Moving FORWARD to a Sustainable FUTURE
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Moving FORWARD to a Sustainable FUTURE ANNUAL REPORT 2018 Moving FORWARD to a Sustainable FUTURE TDM’s strategy is about creating and sustaining value for our stakeholders. We understand that balance in operational excellence and sustaining profitability is key to our continuous growth. The cover of this year’s report captures TDM’s business activities with the aim of achieving Economic Performance (Business sustainability), advancing People Development and preserving our Environment. We have put in place our Value Creation Plan (VCP) and Business Development Plan (BDP) to build capacity and capability in our core sectors of Plantation and Healthcare, with the ultimate aim of delivering sustainable value to all of our stakeholders. We are Moving Forward to a Sustainable Future which is shaped by commitment and performance to excel. OUR VISION To be the iconic corporation of the East Coast that creates sustainable Good values for our Governance stakeholders OUR MISSION Team Work To be a model corporate citizen in Terengganu; People • To create sustainable value for our Centric shareholders. • To improve the well being of our Innovative stakeholders while protecting the environment. • To deliver quality products & services Environment Friendly above expectation for our customers. Shariah • To widen our regional presence. Compliancy • To stimulate human capital development. CORE VALUES Table of Contents O1 ABOUT TDM O5 SUSTAINABILITY 08 ACCOUNTABILITY 2 Who We Are 267 Statistics on Shareholdings 60 Sustainability Report 4 2018 Key Highlights 269 Group Plantations Hectarage 6 Milestones and Achievements Statement 06 GOVERNANCE 8 Corporate Structure 270 5-Year Group Plantation 123 Policies 9 Corporate Information Statistics 129 Corporate Governance 271 5-Year Group Healthcare Overview Statement Statistics O2 HIGHLIGHTS 148 Audit Committee Report 272 List of Properties 154 Statement on Risk Management 277 Group Directory 12 Financial Highlights and Internal Control th 15 Investor Relations 279 Notice of 54 Annual General 161 Additional Compliance Meeting 17 Financial Calendar Statement 284 Statement Accompanying 162 Responsibility Statement by the Notice of Annual General O3 LEADERSHIP PERSPECTIVE Board of Directors Meeting & PROFILES • Proxy Form 20 Message from Our Chairman 07 FINANCIAL STATEMENTS 24 Management Discussion and Analysis 164 Directors’ Report 42 Board of Directors’ Profile 171 Statement by Directors 48 Key Senior Management 171 Statutory Declaration 49 Key Senior Management Profile 172 Independent Auditors’ Report 52 Management Team 176 Statements of Comprehensive Income 177 Statements of Financial Position O4 OUR ACHIEVEMENTS 179 Statements of Changes in Equity 56 Calendar of Events 182 Statements of Cash Flows 58 Media Highlights 184 Notes to the Financial Statements TDM BERHAD ANNUAL REPORT 2018 DIGITAL VERSION Follow the steps below to scan the QR Code reader in 3 easy steps Download the “QR CodeReader” Run the QR Code Reader app Access the soft copy of The soft copy version of TDM BERHAD’s on App Store or Google Play. and point your camera to the the Annual Report. Annual Report 2018 is also available on QR Code. our website. www.tdmberhad.com.my 2 ABOUT TDM TDM Berhad | Annual Report 2018 Who We Are TDM Berhad was incorporated on 1 December 1965 and listed on the main market of Bursa Malaysia Securities Berhad under the plantation sector in 1970. Following a successful restructuring exercise and new strategic direction since 2004, TDM has grown into a leading player in the oil palm plantation and healthcare sectors. TDM Berhad | Annual Report 2018 ABOUT TDM 3 Who We Are PLANTATION DIVISION In 2010, the Group opened its first bio-composting plant to convert empty fruit bunches (EFB) of oil palm into bio- TDM develops and manages 16 oil palm estates and 3 palm organic fertiliser for use in its estates. We now have a total of oil mills. Our estates are located in Sungai Tong, Bukit Besi 3 plants: 2 in Terengganu and 1 in Kalimantan Barat. and Kemaman in Terengganu, and Nanga Pinoh in Kalimantan Barat, Indonesia. TDM’s 3 palm oil mills are in Sungai Tong, Our estates and mills in Terengganu are 100% Roundtable Kemaman and Nanga Pinoh. on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO) certified. Currently, the Group has a total of 43,991 hectares of planted oil palm land at its plantations in Terengganu (31,346 In 2017, we also made progress with the upgrading of hectares) and Kalimantan (12,645 hectares). our mills and investment in new assets. Our aim is to achieve higher oil extraction rate (OER), reduce oil loss, TDM estates are at the following locations: cut processing costs and increase throughput. This involves upgrading our digester capacity and vertical clarifier capacity, • Sungai Tong Complex, Terengganu Estates: Jaya, adopting new technology to enhance the hydrolysis process Fikri, Tayor and Pelung; and increase oil recovery, and upskilling our workforce to • Bukit Besi Complex, Terengganu Estates: Jerangau, enhance competency. Pinang Emas, Gajah Mati and Majlis Agama Islam; • Kemaman Complex, Terengganu Estates: Air Putih, In February 2018, TDM became the first Government- Pelantoh, Tebak and Jernih; and linked Company (GLC) in Terengganu to venture into the production of biogas. The Biogas Production & Power • Nanga Pinoh, Kalimantan Barat North 1, North 2, South Generation Project involves Build-Own-Operate-Transfer 1 & South 2. (BOOT) project financing to be undertaken with Concord Alliance Sdn Bhd. HEALTHCARE DIVISION The Group’s Healthcare Division, Kumpulan Medic Iman Sdn Bhd (KMI), manages 4 specialist hospitals, which offer affordable healthcare services to the community. Hospitals under KMI are: 1. Kelana Jaya Medical Centre (KJMC) in Petaling Jaya, Selangor; 2. Kuantan Medical Centre (KMC) in Kuantan, Pahang; 3. Kuala Terengganu Specialist Hospital (KTS) in Kuala Terengganu, Terengganu; and 4. Taman Desa Medical Centre (TDMC) in Kuala Lumpur. Trusted Healthcare Provider of Choice is the vision of the Healthcare Division. The services offered at all its hospitals cover key disciplines such as general medicine, paediatrics, orthopaedics, general surgery, radiology, obstetrics and gynaecology, ear, nose and throat (ENT), dermatology, ophthalmology, urology, anaesthesiology and gastroenterology. 4 ABOUT TDM TDM Berhad | Annual Report 2018 2018 Key Highlights Operates Manages 4 Specialist 43,991 Hospitals hectares of oil • Kelana Jaya Medical Centre (KJMC), Selangor 4,403 • Kuantan Medical Centre (KMC), Pahang Employees and Workers palm plantation • Kuala Terengganu Specialist Hospital (KTS), Terengganu • Taman Desa Medical Centre (TDMC), Kuala Lumpur PLANTATION * Estates16 100% Palm3 Oil Mills • Sungai Tong Complex, Bukit RSPO Certified Besi Complex and Kemaman • Sungai Tong, Terengganu MSPO Certified Complex in Terengganu • Kemaman, Terengganu • Nanga Pinoh in Kalimantan * Malaysian operations only • Nanga Pinoh, Kalimantan Barat, Barat, Indonesia Indonesia 3 52 Years Bio-Composting Plants Experience in Plantation • Sungai Tong, Terengganu Operations BIO • Kemaman, Terengganu • Nanga Pinoh, Kalimantan Barat, Indonesia HEALTHCARE ISO 9001:2015 CERTIFICATION C E D R T I F I E ISO 9001:2015 Total number of patients since Specialist establishment Hospitals KJMC 314,826 407 KMC 856,000 Beds at the end of 2018 KTS 120,000 TDMC 282,087 TDM Berhad | Annual Report 2018 ABOUT TDM 5 2018 Key Highlights in RM Million Revenue Plantation Healthcare RM404.7 2018 195.1 2018 209.6 million 2017 265.4 2017 183.4 2017: RM448.8 million in RM Million Plantation Healthcare (Loss)/Profit Before Tax (RM68.1) 2018 (78.5) 2018 10.4 million 2017 168.4 2017 (4.1) 2017: RM164.3million in RM Million Plantation Healthcare Adjusted EBITDA* 2018 44.7 2018 29.3 millionRM74.0 2017 212.2 2017 23.4 2017: RM235.6 million Earnings Per Share Net Assets Per Share (4.48 sen) RM0.65 2017: 6.36 sen 2017: RM0.69 * Adjusted EBITDA is a measure of operating performance where it excludes the effect of non-operational items such as fair value gain and losses, foreign exchange gains and losses, impairment losses and gains or losses on disposal of assets. 6 ABOUT TDM TDM Berhad | Annual Report 2018 Milestones and Achievements 1965 2005 2010 Incorporation of TDM. PLANTATION CORPORATE Housing facilities for the estate workers. • Introduction of the Vendor 1970 • The initiative takes an annual cost of Development Programme (VDP) for approximately RM4 million and 10 Local Entrepreneurs. TDM was listed under the Plantation years to complete. - To support the local businesses and Sector on the Main Market of the entrepreneurs. Kuala Lumpur Stock Exchange. AWARDS - To develop sustainable local TDMP was awarded the Most Preferred businesses and in turn, contribute to 1996 CPO Supplier by Cargill Palm Products the betterment of the community. Sdn Bhd. • Implementation of e-Procurement. • Kelana Jaya Medical Centre (KJMC) - To promote healthy competition, was established. 2006 fairness and transparency where • Kuantan Medical Centre (KMC) was only the most competitive and established. CORPORATE qualified vendors are selected. Maiden dividend declared to shareholders. 1997 PLANTATION HEALTHCARE • Total area planted: 33,374 hectares. • Acquisition of Kumpulan Ladang- Kuala Terengganu Specialist Hospital (KTS) Ladang Trengganu Sdn. Bhd. was established. 2011 2002 2007 CORPORATE Introduction of e-Bidding. AWARDS CORPORATE • The electronic system where vendors TDM Plantation Sdn Bhd (TDMP) was TDM expanded its plantation business