JOHOR CORPORATION JOHOR CORPORATION Annual Report 2010 2010 Annual Report Membina JOHOR CORPORATION Level 2, PERSADA JOHOR Jalan Abdullah Ibrahim dan 80000 Johor Bahru Johor, Malaysia. Membela Tel 607 219 2692 Fax 607 223 3175 Email [email protected] www.jcorp.com.my VISION “MEMBINA DAN MEMBELA” MISSION • A state investment corporation contributing to state and national economic growth through an efficient and effective business entity while upholding the community interest. • Upholding position as a business entity that spearheads and controls market, competitive, profit-motivated and recognized. • A catalyst to sustainable business growth which will further create success in fulfilling its obligation as a state investment corporation. • Contributing and adding values to the well-being of the community through business success as well as Corporate Social Responsibility undertakings. TablE OF CONTENTS 003 SECTION 1: CORPORATE STATEMENT 045 SECTION 5: PROSPECTS 046 Economic Review 013 SECTION 2: ABOUT JOHOR 048 Core Business Division CORPORATION • Palm Oil Division • Healthcare Division 014 Corporate Profile • Foods and Quick Service Restaurant Division • Corporate Activities • Property Division • Corporate Information • Property and Logistic Service Division 018 Business Structure • Hospitality Division 019 Corporate Structure 020 Board of Directors 075 SECTION 6: INTRAPRENEUR BUSINESS • Members of the Board of Directors • Profile of the Board of Directors 024 Management Committees 089 SECTION 7: CORPORATE GOVERNANCE • Board Investment Committee 090 Corporate Governance Statement • Board Audit Committee 094 Audit Committee Report • Group Top Management Committee (TERAJU) 096 Internal Control Statement • Group Human Resource Committee Risk Management Statement • Investment Review Committee (JAWS) 098 • Executive Committee (EXCO) 101 SECTION 8: 031 SECTION 3: FINANCIAL HIGHLIGHTS 102 Human Capital Development 104 2010 Significant Corporate Events 035 SECTION 4: CORPORATE SOCIAL 110 JCorp in the News RESPONSIBILITY 112 Awards and Accolades 116 Corporate History • Growth • Expansion • Transformation • Strategic Expansion 123 SECTION 9: FINANCIAL STATEMENTS JCorp group pre-tax hits record RM962 m Business Times, NST 20 April 2011 CORPORATE STATEMENT ANNUAL REPORT 2010 JOHOR CORPORATION SECTION 1 CORPORATE STATEMENT 004 Corporate Statement 003 CORPORATE STATEMENT ANNUAL REPORT 2010 JOHOR CORPORATION 004 yAB Dato’ HAJI Abdul GHANI BIN OTHMAN yBHG TUAN HAJI kAMARUZZAMAN BIN ABU kASSIM Chief Minister of Johor President & Chief Executive Johor Corporation Chairman Johor Corporation CORPORATE STATEMENT BEST RESULT EVER THE RELATIvely FAvOURABLE ECONOMIC BACkDROP AND A SURGE IN THE PRICE OF PALM OIL IN 2010 HELPED PROPEL JCORP TO ITS BEST EvER PERFORMANCE SINCE ITS FOUNDING 40 yEARS AGO. The GROUP PERFORMANCES WERE ALSO RECOGNISED THROUGH LOCAL AND INTERNATIONAL AWARDS PRESENTED DURING THE PERIOD. CORPORATE STATEMENT ANNUAL REPORT 2010 JOHOR CORPORATION Continuing a winning streak, for the third time, Asian economies recorded some of their best JCorp was awarded with a 4-star, the highest performances in 2010. In particular, Southeast rating in Financial Management Accountability Asian nations witnessed a resounding year, Index by National Audit Department. In clocking their best performance in recent addition to that, JCorp bags 2 Association of memory though growth in the final months of Development Financing Institutions in Asia & the year began to taper off. While most of the the Pacific (ADFIAP) awards, kulim (Malaysia) advanced countries are yet to fully recover from Berhad received the Malaysia Sustainability the financial crisis of 2008, emerging markets Reporting Award (MaSRA), kPJ Healthcare especially China and India are showing a Berhad’s Managing Director won the Asia high rate of economic expansion and growing Leading Women CEO of The year and 3 demand. BrandLaureate 2010-2011 awards to JCorp’s Foods and Quick Service Restaurants division. The effective measures implemented by Malaysia to manage the economic crisis JCorp is a market-driven state investment have boosted the country, now well on the corporation incorporated under Johor State path to rapid and sustained recovery. The Enactment No. 4, 1968. It is one of Malaysia’s Malaysian economy registered growth of 7.2% leading business conglomerates, comprising in 2010 in a sharp recovery from the 2009 more than 280 member companies and recession. JCorp heeded the call to action 005 employing more than 65,000 employees in in the Malaysian Government’s Economic Malaysia as well as regionally. 8 member Transformation Programme (ETP) by supporting entities are listed on the Malaysian Stock projects in the targeted oil & gas, palm oil, Exchange, with one PLC, a subsidiary of Kulim healthcare and hospitality sectors, where we (Malaysia) Berhad, New Britain Palm Oil Ltd, have investments. is listed on the Port Moresby Stock Exchange in Papua New Guinea as well as the London Stock Exchange. TURNOvER AT THESE JCorp is a highly diversified corporate entity, COMPANIES STOOD AT with strategic businesses comprising Palm Oil, Foods and Quick Service Restaurants, Healthcare, Property, Intrapreneur ventures RM BILLION FOR and Logistics. Turnover at these companies 7.5 stood at RM7.5 billion for the year ended 31 THE yEAR ENDED 31 December 2010. DECEMBER 2010 ECONOMIC REVIEW The past year has been one of recovery and readjustment. The global economy grew by 3.9% in 2010. The strong recovery seen in the emerging markets has contrasted with a weaker one across the developed world, accelerating a long-term shift in economic power from west to east and from north to south. Governments, central banks and regulators worldwide looked for ways to stimulate and support their domestic economies. CORPORATE STATEMENT ANNUAL REPORT 2010 JOHOR CORPORATION CORPORATE STATEMENT CONTINUED 006 CORPORATE DEVELOPMENTS spread throughout Asia, Papua New Guinea and other countries. Continuing the process kamaruzzaman bin Abu kassim had been appointed the third President started earlier, initiatives have been adopted & Chief Executive of JCorp effective 1 December 2010. The post was group-wide to propel the Group forward towards held by Tan Sri Muhammad Ali Hashim for 28 years (1982 – 2010) and global excellence. In this respect, every division Tan Sri Basir Ismail for 12 years (1970 – 1982). With his 18 years of and operating unit within the Group has set in reputable experience and knowledge within the Group, kamaruzzaman motion plans to improve its performance. will continue to uplift the core values of JCorp while diversifying business to encounter the up and coming challenges awaiting the Corporation to continue leading the way. “MeMBINA DAN MEMbela” The Board of Directors would like to express our “Menjunjung kasih” We are building on 40 years of exponential to His Royal Highness Sultan Ibrahim Ibni Almarhum Sultan Iskandar, growth since incorporation by evaluating and Sultan and The Sovereign Ruler of the State and Territories of Johor strengthening JCorp’s policies. The Corporation Darul Ta’zim upon the consent for the appointment of JCorp’s third upholds its “Membina dan Membela” philosophy President & Chief Executive. The Board of Directors has acclaimed its by developing charismatic entrepreneurs. commitment towards enhancing the cooperation with the Royalties, the State Government as well as the Federal Government. JCorp selects and grooms young people with business potential in Malaysia through organising The Board welcomes Dato’ Paduka Ismee bin Ismail and yB Haji Obet the Didik BISTARI, Tunas BISTARI and Siswa bin Tawil, Johor State Secretary as members of the Board effective BISTARI programs. By placing the development 1 November 2010 and 11 March 2011 respectively. of Intrapreneurs centre stage as one of the core developmental activities, the Group helps to create and inspire more entrepreneurs as INTERNATIONAL BUSINESS SEGMENT components of Bumiputera Commercial and Industrial Community (MPPB) and ultimately, While the Group’s business segments are managed on a worldwide strengthen their socio-economy status. basis, they operate in two main geographical areas: in Malaysia, mainly in Plantations, Foods & Quick Service Restaurants, Healthcare, Property, Intrapreneur ventures and other investments, and; in Papua New Guinea and the Solomon Islands, principally in Palm Oil and processing agricultural produce. Group revenue distribution by geography is dominated by Malaysia (75%), Europe (13%), and the remainder CORPORATE STATEMENT ANNUAL REPORT 2010 JOHOR CORPORATION ECONOMIC TRANSFORMATION PROGRAMME conducive environment in which to nurture entrepreneurs and expand those businesses At the start of the year came the announcement of the Government’s and investments identified for development. transformation plans to propel the country towards becoming a high- Thirdly, JCorp combines business with a income developed nation by 2020. The Government Transformation benevolent CSR role, exercised through its Programme (GTP) was announced in January 2010, followed by the New volunteer Organisation Team, gathering funds 007 Economic Model (NEM) in March 2010 and the Economic Transformation and disbursing multi-fold contributions to a Programme (ETP) in September 2010. The ETP names 12 National Key wide spectrum of deserving CSR causes. Economic Areas (NkEA), as important drivers for economic change in Malaysia to enhance the country’s competitive standing and resilience. 2010 PERFORMANCE During the