· ANNUAL REPORT 2019 Date & Time Monday, 27 July 2020 11.00 a.m. CORE VALUES TDM's sustainability effort is derived from the ability to strengthen our focus during challenging times

STRENGTHENING FOCUS, ACHIEVING TRUE POTENTIALA N N U A L R E P O R T 2 0 1 9

ANNUAL REPORT 2019

Date & TimeMonday, 27 July 202011.00 a.m.

CO RE VALUES

TDM's sustainability effort is derived from the ability to strengthen our focus during challenging times. It is about making critical decisions and improving decision-making for better outcomes through the use of robust strategic frameworks. To us, the ever changing macroeconomic challenges are an opportunity for TDM to make organisational improvements - in our people, our processes, the technology that we leverage on and the branding of TDM.

We recognise our ability as a leading player in the oil palm plantation industry and demonstrate continuous growth in our healthcare business. We believe the unrelenting efforts in optimising our strength will lead TDM to the path of achieving its true potential.

55TH ANNUAL GENERAL MEETING (AGM) OF TDM BERHAD

V IS ION

To be the iconic corporation of the East Coast that creates sustainable values for our stakeholders.

M ISS ION

To be a model corporate citizen in Terengganu;• To create sustainable value for our

shareholders.• To improve the well being of our

stakeholders while protecting the environment.

• To deliver quality products & services above expectation for our customers.

• To widen our regional presence.• To stimulate human capital

development.

STRENGTHENING FOCUS, ACHIEVING TRUE POTENTIAL

ENVIRONMENTAL FRIENDLY

INNOVATIVE

PEOPLE CENTRIC

SHARIAH COMPLIANCY

TEAM WORK

GOOD GOVERNANCE

TDM BERHAD ANNUAL REPORT 2019 DIGITAL VERSION

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www.tdmberhad.com.my

Broadcast VenueTricor Leadership Room Unit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3 Bangsar South No. 8 Jalan Kerinchi 59200 Kuala Lumpur.

TDM BERHAD

CONTENTS

pages

7 - 15

HIGHLIGHTS• 2019 Key Highlights• Financial Highlights• Financial Calendar• Calendar of Events

78-11

1213-15

pages

16 - 43

LEADERSHIP PERSPECTIVE & PROFILES• Management Discussion and Analysis• Board of Directors’ Profile• Key Senior Management Profile• Management Team

16-3031-3738-4142-43

pages

44 - 83

SUSTAINABILITY STATEMENT• Sustainability Overview • Sustainability Matters• Social Sustainability: Creating Shared

Value for Community Development• Sustainability of the Planet• Sustainability at the Workplace: Our

People, Our Greatest Asset

44-4950-5758-63

64-7576-83

pages

2-6

ABOUT TDM • Vision, Mission & Core Values• Who We Are • Corporate Structure• Corporate Information • Investor Relations

2-3456

pages

84 - 122

GOVERNANCE• Policies • Corporate Governance Overview

Statement• Audit Committee Report• Statement on Risk Management and

Internal Control• Additional Compliance Statement• Responsibility Statement by the

Board of Directors

84-9091-107

108-114115-120

121122

pages

123 - 261

FINANCIAL STATEMENTS• Directors’ Report• Statement by Directors• Statutory Declaration• Independent Auditors’ Report• Statements of Comprehensive Income• Statements of Financial Position• Statements of Changes in Equity• Statements of Cash Flows• Notes to the Financial Statements

124-129130130

131-134135-136137-139140-142143-145146-261

pages

262 - 282

ACCOUNTABILITY• Statistics of Shareholdings• Group Plantation Hectarage

Statement• 5-Year Group Plantation Statistics• 5-Year Group Healthcare Statistics• List of Properties• Group Directory• Notice of 55th Annual General Meeting• Statement Accompanying Notice of

Annual General Meeting• Information Guide to Shareholders • Proxy Form

262-263264

265266

267-271272-273274-278

279

280-282

ABOUT TDM HIGHLIGHTS2

ANNUAL REPORT 2019

LEADERSHIP PERSPECTIVE & PROFILES

WHO WE ARE

of Planted Oil Palm Bio-Composting Plants

Biogas Plant

42,022 Ha3 1

PLANTATION DIVISIONTDM develops and manages 16 oil palm estates and three palm oil mills. Our estates are located in Terengganu, Malaysia and Kalimantan Barat, Indonesia. TDM’s three palm oil mills are in Sungai Tong, Kemaman and Nanga Pinoh.

In addition, the Group operates a total of three Bio-Composting plants and a Biogas plant located in both Malaysia and Indonesia.

Currently, the Group has a total of 42,022 Ha of planted oil palm land at its plantations in Terengganu (31,295 Ha) and Kalimantan (10,727 Ha). TDM estates are at the following locations: • Sungai Tong Complex, Terengganu Estates: Jaya,

Fikri, Tayor and Pelung; • Bukit Besi Complex, Terengganu Estates: Jerangau, Pinang

Emas, Gajah Mati and Majlis Agama Islam; • Kemaman Complex, Terengganu Estates: Air Putih, Pelantoh,

Tebak and Jernih; and • Nanga Pinoh, Kalimantan Barat North 1, North 2, South 1 &

South 2.

Our estates and mills in Terengganu are 100% Roundtable on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO) certified.

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.

Certified RSPO & MSPO TDM’s estate in Terengganu

Oil Palm Estates

Palm Oil Mills16 3

SUSTAINABILITY STATEMENT GOVERNANCE ACCOUNTABILITYFINANCIAL STATEMENTS 3

TDM BERHAD

WHO WE ARE

The Group’s Healthcare Division, Kumpulan Medic Iman Sdn. Bhd. (KMI), manages four specialist hospitals, which offer affordable healthcare services to the community.

Hospitals under KMI 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; and • 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.

HEALTHCARE DIVISION

Specialist Hospitals Beds

4 407

Kuala Terengganu Specialist Hospital, one of TDM purpose-built hospital in the East Coast


ANNUAL REPORT 2019


CORPORATE STRUCTURE AS AT 12 JUNE 2020

* In the process of winding up** Dormant

(6265-P)

PLANTATION100%100%100%100%100%93.75%95%95%

• TDM Plantation Sdn. Bhd.• Kumpulan Ladang-Ladang Trengganu Sdn. Bhd.• TDM Trading Sdn. Bhd.• TDM Capital Sdn. Bhd.• **Kemaman Capital Sdn. Bhd.• PT. Rafi Kamajaya Abadi• PT. Sawit Rezki Abadi• *PT. Rafi Sawit Lestari

HEALTHCARE99.28%

90.49%

100%92.33%100%99.29%

• Kumpulan Medic Iman Sdn. Bhd.

• ** Kumpulan Mediiman Sdn. Bhd.

• TDMC Hospital Sdn. Bhd.• Kuantan Medical Centre Sdn. Bhd.• Kuala Terengganu Specialist Hospital Sdn. Bhd.• Kelana Jaya Medical Centre Sdn. Bhd.

OTHER ACTIVITIES70%51%

• **Indah Sari Travel & Tours Sdn. Bhd.• **TD Gabongan Sdn. Bhd.

SUSTAINABILITY STATEMENT GOVERNANCE ACCOUNTABILITYFINANCIAL STATEMENTS 5

TDM BERHAD

CORPORATE INFORMATION

AUDIT COMMITTEE• Haji Azlan bin Md Alifiah (Chairman)• Haji Burhanuddin Hilmi bin Mohamed @

Harun• Haji Mazli Zakuan bin Mohd Noor• Haji Najman bin Kamaruddin• Mohd Kamaruzaman bin A Wahab

NOMINATION AND REMUNERATION COMMITTEE• Haji Mazli Zakuan bin Mohd Noor

(Chairman)• Haji Najman bin Kamaruddin • Haji Azlan bin Md Alifiah• Haji Burhanuddin Hilmi bin Mohamed @

Harun• Mohd Kamaruzaman bin A Wahab

BOARD RISK & COMPLIANCE COMMITTEE• Haji Najman bin Kamaruddin (Chairman)• Mohd Kamaruzaman bin A Wahab• Haji Mazli Zakuan bin Mohd Noor• Haji Burhanuddin Hilmi bin Mohamed @

Harun• Haji Azlan bin Md Alifiah • YB Dato’ Haji Zainal Abidin bin Hussin

BOARD TENDER COMMITTEE• Haji Burhanuddin Hilmi bin Mohamed @

Harun (Chairman)• Haji Mazli Zakuan bin Mohd Noor• Mohd Kamaruzaman bin A Wahab • Haji Azlan bin Md Alifiah

EXECUTIVE COMMITTEE (EXCO)• Mohd Kamaruzaman bin A Wahab

(Chairman)• Haji Mazli Zakuan bin Mohd Noor• Haji Burhanuddin Hilmi bin Mohamed @

Harun• Haji Najman bin Kamaruddin• Zainal Abidin bin Shariff• Amir Mohd Hafiz bin Amir Khalid

COMPANY SECRETARYWan Haslinda Wan Yusoff (MAICSA No. 7055478)SSM PC No. 202008002798

AUDITORS• Messrs. Ernst & Young PLT• Messrs. Hendrawinata Hanny Erwin &

Sumargo (Kreston International)

PRINCIPAL BANKERS• Bank Islam Malaysia Berhad• Maybank Islamic Berhad• OCBC Al-Amin Bank Berhad• CIMB Bank Berhad• RHB Islamic Bank Berhad• Bank Pertanian Malaysia Berhad

(Agrobank)• AmBank Islamic Berhad

SOLICITORS• Messrs. Hutabarat Halim & Rekan• Messrs. Edlin Ghazaly & Associates• Messrs. Azman, Wan Helmi & Associates• Messrs. Fariz Halim & Co

REGISTERED OFFICELevel 5, Bangunan UMNO Terengganu Lot 3224, Jalan Masjid Abidin20100 Kuala Terengganu Terengganu Darul Iman Telephone No : +609 620 4800/ +609 622 8000Facsimile No : +609 620 4803 Website : www.tdmberhad.com.my Email : [email protected]

CORPORATE OFFICE25th Floor, Menara KH Jalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTelephone No : +603 2148 0811Facsimile No : +603 2148 9900

SHARE REGISTRARTricor Investor & Issuing House Services Sdn. Bhd.Unit 32-01, Level 32Tower A, Vertical Business Suite, Avenue 3 Bangsar SouthNo. 8, Jalan Kerinchi 59200 Kuala LumpurTelephone No : +603 2783 9299Facsimile No : +603 2783 9222Email : [email protected]

STOCK EXCHANGE LISTINGMain Market of Bursa Malaysia Securities Berhad

STOCK NAMETDM

STOCK CODE2054

PLANTATION DIVISIONLevel 3, Bangunan UMNO Terengganu Lot 3224, Jalan Masjid Abidin20100 Kuala Terengganu Terengganu Darul Iman Telephone No : +609 620 4800/ +609 622 8000Facsimile No : +609 620 4805

HEALTHCARE DIVISIONKumpulan Medic Iman Sdn. Bhd.25th Floor, Menara KHJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTelephone No : +603 2148 0811Facsimile No : +603 2148 9900

COMMODITIES TRADING25th Floor, Menara KH Jalan Sultan Ismail 50250 Kuala LumpurTelephone No : +603 2148 0811Facsimile No : +603 2148 9900

BOARD OF DIRECTORSYM Raja Dato’ Haji Idris Raja KamarudinNon-Independent & Non-Executive Chairman

Haji Najman bin KamaruddinIndependent &Non-Executive Director

Haji Azlan bin Md AlifiahIndependent & Non-Executive Director

Haji Mazli Zakuan bin Mohd NoorNon-Independent & Non-Executive Director

Haji Burhanuddin Hilmi bin Mohamed @ HarunNon-Independent & Non-Executive Director

Mohd Kamaruzaman bin A WahabIndependent & Non-Executive Director

YB Dato’ Haji Zainal Abidin bin Hussin Non-Independent &Non-Executive Director


ANNUAL REPORT 2019


INVESTOR RELATIONS

As one of the largest plantation companies in the East Coast of Peninsular Malaysia, TDM is committed to securing and maintaining a healthy relationship with our shareholders and the broader investment community.

FOCUSED ON A SUSTAINABLE FUTURE

We have established regular channels of engagement and communication with our multiple stakeholders especially our investors and analysts. Pertinent and timely information is disseminated to keep them abreast of the Group’s strategic direction, operational performance as well as progress on current projects and growth initiatives.

Our investor relations activities are helmed by the Chief Financial Officer and Head of Investor Relations. Investor Relations activities are guided by our Investor Relations policy.

Our 54th Annual General Meeting (AGM) was held on 28 May 2019 at Dewan Gamelan 3, Primula Beach Hotel, Jalan Persinggahan, 20400 Kuala Terengganu, Terengganu Darul Iman. All proposed resolutions were duly passed and minutes of the AGM are available on our website, www.tdmberhad.com.my.

As required by the Main Market Listing Requirements of Bursa Malaysia and in line with the guidelines of the Malaysian Code on Corporate Governance 2017, we issue timely and comprehensive announcements on our quarterly and annual financial results to Bursa Malaysia. These announcements are also posted on our corporate website under our dedicated Investor Relations portal http://tdm.irplc.com/investor-relations.html.

The portal is continuously updated with the latest information including annual reports, quarterly results, Bursa Malaysia announcements, minutes of AGM, press release, and corporate information. For more specific investor-related clarification and feedback, we also provide a dedicated email address, [email protected], whereby queries and comments from the shareholders, investors, analysts, media and general public are addressed in a timely manner.

Throughout the year, we have also conducted numerous face-to-face engagements via investments events such as analyst briefings and non-deal investor roadshows as well as individual meetings at our offices.

Website, IR Website/Portal & Email Address

Number of users

5,222

Number of page visits in 2019

12,820


[email protected]

TDM's Share Average Daily Volume 2019 (shares)

7.0034million

SUSTAINABILITY STATEMENT GOVERNANCE ACCOUNTABILITYFINANCIAL STATEMENTS

TDM BERHAD

2019 KEY HIGHLIGHTS

Hectares of Oil Palm Plantation

Manages

42,022

Employees and Workers

4,377

HEALTHCARE

407 Beds

Certification

7

• Kelana Jaya Medical Centre (KJMC), Selangor

• Kuantan Medical Centre (KMC), Pahang

• Kuala Terengganu Specialist Hospital (KTS), Terengganu

• Taman Desa Medical Centre (TDMC), Kuala Lumpur

Specialist Hospitals

Operates

4ISO 9001:2015

KJMC 339,000

at the end of 2019

Total number of patients since establishment

KTS 350,000KMC TDMC 770,0001,132,000

PLANTATION

• Sungai Tong Complex, Bukit Besi Complex and Kemaman Complex in Terengganu

• Nanga Pinoh in Kalimantan Barat, Indonesia

• Sungai Tong, Terengganu• Kemaman, Terengganu• Nanga Pinoh, Kalimantan Barat, Indonesia

• Sungai Tong, Terengganu• Kemaman, Terengganu• Nanga Pinoh, Kalimantan

Barat, Indonesia

• Nanga Pinoh, Kalimantan Barat, Indonesia.

RSPO CertifiedMSPO Certified* Malaysian operations only

163

100%* 3 Bio-Composting Plants

1 Biogas Plant

Experience in Plantation Operations

53 Years

Palm Oil Mills

Estates


ANNUAL REPORT 2019


FINANCIAL HIGHLIGHTS

RM425.1

mill ion

RM40.4

mill ion

RM63.6

mill ion

RM0.9 billion

RM0.8 billion

RM1.7 billion

Loss Before Tax Adjusted EBITDA

Total Liabilities Shareholders’ Equity Total Assets

Revenue

REVENUE (RM MILLION)

2019 2018Restated

20162017 2015

425.

1

397.

9

568.

1

428.

5

380.

8

(LOSS)/PROFIT BEFORE TAX (RM MILLION)

2019 2018Restated

20162017 2015

(40.

4)

(96.

9)

49.6

35.1

(37.

6)

*From continuing operations*From continuing operations

*From continuing operations*From continuing operations *From continuing operations

GOVERNANCE ACCOUNTABILITYFINANCIAL STATEMENTS 9

TDM BERHAD

SUSTAINABILITY STATEMENT


(LOSS)/EARNINGS PER SHARE (SEN)

2019 2018 20162017 2015

(2.1

3)

(2.1

8)

(7.0

7)

1.34

3.53

MARKET CAPITALISATION (RM MILLION)

2019 2018 20162017 2015

706.

71

277.

64

746.

05

1,02

3.71

1,02

9.76

Income Statement 20192018

Restated2017

Restated2016

Restated2015

Restated

Revenue (RM’000) 425,070 397,947 568,126 428,545 380,830

Profit/(Loss) Before Tax (RM’000) - continuing operations (40,385) (37,586) (96,877) 35,096 49,615

Adjusted EBITDA (RM’000) - continuing operations 63,639 35,451 42,798 91,844 52,004

Profit/(Loss) After Tax (RM’000) - continuing operations (35,837) (36,020) (123,469) 17,068 49,691

Profit/(Loss) After Tax (RM’000) - discontinued operations (174,084) (82,025) - - -

Profit/(Loss) After Tax (RM’000) - Total (209,921) (118,045) (123,469) 17,068 49,691

Statements of Financial Position

Total Assets (RM’000) 1,665,214 1,848,121 2,313,607 2,313,520 2,496,054

Total Liabilities (RM’000) 924,629 918,228 1,251,256 1,246,771 1,165,729

Shareholders’ Equity (RM’000) 769,274 949,096 1,077,169 1,071,954 1,332,470

Key Financial Indicators

PBT/(LBT) Margin (%) - continuing operations (9.50) (9.44) (17.05) 8.19 13.03

Return on Average Shareholders’ Equity (%) - continuing operations (4.17) (3.56) (11.49) 1.42 3.83

Earnings/(Loss) Per Share (sen) - continuing operations (2.13) (2.18) (7.07) 1.34 3.53

Net Assets Per Share (RM) 0.44 0.55 0.64 0.71 0.90

Net Dividends Per Share (sen) - - 0.50 0.50 1.20

Gearing Ratio (times) 0.45 0.41 0.47 0.48 0.40

Current Ratio (times) 1.35 0.66 0.79 1.22 1.18

Price to Earnings Ratio (times) - continuing operations (19.72) (7.80) (6.36) 50.75 19.69

Price to Book Ratio (times) 0.95 0.31 0.70 0.96 0.77

*From continuing operations


ANNUAL REPORT 2019



% %2019 2018

73.52 66.30

Retained for Re-investmentDepreciation/Amortisation

97.32 76.13To EmployeeEmployee Cost

(4.22) (1.27)To GovernmentTaxation

- 6.72To ShareholdersDividend

(9.35) (4.00)Non-Controling Interest

100 100Total Distribution

(57.27) (43.88)Retained for Future GrowthRetained Profit

STATEMENT OF VALUE ADDED (PERCENTAGE %)

73.5

2%

97.3

2%

(4.2

2%)

-

(57.

27%

)

(9.3

5%)

SHARE PERFORMANCE CHART

Jan May SepFeb Jun OctMar Jul NovApr Aug Dec

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

Stoc

k Pr

ice


TDM BERHAD



2019RM’000

2018RM’000

Restated

Revenue 425,070 397,947

Purchases of Good and Services (308,131) (289,966)

Value Added by Group 116,939 107,981

Interest Income 2,247 28,884

Other Income 12,012 7,797

Finance Expenses (23,540) (21,256)

Value added available for distribution 107,658 123,406

STATEMENT OF VALUE ADDED

PlantationLoss Before Tax

RM 24.5 million2018: RM12.2 million

HealthcareProfit Before Tax

RM 14.2 million2018: RM10.3 million

RM79,160,000

Retained for Re-investmentDepreciation/Amortisation

2018: RM81,814,000

RM-

To ShareholdersDividend

2018: RM8,290,000

RM104,769,000

To EmployeeEmployee Cost

2018: RM93,959,000

RM(61,658,000)

Retained for Future GrowthRetained Profit

2018: RM(54,151,000)

(RM4,548,000)

To GovernmentTaxation

2018: RM(1,566,000)

RM(10,065,000)

Non-Controling Interest

2018: RM(4,940,000)

RM107,658,000

Total Distribution

2018: RM123,406,000

*From continuing operations


ANNUAL REPORT 2019


FINANCIAL CALENDAR

Announcement of the unaudited consolidated results for the 2nd quarter ended 30 June 2019.

27AUG 2019

Announcement of the unaudited consolidated results for the 3rd quarter ended 30 September 2019.

26NOV 2019

Announcement of the unaudited consolidated results for the 4th quarter ended 31 December 2019. Subsequently, an

amended results was announced on 2 March 2020.

28FEB 2020

Announcement of the unaudited consolidated results for the 1st quarter ended 31 March 2019.

MAY 2019

28

Announcement on Quarterly Results

Financial Year

1 January 2019 to

31 December 2019

Annual General Meeting

27 July 2020

Notice of Annual General Meeting/ Circulation of Annual Report

26 June 2020


TDM BERHAD


CALENDAR OF EVENTS

2019 TDM EXCELLENCE AWARDS

Inaugurated by TDM Berhad Chairman, YM Raja Dato’ Haji Idris Raja Kamarudin, this event was initiated by the TDM Management to recognise and appreciate the oustanding performance, contribution and dedication of our staff. TDM Group Excellence Awards came in three categories such as Company Performance Award, Individual Performance Award and Long Service Award.

RAMADHAN PROGRAMME WITH CHAIRMAN

The Group is deeply committed and emphasise on the importance of spiritual value, which we try to instill within our staff. Together with TDM Berhad Chairman, YM Raja Dato’ Haji Idris Raja Kamarudin, a special Ramadhan programme was held at Akademi TDM, Sungai Tong, Setiu. A myriad of activities took place during this programme such as a Town Hall meeting with the Chairman, iftar gathering, tarawih prayer and qiamullail prayer which were joined by all staff and management.

18th April 2019

23rd May 2019

VOLUNTEER PROGRAMME

Our volunteer staff distribute food and necessities to five families, twice a month. This is an ongoing philanthropic project that underscores our commitment to giving back to society.

Twice a month

ZIARAH PROGRAMME

This visit took place at Kuala Terengganu Specialist Hospital (KTS) and it was one of the Syariah & Syakhsiyah Department initiatives to directly approach and provide guidance on Ibadah in the Islamic context. The team advised and gave proper instructions on few activities including ablution, tayammum and how to perform solat during sickness condition.


ANNUAL REPORT 2019


9th August 2019

AGREEMENT – TDMP WITH CONCORD BIOTECH SDN. BHD.

TDM Berhad announced that its wholly owned subsidiary, TDM Plantation Sdn. Bhd. had entered into a “Build-Own-Operate and Transfer” (BOOT) with Concord Biotech Sdn. Bhd. (CBSB) for the development of Biogas Plants with power generation facilities at two of our Palm Oil Mills. At the same time, Kumpulan Ladang-Ladang Trengganu (KLLT), another wholly owned subsidiary of TDM had also entered into a sub-lease agreement with Concord Biotech Sdn. Bhd. (CBSB) for leasing of the site for the purpose of development and operating the Biogas power generation plant. This agreement is a platform to support the Value Creation Plan (“VCP”) and Business Development Plan (“BDP”).

QURBAN & AQIQAH WORSHIP PROGRAMME

Both events were conducted at Surau Sungai Tong, Setiu, Kuala Terengganu with involvement of the TDM Group staff who teamed up for the success of the programme. This annual event aims to strengthen relationship between the staff of the TDM Group and communities in the surrounding areas while performing our religious obligation.

12th August 2019

54TH ANNUAL GENERAL MEETING

The 54th Annual General Meeting (AGM) was held at Primula Beach Hotel with a few matters were at the centre of discussion. The shareholders approved 12 resolutions and 1 special resolution at the AGM.

HARI RAYA AIDILFITRI CELEBRATION TERENGGANU 2019

Terengganu Government Secretary's Office organised this state-level celebration to build a closer relationship between the government and the people of Terengganu. TDM showed our full support to the State Government by joining this programme and celebrated Hari Raya Aidilfitri happily with all local citizens who were present.

17th June 2019

28th May 2019

CALENDAR OF EVENTS


TDM BERHAD


CALENDAR OF EVENTS

TERENGGANU BEACH CARNIVAL 2019 “PROGRAM JOM BERSIH PANTAI”

TDM Berhad continues to show its support for programmes that focuses on nature and environmental sustainability. Organised by the Terengganu State Tourism Department, this programme was held at Pantai Batu Burok, Kuala Terengganu.

MALAYSIA DAY SPORT – ORGANISED BY MPKK BT NENAS AND LADANG FIKRI & STPOM

To promote a harmonious relationship with surrounding communities, the staff from Fikri Estate collaborated with MPKK Bt Nenas to organise a sports day in conjunction with Malaysia Day. The event saw tremendous participation and all of them were very happy to be part of this joyful event.

INDEPENDENCE MONTH PROGRAMME – BEDAH BUKU: BICARA PATRIOTIK : “ORANG TERENGGANU, ASAL USUL, ARUS HIDUP & ARAH TUJU”

TDM Berhad held the first and one of a kind programme in the month of August to celebrate Independence Day where the Kuala Terengganu Specialist Hospital lobby was chosen as the venue. The intrinsic nature of this programme was to share historic information of Terengganu such as the origin of its people which was delivered by a well-known and reputable scholar Professor Dato’ Dr Mohamad Abu Bakar. In continuing the success of the event, a similar programme under the theme “Menjulang Peradaban” was initiated with various topics focusing on history, language and culture on the 3rd week of every month at the same venue.

18th August 2019

11th September 2019 16th September 2019


ANNUAL REPORT 2019


MANAGEMENT DISCUSSION AND ANALYSIS

TDM is a producer of certified sustainable palm oil (CSPO), and we have oil palm plantation and milling operations in Terengganu, Malaysia, and Kalimantan, Indonesia. The Group has 16 oil palm estates with a total planted area of 42,022 hectares (Ha) (31,295 Ha in Terengganu and 10,727 Ha in Kalimantan).

TDM owns two 60-metric tonnes (MT) per hour palm oil mills in Terengganu (Sungai Tong and Kemaman) and a 60 MT per hour mill in Nanga Pinoh, Kalimantan with a combined annual capacity of 900,000 MT of Fresh Fruit Bunches (FFB).

In the Plantation industry, sustainability is key to long-term growth. We are proud to be certified by the Roundtable on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO).

Higher plantation productivity

1

Growth in planted areas

2

Higher mill throughput and productivity

3

Younger tree profile in Terengganu estates

4

PLANTATION

BUSINESS CREATION PLAN

AND VALUE CREATION

PLAN

“ASSALAMUALAIKUM WARAHMATULLAHI WABAROKATUH AND SALAM SEJAHTERA.”

ZAINAL ABIDIN BIN SHARIFFGroup Chief Executive Officer

Future Oil Palm Generation


TDM BERHAD



BUSINESS OBJECTIVES AND STRATEGIESThe Group continues to prioritise sustainable and profitable growth in both our core businesses of Plantation and Healthcare. Similar to all businesses, the Group is aware that its ability to achieve these objectives are influenced by both external as well as internal factors. While some external factors are beyond our immediate control, such as weather, commodity prices and currency fluctuations, there are many other factors which we have a direct influence on.

TDM is a provider of community-based healthcare, with four medical facilities under our wing. Two are located in the Klang Valley – Kelana Jaya Medical Centre (KJMC) and Taman Desa Medical Centre (TDMC), and the other two are located on the East Coast – Kuala Terengganu Specialist Hospital (KTS) and Kuantan Medical Centre (KMC).

We have positioned our hospitals in a niche healthcare industry by differentiating our market from the tertiary healthcare centres. As a community-centric healthcare provider, we strive to provide our services with affordable healthcare in a convenient setting.

As a secondary healthcare provider, our hospitals are equipped with the latest technology and operated by a team of medical specialist. With a total of 407 beds, our facilities offer a full range of essential services including general medicine, paediatrics, orthopaedics, general surgery, radiology, obstetrics, gynaecology, ear, nose and throat (ENT), dermatology, ophthalmology, urology, anaesthesiology and gastroenterology.

Higher bed capacity

1

Introduction of new medical modalities and

related services

2

Higher bed occupancy rate

3

HEALTHCARE

BUSINESS DEVELOPMENT PLAN

As such, the Group has concentrated its efforts on managing the factors that are within its control. We are working on improving efficiencies and becoming output driven. In endeavouring to achieve our ambitions, the Group formulated both the Business Development Plan (“BDP”) and Value Creation Plan (“VCP”). These plans focus on significant KPIs that assist in achieving our potential. Strategically, our approach is to create and unlock value from our existing assets, while adding and acquiring new assets through thoughtful planning.

All our hospitals are equipped with the latest technology and operated by a team of medical specialist


ANNUAL REPORT 2019



PLANTATION

PLANTATIONThe Group is driven to be the leading producer of certified sustainable palm oil in the East Coast. Recognition by both the MSPO and RSPO is testament to our commitment to sustainability and strengthens our credentials as a good corporate citizen. Certified Sustainable Palm Oil (CSPO) is also highly valued by the market, and thus we are able to earn a premium of between USD20-30 per MT from the sale of CSPO.

Under the VCP, we have set a higher sales target for CSPO and certified sustainable palm kernel (CSPK) from the 50% achieved in 2019. In managing the risk of high inventories, the Group has sought long-term arrangements to secure placements for our products.

To further maximise the value of our assets, the Group aims to optimise operations at its plantations and mills. This includes rejuvenating its plantations by planting new trees with quality seedlings, while upgrading the facilities in the mills to increase efficiency.

Through the BDP, the Group seeks to improve the age profile of its Terengganu estates. Taking cognisance that our estates are ageing, the Group has scheduled a replanting programme in view of rejuvenating its plantations and increasing the yield of Fresh Fruit Bunches (FFB). We forecast that by 2024, about 40% of our estates would consist of young prime trees.

In furthering our expansion programme, the acquisition of Ladang Bukit Bidong in Setiu, Terengganu, spanning 2,594.50 Ha, is a strategic decision as the oil palm estate is planted with trees ranging from two to twelve years old.

In managing costs, the Group began the divestment processes on its Kalimantan operations as it continues to incur losses. The Group will continue to rehabilitate and manage the Kalimantan plantation, and will make the relevant announcements in compliance with all applicable rules, in the event of any material developments.

Highlights:

Planted Landbank42,022Ha

Palm Oil Mills

3

Recognition by both MSPO and RSPO

“Palm oil is Malaysia's seventh biggest export, and in 2019, total oil palm product exported rose by 12% to 27.86million MT.”

Oil Palm Rejuvenation


TDM BERHAD



REVIEW OF OPERATIONSThe prices of CPO and palm kernel (PK) continued to slide during the year in review, impacted by several factors beyond the Group’s influence, such as the US-China trade war and a volatile commodity market, especially crude oil. As more than 80% of the palm oil Malaysia produces is exported, global issues can significantly impact the prices of CPO and PK.

Despite the global challenges, revenue from the continuing Group’s plantation division remained at RM188.4 million as compared to previous year. The Group total planted area currently stands at 42,022 Ha, which is about 4.5% less than the 43,991 Ha planted in 2018. This reduction is attributed to fires in the Kalimantan plantation, which affected about 2,000 Ha of planted area. Whereas the remaining 71% of planted hectarage located in Terengganu, remain unchange since last year.

To bolster the productivity of our plantations, the Group introduced the “15 Best Agriculture Practices for Yield Improvement” initiative and the “Oil Extraction Rate (OER) Enhancement Programme” in 2019. These initiatives were carried out to meet our Vision 20:22, where we aspire to achieve yield of 20 MT of FFB per Ha and 22% OER.

Quality Inspection


ANNUAL REPORT 2019



Diving deeper into the implementation of the Group’s OER Enhancement Programme, we carried out a review of the Estate/Mill Liaison Committee and upgraded them into a Strategic Operating Unit for better synergy and focus. As a result of these programmes, we achieved an OER of 19.68%, which is 0.36% higher than the 19.32% achieved in the previous year. The Group’s efforts to observe strict crop quality measures to increase OER have also resulted in a reduction in quality claims by 99% in FY 2019.

Consequently, total production of our Malaysian plantations for 2019 increased by 15.57% to 83,843 MT of CPO from 72,550 MT the year before. FFB production was also up by 6.77% to 398,475 MT against 373,213 MT in 2018 leading to an increase of yield per Ha of 4.33% and a reduction in net production cost of 7%. To supplement our FFB production, the Group purchased crops from neighbouring estates and smallholders, increasing our outside crop purchases to 27,577 MT in 2019 against 2,385 MT in 2018.

In support of the Group’s continued growth, the two existing mills in Malaysia have been upgraded to increase efficiency and are now equipped with a new vertical clarifier tank and continuous sterilizer, digester and post heater cooker. The Group has also continued to focus on its human capital, ensuring that top priority is given to Occupational Safety and Health requirements and practices. This has yielded positive results, with zero fatalities and a low accident rate recorded in FY2019.

Healthy seedlings at Tayor estate nursery


TDM BERHAD



REPLANTING FOR THE FUTURESince 2012, the Group’s estates carried out replanting programmes to improve its palm age profile. It is a re-investment that is crucial, as approximately 46% of the palms in our estates are above 20 years old. We recognise the fact that our estates are ageing, with an average palm age of 15.79 years in 2019, and look forward to lowering the average age to 14.31 years in 2020 and 12.77 years in 2024. With an improved age profile, where about 40% of the Group’s estates would consist of young palms, we expect our FFB yield to increase exponentially.

This on-going replanting exercise not only improves the age profile of our estates, but also allows estates to learn from past mistakes by redesigning field infrastructure and preparing for the use of the latest technology and industry know-how. Using the Geographical Information System (GIS) for field designing, improvements were made to the layout of the replanting area in the estates for optimum adoption of future mechanisation and efficient field operation.

In addition, the planting material used in the replanting is a superior variant with potentially higher yield. Coupled with good agriculture practices and higher palm density per Ha, the aim is to achieve early maturity and higher yields, earlier, from younger trees. However, it must be noted that the replanting process will take time as old trees need to be taken down, while young ones need to mature. The Group expects production yield to be on a downtrend until 2022, and to climb steadily after.

To aid the improvement of the Group's age profile, we are in the process of acquiring a 70% stake of THP-YT Plantation Sdn. Bhd. from TH Plantations Berhad. This acquisition has given us access to Ladang Bukit Bidong located in the district of Setiu, with an oil palm estate that covers 2,594.50 Ha and an average age profile of nine years.

In a separate development, the Group entered a 21-year agreement with Concord Biotech Sdn. Bhd. to develop and operate biogas power generation plants at two of our palm oil mills. Under this agreement, we will supply palm oil mill effluent (POME) to Concord Biotech Sdn. Bhd to generate more than 4 megawatts of electricity per hour, which in turn will be sold to Tenaga Nasional Berhad (TNB). Construction work will commence in the second quarter of FY2020. This initiative will kickstart the Group’s downstream ventures for kernel crushing, greener energy usage and will also complement our future mini-biodiesel plant as outlined in our Plantation Business Plan.

OUTLOOKThe Group is optimistic about the long-term fundamentals of the industry and will remain focused on improving productivity and optimising production cost. We are committed to our sustainability agenda to ensure that our growth benefits the people, planet and stakeholders.

CPO83,843(FY18: 72,550)

PK19,617(FY18: 17,308)

Pre-Nursery at Tayor Estate

PLANTATION STATISTICS 2019HECTARE (Ha)Mature Area Immature Area35,925 6,097(FY18: 34,633) (FY18: 9,358)

PRODUCTION (MT)FFB401,864(FY18: 375,295)

RATEOER KER19.68% 4.61%(FY18: 19.32%) (FY18: 4.61%)

AVERAGE PRICE (RM)CPO PK2,129 1,318(FY18: 2,313) (FY18: 1,955)


ANNUAL REPORT 2019



HEALTHCARE

HEALTHCAREBy positioning our hospitals as secondary care hospitals, we are steering our ambitions to becoming a leading community healthcare provider. This approach carves a niche for the Group as it avoids competing head on with tertiary healthcare centres.

The Group is also extracting further value from its healthcare assets with the establishment of Centres of Excellence to focus on the needs of the local community as well as to promote the skillsets of our specialists. To further enhance our business development plan for healthcare, new service modalities has been introduced in our hospitals. We have started a Catheterization Laboratory (Cathlab) in KMC and plan to open another in KTS soon.

In terms of expansion, the Group has plans to move KJMC and TDMC into purpose-built facilities. Both hospitals are located in mature and dense neighbourhoods, and have a relatively small capacity of beds at 44 and 53 respectively. They are also housed in renovated blocks of

shoplots, which makes it challenging to put in place expansion plans. Moving into a purpose-built facility would allow the Group to increase the bed capacities in the two hospitals, as well as introduce more medical service modalities.

In executing this, the Group will adopt an asset-light approach by leasing the hospital buildings and equipment from the asset owners, thus ensuring it has a healthy cash flow to sustain overheads during the initial stage of operations. This provides the Group capacity to look into other business and investment opportunities.

The Group is also actively seeking to add more hospitals to its portfolio, either by setting up new hospitals or via acquisitions of existing ones. We have since identified several locations in the East Coast for new hospitals in line with the Group’s target to double its bed capacity by 2024 through expansion of

Highlights:

Hospital Beds407

The average stay of between

3 & 4is ideal for us as we seek a higher turnover of beds.

days

All our new facilities are designed to be single-bedded rooms.

“Providing quality healthcare in an affordable and convenient setting.”

More medical service modalities will be introduced in our hospitals


TDM BERHAD



brownfield and greenfield hospitals. As part of this initiative, the Group is planning to acquire a Specialist Hospital in Sabah.

REVIEW OF OPERATIONSThe Group’s Healthcare Division continues to uphold its value proposition “Providing quality healthcare in an affordable and convenient setting”. With four hospitals covering Kuala Lumpur, Selangor, Terengganu and Pahang located within mature neighbourhoods, the Group is able to offer convenient locations for patients to undergo check-ups and seek treatment.

Positioning itself in the middle of the market in terms of its pricing strategy, the Group is continually looking to increase and enhance medical facilities to add further value for our customers. For maximum comfort and to ensure optimum privacy for inpatients, all our new facilities are designed as single-bedded rooms. In 2019, the number of operating beds increased by 11% to 336 beds, against 303 beds in 2018.

Coupled with the wide array of services available at our hospitals, these efforts have translated into a strong performance for the year with a 13% growth in revenue. In addition, the Healthcare Division also registered a higher average patient bill of 6% in 2019, driven by an improved case-mix of patients from the opening of Cathlab at KMC and higher surgery cases.

Growth in revenue was contributed by the larger number of inpatients which increased by 8% to 25,431 and outpatients which grew by 1% to 169,820. The higher number of inpatients was largely driven by the Group’s approach to turning over beds at a faster pace. With an average stay of between 3 and 4 days, the Group is able to provide its services to more patients, while discharging patients who need not prolong their stays unnecessarily.

“TDM continues to expand its medical facilities and extend the scope of services for the benefit of the communities we serve.”


ANNUAL REPORT 2019



BUILDING FOR FUTURE GROWTHKuala Terengganu Specialist HospitalThe new KTS in Kuala Terengganu is a prime example of what the Group intends to achieve. Previously a 33-bedded hospital, KTS moved to its newly built facility in 2018. The eye-catching building accommodates 126 single suites, 5 Operating Theatres, 2 Labour Suites, Pathology Laboratory, ICU/HDU and 20 private clinics to host a wide range of specialists.

It is also backed by a comprehensive Radiology Centre, a well-equipped Physiotherapy & Rehabilitation Centre, a wellness centre complete with its corporate lounge, fully equipped in-house kitchen and 24-hour Accident and Emergency Services. Since January 2019, KTS has also started to operate its in-house kitchen for inpatients and outpatients.

Concurrently, KTS has launched its home care service that provides continuous care for post-surgery, diabetic care, insertion and removal of neso-gastric tube, stoma care and many more. In December 2019, KTS achieved another milestone when it was certified as the first private hospital in Terengganu with Baby Friendly Certification. This accreditation is a global initiative by the World Health Organisation (WHO) and United Nations International Children’s Emergency Fund (UNICEF) to promote an ecosystem that supports breastfeeding.

Apart from the baby friendly certification, KTS additionally introduced Basic Life Support (BLS) training to the public in the surrounding areas of Terengganu. The programme train individuals to assist patients who are experiencing respiratory arrest, cardiac arrest, or airway obstruction in emergency situations.

Our Other HospitalsThe Group constantly strives to fulfil the needs and demands of local communities through the expansion of its facilities. On 11 April 2019, Kuantan Medical Centre (KMC) launched its newly built Cathlab and received positive response from the community. The lab contains diagnostic imaging equipment to diagnose and treat heart conditions using catheters instead of surgery. Through cardiac catheterization, recovery time is usually shorter than surgery as it does not require a large incision to open the chest cavity.

As heart disease remains the leading cause of death among Malaysians, regular screening, early detection, and treatment is crucial to avoid cardiovascular complications. Since the Cathlab commenced operations, it has performed more than 300 angiograms and angioplasties. With the recent success of Cathlab services at KMC, the Group is in the planning process of opening our second Cathlab at KTS.

Second edition of Customer Experience Programme (CxP 2.0) has been rolled out to transform and improve service culture at our hospitals


TDM BERHAD



KMC also acquired a new 1.5 Tesla MRI system to replace the 0.3 Tesla scanner. The new system with its powerful magnet, high speed scanning technology, updated software and advanced imaging protocols drastically reduces scanning time and produces images withexceedingly high degree of details and clarity. This allows up to 40% more examinations to be conducted per day.

At the backend, KMC applied an energy management system which resulted in utility costs reduction by as much as 20%. In addition, KMC was appointed as a panel hospital to Alliance Steel Sdn. Bhd., which has an approximately 6,000 employees.

In the Klang Valley, Kelana Jaya Medical Centre (KJMC) and Taman Desa Medical Centre (TDMC) are fully equipped with modern technology and manned by a team of top doctors, nurses and paramedics. In 2019, TDMC completed a turnaround to become a profit-making company following a revenue increase of 30%, as the hospital combined its strengths with an aggressive marketing strategy.

Additionally, KJMC introduced a home physiotherapy service, which services patients within a 30km radius of the hospital. The services and treatment cover sports injury, pre and post-surgery exercise, stroke rehabilitation, respiratory and many more.

OUTLOOKThe Group is optimistic that the Healthcare Division will continue growing, supported by capacity expansion and the introduction of new services. Against a volatile economic environment and with the entry of new players into the industry, challenges will continue to weigh on the Healthcare sector. The Group remains cautiously optimistic about achieving satisfactory operating performance in 2020.

REVIEW OF FINANCIAL PERFORMANCERevenueThe Group posted a higher revenue RM425.1 million for the Financial Year Ended 31 December 2019, an increase of 7% over the RM397.9 million recorded the year before.

Revenue from the continuing operations of Plantation Division remained at RM188.4 million. CPO sales volume grew by 14% to 85,016 MT, while PK grew by 11% to 19,365 MT. However, the double-digit volume growth was offset with lower CPO and PK price by 8% and 33% respectively.

In the Healthcare Division, revenue grew by RM27.2 million or 13%, from RM209.5 million to RM236.7 million. This growth is driven by a higher number of inpatients, which rose up by 8%, as well as higher revenue per inpatient, which increased by 8%.

Profits/LossesThe Group recorded a Loss Before Tax (LBT) from continuing operations of RM40.4 million, as compared to RM37.6 million the year before. Correspondingly, Loss After Tax (LAT) from continuing operations was RM35.8 million, lower by 0.5% or RM0.2 million from RM36.0 million.

However, our Plantation business from continuing operations registered losses of RM24.5 million in 2019 and RM12.2 million in 2018 respectively mainly due to high depreciation and amortization arising from the adoption of MFRS framework whereby our bearer plants have now depreciated over its useful lives. Previously under the FRS framework, the plantation development expenditure was recorded under capital maintenance method whereby it was not depreciated. Whereas for replanting expense it was expensed-off in the year it is incurred.

The change in the accounting treatment of bearer plants under the two different accounting frameworks has resulted in significant change to our plantation division’s financial performance. While this is accurate under the MFRS framework, it does not reflect the true performance of our plantation business. Therefore, to enable a fairer review of the operating performance, the Group has always referred to Adjusted EBITDA, to ensure that we exclude any one-off impact including the effect arising from the above change in the accounting framework.

Group Revenue

Revenue

2019

2019

2018

2018

RM425.1 Million

RM397.9 Million

+7%

Plantation Healthcare

RM188.4 Million RM236.7 Million

RM209.5 Million

0%

+13%

RM188.4 Million

For the second consecutive year, the Healthcare Division recorded higher revenue than the Plantation Division.


ANNUAL REPORT 2019



Adjusted EBITDAAdjusted EBITDA from continuing operations offers a more accurate reflection of TDM performance in particular the operating profit. For the year in review, the Group achieved an Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) of RM63.6 million compared to RM35.4 million in the previous year which was contributed by Plantation and Healthcare divisions as well as improvement in investment holding activities.

During the year, the Plantation Division recorded an Adjusted EBITDA of RM47.7 million despite the challenges of weak palm oil prices. Meanwhile, the Healthcare Division registered an Adjusted EBITDA of RM29.2 million during the year, an increase of 18% compared to the previous year.

Similarly, the Group generated a healthy cash flow from operation of RM39.4 million in the current year, compared to net negative cash flow used in operating activities of RM9.2 million in the previous year.

During the year, the Group used RM21.0 million for investing activities compared to the cash inflow of RM349.7 million generated from the redemption of fixed income securities of RM405.0 million in the previous year.

The Group recorded a net cash flow used in financing activities of RM2.8 million in the current year, mainly on repayments of loans and borrowings of RM83.5 million, with drawdowns of term loans of RM56.6 million. Meanwhile, for the financial year ended 31 December 2018, the Group used RM374.6 million on financing activities mainly due to settlement of IDR Notes of RM374.8 million.

The Group recorded cash and cash equivalents balances of RM54.6 million at the end of the year, or higher by 40% compared to RM39.0 million in the previous year.

Market CapitalisationShare price increased from RM0.17 in Dec 2018 to RM0.42 per share inDec 2019, an increase of 147%.

The Shareholders’ Funds The Group recorded shareholders’ funds of RM769.3 million for the year ended 31 December 2019, compared to RM949.1 million in the previous year mainly due to lower retained earnings from losses related to the proposed disposal of our Kalimantan assets. However, it is very important to note that the proposed disposal will help to improve our earnings as the investment has recorded losses in the previous years. It will also help to improve our financial position as the disposal proceeds will be partly utilised for settlements of all borrowings related to the Kalimantan assets.

The Group’s Total Assets The Group recorded total assets of RM1.7 billion compared to RM1.8 billion in the previous year.

The lower total assets was due to the impairments in relation to assets held for sale in respect of Kalimantan assets, as the assets are carried at lower of its carrying value and fair value less cost to sell.

Net Assets per Share The Group recorded net asset per share of RM0.44 compared to RM0.55 in the previous year due to the proposed disposal of Kalimantan assets.

DividendThe Company is not declaring any dividend in respect of financial year ended 31 December 2019.

Tax The Group recorded income tax credit of RM4.5 million (FY2018: RM1.6 million).

Share Price

DEC2019

DEC2018

RM0.42

RM0.17

+147%

Group Adjusted EBITDA

Adjusted EBITDA

2019

2019

2018

2018

RM63.6 Million

RM35.4 Million

+80%

Plantation Healthcare

RM47.7 Million RM29.2 Million (RM13.3 Million)

RM54.0 Million RM24.7 Million (RM43.3 Million)

-12% +18% +69%

Investment Holding/ Others


TDM BERHAD



RISK MANAGEMENT DISCUSSION AND ANALYSISThe enhancement of Enterprise Risk Management (ERM) processes and risk assessment have improved the efficiency of risk management, which is central towards achieving the longer-term success of the Group. The ERM enhancement process involved a number of initial steps, illustrating the Risk Management Department’s efforts to work closely with stakeholders to integrate risk management within the fabric of the Group’s key business processes, these steps including:

• Risk awareness sessions for the Management team, including key staff to enhance their knowledge on ERM, to understand risk management process and lessons learned from other organisations’ risk management experience.

• Interview sessions were also carried out with the Management and selected key staff to further identify the risks faced by the Group.

Group Cash and Bank balances

2019

2018

RM90.3 Million

RM75.4 Million

+20%

Integrating risk management with key business processes requires building increasingly mature ‘outward’ and ‘inward looking’ processes in order to respond proactively to the key risks at all levels of operations, bearing in mind their often-changing nature. By doing so, the Group can successfully execute its ambitious new Strategy for moving forward in the year 2020 and beyond.Thus, to support this, our key ERM activities in 2019 included:a. Organised Awareness programmes, Risk Assessment and Risk Action

Plan workshops among subsidiaries within the Group.b. Monitored the implementation of the action plans as stated in the

risk assessments of extreme and high risks. This enabled us to focus on major target areas instead of putting effort on every modest risk that doesn’t represent a big threat.- Followed up with the risk representatives every quarter - Site visits and interview sessions whenever necessary- Reports on a quarterly basis to the Board

c. Obtained the result of the effectiveness of risk control self-assessment from every business segment and the status of the risks action plans progress.

d. Evaluation of the risk after determining the overall likelihood of risk occurrence combined with its overall magnitude of impact, together with the progress updates of the risks action plans every quarter and the assessment of the effectiveness from the existing key control in each risk.

These activities have been supported with the determination of significant risks that could impact the Group. These risks were identified through a series of risk assessment exercises that were conducted where all identified risks were individually assessed and ranked as either extreme, high, medium or low. The Group also identified the likely impact of the identified risk, the potential frequency of the risks occurring and effectiveness of the internal control system currently in place to manage these key risks.

The deliverables included in this report have been discussed with the Management team of the Group and the risks identified represents Management’s view on the critical focus areas of the Group. The on-going identification and the management of risks remain the responsibility of the Board and Management of the Group.

Finance CostsThe Group’s total finance costs for the year in review increased to RM23.5 million from RM21.3 million the year before.

Gearing and Debt Rationalisation Exercise The Group’s loans and borrowings reduced by RM17.0 million to RM465.8 million as at 31 December 2019, compared to RM482.8 million in the previous year.

Capital Management Plan (CMP) The Group recorded healthy cash flow from operation of RM39.4 million in Financial Year 2019 and this reflects that our businesses are generating good cash flows to support our investments, financing as well as future dividend payments.

Cash and bank balances of the Group improved by 20% or RM14.9 million to RM90.3 million from RM75.4 million.

The management will continue to manage the Group’s cash flow and capital resources prudently to ensure sufficient funds for operating requirements and capital expenditures.


ANNUAL REPORT 2019



STRATEGIC RISKS1

The price trends of palm oil affecting local growers are influenced by demand and supply of oil and fats and other technical factors, including political crisis and weather conditions. The volatility of global oils and fats demand such as the slowdown of palm oils and exports to China since June 2018 will influence the price of Malaysian palm oil. Only 18% of Malaysian palm oil production is consumed locally and the balance is exported to India, China, European Union, Africa and the Middle East. Intense competition from other vegetable oils will also affect the price of Malaysian palm oil. The European Union, in April 2017, proposed to ban usage of biofuels by 2020 thus impacting Malaysian palm oil marketability. In addition, there is increasing pressure from non-governmental organisations (‘’NGOs’’) and more stringent requirements from the Roundtable on Sustainable Palm Oil (“RSPO”).

Lack of competitive advantages could result in potential losses due to competitive pressure from other healthcare providers. Without a competitive advantage in our healthcare business, it could lead to failure in achieving the targeted profit and creating a sustainable healthcare business. Competitive advantage is simply a factor that distinguishes our healthcare from others and makes customers more likely to choose our products over the competitors.

Mitigation Plans

Mitigation Plans

• Prudently identifying expenditure and reviewing work that are less critical in the operation of the estate and mill in order to reduce cost.

• Development of Integrated Milling from waste products.• The Group to carry out and complete replanting as scheduled.

• Strengthening our patient proposition by enhancing our capabilities and boosting our capacity.

• Marketing strategies are communicated to all relevant staff to ensure staff are well-informed and able to promote to customers / clients. Additional and clearer marketing messages are prepared to promote the desired ‘Hospital Brand’.

• Creating new branding strategies to stand out in the marketplace such as user-friendly website and improving on web content. The Group initiated the improvement of branding positioning through differentiating our brand in the healthcare industry (Community and single bedded).

• Ongoing improvement and upgrading of existing facilities e.g. upgrading of patients’ rooms.

• Community outreach programme is carried out as part of marketing initiatives.

Competitive Environment

Global Macro Environment


TDM BERHAD



HUMAN CAPITAL RISK2

Loss of Key Personnel may cause disruption to the company’s strategic plans and growth, resulting in the loss of competitive advantage. It may also impact recruitment and training costs of new employees whilst affecting productivity.

Mitigation Plans• Establishment of a close supervision system, in which supervisors and

senior management and non-management level employees participate in coaching & mentoring of junior staff.

• Establishment of a performance management system and engagement with colleges or universities:a. Staff performance review is carried out on an annual basis, and

rewards are based on staff performance. To enhance the employee competency level, in-house and public training development courses have been offered to furnish the soft skill and technical capability.

b. Engagement with colleges or universities to ensure continuous supply of manpower.

• Hiring of the best candidates is based on the established recruitment policy, which acts as a guideline to ensure that the candidate fits with the organisational values and goals.

Loss of Key Personnel

OPERATIONAL RISKS3

Due to stiff competition in the market, the healthcare business could face challenges in attracting and retaining consultants, which could disrupt the day-to-day operation e.g. long waiting time that eventually affect the image of the hospitals as well as the Group resulting from loss of customers.

Mitigation Plans• Visiting consultants are hired to ensure sufficient resources through

advertisements in the website and on online employment marketplace Jobstreet when there is a requirement.

• Attractive remuneration packages and benefits to consultants and immediate family members are reviewed on a periodical basis, in line with benchmarks against industry competitors.

• Promoting consultants by involving them with talks, seminars and public forums.

Inability to Attract or Retain Consultants

The plantation’s inability to meet the requirements from the mills to produce an expected amount of CPO and PK due to low tonnage or quantity of FFB harvested. This will affect the forecasted amount of CPO produced due to insufficient quantity supplied to the mill for processing. The Group would need to purchase FFB from external parties in order to meet the customers’ demands.

Mitigation Plans• Enhancing operation efficiency by revising or improving harvesting

system (D10).• Focusing on Rejuvenating Plantation Age Profile by adherence to Long

Range Replanting Programme and High-Density Planting.• New quality of planting materials.

Low Yield of Fresh Fruit Bunches (FFB)


ANNUAL REPORT 2019


COMPLIANCE RISK5

Legal suits may be initiated by third parties such as regulatory bodies, patients, public, suppliers, etc in the course of their day-to-day operations which could result in adverse financial and reputational impact. It is therefore important to have proper records and custody of all correspondences, documents and evidence to defend the Company’s interest or initiate legal action.

Mitigation Plans• Preparation of standard operating procedures (“SOP”), circulation of

the approved SOP and developing specific parameters for contract management, including the process of contract preparation, contract review and approval, non-financial authority limit, stamping matters, safekeeping of legal documents, solicitor appointment and evaluation, and litigation process.

• Formalisation of Group-level policy on matters relating to the finalisation and termination of contracts with the consultants.

• Study the possibility of renegotiating the terms and conditions for unfavorable contracts with the consultants.

• To document ‘lessons learnt and pitfalls to avoid’ from litigation cases for future reference and improvement.

Legal Risk

FINANCIAL RISKS4

A combination of factors which includes internal and external elements such as increasing operational costs and the market volatility may have contributed to the liquidity risk of the Group.

With continuing fluctuation in Crude Palm Oil price as well as global economic uncertainty, the Group has to ensure all liquidity requirements are met without affecting its operations and financials.

Mitigation Plans• For the plantation division, the focus primarily is on productivity

improvement programme to improve our profitability and cash flow generation. Hence, we have embarked on replanting programme since year 2012 which will be critical to increase productivity from the old palm and low productivity areas.

• For healthcare division, the focus is on the capacity and capability expansion programme where we continue to increase our operating bed capacity in our facilities and to introduce new services such as catherization lab to improve our cash flow generation.

• At the Group level, we have embarked on monetisation and fundraising programmes to increase liquidity through sale of idle asset (Pulau Perhentian land) and the Revolving Credit Facility-i from our financier as well as the advance payment arrangement from long term supply contracts with our buyers. In addition, Group Centralised Treasury function will be implemented in 2020 as part of our efforts to improve visibility of the Group liquidity as well as to maximise income from our funds.

Liquidity Risk

The success of an investment does not depend on the evaluation process, but also on the close monitoring of investments such as our palm oil operations in Terengganu and Indonesia and healthcare operations. This will result in the ability to achieve the expected returns on investment, Net Asset Value and turnover of the Group.

Mitigation Plans• Developed specific business recovery plans (with timeline) for the

identified companies that did not meet industry benchmark ratios. The proposed business recovery plans will be submitted to the Boards of the respective companies for approval and implementation.

• To enhance the investment evaluation process from second feasibility study following investment (approximately after two years of initial investment) and evaluation, including test assumptions for any variation from original assumptions used during the initial evaluation process. Results of the study will be used to enhance the investment evaluation process.

Investment Monitoring Risk



TDM BERHAD


BOARD OF DIRECTORS’ PROFILE

Board Committees:• YM Raja Dato' Haji Idris is not a member of any Board

Committees of the Company

Working Experience and Occupation:YM Raja Dato' Haji Idris has acquired more than thirty (30) years of experience holding top management positions in various private limited, public listed and multinational companies.

From 1994 to 2000, YM Raja Dato' Haji Idris was with Siemens Group of Companies in Malaysia where he served as Managing Director of Nixdorf Computers Malaysia Sdn. Bhd. and also as the Executive Director of Siemens Nixdorf Information System (Malaysia) Sdn. Bhd. He was also a Non-Executive Director of Siemens Multimedia Sdn. Bhd. (an MSC Company) and from 1998 to 2000 assumed the position of Vice President at Information and Communication Network of Siemens Malaysia Sdn. Bhd.

He was the former Group Executive Director of TDM Berhad, a public listed entity owned by the Terengganu State Government from the year 2000 to 2004. He also served as the Executive Chairman of Virgo Tours Sdn. Bhd. from 2004 to 2006. YM Raja Dato’ Haji Idris was appointed as a Consultant at the Markfield Institute of Higher Education, Leicestershire, United Kingdom, a position he has held from 2006 to 2011.

YM Raja Dato' Haji Idris was on the board of Kumpulan Darul Ehsan Berhad (KDEB), the investment holding company of the State of Selangor, where he was appointed on 4 April 2011 and served as Chairman of KDEB's property development subsidiary,

Kumpulan Hartanah Selangor Berhad and Central Spectrum (M) Sdn. Bhd. His leadership qualities and attributes led him to hold a position as the Chairman of Kumpulan Perangsang Selangor Berhad, the flagship public listed corporation of the Selangor State Government, a role he served for seven years from 2011 until 1 June 2018.

On 10 August 2012, he was appointed as Chairman of Ceres Telecom Sdn. Bhd., and appointed Executive Chairman on 1 June 2018 till June 2019.

YM Raja Dato’ Haji Idris was appointed as a Director of Terengganu Incorporated Sdn. Bhd. (TI), the strategic investment arm of the Terengganu State Government on 11 June 2018.

YM Raja Dato' Idris was appointed as Chairman of TDM Berhad, a public listed subsidiary of TI from July 2018 and a few of its subsidiaries, namely TDM Plantation Sdn. Bhd., Kumpulan Medic Iman Sdn. Bhd., TDM Capital Sdn. Bhd., TDM Trading Sdn. Bhd. and Kelana Jaya Medical Centre Sdn. Bhd.

YM Raja Dato’ Idris currently is a board member of Perbadanan Kemajuan Iktisad Negeri Kelantan (PKINK), where he was appointed in January 2017 and also a member of the advisory board of Majlis Penasihat Ekonomi Negeri Kelantan (MPEN), which he was appointed to in October 2018.

He was also appointed as Chairman of Malaysia Rubber Export Promotion Council (MREPC) in May 2020.

Qualifications:• Post Graduate Certificate (PGC) in Strategic Management, University of Derby,

United Kingdom (UK)• Fellow of The British Computer Society (FBCS), UK• Fellow of The Chartered Management Institute (FCMI), UK

Other Directorship of Public Companies and Listed Issuers NIL

Number of Board Meetings Attended from 1 January 2019 to 31 December 2019

YM RAJA DATO' HAJI IDRIS RAJA KAMARUDINSMT DSISPGC FBCS FCMINon-Independent & Non-Executive Chairman

Gender Nationality Age Appointed as Director

Male British with Malaysian PR 67 30 July 2018

17/17


ANNUAL REPORT 2019



Board Committees:• Appointed as Member of the Board Risk & Compliance

Committee: 12 January 2020

Working Experience and Occupation:For over 30 years, YB Dato' Haji Zainal Abidin has held various positions that contribute to his broad understanding of the State. He started his career as Assistant State Secretary (Local Government II), Terengganu State Secretary's Office in September 1984. In July 1985, he served as Assistant State Secretary (Social Development, Welfare and Education), Terengganu State Secretary's Office.

He rose steadily through the ranks and built his experience while serving several State District Council and Land Offices such as Kemaman, Hulu Terengganu, Kuala Terengganu, Marang and Dungun from May 1986 until December 2001.

Thereafter, he was posted to the State Treasury Office as Head of Investment Unit from January 2002 to December 2006. He then appointed as President of Dungun District Council in January 2007 and President of Municipal Council Dungun from August 2008 until December 2010.

From January 2011 to May 2014, YB Dato' Haji Zainal Abidin served as Director of the State Sports Council. In June 2014, he returned to the State Secretary’s Office as the Chief Assistant Secretary, Local Government Division and subsequently appointed as Director, State Economic Planning Unit in May 2015.

The position was coupled with his role as Deputy State Secretary (Management) until 2016 when he assumed full responsibility of the position.

In May 2018, YB Dato' Haji Zainal Abidin was appointed as Director of Land and Mines Terengganu, a position held until his appointment as State Financial Officer in August 2019 todate.

Qualification:• Bachelor of Economics from Universiti Kebangsaan Malaysia



YB DATO’ HAJI ZAINAL ABIDIN BIN HUSSIN Non-Independent & Non-Executive Director


Male Malaysian 60 12 January 2020

Not applicable as he was appointed as director on 12 January 2020


TDM BERHAD



Board Committees:• Appointed as Member of the Audit Committee:

1 August 2018• Appointed as Chairman of the Nomination and Remuneration

Committee: 1 August 2018• Appointed as Member of Board Risk & Compliance

Committee: 1 August 2018 • Appointed as Chairman of the Board Tender Committee:

27 August 2018 (Relinquished his position as Chairman of Board Tender Committee: 7 April 2020)

• Appointed as Member of the Executive Committee (EXCO): 1 February 2019

Working Experience and Occupation:Haji Mazli Zakuan started his career as an Application Engineer with Antah Oil Tools & Services Sdn. Bhd. in 1993 and moved on to join Smith International Inc as a Field Engineer. With his considerable experience, knowledge and skills in the oilfield drilling sector, in 1997, he joint Nalco Exxon Chemicals as a Service Engineer and moved up to various management positions of the multinational company.

In 2003, he co-founded Maces Sdn. Bhd. which was the first Malaysian specialty chemicals Company for oilfield and water treatment. Acted as the Senior Vice President, Operation and later as Chief Executive Officer, his entrepreneurial venture has had him to subsequently co-founded PAV Oilfield Services Sdn. Bhd., another local company specialising in oilfield services.

Haji Mazli Zakuan was the former Deputy Chief Executive Officer of Perbadanan Kemajuan Iktisad Negeri Kelantan (PKINK) from 2016 until March 2018, where his role was to enhance the performance of PKINK towards spearheading the economic development of Kelantan. During this period, he served as a Director of various subsidiaries of the PKINK group that is involved in the plantation, properties development and financial services. As a company leader, he also oversaw the operations of a string of subsidiaries of PKINK and was entrusted as the Chairman of a Business Recovery and Continuity Team Committee.

Haji Mazli Zakuan is a registered engineer with the Board of Engineers Malaysia and a member of Society of Petroleum Engineers International since 1993 and 1995 respectively.

Haji Mazli Zakuan was appointed as a Director of Terengganu Incorporated Sdn. Bhd. (TI) on 11 June 2018. TI is the strategic investment arm of the Terengganu State Government. He was also appointed as the Corporate Advisor of Menteri Besar Incorporated on 7 June 2018.

Qualifications:• Undergoing Doctorate in Business Administration, Universiti Kebangsaan

Malaysia (UKM)• Master in Business Administration, Universiti Teknologi MARA (UiTM)• Bachelor of Engineering in Material & Mechanical Engineering, UKM

Other Directorship of Public Companies and Listed Issuers Eastern Pacific Industrial Corporation Berhad (EPIC), a public company


HAJI MAZLI ZAKUAN BIN MOHD NOORNon-Independent & Non-Executive Director


Male Malaysian 50 30 July 2018

17/17


ANNUAL REPORT 2019



Board Committees:• Appointed as Chairman of the Audit Committee: 1 August 2018

(Relinquished his position as Chairman of the Audit Committee on 30 August 2019 and remain as member)

• Appointed as Member of the Nomination and Remuneration Committee: 1 August 2018

(Resigned as member of Nomination and Remuneration Committee on 30 August 2019 and reappointed as member on 7 November 2019)

• Appointed as Member of the Board Risk & Compliance Committee: 1 August 2018

• Appointed as Member of the Board Tender Committee: 27 August 2018 and redesignated as Chairman on 7 April 2020

• Appointed as Member of the Executive Committee (EXCO): 1 February 2019

Working Experience and Occupation:Haji Burhanuddin Hilmi was appointed as Independent & Non-Executive Director on 30 July 2018 and redesignated as Non-Independent & Non Executive Director on 28 June 2019.

Haji Burhanuddin Hilmi, has wide experience in the audit industry and gained considerable insights on industries such as oil & gas, finance and manufacturing. He started his career as the Audit Senior, Audit and Business Advisory Service at Price Waterhouse (now known as PricewaterhouseCoopers [PwC]) from 1993 to 1996. He then became the Manager of the Assurance Division of KPMG, a position he held from 1998 to 2002.

In 2002, he established BH Consulting Sdn. Bhd. and acted as the Managing Director/Principal Consultant. He was primarily involved in assessing clients’ business viability and providing solutions to their business issues and challenges. He also conducted reviews on the effectiveness of the clients’ internal control systems and monitoring of clients’ investments.

From 2006 to 2013, he was the Group Chief Financial Officer of Composites Technology Research Malaysia Sdn. Bhd. (CTRM), a high technology company producing composite parts for Airbus and Boeing aircrafts. A Government-Linked Company under the Ministry of Finance, Inc until 2013 when it was acquired by DRB-Hicom Group.

With his in-depth knowledge and business insights, he was appointed as the Chief Financial Officer of Weststar Aviation Services Sdn. Bhd., a company specialising in offshore helicopter transportation service for numerous oil & gas majors operating in Malaysia, Thailand, Indonesia, and several African countries, from 2013 to 2015.

Thereafter, he was appointed as the Group Chief Financial Officer of Zetro Aerospace Corporation group of companies and Director of Chartridge Conference Company Ltd (UK) from 2015 to 2018.

Haji Burhanuddin Hilmi was appointed as a Director of Terengganu Incorporated Sdn. Bhd., the strategic investment arm of the Terengganu State Government on 24 June 2019.

He was also appointed as a member of the Malaysian Palm Oil Board (MPOB) in April 2020.

Qualifications:• Master of Business Administration (MBA) Majoring in International Business

University of Leeds, United Kingdom• Bachelor of Accounting (Hons), International Islamic University, Malaysia• Chartered Accountant (CA), Malaysian Institute of Accountants (MIA)• Certified Financial Planner (CFP) Financial Planning Association of Malaysia

(FPAM)

Other Directorship of Public Companies and Listed Issuers Eastern Pacific Industrial Corporation Berhad (EPIC), a public company


HAJI BURHANUDDIN HILMI BIN MOHAMED @ HARUNNon-Independent & Non-Executive Director



17/17


TDM BERHAD



1 August 2018• Appointed as Member of the Nomination and Remuneration

Committee: 27 August 2018• Appointed as Chairman of Board Risk & Compliance

Committee (BRCC): 1 August 2018 (Relinquished his position as Chairman of BRCC on 4 October 2018 and remain as member)

• Appointed as Chairman of the Executive Committee (EXCO): 1 February 2019

• Appointed as Member of the Board Tender Committee: 27 August 2018

Working Experience and Occupation:He was admitted to the Bar and became an Advocate and Solicitor in 2003 and started his work as Legal Assistant at Messrs Abdul Haris & Co. In 2004, he was admitted as Peguam Syarie in Terengganu.

He later joined Messrs Fariz Halim & Co as Legal Assistant and in 2005 he joined Messrs Khaled Jalil & Co as a Partner.

Currently, he is a Partner at Messrs Aziz & Co since 2006. He was also a part-time lecturer at the Faculty of Laws and Human Relations (FUHA), UniSZA from 2012 until 2019.

He was also appointed as a member of Marang District Council since June 2018.

Qualification:• Bachelor of Laws (LLB) Hons, International Islamic University Malaysia



MOHD KAMARUZAMAN BIN A WAHABIndependent & Non-Executive Director



16/17



ANNUAL REPORT 2019




4 October 2018• Appointed as Member of the Nomination and Remuneration

Committee: 4 October 2018• Appointed as Chairman of Board Risk & Compliance

Committee: 4 October 2018• Appointed as Member of the Executive Committee (EXCO):

1 February 2019• Appointed as Member of the Board Tender Committee:

7 November 2019

Working Experience and Occupation:Haji Najman is currently the Chief Executive Officer at Icon Futurehome Sdn. Bhd., the company which he co-founded in 2017. The company is involved in providing Smart Home Solutions as well as developing Artificial Intelligence Software products.

He started his career as a Marketing Manager at PSSSB, a subsidiary of Terengganu SEDC from 1992 to 1994. From 1994 to 1996, he was attached to Bumiputra Development Department, Maybank as Credit Officer.

Haji Najman then joined Kuwait Finance House (KFH) Ijarah House, a company specialising in Islamic Leasing financing for two years. Subsequently, from year 1997 to year 2000, he was the Assistant Manager at EON Bank Berhad.

From year 2000 until 2004, he assumed the position as Executive Director for TDM Trading Sdn. Bhd., a wholly-owned subsidiary of TDM Berhad which is involved in the trading of palm oil and palm kernel. During the same period, he was also given the task to oversee the overall operation of TDM Properties Sdn. Bhd.

Since year 2004, he has been the Executive Director for Significant Technologies Sdn. Bhd., a company involved in developing locally grown telecommunication products and solutions as well as providing ISO 17025 certified optical and electrical calibration services to local and multinational companies. The company also provides technical telecommunication training certified by Fiber Optic Association of America (FOA).

Haji Najman is also currently the Deputy President for Artificial Intelligence Society of Malaysia.

Qualification:• Bachelor of Science in Business Administration and Minoring in Economics,

Washington University, St Louis Missouri USA

Other Directorship of Public Companies and Listed IssuersNIL


HAJI NAJMAN BIN KAMARUDDINIndependent & Non-Executive Director


Male Malaysian 52 17 September 2018

17/17


TDM BERHAD



Board Committees:• Appointed as Chairman of the Audit Committee:

30 August 2019• Appointed as Member of the Nomination and Remuneration

Committee: 30 August 2019• Appointed as Member of Board Risk & Compliance

Committee: 12 January 2020• Appointed as Member of the Board Tender Committee:

12 January 2020

Working Experience and Occupation:Haji Azlan started his career as an Accounts Executive at Petronas Carigali Sdn. Bhd. from 1992 to 1993.

He then joined KPFB Holdings Sdn. Bhd. as an Accountant in 1993 until 1994. In October 1994, he joined Celcom Technology Sdn. Bhd. as an Accountant and subsequently promoted as Finance Manager. He was then transferred and promoted to Celcom Sdn. Bhd. as the Senior Manager / Head of Finance for the Shared Infrastructure Group, in 1997.

From 2001 to 2003, he was the Group Chief Financial Officer of Kumpulan Mediiman Sdn. Bhd. He then joined Malaysia National Insurance Berhad as Head of Risk Management from 2003 to 2005.

Thereafter, he was the Vice President Risk Strategy at Etiqa Insurance and Takaful Group from August 2005 to May 2010.

He was Associate Director of Risk Management, Syariah and Compliance at BSN Prudential Takaful Berhad from May 2010 to May 2011.

He was later duly appointed as the Chief Financial Officer of Kumpulan Darul Ehsan Berhad from June 2011 to January 2014.

From January 2014 to 31 July 2016, he was General Manager / CEO of Perbadanan Kemajuan Negeri Selangor (PKNS).

He currently serves as the Vice President of Corporate Planning, Strategic Initiatives and Property Division for Ingress Corporation Berhad since November 2016.

Qualifications:• Diploma in Accountancy, MARA Institute of Technology (ITM) now UITM• A member of The Chartered Institute of Management Accountants (UK),

qualifying at the MARA Institute of Technology (ITM) now UITM • Member of the Chartered Institution of Management Accountants, CIMA (UK),

CGMA and MIA

Other Directorship of Public Companies and Listed IssuersNIL


HAJI AZLAN BIN MD ALIFIAH Independent & Non-Executive Director


Male Malaysian 54 30 August 2019

6/ 6

Notes:1. 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 major shareholder of the Company.

2. Conflict of interest with the Company: None of the directors has any conflict of interest with the Company or

its subsidiary companies.

3. Conviction of offences: None of the directors has been convicted for offences within the

past 5 years other than traffic offences, if any and no public sanction or penalty imposed on them by any regulatory bodies during the financial year.

4. Shareholdings in the Company: The shareholdings of the directors are disclosed on page 263 of the

Annual Report.


ANNUAL REPORT 2019


KEY SENIOR MANAGEMENT PROFILE

QUALIFICATIONS• Attained the Master of Finance, RMIT University, Melbourne Australia in

2006.• Completed The Chartered Association of Certified Accountants’

examination in 1990.• Attained the Diploma in Advanced Accountancy from Luton College of

Higher Education, United Kingdom (now known as University of Luton) in 1989.

SKILLS & EXPERIENCEEncik Zainal Abidin has 30 years of experience in Corporate Management, Strategic Management, Transformation, and Finance in Plantation, Property and Banking industry. He was the Chief Executive of The Incorporated Society of Planters in 2018. Prior to that, he was the Chief Operating Officer cum Chief Financial Officer of Felcra Berhad in 2016. In 2014, he was the Chief Financial Officer of Chemara Palmea Holdings Berhad. He was the Head, Corporate Strategy and Head, Property Management at Sime Darby Property Berhad from 2011 until 2013. He joined Prokhas Sdn. Bhd. in 2009 as the Assistant General Manager, Performance Management Office.

From 2007 until 2009, he held various positions at Sime Darby Berhad including Vice President at Group Chief Executive’s Officer, Vice President (Business Support) of Plantation Downstream Department and Vice President (Transformation Office) under the Group Strategy & Corporate Development Division. He worked for Kumpulan Guthrie Berhad from 1996 to 2007, prior to the merger with Sime Darby Berhad. He started at Kumpulan Guthrie Berhad as the Manager in Tax Department. Other positions held at Kumpulan Guthrie Berhad were Finance Manager at a plantation operation in Palembang, Manager in charge of Group Account and as an Internal Auditor. He was an Internal Auditor for ABN AMRO Bank in 1994 and Bank of Commerce Berhad in 1993. He started his career in 1990 as an Audit Executive at Coopers & Lybrand.

He is also a Board member of TDM Capital Sdn. Bhd. and President Commissaries, PT Rafi Kamajaya Abadi (an Indonesian subsidiary of TDM Berhad).

QUALIFICATIONS• Attained the Intensive Diploma in Oil Palm Management and

Technology, Malaysia Palm Oil Board in 2015.• Attained the Advanced Management Programme from National

University of Singapore in 2011.• Fellow of Association of Chartered Certified Accountants in 2003.• Graduated in Business Administration with Honours in Accounting

and Finance from Liverpool John Moores University, United Kingdom in 2002.

SKILLS & EXPERIENCEEncik Amir Hafiz has 18 years of experience in Financial Management, Corporate Management, Strategic Development in Corporate Restructuring, Corporate Merger and Acquisition. He joined TDM Berhad in 2007 as the Group Manager, Accounts and prior to that he was with PETRONAS and Ernst & Young. Previously working abroad with BMI British Midland in the United Kingdom as an Operational Cost Analyst and began his career as an Equity Analyst at Financial Times Interactive Data in Ireland in 2002.

He is the Commissaries of PT Rafi Kamajaya Abadi (an Indonesia subsidiary of TDM Berhad).

ZAINAL ABIDIN BIN SHARIFFGroup Chief Executive Officer, TDM Berhad

AMIR MOHD HAFIZ BIN AMIR KHALIDChief Financial Officer, TDM Berhad

AGE53

NATIONALITYMALAYSIAN

GENDERMALE

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT1 APRIL 2019

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT1 MARCH 2012

AGE40


GENDERMALE


TDM BERHAD


QUALIFICATIONS• Attained the Master in International Business from University of East

London, United Kingdom from 2008 until 2011.• Completed Senior Management Development Programme from

Harvard Business School in 2008.• Obtained Basic Management Programme from Asian Institute of

Management, Philippines in 1993.• Attained the Diploma in Planting Industry Management from MARA

Institute of Technology, Perlis, Malaysia since 1978 until 1981.

SKILLS & EXPERIENCEHaji Mohd Ghozali has 35 years of experience in the Plantation Operation and Management in Plantation Industry with expertise in Managing Oil Palm, Rubber and Cocoa Plantation, both in Malaysia and Indonesia. His other personal competencies are Stakeholder's Engagement.

Stakeholder's Engagement are related to NGOs, Media and Industry Associations such as Malaysian Agriculture Producers Association, Gabungan Asosiasi Pekebun Sawit Indonesia, Roundtable on Sustainable Palm Oil, Indonesia Sustainable Palm Oil, the Association of Plantation Investors from Malaysia in Indonesia and PLASMA Estates schemes.

He was the former President Director of PT Minamas Gemilang and Head of Sime Darby Plantation Indonesia, based in Jakarta from 2010 to 2015. Before that, he was made the Region Head for Northern Malaysia Plantation at Sime Darby from 2007 until 2010. He was appointed as General Manager Estates in Riau, Sumatera, Indonesia with the Guthrie Group from 2002 until 2006. Previously, he was the Estate Manager with the Guthrie Group from 1994 until 2001. He started his career with Guthrie as an Assistant Manager from 1981 and later as the Training Officer at Guthrie Training Centre from 1992 until 1994.

He was also formerly a certified Trainer on Situational Leadership with the Blanchard Training and Development Inc.

QUALIFICATIONS• Pursuing a Master in Business Administration from Universiti Utara

Malaysia since 2018 with expected completion in 2020.• Attained the Bachelor of Science in Business Administration from

Upper Iowa University in 2002.

SKILLS & EXPERIENCEEncik Hasnol has 17 years of experience in Strategic Planning, Business Development, Project Management Office, Transformation Initiatives, Stakeholder Management, Government Relations and Marketing. He has a diverse background working in various industries covering from Financial Institutions, Development Financial Institution and Leisure & Tourism industry.

He was the former Vice President, Stakeholder Management, Regulatory and Land Matters, Corporate Affairs, Chief Executive Officer’s Office of Desaru Development Holdings One Sdn. Bhd. from 2018 until 2019. Previously he was the Manager, Strategic Management Department of Bank Negara Malaysia from 2017 until 2018. Joined Themed Attractions, Resort and Hotels as Vice President, Government & Regulatory, Group Corporate Affairs and Vice President, Project Management Office, Group Chief Executive Officer’s from 2015 until 2017. He was appointed as Head, Business Development and Research, Strategic Planning & Research of Credit Guarantee Corporation Malaysia Berhad from 2014 until 2015. He was with Maybank from 2005 until 2014, with last position in Planning & Strategic Execution, Business Enablement, Community Distribution, Community Financial Services of Maybank. Began his career in the Acquisition Channels, Credit Card Centre Services, Consumer Banking Division of RHB Bank from 2003 until 2004.

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT2 MAY 2019

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT2 DECEMBER 2019

MOHD GHOZALI BIN YAHAYAPlantation Advisor, TDM Berhad

AGE60


GENDERMALE

HASNOL ZARIMAN BIN MOHD HASHIMHead, Strategy & Business Development, TDM Berhad

AGE44


GENDERMALE



ANNUAL REPORT 2019


MAT YULA BIN KASIMActing Chief Executive Officer Group Healthcare, Kumpulan Medic Iman Sdn. Bhd.

AGE59


GENDERMALE

JALAINI BIN CHE KARChief Executive Officer, TDM Plantation Sdn. Bhd.

AGE53


GENDERMALE


QUALIFICATIONS• Attained the Masters in Business Administration from Open University

Malaysia in 2014.• Completed Bachelors in Business Administration from University

Technology MARA in 2003.• Attained the Diploma in Agriculture from University Putra Malaysia.

SKILLS & EXPERIENCEEncik Jalaini has 31 years of experience in Plantation Management which consist of Operational and Managerial Competency of Oil Palm Industry. Apart from his official duties with TDM, he is also the Chairman for Malayan Agricultural Producers Association Advisory Panel, Terengganu branch and the Chairman of Malaysian Palm Oil Association Terengganu.

He was formerly Acting President Director, PT Rafi Kamajaya Abadi for 3 months in 2012. Previously, he was the Plantation Coordinator of TDM Plantation Sdn. Bhd. in 2010. Promoted as the Estate Manager of TDM Plantation Sdn. Bhd. in 2005. He joined TDM Plantation Sdn. Bhd. in 1991 as an Assistant Manager. He started his career as the Trainee Assistant of The United Malacca Rubber Estate in 1989.

QUALIFICATIONS• Attained the Master of Business Administration from UiTM Dungun,

Terengganu in 2006.• Completed Bachelor Business Administration from Eastern

Washington University, United States in 1987.• Attained the Diploma in Business Studies from MARA Institute of

Technology in 1982.

SKILLS & EXPERIENCEEncik Mat Yula has 38 years of working experience in various fields such as Corporate Management and Corporate Banking ranging from Banking, Plantation and Healthcare Industry.

He was formerly the Senior Group Manager, Business Development & Human Resource of the company since 2015. He was appointed as the Senior Group Manager, Human Resource & Administration in TDM Berhad in 2012. He was also appointed as the President Director and entrusted to spearhead the said subsidiary until the middle of 2012. In 2010, he was assigned as Corporate Affairs Directors of PT Rafi Kamajaya Abadi, the group subsidiary in Indonesia involving in Oil Palm Plantation. In 2007, he was appointed as the Senior Group Manager, Finance Department in TDM Berhad. He joined the group in 2003 as Chief Financial Officer in TDM Plantation Sdn. Bhd. Prior to joining the group, he started his working career as an executive in Bank Pertanian Malaysia in 1982 and subsequently developed his banking career with Affin Bank Berhad. His last post was as Branch Manager in the said bank.

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT1 JANUARY 2017

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT6 SEPTEMBER 2018


TDM BERHAD


MOHAMMAD AZRAIN BIN MOHD KASSIMManager, TDM Trading Sdn. Bhd.

AGE59


GENDERMALE

VIJAYAKUMAR SAMBANTHARPresident Director, PT Rafi Kamajaya Abadi

AGE62


GENDERMALE

Notes: None of the Key Senior Management has:- 1) Any directorship in public companies and listed issuers2) Any family relationship with any director and/or major shareholder of the Company 3) Any conflict of interests with the listed issuer and its subsidiaries4) Been convicted for offences within the past 5 year other than traffic offences, if any and no public sanction or penalty imposed by the relevant regulatory bodies during

the financial year

Save for Amir Mohd Hafiz who holds 110,700 shares in the Company, none of the Key Senior Management has any interest in the securities of the Company.

QUALIFICATIONS• Attained the Associate of the Incorporated Society of Planters in

1989.• Attained the Higher School Certificate in 1977.

SKILLS & EXPERIENCEMr. Vijayakumar Sambanthar has 40 years of experience in Supervisory Management, Operational Management and Advisory Services especially in the Plantation Industry and in the recent past has been engaging in conflict resolutions with Plantation Stakeholders.

He has provided advisory services for Malaysian Kuwait Investment Corporation in Sabah under Technopalm Sdn. Bhd. from 2017 until 2018. He was the Group Operation Manager of Kwantas Corporation Berhad from 2015 until 2017 overseeing operations in Sabah, Sarawak and East Kalimantan. From 2009 until 2014, he was the Learning & Development Senior Manager of Goodhope Asia Limited which has operations in Kalimantan & Papua. Between 1980 to 2009 he served Kuala Lumpur Kepong Berhad as a Cadet, Assistant Manager, Senior Assistant, Manager and the last position as the Training Manager.

QUALIFICATION• Attained the Malaysian Certificate Education in 1978.

SKILLS & EXPERIENCEEncik Mohammad Azrain has more than 40 years of experience in Analytical Skills, Financial Management, Communication in Sales and Marketing especially in the Palm Oil Industry.

He was promoted to Assistant Manager in 2004 after being a Senior Marketing Executive for 3 years and Marketing Executive for 6 years. He joined TDM Trading Sdn. Bhd. in 1995. He previously became a Physical Palm Oil Trader from 1985 to 1994 with Palm Brokers and Palmart Sdn. Bhd. after he became a Floor Trader in the Kuala Lumpur Commodity Futures market for a year under the same company from year 1984 to 1985. He gained knowledge about the US Commodity market as Research Assistant with Drexcomm Sdn. Bhd. (M) in year 1980 to 1983 which was where he began his career.

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT23 NOVEMBER 2018

DATE OF APPOINTMENT AS A KEY SENIOR MANAGEMENT1 JANUARY 2008



ANNUAL REPORT 2019

LEADERSHIP PERSPECTIVE & PROFILESABOUT TDM HIGHLIGHTS42 LEADERSHIP PERSPECTIVE & PROFILES

MANAGEMENT TEAM

ZAINAL ABIDIN BIN SHARIFF Group Chief Executive Officer

AMIR MOHD HAFIZ BIN AMIR KHALIDChief Financial Officer

MOHD GHOZALI BIN YAHAYAPlantation Advisor

MOHD ROSLAN BIN MAMATHead, Internal Audit

AHMAD SHUKRI BIN MOHD ALIHead, Administration

SYED ZULFHADLIE BIN SYED ZINHead, Legal & Secretarial

NORFAR'IZAN BINTI HASHIM Head, Corporate Communication

MOHD MARDI BIN ISMAILHead, Human Resource, Risk Management, Integrity, Compliance & Sustainability

YASMADI BIN YATIMActing Head, Information Technology

MUHAMAD HAMDI BIN HARUNHead, Syariah & Syakhsiyah Development

TDM BERHAD

HASNOL ZARIMAN BIN MOHD HASHIMHead, Strategy & Business Development


TDM BERHAD

SUSTAINABILITY STATEMENT GOVERNANCE ACCOUNTABILITYFINANCIAL STATEMENTS 43SUSTAINABILITY STATEMENT

MAT YULA BIN KASIM Acting Chief Executive Officer Group Healthcare, Kumpulan Medic Iman Sdn. Bhd.

NIK ZAINON BINTI YUSOFFChief Executive Officer, Kuantan Medical Centre Sdn. Bhd.

DR RAYNEY AZMI BIN ALIChief Operating Officer, Kumpulan Medic Iman Sdn. Bhd.

NORLIZA BINTI RAZALIGeneral Manager, TDMC Hospital Sdn. Bhd.

JALAINI BIN CHE KAR Chief Executive Officer

VIJAYAKUMAR SAMBANTHAR President Director

MOHAMMAD AZRAIN BIN MOHD KASSIM Manager

TDM PLANTATION SDN. BHD. PT RAFI KAMAJAYA ABADI TDM TRADING SDN. BHD.

KMDI GROUP

MANAGEMENT TEAM

SALINA BINTI LONGGeneral Manager,Kuala Terengganu Specialist Hospital Sdn. Bhd.

KHAIRULFAHMI BIN MATSOMGeneral Manager,Kelana Jaya Medical Centre Sdn. Bhd.


ANNUAL REPORT 2019


SUSTAINABILITY OVERVIEW

“TDM’s Sustainability Statement for the year 2019 is the Group’s platform to share with stakeholders the initiatives that we have implemented to add more value to our business while considering our impact to the Economy, Environment and Society (EES).”

Prolific growth of cover crop and vigorous growing palms at Air Putih estate


TDM BERHAD


TDM 2019 SUSTAINABILITY STATEMENTTDM's initiatives are closely aligned with the United Nation’s Sustainable Development Goals and supported by the Group’s core values.

This statement has been documented and prepared with the support of the Group’s Sustainability Committee (SCoM) and the Sustainability Working Group (SWG), which comprises the senior management of various related departments involved in the management and implementation of the Group’s sustainability policy.

This statement was also prepared in accordance with the GRI-G4 Sustainability Reporting Framework and Bursa Malaysia's Sustainability Reporting Framework, and covers our activities from 1 January 2019 to 31 December 2019.

The Group is committed to ensuring our business activities remain sustainable. We are always striving to achieve the equilibrium of People, Planet and Profit. In that context, we ensure our business operations are sensitive to the interests of the communities around us, safeguards the environment and enables the Group to earn sustainable profit. In addition, we maintain clear communication channels between the Group and its investors to share information about our long-term shareholder value creation activities and to sustain a loyal shareholder base.

Our sustainability efforts are thus implemented through three pillars which are described in detail in this statement; Social Sustainability, Sustainability at the Workplace and Sustainability of the Planet.

Highlights:

Replanted Reduced water consumption by

Invested over

1,895 Ha 16.3%in 2019 or 6.05% of our total plantation hectarage in Malaysia

increased usage of biomass for energy and reduced our direct GHG Scope 1 emissions (Plantation) Maintained zero-fatalities and reduced our injury rates for the plantation business

for various training programmes for our employeesRM130,000

Highlights:

Kuala Terengganu Specialist Hospital

achieved Baby Friendly Hospital Certification in December

Invested over

RM300,000in healthcare community engagement programmes

Launched an enhanced Customer Experience programme

CxP 2.0for our Healthcare employees

Achieved positive results in the range of

76% to 90%for Customer Satisfaction Score and Net Promoter Score

Catheterization Laboratory (Cathlab) on 11 April 2019

Kuantan Medical Centre launched the newly built



ANNUAL REPORT 2019



SUSTAINABILITY GOVERNANCETDM has a well-defined governance structure in place to drive sustainability across the Group. The established Sustainability Committee assists the Board of Directors (Board) to meet its oversight responsibilities in relation to the approval of policies on sustainability. The Board is responsible and accountable for evaluating the Group’s sustainability performance on a periodic basis.

The Group Chief Executive Officer (GCEO), who is the Chair of the SCoM, is responsible for managing sustainability and decision-making on EES matters within the Group.

The SCoM, which meets quarterly, consists of the Chief Financial Officer, Chief Executive Officer of TDM Plantation, the Chief Executive Officer of Kumpulan Medic Iman, Plantation Advisor and Sustainability Lead.

The SWG consists of Plantation Controller, Mill Managers, Estate Managers and Compliance Executives.

SUSTAINABILITY GOVERNANCE STRUCTURE

BOD RESPONSIBILITIES: • Approving policies.• Oversight of sustainability initiatives and strategy.• Evaluating sustainability performance.

SCoM RESPONSIBILITIES: • Monitoring sustainability initiatives and performance.• Performing management oversight and provide insight to GMC

to ensure group’s sustainability strategies and goals are aligned.• Reviewing sustainability issues highlighted by independent

audits and assurance report.• Advising on group’s sustainability report.

SWG RESPONSIBILITIES:• Review, discuss and communicate company's sustainability

strategies, policies and goals according to the respective zones.• Monitoring and supervising sustainability performance of the

respective zones.• Deliberate reports of sustainability implementation and

sustainable operations monitoring to the SCoM.

Group Management Committee (GMC)

HealthcarePlantation

MEMBERSGCEO

(Chairman) CFO CEO TDMP

CEO KMI

Plantation Advisor

SustainabilityLead

PEOPLE

We are committed to creating a safe, healthy, honest and pleasant working environment while helping our people find value in their work. TDM is an ardent advocate of personal and professional development among our Management and employees. This is also extended to communities directly connected to our operations. Our emphasis on the acquisition of knowledge and skills is grounded on the belief that individuals should sustain their ability to meet the economic and social challenges of their own future.

PLANET

We champion the preservation of the environment and the sustainability of natural resources so as to safeguard the well-being of people, our natural environment and the general quality of life in the present as well as in the future. We are increasingly ‘greening’ our operations and practices through innovation, technologies and other means in order to lower TDM’s carbon footprint and environmental impact.

PROFIT

We are equally committed to our responsibility towards the livelihood of our employees and financial aspirations of our shareholders. We believe this responsibility is best upheld by capitalising on risks and opportunities in growing the company over the long term to ensure healthy financial returns to all our stakeholders.

SUSTAINABILITY POLICY The Group is committed to achieving the goal of sustainable development by balancing the needs of ‘People, Planet and Profit’. The sustainability policy, developed in accordance with the 3P philosophy, was approved by the Board of Directors of TDM Berhad on 27 March 2018.

We believe that responsible corporate practices play a vital role in ensuring sustainable returns, enhancing corporate governance and upholding ethical standards. All members of our Management team, as well as employees, are required to treat corporate responsibility as an integral part of our business.

Board of Directors (BOD)

Sustainability Committee (SCoM)

SUSTAINABILITY WORKING GROUP

(SWG)


TDM BERHAD



MALAYSIAN SUSTAINABLE PALM OIL (MSPO)

Every Malaysian planter was required to be MSPO-certified by the end of 2019. TDM stands as the first Malaysian government-linked company to be 100% MSPO-certified. All of TDM Berhad’s estates and mills in Malaysia were MSPO-certified in 2017.

The MSPO standards were developed by the Malaysian Palm Oil Certification Council (MPOCC) with representatives from various palm oil interest groups. The MSPO standards have seven principles forming the requirements of a management system framework, based on three pillars of sustainability. They also address good agricultural practices which are essential for sustainable agriculture, producing high-quality products while enhancing productivity through yield optimisation.

BSI Malaysia conducts an annual surveillance audit where the certification is renewed after five years.

Certifications—MSPO 678754, 678572, 686825 & 686877, Malaysian Sustainable Palm Oil

ROUNDTABLE ON SUSTAINABLE PALM OIL (RSPO)

All of TDM Berhad’s plantations and mills in Malaysia have been 100% RSPO-certified since 2013.

The RSPO promotes the growth and use of sustainable palm oil through credible global standards and engagements with stakeholders. The RSPO standards help to minimise the negative impacts of oil palm cultivation on the environment and communities in palm oil-producing regions. The authorised certification body (CB), BSI Malaysia, conducts an annual surveillance audit where the certification is renewed after five years.

Certifications—RSPO 587626 & RSPO 595564, Production and Management System

ISO 9001:2015

The Group received the first ISO 9001:2008 Quality Management Systems certification for its Healthcare Division in 2012. Today, all certifications of all the hospitals under the Group have been revised and upgraded to ISO 9001:2015 certification. All hospitals undergo an annual audit to certify that their management systems are in compliance with the requirements.

SUSTAINABILITY ASSURANCEOur sustainability practices for palm oil are assured through a variety of certifications including the Roundtable on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO) standards. While attaining full RSPO certification was a challenging process, it has enabled the company to gain deeper access to international markets and to sell its products at a premium.


ANNUAL REPORT 2019



HOW WE ENGAGE WITH STAKEHOLDERS

KEY STAKEHOLDERS

ENGAGEMENT CHANNELS

FREQUENCY

Investment Community, Shareholders, Fund Managers and Media

Local Communities and Smallholders

Customers

Contractors and Suppliers

Employees

Quarterly Financial Reports Quarterly

Annual Report Annually

Annual General Meeting Annually

Engagement and Meetings As and when required

Engagement and Meetings Four times a year

Community Outreach Programmes Periodically

Strategic Partnerships Upon mutual agreement

Survey As and when required

Feedback Form Periodically

24-hr Support Phone Correspondence Periodically

Email Correspondence Periodically

Mobile correspondence Periodically

Meetings, Visits, Seminars, Talks and Events Periodically

Strategic Partnerships Upon mutual agreement

Engagement and Meetings Four times a year

Site Visits As and when required

Social Gatherings Periodic

Town Hall Meetings At least once a year

Employee Engagement Survey Once every two (2) years

Annual Performance Appraisal Annually

Roll-Calls Weekly for mills / Daily for estates

Morning Briefings Daily


TDM BERHAD



STAKEHOLDER CONCERNS

HOW WE RESPONDED TO STAKEHOLDER CONCERNS

OUTCOMES

• Financial Performance• Current Industry Trends• Prospects• Sustainability issues

• Established and enhanced better relationships

• Provided faster and efficient communication channel with stakeholders in timely manner

• Insights on business progress and performance • Establishing and enhancing better

relationships• Facilitating greater shareholders participation• Narrowing the information gap with

stakeholders

• Strategies and future planning on achieving higher customer satisfaction

• Building better customer relationships• Enhanced policies• Enhanced operations• Awareness and initiatives

• Increased compliance with the Group policies and implementation

• Better awareness on sustainability practices

• Improvement in resolving sustainability issues in the Group’s supply chain

• Awareness of updated policies and implementation

• Awareness of operational improvements• Understanding sustainability

implementation• Building better employee relationships• Balancing work-life activities• Conducive work environment• Performance and morale of employees

• Held briefings on policies• Built better community relationship• Addressed operational concerns• Addressed sustainability concerns

and progress

• Briefing on policies• Addressing operational concerns• Addressing Sustainability concerns and

progress• Building better community relationship• Prospects• Develop initiatives

• Raised awareness and implemented initiatives

• Rolled out strategies and future planning on achieving higher customer satisfaction

• Built better employee relationships• Balanced work-life activities• Ensured a conducive work

environment

• Increased awareness of policies and implementation

• Addressed operational concerns• Addressed sustainability concerns

and progress• Built better business relationships• Drove innovation and enhancement

• Policy Updates• Sustainability Issues• Operational Progress• Crop Quality• Health Awareness• Health Check Ups• Supply Chain

• Quality and Productivity• Sustainability• Addressing Customer Concerns• Sharing Updated Information

• Policy Updates• Requirement Updates• Sustainability Issues• Operational Progress• Crop Quality• Supply Chain

• Operational performance• Requirement Updates• Sustainability Updates• Safety and Health• Company Business Direction• Human Resources Updates• Business Initiatives• Workplace Living Conditions


ANNUAL REPORT 2019


SUSTAINABILITY MATTERS

In 2017, the Group identified 29 materiality matters segmented according to the EES pillars. The Economic pillar included materiality matters related to Corporate Governance while the Social pillar addressed issues related to the Workplace, Marketplace and Community.

In 2018, a Materiality Assessment to identify the top 10 matters was carried out with the help of an independent consultant.

MATERIALITY ASSESSMENT: IDENTIFICATION

Issues highlighted by our key stakeholders in previous engagements.

01

Issues related to global trends and practices.04

Significant issues discussed during our Board meetings.02

RSPO Principles & Criteria.05

The most significant risks highlighted in our risk register.03

MSPO Principles & Criteria.06

“TDM acknowledges the criticality of understanding material matters in enhancing our inherent value to our stakeholders.”

Collaboration with Universiti Malaysia Terengganu (UMT)Research on Pollination Ecology of Oil Palm at Jerangau Estate


TDM BERHAD



We then conducted a survey on our various stakeholder groups, Board of Directors and key Management personnel to enable the creation of a materiality matrix that would help us improve our knowledge of what was simultaneously important to both the company and its stakeholders. The task ahead is to set key performance indicators (KPIs) for each of the materiality matters, followed by action plans and initiatives to meet these targets.

1. Hiring from the Local Community2. Employee Volunteerism & Supporting Charities3. Energy Management4. Emissions & Initiatives to Tackle Climate Change5. Sourcing Materials Responsibly6. Water Management7. Green Building & Other Environmental Initiatives8. Sustainable Procurement & Supplier Assessment9. Local Community Engagement10. Eliminating Child and Compulsory Labour11. * Waste Management12. Recruiting and Retaining Employees13. Employees’ Engagement and Satisfaction14. Providing a Diverse and Inclusive Workplace15. Improving Employer Employee Relationship

16. Preventing Workplace Discrimination17. Stakeholder Engagement18. Protecting Land & Biodiversity19. Customer Privacy20. Board Management & Oversight21. Eliminating Bribery and Corruption22. Training, Education & Career Development23. Customer Feedback and Satisfaction24. Economic & Business Performance25. Protecting Public and Customer Safety26. Risk Management27. Protecting the Safety & Health of Workers & Sub-contractors28. Business Ethics29. Providing High Quality Services

* The highest-ranked materiality matter from the Environment pillar (Waste Management) was included to replace the lowest-ranked Social materiality matter (Eliminating Child and Compulsory Labour) from among the 10 most material matters. This decision was made on the basis that each of the EES pillars of sustainability should be given emphasis in the drive to achieve sustainable development for TDM and its stakeholders.

TDM's Materiality Matrix as of 2018

3

Relevance to Company

5

4

4 5

Impo

rtan

ce to

Sta

keho

lder

s

17

4

10

17

23

13

20

262

8

5

11

18

24

14

2127

3

9

6 12

19

2515

16

22 28 29

Economic

Environment

Social


ANNUAL REPORT 2019



TOP 10 MATERIALITY MATTERS In 2019, TDM continued to revalidate the top 10 material matters as identified in 2018 and no change was made in 2019. We have continued to focus on these 10 material matters to achieve sustainable development for TDM and its stakeholders. A set of key performance indicators (KPIs) for each of the materiality matters has been established, followed by action plans and initiatives to meet these targets.

MATERIALITY MATTER SUSTAINABILITY PILLAR SIGNIFICANCE TO TDM

HIGH-QUALITY SERVICES

Social (Marketplace)

• Improves reputation and brand/ product loyalty • Enables obtaining premium price on product

BRIBERY & CORRUPTION Social

(Governance)

• Transparency and building good governance

SAFETY & HEALTH OF WORKERS & SUB-CONTRACTORS

Social (Workplace)

• Keeps the workplace in good condition and free of accidents

• Staff/ workers can perform their duties at maximum capacity

CUSTOMER PRIVACY


• Protects the confidentiality of customer’s/vendor’s information

BUSINESS ETHICS


• Builds a good reputation among business partners, customers and employees

TRAINING, EDUCATION & CAREER DEVELOPMENT

Economic• Keeps employees’ capabilities and skills updated

to meet current challenges and builds their competencies

PUBLIC & CUSTOMER SAFETY

Social (Workplace)

• Keeps work environment in a conducive condition and accident-free

CUSTOMER FEEDBACK & SATISFACTION

Social (Workplace)

• Understanding of customer expectations and requirements

WASTE MANAGEMENT

• Waste produced is treated properly to avoid environmental pollution and contamination

ECONOMIC & BUSINESS PERFORMANCE

Economic (Governance)

• Sustain value to shareholders

Environment


TDM BERHAD



HOW TDM MANAGED OR RESPONDED TO THE MATTER RISK OF NOT RESPONDING TO THE MATTER

• Loss of potential income and customers• Practised customer service management, obtained product standard certifications and carried out periodic assessments

• Bad reputation and image among stakeholders and the public

• Established guidelines on anti-corruption and bribery via its handbook

• Reviewed existing procedures and monitored their implementation

• Injury, infection or death of staff/ workers and other related parties or family members

• Organisation being sued by related parties affected by the injury/ death

• Established relevant policies and procedures pertaining to safety, health and the environment at workplace for staff to adhere to

• Breach of PDPA and legal action taken by customers/ vendors

• Misuse of customer’s/ vendor’s information

• Strict compliance with Personal Data Protection Act 2010 (PDPA)

• Loss of potential customers and reputation• Adhered to code of business ethics and conduct and practised good governance in doing business

• Employees unable to perform or meet company’s expectations due to changes in the marketplace

• Encouraged employees to keep improving their skills and continued to educate them by sending them for job-related trainings and professional certifications

• Injury, infection or death of customers/ the public and other related parties or family members

• Established relevant policies and procedures pertaining to safety, health and the environment at workplace for staff to adhere to

• Lack of improvement from customers’ perspective and probable increase of dissatisfaction gap compared to competitors

• Established engagement channels for customers to express their concerns or feelings

• Non-compliance with environmental regulations, waste pollution

• Loss of potential value from treatment of waste

• Ensured waste is treated according to the required standards and submitted monthly reports to the relevant authority

• Opportunity loss • Loss in share value

• Enhanced operational efficiencies and land productivity through best agricultural practices and revitalisation of palm age profile

Appropriate responses have been established and potential risks have been identified for each material matter to ensure that they are addressed in a timely and effective manner.


ANNUAL REPORT 2019



MANAGING RISKSIn any initiative, there would be potential risks to the company in terms of business opportunities and financial performance, long-term benefits notwithstanding. For TDM, this is amplified by the nature of our business, which capitalises on land and the environmental aspects as well as social community. The Risk Management department evaluates these risks and provides a mitigation plan to enable a sustainable business that benefits stakeholders.

Changes in our risk exposure last year demonstrate the progress we have made in implementing group and divisional strategies, as well as the dynamics in the group’s operating context. In an ever-changing risk landscape, emerging risks have been identified where their extent, nature and potential impact on the group are uncertain. Emerging risks are monitored on an ongoing basis as their impact is typically understood only over time. Emerging risk themes across the Group that have been incorporated in our divisional strategies include the impact of global economic conditions and geopolitical uncertainties; cyber vulnerabilities and disruptive innovations; customer and brand loyalty and their related reputation management; business disruptions from third-party reliance; and environmental factors like climate change.

3 Delays in replanting programme 6 Ability to Attract

or Retain Medical Consultants

1 Health, safety, environmental hazards

4 Loss or leakage of critical information 7 Liquidity

2 Outbreak of Pests & Diseases 5 Competitive

Environment 8 Investment Monitoring

Through stakeholder engagement, we continue to address and disclose our risks. Our Risk Management Department is tasked with managing internal controls effectively. The group’s risk profile is determined by:• Reviewing and reassessing our divisional and operational risk registers.• Discussing and assessing risk profiles with the relevant management teams and appropriate

Risk Action Plans are established to mitigate the identified risks.• Reviewing the current and future business environments in which we operate to identify

emerging risks.• Monitoring risks on quarterly basis.• Updating and reporting the risks to management on quarterly basis.

This is followed by the determination of significant risks for the TDMB Group in each segment as illustrated below:

Planet

Profit People

7

845 6

12

3


TDM BERHAD



SUSTAINABILITY PILLAR

RISK EXPOSUREHealth, safety, environmental hazards

RISK EXPOSUREDelays in replanting programme

CONTEXTIt is important to promote a safe working environment and ensure that our workers’ and staff’s well-being is protected. Failure to adhere to and comply with requirements could lead to reprimands and penalties by the authorities, affect TDMB’s reputation and lead to higher costs e.g. medical / legal costs.

MATERIALITY MATTER

MATERIALITY MATTERSafety & Health of Workers and Sub-contractors & Public and Customer Safety & Waste Management

Economic and Business Performance

RESPONSE• Established SOP on safety procedures as guided by the authorities and monitored

compliance with RSPO and MSPO standards, including ensuring that OSHA in all operating units is carried out by the Safety & Health Officer.

• Ensured monthly scheduled maintenance is performed by the maintenance team with cleanliness of mill compounds managed by gardeners.

• Ensured DOE and MPOB counter-check samples provided by our mills. Conversion of Waste (EFB) and POME into environmentally-friendly by-products is in place.

Social (Workplace) / People

Social (Marketplace) / People

Environment / Planet

NO. IN CHART

1

PLANTATION


RESPONSE• The Group to carry out and complete replanting activity as per the replanting

programme.• Periodic site visits are carried out to monitor the progress of the replanting

programme.• Study and proposal of the setting up of replanting fund.

Economic (Governance) / Profit

NO. IN CHART

3

CONTEXTThe Plantation sector has been rejuvenating its plantations with replanting programme since Year 2012. This programme is critical to the Company as any delay in replanting process may affect revenue and the Group would have to depend on fresh fruit bunches (“FFB”) from other market players to fulfil market demand for CPO and palm kernel (“PK”) oil. Delays could also lead to low yields of FFB and oil extraction rates (“OER”) in the future.

RISK EXPOSUREOutbreak of pests & diseases

MATERIALITY MATTEREconomic and Business Performance & Environmentally friendly


CONTEXTInability to control the outbreak of diseases may lead to loss of crops, resulting in declining quantity of FFB available for production and additional costs incurred for rectification treatment.

RESPONSE• Prioritised prevention of P&D issues by updating the Company’s policy and SOP on

P&D Management and making them known to everyone.• Implemented Integrated Pest Management (IPM) by increasing barn-owl populations

and beneficial plants in estates.• Implemented IPM by screening and testing less hazardous chemicals.


Environment / Planet

NO. IN CHART

2


ANNUAL REPORT 2019




RISK EXPOSURELoss or leakage of critical information

RISK EXPOSURECompetitive environment

MATERIALITY MATTER

MATERIALITY MATTERCustomer Privacy & Bribery and Corruption

Customer Feedback and Satisfaction, Economic and Business Ethics & Public and Customer Safety

CONTEXTThe risk refers to unwanted losses or leakages of patient medical records. The respective Hospitals could face legal implications from patients in the event that medical records are intentionally or unintentionally exposed.

RESPONSE• Information or documents are stored in a locked document storage room equipped with a

fire door.• On-site storage and cloud back-up storage is performed for all data.• Documents are classified according to the degree of confidentiality for information

security via individual passwords to access the system.


Social (Governance) / People

NO. IN CHART

4

HEALTHCARE


CONTEXTLack of competitive advantages could result in potential losses due to competitive pressure from other healthcare providers. Without a competitive advantage, it could lead to failure in achieving the targeted profit and creating a sustainable healthcare business. Competitive advantage is simply a factor that distinguishes our healthcare from others and makes customers more likely to choose our products over the competitors.

RESPONSE• Strengthening our patient proposition by enhancing our capabilities and boosting our

capacity. • Marketing strategies are communicated to all relevant staff to ensure staff are well-informed

and able to promote to customers / clients. Additional and clearer marketing messages are prepared to promote the desired ‘Hospital Brand’.

• Creating new branding strategies to stand out in the marketplace such as user-friendly website and improving web content. The Group initiated the improvement of branding positioning through differentiating our brand in the healthcare industry (Community and single bedded).

• Ongoing improvement and upgrading of existing facilities e.g. upgrading of patients’ rooms. • Community outreach programme is carried out as part of marketing initiatives.

NO. IN CHART

5

RISK EXPOSUREInability to attract or retain medical consultants

MATERIALITY MATTERHigh Quality Services


RESPONSE• Visiting consultants are hired to ensure sufficient resources through advertisements in the

website and on online employment marketplace Jobstreet when there is a requirement. • Attractive remuneration packages and benefits to consultants and immediate family

members are reviewed on a periodical basis, in line with benchmarks against industry competitors.

• Promoting consultants by involving them with talks, seminars and public forums.

Social(Marketplace)/ People

NO. IN CHART

6

CONTEXTDue to stiff competition in the market, the healthcare business could face challenges in attracting and retaining consultants which could disrupt the day-to-day operation e.g. long waiting time that eventually affect the image of the hospitals as well as the Group resulting from loss of customers.




TDM BERHAD




RISK EXPOSURELiquidity

MATERIALITY MATTEREconomic & Business Performance

CONTEXTA combination of factors which includes internal and external elements such as increasing operational costs and the market volatility may have contributed to the liquidity risk of the Group.

With continuing fluctuation in Crude Palm Oil price as well as global economic uncertainty, the Group has to ensure all liquidity requirements are met without affecting its operations and financials.

RESPONSE• For the plantation division, the focus primarily is on productivity improvement programme

to improve our profitability and cash flow generation. Hence, we have embarked on replanting programme since year 2012 which will be critical to increase productivity from the old areas and low productivity areas.

• For healthcare division, the focus is on the capacity and capability expansion programme where we continue to increase our operating bed capacity in our facilities and to introduce new services such as catherization lab to improve our cash flow generation.

• At the Group level, we have embarked on monetisation and fundraising programmes to increase liquidity through sale of idle asset (Pulau Perhentian land) and the Revolving Credit Facility-i from our financier as well as the advance payment arrangement from long term supply contracts with our buyers. In addition, Group Centralised Treasury function will be implemented in 2020 as part of our efforts to improve visibility of the Group liquidity as well as to maximise income from our funds.


NO. IN CHART

7

GROUP

Economic (Governance) / ProfitRISK EXPOSURE

Investment monitoring

MATERIALITY MATTEREconomic & Business Performance


CONTEXTThe success of an investment does not depend on the evaluation process, but also on the close monitoring of investments such as our palm oil operations in Terengganu and Indonesia and healthcare operations. This will result in the ability to achieve the expected returns on investment, Net Asset Value and turnover of the Group.

RESPONSE• Developed specific business recovery plans (with timeline) for the identified companies

that did not meet industry benchmark ratios. The proposed business recovery plans will be submitted to the Boards of the respective companies for approval and implementation.

• To enhance the investment evaluation process from second feasibility study following investment (approximately after two years of initial investment) and evaluation, including test assumptions for any variation from original assumptions used during the initial evaluation process. Results of the study will be used to enhance the investment evaluation process.

NO. IN CHART

8


ANNUAL REPORT 2019


SOCIAL SUSTAINABILITY: CREATING SHARED VALUE FOR COMMUNITY DEVELOPMENT

PLANTATION Engaging with our plantation stakeholders and local communities within the areas of our operations is pertinent to ensuring smooth daily operations and sustainable business growth. It enables us to gather feedback from our stakeholders and resolve issues, besides meeting the needs of our stakeholders. As some of our operations are located in remote areas, we strive to improve the livelihood of our stakeholders by upgrading the facilities and providing modern conveniences. Guided by our Philanthropy Policy, TDM aims to leave positive social impact that will benefit our stakeholders namely employees, suppliers and customers and community, especially smallholders.

In 2019, we held four stakeholders’ meetings at our mills and estates to gather feedback on any issues that impacted the stakeholders. TDM held two meetings while RSPO and

MSPO hosted one meeting each in the North and South zones respectively. The meetings, which highlighted updates and Group policies, enabled TDM to respond to the issues raised and resolve grievances positively.

Sustainable Community InitiativesThe well-being of our stakeholders is a matter close to our heart. In tandem with our core and sustainable business objectives, we aim to uplift the socio-economic status of our local community to create long term positive social impact.

Besides ensuring that our estates and mills are well equipped with amenities such as schools, clinics and living quarters for staff and workers, TDM also provides quality training and education. In 2019, we invested RM1,570,359 to enhance the well-being of our local community, which included

providing healthcare services and religious lessons for workers and their children. Other facilities in our estates and mills include:• School vans• Places of worship i.e surau and mosques• Amenities i.e halls, sports areas, guard

houses and Auxiliary Police (AP)

TDM had in the past upgraded over 1,000 km of internal roads within its estates to ease the journey of transporting FFB from the estates to the mills. The shorter the lag time between harvesting and milling, the less free fatty acids will form in the FFB, resulting in better yield and quality CPO at the mill. Some of these roads were also used by communities in the surrounding areas to commute to nearby towns as well as to transport their produce for sale.

“We are committed to the mutual respect of TDM’s local communities and stakeholders in surrounding areas of our operations and to uphold legal, communal or customary rights on any project that occurs in their territories that might affect their way of life.”

Stakeholder Engagement


TDM BERHAD



To further engage with our stakeholders, our employees across the Group are encouraged to participate in employee volunteer programmes to build meaningful relationships with the local communities. In 2019, Ladang Fikri staff and Majlis Permuafakatan Komuniti Kampung (MPKK) Kg Bt Nenas organised a Sports Day in conjunction with the Malaysia Day celebration in September. The event helped to foster closer ties between the plantation staff and the surrounding communities. TDM also joined the Terengganu State Tourism Department to clean up the Pantai Batu Burok beach in Kuala Terengganu on 11

September 2019.

We understand the importance of measuring social impact on the community to quantify the quality of the return of investment in our ventures. Thus, we engaged a third-party assessor to conduct Social Impact Assessment where applicable.

Highlights:Engaging Our SuppliersTDM acknowledges the significance of maintaining healthy relationships with its suppliers to drive business results. It is indeed key to achieving our KPIs in three areas: yield (production of FFB), production cost and Profit Before Tax (PBT).

Our engagement with suppliers is guided by MSPO and RSPO guidelines, which all suppliers, their traders and third-party vendors are encouraged to comply with. The guidelines outline our commitment to:• Respect human rights• Adhere to national laws• Be more inclusive of smallholder farmers• Increase the traceability of our supply

chain

We further entrench transparency in the supply chain by providing a comprehensive complaints and grievance mechanism that allows suppliers and other stakeholders to give feedback or file complaints. Our systematic approach includes a framework that ensures the handling, investigating and resolving of social and environmental issues within our supply chain are conducted efficiently. All complaints, conflicts and grievances are resolved through an open, transparent and consultative process, in accordance with Criteria 4.2, 5.1, 6.1, 6.3 and 6.5 of RSPO Principles.

Stakeholders and members of the public can file complaints by writing or through TDM’s corporate website, email at [email protected] or via phone at +609 620 4800. Complaints and grievances are managed by our Head of Corporate Communication, who usually responds within 14 days.

We are pleased to report that there were no complaints or grievances reported for Plantation Division in 2019.

Sustainable Procurement and Supplier Assessment In our commitment to uphold efficient, fair and transparent procurement practices, we have put in place a robust e-procurement system that promotes accountability and

compliance since 2010. The system enables suppliers to purchase goods and services electronically and has improved efficiencies, reduced cost as well as controlled spending. In addition, we have an e-bidding system that allows for a fair and transparent bidding process for contracts above RM500,000. We ensure our contractors and suppliers are familiar with our procurement process by holding dialogues and briefing sessions including during site visits as well as conducting training on the e-bidding system.

The Group also keeps track of its suppliers and contractors who contribute to the local economy and embed sustainability practices in their operations, delivery and services. It enables us to work better with each supplier through different approaches, which help to identify the Economic, Environmental and Social risks and opportunities. Apart from that, our estates and mills also conduct random audits on their suppliers and contractors to ensure they comply with MSPO and RSPO requirements including the Minimum Wages Order.

Land Tenure RightsTDM recognises that the nature of our business is associated with tenure rights.Therefore, we uphold the protection and sustainable use of land, forests and fisheries. We also comply with the national obligations, constitutions, local laws and regulations of the country where TDM operates in.

We respect the individual rights of indigenous and local communities to give or withhold their free, prior and informed consent (FPIC) to the development of land to which they hold legal, communal or customary rights. The Group is committed to ensuring legal compliance as well as international best practices in FPIC are implemented prior to the commencement of any new operations. In 2019, there were zero incidents involving violations of rights of Indigenous People living in Malaysia.

Resettlement Matters

ZEROresettlements

We are pleased to report that there were

in 2019

Invested over

to enhance the well-being of our local community

RM

1.57 MILLION


ANNUAL REPORT 2019


HEALTHCAREEnsuring High Quality Healthcare Services Kumpulan Medic Iman (KMI) is guided by its people-centric mission statement that aims to deliver quality professional services responsibly. We aspire:

• To provide safe, quality, compassionate and personalised care to our customers.

• To be a learning organisation for employees.• To create sustainable value for our

stakeholders.• To be accredited by recognised bodies.

In 2019, we rolled out an enhanced Customer Experience Programme (CxP) 2.0 with the aim to transform and improve the service culture at all our hospitals, focusing on sustaining service standards and practices under ‘Special Heartfelt Practices’ (SHP). SHP was designed to emulate a mother’s touch as it consists of courtesy, care, clarity (in communication) and compassion. This second edition of CxP is an essential part of our guidelines and refresher course for new and existing employees. A series of workshops were conducted for the top

management of KMI Hospitals while front liners including new employees were coached on the programme. A year-long roadshow, which was launched at the end of 2019, highlights the importance of the CxP 2.0.

To enhance customer experience, KMI improved its customer feedback form in 2019 to further meet the needs and demands of customers. The form was created based on the Customer Service Index (CSI), which focuses on the standard Net Promoter Score and Customer Satisfaction Score. The analysis of the form is reviewed and presented quarterly during our Group Marketing Meeting. These scores will help us to forecast business growth and cash-flow, and to assess the positioning of our brand and overall customer satisfaction. Data collected is analysed every month by the respective hospitals.

We continue to gather feedback through our 24-hour customer call centre, suggestion boxes and interviews with inpatients before they are discharged. We also ensure a

comprehensive grievance mechanism is communicated to patients and customers so that they can channel their grievances and complaints to the hospital. The mechanism also enables us to collate, investigate and resolve any grievances within 10 days. Any feedback and comments received are given serious attention. Patients’ complaints are monitored daily and they are attended to within 24 hours. Unresolved complaints will be further investigated and brought to senior management for further resolution.

In 2019, we received 882 complaints, where most of the complaints were resolved. Issues pertaining to infrastructure and parking are however pending and yet to be resolved.

Apart from measuring satisfaction scores and resolving customer complaints, we also participate actively on social media platforms such as Facebook, YouTube and Instagram to help customers make informed decisions. This will not only retain customers but also enable us to improve internal processes and deliver quality services.

Highlights:

Customer Satisfaction Score (average for all four hospitals)

90%To measure customer loyalty and overall service satisfaction

Net Promoter Score (average for all four hospitals)

86%To measure customer loyalty and the likelihood of gaining new and repeat customers

In 2019, we received positive results for both Customer Satisfaction Score and Net Promoter Score:


CxP 2.0 Special Heartfelt Practices designed to emulate a mother’s touch


TDM BERHAD


COMMUNITY-BASED SPECIALIST HOSPITALS

• KUALA LUMPUR • SELANGOR • PAHANG • TERENGGANU

• Right to Healthcare and Compassionate Treatment

• Right to a Choice of Care• Right to an Acceptable Level of

Safety• Right to Adequate Information

and Consent• Right to Redress of Grievances• Right to Participation and

Representation• Right to Health Education• Right to a Healthy Environment

PATIENTS’ CHARTER

2019 Healthcare Community Engagement Programmes

11Blood donation

drives

24Health talks

42Health

screening

48Health

awareness

13CPD seminars

302,029Investment Total (RM)

3Symposium

4Sports

activities


Expanding Our Services and InfrastructureKMI hospitals constantly strive to fulfil the needs and demands of the local communities by expanding its facilities to support its capacity and capability growth. On 11 April 2019, the Kuantan Medical Centre (KMC) launched its newly built Catheterization Laboratory (Cathlab). The Cathlab has been operating since February 2019 and has received positive response from the community. Since the commencement of its operations until the end of 2019, it has performed more than 300 angiograms and angioplasties.

In increasing our capacity, we target to increase the number of beds from 407 to 882 by 2024 either by building new hospitals or through acquisitions. To enhance customer experience, we have also made it a point that all our rooms are single-bedded rooms to ensure privacy and comfort of our patients and their guardians as well as to avoid the spread of infection to other patients.

Healthcare Community Engagement Programmes KMI employees continue to strengthen their relationship with local communities through voluntary and philanthropic programmes that promote healthy living. TDM contributes 2% of its consolidated annual net profit after taxation, minority interest and dividend payments to authorised organisations in Terengganu that support noble causes, sports and economic development.

In 2019, TDM invested over RM300,000 in healthcare community programmes to engage with key stakeholders namely the local community, customers, patients and suppliers. Programmes such as free health screening and talks were held in public areas and social centres to raise awareness and provide education to the wider community on chronic diseases. Compared to 2018, we have increased our investment in healthcare community engagement programmes and added more activities.

ISO 9001: 2015The Group’s Healthcare Division received its first ISO 9001:2008 Quality Management Systems certification in 2012. Today, all our hospitals have been ISO 9001:2015 certified in 2018. The new revision focuses on leadership and addresses risks and opportunities. ISO 9001 helps organisations to deliver high quality products and services to ensure satisfied customers, management, and employees. All our hospitals undergo an annual internal and external audit to certify that the management system complies with the requirements.

Baby Friendly Hospital Initiative (BFHI) In December 2019, the Kuala Terengganu Specialist Hospital achieved Baby Friendly Hospital Initiative, a programme launched by World Health Organisation and UNICEF in 1991. The initiative is a global effort to implement practices that protect, promote and support breastfeeding.


ANNUAL REPORT 2019


Our medical staff also volunteered at community events such as sports days, blood donation drives and festive celebrations. Among our healthcare programmes in 2019 were:

Festival of First EventHeld in January, the event was to reach out to the wider community and promote services offered by the Kuala Terengganu Specialist Hospital (KTSH).

Antenatal WorkshopA workshop was organised by KMC in February for expectant mothers to understand more about pregnancy and preparation for birth. It was conducted by KMC’s obstetrician and gynaecologists, midwives and dieticians.

Larian Jantung KMCA 7km fun run was held in April to promote health awareness and increase engagement between KMC staff and members of the public. Several activities were included such as a mini carnival, booths and the launch of Kuantan Medical Centre official Facebook page.

Cooking and Colouring CompetitionsA cooking competition and a colouring competition were held in April to promote KMC’s newly launched Cathlab and its cardiovascular treatment.

Korean Week – “Annyeong Kts-Imnida”The five-day event in August was conducted to introduce KTS In-Body 770 Body Composition Analyser and promote their Wellness Centre Package. Themed “We Bring Korea To You”, various Korean-themed activities were held to attract visitors.



TDM BERHAD



Customer Privacy At KMI hospitals, ensuring public and customer safety includes the safety of customer privacy. The Group has fully complied with the Personal Data Protection Act 2010 (PDPA) since 2014, which regulates the processing of personal data in commercial transactions. We will continue to uphold our commitment to protecting the confidentiality of our patients’ health information.

Efficient Supply Chain ManagementIn the business of healthcare services, efficient supply chain management is vital to ensure smooth daily operations and sustainable business growth. This includes ensuring our suppliers and vendors comply with all regulatory rules and are legally authorised to sell health products. We work closely with our ethical suppliers and ensure they are committed to the sustainable development of the business. We will continue to uphold the integrity of the healthcare services industry by improving the visibility and transparency of our supply chain. This is done through conducting assessments, identifying and managing risks to improve procurement processes, utilising resources efficiently and achieving set targets.

TDM understands that Malaysian laws and regulations have strict policies and impose heavy penalties on business operations that are non-compliant. Any non-compliance will result in serious consequences on our suppliers, customers, smallholders and the local community. In 2019, we were not fined for any negligence from local authorities.

Run from DiabetesA total of 2,000 people took part in the run that was held in conjunction with the opening of the bridge in Kuala Terengganu in August. The fun run gave the KTS Hospital staff an opportunity to work out together with the hospital’s business partners and staff from the state government.

TDRA Merdeka RunA total of 130 runners took part in this event at SMK Taman Desa in August, which was aimed at promoting a healthy lifestyle and increasing awareness about Taman Desa Medical Centre in Kuala Lumpur. TDMC also offered free health screening while promoting its services and facilities.


ANNUAL REPORT 2019


SUSTAINABILITY OF THE PLANET

PLANTATIONAt TDM, sustainability is an integral part of our business operations and we continuously seek ways to incorporate sustainable practices within our work processes. We are committed to maintaining a balance between creating value and being responsible to society and environment.

Our success is measured in the form of new work policies, improved product qualities, adoption of new and innovative work practices as well as processes that change our employees’ behaviour and the way we operate the business.

TDM is committed to maintaining a sustainable biodiversity to ensure a healthy ecosystem. One of the approaches we have adopted is maintaining the health of the biodiversity at our estates and mills, particularly in areas that will impact biodiversity the most. A healthy biodiversity will enable the local ecosystems to function effectively and benefit the local communities living around the areas.

A healthy ecosystem will provide clean air and water, mitigate floods, droughts and pest infestations while benefiting communities in the form of recreation and education.

To this end, we uphold the regulations in the Principles and Criteria (P&C) of the RSPO and MSPO. We adopt best agricultural practices in the use of pesticides, chemicals, air and water pollution control, soil erosion control and soil formation, nutrient cycling and natural habitats for plants and animals. This includes the practice of Integrated Pest Management (IPM) for control of rats and palm leaf pest such as rearing barn owls (Tyto Alba) and growing Tunera subulata, Casia cobanensis and Antigonon leptopus plants.

Water usage, for mills and domestic use, is always measured via the standard process control and Workers’ Minimum Housing Standard and Amenities Act 1990 respectively. In the estates, water is also used for irrigation and watering in the field and nursery. We acknowledge that good water management

translates into optimum palm yield and lower expenditure from less wastage, while the quality and quantity of water resources is conserved and maintained. Moreover, we put in every effort to mitigate and prevent air and water pollution in the areas that we operate via close monitoring and stringent process control. To manage and reduce waste, we process bio-organic waste into mulch and fertilisers.

To sustain the economic sustainability of our plantation operations, we use high yielding planting materials, adopt high density planting per hectare (Ha) and practise good standards of maintenance and upkeep from the replanting stage. This is to ensure continuous high returns per unit land area.

TDMB produces green palm oil and our operating units were certified with the Roundtable on Sustainable Palm Oil (RSPO) since 2013 and the Malaysian Sustainable Palm Oil (MSPO) in 2017. In 2019, we produced 83,843 metric tons of RSPO

“TDM’s commitment to the environment includes protecting, conserving and enhancing ecosystems and the environment for our future generations regardless of any business industry we pursue, now and into the future.”

Good Watering for Best Quality of Oil Palm Seedlings


TDM BERHAD



Production of Bio-Organic Fertilisers (BOF)

10(MT) 15 20 25 30 35 40 45 50 55

2015 13,155.41

2016 18,818.54

2017 38,323.24

2018 42,611.35

2019 47,096.65

Certified Sustainable Palm Oil (CSPO) and 19,617 metric tons of Certified Sustainable Palm Kernel (CSPK). We sold 34% of these green palm oil with a price premium amounting to RM3.4 million with another RM1.1 million received for price premiums from sales of CSPK.

Going forward, we will roll out some new initiatives to continue maximising our natural capital by growing diversified crops in areas of our estates.

In line with the above initiatives, a pineapple trial project has been scheduled to begin in second half of 2020 in Jerangau Estate.

There are also plans to plant other crops if they are agronomically suitable and economically feasible.

AGE PROFILE 2019

Immature (0-3 years) - 4,954 Ha

Young (4-10 years) - 4,796 Ha

Prime Young (11-15 years) - 3,339 Ha

Prime Old (16-20 years) - 3,701 Ha

Old (21-25 years) - 10,086 Ha

Very Old (>25 years) - 4,419 Ha

PROFILE

HCV Area by estates

696.88 Ha12 Estates in Malaysia

31,295 HaPlanted in Malaysia


ANNUAL REPORT 2019


Human – Elephant Conflict (HEC)In the plantation business, human-wildlife conflict is an inevitable predicament. As agriculture activities require deforestation, they cause loss of habitat, foraging sites and hunting grounds, leading to wildlife encroachment into the plantation. In the oil palm industry, particularly in Malaysia, human-elephant conflict (HEC) has been one of the biggest issues since the beginning of the industry.

While several methods such as electric fencing, elephant trenching and night patrolling have been tried and tested, the elephants have learned to overcome these obstacles. In 2007, scientists found that beehive fencing would keep elephants away from plantation farms. Studies conducted in small scale farms showed that beehive fencing at the farms’ entry points successfully reduced the number of elephant encroachments. Displaying empty beehive boxes also kept the elephants away if they had been stung by the bees before.

Although the model has yet to be tested in large scale farms, TDM is currently testing out the method in the Jernih Estate in Terengganu. Apis cerana or Asian honeybees are being used in the method, which has been modified to suit the local environment. The Kemaman district in Terengganu had the seventh highest number of HEC reported cases in the country, from 2006 to 2015.


BIODIVERSITYBiodiversity is a priority at TDM. We recognise the fact that some of our plantations and operations are close to forest reserves or conservation areas that are home to endangered, rare and threatened species. To underline our commitment to biodiversity, we pay close attention to the management of our operations to conserve the pristine environment of these areas while reducing our impact on biodiversity.

Our Environmental and Biodiversity Policy ensures that we do not develop HCV areas and peatlands. The Group has pledged to undertake conservation initiatives for the continuous protection of the natural ecosystem and its services including implementing zero-burning practice.

“TDM is committed to protecting the environment and to conserve biodiversity through sustainable development that preserves the environment and biodiversity in all aspects and stages of our operations.”

Collaboration with Universiti Malaysia Terengganu (UMT)Beehive Fence Using Honeybees as Natural Deterrent of Asian Elephant


TDM BERHAD



Plan and expectations for HCV areas:• Applying, enforcing and maintaining formal protection

and conservation area• Conserving the habitats of protected and endangered

species of wildlife• Sightings of any wildlife is recorded in logbook• No encroachment

As part of our planting processes, we take great responsibility in ensuring the suitability of the land for sustainable agricultural expansion. To this end, TDM has put in place a methodology guided by international environmental and social sustainability standards to help us facilitate and manage degradation and land rehabilitation.

The methodology supports:• Non-governmental organisations seeking to identify

priority areas for conservation• Private sector in identifying future agricultural expansion

in areas that comply with sustainability criteria• Malaysian government at both local and national levels

in aligning their land-use planning for agricultural expansion with their commitment towards social acceptability and environmental sustainability

• Scientists and land use planners in identifying alternatives for agricultural expansion in areas with conservation value

• Implementing plans for biofuels and carbon sequestration

High Conservation Value (HCV) Oil palm plantations have the potential to leave a negative impact on biodiversity, climate, hydrology and the physical and chemical properties of soil. To reduce our environmental impact and conserve natural resources, TDM has set aside several High Conservation Value (HCV) areas to maintain the biodiversity and protect Rare, Threatened & Endangered (RTE) species in the areas. Currently, we have a total of 696.88 Ha of HCV in the Sungai Tong, Kemaman and Bukit Besi Complex estates.

TDM upholds its NDPE Policy that emphasises on:• No development of

High Carbon Stock (HCS Forest) ;

• No development of High Conservation Value (HCV) Areas ;

• No burning following our No Burn Policy. This policy also follows RSPO commitment under Principle 5.5 ; and

• Reduction of Greenhouse Gas (GHG) Emissions.

“As a member of the Roundtable on Sustainable Palm Oil (RSPO), TDM is committed to safeguarding High Conservation Value (HCV) areas within its plantation areas.”

Highlights:

305.88 HaPelong

6.74 HaMaidam

2.5 HaTayor

98.12 HaGajah Mati

187.9 HaAir Putih

0.25 HaPelantoh

30.03 HaTebak

65.46 HaJernih Estate

Aerial view of Gajah Mati Oil Palm Nursery


ANNUAL REPORT 2019



Replanting Programme 2019

Total Replanted in Malaysia

2019 2018

Replanted in Malaysia

1,89

4.65

Ha

1,38

6 Ha

4.4%

6.05

%

NO DEFORESTATION, NO PEAT AND NO EXPLOITATION (NDPE)TDM upholds its NDPE Policy and ensures its plantation areas in Malaysia are not in peat areas and do not experience peat fires.

Furthermore, our Peat Management strategy focuses on the management, protection and rehabilitation of peatland at a landscape level, which involves:• TDM not accepting any future development of

any peatland regardless of the depth of peat.• TDM’s commitment to supporting RSPO

Principle and Criteria 7.7.6 and the standards set out in the RSPO Manual on Best Management Practice (BMPs) for existing plantations on peat lands.

Highlights:

Slope Protection & River Buffer Zone TDM is committed to protecting slopes and rivers and has in place a Slope Protection & River Buffer Zone policy that entails:• Slopes above 25°: must be

excluded from any new plant development and replanting programme;

• Slopes of less than 25 °: existing plants and plants should be maintained accordingly; and

• Buffer zones should be maintained on both sides of a river bank within the range of 5 to 50 meters based on the river's width.

• Working with experts to explore options of peat definition, restoration or alternative uses in areas unsuitable for replanting.

REPLANTINGSustainable planting is an integral part of the sustainability of the palm oil industry. TDM is committed to replanting palms and reducing our environmental impact. We uphold best industry practices and emphasise on zero-burning practice, with future drainability and GHG emissions reduction as our focus.

Our replanting programme aims to achieve an average age profile of 13 years by 2022 and we replant at least 1,500 Ha per year. We are committed to replant 5% of the total hectarage in our Terengganu plantations.

Over the last few years, TDM has embarked on an aggressive replanting programme to correct the current skewed age profile and achieve a figure of more than 60% prime age palms in the future. To increase productivity and efficiency, we continuously regenerate our estates through high density planting, using superior planting

progenies and redesigning estates to enable higher rate of mechanisation.

Good agricultural practices (GAP) are adopted throughout our operations to boost early maturity and high and early palm yields. Adequate field infrastructure for future mechanisation are also considered at terrace planting and flood prone low-lying areas. This includes having adequate roads connecting to terraces and building raised harvesting paths with Closed Ended Conservation Trenches (CECTs) and collection drains.

For good replants, we start replanting oil palm seedlings sourced from known seed suppliers such as Sime Darby Calixs, Applied Agriculture Research (AAR), FELDA Yangambe and RISDA materials. Due to new planting material and improved processes, we can now harvest after 30 months compared to 36 months previously. In Terengganu, we started replanting in 2012 and reaped the first produce in 2016.

Natural Vegetation Growth in Buffer Zone

Redesigned Planting at Tayor Estate


TDM BERHAD



Integrated Pest Management In our commitment to conserving the environment, the Group has progressively reduced the use of pesticides for pest management and control. We adopt Integrated Pest Management (IPM) in all TDM estates to reduce environmental risk associated with extreme use of pesticides. Our IPM policy consists of various methods to control pest populations and reduces our usage of chemical pesticides, ultimately minimising potential ground water and air contamination.

Our IPM includes installing barn owl boxes for Tyto Alba owls every ten Ha in the estates. Keeping Tyto Alba owls, which feed on rats, is an effective and eco-friendly method to control the population of rats.

We also plant beneficial plants along the main road of the estates and in the field to encourage the proliferation of natural enemies for the control of bagworms and nettle caterpillars to ensure ecological balance. These beneficial plants provide shelter and supplementary food such as nectar to encourage the population of predators and parasites that will control pests.

GOOD AGRICULTURAL PRACTICES (GAP)As a leading sustainable palm oil producer, we place great importance on striking a balance between environmental conservation and business as well as economic development. TDM adopts good agricultural practices (GAP) in our operating units for long-term improvement and sustainability of our oil palm production. We constantly strive to improve our field practices and benchmark them against best industry practices. TDM’s estates observe GAP such as soil management and conservation, water conservation and management, Integrated Pest Management (IPM) as well as best agricultural practices in our replanting activities.

Soil Management and ConservationTDM’s soil management is guided by the Group’s Environment & Biodiversity Policy and Agrochemical Management Policy. We strive to maintain the quality and fertility of our plantation soil in order to sustain high yields while observing GAP and Good Milling Practices (GMP).

The quality of soil is highly determined by geographical factors and management practices. At TDM estates, efforts are being taken to improve the soil quality by incorporating organic matter, preventing excessive erosion of surface soil, improving soil micro-organism population and ensuring the soil stays moist. Depending on the health of the palms, we plan to gradually reduce the use of inorganic fertiliser by incorporating more of our own produced Bio-Organic Fertilisers (BOF) from the Kemaman and Sg. Tong plants. Other methods of improving the soil include EFB mulching and planting soft grasses, ferns of Nephrolepis biserrata species and Leguminous Cover Crops (LCC) to prevent severe erosion.

Oil Palm Planting in Low Lying and Terrace Area

Integrated Pest Management (Tyto Alba)Good ground vegetation at terrace planting


ANNUAL REPORT 2019



Water Conservation and Management Water is a crucial component throughout the lifecycle of oil palm production. It is essential for healthy palm growth and high yield as well as for processing FFB in the production of CPO. Good water management will translate into optimisation of crop production, while the quantity and quality of water resources is conserved and maintained. TDM implements good field practices that reduce surface run off, hence decreasing top soil erosion and diverting surface run off into sumps constructed along roadsides and silt pits in the field.

When replanting in hilly and steep areas, terraces are either constructed with palms planted along the contours and silt pits or built with sedimentation traps to reduce the flow of silt laden water down the slopes into waterways. In flat and undulating areas, soft grasses and leguminous covering crops will break the speed of run-off water and allow it to percolate into the ground. Organic waste such as EFB, Bio-Organic Compost (BOC), palm fronds stacked along palm inter-rows and chipped palm trunks are applied and retained in the field. Collection drains are periodically blocked, and water is retained to conserve moisture during the dry season. In some estates, natural water bodies are being maintained and a gravity feed water pump is used to irrigate the field during the dry period.

At low lying fields, Closed Ended Conservation Trenches (CECT) are constructed to regulate and maintain water levels in the field. Palms are planted on raised paths and water in the CECT is maintained at the desired level for palms’ growth. Only excess water will flow out into collection drains.

In accordance with national guidelines, we established buffer zones along water sources such as rivers, streams and ponds. Buffer zones are strips of land where “no treatment” is practised to allow natural vegetation, shrubs and grasses to grow. These zones will filter soil sediments from entering the waterways besides conserving the biodiversity in the areas of our plantation.

RESOURCE MANAGEMENT AND CONSUMPTION Water ConsumptionWhile TDM recognises the importance of water in our supply chain, we also understand that it is our role and responsibility to safeguard the quality of water for the local communities who rely on the rivers near our operations. In this regard, we reduce the risk of water contamination by conducting a monthly water quality assessment to ensure the health of the river’s ecosystem as well as the quality of the water supply is maintained.

In addition, we conduct an annual river water quality monitoring programme for all rivers that run through our estates to monitor the biological and chemical parameters of the rivers. The programme helps to ensure that TDM’s usage of fertilisers and chemicals do not contaminate the rivers. In 2019, the Group maintained its water quality index within the permissible range approved by the Department of Environment.

In 2019, TDM’s water consumption decreased by 16.29% due to increased awareness among workers and stakeholders to save water besides the replacement of old piping and water meters to reduce and control leakages and wastage.

Annual SATU Water Supply Usage

A B C D E F G H I J K L M N

2016

2017

2018

2019

Areas 2016 2017 2018 2019A Sungai Tong Palm Oil Mill 77,968,000 64,725,000 58,799,000 74,155,000B Kemaman Palm Oil Mill 84,093,000 97,869,750 104,242,000 30,696,000C Jernih Estate 84,093,000 97,869,750 104,242,000 69,192,000D Tebak Estate 84,093,000 97,869,750 104,242,000 71,800,000E Pelantoh Estate 84,093,000 97,869,750 104,242,000 52,370,000F Tayor Estate 112,032,000 127,500,000 115,827,000 118,466,000G Fikri Estate 222,327,000 260,941,000 207,178,000 247,680,000H Jerangau Estate 42,145,000 40,298,000 29,358,000 23,529,001I Gajah Mati Estate 99,023,000 82,970,000 80,904,000 86,060,000J Air Putih Estate 232,584,000 211,589,000 210,450,000 172,295,000K Jaya Estate 100,235,000 83,004,000 179,962,000 171,146,980L Pelung Estate 20,548,000 11,420,000 11,155,000 9,068,000M Pinang Emas Estate 93,612,000 93,740,000 103,913,000 118,140,000N MAIDAM 2,073,000 5,817,000 75,467,000 2,602,000GRAND TOTAL (liters) 1,338,919,000 1,373,483,000 1,489,981,000 1,247,199,981

Observation: Huge savings in water usage observed in FY 2019.Conclusion: This is due to better awareness among workers and stakeholders to save water besides the replacement of old piping and water meters to reduce and control leakages/wastage.

Irrigation Project – Ram Pump

* B,C,D & E for 2016, 2017 & 2018 were equally distributed due to a single bulk meter used for the mentioned areas.


TDM BERHAD



Waste Management and Recycling TDM acknowledges the challenge of waste management in the palm oil industry and has implemented strategic management practices to ensure eco-efficiency in our operations. Every estate and mill also has its own on-site storage for scheduled waste, chemicals and general equipment or items.

We have two bio-composting plants in Kemaman and Sungai Tong with a combined production capacity of 61,000 MT. In 2019, 47,096 MT of bio-organic fertiliser (BOF) was produced. At the bio-composting plants, treated palm oil mill effluent (POME) mixed with empty fruit bunches as BOF are recycled back to the soil as natural fertilisers. Mesocarp fibres and kernel shells are turned into renewable energy to generate steam and electricity for mill processing, sustaining up to 98% of our mills’ energy needs. Empty Fruit Bunches (EFBs) are also recycled to produce microbes-enriched bio-compost that acts as a soil conditioner. About 95% of our EFB contributes to our BOF production.

In 2019, there was an increase in re-usage of POME for the production of BOF as compared with 2018 due to an increase in BOF production. With the theoretical 1:1 formula for POME and BOF mixture, the tonnage for POME used will be almost similar with the production volume of BOF.

With the yearly increase in replanting areas, there was an increase in the requirement of BOF, leading to higher production of BOF. As per the Agriculture Policy, all newly planted seedlings require BOF application and mulching to improve palms growth. A dosage of 20kg per palm was allocated as the nutrient cycling, soil moisture and conservation initiative, is now entering its third generation. The application of BOF was also continued in mature palm areas to improve soil fertility by adding organic matter to the soil and releasing available nutrients.

WASTE MANAGEMENT IN TDM PLANTATIONS (MT)Plantation Division

POME POME

21,4

20

10,2

50

25,6

76

0

Effluent Solid

700

9,91

1

15,2

78

23,8

14

21,4

20

Kemaman BOF 2019 2018

23,0

47

18,7

67

25,6

76

Sungai Tong BOF 2018

PRODUCTION OF BIO-ORGANIC FERTILISERS (MT)

2017KPOM

2018STPOM

2019

Kemaman Bio-Organic Fertilizer Plant

Routine Compost Temperature Monitoring


ANNUAL REPORT 2019



TDM’s wastewater is managed through a ponding system consisting of a combination of anaerobic and aerobic processes. While we reuse 20% of the wastewater in bio-organic fertiliser plant processes, we release 80% of the treated effluent into natural water systems with a Biological Oxygen Demand (BOD) of less than 100 parts per million (ppm). There are no protected or biodiversity rich areas adjacent to where our wastewater or effluent are released as recommended by the Department of Environment Malaysia.

We ensure that all wastewater in inhabited areas within our estates is first trapped by either grease traps or sumps before it is released into the estate lands or nearby rivers. To further ensure efficient management of the wastewater, we conduct a monthly water sampling at the final discharge point in all our mills. An annual water sampling is also conducted within the estates at specific entry and exit points at the end of the estates’ river boundaries.

(3R) practiceWE ARE A STRONG ADVOCATE OF THE REDUCE, REUSE AND RECYCLE (3R) PRACTICE AND AS SUCH SEEK TO PROACTIVELY INCULCATE GOOD HABITS AMONG OUR EMPLOYEES IN ALL AREAS OF OUR OPERATIONS.

These include:• Use of recycled paper for printing drafts.• Placement of recycling bins at all our

hospitals and headquarters.

Rainwater HarvestingThe Group ensures all its operation units have installed rainwater tanks to collect rainwater for watering plants and general washing purposes. It is part of our effort to conserve water and reduce wastage. To further validate our commitment, our Kemaman Bio-Organic Fertiliser (KBOF) plant was designed with slanting roofs to enable rainwater collection for washing and watering flower plants.

Treated Palm Oil Mill EffluentRainwater Harvesting in Estate with Hilly Area


TDM BERHAD



ENERGY MANAGEMENT With climate change becoming a pressing global concern, TDM is aware of its role as a leading sustainable palm oil company to contribute to emission reduction. The Group has continued to monitor the consumption of non-renewable sources for energy generation to ensure efficient utilisation.

Renewable Energy and BiomassOur mills at Kemaman and Sungai Tong are powered by boilers that rely on biomass renewable energy made from recycled fibre and shell. The biomass renewable energy represents 95% of our energy requirements.

In 2019, there was an increase of biomass usage due to higher crop production and the decision to reduce diesel usage for cost and fossil fuel efficiency initiatives.

The Group leverages on innovation in the plantation sector to drive sustainability at all levels of operations. It is slated to start generating energy from biogas under a feed-in-tariff (FiT) to supply electricity from both the Kemaman and Sungai Tong facilities in 2020. Thus, FiT generates economic returns for the Group while reducing electricity and water consumption as well as air pollution. We are also in discussions to capture the by-product of methane gas for conversion into fuel or chemical feedstock as well as to supply direct electricity into the national grid from our FiT efforts.

Looking ahead, our future sustainability initiatives will include bio-composting operations via microbial technology with bacteria from our own ponds, recycling and reusing of all wastes.

MANAGING OUR EMISSIONS The Group collects data and information from all operating units to continually monitor and manage its GHG emissions. We measure our emissions using the RSPO GHG Calculator V4 and ensure the data is audited and certified annually by BSI Malaysia, an appointed RSPO certification body.

Our emissions are reported under Scope 1 (direct emissions) and represent the data from the Kemaman and Sungai Tong complexes. In 2019, the Group’s emissions reduced slightly due to increased awareness in energy usage, emissions and pollution among employees, which led to a more environmentally friendly operation in TDM.

32,007

15,196

KPOM

2019

25,900

12,243

STPOM

2018

Shell

Sungai Tong Mill

BIOMASS FOR ENERGY GENERATION AT MILLS (MT)

PLANTATION DIVISION (tCo2-e)/tFFB SCOPE 1 EMISSIONS

Fibre

Kemaman Mill

0.27

0.18 0.27

0.07

ENERGY CONSUMPTION REDUCTION INITIATIVES AT KEMAMAN AND SUNGAI TONG MILLSInstallation of TimersBoth mills are installed with automatic switches with timers to ensure optimum energy consumption.

Solar PanelsThe Kemaman Complex is also installed with solar panels to generate electricity to the water influent meter.

In the estates, the energizer for our electric fencing is recharged via solar panels.

Compost Windrow

Aerial View of Kemaman Palm Oil Mill


ANNUAL REPORT 2019



HEALTHCAREWASTE MANAGEMENTIn the healthcare division, our waste management is managed as per KMI Hospitals Policy. We ensure all waste is divided into scheduled waste (clinical waste, chemical waste, liquid waste and batteries) and non-scheduled waste (general waste, food waste and recycle waste). In addition, we segregate the various categories of waste using colour coded bags.

The Group acknowledges that spillages are harmful and requires all employees to strictly observe standard precautions. Employees are to seek immediate medical treatment upon contact with harmful materials. We always ensure that our safety policies, procedures and instructions are well communicated to all employees.

The waste at all our complexes is monitored by qualified Certified Environmental Professionals in Scheduled Waste Management (CePSWAM), who report regularly to the Environmental Performance Monitoring Committee (EPMC) and Environmental Regulatory Compliance Monitoring Committee (ERCMC).

As a majority of our clinical waste is non-hazardous, we have appointed a waste management vendor specialising in clinical waste for every hospital.

“In 2019, KMI Hospitals managed approximately 100,000kg of clinical waste without incineration to prevent pollution and toxicity from being discharged to the environment.”

WATER MANAGEMENTAs a healthcare service provider, providing high quality care to patients is a priority at KMI hospitals. As such, we need an adequate supply of clean water to ensure smooth and efficient daily operations. While we rely on many water intensive facilities to provide the best services to our patients, we are also aware that we need to reduce and mitigate environmental impact. In this regard, KMI hospitals are encouraged to practise water saving initiatives to reduce cost and conserve natural resources.

ENERGY MANAGEMENT Hospitals operate round the clock, which naturally results in high electricity consumption due to the equipment, lighting, medical and cooling systems needed for patients, employees and visitors. Our hospitals are equipped with high-tech heating, ventilation and air-conditioning (HVAC) systems to control temperatures and air flow. Other daily activities such as sterilisation of equipment, refrigeration and food service, and the usage of computers, servers as well as medical and lab equipment also contribute to high energy consumption in a hospital.

To manage energy consumption in our hospitals, the Group has put in place strategic measures to increase energy efficiency in all our hospitals. Money saved from energy consumption reduction can benefit the hospitals in other ways such as investing in new technologies to improve patient care. All hospital employees are regularly reminded through awareness campaigns to reduce energy consumption.

Energy audits are conducted at our hospitals to identify, assess and implement energy savings measures in our drive towards reducing energy consumption


TDM BERHAD



Energy Consumption Reduction InitiativesTDM ensures all its hospitals practise sustainability strategies and initiatives in electricity management. This includes engaging with the Ministry of Energy, Green Technology and Water for energy saving grants and appointing an energy manager in any KMI Hospital that exceeds 3 million kWh of electricity usage in addition to controlling building energy intensity. Reports on energy reduction initiatives are discussed during Group operations meeting.

Replacement of Light Bulbs with LEDsAll our hospitals have started replacing their light bulbs with energy saving LEDs, particularly for areas that need 24 hours lighting such as corridors, lobbies, entrances and emergency exit signs.

Installation of TimersTimers are installed at identified areas to better control electricity consumption on every floor. Electricity supply in these areas will shut off automatically according to the schedules.

Internal process improvement in our hospitals has always been a priority in order to deliver quality services


ANNUAL REPORT 2019


SUSTAINABILITY AT THE WORKPLACE: OUR PEOPLE, OUR GREATEST ASSET

The Group is committed to providing a safe, conducive and dynamic environment that caters to the needs and aspirations of our employees. An engaged, skilled and satisfied workforce will enhance our business sustainability. At TDM, we provide structured training programmes for career development, place critical focus on safety, health and wellness and practise the promotion of diversity and inclusivity, free from discrimination.

SAFETY AND HEALTHEnsuring Our People Are SafeMaintaining the safety of our people is paramount for TDM. The Group has an Occupational Safety and Health (OSH) policy that aims to provide a safe and healthy working environment for all our employees and workers from across all levels of the Group. We take pride in adhering to all statutory requirements, relevant standards, guidelines and code of practice pertaining to human rights, safety and health.

SAFETY AND HEALTH COMMITTEE TDM BERHAD

PLANTATION DIVISION SAFETY AND HEALTH COMMITTEE

CHAIRMAN

EMPLOYERREPRESENTATIVES

EMPLOYEEREPRESENTATIVES

SECRETARY(Sustainability,

Safety & Health

Executive)

SAFETY AND HEALTH COMMITTEE

EMPLOYERREPRESENTATIVES

EMPLOYEEREPRESENTATIVES

COMMITTEE MEMBER

“Our employees are our most valuable resource.”


TDM BERHAD



PLANTATION DIVISIONAs the leading plantation company in the East Coast of Malaysia, the safety and health of our workforce is a top priority. We implement OSH best practices in our daily operations, and contractors and visitors to our sites are expected to strictly adhere to these practices as well. We have also formulated an emergency plan and regular training sessions are conducted to ensure preparedness within our organisation and neighbouring communities.

The Safety & Health Committee is jointly managed by our management team, the administration representative and our workers. Representatives from the All Malayan Estates Staff Union (AMESU) and the National Union of Plantation Workers (NUPW) also sit in the committee. As prescribed in our OSH Policy, new workers and employees are required to undergo safety and health training at their respective plantation areas. The training is conducted by the Safety and Health Officer (SHO) or appointed OSH coordinator in estates and mills. TDM also takes great care to ensure its employees and assets are secure from a safety viewpoint. We employ a total of 71 security personnel across three complexes.

In terms of monitoring and reporting, all operating units report to the SHO for OSH related activities, as well as OSH compliance for TDM Plantation. The SHO collects and compiles accident and injury statistics and activities related to OSH on a monthly basis before presenting it to TDM’s top management.

Mitigation measures are in place to reduce incidents and accident rates within our plantation and mills. These include:• Daily toolbox meetings and safety briefings

to workers before commencement of work;• Every Tuesday is Safety Day where briefings

are held by management to all workers on safety and other work- related issues. This is a two-way engagement where workers can put forward their grievances or problems with the management team;

• The Operations Unit conducts periodical training sessions for workers focusing on SOPs, OSH and Sustainability;

• Safety and warning signages are regularly updated; and

• The SHO conducts an annual Compliance and Sustainability Audit for all operating units to ensure compliance with all regulatory requirements and TDM’s OSH Policy.

Medical & Health Surveillance (Annually for mills and estates)

Audiometric Test for hearing (Annually for mills only)

Noise Risk Assessment (to be conducted for all mills and estates in 2020)

!

Chemical Exposure Monitoring (Annually for mills only)

Ergonomic (To be conducted for mills in 2020)

Monthly Health Checkup for staff (Monthly at mills)

CHRA (Chemical Health Risk Assessment) (Every 5 years in mills and estates)

In addition to the mitigation measures, our workers are also screened monthly or annually in the following areas to ensure that they are in the best of health:

Plantation Safety Statistics 2019Overall, there was a lower injury rate, lost day rate and absentee rate recorded in FY2019 compared to FY2018. Employees have become more responsible as they practise greater awareness about occupational safety, while observing stricter compliance to RSPO and MSPO requirements.

PLANTATION SAFETY STATISTICS 20192019 2018

Injury Rate (IR)

(Total No.of Accident/ Injuries x 1000) / Total Workforce

4.48

8.64

(Total No.of Occupational Disease x 1000) / Total Workforce

Occupational Diseases Rate (ODR)

2.56

2.47

(Total No.of Accident x 1000000) / Total

Working Hours

Lost Day Rate (LDR) @ LTIFR

1.88

3.62

(Total No.of LTI x 1000000) /

Total Working Hours

Absentee Rate (AR)

44.9

7

69.5

2PROFILE

Total TDMP Employee

3,125Total Working Hours for the Year

7,450,000


ANNUAL REPORT 2019


HEALTHCARE DIVISIONThe Management of Kumpulan Medic Iman and the hospitals under its management are fully committed to driving Health, Safety and Environment (HSE) efforts to provide peace of mind for our customers, employees and other stakeholders. Numerous initiatives and proactive measures have been taken to ensure workplace safety to prevent incidents from occurring.

The Healthcare Division’s HSE Policy is part of KMI’s governance policies. It sets a clear direction for KMI-managed hospitals to ensure all aspects of health, safety and environment are carried out in the best interests of all staff, patients and stakeholders. In addition, we have other safety policies that cover risk management, incident reporting, no smoking, emergency preparedness and infection control to complement the HSE Policy. KMI hospitals have also embarked on Patients Safety Goals and HSE audits and risk monitoring besides identifying potential events and managing these risks through enterprise risk management activities.

Several key committees were set up to oversee our safety efforts and they are the OSH committee, Radiation Committee, Infection Control Committee, Emergency and Disaster Preparedness Committee and the Risk Management Committee.

These committees ensure that our initiatives, such as the ones below, are carried out according to plan: • Infection control programmes for all hospitals;• Dedicated Infection Control Nurses (ICN) are actively

ensuring that appropriate blood screening is carried out for high risk healthcare workers and that their vaccinations are up to date;

• Hand hygiene awareness and surveillance conducted monthly to ensure compliance which helps to reduce the risk of transmission of organisms;

• Corrective, planned preventive and predictive maintenance of hospital equipment;

• Ensuring staff working in high risk areas comply with all policies and procedures and that they are provided with appropriate personal protection equipment;

• To monitor radiology staff for their radiation levels on an annual basis; and

• To ensure HSE training and awareness is conducted regularly and by qualified personnel.

In 2019, all four KMI hospitals recorded zero sentinel events and minimal incidents of non-compliance concerning the health and safety of products as per the Ministry of Health's regulations under the Private Healthcare Act. According to KMI’s standard of practice, every incident has to be reported and proper investigation will be carried out so that corrective and preventive action can be taken. KMI is committed to further improving our standard of operations and reporting to mitigate future risk.


HEALTHCARE DIVISION SAFETY, HEALTH AND ENVIRONMENT COMMITTEE

Operations Manager

Facility Manager

Infection Control Link Nurses

Safety, Health and Environment Coordinator

Employer Representative

Employee Representative

Human Resource

Quality Manager

Customer Relations

Chief Radiographer

Outsourced Emergency SafetyPlan (ESP)

Clinical Pharmacy Physiotherapist

Dietitian IT AdministrationAudiologist Medical Lab Technician-in-Charge

(MLT)

Document Controller

CHAIRMAN Medical Director

EMPLOYEE RIGHTS AND BENEFITSTDM strives to ensure that its workers are fully aware of their rights and benefits. Comprehensive briefings and induction training programmes are held to help new employees understand the Group’s policies and procedures of the organisation. The Human Resource Department continuously monitors the workers’ understanding of their rights to ensure all employees are able to abide and act by the requirements of the prescribed policies. Our key employment policies and guidelines are generally aligned to upholding good human rights practices as we believe in protecting the rights of our employees.

In addition to this, our Senior Management and Board members conduct site visits at various facilities at both our Plantation and Healthcare Divisions. These visits serve as a platform for proactive engagement with our employees on site. While meetings and

discussions are regularly conducted at the estates and hospitals, Town Hall sessions are also organised to update employees on the Group’s strategic initiatives, business developments, policy awareness and achievements as well as targets set by the Group.

Security Routine Activity


TDM BERHAD



Human RightsThe Group is committed to protecting the rights of its employees and treating them with dignity and respect in line with all relevant legal requirements and regulations and in accordance with the Universal Declaration of Human Rights. The Group’s commitment is reflected in its Social and Humanity Policy as well as the No Deforestation, No Peat, No Exploitation (NDPE) Policy, which uphold the following principles and is stated in our Employee Handbook:• Uphold and promote the Universal

Declaration of Human Rights for all workers, contractors, indigenous people, local communities, and anyone affected by our operations.

• Apply compliance to minimum wages for workers.

• Promote diversity and inclusive culture in the workplace, premised on mutual trust and respect, and avoid practices that discriminate against gender, marital status, race, nationality, ethnicity or age.

• Apply zero tolerance to any form of forced labour, slavery, human trafficking and sexual exploitation.

• Respect and protect human rights, the right of all workers, including contract, temporary, foreign workers, the elimination of discrimination in employment and the promotion of equal rights, the freedom of association and the right to collective bargaining regardless of gender, race, caste, nationality, religion, age, physical condition, sexual orientation, marital status, union membership/affiliation/activity, employment status or political affiliation.

• Practise two-way communication with representatives of employees, and when the need arises, the Group resolves complaints and grievances through an open, transparent and consultative process.

• Provide estate workers with housing facilities.

• Allow a channel for whistleblowing when it is needed.

• Maintain a workplace that is free from abuse, harassment, intimidation and any other unsafe working conditions.

• Apply no child labour in any kind of work including external contractors.• Workers reached an agreement with the Group to let management keep their passports for

safekeeping. However, they may retrieve their passports at anytime. • Respect the rights of employees to practise their religion during work hours.

In line with this policy, the Group is committed to maintaining a workplace and environment which is free of harassment of any form, and this includes sexual harassment. The Group will not tolerate violations of human rights principles and will address any grievances or complaints in a fair, effective and consultative manner. Our guidelines and grievance procedures provide a non-discriminatory and fair treatment framework for all stakeholders involved. Anonymous whistleblowing channels are also available to enable employees and other third parties to report actual or suspected misconduct without the fear of repercussion. We also have a Gender Committee established in 2012 at all operation units, specially formed to monitor the wellness of all female workers and any sexual harassment cases. In 2019, there were no complaints or grievances, or incidents of discrimination or the use of child labour.

BENEFITS GIVEN TO RETAIN ESTATE EMPLOYEES AND WORKERS

Free Housing with regular maintenance

Subsidised water and electricity

supply (provided for free where possible)

Transportation allowance/transportation for employees' children,

to and from schools

Medical care and supporting facilities

Recognition of highlyproductive workers

Basic education facilities for children

Training and awareness programmes

Cultural and religious celebrations and festivals

Places of worship

Recreational facilities


ANNUAL REPORT 2019


Compensation and Benefits TDM is committed to paying all workers the statutory monthly minimum wage and overtime compensation in accordance with the current national labour regulations.

Beyond these benefits, we have also built kindergartens and nurseries to cater to workers’ families who live in the areas surrounding our estates. Contributions for furniture and appliances, as well as cooking gas ensure that all families enjoy basic amenities.

For eligible employees, the Group provides medical benefits, life insurance coverage, housing for estate and mill employees, education allowance and scholarships for MBA and ACCA.

Collective BargainingThe Group recognises trade unions which are registered with the Director-General of Trade Unions (DGT) and in accordance with applicable laws, may enter into collective bargaining with TDM. The collective bargaining process is regulated by law and takes place at the company level guided by the Collective Bargaining Policy and by the Malayan Agricultural Producers Association (MAPA). For the year ending 31 December 2019, a total of 3,058 employees were registered as members of AMESU and the NUPW. The notice period and provisions for consultation and negotiation are specified in collective agreements which vary from MAPA/AMESU and MAPA/ NUPW.

Parental LeaveAt TDM, we observe the following leave policies during these important times for our employees:• Maternity Leave: 60 consecutive days

from birth, up to five surviving children.• Paternity Leave: Male employees are

eligible for up to five working days leave from the birth of their own children, up to five surviving children.

• Compassionate Leave: Two consecutive working days upon death of immediate family members.

• Marriage Leave: Three consecutive days for the first legal marriage.

Facilitating Work-Life BalanceRecreational and sporting activities are organised within the Group to ensure a healthy and positive workforce. This also helps to reinforce team spirit among all employees. Employee involvement in sports and recreational activities are under the purview of the sports and recreational club, Kelab Sukan dan Kebajikan TDM, which was established exclusively for our employees. In addition to this, TDM’s Hari Raya Gathering and Annual Performance Awards also provides another informal setting for employees to build rapport with one another.

DIVERSITY OF PEOPLETDM engages with a diverse workforce spanning a spectrum of different cultures, ethnic backgrounds, genders and ages. At the same time, we respect and welcome the distinct attributes of every individual within our workforce. This is in line with our Gender and Diversity Policy.

As at 31 December 2019, the Group has a total workforce of 4,377 people. Of this total, 33% were women and 67% were male employees. In the Plantation Division, 15% were women and 85% were male employees while in the Healthcare Division, 80% were women and 20% were male employees. More than half of the workers employed in the Plantation Division are foreign labourers from Bangladesh and Indonesia.

The Group actively encourages women to excel in both Divisions. However, the plantation sector is traditionally a male dominated industry due to the physical nature of the tasks involved. Nevertheless, to prevent workplace discrimination amongst women in the plantation industry, TDM has set up a gender committee at the estate level where women are encouraged to participate as committee members.

Notwithstanding this, we have female talents in the management team, which are involved in administrative activities. In the Healthcare Division, women employees are mostly nurses or engaged in administrative duties. Day care centres and kindergartens have also been made available to support the Group’s female employees and their children. There were no disabled employees under our employment within the reporting period.


Hari Raya Aidilfitri celebration organised by TDM Berhad


TDM BERHAD


Category

Plantation

Employment

KTS

KMC

KJMC

TDMC

Plantation

KTS

KMC

KJMC

TDMC

TDM Berhad

TDM Trading Sdn. Bhd

KMDI Sdn. Bhd.

TDM Berhad


KMDI Sdn. Bhd.

ExecutiveManagerial Non-Executive Local Workers Foreign Workers Permanent Contract

EMPLOYEES BY CATEGORY AND EMPLOYMENT

Category Employment

Managerial ExecutiveNon-

ExecutiveLocal

WorkersForeign

Workers Total Permanent Contract TotalPlantation 20 47 178 1,141 1,739 3,125 1,364 1,761 3,125Healthcare:1) KTS 9 225 123 357 215 142 3572) KMC 20 276 223 519 336 183 5193) KJMC 5 110 27 142 137 5 1424) TDMC 9 79 50 138 132 6 138TDM Group: 1) TDM Berhad 23 35 21 79 76 3 792) TDM Trading Sdn. Bhd. 1 2 3 3 0 33) KMDI Sdn. Bhd. 9 5 14 9 5 14Total 96 779 622 1,141 1,739 4,377 2,272 2,105 4,377



ANNUAL REPORT 2019


Nationality Gender

Plantation

KTS

KMC

KJMC

TDMC

TDM Berhad


KMDI Sdn. Bhd.

Plantation

KTS

KMC

KJMC

TDMC

TDM Berhad


KMDI Sdn. Bhd.

Age

Non-MalaysianMalaysian Male Female

<20

21-30

31-40

41-50

51-60

>60

EMPLOYEES BY NATIONALITY, GENDER AND AGE

Nationality Gender Age

MalaysianNon-

Malaysian Total Male Female Total <20 21-30 31-40 41-50 51-60 >60 TotalPlantation 1,385 1,740 3,125 2,649 476 3,125 1,400 1,523 103 99 3,125

Healthcare:

1) KTS 357 357 69 288 357 0 221 110 16 10 0 357

2) KMC 519 519 106 413 519 0 307 141 51 16 4 519

3) KJMC 142 142 25 117 142 0 89 33 11 7 2 142

4) TDMC 138 138 26 112 138 2 51 42 19 19 5 138

TDM Group:

1) TDM Berhad 79 79 48 31 79 7 30 31 11 79

2) TDM Trading Sdn. Bhd. 3 3 3 3 1 1 1 3

3) KMDI Sdn. Bhd. 14 14 8 6 14 3 5 3 3 14

Total 2,637 1,740 4,377 2,934 1,443 4,377 2 2,079 1,884 232 166 14 4,377


Plantation KTS KMC KJMC TDMC TDM Berhad


KMDI Sdn. Bhd.


TDM BERHAD



NURTURING THROUGH TRAINING AND DEVELOPMENTThe Group continues to invest in its human capital to build a talent pool that is agile in meeting the rapidly evolving business needs in the industries in which we operate. We believe in nurturing our people for future growth and to inculcate a high-performance work culture, which will pave the way for a more sustainable future for TDM. In this context, we recognise the vital role of training and development to drive self-improvement and help our business needs.

We ensure our employees have access to continuous training and development opportunities, as stated in our Company Policy where each employee is to undergo at least two man days of training per year. These training programmes cover areas such as customer service, fire safety, financial management and corporate culture, which are either conducted internally or through external moderators. Some of the programmes are also targeted at building core competencies that will help deepen the talent pool available for succession planning. In addition to this, we provide capital development opportunities for our employees as well as our vendors to grow and develop. In 2019, TDM conducted in-house training to facilitate the development of a Talent Management Programme, for the purpose of succession planning, that will be implemented in 2020 through the Group’s talent management policy.

Some of the training programmes, especially those for employees in the Plantation Division, are conducted by the Group’s in-house Akademi TDM that was launched in 2017. In 2019, TDM Berhad and TDM Plantation Sdn. Bhd. invested a total of RM130,515 as compared with RM158,698 in 2018 for employee training and development programmes.

Attractive remuneration packages and benefits to consultants are reviewed on a periodical basis, in line with benchmarks against the industry

In-House Training : Analytical Thinking & Problem Solving Skills (Second series)


ANNUAL REPORT 2019


POLICIES

PROFIT DISTRIBUTION POLICY

DIVIDEND POLICY

WHISTLEBLOWING POLICY

TDM Group’s annual consolidated distributable profits shall be appropriated as follows:

(i) One third for dividends 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.

TDM BERHAD WILL ENDEAVOUR TO PAY OUT DIVIDENDS OF AT LEAST 30% OF ITS CONSOLIDATED ANNUAL NET PROFIT AFTER TAXATION AND MINORITY INTEREST ANNUALLY, SUBJECT TO AVAILABILITY OF DISTRIBUTABLE RESERVES.

Dividends will only be paid-out 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 dividends 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.

1. TDM Whistleblowing policy statement: TDM Berhad is committed to sustaining a high standard of good Corporate Governance and adhering to our Code of Business Ethics.

The Whistleblowing policy acts to support the said values above by ensuring stakeholders can raise concerns on improprieties without fear of reprisals if acting in good faith. The policy, through its procedures, aims to provide a transparent and confidential process when dealing with such raised concerns. This policy and the procedures are applicable to all companies within TDM group.

2. Whistleblowing Whistleblowing is a specific means by which a stakeholder can report or disclose through an established channel, concerns improprieties

including fraud, criminal offences, miscarriage of justice, ethical wrongdoings and corruption, bribery and blackmail.

3. Ombudsperson All complaints and/or concerns should be raised and directed to the Company’s Ombudsperson. The Ombudsperson for TDM is the

Chairman, Audit Committee. The Ombudsperson can be contacted as follows:-


TDM BERHAD


POLICIES

WHISTLEBLOWING POLICY (CONT’D.)

PHILANTHROPY POLICY

3. Ombudsperson (cont'd.)

TDM BerhadAras 5, Bangunan UMNO TerengganuLot 3224, Jalan Masjid Abidin20100 Kuala TerengganuTerengganu, Malaysia

For any concerns, please email feedback.tdmb@ tdmberhad.com.myThis policy was approved by the Board of Directors of TDM Berhad in 2011.

Background• It is part of TDM’s CSR philosophy to be a positive and active participant in the communities where we are present.• This is through responding and assisting in critical social issues as well as in sports and economic development.

Rationale• In implementing the CSR activities, TDM is committed to good corporate governance that encourages transparency.

“ There were cases where minority shareholders watchdog group raised issues regarding the non-disclosure of CSR policies at company AGMs, particularly where contributions for CSR purposes were deemed exceptionally high and could have been detrimental to minority shareholders’ interest. ”

Malaysia Corporate Governance Report 2010

TDM’s Philanthropy PolicyThe board is empowered to review the policy as and when required, in the best interest of the Company and its Subsidiaries.

The revised policy was approved by shareholders at the Annual General Meeting on 28 May 2019.

Notes:1. Approved organisations = Organisations that qualify for tax deduction by IRB.2. The 2% comes from the “for-cash reserved budget” not from profit to be distributed to the shareholders


ANNUAL REPORT 2019


SUSTAINABILITY POLICY

ENVIRONMENT & BIODIVERSITY POLICY

Our commitment to sustainability centers on the 3P Philosophy of “People, Planet & Profit” and is embedded in all aspects of the Group.

Our objectives:The 3P is aimed at ensuring social equity, environment protection and economic progress.

PeopleWe are committed to creating a safe, healthy, honest and pleasant working environment while helping our people find value in their work. We are an ardent advocator of personal and professional development among our management and employees. This is also extended to communities directly connected to our operations. Our emphasis on the acquisition of knowledge and skills is grounded on the belief that individuals should sustain their ability to meet the economic and social challenges of their own future.

PlanetWe champion the preservation of the environment and sustainability of natural resources so as to safeguard the well-being of the people, our natural environment and the general quality of life in the present as well as future. We are increasingly ‘greening’ our operations and practices through innovation, technologies and other means in order to lower TDM’s carbon footprint and environmental impact.

ProfitWe are equally committed to our responsibility towards the livelihood of our employees and financial aspirations of our shareholders. We believe this responsibility is best upheld by capitalising on risks and opportunities in growing the company over the long-term to ensure healthy financial returns to all our stakeholders.

This policy was approved by the Board of Directors of TDM Berhad on 27 March 2018.

TDM is committed to play our part in conserving the fragile balance of the environment through sustainable practices.

Our objectives:1. To protect the environment and to preserve biodiversity through sustainable development that preserves the environment and

biodiversity in all aspects and stages of our operations.2. To promote the conservation and development of biodiversity within our group.3. To ensure that our agricultural operations comply with all relevant laws and National Interpretation of MSPO Principles and Criteria.

In protecting the environment and conserving biodiversity, we shall:• Comply with all statutory and regulatory requirements in matters relating to the environment and biodiversity.• Create, maintain and continue the improvement of sustainable plantation management systems.• Eliminate all adverse effects that could potentially impact on the environment and biodiversity that may arise from our plantation

activities.• Provide an effective working system based on Akta Kualiti Alam Sekeliling 1974 (Akta 127).• Ensure zero burning as a priority as stated in Perintah Kualiti Alam Sekeliling (Aktiviti yang Diisytiharkan) (Pembakaran Terbuka) 2003.• Implement Integrated Pest Management (IPM) technique to reduce the need for chemical pesticides and induces cost savings.

POLICIES


TDM BERHAD


POLICIES

ENVIRONMENT & BIODIVERSITY POLICY (CONT’D.)

OCCUPATIONAL SAFETY & HEALTH POLICY

In protecting the environment and conserving biodiversity, we shall: (cont'd.)• Reduce and phase-out chemicals that fall under the WHO Class 1A & 1B and Stockholm or Rotterdam Conventions.• Continuously working on sound soil management by determining appropriate amount and composition of nutrients.• Continue with our efforts towards dynamic and innovative waste management with the aim of zero waste and/or recycling or responsible

waste management.• Maintain a range of prevention and mitigation measures to reduce the risk of fire and haze.• Strive to commit our employees, contractors, suppliers, trading partners and stakeholders to adhere to this policy and thereby focus on

traceability within our supply chain.


TDM is committed to ensuring the safety and health of all our employees and customers, which is demonstrated by our endeavours to integrate occupational safety and health (OSH) practices into business practices and strategy at all times.

Our objectives:1. To ensure safety and health of all our employees and customers.2. To ensure full compliance with all relevant legislation as well as create and sustain a work culture and environment where safety and

health are the priority.

In striving to secure a safe and healthy work environment we shall:• Ensure to comply with statutory requirements, relevant standards, guidelines and code of practice.• Formulating, establishing, communicating, implementing and maintaining an occupational safety and health in the working environment.• Provide continuous training and supervision to all categories of employees to develop safe and healthy work experience.• Equip and train employees to use appropriate protective equipments.• Reduce and finally impose ban on the use of Paraquat weedicide (1, 1’-Dimethyl-4, 4’-bipyridinium dichloride).• Ensure fire safety plan is implemented and continuously trained for its preparedness within our organisation and neighbouring

communities.• Develop a culture of individual responsibility and accountability for the employee’s own well-being.• Inculcating the culture of safety and health among employees and stakeholders.



ANNUAL REPORT 2019


GENDER & DIVERSITY POLICY

SOCIAL & HUMANITY POLICY

TDM’s social responsibility pays particular attention to create a climate where gender equality and diversity are self-evident as parts of the organisation and where differences are utilised to create business benefits as well as to nurture a fair, just and equitable working environment.

Our objectives:1. To enrich their work experience amid a conducive environment for professional development and career growth.2. To maintain a workplace and environment, which 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.

In line with the policy, we shall:• Endeavour to ensure working conditions, salaries, benefits and other employment terms are designed with the aim to provide equal

opportunities and making it easier for all employees to combine work, private life and parenthood.• Prevent sexual harassment and all other forms of violence against women, workers and community.• Establish a specific complaints and grievance procedure and mechanism, acceptable by all parties, to address gender-based issues.• Not tolerate any form of maltreatment of women and enhance internal procedure for handling complaints.• To communicate, explain and make this policy be understood by all employees, including external contractors and other relevant

stakeholders.


TDM are committed to create a safe, healthy, honest and pleasant working environment and helping our people to find value in their work and life.

Our objectives:1. To conduct our business in a manner that respects the rights and dignity of people and local communities, complying with all legal

requirements.2. To respect and give fair treatment in accordance with the rights of employees for the mutual benefits of the company and the employees.

In fulfilling our Social & Humanity commitments, we shall:• Enhance employees’ work skills and competencies by providing training, exposure and experience.• Not tolerate the use of child or forced labour, slavery or human trafficking in any of our plantation and facilities.• Ensure passport of guest worker shall only be submitted to the management for safe custody, with consent by the guest worker and will

be readily made available upon request.• Ensure no difference in rights between guest and local workers.• We commit to Free, Prior and Informed Consent (FPIC) in all negotiations prior to commencing any new operations as we respect native

rights of indigenous and local communities.• Strive to commit our employees, contractors, suppliers, trading partners and stakeholders to adhere to this policy.

This policy approved by the Board of Directors of TDM Berhad on 27 March 2018.

POLICIES


TDM BERHAD


POLICIES

NO DEFORESTATION, NO PEAT, NO EXPLOITATION (NDPE) POLICY

TDM is committed to sustainable palm oil production and sourcing, which includes the conservation of biodiversity, reduction of greenhouse gases, improvement of livelihoods and food security. It is critical that all parts of the palm oil supply chain – from plantations to retailers – collaborate and act in an environmentally sustainable and socially responsible manner.

This NDPE policy will enhance our existing commitment to the Malaysian Sustainable Palm Oil (MSPO) and Roundtable on Sustainable Palm Oil (RSPO) which provides a common, shared system for growers, processors, buyers and institutions to use in order to check that palm oil is sustainably produced.

Our commitmentsTDM is working closely with other growers, traders, processors, end- user companies, and other industry stakeholders to protect forests, peatlands, and human and community rights. TDM commits to the following standards in the oil palm supply chain:1. No Deforestation2. No Development on Peat3. No Exploitation of People and Local Communities

1. No deforestation• No development of high carbon stock (HCS Forest) TDM recognises primary forests as well as High Density1, Medium Density2, and Low Density3 Forests as High Carbon Stock (HCS)

Forests. We will protect all forests identified as the HCS.• No development of high conservation value (HCV) Areas TDM commits to identify and protect, restore and/or co-manage the forests and other areas identified as having High Conservation

Value (“HCV”) by competent, accredited assessors in accordance with Principle and Criteria 7.12 of the “RSPO Principles and Criteria for the Production of Sustainable Palm Oil 2018”.

• No burning TDM implements “No Burn” policy, which means that there can be no use of fire in the preparation of new plantings, or re- plantings

or any other developments, in accordance with the full scope of this Policy. This policy also follows RSPO commitment under Principle and Criteria section 7.11

• Reduction a Greenhouse Gas (GHG) Emissions We will adopt and implement significant GHG emissions reduction targets, and these will be achieved through treating mill effluent

and managing methane emissions and avoiding deforestation.

2. No development on peat • No development on peat regardless of depth Peat soil contains more than 65% organic matter. TDM will not accept any future development of any peatland, regardless of the

depth of peat in accordance with the full scope of this policy. • Best management practice for existing plantation on peat TDM remains committed to supporting RSPO Principle and Criteria 7.7.6 and the standards set out in the RSPO Manual on Best

Management Practice (BMPs) for existing plantations on peatlands. • Where feasible, explore options for peat restoration by working with expert stakeholders and communities. We will work with experts to explore options of peat definition, restoration or alternative uses in areas unsuitable for replanting.

Notes:1. Remnant forest of advanced secondary forest close to primary condition.2. Remnant forest but more disturbed than High Density Forest.3. Appears to be remnant forest but is highly disturbed and recovering with composition of older forest.


ANNUAL REPORT 2019


NO DEFORESTATION, NO PEAT, NO EXPLOITATION (NDPE) POLICY (CONT’D.)

Our commitments (cont’d.)

3. No exploitation of people and local communities• Respect and support the Universal Declaration of Human Rights TDM commits to uphold and promote the Universal Declaration of Human Rights for all workers, contractors, indigenous people,

local communities, and anyone affected by our operations under the full scope of this policy.• Respect and recognise the rights of all workers including contract, temporary and foreign workers We commit to respect and protect human rights, the right of all workers, including contract, temporary, foreign workers, the

elimination of discrimination in employment and the promotion of equal rights, the freedom of association and the right to collective bargaining.

• Respect land tenure right TDM respects tenure rights, and recognises duty and responsibilities associated with tenure rights, such as respect for the long-

protection and sustainable use of land, forests and fisheries. This is done in cognisance of the national obligations, constitutions, local laws and regulations of the country TDM is operating in.

• Respect the right of indigenous and local communities to give or withhold their free, prior and informed consent (FPIC) to operations on lands to which they hold legal, communal or customary rights

We respect the individual rights of indigenous people and other local communities to give or withhold their FPIC to development of land to which they hold legal, communal or customary rights. The Group commits to ensuring legal compliance as well as international best practices in FPIC are implemented, in accordance with the full scope of this Policy, prior to commencing any new operations.

• Resolve all complaints and conflicts through an open, transparent and consultative process We support and implement RSPO Principle and Criteria 4.2 and will work with parties to resolve complaints and conflicts though an

open, transparent and consultative process.

General Implementation StatementTDM will communicate regularly and effectively with all stakeholders to ensure that they are well-informed of the details of thisPolicy.

We will continue to comply with the principles outlined in the policy and adhere to all other laws and regulations governing biodiversity and conservation in every jurisdiction where we operate.

We recognise that this Policy will need to be constantly reviewed to take into account of changing expectations and circumstances as well as improvements in operational procedures. Any changes must be consistent with the Group’s goals to promote positive environmental impacts and positive social outcomes.

This policy was approved by the Board of Directors of TDM Berhad on 25 February 2019.

POLICIES


TDM BERHAD


CORPORATE GOVERNANCE OVERVIEW STATEMENT

This Corporate Governance Overview Statement is made pursuant to Para 15.25 (1) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”). The Board has also provided specific disclosures on its application of the principles in the Malaysian Code on Corporate Governance (“MCCG”) in its Corporate Governance Report (“CG Report”).

Shareholders are advised to read this overview statement together with the CG Report which can be obtained by referring to the Annual Report announcement in Bursa’s website or by visiting the Company’s website at https://www.tdmberhad.com.my for further details.

The Board remains committed to ensure that the highest standards of corporate governance are practised throughout TDM Group (“TDM Berhad and its Subsidiaries”). The recognises the importance of maintaining good corporate governance practices within the Group as it is the Board’s fundamental responsibility to protect and enhance long-term shareholder value and the financial performance of TDM Group, whilst taking into account the interest of all stakeholders.

The Board is pleased to present an overview of the Corporate Governance Statement, which provides key highlights on how TDM Berhad (“TDM” or “the Company”) complies with the three (3) principles of the MCCG 2017 during the financial year ended 31 December 2019, which are as follows:

a) Principle A : Board Leadership and Effectiveness;b) Principle B : Effective Audit and Risk Management; andc) Principle C : Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders.

In order to provide the latest status update of the Company, this Overview Statement on Corporate Governance also includes information up to 31 May 2020.

PRINCIPLE APart I Board ResponsibilitiesIntended Outcome 1.0

Every company is headed by a Board, which assumes responsibility for the Company’s leadership and is collectively responsible for meeting the objectives and goals of the Company.

1.1 Roles & Responsibilities The Board is responsible for the effective leadership and long-term success of the Group. The Board Charter, which outlines the roles and

responsibilities of the Board and those which it delegates to the various Board Committees is available at the Company’s website at https://www.tdmberhad.com.my. In order to retain control of key decisions and ensure a clear division of responsibilities, the Board has also set out in the Charter, “Reserved Matters” that need to be decided by the Board.

The Board leads the Group and plays a strategic role for the oversight and overall management of the Company. The Board’s key responsibilities include reviewing and approving strategic and annual business plan and budget, overseeing the conduct of the Company’s business, investment proposals, compliance and accountability systems, core values and corporate governance practices of the Group to ensure that the Group operates with integrity and in compliance with the rules and regulations.

The Board is responsible for oversight and overall governance of the Group to ensure that the strategic plans of the Group is implemented and accountability is monitored effectively, whilst the Management is responsible for the day-to-day operations of the business and effective implementation of the plans and goals decided by the Board. The Board provides insights and guidance to the Group Chief Executive Officer (“Group CEO”) and Management to achieve Corporate objectives of the Group. Independence from the management of the Group is a key principle to the effective functioning of the Board.

In discharging the Board’s duties and responsibilities, the Board has delegated certain duties and responsibilities to the following Board Committees to assist the Board in overseeing the Company’s affairs and in deliberation of issues within their respective functions and Terms of Reference (“TOR”), which clearly outline their objectives, duties and powers. The Chairman of each Committee will report to the Board on the outcome of the Committee’s meetings and resolutions, which would also include the key issues deliberated at the Committee’s meetings.


ANNUAL REPORT 2019


PRINCIPLE A (CONT’D.)Part I Board Responsibilities (cont’d.)Intended Outcome 1.0 (cont’d.)

1.1 Roles & Responsibilities (cont’d.) However, the ultimate responsibility for the final decision on all matters lies with the Board.

• Audit Committee (“AC”)• Nomination & Remuneration Committee (“NRC”)• Board Risk & Compliance Committee (“BRCC”)• Board Tender Committee (“BTC”)• Executive Committee (“EXCO”)

The EXCO, which comprises four Non-Executive Directors on the Board was established as a medium between the Board, Board Committees and the Management with a primary function and duty to oversee and ensure all Board decisions and instructions to the Management are implemented smoothly and efficiently vis-a-vis to evaluate and make appropriate recommendation to the Board Committees and/or Board on all matters presented to the EXCO by the Management which requires Board’s decision and approval. The EXCO reports the findings and make subsequent recommendations to the Board.

1.2 Chairman and Group CEO The Chairman of the Board is a Non-Independent & Non-Executive Director. The Chairman is capable to lead the Board based on his leadership

skill, education level and extensive working experience. As the Chairman plays important role in the Board, the Chairman is able to provide effective leadership to the Board and guide the vision, strategic direction and business development of the Company, and at the same time be guided by the independent advice and views from the Independent Directors, who offer the necessary checks and balances in the decision making process of the Board.

The Chairman is responsible to promote and oversee the standards of Corporate Governance within the Board and the Company. The Chairman ensures that Board members receive accurate, timely and clear information to enable them to monitor performance, make sound decisions and give appropriate advice to promote the success of the Company.

The Chairman, whose primary role is to preside over board meetings, has the significant role to ensure that all directors’ views are heard, ensure sufficient time for discussion of each agenda, as well as to provide fair opportunity to all directors to participate actively and constructively during the meetings.

The Chairman assumes the formal role as the leader in chairing the Board meetings and Shareholders’ meetings.

The Group CEO is responsible to oversees the entire business and operations of the Group and lead the management team in the day-to-day operations of the Company, ensuring that implementation of the Board’s strategies, policies, decisions and strategies are effectively implemented and that the day-to-day management of the business are effectively managed as delegated by the Board from time to time.

The positions of the Chairman of the Board and Group CEO are held by two (2) different individuals. There is a clear accepted division of responsibilities between the Chairman and the Group CEO such that no individual has an unrestricted amount of power in any Board Decision. Besides ensuring an appropriate balance of power and authority, the segregation of roles facilitates an open exchange of views and opinions between the Board and the Management in their deliberation of the business, strategies and key operations of the Group.

1.3 Qualified and Competent Company Secretary The Company is supported by a suitably qualified and competent Company Secretary. The Company Secretary is a qualified Chartered

Secretary under Section 235(2)(a) of the Companies Act 2016 and is a Fellow member of the Malaysian Association of the Institute of Chartered Secretaries and Administrators (MAICSA). The Company Secretary is an external Company Secretary from MegaWan Corporate Secretarial PLT with vast knowledge and experience from being in public practice and is supported by a dedicated team of company secretarial personnel.



TDM BERHAD




1.3 Qualified and Competent Company Secretary (cont’d.) The Board is also regularly updated and advised by the Company Secretary on new statutory and regulatory requirements, and the resultant

implications to the Company and Directors in relation to their duties and responsibilities. She is also responsible for ensuring the Group’s compliance with the relevant statutory and regulatory requirements.

1.4 Access to Information and Advice All Directors have the right of access to all relevant Company’s information, access to management and may obtain independent professional

advice at the Company’s expense that are deemed necessary to carry out their duties, subject to prior consultation with the Chairman. To enable them to effectively exercise their duties and responsibilities, Board meetings regularly included sessions on recent key developments in governance and other corporate matters affecting the Company’s businesses.

All Board and Board Committee members are provided with the requisite notice, agenda and board papers prior to the convening of each meeting. All information and documents are provided on a timely manner so that members are given sufficient time to prepare and, where necessary, obtain additional information or clarification prior to the meeting to ensure effectiveness of the proceeding of the meeting

In ensuring the effectiveness of the functions of the Board, all Directors have individual and independent access to the advice and support services of the Company Secretary, Internal and External Auditors and may seek advice from the Management on issues under their respective purview and compliance with statutory obligations, Bursa Malaysia Listing Requirements for Main Market or other regulatory requirements.

In most instances, the Senior Management are invited to be in attendance at Board meetings to provide insight and to furnish clarification on issues that may be raised by the Board. Every Director also has unrestricted access to all information with regard to the activities of TDM Group.

Intended Outcome 2.0

There is demarcation of responsibilities between the Board, Board Committees and Management. There is clarity in the authority of the Board, its Committees and individual Directors.

2.1 Board Charter The Board has adopted a Board Charter which outlines the composition and balance, roles and responsibilities, operations and process of the

Board. The Board will review the Board Charter and Terms of Reference of the Board Committees as and when needed to ensure they remain consistent with the Board’s objective and responsibilities, and relevant standards of corporate governance.

The respective roles and responsibilities of the Board and Board Committees, Independent Directors and Management are clearly set out in the Board Charter as guidance and clarity to enable them to effectively discharge their duties. The Board Charter is to ensure that all Board members acting on behalf of the Company are aware of their duties and responsibilities as Board members, and the various legislations and regulations affecting their conduct, and that the principles and practices of good corporate governance are applied in all their dealings in respect, and on behalf of the Company.

The Board Charter incorporates provisions that provide for the clear demarcation of the respective roles and responsibilities of the Board.

The Board Charter would be reviewed periodically and updated in accordance with the needs of the Company and any new regulations. Any amendments to the Board Charter shall be approved by the Board.

The Board Charter also includes an outline on what is expected of Directors in terms of their commitment, roles and responsibilities as Board Members.

The Board Charter is published on the Company’s website at https://www.tdmberhad.com.my.


ANNUAL REPORT 2019



PRINCIPLE A (CONT’D.)Part I Board Responsibilities (cont’d.)Intended Outcome 3.0

The Board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness. The Board, Management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the Company.

Code of Business Ethics and Anti-Corruption Handbook

The Code of Business Ethics (“CoBE”) and Anti-Corruption Handbook are applicable to all Directors, Management and employees of the Group, which set forth the ethical and professional standards of corporate and individual behaviour expected to enhance the standard of corporate governance and corporate behaviour. The CoBE sets the foundation for how to conduct operations and provides guidance in maintaining trust and credibility with customers, partners, employees, shareholders and other stakeholders.

The CoBE requires all Directors to observe high ethical business standards and to apply these values to all aspects of the Group’s business and professional practices and to act in good faith in the best interest of the Group and its shareholders. Should there be any transaction to be entered into directly or indirectly with the Company or its subsidiaries, the said director has a duty to immediately declare to the Board in order to avoid any conflict of interest.

It also entrusts Board members and employees to apply the principles and practices of good Corporate Governance in all their dealings in respect of and on behalf of the Company; to help foster a culture of honesty and accountability, and uphold the core values of integrity when dealing with ethical issues. Further, the CoBE expressly prohibits improper solicitation, bribery and other corrupt activity not only by employees and directors but also by third parties performing work or services for or on behalf of companies in the TDM Berhad Group.

The Code of Ethics and the Anti-Corruption Handbook are available on the Company’s website.

In relation to governance structure and the directive by Prime Minister for all Government-Linked Companies (“GLC”) to set-up Integrity and Governance Unit, the Integrity Unit had been set up to strengthen internal controls in preventing corruption, abuse of power and malpractices thus, enhance company’s integrity.

The awareness programs have been carried out to the staff pertaining to the new regulation, adherence to the regulation and impact of non-compliance.

Whistleblowing Policy and Gender & Diversity Policy

The Board has adopted a Whistleblowing Policy to facilitate the whistle blower to report or disclose through established channels about any violations or wrongdoings they may observe in the Group without fear of retaliation should they act in good faith when reporting such concerns.

Only genuine concerns should be reported under the whistleblowing policy. The report should be made in good faith with a reasonable belief that the information and any allegations made are substantially true and the report is not made for personal gain. Malicious and false allegations will be viewed seriously and treated as a gross misconduct and if proven may lead to dismissal.

The Whistleblowing Policy is published on the Company’s website at https://www.tdmberhad.com.my.

The main focus of the Gender & Diversity Policy is to ensure working environment, salaries, benefits and other employment terms are designed with the aim to provide equal opportunities and making it easier for all employees to combine work, private life and parenthood including maintaining a workplace and environment, which is free of harassment in any form, including ethnically, religion, gender, national origin, ancestry, non-disqualifying physical or mental disability, marital status, sexual orientation or gender identity.

Further, the Group adopts non-discriminatory policy in employing talents to fulfil its human resource needs at all levels including Board especially in ensuring gender diversity. The Board with open arms accepts the gender diversity in the Board’s composition and Senior Management.


TDM BERHAD




Whistleblowing Policy and Gender & Diversity Policy (cont'd.)The Board through the NRC will continue to consider the gender diversity as part of its future selection and will look into having female Board representation.

The Gender & Diversity Policy is published on the Company’s website at https://www.tdmberhad.com.my.

Part II. Board CompositionIntended Outcome 4.0

Board decisions are made objectively in the best interests of the Company, taking into account diverse perspectives and insights.

4.1 Strengthen Composition of the Board The current Board has seven (7) Directors comprising four (4) Non-Independent & Non-Executive Director and three (3) Independent & Non-

Executive Directors.

The Board is made up of a diverse group of individuals with broad experiences and all Members have demonstrated their ability to exercise sound business judgment.

The Board is of the view that the current composition is suitable to reflect and protect the interests of all the shareholders.

The Board recognises the importance and contribution of its Independent & Non-Executive Directors. They represent the element of objectivity, impartiality and independent judgment of the Board. This ensures that there is adequate check and balance at the Board. The three (3) Independent Directors of the Company provide the Board with vast and varied management exposure, expertise and broad business and commercial experiences.

The ability and effectiveness of an Independent Director is dependent on his calibre, qualification, experience, integrity and objectivity in

discharging his responsibilities in good faith in the best interest of the Company and to safeguard the interests of the shareholders of the Company. Amongst various matters taken into consideration, the Board seeks to strike an appropriate balance between tenure of service, continuity of experience and the merit of refreshing the Board.

The independent directors participated actively in providing independent advice, views and judgement in the decision-making process, thus ensuring that a balanced and unbiased deliberation process is in place to safeguard the interest of all stakeholders. As and when a potential conflict of interest arises, it is a mandatory practice for the Directors concerned to declare their interest and abstain from the decision-making process.

The Non-Executive Directors do not participate in the routine operations and they bring unbiased guidance to the Group. They constructively challenge and at the same time contribute to the development of strategies. Being independent of management and free of any business or other relationship, they are therefore able to promote arm’s-length oversight and at the same time bring independent thinking, views and judgments to bear in decision making. The Board monitors the independence of each Director on yearly basis, in respect of their interests disclosed by them.

The Board and its NRC have upon their annual assessment, concluded that each of the three (3) Independent & Non-Executive Directors continues to demonstrate conduct and behaviour that are essential indicators of independence, and that each of them continues to fulfil the definition and criteria of independence as set out in the Main LR.

The profile of each member of the current Board is set out in the Directors’ Profile of this Annual Report.


ANNUAL REPORT 2019


PRINCIPLE A (CONT’D.)Part II. Board Composition (cont’d.)Intended Outcome 4.0 (cont’d.)

4.2 Tenure of an Independent Director The Board Charter stipulates that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years.

Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to shareholders’ approval and the director’s re-designation to Non-Independent Director.

The Board is of the view that a Director’s independence should not be determined solely based on the tenure of service and the continued tenure of directorship brings considerable stability to the Board. The Company benefits from Directors who have, over time, gained valuable insight into the Group.

None of the Independent & Non-Executive Directors hold office for more than nine (9) years under the reporting period.

4.3 Board Diversity The Board acknowledges the importance of diversity in the Board, including gender, age, ethnicity, experience and skills.

The Board believes that diversity leads to the consideration of all facets of an issue and, consequently, better decisions and performance.

The Board is judicious of the gender diversity recommendation promoted by the MCCG in order to offer greater depth and breadth to board discussions and constructive debates at senior management level. The Board practices no discrimination in term of appointment of Directors as well as hiring employees wherein the Directors and senior management are recruited based on their merit, skills and experience and not driven by age, cultural background and gender.

Currently, there are four (4) female directors in three (3) subsidiaries of the Group. Three of the Subsidiaries are also led by female as Chief Executive Officer (“CEO”) and General Manager (“GM”) respectively.

The Group adopts non-discriminatory policy in employing talents to fulfill its human resource needs at all levels including Board especially in ensuring gender diversity.

The Board will endeavour to have women representation on the Board based on effective blend of required skills, experience and knowledge in areas identified and the needs of the Company.

4.4. Foster Commitment of the Directors The Board meets on a quarterly basis, with additional meetings convened as and when necessary.

The Directors allocate sufficient time to discharge their responsibilities effectively and attend Board and Board Committee meetings with sufficient regularity to deliberate on matters under their purview. Board meetings are held at quarterly intervals with additional meetings convened for particular matters, when necessary. During the year, the Board has deliberated on business strategies and critical issues concerning the Group, including business plan, annual budget, financial results as well as key performance indicators.

The Board is satisfied with the level of time commitment given by Directors towards fulfilling their roles and responsibilities as Directors as evidenced by their attendance at the Board meetings. Board meetings are also supplemented by resolutions circulated to the Directors for decision between the scheduled meetings.



TDM BERHAD




4.4. Foster Commitment of the Directors (cont’d.) During the financial year ended (FYE) 31 December 2019, the Board met seventeen (17) times and the attendance records are as follows:-

No. Name of DirectorNumber of Meeting

attended for FYE 2019 %

1. YM Raja Dato’ Haji Idris Raja Kamarudin Non-Independent & Non-Executive Chairman

17/17 100

2. *Dato’ Bentara Dalam Dato’ Haji A. Rahman Bin Yahya Non-Independent & Non-Executive Director

09/13 69

3. Haji Mazli Zakuan Bin Mohd NoorNon-Independent & Non-Executive Director

17/17 100

4. Mohd Kamaruzaman Bin A Wahab Independent & Non-Executive Director

16/17 94

5. Haji Burhanuddin Hilmi bin Mohamed @ Harun Non-Independent & Non-Executive Director

17/17 100

6. Haji Najman bin Kamaruddin Independent & Non-Executive Director

17/17 100

7. **Haji Azlan bin Md Alifiah Independent & Non-Executive Director

06/06 100

8. ***YB Dato’ Haji Zainal Abidin Bin Hussin Non-Independent & Non-Executive Director

N/A

Note:- * Dato’ Bentara Dalam Dato’ Haji A. Rahman Bin Yahya resigned as Director of the Company on 7 November 2019 ** Haji Azlan bin Md Alifiah was appointed as Director of the Company on 30 August 2019 *** YB Dato’ Haji Zainal Abidin Bin Hussin was appointed as Director of the Company on 12 January 2020.

The attendance of all the Directors at Board meetings held during the FYE 31 December 2019 surpassed the minimum requirements stipulated under the Listing Requirement.

All Directors do not hold more than 5 directorships as required under Rule 15.06 of the Listing Requirements.

4.5. Continuing Education and Training of Directors Paragraph 15.08 of the Listing requirements of Bursa Securities requires Directors to undertake continuous professional development

programs to keep themselves abreast with the changing business environment, regulatory and corporate governance.

Directors were encouraged to continually update their skills and knowledge of the business and to actively participate on continuous professional development programs, so that, the Board is equipped to meet the fast changing competitive business environment and technological changes.


ANNUAL REPORT 2019




4.5. Continuing Education and Training of Directors (cont’d.) Some of the training/courses attended by the Directors during the FYE 2019 are as follows: -

No. Director Training attended Date1. YM Raja Dato’ Idris Raja Kamarudin Terengganu Inc Group Corporate Directors’ Training 2019 20 – 21 Apr 2019

MPOB International Palm Oil Congress and Exhibition (PIPOC) 2019 19 – 21 Nov 2019

2. Dato’ Bentara Dalam Dato’ Haji A. Rahman Bin Yahya (Resigned on 7 November 2019)

Terengganu Inc Group Corporate Directors’ Training 2019 20 – 21 Apr 2019

3. Haji Mazli Zakuan Bin Mohd Noor Terengganu Inc Group Corporate Directors’ Training 2019 20 – 21 Apr 2019


SPE Symposium : Decommissioning & Abandonment 3 – 4 Dec 2019

4. Haji Najman bin Kamaruddin Perdana Leadership Foundation CEO Forum 2019: Accelerating The Fourth Industrial Revolution in Malaysia

4 Apr 2019

Terengganu Inc Group Corporate Directors’ Training 2019 20 – 21 April 2019

Beyond Paradigm Summit 2019 17 – 18 Jul 2019

Enterprise Risk Management: The Essential Building Blocks for a Holistic & Robust ERM Framework

31 Oct 2019


5. Mohd Kamaruzaman Bin A Wahab Terengganu Inc Group Corporate Directors’ Training 2019 20 – 21 Apr 2019

Enterprise Risk Management: The Essential Building Blocks for a Holistic & Robust ERM Framework

31 Oct 2019

6. Haji Burhanuddin Hilmi bin Mohamed @ Harun

Terengganu Inc Group Corporate Directors’ Training 2019 20 – 21 Apr 2019

International Director Summit 2019 - The Trust Compass- Resetting the Course

14 – 15 Oct 2019

MIA Conference 2019 - Trust and Sustainability in a Digital Economy 22 – 23 Oct 2019

7. Haji Azlan bin Md Alifiah (Appointed on 30 August 2019)

MAP Training (Mandatory Accreditation Programme) 21 – 22 Nov 2019

8. YB Dato’ Haji Zainal Abidin Bin Hussin (Appointed on 12 January 2020)

MAP Training (Mandatory Accreditation Programme) 30 – 31 March & 1 Apr 2020

The Directors will continue to undergo relevant training programmes to further enhance their skills and knowledge to discharge their duties effectively.

In addition, the Directors were briefed at Board meetings and Audit Committee meetings on any updates or changes to the relevant guidelines on the regulatory and statutory requirements by the Company Secretary, Internal Auditors and External Auditors.

The Directors are also notified of any corporate announcement released to Bursa Securities and the impending restriction in dealing with the securities of the Company prior to the announcement of financial results or corporate proposals. Directors are also expected to observe insider trading laws at all times when dealing with securities within the permitted trading period.


TDM BERHAD



PRINCIPLE A (CONT’D.)Part II. Board Composition (cont’d.)Intended Outcome 5.0

Stakeholders are able to form an opinion on the overall effectiveness of the Board and individual Directors.

5.1 Nomination and Remuneration Committee (“NRC”) The NRC comprises the following five (5) members: -

Chairman : Haji Mazli Zakuan bin Mohd Noor Non-Independent & Non-Executive Director

Members : Haji Burhanuddin Hilmi bin Mohamed @ Harun Non-Independent & Non-Executive Director

Mohd Kamaruzaman bin A Wahab Independent & Non-Executive Director

Haji Najman bin Kamaruddin Independent & Non-Executive Director

Haji Azlan bin Md Alifiah (Appointed as member on 30 August 2019)

Independent & Non-Executive Director

Dato’ Bentara Dalam Dato’ Haji A. Rahman Bin Yahya(Resigned as member on 7 Nov 2019)

Non-Independent & Non-Executive Director

All members of NRC are Non-Executive Directors (NED) with majority of them being Independent.

In discharging its duties and responsibilities, the NRC is guided by the Terms of Reference (TOR) and is available on the Company’s corporate website.

The NRC is empowered by the Board to amongst others, identify and recommend to the Board suitable candidates for appointment to the Board and Board Committees, re-election and re-appointment of Directors, and review the independence of Independent Directors as well as considering the Board’s succession planning and training programme.

The NRC shall evaluate candidates on the aspect of their: • Integrity, Commitment and Ethics • Skills, Knowledge, Expertise and Experiences • Judgement and Decision Making • Professionalism

For position of Independent & Non-Executive Director, the candidates’ abilities to discharge such responsibilities/ functions independently as expected from the Independent Non-Executive Director.

During the financial year, the NRC has undertaken the following key activities in discharging its duties:1) Reviewed and confirmed the Minutes of the NRC meetings held.2) Reviewed and recommended Directors’ Fees and benefits payable to Non-Executive Directors to the Board for recommendation and

approval at the forthcoming AGM.3) Reviewed and recommended the TOR of NRC for Board’s approval.4) Reviewed and deliberated on Board and Board Committees evaluation forms and recommended to the Board for approval.5) Reviewed and recommended the re-election of Directors at the forthcoming AGM.6) Examined the composition of the Board.7) Reviewed the required mix of skills, experience and other qualities of the Board.8) Reviewed the contribution and performance of each individual director to assess the character, experience, integrity, and competence to

effectively discharge their role as a Director through a comprehensive assessment system.9) Conducted evaluation to assess the effectiveness of the Board as a whole and the Board Committees.10) Reviewed the term of office of the AC and assessed its effectiveness as a whole, the independence of the Independent Directors and

assessed their ability to bring independent and objective judgement to Board deliberations.


ANNUAL REPORT 2019




5.2 Board Effectiveness Evaluation (BEE) The Board through the NRC and facilitated by the Company Secretary, annually assesses the effectiveness of the Board, Board Committees,

the contribution of each individual Directors including assessment of the independence of each of the Independent Directors to set criteria as prescribed by the Listing Requirements by way of a set of customised questionnaires.

Based on the evaluation, the NRC and the Board concluded that all the Independent Directors of the Company continued to demonstrate conduct and behaviour that are essential indicators of independence, and that each of them is independent of the Company’s management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interest of the Company. The Board is satisfied that the Independent Directors continue to exercise independent and objective judgement and act in the interest of the Company and its stakeholders.

Summary of results of the annual assessment are tabled to the NRC for deliberation and reported to the Board.

5.3 Retirement of Directors All Directors, including the Managing Director (if any), shall retire by rotation once every three years in accordance with clause 119 of the

Constitution of the Company. The directors to retire shall be those longest in service since their last appointment. Retiring Directors may offer themselves for re-election to the Board at the Annual General Meeting.

In addition, any newly appointed Director will submit himself/herself for retirement and re-election at the Annual General Meeting immediately following his/her appointment pursuant to clause 118 of the Constitution of the Company. Thereafter he/she shall be subject to the one-third rotation retirement rule.

The NRC is entrusted to review the retirement of Directors.

A Director who is subject to re-election and/or re-appointment at an AGM is assessed by the NRC before a recommendation is made to the Board and shareholders.

Based on the Company’s Constitution of the Company, the following Directors are subject to retirement at the forthcoming AGM:-

Directors to Retire under Clause 119 of the Constitution of the Company:-1. YM Raja Dato’ Haji Idris Raja Kamarudin 2. Haji Najman Bin Kamaruddin

Directors to Retire under Clause 118 of the Constitution of the Company:-1. Haji Azlan Bin Md Alifiah 2. YB Dato’ Haji Zainal Abidin Bin Hussin

The Board (save for the members who abstained from deliberations on their own re-election) supported the NRC’s recommendations.


TDM BERHAD



PRINCIPLE A (CONT’D.)Part III Remuneration - Level and Composition of RemunerationIntended Outcome 6.0

The level and composition of remuneration of Directors and Senior Management take into account the Company’s desire to attract and retain the right talent in the Board and Senior Management to drive the Company’s long-term objectives.

6.1 Remuneration policy The NRC, which consists majority of Independent Directors, assists the Board on matters relating to the development, establishment, review

and revision, and implementation of policies and procedures on remuneration for Directors and Senior Management personnel in the C-Suite Category.

The NRC is responsible for assessing and recommending to the Board the remuneration of Directors and key senior management, and the payment of performance bonus and salary increments for employees of the Group.

For Non-Executive Directors, the level of remuneration would commensurate with the experience and level of responsibilities undertaken by them. The remuneration of Non-Executive Directors comprises annual Directors’ fees, meeting allowance for every Board and Board Committee meeting attended, medical coverage and other claimable benefits. The remuneration of Non-Executive Directors shall be reviewed annually by the NRC and the Board and subject to the approval of the shareholders at the annual general meeting.

The Company will be seeking the shareholders’ approval for the Directors’ Fees and Benefits payable to Non-Executive Directors for the period from 1 July 2020 until 30 June 2021, for the purposes of facilitating payment of Directors’ Fees and Benefits on a monthly basis and/or as and when incurred.

Intended Outcome 7.0

Stakeholders are able to assess whether the remuneration of Directors and Senior Management commensurate with their individual performance, taking into consideration the Company’s performance

7.1 Remuneration of Directors and Senior Management(i) The Board applies Practice 7.1 of the MCCG 2017 to disclose Directors’ remuneration on named basis for individual Directors with detailed

remuneration breakdown. The remunerations received by the Directors in respect of the financial year ended 31 December 2019 are disclosed below:

Company

No. DirectorFees(RM)

Salaries (RM)

Chairman & Committee Allowances

(RM)

Meeting Allowance

(RM)

Other Benefits

(RM)Total (RM)


1. Mohd Kamaruzaman Bin A Wahab 48,000 - 28,000 26,500 30,000 132,500

2. Haji Najman Bin Kamaruddin 48,000 - 24,000 30,000 30,000 132,000

3. Haji Azlan Bin Md Alifiah (Appointed on 30 Aug 2019)

16,307 - 5,776 5,500 30,000 57,583


4. YM Raja Dato’ Haji Idris Raja Kamarudin

48,000 - 120,000 15,000 55,000 238,000

5. Dato’ Bentara Dalam Dato’ Haji A.Rahman Bin Yahya (Resigned on 7 Nov 2019)

40,800 - 11,900 11,500 30,000 94,200


ANNUAL REPORT 2019



PRINCIPLE A (CONT’D.)Part III Remuneration - Level and Composition of Remuneration (cont’d.)Intended Outcome 7.0 (cont’d.)

7.1 Remuneration of Directors and Senior Management (cont’d.)

Company


Salaries (RM)


(RM)

Meeting Allowance

(RM)

Other Benefits

(RM)Total (RM)


6. Haji Mazli Zakuan Bin Mohd Noor 48,000 - 34,000 26,500 30,000 138,500

7. Haji Burhanuddin Hilmi Bin Mohamed @ Harun

48,000 - 30,107 31,000 30,000 139,107

Total 297,107 - 253,783 146,000 235,000 931,890

Group


Salaries (RM)


(RM)

Meeting Allowance

(RM)

Other Benefits

(RM)Total (RM)


1. Haji Najman Bin Kamaruddin 74,000 - 60,000 35,500 74,540 244,040


2. YM Raja Dato’ Haji Idris Raja Kamarudin

86,000 - 218,500 22,000 110,000 437,500

3. Dato’ Bentara Dalam Dato’ Haji A.Rahman Bin Yahya (Resigned on 7 Nov 2019)

57,300 - 44,900 13,500 39,166 154,866

4. Haji Mazli Zakuan Bin Mohd Noor 66,000 - 100,000 34,000 39,417 239,417

Total 283,300 - 390,400 105,000 264,123 1,042,823

(ii) With the best interest of the Group in mind, and taking into consideration the sensitivity, privacy, security, issue of staff pinching, the Board has opted not to disclose on a named basis the remuneration of their key senior management. Instead, the Board discloses the key senior management’s remuneration on an aggregate basis for the financial year ended 31 December 2019, as follows:

Range of Remuneration per annum (RM) No. of Management100,001 – 150,000 1

150,001 – 200,000 1

200,001 – 250,000 -

250,001 – 300,000 1

300,001 – 350,000 3

350,001 – 400,000 1

In addition, the Company is of the view that the interest of the shareholders will not be prejudiced as a result of the non-disclosure of the Group’s Key Senior Management.


TDM BERHAD



PRINCIPLE B Part I Effective Audit & Risk ManagementIntended Outcome 8.0

There is an effective and independent AC.The Board is able to objectively review the AC’s findings and recommendations. The Company’s financial statement is a reliable source ofInformation.

8.1 Audit Committee (“AC”) The Audit Committee is currently chaired by Haji Azlan Bin Md Alifiah who is a member of Chartered Institute of Management Accountant

(CIMA) (UK) and the Malaysian Institute of Accountants (MIA) and has vast experience in finance and corporate matters to lead discussions and deliberations related to financial issues and to review results and statements.

The Board believes that the current composition has the required experience and knowledge for the roles of Audit Committee. The Audit Committee consists of all Non-Executive Directors with majority of them being independent directors and no alternate director is appointed as member of the Audit Committee.

The Company complied with Practice 8.1 of the MCCG 2017 which stipulated that the Chairman of the AC is not the Chairman of the Board.

The AC has responsibility for oversight of the Company’s financial statements, related party transactions, system of internal control, the Company’s relationship with its external auditors and effectiveness of internal audit procedures. In discharging its duties and responsibilities, the AC is guided by the Terms of Reference and is available on the Company’s corporate website.

The AC annually assesses the audit quality, suitability, objectivity, effectiveness and independence of the external auditors. The AC also ensures that any provision of non-audit services by the external auditors are not in conflict with their role as auditors.

On 7 April 2020, the Board adopted the External Auditors Assessment Policy which sets out the guidelines and procedures to be observed by the AC when performing its annual assessment of the external auditors. This policy is available on the Company’s website at https://www.tdmberhad.com.my.

A full AC Report enumerating its membership and a summary of its activities during the financial year is set out on pages 108 to 114 of this Annual Report.

Part II Risk Management and Internal Control FrameworkIntended Outcome 9.0

Company makes informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.The Board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the Company’s objectives is mitigated and managed.

9.1 The Board recognises the importance of a sound system of risk management and internal control to ensure good CG practices and to safeguard the shareholders’ investments as well as the Group’s assets.

The Board is cognisant of its overall responsibility in establishing and maintaining sound risk management and internal control system as well as reviewing its adequacy and effectiveness. The governance structure that is in place provides reasonable assurance of the effectiveness of the Group’s business operations and risk management to safeguard shareholders’ investments and the Group’s assets as well as to ensure its sustainability.

The Board fulfils its responsibilities in the risk governance and oversight functions through the Board Risk & Compliance Committee (“BRCC”) in order to manage the overall risk exposure of the Group. The BRCC ensures that the risk management is embedded in the Group’s business operations by continuously reviewing the risk management policies and procedures; responsibilities and assessing whether the said policies and procedures provide reasonable assurance that risks are managed within a tolerable range.


ANNUAL REPORT 2019


PRINCIPLE B (CONT’D.)Part II Risk Management and Internal Control Framework (cont’d.)Intended Outcome 9.0 (cont’d.)

9.1 The Board recognises the importance of a sound system of risk management and internal control to ensure good CG practices and to safeguard the shareholders’ investments as well as the Group’s assets. (cont’d.)

The Board recognises that some risks cannot be eliminated completely. Nonetheless, with the implementation of an effective system of risk management and internal control, it provides a reasonable but not absolute assurance against material misstatements of financial and management information and records and/or against any material financial losses or fraud.

The BRCC comprises a majority of non-executive & non-independent directors to oversee the Company’s risk management framework and policies.

The existing BRCC comprises six (6) members as follows:-

No. Name of MemberNumber of Meeting

attended for FYE 2019 %1. Haji Najman bin Kamaruddin - Chairman 07/07 100

2. Haji Mazli Zakuan bin Mohd Noor 06/07 86

3. Haji Burhanuddin Hilmi bin Mohamed @ Harun 07/07 100

4. Mohd Kamaruzaman bin A Wahab 06/07 86

5. YB Dato’ Haji Zainal Abidin Bin Hussin (appointed as member on 12 January 2020) Not Available

6. Haji Azlan Bin Md Alifiah (appointed as member on 12 January 2020) Not Available

The TOR of the BRCC can be found in the Company’s website at https://www.tdmberhad.com.my.

An overview of the Group’s risk management and internal controls is set out in the Statement on Risk Management and Internal Control (“SORMIC”) on pages 115 to 120 of this Annual Report.

Board Tender Committee (“BTC”) The BTC key function is to review, monitor and recommend to the Board matters related to procurement of the Group in line with the

Delegated Authority Limit (“DAL”) and Group Procurement Policies and Procedures.

The BTC shall also review any related party transactions and conflict of interest that may arise during any transaction, procedure or course of conduct that may raise questions on integrity.

The main objectives of BTC, amongst others: -

• Achievement of maximum level of economic efficiency in obtaining the Group purchases at competitive and fair prices.• Protection of the Group funds and prevention of any influence of personal interests on tender formalities. reinforce corporate governance,

integrity and transparency in the procurement process and contract management.

The members of the BTC are as follows:

Chairman : Haji Burhanuddin Hilmi bin Mohamed @ Harun Non-Independent & Non-Executive Director

Members : Haji Mazli Zakuan bin Mohd Noor Non-Independent & Non-Executive Director

Mohd Kamaruzaman bin A Wahab Independent & Non-Executive Director

Haji Najman bin Kamaruddin Independent & Non-Executive Director

Haji Azlan Bin Md Alifiah Independent & Non-Executive Director



TDM BERHAD


PRINCIPLE B (CONT’D.)Part II Risk Management and Internal Control Framework (cont’d.) Intended Outcome 10.0

Company has an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such framework.

10.1 The Group’s internal audit (“IA”) function on risks is carried out by the Company’s Internal Audit Department (“IAD”) which reports directly to the AC on its activities based on the approved annual IA plan.

The internal audit function is carried out by the in-house Internal Audit Department (IAD) of the Company. The IAD is led by Head of Internal Audit who reports functionally to the AC. IAD’s authority, scope and responsibilities are governed by an Internal Audit Charter, approved by the AC.

Further information on the Group’s risk management and internal control framework is made available in the Statement of Risk Management and Internal Control of the Annual Report.

10.2 The IAD is headed by Mohd Roslan bin Mamat. He holds a Bachelor of Accounting, Certificate in Internal Auditing for Financial Institution (CIAFIN), Chartered Islamic Finance Professional (CIFP) and Certified Integrity Officer (CeIO)

During the FY2019, the areas audited included audits of the various departments covering the operating subsidiaries within the Group. Internal Audit reports were presented and deliberated in the AC meetings on regular basis. The reports were subsequently issued to the respective operations management, incorporating audit recommendations and management’s responses with regards to any audit finding on the weaknesses in the systems and controls of the operations. The IAD conducted follow-up audit to ensure the agreed audit recommendations were prompt implemented.

In discharging its duties and responsibilities, the Group Manager of IAD received instruction from and reported directly to the AC. The internal audit activities, including the audit scope, procedures, frequency and the content of the reports, remain free from any management interference. IAD has no direct operational responsibility or authority over the areas audited. Since IAD does not involve in the implementation of controls, development of procedures or engage in any activities that may impair the judgment of the Internal Auditors, it maintains its independence and objectivity.

The Internal Auditors are free from any relationships or conflicts of interest, which could impair the audit objectivity and independence for each audit engagement.



ANNUAL REPORT 2019


PRINCIPLE CPart I Effective Audit & Risk ManagementIntended Outcome 11.0

There is continuous communication between the Company and stakeholder to facilitate mutual understanding of each other’s objectives and expectations.Stakeholders are able to make informed decisions with respect to the business of the Company, its policies on governance, the environment and social responsibility.

11.1 Communication with Stakeholders

The Board believes that a constructive and effective investor relationship is essential in enhancing shareholder value. The Board, in its best efforts, always keeps the shareholders and various stakeholders informed of the Group’s business, operations and financial performance and ensure that the communication with them is accurate, factual, informative, consistent, transparent and timely.

The Board ensures that there is effective, transparent and regular communication with its stakeholders through a variety of communication channels as follows:

a) Announcements to Bursa Securities Material information, updates and periodic financial reports are published on a timely basis through announcements to Bursa

Securities. Shareholders and Investors can obtain the Company’s latest announcements such as quarterly financial results in the dedicated website of Bursa Securities at https://www.bursamalaysia.com.

b) Corporate website The Company’s corporate website provides a myriad of relevant information on the Company and is accessible by the public.

c) Annual reports The Company’s Annual Reports to the shareholders remain the central means of communicating to the shareholders, amongst

others, the Company’s operations, activities and performance for the past financial year end as well as the status of compliance with applicable rules and regulations.

d) General meetings The Annual General Meetings (“AGM”) / Extraordinary General Meetings (“EGM”) which are used as the main forum of dialogue for

shareholders to raise any issues pertaining to the Company.

e) Investor Relations Shareholders and other interested parties are welcome to contact the Company should they have any comments, questions or

concerns, by writing in, via telephone or email to the Company’s general email address.



TDM BERHAD


PRINCIPLE C (CONT’D.)Part II Conduct of General MeetingsIntended Outcome 12.0

Shareholders are able to participate, engage the Board and Senior Management effectively and make informed voting decisions at General Meetings.

1.1 Shareholders’ Participation at General Meetings

The AGM, which is the principal forum for shareholders dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification.

In keeping with Practice 12.1 of the MCCG, the notice to shareholders should be given at least 28 days in advance of the AGM. Hence, the Notice of the 54th AGM was issued on 26 April 2019, in effect being 31 days in advance of the scheduled AGM that was held on 28 May 2019.

We continue to encourage shareholders to attend the AGM and convey their expectations and possible concerns on proposed resolutions and matters relating to the Group’s operations before putting each resolution to a vote.

All Directors including the Chairman of the AC, NRC, BRCC, BTC and Key Senior Management as well as the external auditors were present at the last AGM to provide meaningful response to questions addressed to them. The Chairman provided ample time for shareholders to participate in the Questions and Answers session. Suggestions and comments communicated by shareholders were noted by the Board and Management.

The notice of the forthcoming 55th AGM will be circulated to shareholders at least 28 days before the date of the meeting as prescribed by the MCCG 2017 and the said notice will also be advertised in a nationally circulated English or Bahasa Malaysia newspaper.

Poll voting All resolutions tabled during the AGM or EGM are voted by poll with the voting results and procedures validated by an independent scrutineer.

The voting results are disclosed immediately (i.e. percentage of shareholders approving, dissenting and abstaining) for all the resolutions that are tabled.

An independent scrutineer was appointed to validate the votes cast at the AGM. The outcomes of voting were announced to Bursa Securities after the AGM and posted on the Company’s corporate website.

This CG Overview Statement was approved by the Board on 17 June 2020.



ANNUAL REPORT 2019


AUDIT COMMITTEE REPORT

AUDIT COMMITTEE (AC) REPORT“The AC is responsible to facilitate and assist the board of directors in overseeing the financial reporting process. Their role is to review the financial information to ensure that the financial statements of TDM Berhad and the group are prepared appropriately and are in compliance with the Malaysia Financial Reporting Standards (MFRS), review the system of internal

controls which the management and the board have established and report requirements to make certain that it is in compliances with the relevant laws and regulations. On top of that, the AC also evaluates the performances of the internal and external auditors and is also primarily in charge of recommending the appointment, re-appointment and the removal of the external auditors.”

MEMBERS OF THE AC

NUMBER OF MEETING HELD DURING THE YEAR UNDER REVIEW

JANUARY FEBRUARY MARCH APRIL MAY JUNE

2416 24 2628 2

AC SP AC SP AC SP AC SP

Haji Azlan bin Md Alifiah

Haji Burhanuddin Hilmi bin Mohamed@Harun

Haji Mazli Zakuan bin Mohd Noor

Haji Najman bin Kamaruddin

Mohd Kamaruzaman bin A Wahab

AC AC

Notes:Details and background of the AC members can be found from pages 31 to 37 of this Annual Report. Further information on the AC’s Terms of Reference is available at the Company’s website at


(Chairman since 30 August 2019)(Member since

30 August 2019)

(Appointed as Chairman on 1 August 2018. Relinquished as Chairman on 30 August 2019

and remain as member)

(Member since 1 August 2018) (Member since 4 October 2018)

(Member since 1 August 2018)

Independent &Non-Executive Director




Independent &Non-Executive Director

Chairman Members

Total AC meetings in hoursAll members have complied with the minimum attendance of not less than 50% as stipulated in the Terms of Reference of the AC.

Average attendance of AC meetings

94%45 Minutes

32 Hours


TDM BERHAD



JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER

22 2125 25

AC

MEMBERSHIP AND ATTENDANCEThe AC members’ profile and details of their attendance of the AC meetings held during the financial year under review can be found from pages 31 to 37, of this Annual Report.

The Committee is led by its Chairman, Haji Azlan bin Md Alifiah (“Haji Azlan”), an Independent & Non-Executive Director of the Company. Haji Azlan holds an Accountancy Professional Qualification from the Chartered Institute of Management Accountants (UK), MARA Institute of Technology (ITM). He is also a member of the CIMA (UK) as well as the MIA. This is in line with the requirement under paragraph 15.09(1)(c) of the MMLR of Bursa Securities that at least one (1) member of the Committee must be a member of the MIA or have equivalent expertise or experience in the field of accounting and finance.

The AC of the Company consist of experienced and qualified members. Presently, the AC consists of three (3) Independent & Non-Executive Directors i.e. 60% of the total member of AC. All members of AC have sufficient understanding of the Company’s business and financial statements. The AC provides an independent oversight of the internal and external audit functions, governance, risk management, internal controls and reporting requirements.

Whilst the AC’s Terms of Reference (TOR) requires the AC to meet four (4) times a year, during the financial year under review, the AC met ten (10) times. Aside from the AC members, the Group Chief Executive Officer, the Group Company Secretary and the Head, Internal Audit were in attendance at all the AC meetings.

The Board had established a transparent and appropriate relationship with its external auditors through the AC. The representatives of the external auditors were present at the AC meetings during deliberations which required their input and advice. In addition, the AC had met the external auditors without the presence of the Management twice during the financial year under review. During the session without the presence of the Management, the external auditors had discussed with the AC on issues and concerns, arising from the audit and any other relevant matters. Other officers of the Company and its subsidiary companies were also invited to the AC meetings during the deliberation of matters related to them as and when necessary.

The Chairman of the AC regularly provides updates to the Board on key matters deliberated at the AC meetings through the AC Reports. Any members of the Board may enquire or seek clarification on the matters deliberated by the AC as per the AC Reports.

AC SP AC SPAC


ANNUAL REPORT 2019


ROLES AND RESPONSIBILITIES OF THE ACGovernance, Risk Management and Internal Control• Review the adequacy and effectiveness of Governance, Risk Management and Internal Control (GRC) systems through the assistance of

external audit, internal audit, risk management and corporate secretarial functions; and• Review the updates on the internal accounting and auditing process to ensure operational effectiveness, reliable financial reporting in

compliance with regulations and policies.

Financial Reporting• Review and recommend the Quarterly and Annual Consolidated Financial Statements of the Company and Group (including announcement

and press release) for the Board’s approval;• Ensure that the Consolidated Financial Statements of the Group are prepared in accordance with the Malaysian Financial Reporting Standard

and other regulatory requirements; and• Review on significant matters raised by the external auditors and progress updates from Management.

External Audit• Review the criteria for selecting, monitoring and assessing the external auditors. Make recommendations to the Board on the proposals to

shareholders on the appointment, re-appointment and removal of the external auditors as well as the approval of remuneration and terms of engagement of the external auditors;

• Review the scope and results of the external audits and the independence and objectivity of the external auditors; and • Ensure that the external auditors promptly communicate to the AC any information regarding internal control weaknesses or deficiencies,

and that significant findings and observations regarding weaknesses are promptly rectified.

Internal Audit• Review the adequacy and effectiveness of the internal audit function, methodology and processes, as well as to ensure that the Internal Audit

is adequately resourced and set up to carry out its independent assurance and consulting functions, including approving its budget;• Review the Internal Audit’s Plan (Strategic Plan and Annual Plan), its effectiveness and the scope and results of audits; and • Review key audit reports and ensure necessary corrective actions have been taken by the Management in a timely manner to address control

weaknesses, policies and other problems identified by the internal auditors and other control functions.

Related Party Transaction• Review all material related party transactions (including interested person transactions) and keep the Board informed of such transactions,

and the findings and conclusions from its review.

Annual Report Disclosure• Report the work of AC in the discharge of its duties and how it had met its responsibilities, the number of meetings held in a year, details of

attendance of each member in respect of the meeting and details of relevant training attended; and • Review the accuracy and adequacy of the corporate governance disclosure and statement of risk management and internal control.



TDM BERHAD


THE AC ACTIVITIES IN 2019“We are proud to share that the major improvement in FYE 2019 that has been made by the IAD was the alignment of the internal audit methodology to the Internal Auditor’s International Professional Practices Framework (IPPF) and the internationally recognised Internal Control and Risk Management Framework of COSO (Committee of Sponsoring Organisations). This has led to the adoption of the COSO Framework within the Group which can strengthen the achievement of the Corporate Objective of the Company.”

The summary of activities of the AC in the discharge of its duties and responsibilities for the financial year ended 31 December 2019 included the following:

1. Financial Reporting The AC assisted the Board in ensuring the financial statements of the Company and its Group was prepared in accordance with the applicable

financial reporting standards. The AC reviewed and determined whether in the preparation of the financial statements, appropriate accounting policies have been adopted and supported reasonable and prudent judgement and estimates.

The Chief Financial Officer (CFO) is responsible for the financial management of the Company. Amir Mohd Hafiz bin Amir Khalid, the CFO is a Fellow member of ACCA. Details of his profile is available on page 38 of this Annual Report.

During the year under review, the AC has discharged its key responsibilities in relation to financial reporting in the following manner:

(a) Review of the unaudited quarterly financial report for submission to Bursa Securities with the Management before recommending to the Board of Directors for its approval. When reviewing the report, the AC would seek for the assurance that the condensed consolidated interim financial statements have been prepared in accordance with the Malaysian Financial Standards 134: Interim Financial Reporting, paragraph 9.22 of the MMLR and International Accounting Standards 34: Interim Financial Reporting issued by the International Accounting Standards Board ;

(b) Review of the audited statutory accounts of the Company and of the Group, raised issues and concerns, if any, arising from the statutory audit with the external auditors, prior to recommending to the Board of Directors for its approval. The AC’s review included a critical scrutiny of the statutory accounts based on an analytical approach. At the same time, the AC sought assurance from the Management and the external auditors that the financial statements disclosures were in-compliance with relevant and applicable statutory requirements and the Malaysian Financial Reporting Standards. The AC’s scrutiny of the statutory accounts also included a review of the reasonableness of accounting policies and estimates applied by the Group, and reporting ongoing concerns, as concurred by the external auditors in its Report to the AC. The AC also reviewed pertinent audit matters highlighted by the external auditors in their report to the AC which warrant the AC attention;

(c) Review of the Report of the AC pursuant to MMLR for inclusion in the Company’s Annual Report;

(d) Review of the disclosures forming the contents of the Company’s Annual Report as required in Part A of Appendix 9C of MMLR; and

(e) Review of the updates on the internal accounting control in accounting and auditing process to achieve operational effectiveness and efficiency, reliable financial reporting and compliance with regulations and policies.

2. External Audit (a) Review of the audit plan of the Company and its Group for the year under review (inclusive of key audit matters, audit approach, audit

focus areas and scope of work) with external auditors prior to the commencement of the annual audit. The external auditors briefed the AC on their audit plan pertaining to the statutory audit of the Company and its Group, highlighting areas of audit emphasis, key regulatory developments, involvement of the internal auditors and other experts;



ANNUAL REPORT 2019


(b) Review the results of the annual audit, the External Auditor’s Report and the Management Representation Letter together with the Management’s corrective action to address the findings of the external auditors;

(c) Meet with the external auditors without the presence of the Management to discuss issues and concerns if any, arising from the statutory audit and other matters the external auditors may wish to highlight such as the level of assistance provided by the Company’s and its Group’s employees to the external auditors, and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information ; and

(d) Evaluate the performance, independence and suitability of the external auditors and made recommendations to the Board of Directors on their re-appointment and remuneration. In reviewing the performance, independence and suitability of the external auditors, the AC reviewed the qualifications and experience of the audit team as well as conducted an assessment on the effectiveness and the performance of the external auditors and other areas such as the scope of the audit, their independence and objectivity, audit fees and audit experience.

3. Related Party Transaction (a) With the assistance from CFO and Internal Auditors, conduct review of related party transactions entered into by the Company and

the Group to ensure that the transactions entered into were in compliance with paragraphs 10.08 and 10.09 of the MMLR (Chapter 10 Part E – Related Party Transactions) and pursuant to MFRS 124 disclosures (Related Party Disclosures) ;

(b) Review and report to the Board all related party transactions entered by the Company and its Group;

(c) Review of the reports of recurrent related party transactions and the Shareholders regarding the proposed renewal of shareholders’ mandate for existing recurrent related party transactions of a revenue or trading in nature; and

(d) Monitor any potential conflict of interest situations involving Directors and ensured that such situations of conflict were avoided and that the requirements under the Directors’ Code of Ethics were adhered to.

4. Internal Audit4.1 How Internal Audit Operates IAD is committed to provide independent, objective and risk-based assurance and consulting services on the areas of business operations

reviewed as well as give insight and advice on best practices that will enhance, protect and add value to TDM Group. This is accomplished through the following:(a) Established a comprehensive and detailed Internal Audit Plan using appropriate and structured risk-based audit methodology that

is aligned to the TDM Group’s strategic objectives;

(b) Adopting a systematic and disciplined approach in evaluating adequacy and effectiveness of controls to manage the risks exposure within TDM Group’s business operations;

(c) Embracing international standards and best practices such as International Professional Practices Framework (IPPF) and Committee of Sponsoring Organisations (COSO) to further enhance the relevance and effectiveness of the internal audit functions;

(d) Reviewing existing internal control systems and reporting on whether these provide reasonable assurances against material misstatement, loss and fraud;

(e) Reporting any significant issues that affects the process of controlling the activities of and managing the risks faced by the departments, divisions and companies audited; and



TDM BERHAD


(f) Seeking the Management’s agreed course of actions to rectify weaknesses identified and perform follow-up audits to confirm if the actions have been correctly implemented and are adhered to consistently.

4.2 Independence of Internal Audit In discharging its duties and responsibilities, the Head, Internal Audit received instruction from and reported directly to the AC.

The internal audit activities, including the audit scope, procedures, frequency and the content of the reports, remain free from any management interferences. IAD has no direct operational responsibilities or authority over the areas audited. Since Internal Audit Department (IAD) does not involve in the implementation of controls, development of procedures or engage in any activities that may impair the judgment of the Internal Auditors, it maintains its independence and objectivity.

4.3 Conflict of Interest The Internal Auditors were free from any relationships or conflicts of interest, which could impair the audit objectivity and independence

for each audit engagements.

4.4 IAD Resources IAD consists of seven (7) resources including one Head. Details of responsible personnel for Internal Audit as follows:

4.5 Internal Audit Framework IAD has developed its own Internal Audit Framework (IAF) based on the MMLR, MCCG, Committee of Sponsoring Organisations of the

Treadway Commission (COSO) Integrated Internal Control Framework, COSO Enterprise Risk Management Framework and International Professional Practices Framework to guide the IA activities.

4.6 Evaluation of Internal Audit In order to enhance the capability of IAF, the AC evaluates its effectiveness by considering the following performance criteria:

• Overall comprehensiveness of the internal audit plan and its link to the strategic objectives of the company.• Efficient implementation of Internal Audit Plan. Speedy rectification of audit recommendation.• The competency of the internal auditors and adequacy of resources.

The assessment on the IAF provides assurance to the AC on the adequacy and effectiveness of the Group’s Governance, Risk Management and Control Process.

4.7 Internal Audit Activities For 2019 “The implementation of the newly introduced Internal Audit Methodology based on internationally recognised internal audit

framework made FYE2019 a challenging year for the IA Team. This initiative lead to the adoption of the COSO’s Internal Control and Risk Management Framework, Group-wide”

The summary of the activities of the IAD for the year under review are as follows:(a) Review the Internal Audit Charter, Methodology and Procedures in line with the IPPF and COSO. The implementation of these will

further strengthen the appreciation of the internal audit team into a common goal in driving the internal audit function within the Group.

(b) Preparation of the Internal Audit Plan for approval of the AC. The Audit Plan was developed based on assessment of the significant potential risk exposure of the auditable areas. Therefore, the internal audit activities are really focused in giving assurance to the execution of the Company’s Strategic and Business Plan.


Mohd Roslan Mamat

Name

Bachelor of Accounting/Certificate in Internal Auditing for Financial Institution (CIAFIN)/ Chartered Islamic Finance

Professional (CIFP)/Certified Integrity Officer (CeIO)

Degree/Professional Certification

IIAM

Professional Membership

17(Internal Audit &

Risk Management)

Years of Experience


ANNUAL REPORT 2019



(c) Performing internal audit fieldworks throughout the financial year under review involving head office, healthcare and plantation using the newly adopted Methodology. The recommended improvement in term of GRC will increase the likelihood of the Group in achieving its Corporate Objectives.

(d) Issuance of audit reports to the AC and Management, identifying control weaknesses and issues as well as highlighting recommendations for improvement. Through the IA reports, the competencies and capabilities of the management and in driving the targeted result of the Company could be strengthened.

(e) Follow-up on the Management corrective actions on audit issues raised by IAD, internal auditor of Terengganu Incorporated and external auditors. Determine whether corrective actions taken had generally achieved the desired results. This is part of the check and balance between the management to ensure the sustainability of the Group.

(f) Report to AC, the review on the adequacy, appropriateness and compliance of Governance, Risk Management and Internal Controls processes. The AC and Board of Directors could be kept abreast to the current level of GRC and what are the improvements required, going forward.

(g) Review compliance with relevant legal, regulatory and internal policies. This is to ensure the management is properly guided and complied with the relevant regulatory requirements and the policies of the Group.

5. Other AC Activities(a) Review and endorse the Corporate Governance Overview Statement and the Statement of Risk Management and Internal Control for the

Board’s approval and inclusion in the Annual Report;

(b) Review of the proposal for dividend for recommendation to the Board;

(c) Review the TDM Group Internal Control Framework for recommendation to the Board;

(d) Report to the Board any significant issues and concerns discussed during the AC meetings together with the relevant recommendations; and

(e) Review of the assurance provided by the GCEO and CFO on the scope and performance of the risk management and internal control system established by the Group prior to recommendation to the Board for acceptance.

CONCLUSIONDuring the Financial Year Ended 31 December 2019, the TOR of the AC was reviewed to reflect the recommendations of MCCG 2017. Based on the annual evaluation on the effectiveness of the Board, its committees and the members of the Board, it was revealed that the Board was satisfied with the performance of the AC and its members. The AC has discharged its duties in accordance with its TOR and in line with the requirements of MMLR and MCCG 2017.

This statement is made in accordance with a resolution of the Board dated 17 June 2020.


TDM BERHAD


The Board is committed to maintain a sound system of risk management and internal controls throughout TDM Group. This statement is made pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.

1.0 BOARD RESPONSIBILITY1.1 The Board affirms its responsibility for maintaining a sound risk management framework and internal control system to create a

sustainable value to stakeholder as well as the Group’s businesses, conscientiously to discharge its stewardship in identifying principal risks and ensuring the implementation of an appropriate risk management and internal control system to manage those risk in accordance with Malaysian Code on Corporate Governance.

1.2 The Board continually articulates, implements and reviews the adequacy and effectiveness of the Group’s enterprise risk management and internal control system which has been embedded in all aspects of the Group’s activities. The Board reviews the processes, responsibilities and assesses for reasonable assurance that risks have been managed within the Group’s risk tolerable ranges.

1.3 The Board has an overall responsibility for the Group’s risk management and internal control system and is focused on setting the tone and culture towards their effectiveness. Successful integration of good governance structures and processes with performance-focused risk management and internal control at every level of the Group and across our operations have been key towards the effective pursuit of our objectives.

2.0 RISK MANAGEMENT FRAMEWORK2.1 OBJECTIVE AND METHODOLOGY

a. The primary objective of the risk management framework is to support the achievement of the Group’s strategic objective, safeguard the Group’s wealth, people, financial, philosophy and reputability through:• Assist the Board to make sound management decisions within an environment of tolerable of strategic and business risks,

including identifying and leveraging on any opportunity.• A structural and consistent approach to identity, mitigate, manage and monitor as well as rate the risks. • The timely information across clear reporting structures.• Planning and execution to monitor and reassess the top quartile risk profile.• Continuously monitor the information provided to decision-makers in order to assist them as they manage key risks and protect

the interests of shareholders.• Establish KPIs to drive behaviours consistent with our strategy, and reward effective articulation and management of key risks.

b. Continuance of the Board on quarterly to review on the adequacy, effectiveness and integrity of the Group’s Risk Management Framework and relevant policies that are related to risks assessment, acknowledgement and dominance, dissemination and surveillance. Each segment of the Group is exposed to variety of risks. The objective of the Group’s Risk Management is to create value for shareholders whilst optimization and protection of our performance.

c. The Group defends itself from threats with relevant guidelines on risk reporting and disclosure which cover the type of risks as listed below as disclosed in the Management Discussion and Analysis under section Risk Management in pages 27 to 30 of this Annual Report:• Strategic Risk• Human Capital Risk• Operational Risk• Financial Risk• Compliance Risk

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


ANNUAL REPORT 2019


2.2 REPORTING STRUCTURE The Group Management Committee (“GMC”) chaired by Group Chief Executive Officer (“GCEO”) reviewed, appraised and assessed the

controls and actions to mitigate and manage the overall Group’s risk exposure, as well as raised issues of concerns and recommended mitigating actions during FY2019.

a. The Risk Management Department (“RMD”) assists the Board in providing the framework and guidance in which the business units can operate, identify, and report on Group’s risks. The RMD has a broad mandate to ensure the effective implementation of the objectives outlined in the Risk Management Framework throughout the Group. Furthermore, the RMD is also responsible for quarterly reporting higher risk exposures as well as on the progress and assessment of risk management in the Group to the Board. The RMD is assisted by Group Risk Representatives which are responsible for supporting the RMD with oversight of the risk management framework.

b. The Board delegates to the GCEO the responsibility for ensuring the effectiveness of implementation and maintenance of the framework and that all personnel adhere to its mandates. The GMC supports the GCEO in ensuring risk management is adequately carried out, as part of their responsibility in evaluating and making key strategic and operational decisions.

c. Jointly, the GCEO, GMC and RMD are responsible for providing leadership and sponsorship for the implementation of the Risk Management Framework. The GCEO and Management Committee ensure that risk assessment is explicitly performed during strategic planning exercises, on top of managing risk exposures in the pursuit of the Group’s strategies.

d. The structure is encapsulated in the Group’s governance framework on risk management and internal controls which assigned responsibility to relevant level at Board and Management as detailed below:


Audit Committee

Internal Audit Dept.

Board Risk & Compliance Committee

Group Chief Executive Officer/ Group Management Committee

Risk Management Dept. Compliance, Integrity & Sustainability Dept.

Line Management and Employees

Day to day Risk Management

Board of Directors

TDM Berhad HQ Plantation Healthcare


TDM BERHAD


2.3 FEATURES OF RISK MANAGEMENT AND INTERNAL CONTROLa. The goal for Risk Management Framework is specifically designed to identify, evaluate and manage risks rather than to eliminate the

risks that would impede the Group’s long-term and short-term objectives. Accordingly, such system can only provide a reasonable but not absolute assurance against material misstatement or loss, and that any adverse impact arising from a foreseeable future event or situation on the Group’s objectives is mitigated and managed. This is achieved through a combination of foresight, preventive, detective and corrective measures.

b. Consistency of evaluating, monitoring and reporting are the framework for risk management. Formal risk reports are developed and presented on quarterly basis to the GMC, Board Risk & Compliance Committee (“BRCC”) and Board. Significant risks affecting the business are presented to the GMC for reviewing before presented to the BRCC for deliberation for further approval from the Board.

c. The arrangements and accountability of relevant levels of management and operations in the Three (3) Lines of Defence in exercising their functions are designed to reinforce each other in the implementation and strengthening of the Group’s Risk Management Framework and internal control as shown below:


Group Management Committee

1st LINE OF DEFENCE

• Operational Management

• Internal Control Measures

• Risk Management• Compliance• Quality

• Internal Audit

External Audit & Regulations

2nd LINE OF DEFENCE 3rd LINE OF DEFENCE

Board of Directors

Board Risk & Compliance Committee

Audit Committee


ANNUAL REPORT 2019


d. This model provides guidance to the Group for the implemented structure and assigned roles and responsibilities of parties to increase the effectiveness of management of risk and control. Its underlying premise is that, under the oversight and direction of senior management and the board of director. Three separate group or lines of defence within the Group are necessary for effective management of risk and control. The responsibilities of each of the group or lines are: i. First Line of Defence: Operational Management

• Day-to-day ownership and management of risk and control• Develop and implement the Group’s control and risk management processes including internal control processes designed

to identify and assess significant risks, execute activities as intended, highlight inadequate processes, address control breakdowns and communicate to key stakeholders of the activity

• Adequately skilled to perform tasks within their area of operations

ii. Second Line of Defence: Risk Management, Compliance and Quality• Defining activities to monitor and how to measure success as compared to management expectations• Monitoring the adequacy and effectiveness of internal control activities• Providing risk management framework• Identifying and monitoring known and emerging issues affecting the Group’s risk and controls• Provide guidance to develop, implement, or modify in relation to risk management and control processes

iii. Third Line of Defence: Internal Audit• Provide independent assurance to senior management and the Board that the first and second-lines’ efforts are consistent

with the expectations.

3.0 RISK MANAGEMENT PROCESS OF THE GROUP For the year ended 31 December 2019, the Group had undertaken seven (7) steps of risk management process which had been practiced in

quarterly basis as follows:1. Identify the risk2. Assess the risk3. Consider controls4. Reassess the risk5. Treatment of the risk6. Monitor the risk7. Report movement of the risk

The Diagram below shows the risk management process rolled out across the Group and the risk profile is developed at each business sector of the Group i.e. plantation, healthcare and corporate centres:

Identify the risk that impact the performance of strategy and business

objectives

Assess the risk associated with each

opportunity and threat and map exposure

Consider controls in place to address each risk

Reassess the risk and remap exposure in light of controls in

place

Treat the risksMonitor the risksReport movement

of the risk



TDM BERHAD


4.0 STATEMENT ON INTERNAL CONTROL The Group’s internal control system is designed to mitigate the risks which may hinder the effectiveness and efficiency of operations, reliability

of financial report and adherence to the laws and regulations. Thus, the Group’s business objective and plans may not be achieved. The Group has adopted the COSO Internal Control – Integrated Framework as guidelines in creating good control environment. The key elements of the Group’s internal control system based on the following control components:

a. Control Environmenti. In demonstrating towards commitment to integrity and ethical values, the Group has established the relevant policies such as Code

of Ethics & Business Conduct, Anti-Corruption Handbook, Whistleblowing Policy and No Gift Policy, and implemented Corporate & Social Responsibility Activities. In November 2019, the Integrity Unit was set up to comply with the government’s requirement via Prime Minister’s instruction (October 2018). Subsequently, the awareness programme had been initiated as part of adequate initiatives in relation to the introduction of Section 17A of MACC Act 2009.

ii. The Board’s oversight function and responsibility was clearly stated in Board Charter and Terms of Reference (“TOR”) of the respective Board’s Committee. The Executive Committee and Board Tender Committee was formed to enhance Boards’ oversight. Relevant matters are deliberated during these committees’ meeting prior to recommendation to the Board for decision. Revision of TOR has been carried out to strengthen the Board’s Committee. The Board and management hold meeting on regular basis to review the performance, risk assessments and financial statement of the company.

iii. The Group had streamlined the organisational structure to improve reporting lines. It clearly defined lines of responsibility and authority to ensure proper identification of accountability and delegation of duties. Besides, GCEO emphasizes the role of the holding company towards subsidiaries i.e. provide policy and guidance, reporting and monitoring the implementation. The Board had approved the Delegated Authority Limit (“DAL”) that outlines board and management limits and approval authority for various key business processes. Moreover, Group Management Committee was established to discuss and review operational and financial strategy matters of the Group and the Management Investment, Risk and Compliance Committee's function is to evaluate the existing and new investment and divestment of the group.

iv. To enhance the employee’s competency level, they are required to attend in-house training or public development courses to furnish their soft skill and technical capability. The Key Performance Indicator for each employee was set to enforce their accountability.

b. Risk Assessmenti. The management has set its corporate and business objectives through establishment of Strategic Plan and Annual Business Plan.

Risk assessment has been carried out to identify and mitigate the risks which might hinder company from achieving its corporate and business objectives. The details of risk framework and risk assessment processes are explained in the Statement on Risk Management on page 115-120 of this Annual Report.

c. Control Activitiesi. For enhancement of the control activities, the Group has utilised the information technology system via Microsoft Exchange,

Microsoft, accounting system, hospital information system, Smart HR including Plantware and Millware system. Through the systems, certain controls can be done which is more effective as compared to manual control.

ii. Policies and procedures were established at the Group and company level for guidance of employees in the operation of the business to be efficient and effective. All Group policies are required to be approved by the Board upon recommendation from the GCEO. The key policies that has been approved by the Board are on page 84-90 of this Annual Report.

d. Information and Communicationi. Reliable information is important for the Group to carry out its control responsibilities. The relevant reports have been discussed

and tabled at various level of meeting on regular basis. ii. Engagement of the internal audit as well as external audit in the verification of the reliability of information will highlight the Group’s

level of its adequacy and accuracy through their scheduled audit plan. iii. The relevant information then communicated internally to the Management and Board, and externally through Company’s website,

announcement, annual report and media release.



ANNUAL REPORT 2019


e. Monitoring Activitiesi. Assurance from the respective business unit for rectification of the concerned issues should there emerged, the Management had

conducted continuous assessment and regular evaluation process on day to day operation monitoring. Separate evaluation was carried out by Internal Audit Department and External Auditor.

ii. The Audit Committee in relation to the internal controls via the Internal Audit Department, reviews the adequacy and effectiveness of the internal controls as well as the control issues reported by the external auditors. The audit issues highlighted by Internal Auditor and corrective actions taken by Management are deliberated at the Audit Committee meeting. Furthermore, the internal control and risk-related matters warranting the attention by the Board, these matters are recommended by the Audit Committee to the Board for its deliberation and decision.

iii. Through follow up audit exercises, the Management responds towards evaluation, rectifications and communication of the concerned issues as conducted by Internal Audit Department. The summary of external and internal audit activities are articulated in the Audit Committee Report on pages 113 to 114 of this Annual Report.

5.0 REVIEW OF RISK MANAGEMENT AND INTERNAL CONTROL EFFECTIVENESSa. To enable the Board in reviewing the effectiveness and adequacy of risk management and internal control process, the Management

reports quarterly to the Board of the business risks that had impacted or were likely to have impacted the Group. b. The Management’s reports include the Group’s achievement of its strategies including the effectiveness of the risk management and

internal control system in mitigating and monitoring the risks. c. Upon deliberation of Risk Management Report at BRCC meeting, the Board reviewed the risk management’s process for identification,

assessment and evaluation of the identified risks and subsequently reviewed the risks management of the Group in order to manage and mitigate the significant risks identified.

6.0 ASSURANCE FROM MANAGEMENTa. The Board has received assurance from the GCEO and CFO that based on the risk management and internal control of the Group as well

as inquiry and information provided, the Group’s risk management and internal control system is operating adequately and effectively during the financial year 2019.

b. Meanwhile, the Board has on annual basis, considered all the significant aspects of risks and internal control of the Group for the year under review and up to the date of this statement.

c. The Board is satisfied with the adequacy and effectiveness of the Group’s risk management and internal control system.d. The objective to create sustainable value for stakeholder continue to be a prominent point of the Group, and therefore, the system of risk

management and internal control across the Group is continuously subject to enhancement and affirmation.

7.0 REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORSa. The External Auditors have reviewed this statement and reported to the Board that nothing has come to their attention that causes them

to believe that this Statement is not prepared in all material respects, intended to be included in this Annual Report, nor to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board and management thereon.

b. The auditors are also not required to consider whether the processes described to deal with internal control aspects of any significant problem disclosed in the annual report will, in fact remedy the problems.

This Statement on Risk Management and Internal Control was approved by the Board of Directors on 17 June 2020.



TDM BERHAD


1. UTILISATION OF PROCEED RAISED FROM CORPORATE PROPOSAL The Group did not undertake any corporate proposal to raise proceeds during the financial year.

2. AUDIT AND NON-AUDIT FEES For the financial year ended 31 December 2019, the amounts of audit and non-audit fees paid or payable by the Group and the Company to

the external auditors are as follows:-

GroupRM’000

CompanyRM’000

Audit Fees 537 187Non-Audit Fees 5 5

3. MATERIAL CONTRACTS INVOLVING THE INTEREST OF THE DIRECTORS AND/OR MAJOR SHAREHOLDERS During the financial year under review, save as disclosed in the sections under significant related party disclosures set out in Note 33 to the

financial statements, there were no existing material contracts of the Company and its subsidiaries involving the interests of the Directors or major shareholders, either still subsisting at the end of the financial year ended 31 December 2019 or entered into since the end of the previous financial year ended 31 December 2018.

4. LIST OF PROPERTIES The list of properties is stated on pages 267 to 271 of the Annual Report.

5. RECURRENT RELATED-PARTY TRANSACTIONS The Company had obtained mandate from its shareholders in respect of recurrent related party transactions of a revenue and/or trading

nature (“RRPTs”) (“RRPT Mandate”) at the Annual General Meeting (“AGM”) held on 28 May 2019.

Details of the RRPTs are disclosed in Note 33 to the Audited Financial Statements in this Annual Report. The RRPT Mandate will lapse at the conclusion of the forthcoming Annual General Meeting (“55th AGM”) unless such authority is renewed by a resolution passed at the 55th AGM. Accordingly, the Company will be seeking its shareholders’ approval to renew the RRPT Mandate at the 55th AGM.

ADDITIONAL COMPLIANCE STATEMENT


ANNUAL REPORT 2019


The Directors are responsible to ensure that the financial statements of the Group and the Company are properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, the provisions of the Companies Act 2016 in Malaysia (“the Act”) and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, so as to give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the financial performance and cash flows of the Group and the Company for the financial year then ended.

In preparing the financial statements, the Directors have:

(i) adopted appropriate accounting policies and applied them consistently; (ii) made judgements and estimates that are reasonable and prudent; and (iii) adhered to all applicable approved accounting standards in Malaysia

The Statement by the Directors pursuant to Section 251 (2) of the CA 2016 is set out in the section headed “Statement by Directors” of the Directors’ Report enclosed with the Group’s consolidated Annual Audited Financial Statements for the FYE 31 December 2019.

This statement is made in accordance with a resolution of the Board of Directors dated 17 June 2020.

RESPONSIBILITY STATEMENT BY THE BOARD OF DIRECTORS

FINANCIALSTATEMENTS

124-129

130

130

131-134

135-136

137-139

140-142

143-145

146-261

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements


ANNUAL REPORT 2019


The directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2019.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding, provision of management services and cultivation of oil palms.

Other information relating to the subsidiaries are as disclosed in Note 17 to the financial statements.

RESULTS

GroupRM’000

CompanyRM’000

Loss from continuing operations, net of tax (35,837) (128,301)

Loss from discontinued operations, net of tax (174,084) -

Loss net of tax (209,921) (128,301)

Loss attributable to:

Owners of the parent (199,856) (128,301)

Non-controlling interests (10,065) -

(209,921) (128,301)

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 other than the effects arising from the classification of the assets and liabilities of the Indonesian subsidiaries as held for sale as disclosed in Note 24 to the financial statements.

DIVIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors do not recommend payment of any dividend in respect of current financial year.

DIRECTORS’ REPORT


TDM BERHAD


DIRECTORS’ REPORT

DIRECTORS

The names of the directors of the Company in office since the beginning of the financial year to the date of this report are:

YM Raja Dato’ Haji Idris Raja Kamarudin #

Mohd. Kamaruzaman bin A WahabHaji Burhanuddin Hilmi bin Mohamed @ HarunHaji Mazli Zakuan bin Mohd Noor #

Haji Najman bin Kamaruddin #

Haji Azlan bin Md Alifiah (Appointed on 30 August 2019)YB. Dato’ Haji Zainal Abidin bin Hussin (Appointed on 12 January 2020)Dato’ Haji A.Rahman bin Yahya # (Resigned on 7 November 2019)

# Being a director of one or more subsidiaries

The names of the directors of the subsidiaries of the Company since the beginning of the financial year to the date of this report, not including those directors listed above are:

TDM Plantation Sdn. Bhd.YB. Che Alias bin HamidHamdan bin IbrahimYB. Haji Ab Razak bin Ibrahim (Appointed on 8 July 2019)Haji Mohd Norddin bin Abd Jalil (Appointed on 30 September 2019)

Kumpulan Ladang-Ladang Trengganu Sdn. Bhd.YB. Dato’ Haji Mohd Zahari bin Md Azahar

TDM Trading Sdn. Bhd.Naraza bin Muda

TDM Capital Sdn. Bhd.Zainal Abidin bin Shariff (Appointed on 1 October 2019)Dato’ Haji Mohamat bin Muda (Removed on 1 October 2019)

Indah Sari Travel & Tours Sdn. Bhd.Zainal Abidin bin Shariff (Appointed on 13 September 2019)Ahmad Zaki bin Muda (Resigned on 13 September 2019)

TD Gabongan Sdn. Bhd.Zubaidah Ani binti Mohd NoorAmir Mohd Hafiz bin Amir Khalid

PT Rafi Kamajaya AbadiAmir Mohd Hafiz bin Amir KhalidZainal Abidin bin Shariff (Appointed on 5 July 2019)Dato’ Haji Mohamat bin Muda (Retired on 5 July 2019)H Rahman (Demised on 9 June 2020)


ANNUAL REPORT 2019


DIRECTORS’ REPORT

DIRECTORS (CONT’D.)

PT Sawit Rezki AbadiAmir Mohd Hafiz bin Amir KhalidZainal Abidin bin Shariff (Appointed on 5 July 2019)Dato’ Haji Mohamat bin Muda (Retired on 5 July 2019)H Rahman (Demised on 9 June 2020)

PT Rafi Sawit LestariAmir Mohd Hafiz bin Amir KhalidZainal Abidin bin Shariff (Appointed on 5 July 2019)Dato’ Haji Mohamat bin Muda (Retired on 5 July 2019)H Rahman (Demised on 9 June 2020)

Kumpulan Mediiman Sdn. Bhd.Haji Wan Abdul Hakim bin Wan MokhtarRaja Halinuddin bin Raja Halid (Alternate director to Haji Wan Abdul Hakim bin Wan Mokhtar)Major General Dato’ Dr Mohamad Termidzi bin Junaidi (R)Dato’ Haji Wan Zakaria bin Abd Rahman (Demised on 6 September 2019)

Kumpulan Medic Iman Sdn. Bhd.Haji Wan Abdul Hakim bin Wan MokhtarYB. Dr. Azman bin IbrahimYB. Dr. Alias bin RazakYB. Dato’ Haji Mohd Zahari bin Md Azahar (Appointed on 19 November 2019)Dato’ Haji A.Rahman bin Yahya (Resigned on 19 November 2019)

Kelana Jaya Medical Centre Sdn. Bhd. YB. Dr. Alias bin RazakRoslan Shahir bin Mohd ShahirDr. Halimah binti AliDr. Mujahid Fauzi bin Sulong

Kuala Terengganu Specialist Hospital Sdn. Bhd. Dato’ Koh Tat KimDato’ Mazlan bin NgahDr. Harmy bin Mohamed YusoffDr. Muhammad bin Abdullah

Kuantan Medical Centre Sdn. Bhd.Dr. Mokhtar bin AwangDr. Rosni binti AdamDr. Azmi bin SamatDato’ Haji Mohd Azmi bin Mohamad Daham (Appointed on 21 May 2019)YB. Dato’ Haji Mohd Zahari bin Md Azahar (Appointed on 26 November 2019)Balasubramaniam A/L Nachiappan (Appointed on 13 December 2019)Dato’ Haji A.Rahman bin Yahya (Resigned on 26 November 2019)


TDM BERHAD


DIRECTORS’ REPORT

DIRECTORS (CONT’D.)

TDMC Hospital Sdn. Bhd.YB. Dr. Azman bin IbrahimDr. Che Faridah binti IsmailHaji Hadi bin HassanDr. Najihatussalehah binti AhmadDr. Roslan bin Yusof (Resigned on 1 February 2019)

Kemaman Capital Sdn. Bhd.Zainal Abidin bin Shariff

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.

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 below) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.

The directors’ remuneration are as follows:

GroupRM’000

CompanyRM’000

Fees and other emoluments 2,148 932Indemnity given to or insurance effected for directors 30 10Estimated money value of benefits-in-kind 3 -Total directors' remuneration including benefits-in-kind 2,181 942

During the financial year, the Company maintains a liability insurance for the directors of the Group and of the Company. The total amount of sum insured and premium paid for directors of the Group are RM17,800,000 and RM29,671 respectively. The total amount of sum insured and premium paid for directors of the Company are RM5,200,000 and RM9,609 respectively.

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in the Company and its related corporations during the financial year were as follows:

Number of ordinary shares

The Company1 January

2019 Acquired Sold31 December

2019

YM Raja Dato’ Haji IdrisRaja Kamarudin 1,679,600 570,400 (720,400) 1,529,600

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.


ANNUAL REPORT 2019


DIRECTORS’ REPORT

HOLDING COMPANIES

The immediate holding company is Terengganu Incorporated Sdn. Bhd., a company incorporated in Malaysia. The ultimate holding corporation is Menteri Besar, Terengganu (Incorporated), a corporation incorporated in Malaysia under the Menteri Besar (Incorporation), Enactment No.1, 1951.

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 there are no known bad debts 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) it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the 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.

(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) 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 other than as disclosed in Note 39 to the financial statements.

(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 as and 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.


TDM BERHAD


DIRECTORS’ REPORT

SIGNIFICANT EVENTS

The details of the significant events are disclosed in Note 40 to the financial statements.

EVENT OCCURRING AFTER THE REPORTING DATE

The details of the event occurring after the reporting date are disclosed in Note 41 to the financial statements.

AUDITORS

The auditors, Ernst & Young PLT, have expressed their willingness to continue in office.

Auditors’ remuneration are as follow:

GroupRM’000

CompanyRM’000

Statutory audits

- Ernst & Young PLT 459 187

- other than Ernst & Young PLT 78 -

Other services - Ernst & Young PLT 5 5

542 192

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young PLT, as part of the terms of its audit engagement against claims by third parties arising from the audit. No payment has been made to indemnify Ernst & Young PLT for the financial year ended 31 December 2019.

Signed on behalf of the Board in accordance with a resolution of the directors dated 17 June 2020.

YM Raja Dato’ Haji Idris Raja Kamarudin Haji Azlan bin Md Alifiah


ANNUAL REPORT 2019


We, YM Raja Dato’ Haji Idris Raja Kamarudin and Haji Azlan bin Md Alifiah, 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 135 to 261 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 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 2019 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 17 June 2020.

YM Raja Dato’ Haji Idris Raja Kamarudin Haji Azlan bin Md Alifiah

STATUTORY DECLARATIONPURSUANT TO SECTION 251(1)(b) OF THE COMPANIES ACT 2016

I, Amir Mohd Hafiz bin 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 135 to 261 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 theabovenamed, Amir Mohd Hafiz bin Amir Khalidat Kuala Lumpur in the Federal Territory on 17 June 2020 Amir Mohd Hafiz bin Amir Khalid

Before me,

STATEMENT BY DIRECTORSPURSUANT TO SECTION 251(2) OF THE COMPANIES ACT 2016


TDM BERHAD


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

OPINION

We have audited the financial statements of TDM Berhad, which comprise the statements of financial position as at 31 December 2019 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 financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 135 to 261.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2019, and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

BASIS FOR OPINION

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

EMPHASIS OF MATTER

We draw your attention to Note 42 to the financial statements where various significant and material misstatements have been adjusted retrospectively in the 2018 financial statements. These errors have affected the financial position, results and the relevant disclosures of the prior years. Our opinion is not modified with respect to this matter.

INDEPENDENCE AND OTHER ETHICAL RESPONSIBILITIES

We are independent of the Group and of the Company in accordance with the By-laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial year. We have determined that there are no key audit matters to communicate in our report on the financial statements of the Company. The key audit matter for the audit of the financial statements of the Group is described below. This matter was addressed in the context of our audit of the financial statements of the Group as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. For the matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TDM BERHAD(INCORPORATED IN MALAYSIA)


ANNUAL REPORT 2019


IMPAIRMENT ASSESSMENT OF NON-FINANCIAL ASSETS

As at 31 December 2019, the carrying amounts of the Group’s property, plant and equipment and right-of-use assets of the Malaysian plantation segment were RM465,453,000 and RM400,765,000 respectively, representing 52% of Group’s total assets. Due to the significance of the amounts and the poor performance of the Malaysian plantation segment, the directors have engaged registered independent valuers to undertake the valuation of these assets using fair value less costs to sell.

As significant judgement and estimates are involved in the valuation process as disclosed in Note 3.2(a) to the financial statements, we considered this to be an area of audit focus. The valuations of these assets are highly judgemental and include the use of valuation techniques and estimates to be made on the inputs to the valuation models. The key inputs include adjustment factors to the comparable market value such as tenure, ownership, size, location, or condition of the specific assets.

In addressing this area of focus, we performed, amongst others, the following procedures:

• Considered the objectivity, independence and expertise of the independent valuers engaged by management;

• Obtained an understanding of the methodology adopted by the independent valuers in estimating the fair value of the abovementioned assets and assessed whether such methodology is consistent with those used in the industry;

• Obtained an understanding of the comparable market value used as inputs to the valuation models and of the adjustments made to the observable inputs; and

• Assessed observable inputs used in the valuations to available market data.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON

The directors of the Company are responsible for the other information. The other information comprises the Directors’ Report and Statement on Risk Management and Internal Control but does not include the financial statements of the Group and of the Company and our auditors’ report thereon, which we obtained prior to the date of this auditors’ report, and the remaining parts of the annual report which are expected to be made available to us after the date of this auditors’ report.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the remaining parts of the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors of the Company and take appropriate action.

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF TDM BERHAD(INCORPORATED IN MALAYSIA)


TDM BERHAD


INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF TDM BERHAD

(INCORPORATED IN MALAYSIA)

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Group’s and the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.


ANNUAL REPORT 2019


AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D.)

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 17 to the financial statements.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young PLT Tseu Tet Khong @ Tsau Tet Khong202006000003 (LLP0022760-LCA) & AF 0039 03374/06/2022 JChartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia 17 June 2020

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF TDM BERHAD(INCORPORATED IN MALAYSIA)


TDM BERHAD


STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Group Company

Note 2019RM’000

2018 RM’000

Restated

2019 RM’000

2018RM’000

Restated

Continuing operations

Revenue 4 425,070 397,947 75,087 105,367

Cost of sales (308,131) (289,966) (17,562) (19,463)

Gross profit 116,939 107,981 57,525 85,904

Other items of income

Interest income 2,247 28,884 1,073 27,727

Other income 12,012 7,797 9,357 6,453

Other items of expense

Distribution costs (5,910) (3,719) (1,010) (799)

Administrative and other operating expenses (133,937) (151,566) (180,421) (518,565)

Other expenses (8,196) (5,707) (2,250) (2,499)

Finance costs 5 (23,540) (21,256) (13,636) (14,359)

Loss before tax 6 (40,385) (37,586) (129,362) (416,138)

Income tax credit 9 4,548 1,566 1,061 1,643

Loss for the year from continuing operations, net of tax (35,837) (36,020) (128,301) (414,495)

Discontinued operation

Loss for the year from discontinued operation, net of tax 24 (174,084) (82,025) - -

Loss for the year, net of tax (209,921) (118,045) (128,301) (414,495)

Other comprehensive income/(loss):

Other comprehensive income that may be reclassified to profit or loss in subsequent periods:

Foreign currency translation, representing total other comprehensive income that may be reclassified to profit or loss in subsequent periods:

9,230 14,023 - -


ANNUAL REPORT 2019


Group Company

Note 2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Other comprehensive income/(loss): (cont’d.)

Other comprehensive income/(loss) that will not be reclassified to profit or loss in subsequent periods:

Fair value movement of investments in securities 1 (4) - -

Fair value movement of other investment 11,414 (25,790) - -

Net loss on remeasurement of defined benefit obligations (32) - (43) -

Total other comprehensive income/(loss) that will not be reclassified to profit or loss in subsequent periods:

11,383 (25,794) (43) -

Total other comprehensive income/(loss): 20,613 (11,771) (43) -

Total comprehensive loss for the year (189,308) (129,816) (128,344) (414,495)


Owners of the parent (199,856) (113,105) (128,301) (414,495)

Non-controlling interests (10,065) (4,940) - -

(209,921) (118,045) (128,301) (414,495)

Total comprehensive loss attributable to:

Owners of the parent (179,822) (125,479) (128,344) (414,495)

Non-controlling interests (9,486) (4,337) - -

(189,308) (129,816) (128,344) (414,495)

Loss per share attributable to owners of the parent (sen per share):

Basic loss per share (sen per share): 10 (11.87) (6.78)

- continuing operations 10 (2.13) (2.18)

- discontinued operation 10 (9.74) (4.60)

The accompanying accounting policies and explanatory information form an integral part of the financial statements.

STATEMENTS OF COMPREHENSIVE INCOME (CONT’D.)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019


TDM BERHAD


Group Company

Note 2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

Assets

Non-current assets

Property, plant and equipment 12 796,531 1,557,150 1,603,652 5,018 3,971 3,613

Right-of-use assets 13 446,238 - - 1,104 - -

Intangible asset 14 5,463 6,321 7,179 5,463 6,321 7,179

Investment properties 15 - 14,284 10,686 174,339 185,757 180,112

Goodwill 16 991 991 991 - - -

Investments in subsidiaries 17 - - - 224,266 224,266 268,617

Other investments 18 33,708 22,294 363,084 - - 315,000

Investments in securities 19 45 44 48 - - -

Other receivables 22 186 65,880 109,487 - - 63,234

Deferred tax assets 30 64 54 54 - - -

1,283,226 1,667,018 2,095,181 410,190 420,315 837,755

Current assets

Biological assets 20 4,645 3,973 5,455 - - -

Inventories 21 21,198 30,772 37,396 386 646 1,544

Trade and other receivables 22 58,823 58,287 59,328 50,475 392,724 383,882

Prepayments 1,676 1,058 1,525 - - -

Tax recoverable 14,964 11,608 6,421 - - -

Cash and bank balances 23 90,302 75,405 108,301 35,731 33,990 33,315

Assets of disposal group classified as held for sale 24 190,380 - - 175,690 - -

381,988 181,103 218,426 262,282 427,360 418,741

Total assets 1,665,214 1,848,121 2,313,607 672,472 847,675 1,256,496

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2019


ANNUAL REPORT 2019


Group Company

Note 2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

Equity and liabilities

Current liabilities

Lease liabilities 25 1,414 32 - 871 - -

Loans and borrowings 26 80,632 103,249 76,592 56,866 74,175 63,401

Trade and other payables 27 179,011 169,436 197,629 288,653 295,075 270,672

Contract liability 28 16,485 - - - - -

Tax payable 818 675 2,307 225 477 1,709

Liabilities of disposal group classified as held for sale 24 4,706 - - - - -

283,066 273,392 276,528 346,615 369,727 335,782

Net current assets/(liabilities) 98,922 (92,289) (58,102) (84,333) 57,633 82,959

Non-current liabilities

Retirement benefit obligations 29 5,327 4,962 4,293 428 351 318

Lease liabilities 25 61,328 60,792 - 263 - -

Loans and borrowings 26 385,169 379,542 712,311 175,825 198,435 224,315

Other payables 27 - - 49,481 1,813 1,813 -

Deferred tax liabilities 30 189,739 199,540 208,643 2,664 4,141 5,784

641,563 644,836 974,728 180,993 204,740 230,417

Total liabilities 924,629 918,228 1,251,256 527,608 574,467 566,199

Net assets 740,585 929,893 1,062,351 144,864 273,208 690,297

STATEMENTS OF FINANCIAL POSITION (CONT’D.)AS AT 31 DECEMBER 2019


TDM BERHAD


STATEMENTS OF FINANCIAL POSITION (CONT’D.) AS AT 31 DECEMBER 2019

Group Company

Note 2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

Equity attributable to owners of the parent

Share capital 31 350,713 350,713 345,017 350,713 350,713 345,017

Retained earnings/ (accumulated loss)

418,474 618,330 739,725 (208,542) (80,241) 342,544

Other reserves 32 87 (19,947) (7,573) 2,693 2,736 2,736

769,274 949,096 1,077,169 144,864 273,208 690,297

Non-controlling interests (28,689) (19,203) (14,818) - - -

Total equity 740,585 929,893 1,062,351 144,864 273,208 690,297

Total equity and liabilities 1,665,214 1,848,121 2,313,607 672,472 847,675 1,256,496



ANNUAL REPORT 2019

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STATEMENTS OF CHANGES IN EQUITY (CONT’D.)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019


ANNUAL REPORT 2019


STATEMENTS OF CHANGES IN EQUITY (CONT’D.)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Non-distributable Distributable Non-distributable

2019Company

Equity,total

RM’000

Sharecapital

RM’000

Accumulatedloss

RM’000

Otherreserves,

totalRM’000

CapitalreserveRM’000

Employeebenefits plan

reserveRM’000

Opening balance at 1 January 2019 286,655 350,713 (66,794) 2,736 2,736 -

Prior year adjustments (Note 42) (13,447) - (13,447) - - -

Opening balance at 1 January 2019, restated 273,208 350,713 (80,241) 2,736 2,736 -

Loss for the year, net of tax (128,301) - (128,301) - - -

Other comprehensive loss:

Net loss on remeasurement of defined benefit obligations, representing total other comprehensive loss for the year (43) - - (43) - (43)

Total comprehensive loss for the year (128,344) - (128,301) (43) - (43)

Closing balance at 31 December 2019 144,864 350,713 (208,542) 2,693 2,736 (43)

Non-distributable Distributable Non-distributable

2018Company

Equity,total

RM’000

Sharecapital

RM’000

Accumulatedloss

RM’000

Otherreserves,

totalRM’000

CapitalreserveRM’000

Opening balance at 1 January 2018 703,061 345,017 355,308 2,736 2,736

Prior year adjustments (Note 42) (12,764) - (12,764) - -

Opening balance at 1 January 2018, restated 690,297 345,017 342,544 2,736 2,736

Loss for the year, net of tax (414,495) - (414,495) - -

Transactions with owners

Issuance of shares pursuant to dividends reinvestment scheme - 5,696 (5,696) - -

Dividends on ordinary shares (Note 11) (2,594) - (2,594) - -

Total transactions with owners (2,594) 5,696 (8,290) - -

Closing balance at 31 December 2018 273,208 350,713 (80,241) 2,736 2,736



TDM BERHAD


NoteGroup Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Operating activities

Loss before tax from continuing operations (40,385) (37,586) (129,362) (416,138)Loss before tax from discontinued operation (174,078) (82,243) - -

(214,463) (119,829) (129,362) (416,138)Adjustments for:Interest expense 5 23,540 21,256 13,636 14,359Depreciation of property, plant and equipment

- Continuing 6 68,673 80,642 730 824- Discontinuing 6 15,026 17,278 - -

Amortisation of intangible asset 6 858 858 858 858Amortisation of investment property 6 202 314 3,546 4,445Amortisation of right-of-use assets

- Continuing 6 9,427 - 846 -- Discontinuing 6 1,797 - - -

Impairment of right-of-use assets- Discontinuing 6 21,242 - - -

Impairment of property, plant and equipment- Discontinuing 6 87,203 22,579 - -

Property, plant and equipment written off- Continuing 6 5,999 - - -- Discontinuing 6 33,881 - - -

Inventories written off- Continuing 6 21 25 - -- Discontinuing 6 4,771 6,624 - -

Expected credit losses of trade receivables 6 293 1,092 - -Expected credit losses of other receivables

- Continuing 6 - 120 158,933 422,813- Discontinuing 6 11,942 13,659 - -

(Gain)/loss on disposal of property, plant and equipment 6 (78) 5 - -Gain on disposal of investment property 6 (1,734) - (1,734) -Dividend income 6 (1,225) (2,139) (47,398) (75,801)Unrealised gain on the foreign exchange 6 - (450) - (450)Reversal of expected credit losses of trade receivables 6 (2,679) (2,919) - -

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019


ANNUAL REPORT 2019


Group CompanyNote 2019

RM’0002018

RM’000Restated

2019RM’000

2018RM’000

Restated

Operating activities (cont’d.)

Profit from Al Mudharabah 6 (1,204) (2,138) (1,073) (981)Interest income

- Continuing 6 (1,043) (26,746) - (26,746)- Discontinuing 6 (8,204) (6,867) - -

Impairment loss on investments in subsidiaries 6 - - - 44,351Provision for retirement benefit obligations 7 788 669 35 33Revenue arising from contract liability 28 (4,015) - - -Fair value changes of biological assets

- Continuing 6 (686) 1,481 - -- Discontinuing 6 (258) 1 - -

Total adjustments 264,537 125,344 128,379 383,705 Operating cash flows before changes in working capital 50,074 5,515 (983) (32,433)

Changes in working capital(Increase)/decrease in inventories 4,891 (570) 260 898(Increase)/decrease in receivables (8,672) (4,489) 7,626 (458,402)Increase/(decrease) in payables 15,558 (9,721) (6,422) 26,216 Total changes in working capital 11,777 (14,780) 1,464 (431,288)

Cash flows generated from/(used in) operations 61,851 (9,265) 481 (463,721)Interest paid (24,232) (21,554) (13,754) (14,531)Interest received and profit from Al Mudharabah 10,451 35,751 1,073 27,727Taxes paid (12,818) (14,505) (793) (1,232)Taxes refunded 4,224 380 124 -Retirement benefits paid 29 (64) - - - Net cash flows generated from/(used in) operating activities 39,412 (9,193) (12,869) (451,757)

STATEMENTS OF CASH FLOWS (CONT’D.)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019


TDM BERHAD


STATEMENTS OF CASH FLOWS (CONT’D.)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Group Company

Note 2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Investing activities

Purchase of property, plant and equipment 12 (34,326) (56,093) (1,574) (1,010)

Addition to investment properties 15 - - (2,394) (10,090)

Acquisition of right-of-use assets 13 (378) - - -

Dividend received 1,225 2,139 47,398 75,801

Proceeds from disposal of property, plant and equipment 80 2 - -

Proceeds from disposal of investment property 12,000 - 12,000 -

Withdrawal of/(placement for) deposits with licensed banks 1,411 (333) - -

Increase in deposits with licensed banks pledged for bank guarantee facility and Finance Service Reserve Account (999) (1,001) (999) (977)

Redemption of investment in fixed income securities - 404,981 - 404,981

Net cash flows (used in)/generated from investing activities (20,987) 349,695 54,431 468,705

Financing activities

Drawdown of term loans 56,600 47,785 - 17,432

Drawdown of hire purchase facilities 1,023 4,839 - -

Repayments of term loans (74,759) (40,363) (42,364) (30,136)

Repayments of hire purchase facilities (2,401) (3,178) (102) (107)

Repayment of finance lease (6,353) (4,449) (901) -

Drawdown/(repayment) of bank overdraft 2,547 (1,845) 2,547 (1,845)

Proceeds from contract liability 20,500 - - -

Settlement of IDR Notes - (374,784) - -

Dividends paid - (2,642) - (2,594)

Net cash flows used in financing activities (2,843) (374,637) (40,820) (17,250)

Net increase/(decrease) in cash and cash equivalents 15,582 (34,135) 742 (302)

Cash and cash equivalents at 1 January 38,978 73,208 337 639

Effect of foreign exchange rate changes 17 (95) - -

Cash and cash equivalents at 31 December 23 54,577 38,978 1,079 337



ANNUAL REPORT 2019


NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

1. CORPORATE INFORMATION

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.

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 as disclosed in Note 17. There have been no significant changes in the nature of the principal activities during the financial year.

The immediate holding company is Terengganu Incorporated Sdn. Bhd., a company incorporated in Malaysia. The ultimate holding corporation is Menteri Besar, Terengganu (Incorporated), a corporation incorporated in Malaysia under the Menteri Besar (Incorporation), Enactment No.1, 1951.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 17 June 2020.

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 Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (“RM”), which is also the functional currency of the Company. All values are rounded to the nearest thousand (“RM’000”) except when otherwise indicated.

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 2019, the Group and the Company adopted the following new and amended MFRSs and IC Interpretation mandatory for annual periods beginning on or after 1 January 2019.

DescriptionEffective for annual periods

beginning on or after

MFRS 9 Prepayment Features with Negative Compensation (Amendments to MFRS 9) 1 January 2019

MFRS 16 Leases 1 January 2019

MFRS 128 Long-term Interests in Associates and Joint Venture (Amendments to MFRS 128) 1 January 2019

Annual Improvements to MFRS Standards 2015-2017 Cycle 1 January 2019

MFRS 119 Plan Amendment, Curtailment or Settlement (Amendments to MFRS 119) 1 January 2019

IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019


TDM BERHAD



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)

2.2 Changes in accounting policies (cont’d.)

The adoption of the above new and amended MFRSs and IC Interpretation did not have any material effect on the financial statements of the Group and of the Company, except as discussed below:

MFRS 16 Leases

MFRS 16 supersedes MFRS 117 Leases, IC Interpretation 4, Determining whether an Arrangement contains a Lease, IC Interpretation 115, Operating Leases—Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.

The Group and the Company have applied the standard using the modified retrospective approach, under which the cumulative effect of initial recognition is recognised in the retained earnings.

Lessor accounting under MFRS 16 is substantially unchanged from MFRS 117, therefore did not have an impact for leases where the Group and the Company are the lessor.

As permitted by the transitional provision of MFRS 16, the Group and the Company have elected to adopt a simplified transition approach where cumulative effects of initial application, if any are recognised on 1 January 2019 as an adjustment to the opening balance of retained earnings. The Group and the Company have also applied the following practical expedients under MFRS 16:

(i) No adjustments are made on transition for leases for which the underlying assets are of low value.(ii) A single discount rate is applied to portfolio of leases with reasonably similar characteristics.(iii) The Group and the Company use hindsight in determining lease terms for contracts that contain options for extension or

termination.

The detailed impact of changes arising from the adoption of MFRS 16 is set out as follows:

31.12.2018RM’000

Adoption ofMFRS 16

RM’0001.1.2019

RM’000

GroupProperty, plant and equipment (Note 12) 1,557,150 (498,440) 1,058,710Right-of-use asset (Note 13) - 501,590 501,590Lease liabilities (Note 25) (60,824) (3,150) (63,974)

CompanyRight-of-use asset (Note 13) - 1,900 1,900Lease liabilities (Note 25) - (1,900) (1,900)

Any other amended MFRSs and IC Interpretation which are mandatory for companies with financial periods beginning on or after 1 January 2019 did not give rise to any significant effects on the financial statements of the Group and of the Company.


ANNUAL REPORT 2019




2.3 Standards issued but not yet effective

The new and amended MFRSs that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these new and amended MFRSs if applicable, when they become effective.

DescriptionEffective for annual periods

beginning on or after

Amendments to MFRS 3 Business Combinations (Definition of a Business) 1 January 2020Amendments to MFRS 101 Presentation of Financial Statements (Definition of Material) 1 January 2020Amendments to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors

(Definition of Material) 1 January 2020Amendments to MFRS 9 Financial Instruments, MFRS 139 Financial Instruments:

Recognition and Measurement and MFRS 7 Financial Instruments: Disclosures (Interest Rate Benchmark Reform) 1 January 2020

The Conceptual Framework for Financial Reporting (Revised 2018) 1 January 2020MFRS 17 Insurance Contracts 1 January 2021Amendments to MFRS 3 Business Combinations (Reference to the Conceptual Framework) 1 January 2022Amendments to MFRS 101 Presentation of Financial Statements (Classification of Liabilities

as Current or Non-Current) 1 January 2022Amendments to MFRS 116 Property, Plant and Equipment (Property, Plant and Equipment -

Proceeds before Intended Use) 1 January 2022Amendments to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets (Onerous

Contracts - Cost of Fulfilling a Contract) 1 January 2022Annual Improvements to MFRS Standards 2018-2020 Cycle Amendments to MFRS 16 Leases (Covid-19 Related Rent Concessions)

1 January 20221 June 2022

Amendments to MFRS 10 and MFRS 128 Sale and Contribution of Assets between an Investor and its Associates or Joint Venture Deferred

The directors expect that the adoption of the above new and amended MFRSs will not have material impact on the financial statements in the period of initial application.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);(ii) Exposure, or rights, to variable returns from its involvement with the investee; and(iii) The ability to use its power over the investee to affect its returns.


TDM BERHAD




2.4 Basis of consolidation (cont’d.)

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(i) The contractual arrangement(s) with the other vote holders of the investee;(ii) Rights arising from other contractual arrangements; and(iii) The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 9 either in profit or loss or as a change to OCI. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 9, it is measured in accordance with the appropriate MFRS.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.


ANNUAL REPORT 2019




2.4 Basis of consolidation (cont’d.)

Business combinations (cont’d.)

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. The accounting policy for goodwill is set out in Note 2.11.

2.5 Subsidiaries

A subsidiary is an entity over which the Company has all the following:

(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);(ii) Exposure, or rights, to variable returns from its investment with the investee; and(iii) The ability to use its power over the investee to affect its returns.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

2.6 Transactions with non-controlling interests

Non-controlling interests represent the portion of profit or loss and net 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 equity attributable to owners of the parent. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.

2.7 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group and the Company are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented 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.


TDM BERHAD




2.7 Foreign currency (cont’d.)

(b) Foreign currency transactions (cont’d.)

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 net investment in foreign operations, which are recognised initially in OCI 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.

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 Ringgit Malaysia 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 OCI. On disposal of a foreign operation, the cumulative amount recognised in OCI and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

2.8 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 Company and the cost of the item can be measured reliably.

Subsequent to initial recognition, property, plant and equipment are 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 and the Company recognise 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 property, 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.

Freehold land has an unlimited useful life and therefore is not depreciated. Assets under construction are also not depreciated as such assets are not available for use. Depreciation of other property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the assets at the following annual rates.

Buildings 5% - 10%

Plant, machinery, equipment, vehicles and renovation 5% - 20%

The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.


ANNUAL REPORT 2019




2.8 Property, plant and equipment (cont’d.)

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.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in statement of comprehensive income.

Bearer plants comprise pre-cropping expenditure incurred from land clearing to the point of maturity. Such expenditure is capitalised and is amortised at maturity of the crop at the following rates which are deemed as the useful economic lives of the crop:

Pre-cropping expenditure - oil palm over 20 - 22 years

Leasehold land

Accounting policies applied until 31 December 2018

The above accounting policies for property, plant and equipment applies to leasehold land. Leasehold land depreciated over the period of the lease which range from 30 years to 198 years.

Accounting policies applied until 1 January 2019

Following the adoption of MFRS 16 Leases on 1 January 2019, the Group and the Company have reclassified the carrying amount of leasehold land to right-of-use (“ROU”) assets. Refer Note 2.22 for the new accounting policies.

2.9 Biological assets

Biological assets comprised produce growing on bearer plants and are measured at fair value less costs to sell. Fair value is determined based on the estimated future cash flows expected to be generated from the produce. The expected future cash flows are estimated using projected quantity and the estimated market price of the produce.

Biological assets are classified as current assets as the produce are expected to be harvested and sold or used for production on a date not more than 4 weeks after the reporting date. Any gains or losses arising from changes in the fair value less costs to sell are recognised in profit or loss.

2.10 Investment properties

Investment properties are properties which are held either to earn rental income, capital appreciation, or both.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are carried at cost less any accumulated amortisation and accumulated impairment losses.

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 properties are 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.


TDM BERHAD




2.11 Goodwill

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually, or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired.

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 operations within that cash- generating unit is disposed of, the goodwill associated with the operations disposed of is included in the carrying amount of the operations when determining the gain or loss on disposal of the operations. 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 2.7. 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 Ringgit Malaysia at the rates prevailing at the date of acquisition.

2.12 Fair value measurement

The Group and the Company measure financial instruments, and non-financial assets at fair value at each reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or(b) In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group and the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.


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2.12 Fair value measurement (cont’d.)

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

2.13 Impairment of non-financial assets

The Group and the Company assess 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 and the Company make an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs of disposal 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.

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, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss.


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2.14 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.

Initial recognition and measurement

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the business model of the Group and of the Company for managing them. With the exception of receivables that do not contain a significant financing component or for which the Group and the Company have applied the practical expedient, the Group and the Company initially measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under MFRS 15: Revenue from contracts with customers (“MFRS 15”).

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income (“FVOCI”), it needs to give rise to cash flows that are ‘solely payments of principal and interest (“SPPI”)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The business model of the Group and of the Company for managing financial assets refers to how they manage their financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group and the Company commit to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, the financial assets of the Group and the Company are classified as:

(a) Financial assets at amortised cost (debt instruments)(b) Financial assets designated at FVOCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

(a) Financial assets at amortised cost (debt instruments)

The Group and the Company measure financial assets at amortised cost if both of the following conditions are met:

(i) The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

(ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The financial assets at amortised cost of the Group and of the Company includes cash and bank balances, and trade and other receivables.


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2.14 Financial assets (cont’d.)

Subsequent measurement (cont’d.)

(b) Financial assets designated at FVOCI (equity instruments)

Upon initial recognition, the Group and the Company can elect to classify irrevocably their equity investments as equity instruments designated at FVOCI when they meet the definition of equity under MFRS 132 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statements of comprehensive income when the right of payment has been established, except when the Group and the Company benefit from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at FVOCI are not subject to impairment assessment.

The Group elected to classify irrevocably its other investments and investment in securities under this category.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

(i) The rights to receive cash flows from the asset have expired; or(ii) The Group and the Company transferred their rights to receive cash flows from the asset or have assumed obligations to pay the

received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group and the Company have transferred substantially all the risks and rewards of the asset, or (b) the Group and the Company have neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.

When the Group and the Company have transferred their rights to receive cash flows from an asset or have entered into a passthrough arrangement, they evaluate if, and to what extent, they have retained the risks and rewards of ownership. When they have neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group and the Company continue to recognise the transferred assets to the extent of their continuing involvement. In that case, the Group and the Company also recognise associated liabilities. The transferred assets and the associated liabilities are measured on a basis that reflects the rights and obligations that the Group and the Company have retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group and the Company could be required to repay.


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2.15 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.

The Group and the Company recognise an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group and the Company expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade and other receivables, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and the Company have established a provision matrix that is based on their historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Group and the Company consider a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group and the Company may also consider a financial asset to be in default when internal or external information indicates that the Group and the Company are unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group and the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

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 and with original maturities of not more than three months. These also include bank overdraft that form an integral part of cash management of the Group and of the Company.

2.17 Inventories

Inventories are stated at the lower of cost and net 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: 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.

Net 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.


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2.18 Provisions

Provisions are recognised when the Group and the Company have 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 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.

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 loans and borrowings and trade and other payables.

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, net 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 and the Company have unconditional rights 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.


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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.

To the extent that the Group and the Company borrow funds specifically for the purpose of obtaining a qualifying asset, the Group and the Company determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

To the extent that the Group and the Company borrow funds generally and uses them for the purpose of obtaining a qualifying asset, the Group and the Company determine the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate represents the weighted average of the borrowing costs applicable to all borrowings of the Group and the Company that are outstanding during the period.

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.

The Group and the Company being the first time adopter of MFRS Framework on 1 January 2018, have elected to apply the transition exemption under MFRS 123 Borrowing Costs from the date of transition on 1 January 2017, not to restate the borrowing cost component that was capitalised under the previous Financial Reporting Standards Framework and that was included in the carrying amount of assets at that date.

2.21 Employee benefits

(a) Short term benefit

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised as a liability when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. The estimated liability for leave is recognised for services rendered by employees up to the reporting date.

(b) Defined contribution plan

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 Employees 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. The Indonesian companies in the Group are required to provide a minimum amount of pension benefits in accordance with Law 13/2003.


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2.21 Employee benefits (cont’d.)

(c) Defined benefit plan

The Group and the Company operate a funded, defined benefit Retirement Benefit Scheme (“the Scheme”) for their eligible employees. The Group’s and the Company’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.

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognised as expense in profit or loss. Past service costs are recognised when plan amendment or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on high quality corporate bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognised as expense or income in profit or loss.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognised immediately in OCI in the period in which they arise. Remeasurements are recognised in retained earnings within equity and are not reclassified to profit or loss in subsequent periods.

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 net 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.

2.22 Leases

The Group and the Company assess at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

For a contract that contains a lease component and non-lease components, the Group and the Company allocate the consideration in the contract to each lease and non-lease component on the basis of their relative stand alone prices.

As a lessee

The Group and the Company apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group and the Company recognise lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

(i) Right-of-use assets

The Group and the Company recognise right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.


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2.22 Leases (cont’d.)

(i) Right-of-use assets (cont’d.)

If ownership of the leased asset transfers to the Group and the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

(ii) Lease liabilities

At the commencement date of the lease, the Group and the Company recognise lease liabilities measured at the present value of lease payments to be made over the lease term.

The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and the Company and payments of penalties for terminating the lease, if the lease term reflects the Group and the Company exercising the option to terminate.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group and the Company use its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification.

(iii) Short-term leases and leases of low-value assets

The Group and the Company have elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group and the Company recognise the lease payments associated with these leases as an expense over the lease term.

(iv) Extension options

The Group and the Company, in applying their judgement, determine the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group and the Company apply judgement in evaluating whether they are reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, they consider all relevant factors that create an economic incentive for them to exercise either the renewal or termination. After the commencement date, the Group and the Company reassess the lease term if there is a significant event or change in circumstances that is within their control and affects their ability to exercise or not to exercise the option to renew or to terminate.


ANNUAL REPORT 2019




2.22 Leases (cont’d.)

As a lessor

Leases in which the Group and the Company do not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as other income in the period in which they are earned.

2.23 Revenue recognition

Revenue from contracts with customers is recognised by reference to each distinct performance obligation in the contract with customer. Revenue from contracts with customers is measured at its transaction price, being the amount of consideration which the Group and the Company expect to be entitled in exchange for transferring promised goods or services to a customer, net of sales and services tax, returns, rebates and discounts. Transaction price is allocated to each performance obligation on the basis of the relative standalone selling prices of each distinct goods or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time.

The Group and the Company have generally concluded that they are the principal in their revenue arrangements, because they typically control the goods or services before transferring them to the customer. The Group and the Company recognise revenue from contracts with customers for the provision of services and sale of goods based on the five-step model as set out below:

(i) Identify contract with a customer

A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria that must be met.

(ii) Identify performance obligations in the contract

A performance obligation is a promise in a contract with a customer to transfer a goods or service to the customer.

(iii) Determine the transaction price

The transaction price is the amount of consideration to which the Group and the Company expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

If the consideration in a contract includes a variable amount, the Group and the Company estimate the amount of consideration to which they will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

Using the practical expedient in MFRS 15, the Group and the Company do not adjust the promised amount of consideration for the effects of a significant financing component if they expect, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that goods or service will be one year or less.


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2.23 Revenue recognition (cont’d.)

(iv) Allocate the transaction price to the performance obligation in the contract

For a contract that has more than one performance obligation, the Group and the Company allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group and the Company expect to be entitled in exchange for satisfying each performance obligation.

(v) Recognise revenue when (or as) the Group and the Company satisfies a performance obligation

The Group and the Company satisfies a performance obligation and recognise revenue over time if the Group’s and the Company’s performance:

(a) does not create an asset with an alternative use to the Group and the Company and has an enforceable right to payment for performance obligation completed to-date; or

(b) creates or enhances an asset that the customer controls as the asset is created or enhanced; or(c) provides benefits that the customer simultaneously receives and consumes as the Group and the Company perform.

For performance obligations where any one of the above conditions are met, revenue is recognised over time at which the performance obligation is satisfied.

For performance obligations that the Group and the Company satisfy over time, the Group and the Company determined that the input method is the best method in measuring progress of the services because there is direct relationship between the Group’s and the Company’s effort and the transfer of service to the customer.


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2.23 Revenue (cont’d.)

The following describes the performance obligation in contracts with customers:

(i) Sale of goods

Revenue from sale of goods is recognised at a point in time net of discounts and returns when control of the goods is transferred to the customer. A performance obligation is satisfied upon delivery of the goods to the customers as per the sale contract.

(ii) Rendering of services

Revenue from services rendered is recognised at a point in time net of service taxes and discounts when services are transferred to the customer. A performance obligation is satisfied when services are transferred to the customer.

(iii) Interest income and profit from Al Mudharabah

Interest income and profit from Al Mudharabah are recognised using the effective interest rate method.

(iv) Dividend income

Dividend income is recognised when the Group’s and the Company’s right to receive payment is established.

(v) Management fees

Revenue from management fees is recognised over time when management services are transferred to the customer. A performance obligation is satisfied when services are transferred to the customer.

(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.

(vii) Profit distribution from the Sublessees Scheme

Profit distribution from the Sublessees Scheme is recognised when the Group’s and the Company’s right to receive payment is established.


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2.24 Income taxes

(a) Current income tax

Current income 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 at the reporting date in the countries where the Group operates and generates taxable income.

Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(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 taxable 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, 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.

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.


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2.24 Income taxes (cont’d.)

(b) Deferred tax (cont’d.)

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 OCI 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.

2.25 Segment reporting

For management purposes, the Group is organised into business units based on its 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 38, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.26 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of their liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised in equity in the period in which they are declared.


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2.27 Intangible asset

Intangible asset of the Group and of the Company represents the rights on the lands belonging to third parties. Intangible asset is initially measured at cost. Following initial recognition, intangible asset is measured at cost less accumulated amortisation and accumulated impairment losses. The cost of intangible asset is amortised over 30 years, being the useful life of the lands.

The carrying value of intangible asset is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The accounting policy for impairment of non-financial assets is set out in Note 2.13.

2.28 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and the Company.

2.29 Related parties

(a) A person or a close member of that person’s family is related to the Company if that person:

(i) has control or joint control over the Company;(ii) has significant influence over the Company; or(iii) is a member of the key management personnel of the Company or of a parent of the Company.

(b) An entity is related to the Company if any of the following conditions applies:

(i) the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

(iii) both entities are joint ventures of the same third party;(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;(v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to

the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;(vi) the entity is controlled or jointly controlled by a person identified in (a); or(vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of

the entity (or of a parent of the entity).


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2.30 Current and non-current classification

The Group and the Company present assets and liabilities in the statements of financial position based on current and non-current classification.

An asset is classified as current when it is:

- expected to be realised or intended to be sold or consumed in normal operating cycle;- held primarily for the purpose of trading;- expected to be realised within 12 months after the reporting period; or- cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at least 12 months after the

reporting period.

All other assets are classified as non-current. A liability is classified as current when:

- it is expected to be settled in normal operating cycle;- it is held primarily for the purpose of trading;- it is due to be settled within 12 months after the reporting period; or- there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively.

2.31 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statements of financial position if, and only if:

- There is a currently enforceable legal right to offset the recognised amounts; and- There is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.


TDM BERHAD




2.32 Non-current assets held for sale and discontinued operations

The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.

Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the statements of financial position.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

- Represents a separate major line of business or geographical area of operations;- Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or- Is a subsidiary acquired exclusively with a view to resale.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statements of comprehensive income.

2.33 Amount due from Plasma

The government of the Republic of Indonesia requires companies involved in plantation development to provide support to develop and cultivate oil palm lands for local communities in oil palm plantations as part of their social obligation which are known as Plasma Schemes.

The Group assumes responsibility for developing oil palm plantations to the productive stage. When the plantation is at its productive stage, it is considered to be completed and is transferred to the plasma farmers (conversion of plasma plantations). All costs incurred will be reviewed by the relevant authorities and the Group will be reimbursed for all approved costs which are financed by the Group. Conversion value refers to the value reimbursed to the Group upon conversion of the plasma plantations.

The plasma farmers sell all harvest to the Group at a price determined by the Government, which approximates the market price. Part of the proceeds will be distributed to the plasma farmers with the residual retained by the Group as payment for all approved cost financed by the Group.

Accumulated development costs net of reimbursements are presented in the statement of financial position. Any difference between the accumulated development costs of plasma plantations and their conversion value is charged to profit or loss.

Plasma receivables are classified as financial assets carried at amortised cost under MFRS 9. The accounting policy for financial instruments is set out in Note 2.14.


ANNUAL REPORT 2019



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s and of the Company’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 in applying the accounting policies of the Group and of the Company which may have significant effects on the amounts recognised in the financial statements.

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) Impairment of property, plant and equipment and right-of-use assets

Assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which could trigger an impairment review include evidence of obsolescence or physical damage, a significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business, and significant adverse industry or economic changes.

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. Due to the poor performance of the Malaysian plantation segment, the directors have engaged registered independent valuers to undertake the valuation of these assets using fair value less costs to sell.

The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices, adjusted made on inputs to the valuation models less incremental costs of disposing of the asset.

The carrying amounts of property, plant and equipment and right-of-use assets of the Group and of the Company at the reporting date are disclosed in Note 12 and Note 13 respectively.


TDM BERHAD



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D.)

3.2 Key sources of estimation uncertainty (cont’d.)

(b) Provision for expected credit losses of trade receivables

The Group and the Company use a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for the customers.

The provision matrix is initially based on the Group’s and the Company’s historical observed default rates. The Group and the Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e. gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s and the Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future.

The carrying amounts of trade receivables of the Group and of the Company at the reporting date are disclosed in Note 22.

(c) 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 present value of those cash flows. Further details of the carrying value, key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are disclosed in Note 16.

(d) Fair value measurement of other investments

When the fair values of other investments recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation model determined based on market approach. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as risk profile, economic assumptions regarding the industry and geographical jurisdiction in which the investee operates and future financial performance of the investee. Changes in assumptions relating to these factors could affect the reported fair value of other investments.

The carrying amounts of other investments of the Group at the reporting date are disclosed in Note 18.


ANNUAL REPORT 2019



4. REVENUE

The Group and the Company disaggregate revenue by type of goods and services and timing of transfer of services. Transfer of goods and services are wholly carried out in Malaysia.

Type of goods and services

The following tables represent revenue by type of goods and services:

Group Company2019

RM’0002018

RM’000Restated

2019RM’000

2018RM’000

Restated

(i) Revenue from contracts with customers:Sale of goods 235,071 230,113 24,806 27,921Rendering of services 189,465 166,948 - -Management fees from subsidiaries - - 2,883 1,645Management fee from Terengganu

Oil Palm Development- Sublessees Scheme 172 596 - -

Management fee from a managed hospital 362 290 - -425,070 397,947 27,689 29,566

(ii) Other revenue:Dividend income from subsidiaries - - 47,398 75,801

425,070 397,947 75,087 105,367

Timing of transfer of goods and services

The following tables represent revenue from contracts with customers by timing of transfer of goods and services:

Group Company2019

RM’0002018

RM’000Restated

2019RM’000

2018RM’000

Restated

At a point in time 424,536 397,061 24,806 27,921Over time 534 886 2,883 1,645

425,070 397,947 27,689 29,566

Transaction price allocated to the remaining unsatisfied performance obligations

Remaining unsatisfied performance obligations (“RUPO”) represent the transaction price for goods and services for which the Group and the Company have a material right but goods have not been transferred or services have not been performed. As a practical expedient, RUPO does not include contracts for which the Group and the Company recognise revenue at the amount to which the Group and the Company have the right to invoice for goods transferred or services performed, or the performance obligation is part of a contract that has an original expected duration of one year or less.

The Group and the Company have elected to use the practical expedient.


TDM BERHAD



5. FINANCE COSTS

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Interest expense on:

- term loans 20,216 18,624 13,510 14,359

- hire purchase under finance leases 345 220 41 -

- lease liabilities 2,979 2,412 85 -

23,540 21,256 13,636 14,359

The total finance costs for the Group and the Company were RM27,225,000 (2018: RM23,966,000) and RM13,839,000 (2018: RM14,531,000) respectively. The Group capitalised interest costs amounting to RM3,685,000 (2018: RM2,710,000) into property, plant and equipment. The Company capitalised interest costs amounting to RM203,000 (2018: RM172,000) into property, plant and equipment.

6. LOSS BEFORE TAX

The following items have been included in arriving at loss before tax:

Group Company2019

RM’0002018

RM’000Restated

2019RM’000

2018RM’000

Restated

Auditors’ remuneration: - statutory audits - Ernst & Young PLT

- Continuing 459 453 187 187 - statutory audits - other than Ernst & Young PLT

- Discontinuing 78 67 - - - other services - Ernst & Young PLT

- Continuing 5 5 5 5Employee benefits expense (Note 7) - Continuing 104,769 93,959 7,381 6,751 - Discontinuing 395 449 - -Non-executive directors’ remuneration (Note 8) - Continuing 2,029 2,133 932 944 - Discontinuing 118 175 - -Depreciation of property, plant and equipment (Note 12) - Continuing 68,673 80,642 730 824 - Discontinuing 15,026 17,278 - -


ANNUAL REPORT 2019



6. LOSS BEFORE TAX (CONT’D.)

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Amortisation of intangible asset (Note 14) 858 858 858 858

Amortisation of investment properties (Note 15) 202 314 3,546 4,445

Amortisation of right-of-use assets (Note 13)

- Continuing 9,427 - 846 -

- Discontinuing 1,797 - - -

Rental of premises 250 2,896 18 975

Rental of equipment 259 85 31 31

Rental of land 1,057 1,132 140 144

Rental of parking space 86 87 78 65

(Gain)/loss on disposal of property, plant and equipment (78) 5 - -

Gain on disposal of investment property (1,734) - (1,734) -

Inventories written off

- Continuing 21 25 - -

- Discontinuing 4,771 6,624 - -

Property, plant and equipment written off

- Continuing 5,999 - - -


Impairment of right-of-use assets (Note 13)


Impairment of property, plant and equipment (Note 12)

- Discontinuing 87,203 22,579 - -

Expected credit losses of trade receivables (Note 22(a)) 293 1,092 - -

Expected credit losses of other receivables

- Continuing (Note 22(b)) - 120 158,933 422,813

- Discontinuing (Note 22(d)) 11,942 13,659 - -

Reversal of expected credit losses of trade receivables (Note 22(a)) (2,679) (2,919) - -

Reversal of expected credit losses of other receivables (Note 22(b)) - - (69) (23)


TDM BERHAD



6. LOSS BEFORE TAX (CONT’D.)

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Impairment loss on investments in subsidiaries (Note 17) - - - 44,351

Realised loss on the foreign exchange of investment in fixed income securities - 28,097 - 28,097

Share of profits from estates payable to Lembaga Tabung Amanah Warisan Negeri Terengganu 1,049 1,242 1,049 1,242

Share of losses from estates by Majlis Agama Islam dan Adat Melayu Terengganu (735) (441) (735) (441)

Unrealised gain on the foreign exchange - (450) - (450)

Interest income

- Continuing (1,043) (26,746) - (26,746)

- Discontinuing (8,204) (6,867) - -

Profit from Al Mudharabah

- Continuing (1,204) (2,138) (1,073) (981)

Fair value changes of biological assets (Note 20)

- Continuing (686) 1,481 - -

- Discontinuing (258) 1 - -

Rental income (1,682) (1,224) (6,516) (5,973)

Dividend income (1,225) (2,139) (47,398) (75,801)

Profit distribution from Terengganu Oil Palm Development

- Sublessees Scheme (2,030) (3,505) (606) (1,046)


ANNUAL REPORT 2019



7. EMPLOYEE BENEFITS EXPENSE

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Salaries, wages and allowances 74,354 67,287 5,047 4,954

Contributions to defined contribution plan 9,869 9,287 701 684

Bonus and saguhati 11,885 10,525 1,348 882

Overtime 1,387 1,400 129 129

Social security contributions 1,321 1,037 58 54

Provision for retirement benefit obligations (Note 29) 788 669 35 33

Provision for/(reversal of) short term accumulating compensated absences 128 (8) 63 15

Other benefits 7,667 6,531 - -

107,399 96,728 7,381 6,751

Less : Amount capitalised in property, plant and equipment (2,235) (2,320) (167) (120)

105,164 94,408 7,214 6,631

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration amounting to RM1,000 (2018: RM190,000) and RM Nil (2018: RM100,000) respectively as further disclosed in Note 8.

8. DIRECTORS’ REMUNERATION

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Executive directors’ remuneration (Note 7):

Fees and other emoluments 1 190 - 100

Non-executive directors’ remuneration (Note 6):

Fees and other emoluments 2,147 2,308 932 944

Total directors’ remuneration 2,148 2,498 932 1,044

Indemnity given to or insurance effected for directors 30 25 10 5

Estimated money value of benefits-in-kind 3 17 - -

Total directors’ remuneration including benefits-in-kind 2,181 2,540 942 1,049


TDM BERHAD



9. INCOME TAX CREDIT

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Current income tax - continuing operations:

- Malaysian income tax 4,931 7,935 - -

- Over provision of income tax in previous financial years (29) (252) - -

4,902 7,683 - -

Deferred tax - continuing operations (Note 30):

- Relating to origination and reversal of temporary differences (8,941) (9,411) (1,061) (1,643)

- (Over)/under provision of income tax in previous financial years (509) 162 - -

(9,450) (9,249) (1,061) (1,643)

Income tax attributable to continuing operations (4,548) (1,566) (1,061) (1,643)

Income tax attributable to discontinued operation (Note 24) 6 (218) - -

Income tax credit recognised in profit or loss (4,542) (1,784) (1,061) (1,643)


ANNUAL REPORT 2019



9. INCOME TAX CREDIT (CONT’D.)

Reconciliation between income tax credit and accounting loss:

The reconciliation between income tax credit and the product of accounting loss multiplied by the applicable corporate tax rate for the years ended 31 December 2019 and 2018 is as follows:

2019RM’000

2018RM’000

Restated

Group

Loss before tax from continuing operations (40,385) (37,586)

Loss before tax from discontinued operation (Note 24) (174,078) (82,243)

Accounting loss before tax (214,463) (119,829)

Taxation at Malaysian statutory rate of 24% (2018: 24%) (51,471) (28,759)

Effect of different tax rates in foreign jurisdiction (1,741) (822)

Adjustments:

Income not subject to tax (1,383) (8,498)

Expenses not deductible for tax purposes 10,114 30,119

Utilisation of previously unutilised tax losses and unabsorbed capital allowances (439) (139)

Deferred tax assets not recognised on unutilised tax losses, unabsorbed capital allowances and other temporary differences 40,916 6,405

Over provision of income tax in previous financial years (29) (252)

(Over)/under provision of deferred tax in previous financial years (509) 162

Income tax credit for the year (4,542) (1,784)

Company

Loss before tax (129,362) (416,138)

Taxation at Malaysian statutory rate of 24% (2018: 24%) (31,047) (99,873)

Adjustments:

Income not subject to tax (11,849) (25,490)

Expenses not deductible for tax purposes 41,835 123,720

Income tax credit for the year (1,061) (1,643)

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2018: 24%) of the estimated assessable loss for the year.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.


TDM BERHAD



10. LOSS PER SHARE

Basic loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

The following table reflects the loss and share data used in the computation of basic loss per share for the years ended 31 December:

Group

2019RM’000

2018RM’000

Restated

Loss net of tax attributable to owners of the parent used in the computation of basic loss per share (199,856) (113,105)

Add back: Loss from discontinued operation, net of tax, attributable to owners of the parent 163,939 76,701

Loss net of tax from continuing operations attributable to owners of the parent used in the computation of basic loss per share (35,917) (36,404)

2019number of

ordinaryshares

‘000

2018number of

ordinaryshares

‘000

Weighted average number of ordinary shares in issue for basic loss per share computation 1,682,641 1,668,196

Loss per share attributable to owners of the parent (sen per share):

Basic loss per share (sen per share) (11.87) (6.78)

- continuing operations (2.13) (2.18)

- discontinued operation (9.74) (4.60)

(a) Continuing operations

The basic loss per share from continuing operation are calculated by dividing loss for the year from continuing operations, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

(b) Discontinued operation

The basic loss per share from discontinued operation are calculated by dividing loss from discontinued operation, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares.

The Group does not have any outstanding convertible equity instrument as at the reporting date. Accordingly, the diluted loss per share is presented as equal to the basic loss per share.


ANNUAL REPORT 2019



11. DIVIDENDS

Group and Company

|-------------------- Dividends in respect --------------------| of year

|---------------- Dividends ------------| recognised in year

2019RM’000

2018RM’000

2017RM’000

2019RM’000

2018RM’000

Recognised in prior year

First and final dividend in respect of the financial year ended 31 December 2017 of 0.5 sen dividend per share, tax exempt under the single-tier system on 1,657,877,501 ordinary shares proposed on 27 March 2018, approved on 24 May 2018 and paid on 14 August 2018. - - 8,290 - 8,290

- - 8,290 - 8,290

There were no dividend proposed by the Company during financial year ended 31 December 2019.


TDM BERHAD



12. PROPERTY, PLANT AND EQUIPMENT

Freehold land

RM’000Restated

Leaseholdland

RM’000Restated

BuildingsRM’000

Restated

Bearerplants

RM’000Restated

Plant, machinery, equipment,

vehicles and renovation

RM’000Restated

Assetsunder

constructionRM’000

Restated

TotalRM’000

Restated

Group

Cost

At 1 January 2018 7,200 585,336 212,445 614,792 450,971 277,683 2,148,427

Prior year adjustments (Note 42) 2,783 (127,134) 4,659 1,647 (75,415) (15,197) (208,657)

At 1 January 2018, restated 9,983 458,202 217,104 616,439 375,556 262,486 1,939,770

Additions - 61,787 10,790 26,249 13,544 7,274 119,644

Disposals - - - - (48) - (48)

Reclassification (83) 83 170,056 - 84,567 (254,623) -

Transfer to investment properties (Note 15) - - (4,849) - - - (4,849)

Transfer to amount due from Plasma - - - (27,698) - - (27,698)

Exchange differences - (2,245) (65) (8,736) (693) (3,060) (14,799)

At 31 December 2018 9,900 517,827 393,036 606,254 472,926 12,077 2,012,020

At 1 January 2019 7,200 789,021 370,584 606,741 524,179 68,053 2,365,778

Prior year adjustments (Note 42) 2,700 (271,193) 22,450 (486) (51,251) (55,978) (353,758)

At 1 January 2019, restated 9,900 517,828 393,034 606,255 472,928 12,075 2,012,020

Effect of adoption of MFRS 16 Leases - (517,828) (11,717) - - - (529,545)

At 1 January 2019, adjusted 9,900 - 381,317 606,255 472,928 12,075 1,482,475

Additions - - 2,551 26,075 7,743 1,642 38,011

Disposals - - - - (2,060) - (2,060)

Write offs - - - (47,211) (293) - (47,504)

Reclassification - - 103 - 6,927 (7,030) -

Transfer from investment properties (Note 15) - - 4,849 - - - 4,849

Exchange differences - - 41 5,427 2,602 - 8,070

Attributable to discontinued operation (Note 24) - - (1,605) (156,593) (94,248) - (252,446)

At 31 December 2019 9,900 - 387,256 433,953 393,599 6,687 1,231,395


ANNUAL REPORT 2019



12. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)

Freehold land

RM’000Restated

Leaseholdland

RM’000Restated

BuildingsRM’000

Restated

Bearerplants

RM’000Restated

Plant, machinery, equipment,

vehicles and renovation

RM’000Restated

Assetsunder


Restated

TotalRM’000

Restated

Group

Accumulated depreciation and impairment loss

At 1 January 2018 - 51,370 48,002 274,968 194,432 42,225 610,997Prior year adjustments (Note 42) - (33,065) 5,269 (213,866) 8,393 (41,610) (274,879)At 1 January 2018, restated - 18,305 53,271 61,102 202,825 615 336,118Depreciation charge for the year

(Note 6) - 10,542 10,497 50,103 26,778 - 97,920Impairment (Note 6) - - 174 22,317 88 - 22,579Disposals - - - - (41) - (41)Transfer to investment properties

(Note 15) - - (937) - - - (937)Exchange differences - (310) (25) (222) (212) - (769)At 31 December 2018 - 28,537 62,980 133,300 229,438 615 454,870

At 1 January 2019 - 66,555 56,575 332,280 208,439 61,115 724,964Prior year adjustments

(Note 42) - (38,018) 6,405 (198,980) 20,999 (60,500) (270,094)At 1 January 2019, restated - 28,537 62,980 133,300 229,438 615 454,870Effect of adoption of MFRS 16

Leases - (28,537) (2,568) - - - (31,105)At 1 January 2019, adjusted - - 60,412 133,300 229,438 615 423,765Depreciation charge for the year

(Note 6) - - 9,251 47,501 26,947 - 83,699Impairment (Note 6) - - 222 51,995 34,986 - 87,203Disposals - - - - (2,058) - (2,058)Write off - - - (7,368) (256) - (7,624)Transfer from investment

properties (Note 15) - - 1,033 - - - 1,033Exchange differences - - 30 1,255 406 - 1,691Attributable to discontinued

operation (Note 24) - - (1,347) (97,674) (53,824) - (152,845)At 31 December 2019 - - 69,601 129,009 235,639 615 434,864

Net carrying amountAt 1 January 2018 9,983 439,897 163,833 555,337 172,731 261,871 1,603,652

At 31 December 2018 9,900 489,290 330,056 472,954 243,488 11,462 1,557,150

At 31 December 2019 9,900 - 317,655 304,944 157,960 6,072 796,531


TDM BERHAD




Leaseholdland

RM’000Restated

Equipmentand

vehiclesRM’000

Restated

BuildingsRM’000

Restated

Bearerplants

RM’000Restated

RenovationRM’000

Restated

Assets under


Restated

TotalRM’000

Restated

Company

CostAt 1 January 2018 39,036 9,234 - - 5,060 152,227 205,557Prior year adjustments (Note

42) (39,036) - - - - (151,704) (190,740)At 1 January 2018, restated - 9,234 - - 5,060 523 14,817Additions - 174 - 1,008 - - 1,182At 31 December 2018 - 9,408 - 1,008 5,060 523 15,999

At 1 January 2019 39,036 9,408 161,794 - 5,060 523 215,821Prior year adjustments

(Note 42) (39,036) - (161,794) 1,008 - - (199,822)At 1 January 2019, restated - 9,408 - 1,008 5,060 523 15,999Additions - 79 - 1,698 - - 1,777At 31 December 2019 - 9,487 - 2,706 5,060 523 17,776

Accumulated depreciationAt 1 January 2018 3,397 7,582 - - 3,099 523 14,601Prior year adjustments

(Note 42) (3,397) - - - - - (3,397)At 1 January 2018, restated - 7,582 - - 3,099 523 11,204Depreciation charge for

the year (Note 6) - 575 - - 249 - 824At 31 December 2018 - 8,157 - - 3,348 523 12,028

At 1 January 2019 4,880 8,157 2,966 - 3,348 523 19,874Prior year adjustments

(Note 42) (4,880) - (2,966) - - - (7,846)At 1 January 2019, restated - 8,157 - - 3,348 523 12,028Depreciation charge for

the year (Note 6) - 482 - - 248 - 730At 31 December 2019 - 8,639 - - 3,596 523 12,758

Net carrying amountAt 1 January 2018 - 1,652 - - 1,961 - 3,613

At 31 December 2018 - 1,251 - 1,008 1,712 - 3,971

At 31 December 2019 - 848 - 2,706 1,464 - 5,018


ANNUAL REPORT 2019




(a) During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM1,624,000 (2018: RM4,623,000) by means of hire purchase. In the previous financial year, the Group acquired property, plant and equipment with an aggregate cost of RM60,841,000 by means of finance lease. The cash outflow on acquisition of property, plant and equipment of the Group amounted to RM3,114,000 (2018: RM4,433,000).

Net carrying amounts of property, plant and equipment held under hire purchase and finance leases are as follows:

Group Company2019

RM’0002018

RM’0002019

RM’0002018

RM’000

Machinery, equipment and vehicles

- finance lease - 60,392 - -

- hire purchase 10,166 13,754 363 501

(b) The Group’s assets with a carrying amount of RM320,708,000 (2018: RM378,002,000) as disclosed below are pledged to secure loans and borrowings respectively (Note 26).

Group2019

RM’0002018

RM’000

Buildings 292,386 297,329

Leasehold land - 50,588

Equipment 28,322 30,085

320,708 378,002

(c) The Group’s and the Company’s property, plant and equipment include borrowing cost arising from loans and borrowings specifically for the purpose of the improvements and construction of hospital buildings and financing the replanting programme. During the financial year, the borrowing cost capitalised as cost of property, plant and equipment for the Group and the Company amounted to RM3,685,000 (2018: RM2,710,000) and RM203,000 (2018: RM172,000) respectively.

(d) During the financial year, plantation of a subsidiary in Indonesia has been affected by fire due to the prolonged dry spell and strong wind in Kalimantan Barat since early August 2019. Pursuant to the fire incidents, the subsidiary has written off the related bearer plants amounting to RM33,881,000.

During the financial year, the Group has also written off bearer plant amounting to RM5,962,000 arising from damages on Malaysian plantations due to flood and animal attacks.

(e) Given the poor performance of a subsidiary in Indonesia in the previous financial year, the Group has recorded impairment loss amounting to RM22,579,000 arose from valuation performed by independent external valuers.

(f) As at 31 December 2019, the Group recorded impairment loss amounting to RM87,203,000 as the fair value less costs to sell of the property, plant and equipment is lower than its carrying amount. The fair value less cost to sell is based on management estimates of the resale value of the assets, taking into consideration on the offer letter received from a purchaser as further disclosed in Note 41.


TDM BERHAD



13. RIGHT-OF-USE ASSETS

As a lessee

The Group and the Company have lease contracts for buildings, office space and various items of office equipment and medical equipment used in their operations. The leases of buildings and office space generally have lease terms between 2 and 3 years, while office equipment and medical equipment generally have lease terms between 2 and 5 years.

The Group and the Company also have certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Group and the Company apply the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

Finance lease relates to the lease agreement between Kumpulan Ladang-Ladang Trengganu Sdn. Bhd. and Perbadanan Memajukan Iktisad Negeri Terengganu for the use of land for periods ranging from 30 to 99 years, with extension option from the commencement of the effective date as stated in the agreements.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:

Group

Leasehold land under

financeleases

RM’000

Leaseholdland andbuildingRM’000

Otherassets*RM’000

TotalRM’000

Cost:

At 1 January 2019 - - - -

Effect of adoption of MFRS 16 60,841 468,704 3,150 532,695

Additions - 378 109 487

Exchange differences - 1,583 - 1,583

Attributable to discontinued operation (Note 24) - (57,691) - (57,691)

At 31 December 2019 60,841 412,974 3,259 477,074

Accumulated amortisation and impairment:

At 1 January 2019 - - - -

Effect of adoption of MFRS 16 449 30,656 - 31,105

Amortisation for the financial year (Note 6) 526 9,339 1,359 11,224

Impairment - 21,242 - 21,242

Exchange differences - 288 - 288

Attributable to discontinued operation (Note 24) - (33,023) - (33,023)

At 31 December 2019 975 28,502 1,359 30,836

Net carrying amount 59,866 384,472 1,900 446,238

* Other assets consist of building, office space, office equipment and medical equipment.


ANNUAL REPORT 2019



13. RIGHT-OF-USE ASSETS (CONT’D.)

CompanyOther assets*

RM’000

Cost:

At 1 January 2019 -

Effect of adoption of MFRS 16 1,900

Additions 50

At 31 December 2019 1,950

Accumulated amortisation:

At 1 January 2019 -

Effect of adoption of MFRS 16 -

Amortisation for the financial year (Note 6) 846

At 31 December 2019 846

Net carrying amount 1,104

* Other assets consist of building and office equipment.

The Group’s leasehold land with a carrying amount of RM49,100,000 are pledged to secure the Group’s loans and borrowings (Note 26).

As at 31 December 2019, the Group recorded impairment loss amounting to RM21,242,000 as the fair value less costs to sell of the right-of-use assets is lower than its carrying amount. The fair value less cost to sell is based on management estimates of the resale value of the assets, taking into consideration on the offer letter received from a purchaser as further disclosed in Note 41.

As a lessor

The Company has entered into operating leases on its investment property portfolio consisting of certain hospital building. These leases have terms of 3 years.

Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows:

Company

2019RM’000

2018RM’000

Within one year 6,516 6,516

After one year but not more than five years 543 7,059

7,059 13,575


TDM BERHAD



14. INTANGIBLE ASSET

Group and Company

2019RM’000

2018RM’000

At 1 January 6,321 7,179

Amortisation (Note 6) (858) (858)

At 31 December 5,463 6,321

15. INVESTMENT PROPERTIES

Group

2019RM’000

2018RM’000

Restated

Cost

At 1 January 16,249 11,400

Prior year adjustment (Note 42) (400) (400)

At 1 January, restated 15,849 11,000

Transfer from property, plant and equipment (Note 12) - 4,849

Transfer to property, plant and equipment (Note 12) (4,849) -

Disposal (11,000) -

At 31 December - 15,849

Accumulated amortisation

At 1 January 6,032 4,769

Prior year adjustment (Note 42) (4,467) (4,455)

At 1 January, restated 1,565 314

Amortisation (Note 6) 202 314

Transfer from property, plant and equipment (Note 12) - 937

Transfer to property, plant and equipment (Note 12) (1,033) -

Disposal (734) -


Net carrying amount



ANNUAL REPORT 2019



15. INVESTMENT PROPERTIES (CONT’D.)

Company

2019RM’000

2018RM’000

Restated

Cost

At 1 January 11,400 11,400

Prior year adjustment (Note 42) 179,116 169,026


Additions 2,394 10,090

Disposal (11,000) -

At 31 December 181,910 190,516

Accumulated amortisation

At 1 January 5,095 4,769

Prior year adjustment (Note 42) (336) (4,455)

At 1 January, restated 4,759 314

Amortisation (Note 6) 3,546 4,445

Disposal (734) -

At 31 December 7,571 4,759

Net carrying amount

At 31 December 174,339 185,757

The directors have estimated the fair value of investment properties of the Group in the previous financial year to be RM17,415,000. The directors have estimated the fair value of investment properties of the Company as at 31 December 2019 to be RM184,200,000 (2018: RM196,200,000). The fair value have been determined by valuation performed by Messrs. Raine & Horne, independent professional valuer by reference to market evidence of transaction prices of similar properties.


TDM BERHAD



16. GOODWILL

Group

2019RM’000

2018RM’000

At 1 January/31 December 991 991

Impairment testing of goodwill

Goodwill arising from business combinations has been allocated to an individual cash-generating units (“CGU”) for impairment testing which is one (2018: one) of the hospitals within the healthcare sector.

The carrying amount of goodwill allocated to the CGU is as follows:

Group

2019RM’000

2018RM’000

Healthcare 991 991

The recoverable amount of the CGU has been determined based on fair value less costs to sell of the hospital’s assets.

Management believes that any reasonable change in any of the assumptions would not cause the carrying amount of goodwill of the Group to materially exceed its recoverable amount.

17. INVESTMENTS IN SUBSIDIARIES

Company

2019RM’000

2018RM’000

Unquoted shares at cost:

- in Malaysia 236,736 236,736

- outside Malaysia 2,795 50,986

239,531 287,722

Less: Accumulated impairment losses - unquoted shares (15,265) (63,456)

224,266 224,266

In the previous financial year, the impairment of the investments in subsidiaries of the Company arose from a subsidiary incorporated in Indonesia as this subsidiary has delayed progress on operations, which resulted in the impairment loss amounting to RM44,351,000.


ANNUAL REPORT 2019



17. INVESTMENTS IN SUBSIDIARIES (CONT’D.)

Details of the subsidiaries are as follows:

Names of subsidiariesCountry of

incorporation Principal activitiesProportion of

ownership interest2019

% 2018

%

TDM Plantation Sdn. Bhd. Malaysia Management of oil palm plantation, processing and trading of palm oil and related products. 100 100

Kumpulan Ladang-Ladang Trengganu Sdn. Bhd.

Malaysia Cultivation of oil palms, trading of palm oil and other related products. 100 100

TDM Trading Sdn. Bhd. Malaysia Trading of crude palm oil and other related products. 100 100TDM Capital Sdn. Bhd. Malaysia Investment holding, trading, cultivation of oil palms and

other related 100 100Kumpulan Medic Iman

Sdn. Bhd.Malaysia Investment holding and provision of consultancy and

management services to specialist medical centres. 99.28 99.28PT Rafi Kamajaya Abadi *@ Indonesia Cultivation of oil palms, trading of palm oil and

other related products. 93.75 93.75PT Sawit Rezki Abadi *@ Indonesia Cultivation of oil palms, trading of palm oil and

other related products. 95 95PT Rafi Sawit Lestari * Indonesia Dormant 95 95Kumpulan Mediiman Sdn. Bhd. Malaysia Dormant. 90.49 90.49Indah Sari Travel & Tours

Sdn. Bhd. Malaysia Dormant. 70 70TD Gabongan Sdn. Bhd. Malaysia Dormant. 51 51Kemaman Capital Sdn. Bhd. Malaysia Dormant. 100 -Held by Kumpulan Medic Iman

Sdn. Bhd.Kuantan Medical Centre

Sdn. Bhd. Malaysia Specialist medical centre. 92.33 92.33Kelana Jaya Medical Centre

Sdn. Bhd. Malaysia Specialist medical centre. 99.29 99.29Kuala Terengganu Specialist

Hospital Sdn. Bhd. Malaysia Specialist medical centre. 100 100TDMC Hospital Sdn. Bhd. Malaysia Specialist medical centre. 100 100

* Audited by firms of auditors other than Ernst & Young.

@ A subsidiary with auditors’ report that draws reference to the going concern assumptions. The auditors’ report is not qualified.

(a) Summarised financial information of PT Rafi Kamajaya Abadi (“RKA”) and Kuantan Medical Centre Sdn. Bhd. (“KMC”) which have non-controlling interests that are material to the Group is set out below. The summarised financial information presented below is the amount before inter-company elimination and consolidation adjustments. The non-controlling interests in respect of Kumpulan Mediiman Sdn. Bhd., TD Gabongan Sdn. Bhd., Kumpulan Medic Iman Sdn. Bhd., Kelana Jaya Medical Centre Sdn. Bhd., PT Rafi Sawit Lestari, PT Sawit Rezki Abadi and Indah Sari Travel & Tours Sdn. Bhd. are not material to the Group.


TDM BERHAD



17. INVESTMENTS IN SUBSIDIARIES (CONT’D.)

(i) Summarised statements of financial position

2019 2018

RKARM’000

KMCRM’000

RKARM’000

KMCRM’000

Non-current assets 284,079 119,964 320,196 125,602

Current assets 66,108 43,204 73,181 41,835

Total assets 350,187 163,168 393,377 167,437

Current liabilities 756,336 29,926 745,492 30,599

Non-current liabilities 5,414 55,024 4,604 61,198

Total liabilities 761,750 84,950 750,096 91,797

Net (liabilities)/assets (411,563) 78,218 (356,719) 75,640

Equity attributable to owners of the parent (385,840) 72,219 (334,424) 69,838

Non-controlling interests (25,723) 5,999 (22,295) 5,802

(ii) Summarised statements of comprehensive income

2019 2018

RKARM’000

KMCRM’000

RKARM’000

KMCRM’000

Revenue 931 132,797 117 123,897

(Loss)/profit for the year (44,480) 8,273 (80,940) 6,888

(Loss)/profit attributable to owners of the parent (41,700) 7,638 (75,881) 6,360

(Loss)/profit attributable to non-controlling interests (2,780) 635 (5,059) 528

Total comprehensive (loss)/income (44,480) 8,273 (80,940) 6,888

Total comprehensive (loss)/income attributable to owners of the parent (41,700) 7,638 (75,881) 6,360

Total comprehensive (loss)/income attributable to the non-controlling interests (2,780) 635 (5,059) 528

(44,480) 8,273 (80,940) 6,888


ANNUAL REPORT 2019



17 INVESTMENTS IN SUBSIDIARIES (CONT’D.)

(iii) Summarised statements of cash flows

2019 2018

RKARM’000

KMCRM’000

RKARM’000

KMC RM’000

Net cash (used in)/generated from operating activities (6,716) 16,062 2,058 19,598

Net cash used in investing activities (1,225) (706) (2,799) (6,578)

Net cash generated from/(used in) financing activities 7,634 (12,432) 735 (7,341)

Net (decrease)/increase in cash and cash equivalents (307) 2,924 (6) 5,679

Cash and cash equivalents at 1 January 594 14,616 600 8,937

Cash and cash equivalents at 31 December 287 17,540 594 14,616

18. OTHER INVESTMENTS

Group

2019RM’000

2018RM’000

Fair value through other comprehensive income

Unquoted shares, at fair value

Within Malaysia - shares 22,294 4,700

Effect of adoption of MFRS 9 - 43,384

22,294 48,084

Fair value recognised in other comprehensive income (Note 32) 11,414 (25,790)

Total other investments 33,708 22,294


TDM BERHAD



18. OTHER INVESTMENTS (CONT’D.)

The amount represents investments in unquoted shares, Ladang Rakyat Trengganu Sdn. Bhd. which is measured at fair value through other comprehensive income.

The investments are valued using valuation model determined based on market approach which uses both observable and non-observable data. The non-observable inputs to the model includes assumptions regarding the future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and geographical jurisdiction in which the investee operates.

Sensitivity analysis

A 10% increase/decrease in the marketability discount would result in the following changes to the fair value of the investments:

Group

2019RM’000

2018RM’000

10% increase 3,371 2,229

10% decrease (3,371) (2,229)

19. INVESTMENTS IN SECURITIES

Group

2019RM’000

2018RM’000

Fair value through other comprehensive income (“FVOCI”)

Equity instruments (quoted in Malaysia) 45 44

20. BIOLOGICAL ASSETS

Group

2019RM’000

2018RM’000

Restated

At 1 January 3,041 5,000

Prior year adjustment (Note 42) 932 455


Fair value changes (Note 6) 944 (1,482)

Reclassified as held for sale (Note 24) (272) -

At 31 December 4,645 3,973


ANNUAL REPORT 2019



20. BIOLOGICAL ASSETS (CONT’D.)

The biological assets of the Group comprise oil palm fresh fruit bunches (“FFB”) prior to harvest. The valuation model to be adopted by the Group considers the present value of the net cash flows expected to be generated from the sale of FFB.

To arrive at the fair value of FFB, the management considered the oil content of the unripe FFB and derived the assumption that the net cash flow to be generated from FFB prior to more than 4 weeks to harvest to be negligible, therefore quantity of unripe FFB on bearer plants of up to 4 weeks prior to harvest was used for valuation purpose. The value of the unripe FFB was estimated to be approximately 50% for FFB that are 3 to 4 weeks prior to harvest and 83% for FFB that are 1 to 2 weeks prior to harvest, based on actual oil extraction rate and kernel extraction rate of the unripe FFB from tests. Costs to sell, which include harvesting and transport cost, are deducted in arriving at the net cash flow to be generated.

The change in fair value of the biological assets in each accounting period is recognised in profit or loss. The Group’s biological assets were fair valued within Level 3 of the fair value hierarchy. Fair value assessments have been completed consistently using the same valuation techniques.

The key assumptions used to determine the fair value are as follows:

Group2019 2018

Restated

Oil palmsAverage crude palm oil (“CPO”) selling price (RM/MT) 2,843 1,851FFB production (MT) 17,686 25,602Average FFB cost (RM/MT) 133 116

21. INVENTORIES

Group Company

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

At cost:Produced inventories 5,071 6,695 9,636 386 646Pharmaceutical products 3,339 2,858 1,232 - -Consumables 3,457 3,384 2,345 - -Spare parts, equipment and store 5,835 7,384 5,144 - -Seedlings 3,496 10,451 19,039 - -

21,198 30,772 37,396 386 646

During the financial year, the amounts of inventories recognised as an expense in cost of sales of the Group and of the Company were RM183,890,000 (2018: RM154,918,000) and RM13,300,000 (2018: RM15,148,000) respectively.


TDM BERHAD



22. TRADE AND OTHER RECEIVABLES

Group Company

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

CurrentTrade receivables

Third parties 55,080 52,140 61,861 - - -Less: Allowance for impairment

Third parties (8,515) (10,901) (12,728) - - -Trade receivables, net 46,565 41,239 49,133 - - -

Other receivables

Due from subsidiaries - - - 785,061 776,776 374,285Less : Reclassified as held for sale (Note 24) - - - (757,740) - -

- - - 27,321 776,776 374,285Sundry receivables 24,831 29,621 22,648 31,711 47,691 18,550

24,831 29,621 22,648 59,032 824,467 392,835

Less: Allowance for impairmentDue from subsidiaries - - - (583,520) (424,656) (1,866)

Less : Reclassified as held for sale (Note 24) - - - 582,050 - -- - - (1,470) (424,656) (1,866)

Sundry receivables (12,573) (12,573) (12,453) (7,087) (7,087) (7,087)(12,573) (12,573) (12,453) (8,557) (431,743) (8,953)

Other receivables,net 12,258 17,048 10,195 50,475 392,724 383,882Total trade and other receivables (current) 58,823 58,287 59,328 50,475 392,724 383,882

Non-currentOther receivables

Interest receivable (Note 22(c)) - - 63,234 - - 63,234Amount due from Plasma (Note 22(d)) - 65,880 46,253 - - -Sundry receivables 186 - - - - -Total other receivables (non-current) 186 65,880 109,487 - - 63,234

Total trade and other receivables (current and non-current) 59,009 124,167 168,815 50,475 392,724 447,116

Add: Investment in fixed income securities - - 315,000 - - 315,000Add: Cash and bank balances (Note 23) 90,302 75,405 108,301 35,731 33,990 33,315Total financial assets carried at amortised cost 149,311 199,572 592,116 86,206 426,714 795,431


ANNUAL REPORT 2019



22. TRADE AND OTHER RECEIVABLES (CONT’D.)

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2018: 30 to 90 days) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

The Group’s trade receivables that are impaired at the reporting date and the movements of the allowance accounts used to record the impairment are as follows:

Group

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

Trade receivables - nominal amounts 26,622 29,990 21,172

Less: Allowance for expected credit losses (8,515) (10,901) (12,728)

18,107 19,089 8,444

Movement in allowance accounts:

Group

2019RM’000

2018RM’000

Restated

At 1 January 10,901 12,728

Provision for expected credit losses (Note 6) 293 1,092

Reversal of expected credit losses (Note 6) (2,679) (2,919)

At 31 December 8,515 10,901

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.


TDM BERHAD




(b) Other receivables

Amounts due from subsidiaries are unsecured, non-interest bearing and repayable on demand.

The Group’s and the Company’s other receivables that are impaired at the reporting date and the movements of the allowance accounts used to record the impairment are as follows:

Group Company

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Other receivables

- nominal amounts 19,814 19,424 17,815 766,297 757,908

Less: Allowance for expected credit losses (12,573) (12,573) (12,453) (590,607) (431,743)

7,241 6,851 5,362 201,694 353,109


Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

At 1 January 12,573 12,453 431,743 8,953

Provision for expected credit losses (Note 6) - 120 158,933 422,813

Reversal of expected credit losses (Note 6) - - (69) (23)

12,573 12,573 590,607 431,743

Less : Reclassified as held for sale (Note 24) - - (582,050) -

At 31 December 12,573 12,573 8,557 431,743

The directors have estimated the expected credit losses (“ECL”) relating to the amount due from PT Rafi Kamajaya Abadi based on the subsidiary’s expected future cash flows and as a result of the assessment, the carrying value of the amount due from PT Rafi Kamajaya Abadi was impaired by RM158,933,000 (2018: RM422,813,000).

(c) Interest receivable

In previous financial years, the amount was related to the interest receivable from investment in fixed income securities.


ANNUAL REPORT 2019




(d) Amount due from Plasma

Group

2019RM’000

2018RM’000

As at1 January

2018RM’000

Restated

Amount due from Plasma 90,992 79,539 46,253

Less: Provision for expected credit losses (Note 6) (25,601) (13,659) -

Reclassified as held for sale (Note 24) (65,391) - -

Amount due from Plasma, net - 65,880 46,253

Amount due from Plasma relates to advances by a subsidiary operating in Indonesia to the Plasma Programme which was initiated pursuant to the Indonesian government’s policy for partnerships between plantation companies and their respective surrounding communities. This amount will be recovered by the subsidiary upon maturity of the plantation under Plasma before the profits are distributed to Plasma.

The development costs as at 31 December 2018 included transfer of bearer plants owned by Plasma amounting to RM27,698,000 from property, plant and equipment (Note 12).

Amount due from Plasma that is impaired at the reporting date and the movements of the allowance accounts used to record the impairment are as follows:

Group2019

RM’0002018

RM’000

Amount due from Plasma - nominal amounts 90,992 79,539

Less: Allowance for expected credit losses (25,601) (13,659)

65,391 65,880


Group2019

RM’0002018

RM’000

At 1 January 13,659 -

Provision for expected credit losses (Note 6) 11,942 13,659

Less: Reclassified as held for sale (25,601) -



TDM BERHAD



23. CASH AND CASH EQUIVALENTS

Group Company

2019RM’000

2018RM’000

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Cash at banks and in hand 33,411 24,273 12,974 1,079 336

Deposits with licensed banks 56,891 51,132 95,327 34,652 33,654

Cash and bank balances 90,302 75,405 108,301 35,731 33,990 Cash at banks earns interest at floating rates based on daily bank deposits rates. Deposits are made for varying periods of between one day

to 365 days (2018: one day to 365 days) depending on the immediate cash requirements of the Group and of the Company, and earn interest at the respective deposits rate. The weighted average effective interest rates as at 31 December 2019 of the Group and of the Company were 3.25% (2018: 3.26% ) and 4.13% (2018: 4.13%) per annum respectively.

Deposits with licensed banks of the Group and of the Company amounting to RM35,236,000 (2018: RM34,237,000) and RM34,647,000 (2018: RM33,648,000) respectively are pledged for bank guarantee facility and Finance Service Reserve Account (Note 26).

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date:

Group Company

2019RM’000

2018RM’000

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Cash and bank balances

- Continuing operations 90,302 75,405 108,301 35,731 33,990

- Discontinued operation (Note 24) 290 - - - -

Less: Deposits pledged for bank guaranteefacility and Finance Service ReserveAccount (Note 26) (35,236) (34,237) (33,236) (34,647) (33,648)

Less: Deposits with maturity period morethan 3 months (779) (2,190) (1,857) (5) (5)

Cash and cash equivalents 54,577 38,978 73,208 1,079 337


ANNUAL REPORT 2019



24. DISCONTINUED OPERATION AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

On 26 April 2019, the Board of the Company (“the Board”) has approved the disposal of Indonesian subsidiaries, namely, PT Rafi Kamajaya Abadi (“PT RKA”) and PT Sawit Rezki Abadi (“PT SRA”) as a strategic direction of the Company.

On 28 June 2019, the Board has approved the appointment of an investment bank as the principal adviser for the sale process. The sale process comprises of 2 phases, whereby Phase 1 involved identifying potential buyers and manage the asset disposal process whilst Phase 2 involved the advisory and regulatory compliance process.

On 28 February 2020, the Company publicly announced the decision of the Board to dispose Indonesian subsidiaries.

The directors had assessed that the criteria were met in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operation (“MFRS 5”) prior to classifying the assets and liabilities of the Indonesian subsidiaries as held for sale based on the following criteria:

(a) the assets and liabilities of the Indonesian subsidiaries are available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups); and

(b) the sale is highly probable in view that:

(i) the appropriate level of management has committed to a plan to sell the asset (or disposal group);

(ii) an active programme to locate a buyer and complete the plan have been initiated;

(iii) the assets (or disposal group) are actively marketed for sale at a price that is reasonable in relation to its current fair value;

(iv) the sale is expected to qualify for recognition as a completed sale within one year from the date of classification unless a delay is caused by events or circumstances beyond the Company’s control while the Company remains committed to its plan to sell the assets (or disposal group);

(v) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn; and

(vi) it is probable in obtaining the necessary approval from its shareholders.


TDM BERHAD



24. DISCONTINUED OPERATION AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (CONT’D.)

Assets and liabilities of PT RKA and PT SRA classified as held for sale on the Group’s statement of financial position are as below:

Group

Note 2019RM’000

Assets:

Property, plant and equipment a 99,601

Right-of-use assets a 24,668

Trade receivables 109

Other receivables 65,391

Prepayment 26

Biological assets 272

Inventories 23

Cash and bank balances 290

Assets held for sale 190,380

Liabilities:

Other payables (4,287)

Retirement benefit obligations (391)

Tax payable (28)

Liabilities directly associated with assets held for sale (4,706)

Net assets directly associated with disposal group 185,674

Assets classified as held for sale on the Company’s statement of financial position are as below:

Company

2019RM’000

Assets:

Investments in subsidiaries

Unquoted shares at cost 48,191

Less: Accumulated impairment losses (48,191)

-

Trade and other receivables

Due from subsidiaries 757,740

Less: Accumulated impairment losses (582,050)

175,690


ANNUAL REPORT 2019



24. DISCONTINUED OPERATION AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (CONT’D.)

The result of PT RKA and PT SRA for the year are presented below:

Group

Note 2019RM’000

2018RM’000

Revenue 931 118

Cost of sales (20,187) (19,038)

Gross loss (19,256) (18,920)

Interest income 8,204 6,867

Other income 2,622 -

Administrative expenses (18,551) (12,716)

Other expenses a (147,097) (29,203)

Finance costs - (28,271)

Loss before tax (174,078) (82,243)

Income tax (expense)/credit (6) 218

Loss for the year from discontinued operations, net of tax (174,084) (82,025)

The net cash flows incurred by PT RKA and PT SRA are as follows:

Group

2019RM’000

2018RM’000

Operating (6,530) 2,063

Investing (1,432) (3,724)

Financing 7,634 735

Net cash outflow (328) (926)

Note a: As at 31 December 2019, the Group recorded impairment loss on the property, plant and equipments and right-of-use assets amounting to

RM87,203,000 and RM21,242,000 as the fair value less costs to sell of the assets are lower than their carrying amount as further disclosed in Note 12 and Note 13 respectively. The fair value less cost to sell is based on management estimates of the resale value of the assets, taking into consideration on the offer letter received from a purchaser as further disclosed in Note 41.


TDM BERHAD



25. LEASE LIABILITIES

Set out below are the carrying amounts of lease liabilities and the movements during the year:

GroupFinance

leaseRM’000


TotalRM’000

At 1 January 2019 203,575 - 203,576Prior year adjustment (Note 42) (142,751) - (142,752) At 1 January 2019, restated 60,824 - 60,824Effect of adoption of MFRS 16 - 3,150 3,150

60,824 3,150 63,974Additions - 109 109Accretion of interest 4,871 141 5,012Payments (4,903) (1,450) (6,353)At 31 December 2019 60,792 1,950 62,742

Current 35 1,379 1,414Non-current 60,757 571 61,328

60,792 1,950 62,742

* Other assets consist of building, office space and office equipment.

CompanyOther assets*

RM’000

At 1 January 2019 -Effect of adoption of MFRS 16 1,900 At 1 January 2019, restated 1,900Additions 50Accretion of interest 85Payments (901)At 31 December 2019 1,134

Current 871Non-current 263

1,134

* Other assets consist of building and office equipment.


ANNUAL REPORT 2019



25. LEASE LIABILITIES (CONT’D.)

The lease liabilities as at 1 January 2019 can be reconciled to the operating lease commitments as of 31 December 2018, as follows:

GroupRM’000

CompanyRM’000

Assets

Operating lease commitments as at 31 December 2018 3,360 2,025

Weighted average incremental borrowing rate as at 1 January 2019 5.50% 5.50%

Discounted operating lease commitments as at 1 January 2019 3,027 1,900

Add: Commitments relating to leases previously classified as finance lease 60,824 -

Add: Lease payments relating to renewal periods not included in operatinglease commitments as at 31 December 2018 123 -

Lease liabilities as at 1 January 2019 63,974 1,900

The remaining maturities of the lease liabilities as at year end are as follows:

Group Company

2019RM’000

2018RM’000

2019RM’000

2018RM’000

Current

Less than one year 1,414 32 871 -

Non-current

More than 1 year less than 2 years 550 35 233 -

More than 2 years and less than 5 years 190 122 30 -

5 years and more 60,588 60,635 - -

61,328 60,792 263 -

Total 62,742 60,824 1,134 -


TDM BERHAD



26. LOANS AND BORROWINGS

Group Company

Maturity

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

Current

SecuredObligations under hire purchase

(Note 34(b)) 2020 1,907 2,810 3,092 109 109 109

Bank loans: - Business Financing-i at Base

Financing Rate -1.0% per annum 2020 641 989 391 - - - - Business Financing-i at Base

Financing Rate -2.0% per annum 2020 1,099 1,246 1,224 - - - - Commodity Murabahah Term

Financing-i at Cost of Fund +1.0% per annum 2020 28,873 27,564 26,202 23,331 22,084 20,792

- Commodity Murabahah Term Financing-i at Cost of Fund +1.25% per annum 2020 2,083 - - - - -

- Term Financing-i at Cost of Fund +1.0% per annum 2020 11,095 17,150 3,183 - - -

- Muamalat Term Financing-i at3 months Cost of Fund+1.5% per annum 2020 1,508 1,508 - - - -

47,206 51,267 34,092 23,440 22,193 20,901

UnsecuredBank loan: - Revolving Credit Facility-i

at Cost of Fund +1.0% per annum 2020 33,426 51,982 42,500 33,426 51,982 42,500 80,632 103,249 76,592 56,866 74,175 63,401

Non-current

SecuredObligations under hire purchase

(Note 34(b)) 2021-2025 4,605 5,080 3,137 176 278 385

Bank loans: - Business Financing-i at

Base Financing Rate -1.0% per annum 2021-2027 5,516 5,901 6,009 - - -

- Business Financing-i atBase Financing Rate-2.0% per annum 2022 713 1,794 2,988 - - -


ANNUAL REPORT 2019



26. LOANS AND BORROWINGS (CONT’D.)

Group Company

Maturity

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

Non-current (cont’d.)

Secured (cont’d.)

Bank loans (cont’d.): - Commodity Murabahah Term

Financing-i at Cost of Fund +1.0% per annum 2021-2028 206,827 236,844 265,495 158,803 183,858 207,786

- Term Financing-i at Cost of Fund+1.0% per annum 2021-2026 19,043 22,829 23,567 - - -

- Commodity Murabahah TermFinancing-i at Cost of Fund+1.25% per annum 2021-2026 127,567 88,000 75,000 - - -

- Muamalat Term Financing-i at3 months Cost of Fund+1.5% per annum 2021-2026 4,052 4,795 7,071 - - -

Bank overdraft: - Cash Line-i at Base Financing Rate

+0.0% per annum 2021 16,846 14,299 16,144 16,846 14,299 16,144385,169 379,542 399,411 175,825 198,435 224,315

UnsecuredIndonesian Rupiah Notes Programme 2025 - - 312,900 - - -

385,169 379,542 712,311 175,825 198,435 224,315 Total loans and borrowings 465,801 482,791 788,903 232,691 272,610 287,716

The remaining maturities of the loans and borrowings as at year end are as follows:

Group Company

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

On demand or within one year 80,632 103,249 76,592 56,866 74,175 63,401

More than 1 year and less than 2 years 49,356 39,034 33,550 16,846 14,299 14,299

More than 2 years and less than 5 years 110,235 78,897 46,334 385 385 385

5 years and more 225,578 261,611 632,427 158,594 183,751 209,631

465,801 482,791 788,903 232,691 272,610 287,716


TDM BERHAD




Business Financing-i at Base Financing Rate -1.0% per annum

The facility is secured by way of a first party first legal charge over a leasehold land and building known as Kelana Jaya Medical Centre Sdn. Bhd. bearing postal address of FAS Business Avenue, No.1, Jalan Perbandaran, 47301 Kelana Jaya, Petaling Jaya, Selangor and held under H.S (D) 259689, PT No. 14532 Mukim of Damansara, Daerah Petaling, State of Selangor.

The facility is repayable over 120 months. The grace period is 6 months from the first drawdown.

The subsidiary has deposited 3 months security equivalent to the instalment amount held on lien in the form of Term Deposit Tawaruq-i account.

Business Financing-i at Base Financing Rate -2.0% per annum

The facilitiy is secured by way of first party first legal charge and first party second legal charge over a freehold land and a hospital building belonging to TDMC Hospital Sdn. Bhd. erected on GRN 47712, Lot 51913 Mukim and District of Kuala Lumpur, Wilayah Persekutuan bearing postal address No. 45 Jalan Desa, Taman Desa, Off Old Klang Road, 58100 Kuala Lumpur.

The subsidiary has opened a Finance Service Reserve Account (“FSRA”) with the bank and transferred prior to the initial disbursement, an amount equivalent to two (2) monthly payments (“Minimum Reserve Requirement”) amounting to RM225,261 (2018: RM225,261) into the FSRA. Upon maturity, the credit balance in the FSRA shall be used for settlement of the final instalment payment.

Commodity Murabahah Term Financing-i at Cost of Fund +1.0% per annum

(i) Fresh first party first legal charge for RM80,000,000 over a piece of commercial land with a hospital building belonging to Kuantan Medical Centre Sdn. Bhd. 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 facility is repayable over 180 months with a monthly payment of RM632,635. The grace period is 24 months from the first drawdown on 30 August 2012. During the grace period, interest payments are to be serviced monthly and are subject to yearly review.

(ii) Fresh first party first legal charge over land and building of the Company erected on GM569 - 575, Lot 3046 - 3052, Mukim Batu Burok, District of Kuala Terengganu, Terengganu, Terengganu Darul Iman. The facility is repayable over 120 months with a monthly payment of RM762,384. The grace period is 24 months from the first drawdown on 27 August 2013. During the grace period, interest payments are to be serviced monthly and are subject to yearly review.

(iii) Fresh first party second legal charge over land and building of the Company erected on HSD 9357, Lot PT 2407, Mukim Batu Burok, District of Kuala Terengganu, Terengganu, Terengganu Darul Iman. The facility is repayable over 120 months with a monthly payment of RM944,880.

(iv) Fresh first party fourth legal charge over land and building of the Company erected on HSD 9357, Lot PT 2407, Mukim Batu Burok, District of Kuala Terengganu, Terengganu, Terengganu Darul Iman. The facility is repayable over 120 months with a monthly payment of RM1,039,190.

(v) Memorandum of Deposit (“MoD”) of General Investment Accounts (“GIA”) amounting to 30% of the amount disbursed or equivalent to RM30,000,000 has been emplaced and deposited as one of the security arrangements for a banking facility.


ANNUAL REPORT 2019




Commodity Murabahah Term Financing-i at Cost of Fund +1.25% per annum

The term loan facility is secured by specific debenture over the plantation land held under H.S.(D) 1779, PT. No: PT 1666, Mukim Tebak, District of Kemaman owned by TDM Capital Sdn. Bhd. The facility is repayable over 120 months. The grace period is 48 months from the first drawdown on 21 July 2016. During the grace period, interest payments are to be serviced monthly and are subject to yearly review.

Term Financing-i at Cost of Fund +1.0% per annum

The term loan facility is secured by specific debenture over the equipment and machinery in relation to the capital expenditure items on a TDM Plantation Sdn. Bhd.’s existing palm oil mills in Kemaman and Sungai Tong, Terengganu. The facility is repayable over 120 months. The grace period is 18 months from the first drawdown on 28 September 2015. During the grace period, interest payments are to be serviced monthly and are subject to yearly review.

Muamalat Term Financing-i at 3 months Cost of Fund +1.5% per annum

These obligations are secured by specific debenture over the equipment or machines to be financed by Kuala Terengganu Specialist Hospital Sdn. Bhd. The facility is repayable with a maximum period of 8 years, including 30 months of grace profit period, commencing from the date of first disbursement of the facility. During the grace period, interest payment is to be serviced monthly and subject to yearly review.

Revolving Credit Facility-i at Cost of Fund +1.0% per annum

The unsecured Revolving Credit Facility-i at Cost of Fund +1.0% per annum to part finance general requirement for the development and maintenance cost for oil palm plantation activities in Indonesia and Malaysia. Payment in the form of annual limit reduction, commencing on the 25th month from Facility 1st disbursement as scheduled.

As at 31 December 2019, the Company was not able to meet one of the loan covenant ratio which resulted in a departure with respect to the relevant terms and conditions of the facility. Subsequent to the financial year end, the Company has obtained an indulgence from the bank not to change the repayment terms of the affected loan. As the indulgence was obtained subsequent to the financial year end, the non-current portion of the affected loan of RM33,426,000 as at 31 December 2019 has been presented as current loans and borrowings in the financial statements.

Cash Line-i at Base Financing Rate +0.0% per annum

Fresh first party third legal charge over property held of the Company under HSD 9357, Lot PT 2407, Mukim Batu Burok, District of Kuala Terengganu, Terengganu, Terengganu Darul Iman. The facility is repayable over 60 months with a profit portion shall be realised on a monthly basis on the Effective Profit Rate and the principal portion payable by bullet payment upon maturity.


TDM BERHAD




Changes in liabilities arising from financing activities

At 1 January2018

RM’000

Net addition/ (repayment)

RM’000

At 31 December 2018

RM’000

Net addition/(repayment)

RM’000

At 31 December 2019

RM’000

Group

Obligations under hire purchase and finance leases 6,229 1,661 7,890 (1,378) 6,512

Bank loans: - Business Financing-i at Base

Financing Rate -1.0% per annum 6,400 490 6,890 (733) 6,157 - Business Financing-i at Base

Financing Rate -2.0% per annum 4,212 (1,172) 3,040 (1,228) 1,812 - Commodity Murabahah Term

Financing-i at Cost of Fund+1.0% per annum 291,697 (27,289) 264,408 (28,708) 235,700

- Term Financing-i at Cost of Fund+1.0% per annum 26,750 13,229 39,979 (9,841) 30,138

- Revolving Credit Facility-i atCost of Fund +1.0% per annum 42,500 9,482 51,982 (18,556) 33,426

- Commodity Murabahah Term Financing at Cost of Fund+1.25% per annum 75,000 13,000 88,000 41,650 129,650

- Muamalat Term Financing-i at1.5% per annum above 3 monthsCost of Fund 7,071 (768) 6,303 (743) 5,560


+0.0% per annum 16,144 (1,845) 14,299 2,547 16,846Indonesian Rupiah Notes Programme 312,900 (312,900) - - -

788,903 (306,112) 482,791 (16,990) 465,801

Company

Obligations under hire purchase and financial leases 494 (107) 387 (102) 285

Bank loans: - Commodity Murabahah Term

Financing-i at Cost of Fund +1.0% per annum 228,578 (22,636) 205,942 (23,808) 182,134

- Revolving Credit Facility-i atCost of Fund +1.0% per annum 42,500 9,482 51,982 (18,556) 33,426


+0.0% per annum 16,144 (1,845) 14,299 2,547 16,846287,716 (15,106) 272,610 (39,919) 232,691


ANNUAL REPORT 2019



27. TRADE AND OTHER PAYABLES

Group Company

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

CurrentTrade payables

Third parties 49,623 45,374 34,729 69 69 69Due to Sublessees 78,508 77,511 75,791 - - -

128,131 122,885 110,520 69 69 69

Other payablesDue to subsidiaries - - - 280,145 286,252 260,285Sundry payables 22,803 18,567 21,146 4,117 2,461 6,488Interest payable - - 37,674 - - -Accruals 17,426 21,611 20,805 2,187 5,453 2,306Provision 10,651 6,373 7,484 2,135 840 1,524

50,880 46,551 87,109 288,584 295,006 270,603Total trade payables and other payables 179,011 169,436 197,629 288,653 295,075 270,672

Non-currentOther payable

Deposits - - - 1,813 1,813 -Interest payable - - 49,481 - - -

- - 49,481 1,813 1,813 -

Total trade and other payables (current and non-current) 179,011 169,436 247,110 290,466 296,888 270,672

Add: Loans and borrowings (Note 26) 465,801 482,791 788,903 232,691 272,610 287,716Less: Provisions (10,651) (6,373) (7,484) (2,135) 840 (1,524)Total financial liabilities carried at

amortised cost 634,161 645,854 1,028,529 521,022 568,662 556,864

(a) Trade payables

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group and to the Company are up to one month (2018: one month).

(b) Amounts due to subsidiaries

Amounts due to subsidiaries are non-trade in nature, unsecured, non-interest bearing and repayable on demand.


TDM BERHAD



27. TRADE AND OTHER PAYABLES (CONT’D.)

(c) Interest payable

In the previous financial years, the amount was related to the interest payable on the Indonesian Rupiah Notes Programme.

(d) Amount due to Sublessees

Included in trade payables is amount due to Sublessees which relates to the Sublessees Scheme managed by a subsidiary. The lease term of the Scheme expired on 17 April 2012. The subsidiary continues to cultivate the related plantation. Profit distribution from cultivation of the Sublessees Scheme to certain Sublessees has been accrued pending renewal of the Sublessees arrangement.

28. CONTRACT LIABILITY

Contract liability represents advance payment received from customers by TDM Plantation Sdn. Bhd., a subsidiary of TDM Bhd, for the supply of CPO and/or RSPO certified sustainable palm oil. The Group is contractually required to deliver committed volume on a monthly basis at agreed discount to the market price over a period of 12 months. Revenue is recognised in the profit or loss based on the committed volume of CPO and/or RSPO certified sustainable palm oil delivered to the customers under the supply contracts.

The movements in the contract liability balance during the year were:

GroupRM’000

As at 1 January 2019 -

Add: Amounts received during the year 20,500

Less: Amounts recognised as revenue during the year (4,015)

As at 31 December 2019 16,485

Amounts to be recognised as revenue for financial year ended 31 December 2020 16,485


ANNUAL REPORT 2019



29. RETIREMENT BENEFIT OBLIGATIONS

The Company and certain subsidiaries operate an unfunded, defined benefit Retirement Benefit Scheme for their employees. All employees who were employed by the Company and certain subsidiaries 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 Company and certain subsidiaries.

The following tables summarise the components of retirement benefit obligation/expense recognised in the statements of financial position and statements of comprehensive income.

The amounts recognised in the statements of financial position are determined as follows:

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Present value of unfunded defined benefit obligations 5,327 4,962 428 351

The amounts recognised in the statements of comprehensive income are determined as follows:

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Current service cost 378 271 16 15

Past service cost 183 368 - -

Interest cost on defined benefit obligations 227 30 19 18

Net benefit expense, included under employee benefits expense (Note 7) 788 669 35 33


TDM BERHAD



29. RETIREMENT BENEFIT OBLIGATIONS (CONT’D.)

Changes in present value of defined benefit obligations are as follows:

Group Company2019

RM’0002018

RM’000Restated

2019RM’000

2018RM’000

At 1 January 4,962 4,293 351 318Net loss on remeasurement of defined benefit obligations

recognised in other comprehensive income 32 - 42 -Amount recognised in profit or loss Continuing operation (Note 7) 640 426 35 33 Discontinued operation (Note 7) 201 253 - -Exchange difference (53) (10) - -Less: Reclassified as held for sale (Note 24) (391) - - -

5,391 4,962 428 351Contribution paid (64) - - - At 31 December 5,327 4,962 428 351

Analysed as:Non current:Later than 1 year 5,327 4,962 428 351

The principal assumptions used in determining the retirement benefit obligations are shown below:

Group and Company2019 2018

Discount rate 4.30% 5.30%Future salary increase 6.00% 6.00%

The Retirement Benefit Scheme obligations were determined by a professional actuary on 14 February 2020.

Sensitivity analysis

A quantitative sensitivity analysis for significant assumptions as at 31 December 2019 are as shown below:

Group CompanyDefined benefit obligations Defined benefit obligations

IncreaseRM’000

DecreaseRM’000

IncreaseRM’000

DecreaseRM’000

Discount rate (1% movement) 345 (383) 39 (44)Future salary increase (1% movement) 328 (301) 41 (37)

The sensitivity analysis above have been determined based on a method that extrapolates the impact on net defined benefit obligations as a result of reasonable changes in key assumptions occurring at the end of the reporting date.


ANNUAL REPORT 2019



30. DEFERRED TAX

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

At 1 January 145,765 140,084 6,193 6,979

Prior year adjustments (Note 42) 53,721 68,505 (2,052) (1,195)

At 1 January, restated 199,486 208,589 4,141 5,784

Recognised in profit or loss (Note 9) (9,450) (9,249) (1,061) (1,643)

Recognised in equity (501) 159 (416) -

Exchange differences 140 (13) - -

At 31 December 189,675 199,486 2,664 4,141

GroupDeferred tax liabilities:

Propertyplant and

equipmentRM’000


Right-of-useassets

RM’000Total

RM’000

At 1 January 2018 154,423 1,110 - 155,533

Prior year adjustments (Note 42) 53,557 2,944 - 56,501

At 1 January 2018, restated 207,980 4,054 - 212,034

Recognised in profit or loss 5,502 2,950 - 8,452

Recognised in equity 159 - - 159

Exchange differences - (24) - (24)

At 31 December 2018 213,641 6,980 - 220,621

At 1 January 2019 159,000 739 - 159,739

Prior year adjustments (Note 42) 54,641 6,241 - 60,882

At 1 January 2019, restated 213,641 6,980 - 220,621

Recognised in profit or loss (4,514) (545) (1,385) (6,444)

Recognised in equity (85) (416) - (501)

Transfer (103,247) - 103,247 -

Exchange differences 137 8 - 145

At 31 December 2019 105,933 6,026 101,862 213,821

* Other assets consist of biological assets, intangible asset and investment properties.


TDM BERHAD



30. DEFERRED TAX (CONT’D.)

Group (cont’d.)Deferred tax assets:

Provisions RM’000

Leaseliabilities

RM’000

Unutilisedtax losses,

unabsorbedcapital

allowances andreinvestment

allowancesRM’000

TotalRM’000

At 1 January 2018 (11,454) - (3,995) (15,449)

Prior year adjustments (Note 42) 9,596 - 2,408 12,004

At 1 January 2018, restated (1,858) - (1,587) (3,445)

Recognised in profit or loss (559) (14,598) (2,544) (17,701)

Exchange differences 11 - - 11

At 31 December 2018 (2,406) (14,598) (4,131) (21,135)

At 1 January 2019 (8,119) - (5,855) (13,974)

Prior year adjustments (Note 42) 5,713 (14,598) 1,724 (7,161)

At 1 January 2019, restated (2,406) (14,598) (4,131) (21,135)

Recognised in profit or loss (361) (332) (2,313) (3,006)

Exchange differences (5) - - (5)

At 31 December 2019 (2,772) (14,930) (6,444) (24,146)

GroupPresented after appropriate offsetting as follows:

2019RM’000

2018RM’000

Restated

As at1 January

2018RM’000

Restated

Deferred tax assets 64 54 54

Deferred tax liabilities (189,739) (199,540) (208,643)

(189,675) (199,486) (208,589)


ANNUAL REPORT 2019




CompanyDeferred tax liabilities:

Propertyplant and

equipmentRM’000

Intangible assetand investment

propertiesRM’000

Right-of-useassets

RM’000Total

RM’000

At 1 January 2018 7,330 - - 7,330Prior year adjustments (Note 42) (3,256) 2,153 - (1,103)At 1 January 2018, restated 4,074 2,153 - 6,227Recognised in profit or loss (3,737) 3,367 - (370)At 31 December 2018 337 5,520 - 5,857

At 1 January 2019 6,544 - - 6,544Prior year adjustments (Note 42) (6,207) 5,520 - (687)At 1 January 2019, restated 337 5,520 - 5,857Recognised in profit or loss 351 (259) 265 357Recognised in equity - (416) - (416)At 31 December 2019 688 4,845 265 5,798

Deferred tax assets:

Provisions RM’000

Leaseliabilities

RM’000

Unutilisedtax losses,

unabsorbedcapital

allowances andreinvestment

allowancesRM’000

TotalRM’000

At 1 January 2018 (158) - (193) (351)Prior year adjustments (Note 42) (285) - 193 (92) At 1 January 2018, restated (443) - - (443)Recognised in profit or loss 165 - (1,438) (1,273)At 31 December 2018 (278) - (1,438) (1,716)

At 1 January 2019 (158) - (193) (351)Prior year adjustments (Note 42) (120) - (1,245) (1,365)At 1 January 2019, restated (278) - (1,438) (1,716)Recognised in profit or loss (327) (273) (818) (1,418)At 31 December 2019 (605) (273) (2,256) (3,134)


TDM BERHAD




Deferred tax assets have not been recognised in respect of the following items:

Group

2019RM’000

2018RM’000

Unutilised tax losses 99,945 65,015

Unabsorbed capital allowances 26,886 23,712

Other temporary differences 181,134 50,584

307,965 139,311

In accordance with the provision in Finance Act 2018, the unutilised tax losses are available for utilisation in the next seven years, for which, any excess at the end of the seventh year, will be disregarded. Deferred tax assets have not been recognised in respect of unutilised tax losses and unabsorbed capital allowances because it is probable that the future taxable profits of certain loss- making subsidiaries would not be available against which the unutilised tax losses and unabsorbed capital allowances can be utilised.

31. SHARE CAPITAL

Group and Company

Number ofordinary shares

RM’000Share capital

RM’000

At 1 January 2018 1,657,877 345,017

Issuance of shares pursuant to dividend reinvestment scheme 24,764 5,696

At 31 December 2018 and at 31 December 2019 1,682,641 350,713

The holders of ordinary shares are entitled to receive dividends as and when declared from time to time by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regards to the Company’s residual assets.


ANNUAL REPORT 2019



32. OTHER RESERVES

Foreign currency

translation reserve

Fair value adjustment

reserve

Employee benefits plan

reserve

Premium paid on acquisition of non-controlling

interest Total

Group RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2018 (48,468) 43,336 - (31) (5,163)

Prior year adjustments (Note 42) (2,410) - - - (2,410)

At 1 January 2018, restated (50,878) 43,336 - (31) (7,573)


Fair value movement of investments in securities - (4) - - (4)

Fair value movement of other investment - (25,790) - - (25,790)

Foreign currency translation 13,420 - - - 13,420

13,420 (25,794) - - (12,374)

At 31 December 2018 (37,458) 17,542 - (31) (19,947)

At 1 January 2019 (50,944) 17,542 - (31) (33,433)

Prior year adjustments (Note 42) 13,486 - - - 13,486

At 1 January 2019, restated (37,458) 17,542 - (31) (19,947)

Other comprehensive income:

Fair value movement of investments in securities - 1 - - 1

Fair value movement of other investment - 11,414 - - 11,414

Foreign currency translation 8,651 - - - 8,651

Net loss on remeasurement of defined benefit obligations - - (32) - (32)

Total comprehensive income for the year 8,651 11,415 (32) - 20,034

At 31 December 2019 (28,807) 28,957 (32) (31) 87


TDM BERHAD



32. OTHER RESERVES (CONT’D.)

Company

Capital reserveRM’000

Employee benefits plan

reserveRM’000

TotalRM’000

At 1 January 2018 and 31 December 2018 2,736 - 2,736


Net loss on remeasurement of defined benefit obligations, representing total other comprehensive loss - (43) (43)

At 31 December 2019 2,736 (43) 2,693

The nature and purpose of each category of the reserves are as follows:

(a) Foreign currency translation reserve

This relates to foreign exchange differences arising from the translation of the financial statements of the foreign subsidiaries as well as the translation of foreign currency loans used to finance investments in the foreign subsidiaries.

(b) Fair value adjustment reserve

This relates to the cumulative fair value changes, net of tax, of financial assets designated at fair value through other comprehensive income until they are disposed of.

(c) Premium paid on acquisition of non-controlling interest

This relates to the premium paid on acquisition of non-controlling interest in a subsidiary without a change in control.

(d) 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.

(e) Employee benefits plan reserve

This relates to the remeasurement gains and losses arising from the defined benefit obligations.


ANNUAL REPORT 2019



33. 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 the Company and related parties took place at terms agreed between the parties during the financial year:

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Profit distribution from Terengganu Oil Palm Development - Sublessees Scheme (2,030) (3,505) (606) (1,046)

Dividend income from subsidiaries - - (47,398) (75,801)

Management fees charged to subsidiaries - - (2,883) (1,645)

Rental income from a subsidiary - - (6,516) (5,973)

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year are as follows:

Group Company

2019RM’000

2018RM’000

2019RM’000

2018RM’000

Short term benefits 3,032 3,443 880 1,231

Post-employment benefits:

- Defined contribution plan 384 493 132 181

- Defined benefit plan 8 10 2 2

3,424 3,946 1,014 1,414

Included in the total compensation of key management personnel are:

Group Company

2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Executive and non-executive directors’ remuneration excluding benefits-in-kind (Note 8) 2,148 2,498 932 1,044


TDM BERHAD



34. COMMITMENTS

(a) Capital commitments

Capital commitments as at the reporting date are as follows:

Group Company

2019RM’000

2018RM’000

2019RM’000

2018RM’000

Capital expenditure:Approved and contracted for:

Acquisition and expansion 7,000 - 7,000 -Property, plant and equipment 507 - - -

Approved but not contracted for:Acquisition and expansion - 40,000 - -Property, plant and equipment 122,138 117,374 8,060 88

(b) Hire purchase commitments

Future minimum hire purchase under finance leases together with the present value of the net minimum hire purchase are as follows:

Group Company

2019RM’000

2018RM’000

2019RM’000

2018RM’000

Minimum hire purchase :Not later than 1 year 2,172 3,116 122 122Later than 1 year and not later than 2 years 1,621 1,819 116 122Later than 2 years and not later than 5 years 3,516 3,815 81 191

7,309 8,750 319 435Less: Future finance costs (797) (860) (34) (48)Present value of hire purchase 6,512 7,890 285 387

Analysis of present value of hire purchase :Not later than 1 year 1,907 2,810 109 109Later than 1 year and not later than 2 years 1,414 1,618 104 109Later than 2 years and not later than 5 years 3,191 3,462 72 169

6,512 7,890 285 387Less: Due within 12 months (Note 26) (1,907) (2,810) (109) (109)Due after 12 months (Note 26) 4,605 5,080 176 278

The Group and Company have hire purchase for certain items of machinery, equipment and vehicles (Note 12). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term. The hire purchase bore an average interest rate at the reporting date of 3% (2018: 3%) per annum.


ANNUAL REPORT 2019



35. FAIR VALUE OF ASSETS AND LIABILITIES

(a) 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

Other receivables (non-current) 22

Lease liabilities (current) 25

Lease liabilities (non-current) 25

Loans and borrowings (current) 26

Loans and borrowings (non-current) 26

Trade and other payables (current) 27 The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-

term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. Unquoted other investments and quoted investments in securities

The fair values of unquoted other investments are valued using valuation model determined based on market approach and quoted investments in securities are determined directly by reference to their published market bid price at the reporting date.

(b) Fair value hierarchy

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.


TDM BERHAD



35. FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D.)

(b) Fair value hierarchy (cont’d)

Financial instruments

The following table shows carrying amounts of financial assets measured at fair value including their levels in the fair value hierarchy.

Group NoteLevel 1RM’000

Level 2RM’000

Level 3RM’000

TotalRM’000

31 December 2019Financial assets Other investments 18 - - 33,708 33,708Investments in securities 19 45 - - 45

31 December 2018Financial assets Other investments 18 - - 22,294 22,294Investments in securities 19 44 - - 44

There have been no transfers between Level 1, Level 2 and Level 3 during the financial year.

Non-financial instrument measurement

The following table shows carrying amounts of non-financial instrument measured at fair value and non-financial instrument whose fair value is disclosed including their levels in the fair value hierarchy.

NoteLevel 1RM’000

Level 2RM’000

Level 3RM’000

TotalRM’000

Group:31 December 2019 Non-financial instrumentsBiological assets 20 - - 4,645 4,645

31 December 2018Non-financial instrumentsBiological assets 20 - - 3,973 3,973Investment properties 15 - - 17,415 17,415

Company:31 December 2019Non-financial instrumentsInvestment properties 15 - - 184,200 184,200

31 December 2018Non-financial instrumentsInvestment properties 15 - - 196,200 196,200

There have been no transfers between Level 1, Level 2 and Level 3 during the financial year.


ANNUAL REPORT 2019



36. 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 commodity risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Company’s Group Chief Executive Officer, all heads of the 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 years, the Group’s and the Company’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 the Company’s exposures to the above mentioned 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 arise primarily from trade and other receivables. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s and the Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group and the Company trade only with recognised and creditworthy third parties. It is the Group’s and the Company’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 and the Company’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 net trade receivables at the reporting date is as follows:

Group2019 2018

RM’000 % of total RM’000 % of total

By industry sectors:Plantation 15,944 34% 14,541 35%Healthcare 30,621 66% 26,698 65%

46,565 100% 41,239 100%

At the reporting date, the Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risks related to any financial assets other than an amount of RM15,379,000 (2018: RM16,564,000) due from four customers (2018: four customers), representing approximately 33% (2018: 40%) of the net trade receivables of the Group.


TDM BERHAD



36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.)

(a) Credit risk (cont’d.)

Recognition and measurement of impairment losses

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets recognised in the statements of financial position. The Group does not hold collateral as security.

i) Trade receivables

Management has a credit policy in place and the exposure of credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers requiring credit over a certain amount. At each reporting date, the Group assesses whether any of the trade receivables are credit impaired. Impairment losses are provided for either partially or full on the carrying amounts of credit impaired trade receivables when there is no realistic prospect of recovery.

Days past dueCurrent <30 days 30-60 days 61-90 days >91 days TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019Expected credit loss rate 0.1% 6.7% 27.9% 43.6% 91.6% 32.0%Estimated total gross carrying

amount at default 16,125 90 778 1,128 8,501 26,622Expected credit loss 11 6 217 492 7,789 8,515

31 December 2018Expected credit loss rate 0.1% 3.2% 13.0% 15.0% 96.0% 36.3%Estimated total gross carrying

amount at default 14,758 1,456 809 2,121 10,846 29,990Expected credit loss 19 46 105 319 10,412 10,901

ii) Sundry receivables

At the reporting date, the maximum exposure of the Group and of the Company to credit risk is represented by the carrying amount in the statements of financial position. These financial assets are written off when there is no reasonable expectation of recovery. Management has assessed the sundry receivables and determined that the majority of the sundry receivables are fully recoverable and adequate allowance for impairment has been provided for.

iii) Amounts due from subsidiaries

There is minimal risk of default as these companies are either profitable or prospectively profitable except for subsidiaries for which allowances have been made in respect of amounts estimated to be not recoverable as disclosed in Note 22. The credit standing of these companies are periodically monitored and reviewed.

iv) Cash and bank balances

There is minimal risk of default as cash and bank balances are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.


ANNUAL REPORT 2019




(b) Liquidity risk

Liquidity risk is the risk that the Group and 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 arise 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.

Analysis of financial instruments by remaining contractual maturities

At the reporting date, approximately 17% (2018: 21%) and 24% (2018: 27%) of the Group’s and of the Company’s loans and borrowings (Note 26) 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.

2019On demand or

within one yearRM’000

Two to five years

RM’000

Five years and more

RM’000Total

RM’000

GroupFinancial liabilities:Trade and other payables 179,011 - - 179,011Lease liabilities 6,352 20,198 647,021 673,571Loans and borrowings 97,479 277,841 172,606 547,926Total undiscounted financial liabilities 282,842 298,039 819,627 1,400,508

2018

On demand or within one year

RM’000

Two to five years

RM’000

Five years and more

RM’000Total

RM’000

Group

Financial liabilities:

Trade and other payables 169,436 - - 169,436

Lease liabilities 4,903 19,613 651,925 676,441

Loans and borrowings 122,301 249,899 201,545 573,745

Total undiscounted financial liabilities 296,640 269,512 853,470 1,419,622


TDM BERHAD




(b) Liquidity risk (cont’d.)

Analysis of financial instruments by remaining contractual maturities (cont’d.)

2019


RM’000

Two to five years

RM’000

Five years and more

RM’000Total

RM’000

Company


Trade and other payables 288,653 1,813 - 290,466

Lease liabilities 912 269 - 1,181


Total undiscounted financial liabilities 357,162 134,109 70,144 561,415

2018


RM’000

Two to five years

RM’000

Five years and more

RM’000Total

RM’000

Company


Trade and other payables 295,075 - 1,813 296,888


Total undiscounted financial liabilities 370,438 150,436 110,045 630,919

Subsequent to the end of the financial year, the Group has obtained moratorium for certain loans and borrowings amounting to RM9,632,478 for period of six months.


ANNUAL REPORT 2019




(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments will fluctuate because of changes in market interest rates.

Sensitivity analysis for interest rate risk

The Group’s and the Company’s exposure to interest rate risk arise primarily from their loans and borrowings. The Group’s and the Company’s policy is to manage interest cost using a mix of fixed and floating rate debts.

At the end of the reporting year, if interest rates had been 50 basis points higher/lower with all other variables held constant, the Group’s loss before tax would have been RM2,329,000 (2018: RM2,414,000) higher/lower, and the Company’s loss before tax would have been RM1,163,000 (2018: RM1,363,000) higher/lower, arising mainly as a result of higher/lower interest expense on floating rate loans and borrowings of the Group and of the Company. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(d) Commodity price risk

Volatility in the commodity market exposes the Group and the Company to the risk of price fluctuations on oil palm products. To manage and mitigate the risk, the Group and the Company monitor the Malaysian Derivative Exchange (“MDEX”) CPO prices daily as a basis for spot contract sales price, whereas long term contract sales prices are based on Malaysian Palm Oil Board (“MPOB”) Monthly Peninsular Malaysia Average Price.

As at 31 December 2019, sensitivity analysis had been performed based on the Group and the Company exposure to commodity prices. If the CPO or palm kernel prices had been RM100 higher/lower, with all other variables being held constant, the Group’s and the Company’s loss before tax would (decrease)/increase, by approximately:

Group Company

2019RM’000

2018RM’000

2019RM’000

2018RM’000

Effect to loss before tax if CPO price:

- increased by RM100 (2018: RM100) (8,502) (7,447) (1,005) (998)

- decreased by RM100 (2018: RM100) 8,502 7,447 1,005 998

Effect to loss before tax if palm kernel price:

- increased by RM100 (2018: RM100) (1,937) (1,742) (244) (233)

- decreased by RM100 (2018: RM100) 1,937 1,742 244 233


TDM BERHAD



37. CAPITAL MANAGEMENT

The primary objective of the Group’s and the Company’s capital management is to ensure that they maintain strong credit ratings and healthy capital ratios in order to support their businesses and maximise shareholders value.

The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company 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 2019 and 31 December 2018.

The Group and the Company monitor capital using gearing ratio.

The gearing ratio is the net debt divided by total capital plus net debt. The policy of the Group and of the Company is to keep the gearing ratio at a reasonable level. The Group and the Company include within their net debt, loans and borrowings, lease liabilities, 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.

Group Company

Note 2019RM’000

2018RM’000

Restated

2019RM’000

2018RM’000

Restated

Loans and borrowings 26 465,801 482,791 232,691 272,610

Trade and other payables 27 179,011 169,436 290,466 296,888

Lease liability 25 62,742 60,824 1,134 -

Less: Cash and bank balances 23 (90,302) (75,405) (35,731) (33,990)

Net debt 617,252 637,646 488,560 535,508

Equity attributable to the owners of the parent 769,274 949,096 144,864 273,208

Add: Fair value adjustment reserve 32 (28,957) (17,542) - -

Total capital 740,317 931,554 144,864 273,208

Capital and net debt 1,357,569 1,569,200 633,424 808,716

Gearing ratio 45% 41% 77% 66%


ANNUAL REPORT 2019



38. SEGMENT INFORMATION

Business segments

For management purposes, the Group is organised into business units based on its products and services, and has three reportable operating segments as follows:

(i) Plantation - which involves activities such as cultivation of oil palms, sale of fresh fruit bunches and management of plantation operation services.

(ii) Healthcare - which involves activities such as provision of healthcare consultancy and specialist medical centre services.

(iii) Investment holding and others - which involves group level corporate services and dormant companies

Geographical segments

The Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers. The Group’s three business segments operate in two geographical areas:

(i) Malaysia - the operations in this area are principally investment holding, cultivation of oil palms, trading of palm oil and other related products and provision of healthcare services. Other operations include provision of management services.

(ii) Indonesia - the operations in this area are principally cultivation of oil palms, trading of palm oil and other related products.

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.


TDM BERHAD



38.

SEGM

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RMAT

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Busi

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segm

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Plan

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)(1

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29)


ANNUAL REPORT 2019



38.

SEGM

ENT

INFO

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ION

(CO

NT’

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Busi

ness

segm

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(con

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4


TDM BERHAD



38. 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/(income) consist of the following items as presented in the respective notes to the financial statements:

Note 2019RM’000

2018RM’000

Inventories written off 6 4,792 6,649Property, plant and equipment written off 6 39,880 -Impairment of right-of-use assets 6 21,242 -Impairment on property, plant andequipment 6 87,203 22,579Expected credit losses of trade receivables 6 293 1,092Expected credit losses of other receivables 6 11,942 13,779Reversal of expected credit losses of trade receivables 6 (2,679) (2,919)

162,673 41,180

C Additions to non-current assets consist of:

Note 2019RM’000

2018RM’000

Property, plant and equipment 12 38,011 119,644Right-of-use assets 13 487 -

38,498 119,644

39. CONTINGENT LIABILITIES

(a) Kuantan High Court - Dato’ Mohamad Alias A Bakar bin Ali vs Kuantan Medical Centre Sdn Bhd, Dr. Abdul Aziz Bin Awang and Dr. Md Lukman Bin Mohd Mokhtar

The Plaintiff alleges that the 2nd Defendant and 3rd Defendant, as the agents of the 1st Defendant, have negligently failed to carry out anaesthetic procedures on him which caused ‘circumferential disc bulge with desiccation at L 4/5 level with severe spinal stenosis’.

Due to the alleged negligence, the Plaintiff claims for the following:

i. General damages and aggravated damages;ii. Interest thereon calculated at the rate of 8% per annum from the date of service of the Writ, up to the date of judgement;iii. Special damages of RM1,104,414.51;iv. Interest thereon calculated at the rate of 4% per annum from 3 July 2012 up to the date of judgement;v. Interest on the judgement sum calculated at the applicable statutory rate from the date of judgement up to the date of payment;vi. Costs; andvii. Such further or other relief as the Court deems fit.

The Kuantan High Court has vacated the continue hearing date which was initially fixed on 20 April 2020 until 22 April 2020 due to the Movement Control Order (“MCO”). The Court has fixed for further Case Management on 16 June 2020 to enable parties to fix fresh continued Trial dates.


ANNUAL REPORT 2019



39. CONTINGENT LIABILITIES (CONT’D.)

(b) Performance Guarantee and Irrevocable Bank Guarantee by Ambank Islamic Berhad

Ikhasas CPO Sdn. Bhd. (“Buyer”) has entered into a contract (Interim Supply Agreement dated 23 October 2019 (“the Supply Agreement”)) with TDM Plantation Sdn. Bhd., (“Seller”), where the Seller has agreed to supply CPO and/or RSPO certified sustainable palm oil (“CSPO”)(“Products”) to the Buyer under the terms and subject to the conditions in the Supply Agreement. It is part of the term of the Supply Agreement that the Buyer shall make advances in the total aggregate amount of RM21.0 Million (“the Maximum Advance”) in two monthly tranches of RM10.5 Million for each tranche (“the Monthly Advance”), to the Seller, as consideration for the supply of the CPO and/or CSPO.

The Seller has accepted offer from Ambank Islamic Berhad (“the Bank’’) for Islamic banking facility in the form of Bank Guarantee facility amounting to RM22.4 Million (“Guarantee”). This Guarantee is issued pursuant to the Supply Agreement entered between the Buyer and the Seller inter alia to guarantee the due performance of the Seller to deliver the requisite amount of CPO and/or CSPO, whereby the Buyer shall make the Monthly Advances to the Seller according to the terms of the Supply Agreement for the supply of the CPO and/or CSPO by the Seller to the Buyer.

In consideration of the Seller agreeing to enter in the Supply Agreement with the Buyer, the Bank hereby irrevocably and unconditionally agree to:

(i) guarantee the performance of the obligations of the Seller to the Buyer for the delivery of the requisite amount of CPO and/or CSPO in the manner set out in the Supply Agreement. The Bank shall unconditionally and irrevocably pay to the Buyer on demand in writing made by Buyer’s duly authorised representative from time to time or at any time for amounts in aggregate not exceeding the sum of RM22,400,000.00 (Malaysia Ringgit Twenty Two Million Four Hundred Thousand Only) (“guaranteed amount”) in two tranches of RM11,200,000.00 for each bank guarantee tranche;

(ii) pay to the Buyer, within Fourteen (14) Banking Days upon receipt of written demand, the maximum aggregate liability not exceeding the guaranteed amount of RM11,200,000.00 on each bank guarantee tranche, via telegraphic transfer to the Buyer’s bank account.

This Guarantee shall be governed by and construed in accordance with Malaysia laws and all parties hereto submit to the exclusive jurisdiction of the courts of Malaysia to settle any disputes which may arise out of or in connection with this Guarantee.

The above performance guarantee is not recognised as liabilities in the financial statements but disclosed in the note to the financial statements. No material losses are anticipated from the performance guarantee and the guarantee is not secured over the assets of the Group.

(c) High Court of Malaya at Kuala Terengganu - Wahab bin Mohd Said vs Dr. Juzar Mohsinbhai Jadliwala and Kuala Terengganu Specialist Hospital Sdn. Bhd.

The Plaintiff alleges that the 1st Defendant, Dr. Juzar Mohsinbhai Jadliwala as an employee, representative and/or agent to 2nd Defendant has negligently failed to carry out a medical procedure on him.

Due to the alleged negligence, the Plaintiff claims for the following:

i. General damages of RM700,000.00 or any amount as granted by the Court;ii. Special damages with interest;iii. Exemplary damages of RM300,000.00 or any amount as granted by the Court;iv. Aggravated damages of RM300,00.00 or any amount granted by the Court;v. Interest on the damages calculated at a rate of 5% per annum from the date of action up to the date of full settlement;vi. Costs; andvii. Such other relief as the Court deems fit.


TDM BERHAD



39. CONTINGENT LIABILITIES (CONT’D.)

(c) High Court of Malaya at Kuala Terengganu - Wahab bin Mohd Said vs Dr. Juzar Mohsinbhai Jadliwala and Kuala Terengganu Specialist Hospital Sdn. Bhd. (cont’d.)

During Case Management on 17 November 2019, the learned High Court judge has transferred the case to session court and fixed for further Case Management on 8 December 2019.

The Court has fixed this matter for further Case Management on 19 January 2020 to enable parties to obtain further directions from Court. The Court has also fixed the hospital’s notice for directions from Court (with respect to the hospital’s Notice Seeking Contribution/Indemnity against the 1st Defendant (i.e. Dr. Juzar)) the same day (i.e. 19 January 2020).

The Court has fixed for the trial dates as follows:-

i. 9 August 2020,ii. 6 and 13 September 2020;iii. 20 - 21 October 2020; andiv. 25 - 27 October 2020

(d) High Court of Malaya at Kuala Terengganu - Mohd Fadzlong bin Yusoff vs Dr. Siti Nordiana binti Ayub and Kuala Terengganu Specialist Hospital Sdn. Bhd.

The Plaintiff alleges that the 1st Defendant, Dr. Siti Nordiana binti Ayub as an employee, representative and/or agent to 2nd Defendant has negligently failed to carry out a proper medical procedure on his wife Fadzliana binti Abdullah (the deceased).

Due to alleged negligence, the Plaintiff claims for the following :

i. General damages of RM1,000,000.00 or any amount as granted by the Court withii. Special damages with interest;iii. Exemplary damages of RM250,000.00 or any amount as granted by the Court;iv. Aggravated damages of RM250,000.00 or any amount as granted by the Court;v. Interest on the damages calculated at a rate of 5% per annum from the date of action up to the date of full settlement;vi. Legal costs;vii. Costs; andviii. Such further notice or other relief as the Court deems fit

During Case Management (E-review) on 6 May 2020, the Court has directed as follows:

i. That the 1st Defendant to file a Third-Party Notice on or before 15 June 2020;ii. That the Defendants to file their respective Defence on or before 15 June 2020; andiii. The above matter fixed for further Case Management on 15 June 2020 before High Court Judge.

During the Case Management held on 15 June 2020, the Court has directed all Parties to file necessary cause papers in preparation for trial. The matter is fixed for further Case Management on 1 July 2020.


ANNUAL REPORT 2019



40. SIGNIFICANT EVENTS

(a) Signing of Medium-Term Supply Agreement for the Supply of CPO and/or CSPO Between TDM Plantation Sdn. Bhd. and Ikhasas CPO Sdn. Bhd.

On 8 July 2019, the Company had announced that its wholly owned subsidiary, TDM Plantation Sdn. Bhd. (“Seller”) had entered into a Medium-Term Supply Agreement (“Agreement”) with Ikhasas CPO Sdn. Bhd (“Buyer”) for the supply of CPO and/or CSPO (“Products”) for a Supply Period of Forty Three (43) months from the first day of the calendar month following the month when payment of the first tranche of the Upfront Payment is made in accordance with the Agreement.

The execution of the Agreement is not subjected to any approval from the Shareholders and/or any relevant Regulatory Authorities.

(b) The Development of Biogas Plants with Power Generation Facilities at Kemaman Palm Oil Mill and Sungai Tong Palm Oil Mill

On 9 August 2019, the Company had announced that its wholly owned subsidiaries, entered the following agreements pertaining to the development of Biogas Plants with power generation facilities at Kemaman Palm Oil Mill and Sungai Tong Palm Oil Mill.

1. TDM Plantation Sdn. Bhd. entered into Built, Own, Operate and Transfer (“BOOT”) agreement with Concord Biotech Sdn. Bhd. (“CBSB”) (“BOOT Agreement”).

The BOOT agreement entails granting and authorising CBSB to design, engineer, finance, construct, commission, own, operate, transfer, maintain and manage directly a Biogas Plant with Power Generation Facilities at Sungai Tong Palm Oil Mill, Sungai Tong, Setiu, Terengganu and Kemaman Palm Oil Mill, Padang Kubu, Kemaman, Terengganu on a BOOT basis.

2. Kumpulan Ladang-Ladang Trengganu Sdn. Bhd. entered into Sub-Lease agreement with CBSB (“sublessee”) (“Sub-Lease Agreement”).

The Lease Agreement is related to the leasing of part of lands under the following titles for the development of Biogas Plants:

i. Q.T.(R) Kemaman, Lot PT. LO 28, Mukim Tebak, Daerah Kemaman, Terengganu; andii. GRN6521, Lot 7663, Mukim Belara, Daerah Kuala Terengganu, Terengganu.

(c) Fire Incidents at PT Rafi Kamajaya Abadi (“PT RKA”)

The Company had on 17 September 2019, announced that approximately 1,201 hectares of PT RKA’s area has been affected by fire. As at the date of the announcement i.e. on 17 September 2019, the fire has been extinguished. From the beginning of dry weather in early August 2019, PT RKA has been on high alert and has put in place measures to manage and control fire incidents in the operating areas. This includes equipping our firefighting teams to deal with the dry weather, strong wind and the risk of fire.

Further on 3 October 2019, the Company made an announcement to clarify on an article published by The Edge entitled “Six Malaysian firms behind open burning, says Indonesia” dated 2 October 2019, which stated PT RKA allegedly conducted the largest opening burning of 600 hectares in West Kalimantan. The Board of Directors of the Company has emphasized that the reported statement by The Edge on the alleged open burning is not true. The Board further highlighted that since the beginning of the dry weather in early August 2019, PT RKA had encountered few fire incidences within its operating area and the matter had been reported to local authorities including the police department. The affected areas are accessible by the surrounding villagers and with the prolonged dry spell which made it vulnerable to be exposed to such fire incidences. The Management has lodged police report on the fire incident and full cooperation has been given to the authority to accommodate the investigation.

The Company had on 22 October 2019, announced that PT RKA had on 21 October 2019 received and accepted the Governor Decision No 1279/2019 regarding Administrative Sanction (hereinafter referred to as “the Decree”) by the Governor of Kalimantan Barat (“Governor”) to PT RKA dated 4 October 2019. The sanction arose as a result of the fire incident, among others, imposed that PT RKA has to stop its activities at the affected areas of approximately 900 hectares for three (3) years. PT RKA has consulted its Solicitors to file an application to Administrative Court (“Pengadilan Tata Usaha Negara”) in Indonesia for a review of the Decree.


TDM BERHAD



40. SIGNIFICANT EVENTS (CONT’D.)

(c) Fire Incidents at PT Rafi Kamajaya Abadi (“PT RKA”) (cont’d.)

Further on 25 October 2019, the Company made an announcement to provide additional information on the announcement made on 22 October 2019, in relation to the financial and operational impact arising from the Decree.

Further on 1 April 2020, the Company made an announcement that PT RKA solicitor had on 9 January 2020 registered an appeal to the Administrative Court on the administrative sanction by the Governor and the first hearing was held on 31 March 2020. During the said hearing, the Solicitor had submitted all the relevant and necessary documents requested by the Court.

On 21 April 2020, the Company made an announcement that PT RKA solicitor had on 21 April 2020 informed that the Court has fixed the next hearing on 28 April 2020 for all the parties to give their testimony. The conclusion of the hearing is scheduled on 5 May 2020 and the verdict will be rendered either on 12 May 2020 or 19 May 2020.

On 28 April 2020, the Company made an announcement that PT RKA solicitor had on 28 April 2020 informed that the Court has agreed to vacate the hearing due to domestic travelling restrictions in Indonesia. As such, the Court has fixed the next hearing on 3 June 2020 for both parties to give their testimony.

On 4 June 2020, the Company made an announcement that pursuant to the application by PT RKA’s solicitor for postponement of the hearing due to domestic travelling restrictions in Indonesia, the Court had agreed to vacate the said hearing. The Court had fixed the next hearing on 18 June 2020 for both parties to give their testimony.

(d) Heads of Agreement in relation to the Proposed Purchase of 70% equity interests in THP-YT Plantation Sdn. Bhd. from TH Plantations Berhad (“THP” or “Vendor”)

On 31 December 2019, the Company had entered into a Heads of Agreement (“HOA”) to record the principle agreement and understanding with THP in relation to the proposed acquisition of 25,900,000 ordinary shares (“Sale Shares”)(equivalent to 70% equity interests) of THP-YT Plantation Sdn. Bhd. (“THP-YT”) (“Acquisition of Sale Shares”) for the consideration of RM7,000,000.00. As part of the Acquisition of the Sale Shares, the Company and THP agree to the proposed settlement of part of the inter-company advances by THP-YT to THP Suria Mekar Sdn. Bhd. (“THSM”), a wholly-owned subsidiary of THP of RM78,684,856.91 (“Advances”) as follows:

a. Part of the Advances amounting to RM62,000,000 (“Settlement Sum”) shall be settled by way of:

(i) a facility sum from a facility to be taken by the THP-YT from a Bank (“Facility Sum”); and

(ii) shareholders’ advances by the Company and/or Yayasan Terengganu (“YT”), who owns 30% equity interests in THP-YT, to THP-YT for settlement of the difference between the Settlement Sum and the Facility Sum (“Balance Sum”) (“Proposed Settlement of Balance Sum”).

b. The balance of the Advances, being the difference between the Advances and the Settlement Sum (“Balance Advances”), shall be assigned by THSM to the Purchaser for the consideration of RM1.00 (“Assignment”).

The HOA will enable THP and the Company (collectively referred to as the “Parties”) to negotiate and finalise on the terms of the definitive agreement for the Proposed Sale Shares (“SPA Shares”) and the Proposed Settlement of Balance Sum (“Settlement Agreement”) (collectively referred to as the “Proposed Acquisition”). The SPA Shares and the Settlement Agreement will be executed between the Parties within eight weeks after the execution of the HOA (“Term”). A detailed announcement on the Proposed Acquisition will be released upon signing of the SPA Shares and the Settlement Agreement. Upon completion of the Proposed Acquisition, THP-YT will be a subsidiary of the Company.

In conjunction to the above HOA, the Company had on 3 March 2020 entered into the following Agreements:

a. Share Purchase Agreement (“SPA”) relating to the Sale and Purchase of 25,900,000 Ordinary Shares of the Issued Share Capital of THP-YT; and

b. Settlement Agreement (“SA”) with THSM and THP-YT in relation to the settlement of the Advances owing to THSM.


ANNUAL REPORT 2019



40. SIGNIFICANT EVENTS (CONT’D.)

(d) Heads of Agreement in relation to the Proposed Purchase of 70% equity interests in THP-YT Plantation Sdn. Bhd. from TH Plantations Berhad (“THP” or “Vendor”) (cont’d.)

On 12 March 2020, the Company announced to provide additional information to the said announcement in relation to the signing of SPA and SA on the valuation of oil palm plantation of THP-YT:

a. Date of Valuation and amount of Valuation The valuation amount of RM100.0 million was derived from the valuation done by Messrs. CH Williams Talhar & Wong,

independent professional valuer as at 30 December 2019.

b. Justification of the purchase consideration in comparison with Valuation The total consideration of RM69.0 million (comprises of 70% equity purchase of RM7.0 million and Advances Settlement Sum of

RM62.0 million) or equivalent to an enterprise value of RM72 million, is well within the valuation amount of RM100.0 million.

On 18 May 2020, the Company announced that in light of a Movement Control Order (“MCO”) which has been imposed by the Government, it has resulted in much setbacks for both parties in fulfilling their respective obligations under the SPA. Both parties have now agreed to enter into two Variation Letters to vary the terms of the SPA and SA so as to allow ample time for the parties to fulfil their respective obligations under the SPA and SA. Both parties have agreed for the Long Stop Date to be amended to 120 days from the SPA execution date.

41. EVENT OCCURRING AFTER THE REPORTING DATE

(a) Letter of Offer in respect of the proposed disposal by the Company of the entire equity interest in PT Rafi Kamajaya Abadi (“PT RKA”) and PT Sawit Rezki Abadi (“PT SRA”) (“Proposed Disposal”)

On 28 February 2020, the Company announced that it had received an offer vide letter dated 18 February 2020 (“Offer Letter”) from PT Aragon Agro Pratama (“Purchaser” or “Aragon”) to acquire the following from the Company for a total aggregate cash consideration of USD50.0 million (“Offer”):

a. the entire equity interests in RKA, a direct subsidiary of the Company; andb. the entire equity interests in SRA, a direct subsidiary of the Company.

The Company has decided to accept the Offer, subject to, among others:

a. the completion of the valuation due diligence by the Purchaser’s adviser;b. the fulfilment of conditions precedent that shall be mutually agreed between the parties and set out accordingly in the

conditional sale and purchase agreement (“CSPA”); andc. the approval of the relevant authorities for the Proposed Disposal (if required).

On 13 March 2020, the Company announced that both parties have mutually agreed to further extend the aforesaid initial deadline by another 21 days to execute the CSPA.

On 3 April 2020, the Company announced that both parties have mutually agreed to further extend the aforesaid initial deadline to 30 April 2020 to execute the CSPA due to the Indonesian Government has imposed stricter limits on mobility between regions and is implementing a large-scale policy of social distancing to curb the spread of the Coronavirus Disease 2019 (“COVID-19”). Notwithstanding that, both parties via online communication continue to work towards finalising the salient terms of the CSPA.

On 30 April 2020, the Company announced that both parties have mutually agreed to further extend the aforesaid initial deadline to 31 May 2020 to execute the CSPA due to the Indonesian Government has continued to impose stricter social distancing restrictions across the country and this has affected the progress with the financing application with the bankers. Notwithstanding that, both parties via online communication continue to work towards finalising the salient terms of the CSPA.


TDM BERHAD



41. EVENT OCCURRING AFTER THE REPORTING DATE (CONT’D.)

(b) Proposed Private Placement of up to 10% of the total number of issued shares of the Company in accordance with the general mandate pursuant to Section 75 and Section 76 of the Companies Act 2016 (“Proposed Private Placement”)

On 3 March 2020, the Company has announced that it is proposing to undertake a private placement of up to 10% of the total number of issued shares of the Company at an issue price to be determined and announced later. As at 2 March 2020, the size of the Proposed Private Placement is up to 168,264,100 new Shares (“Placement Shares”).

a. The Proposed Private Placement will be undertaken in accordance with the general mandate pursuant to Section 75 and Section 76 of the Companies Act 2016 (“General Mandate”) obtained from the shareholders of the Company at its annual general meeting (“AGM”) convened on 28 May 2019. The General Mandate is in force until the Company’s next AGM (unless revoked or varied by the shareholders at a general meeting prior to the next AGM).

b. The Company proposes to obtain a new mandate at its forthcoming AGM. The Proposed Private Placement will be undertaken under the existing mandate and/or the new mandate to be obtained.

On 6 March 2020, the Company announced that the additional listing application in respect of the Proposed Private Placement had been submitted to Bursa Malaysia Securities Berhad.

On 13 March 2020, the Company announced that Bursa Malaysia Securities Berhad had, vide its letter dated 11 March 2020, approved the listing of and quotation for 168,264,100 Placement Shares to be issued pursuant to the Proposed Private Placement.

(c) Emergence of COVID-19

COVID-19 is an emerging and growing global and local issue, and it is not just a health crisis, but imploding into societal, economic and business crises. Subsequent to end of the financial year, the COVID-19 outbreak was declared a pandemic by the World Health Organization in March 2020. The outbreak and the response of the Government in dealing with the pandemic affects general activity levels within the community, the economy and the operations of the Group and of the Company. The directors concluded that the COVID-19 outbreak did not provide evidence of conditions that existed on or before 31 December 2019 and have accordingly assessed it to be a non-adjusting event.

Should the virus pandemic continue for an extended period of time, possible financial impacts may include: impairment concerns, supply chain and logistics interruptions, changes in customer spending patterns and volumes and cash flow disruption. As none of these items are known with any certainty at the date of this report, no financial effect of these items or other potential items are contained in the financial statements.


ANNUAL REPORT 2019



42. PRIOR YEAR ADJUSTMENTS

Certain errors affecting the financial position and results of the prior year have been adjusted retrospectively in accordance with the requirements of MFRS 108: Accounting Policies, Changes in Accounting Estimates and Errors.

The prior year adjustments are in relation to the following errors:

(A) The use of fair value as deemed cost arising from the adoption of MFRS 1: First-time Adoption of Malaysia Financial Reporting Standards and requirement to capitalise replanting expenditure under MFRS 116: Property, Plant and Equipment;

(B) The computation of finance lease liabilities in accordance with MFRS 117: Leases;(C) Incorrect classification of share of profits and recognition of lease premium income attributed to Sublessees Scheme;(D) Classification of short term borrowings;(E) Interest capitalisation;(F) Consolidation and other entries;(G) Related income tax effects arising from various errors above; and(H) Reclassification of leasehold land and buildings previously classified as property, plant and equipment.

The effect of the prior year adjustments is stated below.

(i) Reconciliation of statements of financial position as at 1 January 2018

As previouslystated

RM’000Adjustments

RM’000

As restated

RM’000

Statements of financial position

Group

Assets

Non-current assets

Property, plant and equipment 1,537,430 66,222 1,603,652

A 162,235

E 7,782

F(i) (103,795)

Intangible asset 7,179 - 7,179

Investment properties 6,631 A 4,055 10,686

Goodwill 991 - 991

Other investments 363,084 - 363,084

Investments in securities 48 - 48

Other receivables 109,904 F(iv) (417) 109,487

Deferred tax assets 15,449 G (15,395) 54

2,040,716 54,465 2,095,181


TDM BERHAD



42. PRIOR YEAR ADJUSTMENTS (CONT’D.)

(i) Reconciliation of statements of financial position as at 1 January 2018 (cont’d.)

As previouslystated

RM’000Adjustments

RM’000

As restated

RM’000

Statements of financial position (cont’d.)

Group

Current assets

Biological assets 5,000 F(iv) 455 5,455

Inventories 33,280 4,116 37,396

F(iii) 2,383

F(iv) 1,733

Trade and other receivables 75,379 F(iv) (16,051) 59,328

Prepayments 2,052 F(iv) (527) 1,525

Tax recoverable 4,588 1,833 6,421

F(iv) 3,069

G (1,236)

Cash and bank balances 108,217 F(iv) 84 108,301

228,516 (10,090) 218,426

Total assets 2,269,232 44,375 2,313,607


Current liabilities

Loans and borrowings 41,592 D 35,000 76,592

Trade and other payables 172,696 24,933 197,629

E (176)

F(i) 1,719

F(iv) 23,390

Tax payable 2,392 G (85) 2,307

216,680 59,848 276,528

Net current assets/(liabilities) 11,836 (69,938) (58,102)


ANNUAL REPORT 2019





As previouslystated

RM’000Adjustments

RM’000

As restated

RM’000


Group


Retirement benefit obligations 4,293 - 4,293

Loans and borrowings 749,411 (37,100) 712,311

D (35,000)

F(iv) (2,100)

Other payable 87,710 F(iv) (38,229) 49,481

Deferred tax liabilities 155,533 53,110 208,643

F(i) 20,561

F(iv) 17,709

G 14,840

996,947 (22,219) 974,728

Total liabilities 1,213,627 37,629 1,251,256

Net assets 1,055,605 6,746 1,062,351


Share capital 345,017 - 345,017

Retained earnings 725,607 14,118 739,725

A 166,290

E 7,958

F(i) (126,075)

F(ii) 7,372

F(iii) 2,383

F(iv) (12,424)

G (31,386)

Other reserves (5,163) F(ii) (2,410) (7,573)

1,065,461 11,708 1,077,169

Non-controlling interests (9,856) F(ii) (4,962) (14,818)

Total equity 1,055,605 6,746 1,062,351

Total equity and liabilities 2,269,232 44,375 2,313,607


TDM BERHAD





As previouslystated

RM’000Adjustments

RM’000

As restated

RM’000

Statements of financial position

Company

Assets

Non-current assets

Property, plant and equipment 190,956 (187,343) 3,613

A (15,284)

E 1,422

H (173,481)

Intangible asset 7,179 - 7,179

Investment properties 6,631 H 173,481 180,112

Investment in subsidiaries 268,617 - 268,617

Other investments 315,000 - 315,000

Other receivables 63,234 - 63,234

Deferred tax assets 351 G (351) -

851,968 (14,213) 837,755

Current assets

Inventories 1,544 - 1,544

Trade and other receivables 383,882 - 383,882

Cash and bank balances 33,315 - 33,315

418,741 - 418,741

Total assets 1,270,709 (14,213) 1,256,496


Current liabilities


Trade and other payables 270,672 - 270,672

Tax payable 1,612 G 97 1,709

300,685 35,097 335,782

Net current assets 118,056 (35,097) 82,959


ANNUAL REPORT 2019





As previouslystated

RM’000Adjustments

RM’000

As restated

RM’000


Company


Retirement benefit obligations 318 - 318

Loans and borrowings 259,315 D (35,000) 224,315

Deferred tax liabilities 7,330 G (1,546) 5,784

266,963 (36,546) 230,417

Total liabilities 567,648 (1,449) 566,199

Net assets 703,061 (12,764) 690,297


Share capital 345,017 - 345,017

Retained earnings 355,308 (12,764) 342,544

A (15,284)

E 1,422

G 1,098

Other reserves 2,736 - 2,736

Total equity 703,061 (12,764) 690,297

Total equity and liabilities 1,270,709 (14,213) 1,256,496


TDM BERHAD




(ii) Reconciliation of statements of financial position as at 31 December 2018

As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of financial positionGroup

AssetsNon-current assetsProperty, plant and equipment 1,640,814 (83,664) 1,557,150

A 139,116B (141,162)E 10,466

F(i) (111,318)F(ii) 16,451F(iv) 2,783

Intangible asset 6,321 - 6,321Investment properties 10,217 A 4,067 14,284Goodwill 991 - 991Other investments 22,294 - 22,294Investments in securities 44 - 44Other receivables 65,880 - 65,880Deferred tax assets 13,974 G (13,920) 54

1,760,535 (93,517) 1,667,018

Current assetsBiological assets 3,041 F(iv) 932 3,973Inventories 28,021 2,751 30,772

F(iii) 2,383F(iv) 368

Trade and other receivables 93,501 (35,214) 58,287C (11,066)E (1,266)

F(iv) (22,882)Prepayments 1,847 F(iv) (789) 1,058Tax recoverable 6,984 4,624 11,608

F(iv) 76G 4,548

Cash and bank balances 75,405 F(iv) - 75,405 208,799 (27,696) 181,103

Total assets 1,969,334 (121,213) 1,848,121


ANNUAL REPORT 2019




(ii) Reconciliation of statements of financial position as at 31 December 2018 (cont’d.)

As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of financial position (cont’d.)Group


Current liabilitiesLease liability 1,561 B (1,529) 32Loans and borrowings 58,156 45,093 103,249

D 36,982F(iv) 8,111

Trade and other payables 140,320 29,116 169,436B 1,360C 28,610E (1,884)

F(i) 1,719F(iv) (689)

Tax payable 1,263 G (588) 675 201,300 72,092 273,392

Net current assets/(liabilities) 7,499 (99,788) (92,289)

Non-current liabilitiesRetirement benefit obligations 4,719 F(iv) 243 4,962Lease liability 202,014 B (141,222) 60,792Loans and borrowings 427,929 (48,387) 379,542

D (36,982)F(iv) (11,405)

Other payable 26,411 C (26,411) -Deferred tax liabilities 159,739 39,801 199,540

F(i) 31,472F(iv) 133

G 8,196820,812 (175,976) 644,836

Total liabilities 1,022,112 (103,884) 918,228Net assets 947,222 (17,329) 929,893


TDM BERHAD





As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of financial position (cont’d.)Group

Equity attributable to owners of the parentShare capital 350,713 - 350,713Retained earnings 642,657 (24,327) 618,330

A 143,183B 229C (13,265)E 11,084

F(i) (144,509)F(ii) 9,453F(iii) 2,383F(iv) (15,905)

G (16,980)Other reserves (33,433) F(ii) 13,486 (19,947)

959,937 (10,841) 949,096Non-controlling interests (12,715) F(ii) (6,488) (19,203)Total equity 947,222 (17,329) 929,893Total equity and liabilities 1,969,334 (121,213) 1,848,121


ANNUAL REPORT 2019





As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of financial position (cont’d.)Company

AssetsNon-current assetsProperty, plant and equipment 195,947 (191,976) 3,971

A (14,092)E 1,568H (179,452)

Intangible asset 6,321 - 6,321Investment properties 6,305 H 179,452 185,757Investment in subsidiaries 224,266 - 224,266Deferred tax assets 351 G (351) -

433,190 (12,875) 420,315

Current assets

Inventories 646 - 646

Trade and other receivables 392,170 554 392,724

B 57

E (152)

F(iv) 649

Cash and bank balances 33,990 - 33,990

426,806 554 427,360

Total assets 859,996 (12,321) 847,675


Current liabilities


Trade and other payables 293,773 F(iv) 1,302 295,075

Tax payable 63 G 414 477

331,029 38,698 369,727

Net current assets 95,777 (38,144) 57,633


TDM BERHAD





As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of financial position (cont’d.)Company

Non-current liabilitiesRetirement benefit obligations 351 - 351

Loans and borrowings 235,417 D (36,982) 198,435

Other payable - F(iv) 1,813 1,813

Deferred tax liabilities 6,544 G (2,403) 4,141

242,312 (37,572) 204,740

Total liabilities 573,341 1,126 574,467

Net assets 286,655 (13,447) 273,208


Share capital 350,713 - 350,713

Retained earnings (66,794) (13,447) (80,241)

A (14,092)

B 57

E 1,416

F(iv) (2,466)

G 1,638

Other reserves 2,736 - 2,736

Total equity 286,655 (13,447) 273,208

Total equity and liabilities 859,996 (12,321) 847,675


ANNUAL REPORT 2019




(iii) Reconciliation of profit or loss and comprehensive income for the year ended 31 December 2018

As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of comprehensive incomeGroup

Revenue 404,698 F(iv) (6,633) 398,065Cost of sales (285,534) (23,470) (309,004)

A (28,017)B 2,234

F(i) (2,253)F(iv) 4,566

Gross profit 119,164 (30,103) 89,061Other items of income Interest income 35,880 F(iv) (129) 35,751 Other income 18,803 (11,006) 7,797

C (13,265)F(i) (113)

F(iv) 2,372Other items of expense Distribution costs (3,792) F(iv) 73 (3,719) Administrative expenses (205,468) 41,186 (164,282)

A 2,111E (26)

F(i) 8,469F(iv) 30,632

Other expenses (6,763) (28,147) (34,910)A 2,801

F(iv) (30,948) Finance costs (25,931) B,F (23,596) (49,527)

A (2)B (2,005)E 3,152

F(i) (24,537)F(iv) (204)

Loss before tax (68,107) (51,722) (119,829)Income tax (expense)/credit (9,412) 11,196 1,784

F(iv) (3,210)G 14,406

Loss for the year, net of tax (77,519) (40,526) (118,045)


TDM BERHAD




(iii) Reconciliation of profit or loss and comprehensive income for the year ended 31 December 2018 (cont’d.)

As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of comprehensive income (cont’d.)

Group


Fair value movement of investment in securities (4) - (4)

Fair value movement of other investments (25,790) - (25,790)

Foreign currency translation (2,476) F(ii) 16,499 14,023

Other comprehensive loss for the year, net of tax (28,270) 16,499 (11,771)

Total comprehensive loss for the year (105,789) (24,027) (129,816)


Owners of the parent (74,660) (38,445) (113,105)


(77,519) (40,526) (118,045)

Total comprehensive loss attributable to:

Owners of the parent (102,930) (22,549) (125,479)


(105,789) (24,027) (129,816)


ANNUAL REPORT 2019




(iii) Reconciliation of profit or loss and comprehensive income for the year ended 31 December 2018 (cont’d.)

As previouslystated

RM’000Adjustments

RM’000As restated

RM’000

Statements of comprehensive income

Company

Revenue 107,546 F(iv) (2,179) 105,367

Cost of sales (20,006) B 543 (19,463)

Gross profit 87,540 (1,636) 85,904

Other items of income

Interest income 27,727 - 27,727

Other income 6,453 - 6,453

Other items of expense

Distribution costs (799) - (799)

Administrative expenses (518,607) 42 (518,565)

A 355

E (26)

F(iv) (287)

Other expenses (3,336) A 837 (2,499)

Finance costs (13,893) (466) (14,359)

B (486)

E 20

Loss before tax (414,915) (1,223) (416,138)

Income tax credit 1,103 G 540 1,643

Loss for the year, representing total comprehensive loss for the year (413,812) (683) (414,495)

(iv) The prior year adjustments have not had a material impact on the movement of the cash and cash equivalents of the Group and of the Company.


TDM BERHAD




A. The use of fair value as deemed cost arising from the adoption of MFRS 1: First-time Adoption of Malaysia Financial Reporting Standards and requirement to capitalise replanting expenditure under MFRS 116: Property, Plant and Equipment

Under the previous Financial Reporting Standard Framework, the Group and the Company had adopted the revaluation model on certain property, plant and equipment (“PPE”) and the fair value model for their investment properties.

Upon adoption of MFRS Framework on 1 January 2018, the Group and the Company have elected to apply the deemed cost model for their PPE and investment properties.

The previous carrying amounts of the revalued PPE and the fair value of investment property as at 1 January 2017 were taken in as the deemed cost as at 1 January 2017, being the date of transition to MFRS Framework. However, the deemed costs for different class of assets with different useful lives had been incorrectly determined as at 1 January 2017. The incorrect determination of the deemed cost had consequentially resulted in depreciation and amortisation charges being incorrectly computed. Adjustments have been made to rectify the errors.

Additionally, the Group and the Company had expensed replanting expenditures incurred in prior years to profit or loss. As required by MFRS 116, these qualifying expenditures have to be capitalised as property, plant and equipment and adjustments have been made to rectify the errors.

The increase/(decrease) in equity, assets, liabilities, income and/(or) expenses arising from the errors are stated below:

Group Company

1 January2018

RM’000

31 December2018

RM’000

1 January2018

RM’000

31 December2018

RM’000

Non-current assets

Property, plant and equipment 162,235 139,116 (15,284) (14,092)

Investment properties 4,055 4,067 - -


Retained earnings 166,290 143,183 (15,284) (14,092)

Statement of comprehensive income

Cost of sale 28,017 -

Administrative expenses (2,111) (355)

Other expenses (2,801) (837)

Finance costs 2 -


ANNUAL REPORT 2019




B. The computation of finance lease liabilities in accordance with MFRS 117: Leases

The Group entered into certain lease arrangements for the use of lands in 2018 where the present value of the minimum lease payments for these lands was incorrectly calculated. The present value has been recomputed based on the respective tenure of the leases after considering extension option and adjustments have been made to reflect the revised present value computation, the consequential effects on depreciation and finance cost on lease liabilities.


Group Company

1 January2018

RM’000

31 December2018

RM’000

1 January2018

RM’000

31 December2018

RM’000

Non-current assets

Property, plant and equipment - (141,162) - -

Current assets

Trade and other receivables - - - 57


Lease liability - (141,222) - -

Current liabilities

Lease liability - (1,529) - -

Trade and other payables - 1,360 - -


Retained earnings - 229 - 57


Cost of sale (2,234) (543)

Finance costs 2,005 486


TDM BERHAD




C. Incorrect classification of share of profits and recognition of lease premium income attributed to Sublessees Scheme

The Group has reclassified into non-current payables, a portion of the share of profits arising from Sublessees Scheme which the Group does not have unconditional right to defer settlement beyond 12 months. In addition, the Group has recognised a lease premium to be charged to the sublessees but the relevant lease agreements have not yet been formalised as at 31 December 2018. Adjustments have been made to present the non-current portion of liability as current liability and to reverse the related discounting effect, and to reverse the lease premium income recognised.


Group1 January

2018RM’000

31 December2018

RM’000

Current assets

Trade and other receivables - (11,066)


Trade and other payables - (26,411)

Current liabilities

Trade and other payables - 28,610


Retained earnings - (13,265)


Other income (13,265)


ANNUAL REPORT 2019




D. Classification of short term borrowings

A departure with respect to compliance to a loan covenant ratio as at 31 December 2018 and 31 December 2017 was detected after the issuance of the audited financial statements for the year ended 2018. As a result, the presentation of the non-current portion of the affected loans have been rectified and reclassified as current loans and borrowings.


Group Company1 January

2018RM’000

31 December2018

RM’000

1 January2018

RM’000

31 December2018

RM’000

Non-current liabilitiesLoans and borrowings (35,000) (36,982) (35,000) (36,982)

Current liabilitiesLoans and borrowings 35,000 36,982 35,000 36,982

E. Interest capitalisation

When the Group and the Company detected the error in item (A) above, the Group and the Company revisited the measurement of their qualifying assets and noted that general borrowing costs eligible for capitalisation have been omitted. This has resulted in additional interests capitalised into their property, plant and equipment.



2018RM’000

31 December2018

RM’000

1 January2018

RM’000

31 December2018

RM’000

Non-current assetsProperty, plant and equipment 7,782 10,466 1,422 1,568

Current assetsTrade and other receivables - (1,266) - (152)

Current liabilitiesTrade and other payables (176) (1,884) - -

Equity attributable to owners of the parentRetained earnings 7,958 11,084 1,422 1,416

Statement of comprehensive incomeAdministrative expenses 26 26Finance cost (3,152) (20)


TDM BERHAD




F. Consolidation and other entries

This category encompassed corrections with respect to consolidation and other entries, and corrections of other items, as follows:

(i) The Group has transitioned into the MFRS Framework on 1 January 2017 and adopted the deemed cost model on its PPE whilst the foreign subsidiaries continued to adopt the revaluation model on its PPE. Adjustments made to align the financial statements of the foreign subsidiaries with the Group’s accounting policies had been incorrectly calculated during consolidation resulted in:

• Depreciation of foreign subsidiaries’ PPE being incorrectly determined;• Finance costs capitalised on foreign subsidiaries’ PPE being incorrectly determined; and• Trade and other payables and deferred tax liabilities and being understated and PPE being due to incorrect classification.

Group1 January

2018RM’000

31 December2018

RM’000

Non-current assets

Property, plant and equipment (103,795) (111,318)


Deferred tax liabilities 20,561 31,472

Current liabilities

Trade and other payables 1,719 1,719


Retained earnings (126,075) (144,509)


Cost of sales 2,253

Other income (113)

Administrative expenses (8,469)

Finance cost 24,537


ANNUAL REPORT 2019




F. Consolidation and other entries (cont’d.)

(ii) The financial statements of foreign operations have been incorrectly translated into Ringgit Malaysia at the reporting date. The incorrect translation had consequentially resulted in foreign exchange translation differences and amount attributed to non-controlling interests being incorrectly computed.


Group1 January

2018RM’000

31 December2018

RM’000

Non-current assets

Property, plant and equipment - 16,451


Retained earnings 7,372 9,453

Other reserves (2,410) 13,486

Non-controlling interests (4,962) (6,488)

Other comprehensive loss

Foreign currency translation (16,499)


Owners of the parent (2,081)

Non-controlling interests 2,081

Total comprehensive loss

Owners of the parent (17,977)

Non-controlling interests (1,478)


TDM BERHAD





(iii) The subsidiaries accounted for certain assets write down in the prior period after the Group had prepared its consolidation. These adjustments had been posted at Group through consolidation entries in the relevant years. However, the Group had omitted to eliminate these consolidation entries in the subsequent financial year, which resulted in the financial effect being taken up twice. The Group had made correction to these entries.


Group1 January

2018RM’000

31 December2018

RM’000

Current assets

Inventories 2,383 2,383


Retained earnings 2,383 2,383

(iv) Other entries mainly in respect of incorrect classification between assets and liabilities, incorrect classification between income and expenses, understatement of liabilities, incorrect recognition of fair value changes on biological assets and incorrect recognition of expected credit loss and bad debts written off on receivables.



2018RM’000

31 December2018

RM’000

1 January2018

RM’000

31 December2018

RM’000

Non-current assets

Property, plant and equipment - 2,783 - -

Other receivables (417) - - -

Current assets

Biological assets 455 932 - -

Inventories 1,733 368 - -

Trade and other receivables (16,051) (22,882) - 649

Prepayment (527) (789) - -

Tax recoverable 3,069 76 - -

Cash and bank balances 84 - - -


ANNUAL REPORT 2019





(iv) Other entries mainly in respect of incorrect classification between assets and liabilities, incorrect classification between income and expenses, understatement of liabilities, incorrect recognition of fair value changes on biological assets and incorrect recognition of expected credit loss and bad debts written off on receivables. (cont’d.)


2018RM’000

31 December2018

RM’000

1 January2018

RM’000

31 December2018

RM’000


Retirement benefit obligations - 243 - -

Lease liability - - - -

Loans and borrowings (2,100) (11,405) - -

Other payables (38,229) - - 1,813

Deferred tax liabilities 17,709 133 - -

Current liabilities

Loans and borrowings - 8,111 - -

Trade and other payables 23,390 (689) - 1,302

Tax payable - - - -


Retained earnings (12,424) (15,905) - (2,466)


Revenue 6,633 (2,179)

Cost of sales (4,566) -

Interest income 321 -

Other income 2,372 -

Distribution costs (73) -

Administrative expenses (30,632) 287

Other expenses 30,948 -

Finance costs 204 -

Income tax expenses 3,210 -


TDM BERHAD




G. Related income tax effects arising from various errors above

These are adjustments relating to the consequential income tax and deferred tax effects arising from the adjustments of items (A) to (C), (E) and (F) above.



2018RM’000

31 December2018

RM’000

1 January2018

RM’000

31 December2018

RM’000

Non-current assetsDeferred tax assets (15,395) (13,920) (351) (351)

Current assetsTax recoverable (1,236) 4,548 - -

Non-current liabilitiesDeferred tax liabilities 14,840 8,196 (1,546) (2,403)

Current liabilitiesTax payable (85) (588) 97 414

Equity attributable to owners of the parentRetained earnings (31,386) (16,980) 1,098 1,638

Statement of comprehensive incomeIncome tax expense (14,406) (540)

H. Reclassification of leasehold land and buildings previously classified as property, plant and equipment

The Company has re-assessed the usage and intent for its leasehold land and buildings previously classified as property, plant and equipment and has established that these classification does not appropriately reflect the manner in which these assets are principally used or intended to be used. This has resulted in the reclassification of leasehold land and buildings from property, plant and equipment to investment properties.


Company1 January

2018RM’000

31 December2018

RM’000

Non-current assetsProperty, plant and equipment (173,481) (179,452)Investment properties 173,481 179,452


ANNUAL REPORT 2019


STATISTICS OF SHAREHOLDINGS

Analysis of Shareholdings

Issued and Paid-up Capital : RM350,712,618 comprising 1,682,641,001 units of Ordinary Shares Voting Rights : One (1) vote per ordinary share

Analysis by Size of HoldingsSize of Holdings No. of Holders % No. of Shares %1 - 99 165 1.401 6,122 0.000

100 - 1,000 356 3.023 177,608 0.010

1,001 - 10,000 3,402 28.889 20,240,356 1.202

10,001 - 100,000 6,812 57.846 221,541,481 13.166

100,001 - 84,132,049* 1,039 8.823 406,398,981 24.152

84,132,050 and above** 2 0.016 1,034,276,453 61.467

Total 11,776 100.000 1,682,641,001 100.000

Remark : * Less than 5% of issued shares

** 5% and above of issued shares

List of Top 30 HoldersNo. Name No. of Shares Percentage %

1 Terengganu Incorporated Sdn. Bhd. (A/C No: 098-001-045464245) 783,008,743 46.534

2 Terengganu Incorporated Sdn. Bhd. (A/C No: 087-055-045755196) 251,267,710 14.932

3 Lembaga Tabung Amanah Warisan Negeri Terengganu 23,482,107 1.395

4 Public Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Kong Goon Khing (E-SRK)

10,770,000 0.640

5 Maybank Nominees (Tempatan) Sdn. Bhd. Mtrustee Berhad for Pacific Pearl Fund (UT-PM-PPF)(419471)

8,205,500 0.487

6 Low Keng Joo 6,400,000 0.380

7 Amanahraya Trustees Berhad Public Islamic Treasures Growth Fund

6,331,600 0.376

8 Maybank Nominees (Tempatan) Sdn. Bhd.Mtrustee Berhad for Great Eastern Life Assurance(Malaysia) Berhad (Par 1) (CS-PM-GELA)(419456)

6,321,800 0.375

9 RHB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account for Veloo A/L Karupayah

5,000,000 0.297

10 UOB Kay Hian Nominees (Asing) Sdn. Bhd. Exempt an for UOB Kay Hian Pte Ltd (A/C Clients)

4,753,300 0.282

11 Universal Trustee (Malaysia) BerhadPacific Premier Fund

3,575,700 0.212

12 Affin Hwang Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ang Joo Seng (ANG1536M)

3,346,900 0.198

13 Lee Bee Geok 3,203,300 0.190

14 Kumpulan Pengurusan Kayu Kayan Trengganu Sdn. Bhd. 3,140,016 0.186

AS AT 12 JUNE 2020


TDM BERHAD


STATISTICS OF SHAREHOLDINGSAS AT 12 JUNE 2020

List of Top 30 HoldersNo. Name No. of Shares Percentage %

15 Maybank Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Chan Cheu Leong

2,970,000 0.176

16 Megategas Sdn. Bhd. 2,938,610 0.174

17 Citigroup Nominees (Asing) Sdn. Bhd. Exempt an for OCBC Securities Private Limited (CLIENT A/C-NR)

2,632,950 0.156

18 Huang, Yu-Ling 2,573,060 0.152

19 Tan Hock Kien 2,541,200 0.151

20 Tai Tsu Kuang @ Tye Tsu Hong 2,250,000 0.133

21 Soon Lian Huat Holdings Sdn. Berhad 2,233,000 0.132

22 Public Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Kong Goon Siong (E-JCL)

2,000,000 0.118

23 Tan Ah Wah 1,980,000 0.117

24 Yeong Cherng Sdn. Bhd. 1,980,000 0.117

25 Amanahraya Trustees BerhadPublic Strategic Smallcap Fund

1,928,660 0.114

26 Eng Bak Chim 1,831,000 0.108

27 Pretam Singh A/L Chanan Singh 1,675,630 0.099

28 CIMB Group Nominees (Tempatan) Sdn. Bhd.CIMB Commerce Trustee Berhad for PacificMillennium Fund

1,647,300 0.097

29 Maybank Nominees (Tempatan) Sdn. Bhd.Ooi Beng Lee

1,579,300 0.093

30 HSBC Nominees (Asing) Sdn. Bhd.Exempt an for Credit Suisse (Sg Br-Tst-Asing)

1,562,680 0.092

Information on Substantial ShareholdersNo. Name Holdings %1 Terengganu Incorporated Sdn. Bhd. 1,034,276,453 61.466

Information on Directors HoldingsNo. Name Holdings %1 YM Raja Dato’ Haji Idris Raja Kamarudin 1,000,000 0.059

2 YB Dato’ Haji Zainal Abidin bin Hussin 0 0.000

3 Haji Burhanuddin Hilmi bin Mohamed @ Harun 0 0.000

4 Mohd Kamaruzaman bin A Wahab 0 0.000

5 Haji Azlan bin Md Alifiah 0 0.000

6 Haji Mazli Zakuan bin Mohd Noor 0 0.000

7 Haji Najman bin Kamaruddin 0 0.000


ANNUAL REPORT 2019


GROUP PLANTATION HECTARAGE STATEMENT

Total Hectarage Managed By Groups (Hectares)OIL PALM

Mature Hectarage 35,925

Immature Hectarage 6,097

Total Planted 42,022

Hectarage by Company/Division Sublease Mature 8,891

Immature 1,144

TDM Capital Sdn. Bhd. Mature 804

Immature 774

Kumpulan Ladang-Ladang Trengganu Sdn. Bhd. Mature 14,810

Immature 2,780

Ladang Tabung Warisan Mature 1,336

Immature 0

Ladang Majlis Agama Islam Terengganu Mature 500

Immature 256

PT Rafi Kamajaya Abadi Mature 9,584

Immature 1,143

TOTAL PLANTED Mature 35,925Immature 6,097

GRAND TOTAL 42,022


TDM BERHAD


5-YEAR GROUP PLANTATION STATISTICS

PLANTED AREA UNIT 2019 2018 2017 2016 2015

Oil Palm Area Malaysia Operation

Immature (0 - 3 Year) Ha 4,954 5,606 4,986 5,151 5,172

Young (4 - 10 Year) Ha 4,796 3,568 2,417 1,607 2,146

Prime-Young (11 - 15 Year) Ha 3,339 3,339 3,363 3,149 4,144

Prime-Old (16 - 20 Year) Ha 3,701 4,219 4,361 11,593 11,523

Old (21 - 25 Year) Ha 10,086 9,852 13,444 9,832 9,012

Very Old (25 Year Above) Ha 4,419 4,762 2,982 487 0

Total Planted Area 31,295 31,346 31,553 31,819 31,997

Indonesia Operation

Immature (0 - 3 Year) Ha 1,143 3,752 3,752 3,752 7,604

Young (4 - 10 Year) Ha 9,584 8,893 8,893 8,893 5,595

10,727 12,645 12,645 12,645 13,199

Total Planted Area 42,022 43,991 44,198 44,464 45,196

Oil Palm Malaysia Operation

FFB Production MT FFB/Ha 398,475 373,213 453,608 401,020 464,597

Yield per mature hectare MT FFB/Ha 15.13 14.50 17.07 15.04 17.32

Indonesia Operation

FFB Production MT FFB/Ha 3,389 2,082 1,897 2,598 5,175

Mills FFB Processed

- own MT 394,497 364,255 445,063 397,457 449,023

- outside MT 3,852 6,444 5,396 206 12,385

FFB Purchase by Mills MT 27,577 2,385 0 796 8,352

Total 425,926 373,084 450,459 398,459 469,761

FFB Sold MT 141.72 2,779 2,868 6,029 8,357

Average selling prices:

- Crude Palm Oil RM/MT ex-mill 2,129 2,313 2,872 2,696 2,184

- Palm Kernel RM/MT ex-mill 1,318 1,955 2,614 2,258 1,578

- Fresh Fruit Bunch RM/MT 347 383 488 363 424

Production

- Crude Palm Oil MT 83,843 72,550 84,027 78,494 90,552

- Palm Kernel MT 19,617 17,308 21,969 20,262 23,388

Extraction Rate

- Crude Palm Oil % 19.68 19.32 18.56 19.57 19.49

- Palm Kernel % 4.61 4.61 4.85 5.05 5.05

Palm Product Per Mature Hectare MT/Ha 3.68 3.47 3.99 3.70 4.25


ANNUAL REPORT 2019


5-YEAR GROUP HEALTHCARE STATISTICS

HEALTHCARE GROUP 2019 2018 2017 2016 2015

No. Beds 407 407 297 297 297

Key Drivers of Growth:

Occupancy Rate 67% 59% 56% 60% 59%

Consultants - Resident 56 54 53 45 44

Doctor: Patient - Ratio 3,486 3,557 3,377 4,129 4,098

No. of Inpatient 25,431 23,507 21,579 21,706 20,985

No. of Outpatient 169,820 168,576 162,335 164,093 159,328

Average Length of Stay 2.96 2.96 2.66 2.80 2.92


TDM BERHAD


LIST OF PROPERTIES

List of Assets Estates Division Tenure Area(Ha)

Description Net Book Value(RM)

FirstExpiry Date

SecondExpiry Date

Mukim Tebak Kemaman Oil Palm Plantation

96,083,880

HS (D) 1779 Lot PT 1666 Jernih Estate Leasehold 2052 3,681.10

GRN 18274 Lot 2514 Jernih Estate Leasehold 2078 218.20

Sublease 2018

HS (D) 2872 Lot PT 402 B Jernih Estate Leasehold 2078 198.19

Sublease 2018

GRN 12509 Lot 821 Pelantoh Estate South Leasehold 2078 35.45






PN 3380 Lot 2523 Pelantoh Estate South Leasehold 2075 11.44

HS (D) 011 Lot PT 28* Pelantoh/Tebak Estate

Leasehold 2013Sublease 2012

Leasehold 2059 3,439.83

HS (D) 012 Lot PT 29* Tebak/Jernih Estate

Leasehold 2014 Sublease 2013

Leasehold 2060 3,439.83

GRN 12499 Lot 823 Pelantoh Estate South 0.23

(replacing HS(D) 208)

HS (D) 13 Lot 30 Tebak Estate Leasehold 2014 Leasehold 2060 195.87

HS (D) 001 L/NF 198/65* Air Putih Estate Leasehold 2012 Leasehold 2058 129.50

Sublease 2011


Sublease 2011


Sublease 2011

HS (D) 004 L/NF 198/65* Air Putih Estate Leasehold 2012 Leasehold 2058 1,916.59

Sublease 2011

Mukim Belara Sungai Tong Oil Palm Plantation

44,152,727

GRN 22945 Lot 15111 Jaya Estate Bari Leasehold 2072 0.4611

GRN 22946 Lot 15112 Jaya Estate Bari Leasehold 2072 1,407

GRN 22947 Lot 15113 Jaya Estate Bari Leasehold 2072 1.15

GRN 6001 Lot 6558 Jaya Estate Jaya Leasehold 2072 1,661.42

GRN 6247 Lot 6743 Jaya Estate Jaya Leasehold 2072 84.91


ANNUAL REPORT 2019


LIST OF PROPERTIES



FirstExpiry Date

SecondExpiry Date

Mukim Belara Sungai Tong Oil Palm Plantation

53,194,932

HS (D) 401 Lot PT 804K (replacing HS(D) 1017 Lot PT 804 K)

Fikri Estate Sentosa Leasehold 2072 103.60

GRN 9309 Lot 8264 Fikri Estate Sentosa Leasehold 2072 58.44


GRN 17446 Lot 7682 (replacing HS (D) 1983 PT 381 K)



GRN 15359 Lot 8168 (replacing HS(D) 813 PT 882 K)


HS (D) 400 Lot PT 883 K (replacing HS(D) 814)


HS (D) 399 Lot PT 642 K (replacing HS (D) 561 Lot PT 642 K)


GRN 6005 Lot 7254 Fikri Estate Fikri Leasehold 2072 82.28






PN 8088 Lot 15966 Fikri Estate Fikri Leasehold 2104 24.96

PN 8089 Lot 15965 Fikri Estate Fikri Leasehold 2104 13.85

HS(M) 1007 (loji) Lot PT 884 K

Fikri Estate Fikri Leasehold 2072 0.20

PN 3074 Lot 9390 Fikri Estate Pakoh Jaya Leasehold 2087 472.00

PN 7567 Lot 12033 Fikri Estate Pakoh Jaya Leasehold 2098 79.84

PN 6199 Lot 10939 (replacing HS (D) 6416 PT 4152 K)

Fikri Estate Pakoh Jaya Leasehold 2098 15.16






TDM BERHAD


LIST OF PROPERTIES



FirstExpiry Date

SecondExpiry Date

Mukim Hulu Nerus Sungai Tong Oil Palm Plantation

39,028,657

HS (D) 764 Lot 707 K Tayor Estate Leasehold 2072 498.02

GM 1533 Lot 0054 Tayor Estate Leasehold 2072 1.81

GM 3158 Lot 1141 (replacing HS(D) 770 Lot 789 K)

Tayor Estate Leasehold 2072 3.26

GM 3157 Lot 1140 (replacing HS (D) 769 Lot 788 K)




GRN 16181 Lot 10237(replacing Geran 8683 Lot 3039)


GRN 8684 Lot 3040 Tayor Estate Leasehold 2072 12.65

GRN 8685 Lot 3041 Tayor Estate Leasehold 2072 1,133.65

Mukim Hulu Nerus Sungai Tong Oil Palm Plantation

62,204,484

PN 12150 Lot 51902 (replacing HS (D) 1235 PT 7218)

Pelung Estate Leasehold 2102 3,002.00


Pelung Estate Leasehold 2065 10.20 Office & Clusters

PN 3851 Lot 10372 Pelung Estate Leasehold 18/12/2095

0.03 Clusters


0.03 Clusters


0.03 Clusters


0.03 Clusters


0.03 Clusters


0.03 Office


ANNUAL REPORT 2019


LIST OF PROPERTIES



FirstExpiry Date

SecondExpiry Date

PN Mukim Besul Bukit Besi Oil Palm Plantation

106,784,218

GN 14644 Lot 3999 (replacing HS(D) 72 PT 140

Gajah Mati/ Pinang Emas

Estate

Leasehold 2075

5,139.00

HS (D) 73 Lot PT 141 Pinang Emas Estate

Leasehold 2075

624.84


Leasehold 2075

738.15


Leasehold 2075

621.60


Leasehold 2075

284.90


Leasehold 2075

336.70

Mukim Jerangau Bukit Besi Oil Palm Plantation

4,964,115


Jerangau Estate Chakuh 9 Leasehold 2051

406.90


6,927,375

PN 669 Lot 37 Jerangau Estate Jerangau Leasehold 2049

456.89

PN 669 Lot 204 Jerangau Estate Jerangau Leasehold 2049

36.74


9,766,262

PN 825 Lot 1157 Jerangau Estate Landas Leasehold 2058

580.52

Mukim Batu Buruk 3,815,708GM 569-575 Lot 3046-3052 Bgn Jalan Kamaruddin Jalan Kamaruddin Kuala Terengganu

Leasehold 2090

1,390.00 sq. m

5 units of 4 storey

shophouses and 2 parcels

of land


TDM BERHAD


LIST OF PROPERTIES



FirstExpiry Date

SecondExpiry Date

State of Pahang 85,516,947Mukim Kuala Kuantan PN 7723 Lot 54559District of Kuantan

Leasehold 2096

43,240.00sq m

Hospital Building

Wilayah Persekutuan 25,994,462GRN 47712 Lot 51913Mukim and District of Kuala LumpurTaman Desa Medical Centre Lot 45, Jalan Desa,Desa Business Park, Taman Desa Off Jalan Klang Lama Kuala Lumpur

Freehold 1,486.00sq m

Hospital Building

State of Selangor 8,300,076Mukim Damansara Lot No. 3,4,5,6HS (D) 259689 PTNo. 14532 District

Leasehold 2092

2,888.4sq. m

Hospital

State of Kalimantan 124,269,759Kabupaten Melawi, Provinsi Kalimantan Barat, Indonesia. (HGU)

Leasehold Land

18,007.98Ha

Oil Palm Plantation

Mukim Batu Buruk 174,338,889PN 10209 Lot 60035Lot 3963Jalan Sultan Mahmud Kg Batu Buruk,Kuala Terengganu

Leasehold 2111

23,450sq. m

Hospital Building


ANNUAL REPORT 2019


GROUP DIRECTORY

TDM BerhadLevel 5, Bangunan UMNO Terengganu Lot 3224, Jalan Masjid Abidin20100 Kuala Terengganu Terengganu, MalaysiaTel : (609) 620 4800 / (609) 622 8000Fax : (609) 620 4803Website : www.tdmberhad.com.my

TDM Berhad25th Floor, Menara KH Jalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel : (603) 2148 0811 Fax : (603) 2148 9900

SUNGAI TONG COMPLEX

Jaya EstateSungai Tong, 21500 Setiu Terengganu, MalaysiaTel : (6019) 950 3800Email : [email protected]

Fikri EstateSungai Tong, 21500 Setiu Terengganu, MalaysiaTel : (6017) 962 4060Email : [email protected]

Tayor EstateSungai Tong, 21500 Setiu Terengganu, MalaysiaTel : (6011) 1198 7290Email : [email protected]

Pelung EstateSungai Tong, 21500 Setiu Terengganu, MalaysiaTel : (6017) 989 0829Email : [email protected]

BUKIT BESI COMPLEX

Jerangau EstateWakil Pos Pelar, 21810 Ajil Terengganu, MalaysiaTel : (6016) 961 9839Email : [email protected]

Pinang Emas Estate 23200 Bukit Besi, Dungun Terengganu, MalaysiaTel : (6019) 902 5800Fax : (609) 849 0059Email : [email protected]

Gajah Mati Estate 23200 Dungun Terengganu, MalaysiaTel : (6011) 6572 7247Email : [email protected]

Majlis Agama Islam EstateAM 9, Bandar AMBS23400 Dungun, Terengganu, MalaysiaTel : (609) 822 2215Email : [email protected]

HEADQUARTERS

CORPORATE OFFICE

TDM Plantation Sdn. Bhd.Kumpulan Ladang-Ladang Trengganu Sdn. Bhd. TDM Capital Sdn. Bhd.Level 3, Bangunan UMNO TerengganuLot 3224, Jalan Masjid Abidin 20100 Kuala Terengganu Terengganu, MalaysiaTel : (609) 620 4800 / (609) 622 8000Fax : (609) 620 4805

TDM Trading Sdn. Bhd. 25th Floor, Menara KH Jalan Sultan Ismail50250 Kuala Lumpur, Malaysia Tel : (603) 2148 0811Fax : (603) 2148 9900

P.T. Rafi Kamajaya Abadi P.T. Rafi Sawit LestariP.T. Rafi Rezki Abadi(Incorporated in Indonesia)JL Propinsi Pinoh Sintang Desa Sidomulyo No. 5 Nanga PinohKab Melawi, Kalimantan Barat, Indonesia Office : (0062) 5682 2784Fax : (0062) 5682 2767

PLANTATION DIVISION

ESTATES AND MILLS


TDM BERHAD


GROUP DIRECTORY

KEMAMAN COMPLEX

Air Putih EstateP.O. Box 19, 24007 KemamanTerengganu, MalaysiaTel : (609) 859 8367Fax : (609) 859 8367Email : [email protected]

Pelantoh EstateP.O. Box 10, Padang Kubu, 24007 Kemaman Terengganu, MalaysiaTel : (609) 822 6400Fax : (609) 822 6822Email : [email protected]

Tebak EstateP.O. Box 10, Padang Kubu, 24007 Kemaman Terengganu, MalaysiaTel : (6016) 925 4142Email : [email protected]

Jernih EstateP.O. Box 10, Padang Kubu, 24007 Kemaman Terengganu, MalaysiaTel : (6019) 928 4716Email : [email protected]

Sungai Tong Palm Oil Mill Sungai Tong, 21500 Setiu Terengganu, MalaysiaTel : (609) 657 1242Fax : (609) 824 6472Email : [email protected]

Kemaman Palm Oil MillPadang Kubu, 24010 Kemaman Terengganu, MalaysiaTel : (609) 822 6566Fax : (609) 822 6704Email : [email protected]

Kumpulan Medic Iman Sdn. Bhd.25th Floor, Menara KH Jalan Sultan Ismail50250 Kuala Lumpur, Malaysia Tel : (603) 2148 0811Website : www.kmihealthcare.com

Kelana Jaya Medical Centre Sdn. Bhd.No 1, FAS Business AvenueJalan Perbandaran SS7, Kelana Jaya 47301 Petaling JayaSelangor, MalaysiaTel : (603) 7805 2111Facebook : www.facebook.com/kjmcofficial

Kuantan Medical Centre Sdn. Bhd.Jalan Tun RazakBandar Indera Mahkota 25200 KuantanPahang, MalaysiaTel : (609) 590 2828Facebook : www.facebook.com/kuantanmedicalcentre

Kuala Terengganu Specialist Hospital Sdn. Bhd.Jalan Sultan Mahmud Batu Burok20400 Kuala Terengganu Terengganu, MalaysiaTel : (609) 637 8888Facebook : www.facebook.com/kualaterengganuspecialisthospital

TDMC Hospital Sdn. Bhd. 45, Jalan Desa, Taman Desa 58100 Old Klang Road Wilayah PersekutuanKuala Lumpur, Malaysia Tel : (603) 7982 6500Facebook : www.facebook.com/mytdmc

MANAGE: Tawau Specialist Hospital Sdn. Bhd.TB 4551 Jalan Abaca91000 TawauSabah, Malaysia Tel : (6089) 771 873

ESTATES AND MILLS

MILLS

HEALTHCARE DIVISION


ANNUAL REPORT 2019


NOTICE OF 55TH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Fifty-Fifth (55th) Annual General Meeting (“AGM”) of the Company will be conducted through live streaming from the Broadcast Venue at Tricor Leadership Room, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur on Monday, 27 July 2020 at 11.00 a.m or at any adjournment thereof for the purpose of considering and if thought fit, passing the following business with or without modifications:

AGENDAORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 December 2019 together with the Reports of the Directors and the Auditors thereon.

Please refer to Explanatory Note 1

2. To re-elect the following Directors who retire in accordance with Clause 119 of the Constitution of the Company and being eligible, offer themselves for re-election:-

2.1 YM Raja Dato’ Haji Idris Raja Kamarudin2.2 Haji Najman Bin Kamaruddin

Ordinary Resolution 1Ordinary Resolution 2

3. To re-elect the following Directors who retire in accordance with Clause 118 of the Constitution of the Company and being eligible, offer themselves for re-election:-

3.1 Haji Azlan Bin Md Alifiah3.2 YB Dato’ Haji Zainal Abidin Bin Hussin

Ordinary Resolution 3Ordinary Resolution 4

4. To approve the payment of Directors’ Fee up to an amount of RM486,000.00 for the period from 1 July 2020 until 30 June 2021.

Ordinary Resolution 5

5. To approve the payment of Directors’ Benefits to the Non-Executive Directors up to an amount of RM1,540,000.00 for the period from 1 July 2020 until 30 June 2021.


6. To re-appoint Messrs. Ernst & Young as Auditors of the Company for the financial year ending 31 December 2020 and to authorise the Directors to fix their remuneration.


SPECIAL BUSINESSTo consider and if thought fit, to pass the following resolutions:

7. Authority to Issue Shares Pursuant to Section 75 and 76 of the Companies Act, 2016

“THAT subject always to the Companies Act 2016 (“the Act”), the Constitution of the Company and approvals from Bursa Malaysia Securities Berhad and any other Governmental/Regulatory Authorities, where such approval is necessary, authority be and is hereby given to the Directors of the Company, pursuant to Sections 75 and 76 of the Act, to allot shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors of the Company may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 20% of the total number of issued shares (excluding treasury shares) of the Company for the time being;

AND THAT the Directors of the Company be and are hereby empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next AGM of the Company.”



TDM BERHAD



SPECIAL BUSINESS (CONT'D.)

8. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

“THAT, subject always to the Companies Act 2016 (“the Act”), the Constitution of the Company and the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, approval be and is hereby given to the Company and its subsidiaries to enter into all transactions involving the interests of Directors, major shareholders or persons connected with Directors and/or major shareholders of the Group (“Related Parties”) as described in the Circular to Shareholders dated 26 June 2020 (“Recurrent RPTs”) provided that such transactions are:- (i) recurrent transactions of a revenue or trading nature; (ii) necessary for the day-to-day operations; (iii) carried out in the ordinary course of business and on normal commercial terms which are not

more favourable to the Related Parties than those generally available to the public; and (iv) are not to the detriment of the minority shareholders

(“RRPT Mandate”).

AND THAT such approval shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting of the Company, at which time it will lapse, unless by a resolution passed at that meeting, the authority is renewed; or

(b) the expiration of the period within which the next Annual General Meeting of the Company is required to be held pursuant to Section 340 of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(c) revoked or varied by a resolution passed by shareholders in a general meeting;

whichever is earlier; and the aggregate value of the Recurrent RPTs be disclosed in the annual report of the Company.


9. To transact any other business of which due notice shall have been given in accordance with the Companies Act 2016 and the Company’s Constitution.

BY ORDER OF THE BOARD

WAN HASLINDA BINTI WAN YUSOFF (MAICSA 7055478) SSM PC No : 202008002798Company Secretary

Kuala TerengganuDated : 26 June 2020


ANNUAL REPORT 2019


Notes:-

1. IMPORTANT NOTICE As part of the initiatives to curb the spread of Coronavirus Disease 2019 (“COVID-19”) and precautionary measure amid Covid-19, the Fifty-Fifth

(55th) AGM will be conducted through live streaming and online remote voting using the Remote Participation and Voting facilities (“RPV”) provided by Tricor Investor & Issuing House Services Sdn. Bhd.

Shareholders are to attend, speak (including posing questions to the Board via real time submission of typed texts) and vote (collectively, “participate”) remotely at the 55th AGM using the RPV provided by Tricor Investor & Issuing House Services Sdn. Bhd. via its TIIH Online website at https://tiih.online. With the RPV, you may exercise your right as a member of the Company to participate and vote at the 55th AGM.

The Broadcast Venue is strictly for the purpose of complying with Section 327(2) of the Companies Act 2016 which requires the Chairperson of the meeting to be present at the main venue of the meeting. Since the 55th AGM will be conducted via RPV, no Shareholders/Proxy(ies) from the public will be physically present at the Broadcast Venue to attend the 55th AGM in person at the Broadcast Venue on the day of the meeting.

The Company shall strictly comply and implement all the Government and/or relevant authorities’ directives and guidelines on public gatherings or events which may be issued from time to time.

Please read these Notes carefully and follow the procedures in the Information Guide to Shareholders on 55th AGM in order to participate remotely via RPV.

2. For the purpose of determining a member who shall be entitled to participate in the 55th AGM via RPV, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Section 34(1) of the SICDA to issue a General Meeting Record of Depositors. Only a depositor whose name appears on the Record of Depositors as at 20 July 2020 shall be entitled to participate in this AGM via RPV.

3. A member who is entitled to participate in this AGM via RPV, is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorized representative to participate in his/her place. A proxy may but need not be a member of the Company. A member may appoint more than one (1) proxy to participate instead of the member at the general meeting, provided that the member specifies the proportion of the member’s shareholdings to be represented by each proxy.

4. Where a Member is an Authorised Nominee, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds to which shares in the Company standing to the credit of the said account.

5. Where a Member of the Company is an Exempt Authorised Nominee which holds Deposited Securities 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.

6. Pursuant to Paragraph 8.29A (1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in the Notice of 55th AGM will be put to vote by poll. Poll Administrator and Independent Scrutineers will be appointed to conduct the polling/e-polling process and verify the results of the poll respectively.

7. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal, or under the hand of two (2) authorised officers, one of whom shall be a director or of its attorney duly authorised in writing. The Directors may but shall not be bound to require evidence of the authority of any such attorney or officer.

8. A Shareholder who has appointed a proxy or attorney or authorised representative to attend, participate and vote at this Annual General Meeting via RPV must request his/her proxy to register himself/herself for RPV at TIIH Online website at https://tiih.online.

Please follow the Procedures for RPV in the Information Guide to Shareholders.



TDM BERHAD



9. Shareholders who appoint proxies to participate in the 55th AGM via RPV must ensure that the duly executed proxy forms are deposited at the office of the Share Registrar of the Company at Tricor Investor & Issuing House Services Sdn Bhd, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi 59200 Kuala Lumpur, Wilayah Persekutuan or the Customer Service Centre at Unit G-3, Ground Floor, Vertical podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than 48 hours before the time holding the AGM. Alternatively, in accordance to Section 326 of the Companies Act 2016, you have the option to lodge the proxy appointment electronically via TIIH Online at https://tiih.online or email to [email protected] not less than 48 hours before the time holding the AGM.

Please refer to Information Guide to Shareholders for submission of electronic Proxy Form.

10. The Personal Data Protection Act 2010, which regulates the processing of personal data in commercial transactions, applies to the Company. By providing to us your personal data which may include your name, contact details and mailing address, you hereby consent, agree and authorise the processing and/ or disclosure of any personal data of or relating to you for the purposes of issuing the notice of this meeting and convening the meeting, including but not limited to preparation and compilation of documents and other matters, whether or not supplied by you. You further confirm to have obtained the consent, agreement and authorisation of all persons whose personal data you have disclosed and/ or processed in connection with the foregoing.

EXPLANATORY NOTES TO THE AGENDA:-

Item 1 of the Agenda This item is meant for discussion only. The provisions of Section 340 (1) of the Companies Act, 2016 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.

Item 4 and 5 of the Agenda – Ordinary Resolution 5 & 6Section 230 (1) of the Companies Act 2016, provides amongst others, that “the fees” of the Directors and “any benefits” payable to the Directors shall be approved at a general meeting. In this respect, the Board agreed that the shareholders’ approval shall be sought at the 55th AGM on the Directors’ fees and benefit in two (2) separate resolutions.

The payment of the Directors’ Fees for the period from 1 July 2020 until 30 June 2021 will only be made if the proposed resolution 5 has been approved at the 55th AGM of the Company.

In determining the estimated total amount of Directors’ Benefit, the Board had considered various factors which include amongst others, the number of scheduled and Special Board meetings, scheduled and Special Board Committee meetings as well as the number of Non-Executive Directors (NEDs) involved in these meetings.

The estimated sum of RM1,540,000.00 is for Directors’ Benefits for the period from 1 July 2020 until 30 June 2021. The payment of the directors’ benefit will be made on monthly basis and/or as and when incurred if the Proposed Resolution 6 has been passed at the 55th AGM. The Board is of the view that it is fair and equitable for the Directors to be paid on a monthly basis and/or as and when incurred, given that they have duly discharged their duties and responsibilities and provided their services to the Company throughout the said period.


ANNUAL REPORT 2019


Item 7 of the Agenda – Ordinary Resolution 8Authority to Issue Shares pursuant to Sections 75 and 76 of the Companies Act, 2016 (“the Act”)

The Company had in its 54th AGM held on 28 May 2019, obtained its Shareholders’ approval for the renewal of the general mandate for issuance of shares pursuant to Section 75 & 76 of the Act.

The Company did not issue any new ordinary shares pursuant to this mandate as at the date of this Notice.

The proposed Ordinary Resolution No: 8 is a renewal of the mandate to issue shares under Section 75 and 76 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 20% of the issued share capital of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting 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 utilise 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.

Item 8 of the Agenda – Ordinary Resolution 9 Proposed Renewal of Shareholders’ Mandate

The proposed Resolution 9, if passed, will provide a renewed mandate for the Company and/or its subsidiaries to enter into the recurrent related party transactions of a revenue or trading nature which are necessary for the Group’s day-to-day operations, subject to the transactions being in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

This mandate shall lapse at the conclusion of the next Annual General Meeting unless authority for the renewal is obtained from the shareholders of the Company at a general meeting.

Please refer to the Circular to Shareholders dated 26 June 2020 on the Proposed Renewal of Shareholders’ Mandate for further information.



TDM BERHAD


No individual is standing for election as Director at the forthcoming Fifty-Fifth Annual General Meeting of the Company

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING(PURSUANT TO PARAGRAPH 8.27 (2) OF THE MAIN MARKET LISTING REQUIREMENT)


ANNUAL REPORT 2019


INFORMATION GUIDE TO SHAREHOLDERS ON FIFTY-FIFTH (55TH) ANNUAL GENERAL MEETING

Date : Monday, 27 July 2020 Time : 11.00 a.m.Broadcast Venue : Tricor Leadership Room, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3

Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur.

MODE OF MEETING

In view of the Coronavirus Disease 2019 (“COVID-19”) pandemic and the Company’s measure to curb the spread of COVID-19, the 55th Annual General Meeting (“AGM”) will be conducted through live streaming and online remote voting using the Remote Participation and Voting facilities (“RPV”) provided by Tricor Investor & Issuing House Services Sdn. Bhd. This is in line with the Guidance Note on the Conduct of General Meetings for Listed Issuers issued by the Securities Commission Malaysia on 18 April 2020 and 18 June 2020.

The Broadcast Venue is strictly for the purpose of complying with Section 327(2) of the Companies Act 2016 which requires the Chairperson of the meeting to be present at the main venue of the meeting. Since the 55th AGM will be conducted via RPV, no Shareholders/Proxy(ies) from the public will be physically present at the Broadcast Venue to attend the 55th AGM in person at the Broadcast Venue on the day of the meeting.

The Company shall strictly comply and implement all the Government and/or relevant authorities’ directives and guidelines on public gatherings or events which may be issued from time to time.

REMOTE PARTICIPATION AND VOTING FACILITIES (“RPV”)

Shareholders are to attend, speak (including posing questions to the Board via real time submission of typed texts) and vote (collectively, “participate”) remotely at the 55th AGM using the RPV provided by Tricor Investor & Issuing House Services Sdn. Bhd. (“Tricor” or “TIIH”) via its TIIH Online website at https://tiih.online.

Shareholders who appoint proxies or attorney or authorized representative(s) to participate via RPV in the 55th AGM must ensure that the duly executed proxy forms are deposited in a hard copy form or by electronic means to Tricor no later than Saturday, 25 July 2020 at 11.00 a.m.

A Shareholder who has appointed a proxy or attorney or authorised representative to attend, participate and vote at this Annual General Meeting via RPV must request his/her proxy to register himself/herself for RPV at TIIH Online website at https://tiih.online.

As the 55th AGM will be conducted via RPV, members who are unable to participate in this AGM may appoint the Chairperson of the meeting as his/her proxy and indicate the voting instructions in the proxy form.


TDM BERHAD



PROCEDURES FOR RPV Shareholders/proxies/corporate representatives/attorneys who wish to participate the 55th AGM remotely using the RPV are to follow the requirements and procedures as summarized below:

Procedure Action

BEFORE THE AGM DAY

(a) Register as a user with TIIH Online

• Using your computer, access the website at https://tiih.online. Register as a user under the “e-Services”. Refer to the tutorial guide posted on the homepage for assistance.

• If you are already a user with TIIH Online, you are not required to register again. You will receive an e-mail to notify you that the remote participation is available for registration at TIIH Online.

(b) Submit your request • Registration is open from 11.00 a.m. Friday, 26 June 2020 up to 11.00 a.m. Saturday, 25 July 2020.• Login with your user ID and password and select the corporate event: “(REGISTRATION) TDM

55th AGM.• Read and agree to the Terms & Conditions and confirm the Declaration.• Select “Register for Remote Participation and Voting”.• Review your registration and proceed to register.• System will send an e-mail to notify that your registration for remote participation is received and

will be verified.• After verification of your registration against the General Meeting Record of Depositors as at 20

July 2020, the system will send you an e-mail to approve or reject your registration for remote participation.

ON THE DAY OF THE AGM

(c) Login to TIIH Online • Login with your user ID and password for remote participation at the 55th AGM at any time from 10.30 a.m. i.e. 30 minutes before the commencement of the AGM on Monday, 27 July 2020 at 11.00 a.m.

(d) Participate through Live Streaming

• Select the corporate event: “(LIVE STREAM MEETING) TDM 55TH AGM” to engage in the proceedings of the 55th AGM remotely.

• If you have any question for the Chairperson / Board, you may use the query box to transmit your question. The Chairperson/ Board will endeavor to respond to questions submitted by remote participants during the 55th AGM. If there is time constraint, the responses will be e-mailed to you at the earliest possible, after the meeting.

(e) Online Remote Voting • Voting session commences from 11.00 a.m. on Monday, 27 July 2020 until a time when the Chairperson announces the completion of the voting session of the 55th AGM.

• Select the corporate event: “(REMOTE VOTING) TDM 55TH AGM”.• Read and agree to the Terms & Conditions and confirm the Declaration.• Select the CDS account that represents your shareholdings.• Indicate your votes for the resolutions that are tabled for voting.• Confirm and submit your votes.

(f) End of remote participation • Upon the announcement by the Chairperson on the closure of the 55th AGM, the live streaming will end.

Note to users of the RPV facilities:1. Should your application to join the meeting be approved, we will make available to you the rights to join the live streamed meeting and to

vote remotely. Your login to TIIH Online on the day of meeting will indicate your presence at the virtual meeting.2. The quality of your connection to the live broadcast is dependent on the bandwidth and stability of the internet at your location and the

device you use.3. In the event you encounter any issues with logging-in, connection to the live streamed meeting or online voting, kindly call Tricor Help Line

at 011-40805616 / 011-40803168 / 011-40803169 / 011-40803170 for assistance or e-mail to [email protected] for assistance.


ANNUAL REPORT 2019


ELECTRONIC LODGEMENT OF PROXY FORMThe procedures to lodge your proxy form electronically via Tricor’s TIIH Online website are summarised below:

Procedure Action

(a) Register as a Userwith TIIH Online

• Using your computer, please access the website at https://tiih.online. Register as a user under the “e-Services”. Please do refer to the tutorial guide posted on the homepage for assistance.

• If you are already a user with TIIH Online, you are not required to register again.

(b) Proceed with submission of Proxy Form

• After the release of the Notice of Meeting by the Company, login with your user name (i.e. email address) and password.

• Select the corporate event: “Submission of Proxy Form”.• Read and agree to the Terms & Conditions and confirm the Declaration.• Insert your CDS account number and indicate the number of shares for your proxy(s) to vote on

your behalf.• Appoint your proxy(s) and insert the required details of your proxy(s) or appoint Chairman as

your proxy.• Indicate your voting instructions – FOR or AGAINST, otherwise your proxy will decide your vote.• Review and confirm your proxy(s) appointment.• Print proxy form for your record.

PRE-MEETING SUBMISSION OF QUESTION TO THE BOARD OF DIRECTORSShareholders may submit questions for the Board in advance of the 55th AGM via Tricor’s TIIH Online website at https://tiih.online by selecting “e-Services” to login, pose questions and submit electronically no later than Saturday, 25 July 2020 at 11.00 a.m.. The Board will endeavor to answer the questions received at the AGM.

NO DOOR GIFT/FOOD VOUCHERThere will be no distribution of door gifts or food vouchers for the 55th AGM since the meeting will be conducted on virtual basis.

TDM Berhad would like to thank all its shareholders for their kind co-operation and understanding in these challenging times.

ENQUIRYIf you have any enquiries on the above, kindly contact the following persons during office hours on Mondays to Fridays from 9.00 a.m. to 5.30 p.m. (except on public holidays):

Tricor Investor & Issuing House Services Sdn BhdGeneral Line : 603-2783 9299 Fax Number : 603-2783 9222Email : [email protected] persons : Ms. Shanti Renganathan +603-2783 7971 ; email : [email protected] Encik Mohamad Khairudin +603-2783 7973 ; email : [email protected]


Proxy Form

CDS Accounts No.

Number of Ordinary Share(s) held(Incorporated in Malaysia)

I/We (FULL NAME OF SHAREHOLDER AS PER NRIC / CERTIFICATE OF INCORPORATION IN CAPITAL LETTERS)

NRIC No. / Company No. of

(FULL ADDRESS)

being a member of TDM BERHAD, hereby appoint:

FIRST PROXY

Full Name of Proxy in capital letters Proportion of Shareholdings

Number of Shares Percentage

NRIC No/Passport No

and,

SECOND PROXY

Full Name of Proxy in capital letters Proportion of Shareholdings

Number of Shares Percentage

NRIC No/Passport No# to put on a separate sheet where there are more than two (2) proxies

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies on my/our behalf at the Fifty-Fifth (55th) Annual General Meeting (“AGM”) of the Company which will be conducted through live streaming from the Broadcast Venue at Tricor Leadership Room, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur on Monday, 27 July 2020 at 11.00 a.m, or at any adjournment thereof, on the following resolutions referred to in the Notice of 55th AGM.

My/our proxy is to vote as indicated below:

Resolution No Resolutions For AgainstOrdinary Resolution 1 To re-elect YM Raja Dato’ Haji Idris Raja Kamarudin as Director of the Company

Ordinary Resolution 2 To re-elect Haji Najman Bin Kamaruddin as Director of the Company

Ordinary Resolution 3 To re-elect Haji Azlan Bin Md Alifiah as Director of the Company

Ordinary Resolution 4 To re-elect YB Dato’ Haji Zainal Abidin Bin Hussin as Director of the Company

Ordinary Resolution 5 To approve the payment of Directors’ Fee up to an amount of RM486,000.00 for the period from 1 July 2020 until 30 June 2021

Ordinary Resolution 6 To approve the payment of Directors’ Benefits to the Non-Executive Directors up to an amount of RM1,540,000.00 for the period from 1 July 2020 until 30 June 2021

Ordinary Resolution 7 To re-appoint Messrs. Ernst & Young as Auditors of the Company for the financial year ending 31 December 2020 and to authorise the Directors to fix their remuneration

Ordinary Resolution 8 Authority to Issue Shares Pursuant to Section 75 and 76 of the Companies Act, 2016

Ordinary Resolution 9 Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

Please indicate with an “X” in the appropriate space how you wish your vote to be cast. If you do not indicate how you wish your proxy to vote on any resolution, the proxy shall vote as he/she thinks fit, or at his/her discretion, abstain from voting.

Dated this day of , 2020

Signature/ Common Seal of Shareholder(s)

Company No: 196501000477 (6265-P)

Notes:1. IMPORTANT NOTICE As part of the initiatives to curb the spread of Coronavirus Disease 2019 (“COVID-19”) and precautionary measure amid Covid-19, the Fifty-Fifth (55th) AGM will be conducted through live streaming and online remote

voting using the Remote Participation and Voting facilities (“RPV”) provided by Tricor Investor & Issuing House Services Sdn. Bhd. Shareholders are to attend, speak (including posing questions to the Board via real time submission of typed texts) and vote (collectively, “participate”) remotely at the 55th AGM using the RPV provided by Tricor

Investor & Issuing House Services Sdn. Bhd. via its TIIH Online website at https://tiih.online. With the RPV, you may exercise your right as a member of the Company to participate and vote at the 55th AGM. The Broadcast Venue is strictly for the purpose of complying with Section 327(2) of the Companies Act 2016 which requires the Chairperson of the meeting to be present at the main venue of the meeting. Since the

55th AGM will be conducted via RPV, no Shareholders/Proxy(ies) from the public will be physically present at the Broadcast Venue to attend the 55th AGM in person at the Broadcast Venue on the day of the meeting. The Company shall strictly comply and implement all the Government and/or relevant authorities’ directives and guidelines on public gatherings or events which may be issued from time to time. Please read these Notes carefully and follow the procedures in the Information Guide to Shareholders on 55th AGM in order to participate remotely via RPV.2. For the purpose of determining a member who shall be entitled to participate in the 55th AGM via RPV, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Section 34(1) of the

SICDA to issue a General Meeting Record of Depositors. Only a depositor whose name appears on the Record of Depositors as at 20 July 2020 shall be entitled to participate in this AGM via RPV.3. A member who is entitled to participate in this AGM via RPV, is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorized representative to participate in his/her place. A proxy

may but need not be a member of the Company. A member may appoint more than one (1) proxy to participate instead of the member at the general meeting, provided that the member specifies the proportion of the member’s shareholdings to be represented by each proxy.

4. Where a Member is an Authorised Nominee, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds to which shares in the Company standing to the credit of the said account.

5. Where a Member of the Company is an Exempt Authorised Nominee which holds Deposited Securities 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.

TDM BERHADC/O SHARE REGISTRARTricor Investor & Issuing House Services Sdn Bhd, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi 59200 Kuala Lumpur, Wilayah Persekutuan

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AFFIX STAMP

6. Pursuant to Paragraph 8.29A (1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in the Notice of 55th AGM will be put to vote by poll. Poll Administrator and Independent Scrutineers will be appointed to conduct the polling/e-polling process and verify the results of the poll respectively.

7. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal, or under the hand of two (2) authorised officers, one of whom shall be a director or of its attorney duly authorised in writing. The Directors may but shall not be bound to require evidence of the authority of any such attorney or officer.

8. A Shareholder who has appointed a proxy or attorney or authorised representative to attend, participate and vote at this Annual General Meeting via RPV must request his/her proxy to register himself/herself for RPV at TIIH Online website at https://tiih.online.

Please follow the Procedures for RPV in the Information Guide to Shareholders.9. Shareholders who appoint proxies to participate in the 55th AGM via RPV must ensure that the duly executed proxy forms are deposited at the office of the Share Registrar of the Company at Tricor Investor & Issuing

House Services Sdn Bhd, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi 59200 Kuala Lumpur, Wilayah Persekutuan or the Customer Service Centre at Unit G-3, Ground Floor, Vertical podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than 48 hours before the time holding the AGM. Alternatively, in accordance to Section 326 of the Companies Act 2016, you have the option to lodge the proxy appointment electronically via TIIH Online at https://tiih.online or email to [email protected] not less than 48 hours before the time holding the AGM.

Please refer to Information Guide to Shareholders for submission of electronic Proxy Form.10. The Personal Data Protection Act 2010, which regulates the processing of personal data in commercial transactions, applies to the Company. By providing to us your personal data which may include your name,

contact details and mailing address, you hereby consent, agree and authorise the processing and/ or disclosure of any personal data of or relating to you for the purposes of issuing the notice of this meeting and convening the meeting, including but not limited to preparation and compilation of documents and other matters, whether or not supplied by you. You further confirm to have obtained the consent, agreement and authorisation of all persons whose personal data you have disclosed and/ or processed in connection with the foregoing.

TDM BERHAD (6265-P)

Level 5, Bangunan UMNO TerengganuLot 3224, Jalan Masjid Abidin,20100 Kuala Terengganu,Terengganu, Malaysia

T: +609 620 4800 / +609 622 8000F: +609 620 4803www.tdmberhad.com.my