DRIVING SUSTAINABLE GROWTH - Johor Corporation
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About Johor Corporation Johor Corporation was established as a public enterprise and a statutory body with the passing of the Johor Corporation Enactment No. 4, 1968 (as amended under Enactment No. 5, 1995). As a state-owned conglomerate, Johor Corporation through its Group of Companies are involved in core businesses comprising Plantations, Specialist Healthcare, Food & Restaurant Services, as well as Property. MISSION A conglomerate contributing to the Playing the role of catalyst for Maintaining its position as a Contributing and improving the state and national economic growth sustainable business growth and competitive, profit generating well-being of the community through efficient and effective subsequently achieving success and highly regarded business through business success business entities while upholding to discharge its obligations as a entity that leads & dominates and corporate responsibility community interests. state investment corporation. the market. undertakings. VISION MEMBINA & MEMBELA JOHOR CORPORATION CORE VALUES 2.0 INTEGRITY PROFESSIONAL INNOVATIVE LOYAL TEAMWORK We execute our task We are committed We are knowledgeable, We execute our We work as a team, with trustworthiness, to executing our task visionary, creative, dare responsibilities with contributing to achieving a honesty and fairness, efficiently through to lead, responsive and dedication and common goal and shared in line with the law and professional knowledge resourceful in pursuit commitment towards vision in an interactive and corporate governance and skills, thereby of Johor Corporation’s Johor Corporation’s conducive environment. principles. providing excellent service Business Continuity mission and vision and quality product Mission. while being resilient to our customers and and devoted to Johor shareholders. Corporation.
A NEW LOGO I N S I D E T H I S R E P O RT FOR A NEW 1. CORPORATE STATEMENT ERA Chairman’s Statement Corporate Statement 4 6 Symbolises the gateway that will bridge us all into a future of innovation and 2. ABOUT JOHOR CORPORATION advancement Corporate Profile & Information 13 Corporate Structure 14 Board of Directors’ Profile 16 34 3. FINANCIAL REVIEW PROSPECTS KULIM Statements of Comprehensive Income 20 Statements of Financial Position 22 BUSINESS Statements of Cash Flows 24 Statement of Changes In Equity 27 Financial Performance Summary JCorp & Group (2015-2019) 30 4 4. PROSPECTS The new Johor Corporation (JCorp) brand identity reflects the ambition, CORPORATE STATEMENT Economic Review 32 aspiration and direction of the Group. The new logo is a representation of CHAIRMAN’S STATEMENT Kulim Business 34 Specialist Healthcare Division 42 JCorp’s forward trajectory, as well as its desired image moving forward – dynamic, modern and forward thinking. The main distinguishing feature 42 Food and Restaurant Services Business Property Division 48 58 in the modern logotype is its clean sharp and minimalist representation of Industrial Development Division 70 PROSPECTS Business Development Division 78 the ‘JCorp’ identity. SPECIALIST Corporate Responsibility Division 80 HEALTHCARE Group Human Capital Management The red ‘O’ symmetrically balances the overall logo which as a whole DIVISION Division 88 Group IT Advancement Division 92 symbolises the gateway that will bridge us all into a future of innovation and advancement. 5. CORPORATE GOVERNANCE STATEMENT Corporate Governance Statement 94 The typefaces used are clean and bold, connoting strength and resilience, Risk Management and Internal Control 99 all reminiscent of an image of a world class corporation. Designed in the Board Governance & Business colours of Johor Darul Ta’zim, our new logo also pays homage to our roots Ecosystem Committee Report 102 as we continue to carry the colours of our heritage on the path forward. 6 58 Please scan the QR Code to link to website for more CORPORATE STATEMENT PROSPECTS DYNAMIC, MODERN AND CLEAN AND BOLD, CONNOTING information on how JCorp FORWARD THINKING STRENGTH AND RESILIENCE CORPORATE STATEMENT PROPERTY DIVISION contributed to the state.
P4 P5 SECTION 1 SECTION 1 Corporate Statement Corporate Statement Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 CHAIRMAN’S CHAIRMAN’S STATEMENT STATEMENT JCORP’S TRANSFORMATION TO ENABLE PROSPEROUS JOHOR AGENDA SINCE BEING GIVEN THE TRUST TO LEAD THE JOHOR STATE GOVERNMENT, I HAVE BROUGHT THE PROSPEROUS JOHOR AGENDA TO THE FOREFRONT, WHICH WILL FOCUS ON DEVELOPMENT IN AN EQUITABLE AND HOLISTIC MANNER FOR THE WELL-BEING AND PROPSPERITY OF OUR CITIZENS. In our efforts to fully realise developments that benefit the people, an experienced strategic institution such as Johor Corporation (JCorp) is definitely needed to implement these aspirations. I am confident that JCorp will be able to accomplish the Prosperous Johor agenda through the execution of the Johor Sustainable Development Plan. The synergy between JCorp, State Government and related agencies involved in the development of Johor must also continue to be galvanised. This role not only needs to be continued, JCorp’s efforts to improve its market share President and Chief Executive, as well but needs to be multiplied through in its four core businesses – agriculture, as JCorp’s Board of Directors who Johor requires a strategic plan to act intelligently, swiftly expansion of business activities as well as specialist healthcare, property as well have led the new leadership within this and in an organised way to face the post-COVID-19 era. the implementation of other important as food and restaurant services will also conglomerate. development projects for the people. generate more revenue going forward. We need to unify our expertise, energy, focus and I am confident that JCorp’s transformation other resources to fulfil this mission and achieve the I have given and will always give my I have also witnessed JCorp’s many efforts will be emulated by other state state’s vision. full support and cooperation towards achievements in the agriculture sector, development and investment agencies. JCorp’s transformation that began in namely for the MD2 pineapple, Melita, From the perspective of development, investment 2020. This transformation will be able to which has succeeded in penetrating the This initiative must also go hand-in-hand and economic progress, the people should not be bring JCorp to a higher level at both the markets of multiple countries. In addition, with new futuristic ideas, innovation, looking at topline numbers only, but also take part domestic and regional stage. downstream products such as tarts, improvements in governance, moral in these activities to benefit from the spill-over effects jam, juice and fresh-cut fruits have also values, integrity and professionalism so of economic prosperity. The idea to spread JCorp’s wings by been well-received in the market. that the Johor Prosperous agenda can be riding the Industrial Revolution 4.0 to quickly achieved. Through 34 industrial zones developed across the enter business and industry also cannot The government will also leverage on state, JCorp has succeeded in providing 220,000 job be delayed further. JCorp’s expertise to help farmers and May Allah SWT ease our tasks and bless opportunities. This is one of JCorp’s major contributions in growers succeed in its mission to plant our devoted efforts. realising the Johor State Government’s agenda. The Internet as a platform for Del Monte pineapples which has the technological business and the digital potential to produce excellent returns. economy must be fully exploited in order to create entrepreneurs for the new I also like to take this opportunity to Johor Corporation DATUK HAJI HASNI BIN MOHAMMAD economy. heartily congratulate Yang Berbahagia 30 June 2020 Menteri Besar Johor Datuk Syed Mohamed Syed Ibrahim, Johor Corporation Chairman
P6 P7 SECTION 1 SECTION 1 Corporate Statement Corporate Statement Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 CORPORATE CORPORATE STATEMENT STATEMENT DRAMATIC JCORP IS NOW FOCUSING AND PREPARING THE TRANSFORMATION TO ORGANISATION TO STEP INTO THE NEW DECADE WHILE REMAIN SUSTAINABLE BRINGING JCORP TO A MUCH HIGHER LEVEL. A HOST OF DEVELOPMENTS IN OUR BUSINESS AND CORPORATE of its stakeholders. Currently, the global In line with this development, the Group ACHIVEMENTS HAS COLOURED THE economy has been seriously impacted is being strengthened with various FINANCIAL YEAR 2019 FOR JOHOR CORPORATION. by the COVID-19 outbreak, since systems and high-tech applications that PERFORMANCE 2019 CONCURRENTLY, THIS ECONOMIC January 2020 and it is now a global are able to improve the efficiency of data REVENUE INSTITUTION AND CHANGE AGENT health emergency that has disrupted the management and services in addition to accelerating operational efficiency FOR THE STATE HAS FACED FIERCE CHALLENGES AND TAKEN DELIBERATE MAIN BUSINESSES economy and global communities. to provide a positive experience to our RM6,007 million STEPS TO ENSURE THE GROUP’S EXPLORING THE FIFTH CORE customers – a vital element to succeed in PROFIT BEFORE TAX BUSINESS business now and in the future. BUSINESS CONTINUES TO BE RELEVANT AND RM384 million JCorp is now focusing and preparing At the same time, JCorp continues to COMPETITIVE AS WELL PROFIT AFTER TAX the organisation to step into the new strengthen its four core businesses AS CAPABLE IN THE MARKET. IN ADDITION, Kulim decade while bringing JCorp to a much higher level. The technology and digital of plantations, property, health and food through Kulim (Malaysia) Berhad RM295 million THE UNCERTAIN PG. 34 business is now being explored and built (Kulim), Johor Land Berhad (JLand), GLOBAL POLITICAL AND up to become JCorp’s fifth core business KPJ Healthcare Berhad (KPJ Healthcare) ECONOMIC CLIMATE to generate additional revenue. This and QSR Brands (M) Holdings Bhd HAS IMPACTED BOTH transformation is aligned with global (QSR Brands) to remain dominant and GLOBAL AND DOMESTIC trends that is essentially a computer in relevant in the marketplace. ACTIVITIES. constant communication as part of a sophisticated and perplexing system. At the domestic level, Specialist Look at the developments occurring with Johor Corporation (JCorp) Healthcare the Industrial Revolution 4.0 (IR4.0) that is was also affected. The main PG. 42 seeing automation, drones and robotics factors were the effects of taking over the roles of humans. Digital the trade war between US applications and wireless technology for and China, in addition to the fifth-generation cellular network (5G) falling commodity prices in powers the way life is conducted around the world market, especially the world now. crude oil and crude palm oil. This situation required JCorp Property This fifth core business calls on JCorp to drastically change its business PG. 58 to venture into the areas where we have and operations, including expertise. This involves products that going into new portfolios to are based on innovation and intellectual generate new income in the property, such as industrial and operations future. This action is required management, corporate responsibility to enable JCorp to continue management, the establishment of waqaf its business and maintain its and the commercialisation of certain position in the market, while Food & Restaurant business and services modules. upholding the confidence Services PG. 48
P8 P9 SECTION 1 SECTION 1 Corporate Statement Corporate Statement Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 CORPORATE CORPORATE STATEMENT STATEMENT TRANSFORMATION & million, whereas net assets improved ORGANISATIONAL STRUCTURE to RM1.45 billion compared to RM1.40 billion in the same period. Damansara JCorp continues to place a high priority Assets Sdn Bhd recorded income of on identifying risks in the market as well as RM158.6 million compared to RM133.7 its impact on business and stakeholders, million. eventhough returns may be attractive and profitable. In this context, JCorp will QSR Brands which drives the food enter 2020 more cautiously, strategically business via KFC and Pizza Hut and with unwavering wisdom. Reviews, demonstrated excellent performance. corrections and audits are carried KFC Malaysia recorded revenue of out to identify weaknesses, strengths, RM2.8 billion, growing by 2.2% on potential or shortcomings in corporate the RM2.74 billion recorded last year. governance, finances, procurement Pizza Hut, meanwhile, achieved as well as operations, through their outstanding revenue growth for the 3rd respective control measures. consecutive year with RM596 million, a 6.6% increase compared to 2018. With these changes and new The success of both these brands was requirements, JCorp will not neglect the the result of dedicated commitment skills of its employees in order to carry to strategy, branding, exciting product out this transformation that is intended innovation and digital transformation for to elevate JCorp’s honour and status to a customer convenience. podium of excellence as Johor’s strategic institution. ISLAMIC BUSINESS from our role, vision and mission that is and food (QSR Brands) remains solid and In accordance with Islamic teachings, clearly outlined in the Johor Corporation relevant as markets all over were plagued At the same time, the potential of Waqaf JCorp emphasises the philosophy that Enactment No. 4, 1968 (Amendment No. by a variety of sentiments throughout An-Nur Corporation Berhad (WANCorp) duty and responsibility must be carried 5, 1995). 2019. continues to be honed. The space and out skilfully and with excellence. Thus, opportunities for WANCorp to leverage JCorp’s core values and corporate Examples of the drastic steps taken Kulim remained resilient even though its potential, role and achievements have culture have been streamlined to included reviewing and reorganising it was impacted by the decline in crude been identified. WANCorp will also be strengthen the personalities of every the organisational structure and palm oil and palm kernel prices in directed to explore other new areas employee who will need to be at their business plan to obtain optimal results, the international commodity market including the Islamic Business that will be best for an organisation like JCorp. in addition to the implementation of throughout 2019. This scenario able to improve capabilities and earnings Through this, JCorp is confident that the Transformation Plan 2020-2022 that was overcome through corporate to strengthen the socioeconomic agenda the full commitment of its employees has succeeded and greatly impacted developments that strengthened its billion in 2019 compared to RM3.4 billion of the ummah. will be able to move this development JCorp and Johor especially. Focus was foundations and optimised its portfolio. the year before, mainly contributed by agency to succeed in its transformation, also given on how to mitigate economic Some of these actions included realising an increase in patient numbers. This Noting WANCorp’s achievements that will bring JCorp to a higher level, weakness because of the effects of investments, exploring new business achievement was a result of an ongoing throughout 2019, we are confident it to be sustainable and relevant while the health emergency post-COVID-19, sectors and strengthening the marketing strategy to increase the capacity of all is able to progress further. Besides its contributing to the people’s well-being. as well as the new global landscape that of agribusiness products. hospitals in its network. main responsibility as JCorp’s corporate has been redrawn. social responsibility arm, the scope of To realise and achieve this transformation JCorp’s property development and WANCorp’s activities and programmes goal, drastic actions through the CORE BUSINESS PERFORMANCE Meanwhile, KPJ Healthcare succeeded investment arm, JLand, faced a tepid which include religion, charity and intelligence process – wise but firm, in increasing its revenue despite a market with Johor recording the highest society, education and entrepreneur prudent with managed risk; have been The performance of our four core challenging business environment. level of unsold properties in the first half development will be reorganised, taken by JCorp. This has been done businesses, plantations under Kulim, The network of specialist hospitals of 2019 at 18.8%. However, this did not strengthened and expanded. without compromising or absconding property (JLand), health (KPH Healthcare) recorded revenue growth of 7% or RM3.6 prevent JLand from raking in revenue of RM400 million compared to RM374
P 10 P 11 SECTION 1 SECTION 1 Corporate Statement Corporate Statement Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 CORPORATE CORPORATE STATEMENT STATEMENT appreciation and thanks to all, especially the Johor State Government and the JCORP IS READY TO OVERCOME EXTERNAL Federal Government, together with their departments and agencies as well as UNCERTAINTIES THAT HAVE BEEN AGGRAVATED BY THE other stakeholders including bank and financial advisors on the commitment ABNORMALITIES SET OFF BY THE DISRUPTION EDGE. given. We also pay tribute and offer our thanks to FACING CHALLENGES Iskandar, Bandar Dato’ Onn, Johor Bahru. 01 DYMM Sultan Johor inspecting the our customers, strategic partners, media automated MD2 pineapple harvesting 02 DYMM Permaisuri Johor and our biggest stakeholders which JCorp is ready to overcome external The Sultan of Johor also graced Kulim process at the Kulim Pineapple Farm. visiting patiens at the Tunku Laksamana Johor include our individual and institutional uncertainties that have been aggravated Pineapple Farm Sdn Bhd, Ulu Tiram Hermatology Ward, Hospital shareholders of the Group’s companies by the abnormalities set off by the which was the final stopover location for Sultanah Aminah, Johor. - KPJ Healthcare, E.A. Technique Berhad, disruption edge. The effect of 5G the Program Kembara Mahkota Johor Al-Salam REIT and Al-‘Aqar Healthcare technology and technological shock 2019 convoy on 22 July 2019. The Sultan REIT; who have given or stated their resulting from the game changers of of Johor also officiated the launch of commitment to all our corporate plans, artificial intelligence, robotics and drones Menara JLand at KOMTAR JBCC, on investments and business transactions has exceeded the logical boundaries 27 November 2019. received its MS ISO throughout 2019. of mankind. These developments will 37001: 2016 Anti constantly be monitored and analysed On 17 April 2019, The Queen of Johor Bribery Management This note would only be complete with considering how these technologies officiated the launch of The Caring Systems (ABMS) our highest thanks and appreciation to could dominate the world’s intelligence Home By Pizza Hut at Hospital Sultanah certification. Kulim the entire JCorp Board Members for all through robots that are taking over Aminah, Johor Bahru. Prior to the event, was awarded Best their invaluable input and contributions, human roles one by one. Like other His Royal Highness Tunku Mahkota of Annual Report be it in the form of guidance, wisdom or entities, JCorp is faced with reputational, Johor officiated the handover of offer Of Non-Listed experience that they have accorded to brand and image risk, as well as slander letters for Rumah Impian Bangsa Johor at Organisations while ensure that JCorp remains relevant. and misinformation on social media Terminal Larkin Sentral on 3 March 2019. Kulim’s Laboratory that is difficult to control. Therefore, this Unit received the It is clear and proven that the contributions issue will be managed with speed and Meanwhile, JCorp and all its employees IKM Laboratory from all quarters have enabled JCorp intelligence. would like to extend our heartfelt Excellence Award; to accelerate its operations on a strong congratulations to YAB Datuk Hasni JCorp also acknowledges YB Dato’ KPJ Pasir Gudang Specialist Hospital platform that has the capability to CORPORATE EVENTS Mohammad on his appointment as Ishak Sahari; YBhg Datuk Seri Dr Ismail received the International Hospital overcome challenges in a new phase of Johor’s 18th Menteri Besar and JCorp’s Haji Bakar; YBhg Datuk Siti Zauyah Md Federation Award 2019; and JLand our corporate journey to a higher level at There were numerous highlights and new Chairman. This mandate was last Desa; YBhg Dato’ Azman Mahmud; YBhg celebrated its recognition at the Malaysia the national and even regional stage. corporate events colouring JCorp’s year held by YB Dato’ Dr Sahruddin Haji Jamal Datuk Dr Hafsah Hashim; YB Datuk Dr Property Awards 2019 for the categories in 2019. Through this avenue, JCorp and JCorp would like to record our Shahruddin Md Salleh; and YBhg Datuk of International Real Estate Federation would like to take this opportunity to deepest thanks and appreciation for his Ibrahim Ahmad for their guidance, and Master Plan. express our utmost gratitude to His contributions. support, wisdom and expertise while on Majesty The Sultan of Johor and Her JCorp’s Board of Directors. HEARTFELT TRIBUTE Majesty The Queen of Johor for gracing JCorp and all its employees would a number of ceremonies organised by also like to wish a warm welcome to I would also like to take this opportunity AWARDS & RECOGNITION Strong cooperation and staunch support JCorp throughout the year. YB Tuan Amir Nasruddin; YBhg Dato’ Asri to acknowledge and offer our sincere of all our stakeholders has enabled Hamidon; YBhg Dato’ Saiful Anuar Lebai thanks and gratitude to YB Dato’ Our corporate achievements are also JCorp to fulfil its role and carry out its On 28 May 2019, His Majesty The Sultan Hussen; YBhg Datuk Nor Azri Zulfakar; Kamaruzzaman Abu Kassim, who led this measured through recognition and mandate while moving closer to its of Johor, Her Majesty The Queen of Johor and YBhg Dato’ Sr Hisham Jafrey on institution from October 2010 until his awards from independent organisations goals. Thus, in representing JCorp and and His Royal Highness Tunku Mahkota their appointments as new Directors on retirement in December 2019. and standard bearers. In 2019, JCorp the Group, I wish to extend my deepest of Johor officiated Johor Corporation JCorp’s Board of Directors. 2019 breaking fast event at Masjid Sultan
P 12 P 13 SECTION 1 SECTION 2 Corporate Statement About Johor Corporation Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 CORPORATE STATEMENT CORPORATE PROFILE & INFORMATION Johor Corporation was established as a public enterprise and a statutory body via Johor Corporation Enactment No. 4 , 1968 (Amendment No. 5 , 1995). As a State-owned Conglomerate, Johor Corporation through its Group of Registered Office Companies are involved in core businesses encompassing: JOHOR CORPORATION Level 11, Menara KOMTAR • Plantations – Kulim (Malaysia) Berhad. Johor Bahru City Centre • Specialist Healthcare – KPJ Healthcare Berhad. 80000 Johor Bahru, Johor, Malaysia. • Property - TPM Technopark Sdn Bhd, TLP Terminal Sdn Bhd, Johor Land Berhad, Telephone : +607-219 2692 Damansara Assets Sdn Bhd, Al-‘Aqar Healthcare REIT and Al-Salām REIT. Fax : +607-223 3175 • Food & Restaurant Services – QSR Brands (M) Holdings Bhd. Email : firstname.lastname@example.org Johor Corporation is a domestic market leader in a number of core businesses and has expanded its operations overseas. Branch Office The Plantations Business owns operations and interests in: JOHOR CORPORATION • Malaysia: 50,851 hectares. CAWANGAN KUALA LUMPUR • Indonesia: 14,511 hectares.* Level 11, Menara JCorp (*Area granted under Right of Exploitation (HGU)). No 249 Jalan Tun Razak 50400 Kuala Lumpur, Malaysia. Telephone : +603-2787 2692 Fax : +603-2787 2700 Specialist Healthcare business spearheaded by KPJ Healthcare Berhad, has expanded to: • Jakarta, Indonesia. ACKNOWLEDGEMENTS • Brisbane, Australia. Auditor Ernst & Young • Bangkok, Thailand. Thanks, congratulations and a deep Level 23A, Menara Milenium, • Dhaka, Bangladesh. appreciation must go out to our 62,000 Jalan Damanlela employees of the JCorp Group that are Pusat Bandar Damansara, totally committed, dedicated, capable Kuala Lumpur, 50490, Malaysia. and hardworking to fulfil the mandate Food & Restaurant Services have spread from Malaysia to: that has been given. They have served while holding firm to our core values, • Singapore (KFC & Pizza Hut). corporate culture values, integrity and Principal Banker • Brunei (KFC). MAYBANK • Cambodia (KFC). compliance to corporate governance Lot M1-22, 106-108 City Square procedures. Our ongoing transformation Jalan Wong Ah Fook can only succeed with the support of 80000 Johor Bahru, Johor, Malaysia. each and every employee as they are the Four listed companies on Bursa Malaysia: source of JCorp’s strength that will push us through new economic challenges to achieve our vision and mission – • KPJ Healthcare Berhad. • E.A. Technique (M) Berhad. Membina dan Membela • Al-‘Aqar Healthcare REIT. • Al-Salām REIT. Johor Corporation 30 June 2020
P 14 P 15 SECTION 2 SECTION 2 About Johor Corporation About Johor Corporation Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 CORPORATE CORPORATE STRUCTURE STRUCTURE 51% Kumpulan 100% 36.14% 96.07% Lablink (M) Perubatan (Johor) Sdn Bhd Sdn Bhd 100% 100% 80% 38.61% 100% 65% Point Zone (M) 100% Mahamurni EPA Management Kulim Energy Sdn Bhd Plantations Sdn Bhd Sdn Bhd 2.56% Sdn Bhd 75% 75% Business 50.60% 100% Massive Equity 56% 100% Chronicles Sdn Bhd Sdn Bhd 100% 77.62% SPMB Holdings 100% 100% Sdn Bhd 48.02% 4.21% 100% 100% N2W 100% 11.82% Bukit Damansara Corporation Development Sdn Bhd Sdn Bhd 100% 88.18% 100% 100% 100% 100% Ibrahim Bandar Baru 60% International Johor City Majidee Business District Development Development (Johor) Sdn Bhd Sdn Bhd Sdn Bhd 75% 100% 100% Plantation Specialist Food & Property Intrapreneur Shipping Port/Logistic Industry Intrapreneur Investment WANCorp/ Significant Management Real Estate Healthcare Restaurant Development Holding OBA Direct Holding Investment Trust Services (REIT)
P 16 P 17 SECTION 2 SECTION 2 About Johor Corporation About Johor Corporation Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 BOARD of DIR ECTORS’ Profile DATUK HAJI HASNI BIN DATO’ HAJI TAN SRI DR ALI AZMI BIN MOHAMMAD BIN HAMSA DATO’ HAJI A. RAHIM Chief Minister of Johor Deputy Chairman ROHANI Chairman Johor Corporation Johor Corporation State Secretary of Johor BIN HAJI NIN Appointed Director of Johor State Financial Officer of Johor He was appointed as Chairman of Johor He was appointed the Director of Corporation effective 1 January Appointed Director of Johor Corporation representing the Corporation Board of Directors effective Johor Corporation effective 2017. He holds a Bachelor State Government effective 20 October 2017. He holds 28 February 2020. He holds a Bachelor 1 November 2009. Beginning of Science (Human Resource a Bachelor of Arts (Hons) in Economics from Universiti of Science in Civil Engineering from 15 June 2020, he was appointed Development) from Universiti Kebangsaan Malaysia. He is currently the State Financial the University of Missouri, Rolla, United the Deputy Chairman as well as Teknologi Malaysia obtained Officer of Johor. Independent Director of Johor States of America. He is now the Chief in 2004 and a Bachelor of Corporation. He holds a Philosophy Minister of Johor. Development (Economic and Doctorate (PhD) from Oklahoma State Management) from Universiti University in 1997, MS (Economics) Kebangsaan Malaysia obtained from Oklahoma State University in in 1990. He is currently the State 1986, B.A (Hons) from University of Secretary of Johor. Malaya in 1979 and Diploma in Public Management from INTAN in 1980. DATUK SYED MOHAMED BIN SYED IBRAHIM TUAN President & Chief Executive AMIR BIN Johor Corporation He was appointed President & Chief NASRUDDIN State Legal Advisor of Johor Executive and Director of Johor Corporation effective 9 Januari 2020. He was appointed Director of He holds a Degree in Economic Johor Corporation effective Analysis from Universiti Malaya and continued with the Senior Management 1 January 2020. He obtained Development in Public Enterprise a Diploma in Law and an programme in Harvard University. Advanced Diploma in Law (LLB He is also Chairman and Board Director Honours) from Institut Teknologi of Prasarana Integrated Development Sdn Bhd, Board Director of Yayasan MARA in 1994. He is currently Sultan Ibrahim Johor, Yayasan Kanser the State Legal Advisor of Johor. Tunku Laksamana Johor and Iskandar Seafront Assets Sdn Bhd. Prior to this, he was the Chairman of FELDA Investment Corporation; President & Executive Chairman of Iskandar Waterfront Holdings Sdn Bhd. He is also a Board Director for Yayasan Sultan Ibrahim Johor and Yayasan Kanser Tunku Laksamana Johor.
P 18 P 19 SECTION 2 SECTION 2 About Johor Corporation About Johor Corporation Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 BOARD OF DIRECTORS’ BOARD OF DIRECTORS’ PROFILE PROFILE DATO’ SAIFUL DATO’ SR. ANUAR HISHAM BIN DATO’ ASRI BIN BIN LEBAI JAFREY HAMIDON HUSSEN Managing Director, ARH Jurukur Bahan Sdn Bhd Treasury Secretary-General Ministry of Finance Secretary General, Ministry of Appointed Director of Johor NURALIZA BINTI Economic Affairs Board of Directors Johor Corporation Appointed Director of Johor Corporation effective 1 May 2020. He holds a degree in ABDUL RAHMAN He was appointed the Director of Johor Quantity Surveying from the Assistant Secretary Corporation effective 1 October Corporation effective 15 Jun 2020. He has Leeds Metropolitan University, She was appointed as Johor Corporation Assistant 2019. He holds a Bachelor of a Bachelor’s Degree in Economics from United Kingdom. He is a Fellow of Secretary on 1 March 2020. She has a Professional Economics (Development) from the Hiroshima University, Japan. Prior to the Royal Institution of Surveyor Degree from the Institute of Chartered Secretaries Universiti Kebangsaan Malaysia. this, he was the Treasury Deputy Secretary- Malaysia and a Member of the and Administrators (ICSA)(UK). She began serving Prior to this, he held the position General (Policy). He is now the Treasury Royal Institute of Chartered in Johor Corporation from 1 October 1997. of Deputy Secretary-General Secretary-General. Surveyors, United Kingdom. She currently holds the position of Company (Management) at the Ministry of Health. He is currently the Director- In addition, he is also on the Secretary Department Head, Johor Corporation. General, Economic Planning Unit, Industry Member Advisory Panel of Prime Minister’s Department. SEGi University. DATUK NOR AZRI BIN MOHD ZULFAKAR NORDIN Director-General, Implementation and JAMALUDIN Coordination Unit, Secretary Johor Corporation Prime Minister’s Office He was appointed Secretary Appointed Director of Johor of Johor Corporation effective Corporation effective 8 March 2 February 2020. He holds 2020. He holds a Degree a Bachelor of Law from the in Business Administration University of West London, (Financial Management) from United Kingdom. He began the Massachusetts Institute of serving with Johor Corporation Technology (MIT), Cambridge on 2 February 2020. He currently Massachusetts, United States of holds the position of Head America. Prior to this, he was a of Corporate Services, Board Director for the Penang Johor Corporation. Regional Development Authority (PERDA).
P 20 P 21 SECTION 3 SECTION 3 Financial Review Financial Review Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 Group Corporation Group Corporation 2019 2018 2019 2018 2019 2018 2019 2018 Note Restated Restated Restated Restated Continuing operations Other comprehensive income, to be reclassified to Revenue 4 6,007 5,657 566 460 profit or loss in subsequent periods: Cost of sales (4,217) (3,967) (155) (194) Foreign currency translation of foreign operations 5 46 - - Gross profit 1,790 1,690 411 266 Other comprehensive income/(loss), not to be reclassified to profit or loss in subsequent periods: Other items of income Fair value adjustment for financial assets at Other income 5 381 376 112 370 FVOCI (4) (199) - - Fair value adjustment for financial assets at Other items of expense FVOCI in relation to disposal of subsidiary 99 - - - Distribution expenses (43) (54) (1) (1) Net surplus from revaluation of property, plant and equipment 42 89 - - Administrative expenses (1,220) (1,144) (155) (136) Surplus on transfer of property, plant and Other expenses 6 (178) (147) (68) (194) equipment to investment property 5 - - - Finance costs 7 (470) (451) (137) (152) Disposal of property, plant and equipment (6) - - - Share of results of associates, net of tax 27 27 - - Other comprehensive income/(loss), for the financial Share of results of joint ventures, net of tax 97 91 - - year, net of tax 141 (64) - - Profit before tax from continuing operations 8 384 388 162 153 Total comprehensive income for the financial year 429 148 164 159 Tax 11 (89) (172) 2 6 Profit attributable to: Profit from continuing operations, net of tax 295 216 164 159 Owner of the Corporation 101 62 164 159 Non-controlling interests 187 150 - - Discontinued operations Loss from discontinued operations, net of tax 12 (7) (4) - - 288 212 164 159 Profit net of tax 288 212 164 159 Total comprehensive income attributable to: Owner of the Corporation 217 (99) 164 159 Non-controlling interests 212 247 - - 429 148 164 159
P 22 P 23 SECTION 3 SECTION 3 Financial Review Financial Review Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 STATEMENTS OF FINANCIAL POSITION STATEMENTS OF FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 FINANCIAL POSITION FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 Group Corporation Group Corporation 31.12.2019 31.12.2018 01.01.2018 31.12.2019 31.12.2018 01.01.2018 31.12.2019 31.12.2018 01.01.2018 31.12.2019 31.12.2018 01.01.2018 Note Restated Restated Restated Restated Note Restated Restated Restated Restated ASSETS EQUITY AND LIABILITIES Non-current assets Current liabilities Property, plant and equipment 13 8,928 10,601 10,569 352 597 529 Current tax liabilities 35 34 63 - - - Right-of-use assets 14 2,079 - - 253 - - Lease liabilities 30 47 - - 6 - - Inventories 15 493 737 759 34 261 365 Loans and borrowings 31 2,123 2,635 2,307 3 807 11 Investment properties 16 4,704 4,265 3,549 1,982 1,875 1,499 Trade and other payables 32 2,119 1,788 2,022 1,164 391 1,058 Biological assets 17 - 2 1 - - - Contract liabilities 26 95 78 20 12 - - Intangible assets 18 251 252 250 - - - Derivative financial instrument 27 3 2 2 - - - Investment in subsidiaries 19 - - - 3,378 3,151 3,327 4,422 4,537 4,414 1,185 1,198 1,069 Investment in associates 20 300 282 268 4 4 4 Liabilities directly associated with disposal Investment in joint ventures 21 1,760 1,701 1,583 - - - group classified as held for sale 29 - 180 203 - - - Deferred tax assets 22 210 171 170 148 118 82 4,422 4,717 4,617 1,185 1,198 1,069 Financial assets at Fair Value through Net current assets/(liabilities) 64 (57) (236) 234 221 188 Other Comprehensive Income Non-current liabilities ("FVOCI") 23(a) 28 20 215 - - - Trade and other payables 32 442 439 271 1,067 1,100 378 Financial assets at Fair Value through Other long term liabilities 33 1,227 1,235 1,056 958 934 783 Profit or Loss (“FVTPL”) 23(b) 2 - - - - - Deferred tax liabilities 22 789 808 772 266 241 211 Trade and other receivables 25 40 23 65 - - - Loans and borrowings 31 7,272 6,642 6,387 1,789 1,808 2,609 18,795 18,054 17,429 6,151 6,006 5,806 Lease liabilities 30 81 - - 16 - - Current assets 9,811 9,124 8,486 4,096 4,083 3,981 Inventories 15 1,592 1,314 1,346 900 665 707 Total liabilities 14,233 13,841 13,103 5,281 5,281 5,050 Biological assets 17 29 21 31 - - - Net assets 9,048 8,873 8,707 2,289 2,144 2,013 Contract costs 24 7 2 4 - - - Equity Trade and other receivables 25 1,017 1,078 1,194 159 290 143 Capital reserves 34(a) 391 392 392 55 55 55 Contract assets 26 134 129 61 39 76 - Asset revaluation reserve 34(b) 159 149 123 - - - Financial assets at Fair Value through Profit or Loss ("FVTPL") 23(b) 5 4 5 21 20 56 Currency fluctuation reserve 34(c) 9 (66) (43) - - - Tax recoverable 118 83 68 1 4 4 FVOCI reserve 34(d) (99) (95) 69 - - - Cash and bank balances 28 1,136 1,239 877 116 119 30 Revenue reserve 34(e) 6,058 6,066 5,913 2,234 2,089 1,958 4,038 3,870 3,586 1,236 1,174 940 6,518 6,446 6,454 2,289 2,144 2,013 Assets of disposal group classified as held Non-controlling interests 2,530 2,427 2,253 - - - for sale 29 448 790 795 183 245 317 Total equity 9,048 8,873 8,707 2,289 2,144 2,013 4,486 4,660 4,381 1,419 1,419 1,257 Total equity and liabilities 23,281 22,714 21,810 7,570 7,425 7,063 Total assets 23,281 22,714 21,810 7,570 7,425 7,063
P 24 P 25 SECTION 3 SECTION 3 Financial Review Financial Review Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 STATEMENTS OF CASH FLOWS STATEMENTS OF FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 Group Corporation 2019 2018 2019 2018 Restated Restated Group Corporation 2019 2018 2019 2018 Changes in working capital Restated Restated Inventories (39) (158) (11) (156) OPERATING ACTIVITIES Receivables 54 505 (48) 213 Profit before tax: Contract assets (5) (68) - - Continuing operations 384 388 162 153 Payables 239 (226) 984 234 Discontinued operations (8) (5) - - Contract liabilities 15 58 - - Adjustments: Associates and joint ventures 42 (5) - - Property, plant and equipment: Cash generated/(used in) from operations 1,371 1,064 917 219 Net gain on disposal (10) (31) - - Tax refunded 45 8 3 - Written off 4 1 - - Tax paid (205) (223) (3) - Depreciation 391 426 6 23 Impairment loss 10 29 2 - Net cash generated from operating activities 1,211 849 917 219 Right-of-use assets Depreciation 70 - 22 - INVESTING ACTIVITIES Investment properties: Proceeds from disposal of investment in: Changes in fair value (165) (65) (74) (183) Subsidiaries - - - 52 Net loss/(gain) on disposal - 1 - 5 Financial assets at fair value through profit or loss - 5 - - Biological assets: Acquisition of additional interest in subsidiaries - (2) (17) (60) Changes in fair value (2) 7 - - Dividend received from subsidiaries 2 5 280 212 Gain on disposal of: Dividend received from associates 11 13 - - Subsidiaries (1) - - (43) Adjustment on initial recognition of MFRS 16 - - 1 - Associates (2) - - - Interest received 32 45 11 8 Asset held for sales - (71) - - Financial assets through profit or loss: Property, plant and equipment: Changes in fair value (1) 1 (1) 44 Proceeds from disposal 24 190 - 5 Allowance for impairment : Purchase (606) (617) (37) (3) Joint venture 43 - - - Right of use asset: Subsidiaries - - - 48 Purchase (15) - - - Intangible assets: Investment properties: Written off - 1 - - Purchase (195) (428) (11) (10) Amortisation and impairment 12 5 - - Biological assets: Dividend income (2) (5) (280) (212) Proceeds from disposal 3 6 - - Unrealised foreign currency exchange loss/(gain) (3) 10 - - Purchase (7) (4) - - Amortisation: Intangible assets: Government grant (14) (16) (7) (7) Proceeds from disposal - 3 - - Land lease rental (15) (14) (11) (11) Purchase (15) (11) - - Allowance for impairment of trade and other receivables 70 12 56 9 Purchase of: Reversal of impairment for trade and other receivables (10) (4) (9) (42) Financial assets at fair value through other comprehensive income (41) - - - Interest expense 470 451 137 152 Financial assets at fair value through profit or loss (1) (5) - (42) Interest income (32) (45) (11) (8) Share of results of associates and joint ventures (124) (118) - - Investment in joint venture (47) (27) - - Operating profit/(loss) before changes in working capital 1,065 958 (8) (72) Increase in deposits with licensed bank with maturity of more than 3 months (77) (93) - -
P 26 P 27 SECTION 3 SECTION 3 Financial Review Financial Review Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 STATEMENT OF CHANGES IN EQUITY Group Corporation FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 2019 2018 2019 2018 Restated Restated (187) (1) (6) (4) (119) (119) (18) (253) Total equity 9,060 8,873 8,872 288 42 5 99 5 141 429 2 1 9,048 INVESTING ACTIVITIES (CONTINUED) Government grant received 21 15 14 10 Net cash inflow on disposal group classified as held for sale - 181 - 91 (4) (6) (119) (1) (109) Non- controlling interests 2,427 - 2,427 - 2,427 187 35 - - - 25 212 8 3 - 2,530 Net cash flows (used in)/generated from investing activities (911) (724) 241 263 FINANCING ACTIVITIES Drawdown of term loans and other long term borrowings 2,846 1,544 - - (187) (1) (2) (4) (118) (6) (2) (18) (144) Total 6,633 6,446 6,445 101 7 5 99 11 116 217 - 6,518 Repayment of term loans and other long term borrowings (2,799) (955) (809) (5) Repayment of the lease liabilities (24) - (8) - Repayment to subsidiaries - - (199) (224) Advances from non-controlling interest of subsidiaries, (187) (1) (181) (6) (2) (18) (207) Revenue reserve 6,253 6,066 6,065 101 - - - - 99 - 99 200 - 6,058 net of repayments - (5) - - Proceed from dilution of interest in subsidiary - 120 - - Disposal of subsidiary 3 - - - (95) (95) (95) (4) (4) (4) (99) FVOCI reserve - - - - - - - - - - - - - - Interest paid (470) (451) (77) (112) Interest paid to subsidiaries - - (60) (40) Dividend paid to non-controlling interests (119) (104) - - (66) (66) (66) Currency fluctuation reserve - - - - - - - - 11 11 11 - 64 - - - 64 9 Distribution of fund to State Government (8) (12) (8) (12) Designated account (34) (17) - - Net cash used in financing activities (605) 120 (1,161) (393) (2) Net change in cash and cash equivalents (305) 245 (3) 89 Asset revaluation reserve 149 - 149 - 149 - 7 5 - - - 10 10 - - - - - - 159 Cash and cash equivalents at 1 January 866 607 119 30 Effect of exchange rate changes on cash and cash equivalents 7 14 - - Cash and cash equivalents at 31 December 568 866 116 119 (1) (1) Capital reserves 392 - 392 - 392 - - - - - - - - - - - - - 391 CASH AND CASH EQUIVALENTS Cash and bank balances 761 834 100 27 Fixed deposits 375 405 16 92 Note 23(a) 43 13 16 1,136 1,239 116 119 Bank overdrafts (213) (129) - - Disposal of property, plant and equipment Fair value adjustment for financial assets in Revaluation surplus on property, plant and At 1 January 2019 (as previously reported) Dividend paid to non-controlling interests Deposit with licensed bank with maturity of more than 3 months (203) (126) - - Surplus on transfer of property, plant and Closing balance at 31 December 2019 Fair value adjustment for financial assets equipment to investment properties Adjusted balance as at 1 January 2019 Total other comprehensive loss for the Foreign currency translation of foreign Designated account (152) (118) - - Total comprehensive income for the relation to disposal of subsidiary Accretion of interest in subsidiaries Dilution of interest in subsidiaries 568 866 116 119 Distribution to State Government Other comprehensive income At 1January 2019 (restated) Transaction with owner Disposal of subsididary Prior year adjustment Effect of MFRS 16 financial year financial year Profit net of tax equipment operations at FVOCI Group 2019
P 28 P 29 SECTION 3 SECTION 3 Financial Review Financial Review Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 Asset Currency Non- Asset Capital revaluation Revenue Total 2018 Capital revaluation fluctuation FVOCI Revenue controlling Total Corporation Note reserves reserve reserve equity Group Note reserves reserve reserve reserve reserve Total interests equity At 1 January 2019 (as previously reported) 55 - 2,223 2,278 At 1 January 2018 392 123 (43) 69 6,063 6,604 2,253 8,857 Prior year adjustment 43 - - (134) (134) Prior year adjustment 43 - - - - (150) (150) - (150) At 1 January 2019 (restated) 55 - 2,089 2,144 Effect of MFRS 16 44 - - (1) (1) At 1 January 2018 (restated) 392 123 (43) 69 5,913 6,454 2,253 8,707 Adjusted balance as at 1 January 2019 55 - 2,088 2,143 Effect of MFRS 9 - - - - 4 4 - 4 Profit net of tax - - 164 164 Adjusted balance as at 1 January 2018 392 123 (43) 69 5,917 6,458 2,253 8,711 Distribution to State Government - - (18) (18) Total comprehensive income for the financial year 55 - 2,234 2,289 Profit net of tax - - - - 62 62 150 212 Closing balance at 31 December 2019 55 - 2,234 2,289 Other comprehensive income Revaluation surplus on property, Asset plant and equipment 13 - 26 - - - 26 63 89 Capital revaluation Revenue Total Note reserves reserve reserve equity Fair value adjustment for financial assets at FVOCI - - - (164) - (164) (35) (199) At 1 January 2018 (as previously reported) 55 118 1,814 1,987 Foreign currency translation of foreign Prior year adjustment 43 - - (120) (120) operations - - (23) - - (23) 69 46 Effect of MFRS - (118) 264 146 At 1 January 2018 (restated) 55 - 1,958 2,013 Total other comprehensive income for Effect of MFRS 9 - - (28) (28) the financial year - 26 (23) (164) - (161) 97 (64) Adjusted balance as at 1 January 2018 55 - 1,930 1,985 Total comprehensive income for the Profit net of tax - - 159 159 financial year - 26 (23) (164) 62 (99) 247 148 Total comprehensive income for the financial year 55 - 2,089 2,144 Transaction with owner Closing balance at 31 December 2018 55 - 2,089 2,144 Dividend paid to non-controlling interests - - - - - - (104) (104) Accretion of interest in subsidiaries - - - - 33 33 (35) (2) Dilution of interest in subsidiaries - - - - 54 54 66 120 - - - - 87 87 (73) 14 Closing balance at 31 December 2018 392 149 (66) (95) 6,066 6,446 2,427 8,873 Please scan the QR Code above to view the full pdf version of financial report online.
P 30 P 31 SECTION 3 SECTION 3 Financial Review Financial Review Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 FINANCIAL PERFORMANCE SUMMARY FINANCIAL PERFORMANCE JCORP & GROUP (2015-2019) SUMMARY JCORP & GROUP (2015-2019) LEGEND LEGEND JCorp GROUP JCorp GROUP REVENUE TOTAL ASSETS 566 6,007 6,643 23,281 2019 2019 460 5,657 7,244 22,714 2018 2018 245 5,564 7,063 21,810 2017 2017 288 5,355 7,425 21,080 2016 2016 574 5,306 7,570 20,606 2015 2015 PROFIT BEFORE TAX TOTAL LIABILITIES 162 384 5,281 14,233 2019 2019 153 388 5,281 13,841 2018 2018 93 583 5,050 13,103 2017 2017 112 541 5,275 13,293 2016 2016 262 499 4,773 11,406 2015 2015 PROFIT AFTER TAX TOTAL EQUITY 164 295 2,289 9,048 2019 2019 159 216 2,144 8,873 2018 2018 94 471 2,013 8,707 2017 2017 120 415 1,969 7,787 2016 2016 206 381 1,870 9,200 2015 2015
P 32 P 33 SECTION 4 SECTION 4 Prospects Prospects Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 ECONOMIC ECONOMIC REVIEW REVIEW ECONOMIC REVIEW 2019 MALAYSIA’S GROSS DOMESTIC PRODUCT (GDP) RECORDED After hovering in the range of 4.0-5.0% sectors that grew 3.8% and 0.1% A SHARP DECLINE TO 3.6% IN THE FOURTH QUARTER OF 2019, over the last six consecutive quarters respectively. The construction LEADING TO 2019’S GDP GROWTH OF ONLY 4.3%. since the second quarter of 2018, sector’s marginal growth was Malaysia’s Gross Domestic Product because of the completion (GDP) recorded a sharp decline to 3.6% of large-scale projects, with 2020 ECONOMIC PERSPECTIVE US-China trade war that is still being felt response of the whole world to ease in the fourth quarter of 2019, leading fewer new projects which are until now with signs that it may erupt monetary policy and implement stimulus to 2019’s GDP growth of only 4.3%. mostly smaller scale and an The year 2020 began encouragingly again, and the fall of the crude oil market packages during the first half of 2020 In line with Malaysia’s slowest economic oversupply of real estate. where the worst market scenario by due to the price war between Saudi is expected to strengthen the recovery growth since 2009, the world economy Although the services and consensus expected the weakness in the Arabia and Russia. of global growth by the end of 2020 or and global trade only expanded 2.9% manufacturing sector were second half of 2019 to continue into the by early 2021. In line with the forecast (2018: 3.6%) and 1.0% (2018: 3.7%), the biggest contributors to first half of 2020, whereas a clear rebound The dramatic decline in the economy in of economic recovery in 2021, Malaysia respectively. This clearly demonstrated overall GDP growth, it also was seen in the second half of 2020 as the first quarter of 2020 due to the rapid is also expected to return to a positive that Malaysia was impacted by external experienced a deceleration a result of the easing of interest rates spread of COVID-19 since early March growth trajectory. pressures throughout 2019. due to weak global around the world and a more relaxed 2020 which forced the implementation demand for manufactured financial market. However, what was of the MCO and its variants. This was As of now, cuts to the OPR have This included global trade tensions and items and household earlier considered a local issue for China, compounded by the repeated supply amounted to 100 basis points, bringing it an increase in protectionist rhetoric that spending returning led to the outbreak of the COVID-19 disruptions in the commodity sector to 2.0% and with four stimulus packages was not limited to the US and China; an to more appropriate pandemic, a black swan event that was as well as the risk of being collateral totalling RM295 billion, it is hoped that increase in geopolitical risk in the Middle levels compared acknowledged as a global pandemic on damage in the price war between Saudi this will reduce the economic impact of East, Eastern Europe, South Asia and the to 2018’s unusual 11 March 2020. Arabia and Russia, and the local political COVID-19. Asia-Pacific; the uncertainty of economic, performance. instability continuing to impact Malaysia’s social, political and international relations Meanwhile, the equity market based on Since then, the majority of the world’s economy negatively. BNM has also forecasted average between Europe and Britain as a result As a result of the supply disruptions the Bursa Malaysia Composite Index countries have had to institute lockdowns inflation growth of between -1.5% of Brexit, and the economic impact in commodity output in 2018, the first (KLCI) was trapped in a downward trend, and all kinds of social distancing While there is a wide range of views for and 0.5% for 2020 considering the of climate change aside from several half of 2019 witnessed the resurgence declining by 6% and closing at 1,588.8 protocols to stem the spread, resulting in Malaysia’s economic prospects in 2020, downward pressure on prices in general, internal speed-bumps in growth trends. of the agricultural and mining sectors, points (2018: -5.9% and 1,690.6 points) the world grinding to a halt. This global BNM’s official forecast of -2.0% to +0.5% largely mirroring the prospects of low especially palm oil and natural gas. at the end of 2019 due to outflows health crisis and critical steps taken to is the least pessimistic, although the crude oil prices and other commodities In fact, domestic demand growth However, this all changed in the second by foreign investors (-RM6.7 billion). stop the outbreak at both the global and likelihood that it will be a recession that is in the global market, as well as muted moderated at 4.3% due to lack of half of 2019 when there were supply However, the Ringgit ended the year local level has led to a global recession worse than the Global Financial Crisis of aggregate demand. With the focus on support from the main driver of growth, disruptions as a result of plant closures stronger by 1.1% to RM4.0925 compared and a simultaneous supply and demand 2008-2009 cannot be discounted. strengthening the support for economic the private sector. This contraction in and maintenance activities that affected to the US dollar. The average price of shock due to weak final demand and recovery, low inflationary pressures gross fixed capital formation caused the output of crude oil and natural gas palm oil and crude oil (Brent), two global disruption in the supply chain. Therefore, the prospects for global that could threaten deflation permits a by the shrinkage in public sector resulting in the mining sector continuing commodities that has a direct impact on growth depend on how quickly the more accommodative monetary policy investments and a slowdown in private its contraction trend. The lagged impact Johor Corporation declined in 2019 with Based on the latest forecasts from the virus can be contained and eventually through further cuts to the OPR, to as sector investments growth was the main due to the drought and less fertiliser palm oil at RM2,119/metric ton (2018: International Monetary Fund (IMF) and stopped, as well as the shape, scope and low as 1.5%, which would be the lowest reason Malaysia recorded its slowest application in early 2019 affected palm RM2,235/metric ton) and crude oil at World Bank (WB), the global economy scale of the various follow-up measures in history, or further cuts to the Statutory GDP growth since 2009. oil production, the main cause of the US$64.37/per barrel (2018: US$71.19/ is expected to contract by 3.0% to for cross-border travel to control the Reserve Rates of 2.0% currently. All this decline in its recovery, although this was per barrel). 5.2%. Some of the other contributors spread of the pandemic and to reduce is to ensure the Malaysia’s real GDP In terms of the supply side, the offset by the agriculture sector which to this global recession which has the multi-dimensional negative effects does not take too long to return to its decline in GDP growth was mainly recorded growth of 2.0% (2018: 0.1%). been regarded as unprecedented and with monetary and fiscal stimulus during long-term potential growth output contributed by the loss of momentum unparalleled include the effects of the and post-COVID-19. The economic estimated at between 4.3% and 4.8%. in the manufacturing and construction
P 34 P 35 SECTION 4 SECTION 4 Prospects Prospects Johor Corporation / Annual Report 2019 Johor Corporation / Annual Report 2019 KULIM KULIM BUSINESS BUSINESS in Indonesia valued at RM44.03 million, and set aside an allocation for expected REVENUE losses from a litigation case involving EA Tech and Malaysia Marine and Heavy RM1.21 billion THE YEAR 2019 HAS BEEN Engineering amounting to RM45.28 million. Despite this, the Group’s cashflow OIL & GAS REVENUE ANOTHER CHALLENGING PERIOD FOR KULIM remains strong. RM307.52 million (MALAYSIA) BERHAD (KULIM) At the same time, the Intrapreneur CPO PRICE Venture (IV) Division recorded revenue AS THE LOW PRICES OF CRUDE PALM OIL (CPO) AND of RM37.63 million, 21.49% less than the RM47.93 million in 2018. This Division RM2,181 average PALM KERNEL (PK) IMPACTED recorded profit before tax of RM0.25 million in 2019 compared to RM1.24 On 13 February 2019, the disposal of THE GROUP’S EARNINGS. million the year before. a 75% equity stake in Optimum Status Sdn Bhd (OSSB) which is owned by EPA The Oil & Gas Division recorded revenue Management Sdn Bhd to IV Kulim or Kulim However, Kulim has remained resilient of RM307.52 million, falling by 34.56% Safety Strategy Training and Services Sdn with a host of initiatives to optimise the from the RM469.92 million achieved the Bhd was successfully completed. This potential value of our business segments. year before. This Division recorded losses disposal is in line with our strategy to The Palm Oil Plantation business is still before tax of RM92.51 million compared transform KSTS into a health, safety and the main contributor to revenue despite to profit before tax of RM73.91 million environment management company. the uncertain price environment for the year before. CPO and PK, European Union sanctions On the 1 May 2019, Kulim stopped towards palm oil use, high inventories Although facing challenges in balancing operations of EPASA Shipping Agency and lower CPO exports to other main investments against creditors and Sdn Bhd and turned it into a dormant markets. Our operations were also cash flow, Kulim remains committed to company (not active). affected by worker shortages and the delivering value to our shareholders. rising cost of labour. In line with this, the Board of Directors Following this, on 7 May 2019, Kulim have approved a dividend payment of acquired the 25% stake belonging to From a financial perspective, the RM200 million for the year 2019. Intrapreneur in Renown Value Sdn Bhd. Group’s revenue declined to RM1.21 This step was to increase Kulim’s revenue billion as of end-December 2019 CORPORATE DEVELOPMENTS through stronger MD2 pineapple farming compared to RM1.39 billion by paying close attention and having full recorded in 2018. The decline In 2019, Kulim continued to streamline control of the pineapple business. was caused by the 35% all its portfolio assets in an effort to reduction in revenue from strengthen the company’s operations On 1 October 2019, Kulim and MTC Orec EA Technique (M) Berhad as well as ensure optimum revenue Sdn Bhd entered into a Subscription (EA Tech) as there was no generation. Kulim’s approach to optimise and Shareholders Agreement (SHA) for revenue from Engineering, There was a slight decrease in the The Group recorded losses before tax its portfolio takes into account factors the formation of Kulim Green Energy Procurement, Contract, production of PK to 77,256 tonnes in of RM127.85 million in 2019, compared such as the market condition, disposal Ventures Sdn Bhd (KGEV) as a joint Installation and Construction 2019 compared to 79,286 tonnes in 2018. to a profit before tax of RM57.81 million of non-profitable assets or businesses venture company for biomethane projects throughout 2019. In addition, the price of PK dropped the year before. The loss before tax that are no longer aligned with the commercialisation. MTC Orec was In addition, the lower revenue was sharply in 2019 to an average price was primarily due to the recognition Group’s strategic vision. In addition to established to capture the synergy compounded by lower contribution of RM1,289 per tonne compared to of impairments due to changes to the this, realising some of our investments is between O’REC Ind Sdn Bhd and MTC from the Plantation Division, specifically RM1,792 per tonne in 2018. However, Malaysian Financial Reporting Standards also an option if an appropriate offer is Engineering Sdn Bhd. revenue from PK amounting to RM43 the Plantations segment remains the (MFRS). The Group also recorded joint- received. million. main contributor to the Group, delivering venture losses in the oil and gas segment RM834.61 million or 69.04% of revenue.
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