Embedding Sustainable Values
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EMBEDDING SUSTAINABLE VALUES ANNUAL REPORT 2017 Who we are TH Plantations Berhad (“THP”), the Our Core Business plantation arm of Lembaga Tabung Haji (“TH”), is engaged in the business of oil palm and rubber plantations in Malaysia. Developing and cultivating oil 6 Palm Oil Mills with It was first incorporated in 1972 as palm Total Milling Capacity of Perbadanan Ladang-Ladang Tabung Haji 240 Metric Tonnes Per Hour Sendirian Berhad with its first estate being Marketing of Processing Ladang Sungai Mengah, measuring 4,054 CPO, PK and FFB into Management Agent FFB CPO and PK hectares. Over the years, THP gradually expanded its land bank and to date, THP’s land bank stands close to 101,000 hectares. With the acquisitions made in recent years, 5% 6% 5% THP believes there is vast potential for 22% 10% significantly higher FFB and CPO production 25% in the coming years. Group Semenanjung 28% Average Age: Average Age: 17% LEGENDS 10 Years 10 Years 25> (Old Mature) 4 – 9 (Young Mature) 20 – 25 (Mature) <4 (Immature) 10 – 19 (Prime Mature) 40% 42% Who we are 6 Palm Oil Mills with 32 Oil Palm Estates 7 Forestry Plantations 101,000ha Total Milling Capacity of in Malaysia & Indonesia in Sabah of land bank 240 Metric Tonnes Per Hour 0% 3% 0% 0% 0% 0% 18% 16% 25% 34% Sabah Sarawak Indonesia Average Age: Average Age: Average Age: 4% 100% 14 Years 9 Years 1 Year 24% 47% 29% INSIDE THIS REPORT Cover Rationale About This Report 2 Corporate Information 3 Corporate Structure 5 Strategic Report Management Discussion & Analysis 9 Business Model and Strategy 11 Financial Review 15 Managing Our Risks 16 Sustainability Statement Linking Sustainability to Our Strategy 23 Our Governance Framework Our Board Leadership 55 An Experienced Management 67 Corporate Governance Overview 71 Embedding Sustainable Values reflects THP’s Statement of Risk Management & Internal Control 95 determination towards realising its goal of Additional Compliance Information 100 becoming a regionally- and globally-recognised Performance Statistics sustainable palm oil producer. Performance Statistics 103 By embracing sustainability, we believe we have in place the Financial Statements right components – clear vision, strong values, innovative Financial Statements 111 culture and a dynamic team – in place to maximise growth opportunities, now and in the future. Guided by our strategic Key Growth Nodes, we are focused on delivering long-term Other Information shareholder value while remaining true to our responsibilities to Properties Owned by the Group 219 the environment and the communities around us. Statistics of Shareholdings 225 Directory of Estates and Mills 228 Notice of the 44th Annual General Meeting 232 Glossary 235 Proxy Form • Navigation Icons Corporate Website The following icons feature throughout the report to improve As well as general information about THP’s usability and show integration between the various elements: business, the website includes an overview of the Group and information on investor relations Indicates a website reference where more information can (IR) and employment opportunities. be found. Please scan this QR code with your smartphone to Indicates a page or note reference of information which access our website www.thplantations.my can be found elsewhere in this report. ABOUT THIS REPORT FEEDBACK At THP, we believe in creating meaningful conversations with our stakeholders as this allows us to understand market needs and stakeholder perspectives, strengthen our strategy and most importantly, builds trust for the longer term. As such, we value the feedback, comments and questions received on our reports thus far. For those who would like to provide feedback on our reports, please contact our Investor Relations unit at 03-2603 4852 or email us at [email protected]. Recognising that the value we bring to our diverse base of FORWARD LOOKING stakeholders and shareholders is derived not just by our financial STATEMENTS performance, but also our actions on the sustainability front, we This report contains forward-looking have improved on our reporting approach this year, providing a statements characterised by the use comprehensive overview of our successes, challenges and how we of words or phrases such as “might”, responded to them in a clear and concise manner. “forecast”, “anticipate”, “project”, “may”, “believe”, “predict”, “expect”, “continue”, “will”, “estimate”, “target”, and other similar expressions. The report may also contain forecast Guided by our main aim of creating and As this Report is our main communication information such as improvements delivering long-term value, this Report allows platform to our stakeholders, its scope covers in production or stipulates a certain us to communicate our strategies, actions THP’s main business units and key functions. course of action with regard to our and meaningful outcomes, taking into We have discussed a broad range of critical business. However, these statements consideration not just business needs, but also areas including how we manage our business, do not guarantee future operating, capital resources and stakeholders’ interests. key areas of interests, and concerns as well as financial or other results as it may how we responded to challenges during the involve certain risks and uncertainties. Demonstrating our efforts in adopting best year in review. As such, it is important to note that practices, transparency and accountability, the statements here do not provide our management processes and reporting This Report provides a balanced, accurate a warranty or guarantees that the publications are aligned to the Malaysian and accessible assessment of THP’s strategy, anticipated results mentioned by Code on Corporate Governance 2017 (“MCCG performance and also future opportunities, these forward-looking statements will 2017”), Bursa Malaysia Securities Berhad’s in relation to financial, economic, social, be achieved. Main Market Listing Requirements and environmental and governance issues. Sustainability Reporting Guidelines. TH Plantations Berhad Annual Report 2017 2 CORPORATE INFORMATION as at 16 March 2018 Board of Directors Audit Committee Tan Sri Dato’ Sri Ab. Aziz bin Kasim Mohd Adzahar bin Abdul Wahid Chairman Chairman Independent Non-Executive Director Independent Non-Executive Director Datuk Seri Nurmala binti Abd Rahim Tan Sri Dato’ Sri Ismee bin Haji Ismail Member Deputy Chairman Independent Non-Executive Director Non-Independent Non-Executive Director Dato’ Sri Amran bin Mat Nor Datuk Seri Johan bin Abdullah Member Non-Independent Non-Executive Director Independent Non-Executive Director Mohd Adzahar bin Abdul Wahid Dato’ Shari bin Haji Osman Independent Non-Executive Director Member Independent Non-Executive Director Datuk Seri Nurmala binti Abd Rahim Independent Non-Executive Director Dato’ Sri Amran bin Mat Nor Independent Non-Executive Director Nomination Committee Datuk Seri Nurmala binti Abd Rahim Datuk Abdul Shukur bin Haji Idrus Chairman Non-Independent Non-Executive Director Independent Non-Executive Director Dato’ Shari bin Haji Osman Datuk Seri Johan bin Abdullah Independent Non-Executive Director Member Non-Independent Non-Executive Director Dato’ Dr. Md Yusop bin Omar Mohd Adzahar bin Abdul Wahid Independent Non-Executive Director Member Independent Non-Executive Director Kolonel Dato’ Ab Jabar bin Mohamad Aris Non-Independent Non-Executive Director Dato’ Sri Zainal Azwar bin Zainal Aminuddin Chief Executive Officer/Executive Director Place of Incorporation and Domicile Malaysia 3 TH Plantations Berhad Annual Report 2017 CORPORATE INFORMATION as at 16 March 2018 Remuneration Committee Registered Office Auditors Tan Sri Dato’ Sri Ab. Aziz bin Kasim Level 35 KPMG Desa Megat PLT Chairman Menara TH Platinum Level 10 KPMG Tower Independent Non-Executive Director No. 9 Persiaran KLCC 8 First Avenue 50088 Kuala Lumpur Bandar Utama Tan Sri Dato’ Sri Ismee bin Haji Ismail Tel : 03 2603 4800 47800 Petaling Jaya Fax : 03 2603 4695 Selangor Darul Ehsan Member Tel : 03 7721 3388 Non-Independent Non-Executive Director Fax : 03 7721 3399 Dato’ Shari bin Haji Osman Member Share Registrar Independent Non-Executive Director Symphony Share Registrars Sdn Bhd Level 6 Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Investment Committee Selangor Darul Ehsan Tel : 03 7841 8000 Tan Sri Dato’ Sri Ismee bin Haji Ismail Fax : 03 7841 8008 Chairman Non-Independent Non-Executive Director Investor Relations Mohd Adzahar bin Abdul Wahid Sustainability and Investor Relations Department Member Level 31 Independent Non-Executive Director Menara TH Platinum No. 9 Persiaran KLCC Dato’ Shari bin Haji Osman 50088 Kuala Lumpur Member Tel : 03 2603 4800 Independent Non-Executive Director Fax : 03 2603 4278 Principal Bankers Bank Islam Malaysia Berhad CIMB Bank Berhad Secretaries Standard Chartered Bank Malaysia Berhad Aliatun binti Mahmud (LS 0008841) Wan Nurul Hidayah binti Wan Yusoff (LS 0008555) Stock Exchange Listing Main Market of Bursa Malaysia Securities Berhad Listed since 27 April 2006 Website Stock Name: TH PLANT 5112 www.thplantations.my Stock Code: TH Plantations Berhad Annual Report 2017 4 CORPORATE STRUCTURE as at 16 March 2018 THP Agro Management Sdn. Bhd. THP Bukit Belian Sdn. Bhd. THP Ibok Sdn. Bhd. 100% 100% 100% TH Ladang (Sabah & Sarawak) Sdn. Bhd. Maju Warisanmas Sdn. Bhd. THP Suria Mekar Sdn. Bhd. 100% 100% 100% Hydroflow Sdn. Bhd. 70% Kee Wee Plantation Cempaka Teratai Derujaya Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. 65% 65% 100% 100% 100% TH PELITA Sadong TH PELITA Gedong TH PELITA Beladin Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. 5% 5% 55% TH PELITA Meludam Sdn. Bhd. 60% 5 TH Plantations Berhad Annual Report 2017 CORPORATE STRUCTURE as at 16 March 2018 INDICATORS Management Oil Palm Tradeline Investment Financing Forestry Non-Trading Teak Services Services Holding Manisraya Sdn. Bhd. THP Kota Bahagia Sdn. Bhd. Bumi Suria Ventures Sdn. Bhd. 100% 100% 100% PT Persada Kencana Prima THP Saribas Sdn. Bhd. THP-YT Plantation Sdn. Bhd. 93% 80% 70% THP Sabaco Sdn. Bhd. 51% TH-Bonggaya Kuni Riang Halus Riang Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. 100% 100% 100% TH-USIA Jatimas Ladang Jati Keningau TH PELITA Simunjan Sdn. Bhd. Sdn. Bhd. Sdn. Bhd.