How To Understand The Board Of Directors Of Tsh Group

Transcription

1 ANNUAL REPORT 2013

2 TABLE OF CONTENTS 2 Notice of Annual General Meeting 5 Statement Accompanying Notice of Annual General Meeting 6 Chairman s Statement 10 Our People and Faces 12 Corporate Structure 13 Corporate Information 14 Profile of Board of Directors 19 Statement on Corporate Governance 34 Statement on Corporate Responsibility 38 Statement on Risk Management and Internal Control 39 Audit Committee Report 45 Statement of Directors Responsibilities in respect of the Audited Financial Statements 46 Five-Year Financial Highlights 48 Directors Report 52 Statement by Directors 53 Independent Auditors Report 55 Statements of Comprehensive Income 57 Statements of Financial Position 59 Statements of Changes in Equity 62 Statements of Cash Flows 65 Financial Statements 164 Analysis of Shareholdings 167 List of Top 10 Properties owned by TSH Group Proxy Form

3 2 TSH RESOURCES BERHAD (49548-D) notice of annual general meeting NOTICE IS HEREBY GIVEN THAT the Thirty-Fourth Annual General Meeting ( AGM ) of the Company will be held at Ballroom 2, LG Level, Eastin Hotel, 13, Section 16/11, Jalan Damansara, Petaling Jaya, Selangor Darul Ehsan on 3 June 2014 at 9.30 am to transact the following businesses:- 1. To receive the Audited Financial Statements for the financial year ended 31 December 2013 together with the Reports of the Directors and Auditors thereon. 2. To declare a first and final single tier dividend of 3.5 sen per ordinary share for the financial year ended 31 December To approve payment of Directors fees of RM144,000 for the financial year ended 31 December To re-elect Datuk Suboh bin Md Yassin, who is retiring by rotation in accordance with Article 95 of the Company s Articles of Association, and who being eligible, offer himself for re-election. 5. To re-elect YB Datuk Nur Jazlan bin Mohamed, who is retiring in accordance with Article 86 of the Company s Articles of Association and who being eligible, offer himself for re-election. 6. To re-appoint Datuk Jaswant Singh Kler, who is retiring pursuant to Section 129(6) of the Companies Act, 1965 and to hold office until the conclusion of the next AGM. 7. To re-appoint Messrs Ernst & Young as the Company s Auditors and to authorise Directors to fix their remuneration. Resolution 1 Resolution 2 Resolution 3 Resolution 4 Resolution 5 Resolution 6 Resolution 7 As Special Business: To consider and, if thought fit, pass the following resolutions:- 8. ORDINARY RESOLUTION 1 PROPOSED AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 Resolution 8 THAT, subject always to the approvals of the relevant regulatory authorities, the Directors be and are hereby empowered by the shareholders, pursuant to Section 132D of the Companies Act, 1965 to issue new ordinary shares in the Company from time to time at such price, upon such terms and conditions, provided that the aggregate number of the new ordinary shares to be issued pursuant to this resolution does not exceed 10% of the issued capital of the Company for the time being AND THAT the Directors be and are empowered to obtain the approval from the Bursa Malaysia Securities Berhad for listing and quotation for the additional new ordinary shares to be issued AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.

4 ANNUAL REPORT notice of annual general meeting 9. ORDINARY RESOLUTION 2 PROPOSED RENEWAL OF THE AUTHORITY FOR SHARE BUY-BACK Resolution 9 THAT, subject to the Companies Act, 1965, the Bursa Malaysia Securities Berhad ( Bursa Securities ) Main Market Listing Requirements, the Company s Articles of Association and the approvals of other relevant authorities, the Company be and is hereby authorised to purchase and hold such number of ordinary shares of RM0.50 each in the Company ( Proposed Share Buy-Back ) as may be determined by the Directors of the Company from time to time through the Bursa Securities upon such terms and conditions as the Directors may deem fit in the interest of the Company provided that the aggregate number of shares purchased and/or held pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up share capital of the Company AND THAT the maximum amount of fund to be allocated by the Company for the purpose of purchasing its own shares shall not exceed the total retained profits of RM126,746,000 and share premium of RM138,471,000 based on the latest audited as at 31 December THAT such authority shall commence immediately upon passing of this ordinary resolution until the conclusion of the next AGM of TSH unless earlier revoked or varied by ordinary resolution passed by the shareholders of TSH in a general meeting or upon the expiration of the period within which the next AGM is required by law to be held, whichever occurs first. THAT the Directors be and are hereby authorised to take all steps necessary to implement, finalise and to give full effect to the Proposed Share Buy-Back AND FURTHER THAT authority be and is hereby given to the Directors to decide in their discretion to either retain the shares so purchased as treasury shares, to be either distributed as share dividends or re-sold on the Bursa Securities or subsequently cancelled, or to cancel the shares so purchased, or a combination of both. 10. ORDINARY RESOLUTION 3 PROPOSED RENEWAL OF THE EXISTING SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE Resolution 10 THAT approval be and is hereby given for the Renewal of the Existing Shareholders Mandate for the Company and/or its subsidiary companies to enter into recurrent related party transactions of a revenue or trading nature with related parties which are necessary for the day to day operations and on normal commercial terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders as set out in Section 2.2 of the Circular to Shareholders dated 12 May 2014; and THAT a New Shareholders Mandate be and is hereby granted for the Company and/or its subsidiary companies to enter into additional recurrent related party transactions of a revenue or trading nature with related parties which are necessary for the day to day operations and on normal commercial terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders as set out in Section 2.2 of the Circular to Shareholders dated 12 May 2014; (collectively known as the Mandate )

5 4 TSH RESOURCES BERHAD (49548-D) notice of annual general meeting THAT such Mandate shall commence upon passing of this ordinary resolution and continue in force until:- (a) the conclusion of the next AGM of the Company following the general meeting at which such Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting whereby the authority is renewed; (b) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or (c) revoked or varied by resolution passed by the shareholders of the Company in general meeting, whichever is the earlier. THAT the Directors be and are hereby empowered to do all such acts and things (including executing all such documents as may be required) as they may be considered expedient or necessary to give full effect to the Mandate with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities. 11. ORDINARY RESOLUTION 4 RETENTION OF INDEPENDENT DIRECTOR Resolution 11 THAT subject to the passing of Resolution 6, approval be and is hereby given to Datuk Jaswant Singh Kler, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as Independent Non-Executive Director of the Company. 12. To transact any other business of which due notice shall have been given. NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS ALSO HEREBY GIVEN THAT the first and final single tier dividend of 3.5 sen per ordinary share for the financial year ended 31 December 2013, if approved by the shareholders at the forthcoming Annual General Meeting will be paid on 23 June 2014 to depositors registered in the Record of Depositors at the close of business on 4 June A depositor shall qualify for entitlement only in respect of:- a) Shares transferred into the depositor s securities account before 4.00 pm on 4 June 2014 in respect of transfers; and b) Shares bought on the Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities. By Order of the Board LIM FOOK HIN (MICPA 909) CHOW YEEN LEE (MAICSA ) Company Secretaries Kuala Lumpur 12 May 2014

6 ANNUAL REPORT notice of annual general meeting Notes: 1. Only depositors whose names appear in the Record of Depositors as at 27 May 2014 be regarded as members and entitled to attend, speak and vote at the meeting. 2. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company. 3. The instrument appointing a proxy shall be in writing under the hand of the depositor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal and shall be deposited at the Registered Office of the Company at Level 10, Menara TSH, No. 8 Jalan Semantan, Damansara Heights, Kuala Lumpur, not less than 48 hours before the time appointed for holding this meeting or adjourned meeting. 4. Where a member appoints two (2) or more proxies to attend the same meeting, the member shall specify the proportion of his shareholdings to be represented by each proxy. If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fit and if no names are inserted in the space for the name of proxy, the Chairman of the meeting will act as proxy. 5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one 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. Explanatory Notes on Special Business 6. Resolution 8 is a renewal of the general mandate empowering the Directors of the Company, pursuant to Section 132D of the Companies Act, 1965, to issue and allot new shares in the Company from time to time provided that the aggregate number of shares issued pursuant to the general mandate does not exceed 10% of the issued share capital of the Company for the time being. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next AGM. As at the date of this notice, 62,580,000 ordinary shares of RM0.50 each were issued via private placement pursuant to Section 132D of the Companies Act, 1965 under the general mandate which was approved at the last AGM held on 21 May 2013 and which will lapse at the conclusion of the Thirty-Fourth AGM to be held on 3 June The proceeds raised totaling of RM141,639,400 have been utilized in the following manner:- Utilisation of Proceeds RM million 1) Working Capital ) Downpayment for the Sabah Plantation Estates ) Future investment ) Expenses for private placement exercise The renewal of the general mandate will provide flexibility to the Company for any possible fund raising activities without the need to convene separate general meeting to specifically approve such issuance of shares and thereby reducing administrative time and costs associated with the convening of such meeting. However, at this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate is obtained, the Company will make an announcement in respect of the purpose and utilization of proceeds arising from such issue. 7. For Resolution 9 and 10, further information on the Proposed Renewal of the Authority for Share Buy-Back, Proposed Renewal of the Existing Shareholders Mandate and Proposed New Shareholders Mandate for recurrent related party transactions of a revenue or trading nature are set out in the Circular to Shareholders of the Company dated 12 May 2014 which is sent out together with the Company s 2013 Annual Report. 8. For Resolution 11, the Nomination Committee has assessed the independence of Datuk Jaswant Singh Kler, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended him to continue to act as Independent Non-Executive Director of the Company based on the following justifications:- (i) (ii) He fulfilled the criteria under the definition of an Independent Director as stated in the Bursa Securities Main Market Listing Requirements, and demonstrates complete independence in character and judgement both in his designated role and as Board member and thus, he would continue to bring independent view of the Company s affairs to the Board. His in-depth knowledge of the Group s businesses and his extensive experience and expertise continue to provide invaluable contribution to the Board. 9. Dato Leong Leong Khee Seong who retires in accordance with Section 129(6) of the Companies Act, 1965 has expressed his intention not to seek re-appointment as Director of the Company. Hence, he will retain office until the close of the AGM. STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING Details of persons who are standing for election as Directors No individual is seeking election as a Director at the Thirty-Fourth Annual General Meeting of the Company.

7 6 TSH RESOURCES BERHAD (49548-D) CHAIRMAN S STATEMENT Dear valued shareholders, On behalf of the Board, it gives me great pleasure to present the Annual Report and Audited Financial Statements for TSH Resources Berhad and its Group of Companies for the financial year ended 31 December 2013.

8 ANNUAL REPORT CHAIRMAN S STATEMENT PERFORMANCE REVIEW 2013 was a challenging year for the oil palm industry. The contraction of CPO prices started in the second half on 2012 continued well into the third quarter of 2013 before staging a recovery in the last quarter. This had resulted in a drop of 14% in average CPO price in 2013 compared to Other challenges included the imposition of minimum wages by the authorities which added further stress to cost management. On the other hand, a moderate global economic recovery has helped to generate some modest growth in demand. This coupled with the Malaysia s new CPO export duties structure and higher usage of palm biodiesel had contributed in a significant drop in inventory from 2.50 million mt in 2012 to 1.98 million mt at the end of TSH Group has taken the above challenges in its stride and in year 2013, achieved a significantly higher pretax profit of RM164.5 million against RM100.0 million in Group revenue for the year was RM1,018 million against 2012 of RM985 million. Contributions came from the Palm & Bio-Integration segment driven by higher FFB yield and contributions from TSH-Wilmar Sdn. Bhd., our joint venture refinery and kernel crushing business. Included in the results is also a gain on disposal of investment securities-pontian United Plantations Berhad, partially offset by primarily unrealised forex losses arising from the strengthening of USD against Asian currencies. FFB production grew significantly by 28% from 425,000 mt in 2012 to 543,000 mt in Despite the lower average CPO price of RM2,251 per mt in 2013 compared to RM2,640 per mt in 2012, profit margin improved due to lower unit cost of production and operational efficiencies. Estates in Indonesia continue to show significantly improved performance as more planting come into harvest and higher maturity age resulting in higher crop and oil yields. Performance for our Wood Product segment has shown a modest improvement in This came about following rationalisation of Ekowood operation in Europe and the market shifts to domestic and Asia region which started in 2012 has begun to yield positive results. However, contributions from the Wood Product segment do not have any significant effects on the results of the Group. DELIVERING SHAREHOLDERS VALUE Subject to the approval of the shareholders at the forthcoming 34 th Annual General Meeting of the Company, your Board of Directors had on 25 February 2014 proposed a first and final single tier dividend of 3.5 sen per ordinary share to be paid out of the Company s profit. The proposed dividend payout is consistent with the Company s long term dividend payout policy of 20% to 30% of profit. The Board of Directors will strive to improve the Company s dividend payout by providing more cash value return to shareholders. STRATEGIC EXPANSION OF LANDBANK On 18 October 2013, the Company completed the acquisition of the entire equity interest of Casa Logistic Sdn Bhd, an investment holding company which holds a 90% equity interest in a Indonesian incorporated company, PT Perkebunan Sentawar Membangun. This acquisition will add another 5,084 hectares to our plantation landbank in Kalimantan Timur, Indonesia. On 6 December 2013, the Company announced the Proposed Acquisition of 60% equity interest in the share capital of Sg Kalabakan Estate Sdn. Bhd. This Proposed Acquisition will add another 26,794 hectares to our plantation landbank in Sabah. The Proposed Acquisition is expected to complete by 2nd quarter of SIGNIFICANT CORPORATE DEVELOPMENT In 2013, as part of a fund raising exercise, the Company issued 62,580,000 new ordinary shares of RM0.50 each through private placements. These shares were subsequently listed on the Main Market of Bursa Malaysia Securities Berhad. On 9 September 2013, the Company via its indirect wholly owned subsidiary, Bisa Jaya Sdn Bhd completed the disposal of the entire equity interest of 16.17% in Pontian United Plantations Berhad to Felda Global Ventures Holdings Berhad for a total cash consideration of RM195.8 million pursuant to a Voluntary Conditional Take-Over Offer. AWARD RECEIVED On 2 September 2013, the Group bagged the prestigious Best Performing Stock (Plantation) award from The Edge Billion Ringgit Club Awards The award is testament to the hard work and the continuous commitment to growth from our employees in the Group. COMMITTED TO SUSTAINABILITY DEVELOPMENTS The Group is committed to sustainability initiatives, which have been an integral part of our way of doing business. The Board of Directors strongly believes that contributing positively towards social and environmental causes will help to create business sustainability and enhance value for all its stakeholders. The Group has over the years been involved in numerous programs through the products and services we offer, producing in an environmentally responsible manner. More importantly, our social responsibility program improves the livelihood for those in need in the community we operate in. In 2012, the Group has taken a step further by setting up a dedicated department headed by a senior manager, to focus solely on management of the sustainability issues concerning our Group s oil palm activities in particular attention to the principles

9 8 TSH RESOURCES BERHAD (49548-D) CHAIRMAN S STATEMENT and criteria of the mandatory requirements under the Indonesian Sustainable Palm Oil ( ISPO ) and the Roundtable on Sustainable Palm Oil ( RSPO ). In 2013, in continuing with the sustainability development, the Group registered as a member of RSPO and its membership is currently under process. We have also obtained full ISPO certification for one of our significant entity in Indonesia and the rest of our other entities certification are in progress. Our other specific initiatives include the following: Environment Renewable Energy generation to supply green energy - electricity and steam to Sabah Electricity Sdn Bhd and our own palm oil mills. Removal of solid palm oil waste as feedstock for the Biomass/ Biogas plants and Eko Pulp and Paper plant. Accredited producer by the Forest Stewardship Council for usage of sustainable wood materials. Approved CDM projects that qualify for carbon credits under the Kyoto Protocol. Land development in a responsible manner to comply with the Environmental conditions and avoid biodiversity impairment. Sustainable forestry projects including enrichment planting and silviculture treatment under the Forest Management Unit Programme in Sabah. Community/Workplace Drive and implement the Plasma Development Programme. Develop human capital through the establishment of Training Academy. Provide housing, school and other amenities for workers and its families. Provide philanthropic support to various causes with particular emphasis on education. Commit to maintaining high safety and health standards through the establishment of the Health and Safety Committee and safety training. Improve infrastructure for communities living in the surrounding plantations. Building a sustainable pool of talent for the oil palm sector through the signing of Memorandum of Understanding with University Malaysia Sabah. PROSPECTS AND OUTLOOK The Group is mindful of the challenging operating conditions of the oil palm sector and to move ahead requires the Group to be well positioned to leverage on new opportunities. In spite of the volatile conditions, the Group is committed to growth premised on: Total planted area in the Group including Associate is about 49,900 hectares comprises of 16,900 hectares located in Sabah and 33,000 hectares located in Indonesia. The young oil palm age profile with about 80% of planted area comprising of immature and young mature fields. The Group s total land bank of 81,000 hectares of unplanted area. The Group s commitment to its oil palm planting programme to plant approximately 4,000 to 5,000 hectares annually. The Group has planted about 4,200 hectares in 2013 inclusive of those under the Plasma Development Programme. This and the young age profile will provide sustainable growth for many years to come.

10 ANNUAL REPORT CHAIRMAN S STATEMENT Continuing the extensive use of superior planting material - TSH s WAKUBA oil palm ramets in Sabah and Indonesia with the objective of producing higher FFB and oil yields. The use of these high yielding materials will further propel our yield per hectare to a significantly higher level than the industry average in coming years. FFB production is expected to increase significantly in 2014 and the following years with more oil palm areas in Indonesia coming into maturity and peak yield age. Our unit production cost will continue to undergo a downtrend as the FFB yield increases. Cost optimisation through improvement in efficiency and efficacy as well as oil yield improvement will also continue to reduce the unit cost of production. Good agronomic practices and standards, being our operational strength as well, are maintained throughout our estates in Sabah and Indonesia and this augers well going forward. Forecast by major industry players points to a more optimistic view of the plantation sector. Better CPO outlook for 2014 is expected, premised on better domestic biodiesel consumption in Indonesia and Malaysia, which would help keep inventories at a comfortable level. Other factors contributing to a higher support level for the CPO prices will depend on the level of discount to soy oil price, expected adverse weather conditions and continuing demands from major importer countries like China and India. IN APPRECIATION I would like to express my gratitude to our employees, for their unflinching dedication and contribution to the Group s performance. To all our shareholders, customers, business associates, strategic partners, financers and suppliers on behalf of the Board, I thank you, for your unwavering support and confidence in the Group. And to my colleagues on the Board, we have faced many challenging cyclical changes together, which we have managed to overcome through the Board s valuable insights and strategic guidance. I would like to express my deepest appreciation for the continuous support and steadfast commitment to the Group. Datuk (Dr.) Kelvin Tan Aik Pen Chairman In view of the good prospects and the mitigation measures taken for operating challenges faced, your management is optimistic that the Group will continue to maintain a strong financial performance and is well positioned to take on new opportunities in 2014.

11 10 TSH RESOURCES BERHAD (49548-D) OUR PEOPLE & FACES

12 ANNUAL REPORT OUR PEOPLE & FACES

13 12 TSH RESOURCES BERHAD (49548-D) CORPORATE STRUCTURE Palm Bio-Integration TSH Plantation Sdn. Bhd. ( H) TSH Plantation Management Sdn. Bhd. (46602-V) TSH Palm Products Sdn. Bhd. ( H) TSH-Wilmar Sdn. Bhd. ( U) Eko Pulp & Paper Sdn. Bhd. ( K) TSH Bio-Energy Sdn. Bhd. ( H) TSH Bio-Gas Sdn. Bhd. ( M) TSH Biotech Sdn. Bhd. ( V) Innoprise Plantations Berhad ( M) PT. Andalas Agro Industri (Incorporated in Indonesia) PT. Andalas Wahana Berjaya (Incorporated in Indonesia) PT. Sarana Prima Multi Niaga (Incorporated in Indonesia) PT. Teguh Swakarsa Sejahtera (Incorporated in Indonesia) PT. Laras Internusa (Incorporated in Indonesia) PT. Farinda Bersaudara (Incorporated in Indonesia) PT. Mitra Jaya Cemerlang (Incorporated in Indonesia) PT. Bulungan Citra Agro Persada (Incorporated in Indonesia) PT. Munte Waniq Jaya Perkasa (Incorporated in Indonesia) PT. Andalas Wahana Sukses (Incorporated in Indonesia) PT. Perkebunan Sentawar Membangun (Incorporated in Indonesia) Wood Products Ekowood International Berhad ( D) Ekowood S.A (Incorporated in Luxembourg) Ekowood Iberica S.L (Incorporated in Spain) Ekowood (USA) Inc. (Incorporated in the State of California, USA) TSH Forestry (Sabah) Sdn. Bhd. ( U)

14 ANNUAL REPORT CORPORATE INFORMATION Board of Directors Datuk (Dr.) Kelvin Tan Aik Pen Chairman, Non-Independent Non-Executive Director Dato Tan Aik Sim Group Managing Director Datuk Suboh bin Md Yassin Independent Non-Executive Director Dato Leong Leong Khee Seong Independent Non-Executive Director YB Datuk Nur Jazlan bin Mohamed Independent Non-Executive Director Datuk Jaswant Singh Kler Independent Non-Executive Director Tan Aik Kiong Group Executive Director Lim Fook Hin Executive Director Chew Siew Yeng Executive Director Tan Aik Yong Alternate Director to Datuk (Dr.) Kelvin Tan Aik Pen Audit Committee Datuk Jaswant Singh Kler Chairman/Independent Non-Executive Director Datuk Suboh bin Md Yassin Member/Independent Non-Executive Director YB Datuk Nur Jazlan bin Mohamed Member/Independent Non-Executive Director (Member of the Malaysian Institute of Accountants) Nomination Committee Datuk Suboh bin Md Yassin Chairman/Independent Non-Executive Director Datuk Jaswant Singh Kler Member/Independent Non-Executive Director Remuneration Committee Datuk Jaswant Singh Kler Chairman/Independent Non-Executive Director Datuk Suboh bin Md Yassin Member/Independent Non-Executive Director Lim Fook Hin Member/Executive Director Company Secretaries Lim Fook Hin (MICPA 909) Chow Yeen Lee (MAICSA ) Registered Address Level 10, Menara TSH No. 8 Jalan Semantan Damansara Heights Kuala Lumpur Tel : Fax : tsh@tsh.com.my Website : Auditors Ernst & Young MPT 4604, Lot rd Floor, Block B Bandaran Baru, Jalan Baru Tawau, Sabah Tel : Fax : Principal Bankers AmBank (M) Berhad Cooperatieve Centrale Raiffeisen - Boerenleenbank B.A. (Rabobank Nederland) HSBC Bank Malaysia Berhad Kuwait Finance House Malayan Banking Berhad OCBC Bank (Malaysia) Berhad Share Registrar Symphony Share Registrars Sdn. Bhd. Level 6, Symphony House Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel : Fax : /8152 Stock Exchange Listing Main Market of Bursa Malaysia Securities Berhad

15 14 TSH RESOURCES BERHAD (49548-D) PROFILE OF BOARD OF DIRECTORS Datuk (Dr.) Kelvin Tan Aik Pen, DPMP, PGDK, aged 56, a Malaysian, is the Chairman, Non-Independent Non-Executive Director of the Company. He has been a Director of TSH since his appointment to the Board on 17 January He is currently the Chairman of Ekowood International Berhad and the Managing Director of Innoprise Plantations Berhad. These companies are listed on the Main Market of Bursa Malaysia Securities Berhad. He also sits on the board of a number of private companies. Datuk (Dr.) Kelvin Tan Aik Pen Chairman, Non-Independent Non-Executive Director Datuk (Dr.) Kelvin Tan has more than twenty five (25) years experience in resource based industry, which includes extensive working knowledge in international trade practices. He was the Chairman of the Malaysian Cocoa Board for 8 consecutive years from 1997 to 2004 and trustee of the Borneo Conservation Trust Sabah from 2010 to He serves as Honorary Director of Sabah Chinese High School. As recognition for the many contributions to environmental conservation and forestry, Datuk (Dr.) Kelvin Tan was conferred an Honorary Doctorate in Philosophy (Agroforestry) by Universiti Malaysia Sabah on 3 September He is the brother of Tan Aik Kiong, Dato Tan Aik Sim and Tan Aik Yong. Other than the deemed interest as disclosed in the Circular to Shareholders on recurrent related party transactions, he has no other conflict of interest with the Company and has no conviction for offences within the past ten (10) years. Dato Tan Aik Sim, DIMP, aged 50, a Malaysian, was appointed as Group Managing Director on 1 January 2009 after serving as Chief Executive Officer since 1 September He was appointed to the Board of Directors of the Company on 27 February He is also the Group Managing Director of Ekowood International Berhad ( Ekowood ) and sits on the board of various subsidiary companies of TSH. He obtained Bachelor Degrees in both Economics and Engineering from Monash University, Australia in He started his career in the Cocoa industry in 1989 with significant involvement in the setting-up of its manufacturing facilities and its subsequent operation of a number of companies within the cocoa sector. He also played a leading role in the listing of TSH in 1994 and Ekowood in Dato Tan Aik Sim Group Managing Director He was appointed to Ekowood to spearhead the establishment of the integrated timber complex from a green field site. Through his active involvement since then, Ekowood has grown rapidly to now an award-winning internationally recognised brand within the engineered hardwood flooring industry. His initial involvement in TSH includes overseeing the forest management unit in Sabah before progressing into the biomass energy sector. In the recent years, he has been actively involved in palm oil plantation segment and its related downstream activities. He has played a pivotal role in the rapid growth of TSH s palm segment especially in Indonesia. He is also instrumental in developing and putting in place the necessary business platform for the next development phases of the palm segment in Indonesia and Sabah. He is the brother of Datuk (Dr.) Kelvin Tan Aik Pen, Tan Aik Kiong and Tan Aik Yong. Other than the deemed interest as disclosed in the Circular to Shareholders on recurrent related party transactions, he has no other conflict of interest with the Company and has no conviction for offences within the past ten (10) years.

16 ANNUAL REPORT PROFILE OF BOARD OF DIRECTORS Datuk Suboh bin Md Yassin, aged 63, a Malaysian, was appointed to the Board of Directors of TSH as an Independent Non-Executive Director on 1 March He also serves as the Chairman of the Nomination Committee and member of the Audit Committee and Remuneration Committee. He holds a Bachelor of Arts (Hons) from University of Malaya, a Master Degree in Business Administration (MBA) from the European University in Geneva and obtained an Advanced Management from Harvard University. He holds directorship in various subsidiary companies within the Group. Datuk Suboh bin Md Yassin Independent Non-Executive Director Having served the Government of Malaysia for thirty four (34) years, Datuk Suboh retired on 11 January He had served in senior positions while in the civil service, amongst others as Assistant Director in the Prime Minister s Department from 1974 to 1977, Assistant Director of the Ministry of International Trade and Industry from 1978 to 1980, First Secretary (Economic Affairs) Permanent Mission of Malaysia to the United Nations and other International Organisation from 1981 to 1983, Principal Assistant Director of the Ministry of International Trade and Industry from 1984 to 1985, Counsellor (Economic Affairs) Embassy of Malaysia, Washington D.C., United States of America from 1986 to 1992, Deputy Permanent Representative, Permanent Mission of Malaysia to the World Trade Organisation from 1992 to 1999, Advisor to the Islamic Development Bank, Jeddah from 1999 to August 2001, Deputy Secretary General 2 of the Ministry of Primary Industries from 1 September 2001 to 31 March 2004, Deputy Secretary General 1 of the Ministry of Natural Resources and Environment from 1 April 2004 to 11 February 2006 and Secretary General of the Ministry of Natural Resources and Environment from 12 February 2006 to 11 January He has no conviction for any offence within the past ten (10) years and has no family relationship with any Director or major shareholder of the Company nor any conflict of interest with the Company. Dato Leong Leong Khee Seong, aged 75, a Malaysian, was appointed as an Independent Non-Executive Director of the Company on 1 December He was Deputy Minister of Primary Industries from 1974 to 1978 and subsequently promoted as the Minister from 1978 to He was a member of Parliament from 1974 to Prior to his political career, he was a substantial shareholder of his family s private limited companies involved in general trading. Between 1986 and 1990, he was the Chairman of the General Agreement on Tariffs and Trade s Negotiating Committee on Tropical Products (1986 to 1990) and Chairman of the Group of 14 on Asean Economic Cooperation and Integration (1986 to 1987). He was an Independent Non-Executive Director of Sin Chew Media Corporation Berhad and the Executive Chairman of Nanyang Press Holdings Berhad. He graduated from the University of New South Wales, Australia with a Degree in Chemical Engineering in He is currently the First Chancellor of Help University. Dato Leong Leong Khee Seong Independent Non-Executive Director He is currently an Independent Non-Executive Director of Industrial & Commercial Bank of China (M) Bhd. He does not have any family relationship with any other Director and/or other major shareholder of the Company. He has no conflict of interest with the Company and has no conviction for offences within the past ten (10) years. Dato Leong who retires in accordance with Section 129(6) of the Companies Act, 1965 has expressed his intention not to seek re-appointment as Director of the Company. Hence, he will retain office until the close of the Annual General Meeting.

17 16 TSH RESOURCES BERHAD (49548-D) PROFILE OF BOARD OF DIRECTORS YB Datuk Nur Jazlan bin Mohamed, aged 48, a Malaysian, was re-appointed as an Independent Non-Executive Director of TSH on 22 May He also serves as a member of the Audit Committee. He is a Fellow member of the Association of Chartered Certified Accountants (ACCA), UK. He was a Council Member of the Malaysian Institute of Accountants from 2001 to August In addition to his professional credentials, YB Datuk Nur Jazlan is also active in politics. He is the Chief of UMNO Pulai, Johor and also Chairman of Barisan Nasional for the division since He was an EXCO Member of UMNO Youth from 1996 until He is a third term Member of Parliament for Pulai and was re-elected as a Member of Parliament in the recent general election held on 5 May He is also the Chairman of Public Accounts Committee (PAC). YB Datuk Nur Jazlan bin Mohamed Independent Non-Executive Director YB Datuk Nur Jazlan also has wide corporate experience since YB Datuk Nur Jazlan is a Director of Ekowood International Berhad and Asia Bioenergy Technologies Berhad, all of which are listed on the Main Market of Bursa Securities. He is a director of United Malayan Land Bhd and also sits on the board of several other private limited companies. He does not have any family relationship with any other Director and/or other major shareholder of the Company. He has no conflict of interest with the Company and has no conviction for offences within the past ten (10) years. Datuk Jaswant Singh Kler, PGDK, ASDK, aged 73, a Malaysian, was appointed as an Independent Non-Executive Director on 1 February He also serves as the Chairman of the Remuneration Committee and Audit Committee apart from being a member of the Nomination Committee. He is an Associate member of the Incorporated Society of Planters and continues to play an active role as a senior member of the planting fraternity in Malaysia and sits on the Board of Innoprise Plantations Berhad. He holds directorship in various subsidiary companies of TSH Group. Notably, he was the Chairman of the East Malaysia Planters Association for sixteen (16) years from 1985 to He was an Independent Non-Executive Director of Kwantas Corporation Berhad and an Executive Director of Bena Plantation Sdn. Bhd. when he left in 2006 and 1984 respectively. He now manages his own plantation consultancy business under Agri Cek Sdn. Bhd.. Datuk Jaswant Singh Kler Independent Non-Executive Director He participates actively as a committee member of the Malaysian International Chamber of Commerce & Industry of Sabah branch and as a committee member for Human Resources and also on the Home Affairs of MICCI standing committee. He is a member of the Institute for Development Studies (Sabah) and also a life member of Agricultural Institute of Malaysia. He does not have any family relationship with any other director and/or other major shareholder of the Company. Other than the deemed interest as disclosed under Notes to the Financial Statements of this Annual Report, he has no other conflict of interest with the Company and has no conviction for offences within the past ten (10) years.

18 ANNUAL REPORT PROFILE OF BOARD OF DIRECTORS Tan Aik Kiong, aged 54, a Malaysian, is the Group Executive Director of TSH. He was appointed to the Board of Directors of TSH on 25 November He also sits on the board of various subsidiary companies of TSH and also holds directorship in other private limited companies. He obtained a Master degree in Civil Engineering, majoring in Construction Management, from the University of Oklahoma, United States of America in Prior to joining the Company in 1987, he worked with Prudential Bache Ltd., an established brokerage and commission house in 1986 and subsequently with Ameroid Services Pte. Ltd., an independent warehousing company in Singapore. He is the brother of Datuk (Dr.) Kelvin Tan Aik Pen, Dato Tan Aik Sim and Tan Aik Yong. Other than the interest and deemed interest as disclosed in the Circular to Shareholders on recurrent related party transactions, he has no other conflict of interest with the Company and has no conviction for offences within the past ten (10) years. Tan Aik Kiong Group Executive Director Lim Fook Hin, aged 64, a Malaysian, was appointed as an Executive Director of TSH on 9 May He also serves as a member of the Remuneration Committee. He is currently the Executive Director of Ekowood International Berhad and Innoprise Plantations Berhad. He also sits on the board of some subsidiary companies within the TSH Group and also holds directorship in other private limited companies. He is a member of the Malaysian Institute of Certified Public Accountants. After qualifying as a member of the ICAEW, he joined Coopers & Lybrand as an audit senior in 1976 and was transferred to Coopers management consultancy services in He joined the Commonwealth Development Corporation in 1978 and was seconded to Sarawak Oil Palm Sdn. Bhd. as the Company Secretary. Lim Fook Hin Executive Director He joined BAL Plantation Sdn. Bhd. in 1981 as the Financial Controller until His main responsibility included financial management, merger and acquisition and commodity marketing. He was the Chief Executive of United Palm Oil Industries PLC ( UPOIC ), a company listed on the Stock Exchange of Thailand before joining TSH in He does not have any family relationship with any other Director and/or other major shareholder of the Company. Other than the interest and deemed interest as disclosed in the Circular to Shareholders on recurrent related party transactions, he has no other conflict of interest with the Company and has no conviction for offences within the past ten (10) years.

19 18 TSH RESOURCES BERHAD (49548-D) PROFILE OF BOARD OF DIRECTORS Chew Siew Yeng, aged 56, a Malaysian, is the Chief Financial Officer of TSH. He was appointed to the Board of Directors of TSH on 1 January He also sits on the Board of various subsidiary companies of TSH. He is a member of the Malaysian Institute of Certified Public Accountant and Malaysian Institute of Accountants. He started his career with an international accounting firm, PricewaterhouseCoopers from 1979 until 1994 and during this period, he has wide clientele and work exposure in Audit and Business Advisory, Business Centre and Management Consultancy departments covering all sectors of industries in private and listed companies notably in banking and finance, manufacturing and trading. Chew Siew Yeng Executive Director He joined a listed company, AMDB Bhd in 1995 as the Group Financial Controller until 2007 with his last position as Senior General Manager-Corporate Services/Finance and Chief Risk Officer before joining TSH. During this period, his main responsibilities included serving on the EXCO/Board of subsidiary companies within the AMDB Group and financial management involving the supervision of the Group Finance functions, merger and acquisition, risk management, treasury and tax function. He does not have any family relationship with any other Director and/or other major shareholder of the Company. He has no conflict of interest with the Company and has no conviction for offences within the past ten (10) years. Tan Aik Yong, aged 45, a Malaysian, was appointed as an Alternate Director on 4 July He is a non-practising barrister with a degree in Bachelor of Laws (LLB) from Queen Mary College, University of London. He qualified as a Chartered Financial Analyst (CFA) in His career started with a law firm in Kuala Lumpur and had spent about 10 years in investment banking activities in the region. He was a senior manager in United Overseas Bank Group prior to joining TSH Group to handle investment planning, corporate and financing matters in He also sits on the board of Ekowood International Berhad as an Alternate Director and various subsidiary companies within the Group and holds directorship in other private limited companies. Tan Aik Yong Alternate Director to Datuk (Dr.) Kelvin Tan Aik Pen He is the brother of Datuk (Dr.) Kelvin Tan Aik Pen, Dato Tan Aik Sim and Tan Aik Kiong. Other than the interest and deemed interest as disclosed in the Circular to Shareholders on recurrent related party transactions, he has no other conflict of interest with the Company and has no conviction for offences within the past ten (10) years.

20 ANNUAL REPORT STATEMENT ON CORPORATE GOVERNANCE The Board of Directors of TSH ( Board ) recognises that exercise of good corporate governance in conducting the business and affairs of the Company with integrity, transparency and professionalism are key components for the Company s continued progress and success. These will not only safeguard and enhance shareholders investment and value but will at the same time ensure that the interests of other stakeholders are protected. The Board is therefore committed to high standards of corporate governance and business practices. Accordingly, the Board has adopted TSH Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities. These guidelines, along with the term of references of the Board and Board Committees provide the framework for corporate governance at TSH. This Corporate Governance Statement provides information about TSH s corporate governance practices for 2013, including the manner in which the Company has applied the Principles and the extent of compliance with the Recommendations as set out in the Malaysian Code of Corporate Governance 2012 ( Code ). PRINCIPLE 1 : ESTABLISH CLEAR ROLES AND RESPONSIBILITIES Roles and Principal Duties Presently, the Board comprises nine (9) members and one (1) alternate director of which four (4) are Independent Non-Executive Directors, one (1) Non-Executive Director who is also the Chairman and four (4) Executive Directors, including Group Managing Director. During the year under review, YB Datuk Nur Jazlan bin Mohamed resigned from the Board and Audit Committee on 16 April 2013 to facilitate his candidacy for the general election. He was subsequently re-appointed as Independent Non-Executive Director and member of the Audit Committee on 22 May The Board is of the view that the current Board size is appropriate for the complexity and scale of operations of the Company. The composition of the Board continues to provide the Group with a wealth of knowledge and experience to draw from a comprehensive mix of skills which includes financial, technical and business expertise that is important for the continued successful direction of the Group. Collectively, Datuk (Dr.) Kelvin Tan Aik Pen and his family constitute significant shareholders of the Company but with less than majority. The Board is satisfied that current Board composition fairly reflects the investment of minority shareholders of the Company. Of the total nine (9) Board members, four (4) are Independent Directors and two (2) Executive Directors who are not related to the significant shareholder. The positions of Chairman and Group Managing Director are individually held by two (2) persons to ensure a balance of power and authority. There is a clear distinction between the roles and responsibilities of the Board, Chairman and Group Managing Director which are set out in the TSH Corporate Governance Guidelines. The balance of responsibilities between the Board and Group Managing Director will be reviewed on a regular basis so as to ensure that the division of functions remains appropriate to the needs of the Company. The role of Chairman include, amongst others, overseeing the orderly conduct and effectiveness of the Board by ensuring a cohesive working relationship between members of the Board whilst the Group Managing Director has overall responsibility for the day-to-day management of the business and is responsible for the Group strategies, organizational effectiveness, implementation of Board policies and decisions. Generally, the Executive Directors are responsible for making and implementing operational and corporate decisions as well as developing, coordinating and implementing business and corporate strategies. Non-Executive Directors play key supporting roles, contributing knowledge and experience towards the formulation of policies and in the decision-making process. They could provide the relevant checks and balances, focusing on shareholders and other stakeholders interests and ensuring that high standards of corporate governance are applied. Where a potential conflict of interest may arise, it is mandatory practice for the Director concerned to declare his interest and abstain from the decision-making process.

21 20 TSH RESOURCES BERHAD (49548-D) STATEMENT ON CORPORATE GOVERNANCE The Board takes full responsibility for the overall performance of the Company and the Group. The main responsibilities of the Board comprise the following:- Setting the objectives, goals and strategic plan for the Company with a view to maximizing shareholder value and promoting sustainability; Adopting and monitoring progress of the Company s strategy, budgets, plans and policies; Overseeing the conduct of the Company s business to evaluate whether the business is being properly managed; To consider and approve reserved matters covering corporate policies, material investment and acquisition/disposal of assets; Identifying principal risks and ensure implementation of appropriate systems to manage these risks; Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing senior management; Developing and implementing an investor relations programme or shareholder communications policy for the Company; Reviewing the adequacy and the integrity of the Company s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines; and Reviewing the term of office and performance of the Audit Committee and each of its members at least once in every three (3) years to determine whether the Audit Committee members have carried out their duties in accordance with their terms of reference. The Board has adopted a Board Charter which serves as a source of reference and primary induction literature, providing insights to prospective Board members and senior management. The Board Charter will be periodically reviewed and updated in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board s responsibilities. The details of the Board Charter are available for reference in the Company s website at Code of Conduct and Ethics The Company has adopted a code of conduct and ethics which applies to Directors, officers and employees of the Group and is available on the Company s website. The Board of Directors of TSH continues to adhere to the Code of Ethics for Company Directors issued by the Companies Commission of Malaysia ( Code of Ethics ). The Board is ultimately responsible for the implementation of this Code of Ethics. The Board has delegated to the Nomination Committee the responsibility to administer this Code of Ethics. Directors who learn of or suspect that a violation of the Code of Ethics has occurred or is likely to occur must immediately report the violation to the Chairman of the Nomination Committee, or to any other member of the Nomination Committee, except in the case of issues regarding the Company s, financial reporting, accounting, auditing matters or internal accounting controls of which it should be reported to the Chairman of the Audit Committee. If a Director is unsure whether a violation should be reported to the Nomination or the Audit Committee, he or she is encouraged to report to both Committees. Directors who report violations or suspected violations in good faith will not be subject to retaliation of any kind. Reported violations will be treated confidentially to the extent possible. Alleged violations of the Code of Ethics shall be investigated by the Nomination Committee and may result in discipline and other action at the discretion of the Board upon recommendation of the Nomination Committee, including, where appropriate, removal from the Board. The Board is ultimately responsible for the investigation and resolution of all issues that may arise under this Code of Ethics.