or loss 2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Deferred tax liabilities: Property, plant and equipment and biological assets 10,403 (80) 202 10,525 (222) 10,303
Deferred tax assets: Other payables (42) (5) - (47) 14 (33) Others (460) (306) - (766) 766 -
(502) (311) - (813) 780 (33)
9,901 (391) 202 9,712 558 10,270
Presented after appropriate offsetting as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Deferred tax assets (9,674) (9,585) (33) (813) Deferred tax liabilities 98,433 99,136 10,303 10,525
88,759 89,551 10,270 9,712
Deferred tax assets have not been recognised in respect of the following items:
Group 2012 2011 RM’000 RM’000 Unused tax losses 80,418 72,192 Unabsorbed capital allowances 28,619 31,980
109,037 104,172
The availability of unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the tax authority. The use of tax losses of subsidiaries in other countries is subject to the agreement of the tax authorities.
Annual Report 2012 TDM Berhad (6265-P) 181 notes to the financial statements (continued) For the financial year ended 31 December 2012
31. Related Party Disclosures
(a) In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Profit distribution from Terengganu Oil Palm Development - Sublessees Scheme (48,784) (50,905) (10,108) (16,147) Sale of building to a director - (300) - - Dividend income from subsidiaries - - (46,457) (52,697) Management fee charged to subsidiaries - - (29,304) (33,195) Healthcare services charged by subsidiaries - - - 580 Write back of interest payable to a related corporation (Note 31(c)) 15,559 - 15,559 -
(b) Compensation of key management personnel
The remuneration of directors and other members of key management during the year was as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Short term benefits 3,292 4,102 816 1,316 Post-employment benefits: - Defined contribution plan 324 303 139 120 - Defined benefit plan 2 2 - - Share options granted under ESOS 111 544 31 291
3,729 4,951 986 1,727
Annual Report 2012 TDM Berhad (6265-P) 182 notes to the financial statements (continued) For the financial year ended 31 December 2012
31. Related Party Disclosures (Cont’d.)
(b) Compensation of key management personnel (cont’d.)
Included in the total key management personnel are:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Executive and non-executive directors’ remuneration excluding benefits-in-kind (Note 8) 2,516 2,276 1,034 894
(c) Write back of interest payable to a related corporation
During the financial ear,y the Company discovered that provision for interest payable to a related corporation was over estimated by RM15,559,000. The write back was accounted for prospectively and the effect was recognised in the current financial year. The directors deem this reversal correct pursuant to a fact finding exercise supported by external legal advise.
32. Commitments
(a) Capital commitments
Capital commitments as at the reporting date are as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Capital expenditure Approved and contracted for: Property, plant and equipment 10,582 85,397 3,574 -
Approved but not contracted for: Property, plant and equipment 404,990 33,084 91,260 671
Annual Report 2012 TDM Berhad (6265-P) 183 notes to the financial statements (continued) For the financial year ended 31 December 2012
32. Commitments (Cont’d.)
(b) Finance lease commitments
The Group has finance leases for certain items of machinery, equipment and motor vehicles (Note 13). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.
Future minimum lease payments under finance leases together with the present value of the nett minimum lease payments are as follows:
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
Minimum lease payments: Not later than 1 year 152 763 2 66 Later than 1 year and not later than 2 years 68 159 - - Later than 2 years and not later than 5 years - 59 - -
220 981 2 66 Less: Future finance charges - (38) - (1)
Present value of finance lease payables 220 943 2 65
Analysis of present value of hire purchase payables: Not later than 1 year 152 738 2 65 Later than 1 year and not later than 2 years 68 148 - - Later than 2 years and not later than 5 years - 57 - -
220 943 2 65 Less: Due within 12 months (Note 24) (152) (738) (2) (65)
Due after 12 months (Note 24) 68 205 - -
The hire purchase and lease liabilities bore an average interest rate at the statements of financial position date of 3.7% (2011: 3.57%) per annum. The Group and the Company have finance leases and hire purchase contracts for various items of property, plant and equipment (see Note 13(b)). These leases have terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that holds the lease. There are no restrictions placed upon the Group and the Company by entering into these leases and no arrangements have been entered into for contingent rental payments.
Annual Report 2012 TDM Berhad (6265-P) 184 notes to the financial statements (continued) For the financial year ended 31 December 2012
33. Fair Value of Financial Instruments
(a) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value:
Group 2012 2011 RM’000 RM’000 RM’000 RM’000 Carrying Fair Carrying Fair amount value amount value
Financial liabilities: Borrowings (non-current) - Obligations under finance leases 68 182 205 241 - Bank loan: - 8.0% per annum fixed rate loan 172 - 359 291 - RM loan at Effective Cost of Fund + 1% per annum 29,834 30,147 - -
(b) Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:
Note Trade and other receivables (current) 22 Borrowings (current) 24 Trade and other payables (current) 25
The carrying amounts of these financial assets and liabilities are reasonable approximations of fair values, either due to their short-term nature.
The carrying amounts of the current portion of borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.
Annual Report 2012 TDM Berhad (6265-P) 185 notes to the financial statements (continued) For the financial year ended 31 December 2012
33. Fair Value of Financial Instruments (Cont’d.)
(c) Fair value hierarchy
The following table analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:
• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable input).
Group Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 31 December 2012 Quoted shares 95 - - 95
31 December 2011 Quoted shares 151 - - 151
34. Financial Risk Management Objectives and Policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Company’s Chief Executive Officer, all heads of subsidiaries and certain managers of the Company. The Audit Committee provides independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.
The following sections provide details regarding the Group’s and Company’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities and cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
Annual Report 2012 TDM Berhad (6265-P) 186 notes to the financial statements (continued) For the financial year ended 31 December 2012
34. Financial Risk Management Objectives and Policies (Cont’d)
(a) Credit risk (cont’d)
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date is as follows:
Group 2012 2011 RM’000 % of total RM’000 % of total
By industry sectors: Plantations 32,145 65% 50,970 77% Healthcare 17,305 35% 15,237 23%
49,450 100% 66,207 100%
Financial assets that are neither past due nor impaired
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 22. Deposits with banks and other financial institutions and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 22.
(b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.
Annual Report 2012 TDM Berhad (6265-P) 187 notes to the financial statements (continued) For the financial year ended 31 December 2012
34. Financial Risk Management Objectives and Policies (Cont’d.)
(b) Liquidity risk (cont’d.)
Analysis of financial instruments by remaining contractual maturities
At the reporting date, approximately 1% (2011: 62%) of the Group’s borrowings and 100% (2011: 100%) of the Company’s borrowings (Note 24) will mature in less than one year based on the carrying amount reflected in the financial statements.
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.
2012 On demand or within Two to one year five years Total RM’000 RM’000 RM’000
Group Financial liabilities: Trade and other payables 123,528 - 123,528 Borrowings 339 30,074 30,413
Total undiscounted financial liabilities 123,867 30,074 153,941
2012 On demand or within Two to one year five years Total RM’000 RM’000 RM’000
Company Financial liabilities: Trade and other payables 131,249 - 131,249 Borrowings 2 - 2
Total undiscounted financial liabilities 131,251 - 131,251
Annual Report 2012 TDM Berhad (6265-P) 188 notes to the financial statements (continued) For the financial year ended 31 December 2012
34. Financial Risk Management Objectives and Policies (Cont’d.)
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts.
(d) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Group has transactional currency exposures arising from inter company transactions that are denominated in a currency other than the respective functional currencies of Group entities. The foreign currency in which these transactions are denominated is mainly Rupiah (Rp).
35. Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2012 and 31 December 2011.
The Group monitors capital using a gearing ratio, which is nett debt divided by total capital plus nett debt. The Group includes within nett debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes, equity attributable to the owners of the parent less the fair value adjustment reserve less asset revaluation reserve.
Annual Report 2012 TDM Berhad (6265-P) 189 notes to the financial statements (continued) For the financial year ended 31 December 2012
35. Capital Management (Cont’d.)
Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Borrowings 24 30,413 1,490 2 65 Trade and other payables 25 123,528 167,781 131,249 72,615 Less: - Cash and bank balances 23 (212,554) (224,524) (1,725) (2,505) Financial liabilities, attributable to discontinued operation, net of cash and bank balances - 5,570 - -
Net debt (58,613) (49,683) 129,526 70,175
Equity attributable to the owners of the parent 1,234,267 1,157,210 412,317 352,520 Less: - Fair value adjustment reserve 27 19 (37) - - Less: - Asset revaluation reserve 27 (497,150) (487,563) (35,819) (35,819)
Total capital 737,136 669,610 376,498 316,701
Capital and net debt 678,523 619,927 506,024 386,876
Gearing ratio -9% -8% 26% 18%
Annual Report 2012 TDM Berhad (6265-P) 190 notes to the financial statements (continued) For the financial year ended 31 December 2012
36. Segment Information
For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows:
(i) The Plantation Division involved in activities such as cultivation of oil palms, sale of fresh fruit bunches and management of plantation operation services.
(ii) Healthcare Division provides healthcare consultancy and operates specialist medical centres.
(iii) Food division involved in activities such as integrated poultry farming and processing of related products. This segment has been disposed during the previous financial year (Note 10).
The amounts relating to food division have been excluded to arrive at amounts shown in the consolidated statement of comprehensive income as they are presented separately in the statement of comprehensive income within one line item, “profit/(loss) from discontinued operation, nett of tax”.
(iv) Other division involve dormant companies.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
Annual Report 2012 TDM Berhad (6265-P) 191 notes to the financial statements (continued) For the financial year ended 31 December 2012 942 2011 2011 3,269 4,734 20,711 93,131 RM’000 220,579 515,519 655,391 RM’000 Restated 277,438 (139,872) 1,459,516 statements statements
2012 2012 1,031 2,053 5,117 Per consolidated Per Per consolidated Per 28,375 financial financial RM’000 149,025 455,258 579,942 RM’000 125,844 255,722 (124,684) 1,515,180
B A C Notes Notes
- - - - - 6 - 26 10 360 2011
2011
2,165 RM’000 RM’000
Others Others ------6 20 (233) 2012 2012 2,485 1,434 RM’000 RM’000
-
370 2011 2011 1,377 4,879 1,336 5,616 (4,431) 10,606 90,323 94,754 11,942 RM’000 RM’000
- - - - (Discontinued)
Healthcare 476 229 2012 2012 9,991 6,544 (6,181) Food RM’000 RM’000 106,685 112,866
942
2011 2011 4,338 1,892 15,826 16,894 20,074 RM’000 RM’000 209,613 425,196 560,637 Restated 133,833 (135,441)
Plantation Healthcare 555 2012 2012 2,053 4,868 21,825 43,284 88,123 RM’000 RM’000 139,267 348,573 467,076 176,640 (118,503)
2011 74,901 RM’000 251,738
1,311,576 (Cont’d.)
Plantation 2012 82,560 RM’000 166,165
1,336,055
Information
enue liabilities
-segment vidend income
non-current assets
otal revenue otal revenue 36. Segment
Segment profit
Other non-cash expenses
Depreciation Di Assets: Additions to Results: Interest income External rev Segment assets Inter Segment Revenue: T
Annual Report 2012 TDM Berhad (6265-P) 192 notes to the financial statements (continued) For the financial year ended 31 December 2012
36. Segment Information (Cont’d.)
Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements.
A Inter-segment revenues are eliminated on consolidation.
B Other non-cash expenses consist of the following items as presented in the respective notes to the financial statements:
Note 2012 2011 RM’000 RM’000 Inventories written off 6 37 - Impairment loss on trade receivables 6 473 865 Impairment loss on other receivables 6 - 624 Property, plant and equipment written off 6 5 309 Share options granted under ESOS - Continuing operations 7,8 516 1,471
1,031 3,269
C Additions to non-current assets consist of:
Note 2012 2011 RM’000 RM’000 Property, plant and equipment 13 86,224 52,191 Biological assets 14 39,620 40,940
125,844 93,131
37. Prior Year Adjustments
(a) Understatement of profits distribution from Terengganu Oil Palm Development – Sublessess Scheme
During the financial ear,y the Company discovered that the profit distributions from Terengganu Oil Palm Development – Sublessess Scheme (profit distributions) to a subsidiary, Kumpulan Ladang-Ladang Trengganu Sdn. Bhd. in prior years were understated in the books of that subsidiary. These profit distributions should be accounted for as profits in the subsidiary’s profit or loss. This understatement of profit was discovered during a fact finding exercise supported by external legal advise. The financial statements of 2011 have been restated to correct this understatement of profit. The effect of the restatement on those financial statements is summarised in Note 37(c) and (d).
Annual Report 2012 TDM Berhad (6265-P) 193 notes to the financial statements (continued) For the financial year ended 31 December 2012
37. Prior Year Adjustments (Cont’d.)
(b) Error in revaluation of property, plant and equipment
In prior year, revaluation exercise of property, plant and equipment was performed by PT. Rafi Kamajaya Abadi, a subsidiary of the Company. The revaluation surplus arising from the exercise was recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve. During the financial year, the Indonesian Tax Office required a reperformance of the revaluation exercise. Subsequently, the Company discovered that the revaluation amount posted in prior year has to be corrected. The financial statements of 2011 have been restated accordingly. The effect of the restatement on those financial statements is summarised in Note 37(c) and (d).
(c) Reconciliation of equity as at 1 January 2011 and 31 December 2011
As previously As stated restated 1 January 1 January 2011 Note 37(a) Note 37(b) 2011 RM’000 RM’000 RM’000 RM’000
Group Trade and other receivables 60,900 21,572 - 82,472 Trade and other payables 147,146 (107) - 147,253 Tax payable 6,090 (5,250) - 11,340 Retained earnings 228,996 (16,215) - 245,211
Company Trade and other receivables 52,097 1,252 - 53,349 Tax payable (813) (318) - (1,131) Retained earnings (21,924) (934) - (20,990)
Group Property, plant and equipment 582,250 - (12,872) 569,378 Other reserves 500,463 - 12,872 487,591 Trade and other receivables 79,279 (23,328) - 102,607 Trade and other payables 166,304 2,456 (979) 167,781 Tax payable 10,350 1,508 - 11,858 Retained earnings 347,161 19,364 979 367,504
Company Trade and other receivables 152,266 1,946 - 154,212 Tax payable (2,741) (491) - (3,232) Retained earnings 9,285 1,455 - 10,740
Annual Report 2012 TDM Berhad (6265-P) 194 notes to the financial statements (continued) For the financial year ended 31 December 2012
37. Prior Year Adjustments (Cont’d.)
(d) Reconciliation of total comprehensive income as at 1 January 2011 and 31 December 2011
As previously As stated restated 31 December 31 December 2011 Note 37(a) Note 37(b) 2011 RM’000 RM’000 RM’000 RM’000
Group Revenue 503,234 12,285 - 515,519 Cost of sales (214,374) (4,656) - (219,030) Distribution costs (8,064) (450) - (8,514) Administrative expenses (75,359) (2,372) 979 (76,752) Other expenses (5,001) (150) - (5,151) Income tax expense (56,390) (1,508) - (57,898) Profit for the year, nett of tax 159,113 3,149 979 163,241
Company Revenue 144,748 694 - 145,442 Income tax expense (15,199) (173) - (15,372) Profit for the year, nett of tax 69,477 521 - 69,998
38. Authorisation of Financial Statements for Issue
The financial statements for the year ended 31 December 2012 were authorised for issue in accordance with a resolution of the directors on 9 April 2013.
Annual Report 2012 TDM Berhad (6265-P) 195 supplementary information
39. Supplementary Information - Breakdown of Retained Profits into Realised and Unrealised
The breakdown of the retained profits of the Group and of the Company as at 31 December 2012 and 31 December 2011 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and 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.
Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Restated Restated
Total retained profits - Realised 318,918 193,990 44,740 8,577 - Unrealised 77,282 72,970 1,670 2,163
396,200 266,960 46,410 10,740
Less: Consolidation adjustments 28,336 100,544 - -
Retained profits as per financial statements 424,536 367,504 46,410 10,740
Annual Report 2012 TDM Berhad (6265-P) 196 statistics on shareholdings As at 2 April 2013
Analysis of Shareholdings
Authorised Share Capital RM500,000,000.00
Issued and Paid-up Capital RM246,943,614 comprising 246,943,614 Ordinary Shares of RM1.00 each
Voting Rights One (1) vote per ordinary share
A. Distribution of Shareholdings
Breakdown of No. of Percentage No. of Percentage Shareholdings Shareholders % Shares %
1 - 99 69 1.199 1,610 0.000 100 – 1,000 920 15.988 807,432 0.326 1,001 – 10,000 3,838 66.701 15,975,269 6.469 10,001 – 100,000 805 13.990 24,587,653 9.956 100,001 – 12,347,179 120 2.085 55,746,026 22.574 12,347,180 and above 2 0.034 149,825,624 60.671
TOTAL 5,754 100.000 246,943,614 100.000
B. List of Thirty (30) Largest Shareholders
No. Name No. of Percentage Shares %
1. Terengganu Incorporated Sdn Bhd 117,025,624 47.389 2. Perbadanan Memajukan Iktisad Negeri Terengganu 32,800,000 13.282 3. HDM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for United Teochew (Malaysia) Bhd (M09) 6,133,200 2.483 4. Permodalan Terengganu Berhad 3,742,000 1.515 5. Lembaga Tabung Amanah Warisan Negeri Terengganu 3,557,895 1.440 6. Citigroup Nominees (Tempatan) Sdn Bhd Exempt AN For American International Assurance Berhad 2,090,200 0.846 7. HSBC Nominees (Asing) Sdn Bhd BNY Brussels For Wisdomtree Emerging Markets Equity Income Fund 2,079,985 0.842 8. Citigroup Nominees (Asing) Sdn Bhd CBNY for Dimensional Emerging Markets Value Fund 2,012,300 0.814 9. ABB Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Yayasan Terengganu (1115001178) 2,000,000 0.809
Annual Report 2012 TDM Berhad (6265-P) 197 statistics on shareholdings (continued) As at 2 April 2013
No. Name No. of Percentage Shares % 10. HSBC Nominees (Asing) Sdn Bhd Exempt AN For Credit Suisse (SG BR-TST-ASING) 1,310,000 0.530 11. Soon Ah Khun @ Soon Lian Huat 952,000 0.385 12. Pesama Timber Corporation Sdn Bhd 870,934 0.352 13. Gan Soh Choo 852,000 0.345 14. HLB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Koay Ean Chim 844,900 0.342 15. Gan Kho @ Gan Hong Leong 800,000 0.323 16. Amanahraya Trustees Berhad Public Dividend Select Fund 758,900 0.307 17. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Koay Ean Chim (IMO/TAS) 740,000 0.299 18. Eng Bak Chim 700,000 0.283 19. HSBC Nominees (Asing) Sdn Bhd Exempt AN For JPMorgan Chase Bank, National Association (U.S.A) 697,600 0.282 20. Citigroup Nominees (Asing) Sdn Bhd CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc 677,600 0.274 21. HSBC Nominees (Asing) Sdn Bhd BNY Brussels For Wisdomtree Emerging Markets Smallcap Dividend Fund 661,269 0.267 22. Citigroup Nominees (Asing) Sdn Bhd Exempt AN For Citibank NA, Singapore (Julius Baer) 592,600 0.239 23. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Razaki Puteh (E-KTU) 589,800 0.238 24. Citigroup Nominees (Asing) Sdn Bhd CBNY For DFA Emerging Markets Small Cap Series 567,000 0.229 25. HSBC Nominees (Asing) Sdn Bhd Exempt AN for the Bank of New York Mellon (Mellon Acct) 562,200 0.227 26. Wong Ah Tim @ Ong Ah Tin 550,000 0.222 27. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Teoh Ah Baa @ Teoh Beng Suang (IMO/M&A) 539,400 0.218 28. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Roslan Awang Chik (E-KTU) 529,000 0.214 29. Megategas Sdn Bhd 500,000 0.202 30. Kumpulan Pengurusan Kayu Kayan Trengganu Sdn Bhd 475,760 0.192
Annual Report 2012 TDM Berhad (6265-P) 198 statistics on shareholdings (continued) As at 2 April 2013
C. List of Substantial Shareholders (5% and above)
Direct Interest Deem Interest No. Name No. of Percentage No. of Percentage Shares % Shares %
1. Terengganu Incorporated Sdn Bhd 117,025,624 47.389 - - 2. Perbadanan Memajukan Iktisad Negeri Terengganu 32,800,000 13.282 - -
D. List of Directors’ Shareholdings
No. Name No. of Shares Percentage %
1. Abdul Mutalip Sulaiman 0 0.000
2. Public Nominees (Tempatan) Sdn Bhd 330,000 0.133 Pledged Securities Account for Abdul Razak Ismail (E-KTU)
3. Dato’ Haji Abdul Razak Ismail 0 0.000 4. Dato’ Haji Mat Razali Kassim 0 0.000
5. Datuk Haji Roslan Awang Chik 0 0.000
6. Haji Long A. Rahman 0 0.000
7. Haji Zakaria K C Ahammu 0 0.000
8. Public Nominees (Tempatan) Sdn Bhd 99,000 0.040 Pledged Securities Account for Long A. Rahman (E-KTU)
9. Public Nominees (Tempatan) Sdn Bhd 529,000 0.214 Pledged Securities Account for Roslan Awang Chik (E-KTU)
10. Wong Shew Yong 330,000 0.133
Annual Report 2012 TDM Berhad (6265-P) 199 group plantation hectarage statement
Total Hectarage Managed By Group’s Group’s Owned Other (Hectares) (Hectares) (Hectares)
Oil Palm Mature Hectarage 30,574 25,175 5,399 Immature Hectarage 9,944 9,700 244
Total Planted 40,518 34,875 5,643
Hectarage by Company/Division
Sublease Mature 9,620 6,349 3,271 Immature 718 474 244 TDM Capital Sdn Bhd Mature 1,796 1,796 - Immature - - - Kumpulan Ladang-Ladang Mature 17,030 17,030 - Terengganu Sdn Bhd Immature 1,145 1,145 - Ladang Tabung Warisan Mature 1,336 - 1,336 Immature - - - Ladang Majlis Agama Islam Terengganu Mature 792 - 792 Immature - - - PT. Rafi Kamajaya Abadi Mature - - - Immature 8,081 8,081 -
Total Planted 40,518 34,875 5,643
Annual Report 2012 TDM Berhad (6265-P) 200 5-years group plantation statistics
UNIT 2012 2011 2010 2009 2008
PLANTED AREA Oil Palm Area Malaysia Operation
Immature (0 - 3 Year) hectare 1,863 264 95 576 1,737 Young (4 - 10 Year) hectare 3,487 3,467 5,685 7,443 9,124 Prime-Young (11 - 15 Year) hectare 9,833 12,457 12,410 12,157 12,033 Prime-Old (16 - 20 Year) hectare 10,841 11,259 10,548 9,105 7,636 Old (21 - 25 Year) hectare 6,119 4,539 3,828 3,488 2,180 Very Old (25 Year Above) hectare 294 473 - - - 32,437 32,459 32,566 32,769 32,710
Indonesia Operation Immature (0 - 3 Year) hectare 8,081 6,575 808 453 -
8,081 6,575 808 453 - Total Planted Area 40,518 39,034 33,374 33,222 32,710
Oil Palm FFB Production tonne 558,583 625,765 550,625 530,494 595,001 Yield per mature hectare mt FFB/ha 18.27 19.44 17.00 16.48 19.21
Mills FFB Processed - own tonne 506,892 555,076 510,287 476,713 413,921 - outside tonne 13,094 53,617 29,365 25,905 67,651 FFB Purchase by Mills tonne 13,108 20,733 26,140 21,583 12,509 Total 533,094 629,426 565,792 524,201 494,081
FFB Sold tonne 17,407 37,713 10,733 27,844 127,251
Average selling prices: - Crude Palm oil RM/mt ex-mill 2,946 3,237 2,659 2,237 2,884 - Palm Kernel RM/mt ex-mill 1,677 2,226 1,434 996 1,656 - Fresh Fruit Bunch RM/mt 578 612 584 403 482
Production - Crude Palm Oil tonne 112,905 122,531 107,806 105,559 116,639 - Palm Kernel tonne 29,714 31,488 28,615 28,138 31,391
Extraction Rate - Crude Palm Oil % 20.26 19.58 20.00 20.01 19.34 - Palm Kernel % 5.34 5.05 5.29 5.32 5.21
Palm Product Per Mature Hectare tonne/ha 4.66 4.73 4.20 4.15 4.78
Annual Report 2012 TDM Berhad (6265-P) 201 list of Properties
Production / Company / Division Nett Book Value (Metric Tonne) Estate Division Tenure Area (Hectares) Description (RM)
Mukim Tebak Kemaman Oil Palm plantation 175,400,000
HS (D) 1779 PT 1666 Part Jernih Estate/ Leasehold exp. 2052 3,681.10 Tebak Sublease exp. 2052 GRN 18274 Lot 2514 Part Jernih Estate/ Leasehold exp. 2078 218.20 Tebak Sublease exp. 2018 HS (D) 2872 PT 402 B Part Jernih Estate/ Leasehold exp. 2078 198.19 Tebak Sublease exp. 2018 GRN 12509 PT 821 Pelantoh Estate North & South Leasehold exp. 2013 35.45 Pelantoh GRN 12510 Lot 2444 Pelantoh Estate North & South Leasehold exp. 2013 82.28 Pelantoh GRN 12511 Lot 2550 Pelantoh Estate North & South Leasehold exp. 2013 24.96 Pelantoh GRN 12512 Lot 2443 Pelantoh Estate North & South Leasehold exp. 2013 73.49 Pelantoh GRN 12618 Lot 822 Pelantoh Estate North & South Leasehold exp. 2013 68.71 Pelantoh GRN 12497 Lot 833 Pelantoh Estate North & South Leasehold exp. 2013 88.58 Pelantoh HS (D) 001 L/NF 198/65 Air Putih Estate Leasehold exp. 2012 129.50 Sublease exp. 2011 HS (D) 002 L/NF 198/65 Air Putih Estate Leasehold exp. 2012 414.40 Sublease exp. 2011 HS (D) 003 L/NF 198/65 Air Putih Estate Leasehold exp. 2012 976.38 Sublease exp. 2011 HS (D) 004 L/NF 198/65 Air Putih Estate Leasehold exp. 2012 1,916.63 Sublease exp. 2011 HS (D) 011 PT 28 Pelantoh Estate Sublease exp. 2014 3,439.95 HS (D) 012 PT 29 Pelantoh Estate Sublease exp. 2014 3,439.95
Mukim Belara Sungai Tong Oil Palm plantation 103,400,000
GRN 12885 Lot 7250 Jaya Estate Bari Leasehold exp. 2072 1,413.09 GRN 6001 Lot 6558 Jaya Estate Jaya Leasehold exp. 2072 1,661.42 GRN 6247 Lot 6743 Jaya Estate Jaya Leasehold exp. 2072 84.91
Annual Report 2012 TDM Berhad (6265-P) 202 list of properties (continued)
Production / Company / Division Nett Book Value (Metric Tonne) Estate Division Tenure Area (Hectares) Description (RM)
Mukim Belara Sungai Tong Oil Palm plantation 111,400,000
HS (D) 1017 PT 804 K Fikri Estate Sentosa Leasehold exp. 2072 103.60 GRN 9309 Lot 8264 Fikri Estate Sentosa Leasehold exp. 2072 58.44 GRN 10657 Lot 6641 Fikri Estate Sentosa Leasehold exp. 2072 1.54 GRN 17446 Lot 7682 Fikri Estate Sentosa Leasehold exp. 2072 20.40 (replacing HS (D) 1983 PT 381 K) GRN 8238 Lot 8187 Fikri Estate Sentosa Leasehold exp. 2072 68.15 GRN 15359 Lot 8168 Fikri Estate Sentosa Leasehold exp. 2072 7.67 (replacing HS (D) 813 PT 882 K) HS (D) 814 PT 883 K Fikri Estate Sentosa Leasehold exp. 2072 895.81 HS (D) 561 PT 642 K Fikri Estate Sentosa Leasehold exp. 2072 635.86 GRN 6005 Lot 7254 Fikri Estate Fikri Leasehold exp. 2072 82.28 GRN 6521 Lot 7663 Fikri Estate Fikri Leasehold exp. 2075 58.77 GRN 13085 Lot 8169 Fikri Estate Fikri Leasehold exp. 2072 141.02 GRN 6003 Lot 7251 Fikri Estate Fikri Leasehold exp. 2072 536.08 GRN 6004 Lot 7253 Fikri Estate Fikri Leasehold exp. 2072 224.28 GRN 6491 Lot 7662 Fikri Estate Fikri Leasehold exp. 2072 128.68 PN 3074 Lot 9390 Fikri Estate Pakoh Jaya Leasehold exp. 2087 472.00 PN 7567 Lot 12033 Fikri Estate Pakoh Jaya Leasehold exp. 2102 79.84 PN 6199 Lot 10939 Fikri Estate Pakoh Jaya Leasehold exp. 2098 15.16 (replacing HS (D) 6416 PT 4152 K) PN 6200 Lot 11404 Fikri Estate Pakoh Jaya Leasehold exp. 2098 17.90 (replacing HS (D) 6417 PT 4153 K) PN 6201 Lot 11405 Fikri Estate Pakoh Jaya Leasehold exp. 2098 2.74 (replacing HS (D) 6418 PT 4154 K)
Mukim Hulu Nerus Sungai Tong Oil Palm plantation 73,900,000
HS (D) 764 Lot 707 K Tayor Estate Leasehold exp. 2072 498.02 GM 1533 Lot 0054 Tayor Estate Leasehold exp. 2072 1.81 GM 3158 Lot 1141 Tayor Estate Leasehold exp. 2072 2.83 (replacing HS (D) 770 Lot 789 K) GM 3157 Lot 1140 Tayor Estate Leasehold exp. 2072 2.63 (replacing HS (D) 769 Lot 788 K) GM 617 Lot 0097 Tayor Estate Leasehold exp. 2072 1.12 GM 1546 Lot 0094 Tayor Estate Leasehold exp. 2072 1.73 GRN 16181 Lot 10237 Tayor Estate Leasehold exp. 2072 569.42 (replacing Geran 8683 Lot 3039) GRN 8684 Lot 3040 Tayor Estate Leasehold exp. 2072 12.65 GRN 8685 Lot 3041 Tayor Estate Leasehold exp. 2072 1,133.65
Mukim Hulu Nerus Sungai Tong Oil Palm plantation 59,000,000
HS (D) 1235 PT 7218 Pelung Estate Leasehold exp. 2012 3,007.00
Annual Report 2012 TDM Berhad (6265-P) 203 list of properties (continued)
Production / Company / Division Nett Book Value (Metric Tonne) Estate Division Tenure Area (Hectares) Description (RM)
Mukim Besul Bukit Besi Oil Palm plantation
HS (D) 72 PT 140 Gajah Mati Estate/ Leasehold exp. 2075 4,854.61 Pinang Emas HS (D) 73 PT 141 Gajah Mati Estate Leasehold exp. 2075 624.84
Mukim Jerangau Bukit Besi Oil Palm plantation 111,200,000
HS (D) 74 PT 1140 Pinang Emas Estate Leasehold exp. 2075 738.15 HS (D) 75 PT 1143 Pinang Emas Estate Leasehold exp. 2075 456.89 HS (D) 76 PT 1144 Pinang Emas Estate Leasehold exp. 2075 36.74 HS (D) 77 PT 1145 Pinang Emas Estate Leasehold exp. 2075 580.52
Mukim Jerangau Bukit Besi Oil Palm plantation 10,000,000
HS (D) 397 PT 3643 Jerangau Estate Chakuh 9 Leasehold exp. 2051 406.77
Mukim Jerangau Bukit Besi 32,500,000
PN 669 Lot 37 Jerangau Estate Jerangau Leasehold exp. 2049 456.89 PN 669 Lot 204 Jerangau Estate Jerangau Leasehold exp. 2049 36.74 PN 825 Lot 1157 Jerangau Estate Jerangau Leasehold exp. 2058 580.52
Mukim Bandar Kuala Terengganu 1,600,000
Geran 6763 Lot 3072 Freehold 297.00 sq. m 2 units of 4 storey Geran 6764 Lot 3073 shophouses (Office) 102&102A, Jalan Sultan Ismail Kuala Terengganu
Mukim Batu Buruk 4,635,000
GM 569-575 Lot 3046-3052 Leasehold exp. 2090 1,390 sq. m 5 units of 4 storey Bgn Jalan Kamaruddin shophouses and Jalan Kamaruddin 2 parcels of land Kuala Terengganu
Mukim Pulau Perhentian 11,000,000
PN 7652 Lot 470 Leasehold exp. 2051 448,271.70 Undeveloped (replacing HS (D) 2209 PT 320) sq. m Resort Land
State of Pahang
Mukim Kuala Kuantan Leasehold exp. 2096 43,240 sq. m Hospital Building PN 7723 Lot 54559 District of Kuantan
Annual Report 2012 TDM Berhad (6265-P) 204 list of properties (continued)
Production / Company / Division Nett Book Value (Metric Tonne) Estate Division Tenure Area (Hectares) Description (RM)
Wilayah Persekutuan 22,000,000
GRN 47712 Lot 51913 Freehold 1,486 sq m Hospital Building Mukim and District of Kuala Lumpur TMDC Hospital Lot 45, Jalan Desa Desa Business Park, Taman Desa Off Jalan Klang Lama Kuala Lumpur
State of Selangor 3,600,000
Mukim Damansara Leasehold exp. 2092 2,815.2 sq. m Hospital Building Lot No. 3.5 and 4.5 HS (D) 85220 PT No. 14532 District of Petaling
Provinsi Kalimantan Barat, Kabupaten Melawi, Indonesia Oil Palm plantation 28,850,844
PT. Rafi KamajayaAbadi Leasehold exp. 2044/2047 18,007.98 ha Nanga Pinoh (HGU) Kabupaten Melawi Kalimantan Barat Indonesia
Annual Report 2012 TDM Berhad (6265-P) 205 group directory
Plantations & Factories Headquarters Kompleks Sungai Tong TDM Berhad Aras 5, Bangunan UMNO Terengganu Ladang Jaya Lot 3224, Jalan Masjid Abidin Sungai Tong, 21500 Setiu 20100 Kuala Terengganu Terengganu Terengganu, Malaysia Tel : (609) 824 1023 Tel : (609) 620 4800 Fax : (609) 824 0993 Fax : (609) 620 4803 Website : www.tdmberhad.com.my Ladang Fikri Sungai Tong, 21500 Setiu Terengganu Plantation Division Tel : (609) 824 7612 Fax : (609) 824 3901
TDM Plantation Sdn Bhd Ladang Tayor Aras 5, Bangunan UMNO Terengganu Sungai Tong, 21500 Setiu Lot 3224, Jalan Masjid Abidin Terengganu 20100 Kuala Terengganu Tel : (609) 824 1790 Terengganu, Malaysia Fax : (609) 824 1679 Tel : (609) 620 4800 Fax : (609) 620 4803 Ladang Pelung Website : http://plantation.tdmberhad.com.my Sungai Tong, 21500 Setiu Terengganu Kumpulan Ladang-Ladang Trengganu Sdn Bhd Tel : (609) 824 0829 Aras 5, Bangunan UMNO Terengganu Fax : (609) 824 1017 Lot 3224, Jalan Masjid Abidin 20100 Kuala Terengganu Kompleks Bukit Besi Terengganu, Malaysia Tel : (609) 620 4800 Ladang Gajah Mati Fax : (609) 620 4803 Bukit Besi, 23000 Dungun Terengganu TDM Trading Sdn Bhd Tel : (609) 834 1288 / (609) 834 3536 25th Floor, Menara KH Fax : (609) 834 0288 Jalan Sultan Ismail 50250 Kuala Lumpur, Malaysia Ladang Majlis Agama Islam Tel : (603) 2148 0811 Bukit Besi, 23000 Dungun Fax : (603) 2148 9900 Terengganu Tel : (609) 822 2001 PT. Rafi Kamajaya Abadi (Incorporated in Indonesia) Fax : (609) 822 2001 JL Provinsi Sintang – Nanga Pinoh Desa Sido Mulyo Kec Pinoh Kota Ladang Pinang Emas 78672 Kabupaten Melawi Bukit Besi, 23000 Dungun Kalimantan Barat, Indonesia Terengganu Office : (0062) 5682 2784 Tel : (609) 834 0377 Estate : (0062) 5682 2766
Annual Report 2012 TDM Berhad (6265-P) 206 group directory (continued)
Ladang Jerangau Healthcare Division Wakil Pos Pelar, 21810 Ajil Hulu Terengganu, Terengganu Tel : (609) 838 4127 Kelana Jaya Medical Centre Sdn Bhd Fax : (609) 838 4127 No. 1, FAS Business Avenue Jalan Perbandaran SS7, Kelana Jaya Kompleks Kemaman 47301 Kelana Jaya Selangor, Malaysia Ladang Air Putih Tel : (603) 7805 2111 P.O. Box 19, Padang Kubu Fax : (603) 7806 3505 24007 Kemaman, Terengganu www.kjmc.com.my Tel : (609) 859 8367 Fax : (609) 859 8367 Kuantan Medical Centre Sdn Bhd No. 1, Jalan Tun Ismail 9 Ladang Tebak 25000 Kuantan P.O. Box 14, Padang Kubu Pahang, Malaysia 24007 Kemaman, Terengganu Tel : (609) 514 2828 Tel : (609) 852 1552 Fax : (609) 514 7688 Fax : (609) 852 1552 www.kmcsb.com.my
Ladang Jernih Kuala Terengganu Specialist Hospital Sdn Bhd P.O. Box 12, Padang Kubu No. 443B, Jalan Kamaruddin 24007 Kemaman, Terengganu 20400 Kuala Terengganu Tel : (6019) 928 4716 Terengganu, Malaysia Tel : (609) 624 5353 Ladang Pelantoh Fax : (609) 626 5211 P.O. Box 10, Padang Kubu www.kts.net.my 24007 Kemaman, Terengganu Tel : (609) 822 6400 TDMC Hospital Sdn Bhd Fax : (609) 822 6023 No. 45, Jalan Desa, Taman Desa Off Jalan Klang Lama Mills 58100 Kuala Lumpur Tel : (603) 7982 6500 Kilang Kelapa Sawit Sungai Tong Fax : (603) 7625 8652 Sungai Tong, 21500 Setiu Terengganu Tel : (609) 824 7290 Fax : (609) 824 6472
Kilang Kelapa Sawit Kemaman P.O. Box 13, Padang Kubu 24007 Kemaman, Terengganu Tel : (609) 822 6566 Fax : (609) 822 6704
Annual Report 2012 TDM Berhad (6265-P) 207 notice of annual general meeting
NOTICE IS HEREBY GIVEN THAT the Forty-Eighth (48th) Annual General Meeting of the Company will be held at Gamelan 3, Level 3, Primula Beach Hotel Sdn Bhd, Jalan Persinggahan, 20400 Kuala Terengganu, Terengganu on Thursday, 23 May 2013 at 11.00 a.m. for the following purposes:
AGENDA
As Ordinary Business
1. To receive the Statutory Financial Statements for the financial year ended 31 December 2012 together with the Reports of the Directors and the Auditors thereon.
2. To re-elect the following Directors retiring pursuant to Article 113 of the Company’s Articles of Association, and being eligible, offer themselves for re-election.
i) Haji Zakaria K C Ahammu (Ordinary Resolution 1)
ii) Dato’ Haji Abdul Razak Ismail (Ordinary Resolution 2)
3. To approve the payment of the first and final dividend of 22 sen per ordinary share, tax exempt under the single-tier system for the financial year ended 31 December 2012. (Ordinary Resolution 3)
4. To approve the payment of Directors’ Remuneration for the financial year ending 31 December 2013. (Ordinary Resolution 4)
5. To re-appoint Messrs. Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration. (Ordinary Resolution 5)
As Special Business To consider and if thought fit, to pass the following resolutions:
6. Re-Appointment of Haji Long A. Rahman as a Director Pursuant to Section 129(2) of the Companies Act, 1965
“THAT Haji Long A. Rahman, being over the age of 70 years and retiring in accordance with Section 129(2) of the Companies Act, 1965, be and is hereby re-appointed as a Director of the Company and to hold office until the conclusion of the next Annual General Meeting of the Company.” (Ordinary Resolution 6)
Annual Report 2012 TDM Berhad (6265-P) 208 notice of annual general meeting (continued)
7. Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965
“THAT subject always to the Companies Act, 1965, Articles of Association of the Company and approvals from Bursa Malaysia Securities Berhad and any other governmental/regulatory bodies, where such approval is necessary, full authority be and is hereby given to the Directors pursuant to Section 132D of the Companies Act, 1965 to issue not more than ten percent (10%) of the issued capital of the Company at any time upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit or in pursuance of offers, agreements or options to be made or granted by the Directors while this approval is in force and that the Directors be and are hereby further authorized to make or grant offers, agreements or options which would or might require shares to be issued after the expiration of the approval hereof AND THAT authority be and is hereby given to the Directors to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad.” (Ordinary Resolution 7)
8. Proposed Amendment to the Memorandum of Association of the Company
“THAT, to enable the Company to buy-back its own shares and to provide financial assistance to any person to purchase the shares of the Company the Memorandum of Association of the Company be amended by the insertion of a new Clause 3(xxxxii) which reads as follows:-
(xxxxii) To purchase its own shares or to give financial assistance to any person for the purpose of the purchase of its own shares or both, subject to, and in accordance with the Companies Act, 1965, the rules, regulations and orders made pursuant thereto and the requirements of Bursa Malaysia Securities Berhad and any other relevant authority.” (Special Resolution 1)
9. Proposed Amendment to the Articles of Association of the Company
“THAT Article 69 of the Articles of Association of the Company be hereby amended as follows:
Existing Article Amended Article Except as provided in Article Except as provided in Article 71 hereof if 71 hereof if a poll is duly a poll is duly demanded it shall be taken demanded it shall be taken in in such manner as the Chairman directs such manner as the Chairman (including the use of ballot or voting papers directs, and the result of the or tickets or electronically using various forms poll shall be deemed to be the of electronic devices), and the result of the resolution of the meeting at poll shall be deemed to be the resolution of which the poll is demanded. the meeting at which the poll is demanded.” (Special Resolution 2)
10. To transact any other ordinary business of which due notice shall be given.
Annual Report 2012 TDM Berhad (6265-P) 209 notice of annual general meeting (continued)
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of members at the 48th Annual General Meeting to be held on 23 May 2013, the first and final dividend of 22 sen per ordinary share, tax exempt under the single-tier system for the financial year ended 31 December 2012 will be paid on Friday, 7 June 2013 to Depositors whose names appear in the Record of Depositors on Wednesday, 29 May 2013. A Depositor shall qualify for entitlement only in respect of:
(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 29 May 2013 in respect of ordinary transfers; and
(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.
By Order of the Board
YEAP KOK LEONG (MAICSA No. 0862549) WONG WAI FOONG (MAICSA No. 7001358) Company Secretaries
Kuala Terengganu Date: 30 April 2013
Annual Report 2012 TDM Berhad (6265-P) 210 notice of annual general meeting (continued)
Notes: - 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company and the provisions of the Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. A member shall appoint not more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.
2. Where a member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991 (SICDA), it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account.
3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account “omnibus account”, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.
4. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.
5. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation, either under the common seal, or under the hand of an officer or attorney duly authorised.
6. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in this Proxy Form.
7. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority, shall be deposited at the registered office of the Company at Aras 5, Bangunan UMNO Terengganu, Lot 3224, Jalan Masjid Abidin, 20100 Kuala Terengganu, Terengganu Darul Iman not less than 48 hours before the time for holding the Meeting or adjourned meeting at which the person named in the instrument proposes to vote, or in the case of the poll, not less than 24 hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid.
8. For the purpose of determining a member who shall be entitled to attend and vote at the Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Article 57B of the Articles of Association of the Company and Section 34(1) of the SICDA to issue a General Meeting Record of Depositors as at 17 May 2013. Only a depositor whose name appears on the Record of Depositors as at 17 May 2013 shall be entitled to attend the said meeting or appoint proxies to attend and vote in his stead.
9. Explanatory Note:
Agenda No. 1 This item is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965 require that the audited financial statements and the Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting. As such this Agenda item is not a business which requires a resolution to be put to vote by shareholders.
Explanatory Note on Special Business:-
Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965 The Company had on 47th Annual General Meeting held on 17 May 2012, obtained its shareholders’ approval for the renewal of the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 (the Act).
The Company had on 14 May 2012, issued a total of 3,557,895 ordinary shares of RM1.00 each representing 1.45% of the issued and paid-up share capital of the Company, at an issue price of RM4.75 per share, as the purchase consideration for the acquisition of a parcel of leasehold land held under H.S.(D) 9537, Lot No. PT 2407, Mukim Batu Buruk, District of Kuala Terengganu, Terengganu Darul Iman from Lembaga Tabung Amanah Warisan Negeri Terengganu for a total purchase consideration of RM16.90 million as per the Company’s announcement to Bursa Malaysia Securities Berhad on 16 May 2012.
It is further noted that, the Company had on 11 July 2012, issued a total of 291,519 ordinary shares of RM1.00 each representing 0.12% of the issued and paid- up share capital of the Company, at an issue price of RM2.83 per share, as the balance of purchase consideration for the acquisition of 23,691,931 ordinary shares of RM1.00 each, representing 100% of the issued and paid-up share capital in TDMC Hospital Sdn Bhd as per the Company’s announcement to Bursa Malaysia Securities Berhad on 13 July 2012.
The proposed Ordinary Resolution No. 7 is a renewal of the mandate to issue shares under Section 132D of the Act. If passed, it will allow the Directors of the Company, from the date of the above Annual General Meeting, authority to issue and allot shares from the unissued capital of the Company but not exceeding 10% of the issued share capital of the Company.
A renewal for the said mandate is sought to avoid any delay and cost involved in convening such a general meeting. Should the mandate be exercised, the Directors will utilize the proceeds raised for funding current and / or future investment projects, working capital, acquisition, issuance of shares as settlement of purchase consideration and / or such other applications they may in their absolute discretion deem fit.
Proposed Amendment to the Memorandum of Association of the Company The proposed amendment is to render the Memorandum of Association of the Company to be consistent with Section 67A of the Companies Act, 1965.
Proposed Amendment to the Articles of Association of the Company The proposed amendment to the Articles of Association of the Company is to facilitate poll voting by electronic means.
Annual Report 2012 TDM Berhad (6265-P) 211 statement accompanying notice of annual general meeting
(Pursuant To Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)
There is no person seeking election as Director at this Annual General Meeting.
Annual Report 2012 TDM Berhad (6265-P) 212 TDM Berhad (6265-P) proxy form (Incorporated in Malaysia) CDS Account No.
I/We (name of shareholder as per NRIC/passport/certificate of incorporation in capital letters) with (new NRIC No.) (Old NRIC No.) (Passport No.) (Company No.) of (full address) being a member(s) of abovementioned Company, hereby appoint (name of proxy as per NRIC/passport in capital letters) with (New NRIC No.) (Old NRIC No.) (Passport No.) of (full address) or failing him/her (name of proxy as per NRIC/passport in capital letters) with (New NRIC No.) (Old NRIC No.) (Passport No.) of (full address) or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at Forty-Eighth (48th) Annual General Meeting of the Company to be held at Gamelan 3, Level 3, Primula Beach Hotel, Jalan Persinggahan, 20400 Kuala Terengganu, Terengganu on Thursday, 23 May 2013 at 11.00 a.m. and at any adjournment thereof.
My/Our proxy is to vote as indicated below:
Please indicate with an “X” in the spaces as provided below how you wish to cast your votes. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.
No. Resolutions For Against 1 To re-elect Haji Zakaria K C Ahammu retiring pursuant to Article 113 Ordinary Resolution 1 of the Company’s Articles of Association.
2 To re-elect Dato’ Haji Abdul Razak Ismail retiring pursuant to Article 113 Ordinary Resolution 2 of the Company’s Articles of Association.
3 To approve the payment of the First and Final dividend of 22 sen per ordinary share, tax exempt under the single-tier system for the financial year ended Ordinary Resolution 3 31 December 2012.
4 To approve the payment of Directors’ Remuneration for the financial year Ordinary Resolution 4 ending 31 December 2013.
5 To re-appoint Messrs. Ernst & Young as Auditors of the Company and Ordinary Resolution 5 to authorise the Directors to fix their remuneration.
6 To re-appoint Haji Long A. Rahman as a Director pursuant to Section 129(2) Ordinary Resolution 6 of the Companies Act, 1965.
7 Authority to issue shares pursuant to Section 132D of the Companies Ordinary Resolution 7 Act, 1965.
8 Proposed Amendment to the Memorandum of Association of the Company. Special Resolution 1
9 Proposed Amendment to the Articles of Association of the Company. Special Resolution 2
For appointment of two (2) proxies, percentage of shareholdings to be represented by the proxies: Signature(S)/Common Seal of Members No. of Shares Percentage
Proxy 1 % Numbers of shares held : Proxy 2 % Date : Total 100% Notes: 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company and the provisions of the Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. A member shall appoint not more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. 2. Where a member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991 (SICDA), it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account. 3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account “omnibus account”, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. 4. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies. 5. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation, either under the common seal, or under the hand of an officer or attorney duly authorised. 6. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in this Proxy Form. 7. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority, shall be deposited at the registered office of the Company at Aras 5, Bangunan UMNO Terengganu, Lot 3224, Jalan Masjid Abidin, 20100 Kuala Terengganu, Terengganu Darul Iman not less than 48 hours before the time for holding the Meeting or adjourned meeting at which the person named in the instrument proposes to vote, or in the case of the poll, not less than 24 hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid. 8. For the purpose of determining a member who shall be entitled to attend and vote at the Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Article 57B of the Articles of Association of the Company and Section 34(1) of the SICDA to issue a General Meeting Record of Depositors as at 17 May 2013. Only a depositor whose name appears on the Record of Depositors as at 17 May 2013 shall be entitled to attend the said meeting or appoint proxies to attend and vote in his stead.
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TDM Berhad (6265-P) Aras 5, Bangunan UMNO Terengganu Lot 3224, Jalan Masjid Abidin 20100, Kuala Terengganu Terengganu Darul Iman
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www.tdmberhad.com.my
(6265-P)
TDM Berhad Aras 5, Bangunan UMNO Terengganu Lot 3224, Jalan Masjid Abidin 20100 Kuala Terengganu Terengganu Darul Iman Malaysia Tel : (609) 620 4800 Fax : (609) 620 4803