Sie sind auf Seite 1von 288

SUSTAINABLE

HEALTHCARE

KP J Healthcare is the leading


provider of private healthcare
services in Malaysia. We deliver high
standards of care to our patients,
with integrity and compassion.

ANNUAL REPORT 2017


KPJ
HEALTHCARE BERHAD

2017
ANNUAL REPORT

KPJ Healthcare Bhd


(KPJ)’s success journey
in Malaysia for the last
36 years underscores
our philosophy that
building and growing
our business sustainably
in a responsible manner
go hand-in-hand. We
serve our mission to
provide patients with
quality healthcare
services as we continue
to create long-term value
for shareholders, and
support the development
and expansion of the
healthcare industry in the
country.

OUR VALUES

W hat We Str ive For


As a global provider of premium healthcare services, KPJ is committed to world-class excellence in every aspect of
healthcare. Our medical expertise and advanced facilities enable us to provide a one-stop continuum of care to cater to the
rapidly growing demands of the markets we operate in.

OUR CORE VALUES


Our values represent the philosophy of our organisation and guides all our decision-making and actions. We strive to
maintain a patient-centred environment focused on compassionate care. Our core values of Ensuring Safety, Delivering
Service with Courtesy, Performing Duties with Integrity, Exercising Professionalism at All Times, and Striving for Continuous
Improvement are an intrinsic part of our commitment to ‘Care for Life’ in every aspect of our operations.

We hold ourselves accountable to high standards and our core values reaffirm our commitment to serving all those who count on us.

DELIVERING PERFORMING EXERCISING STRIVING FOR


ENSURING
SERVICE WITH DUTIES WITH PROFESSIONALISM CONTINUOUS
SAFETY
COURTESY INTEGRITY AT ALL TIMES IMPROVEMENT
INSIDE THIS REPORT
2 About This Report
4 At a Glance
5 Corporate Information
6 Corporate Structure

S T R AT E G I C R E P O RT
10 Five Reasons to Invest in KPJ Healthcare
12 Chairman’s Statement
16 Business Model
18 Our Strategy
20 Management Discussion and Analysis
45 Group Financial Review
46 Group Financial Highlights
47 Group Operational Highlights
48 Statement of Value Added
49 Investor Information
52 Group Quarterly Performance
54 Sustainability Statement
94 Risk Management and Internal Control
100 Principal Risks

GOVERNANCE
106 Board of Directors
108 Directors’ Profile
119 Executive Committee Members’ Profiles
126 Hospital Medical Directors
128 Corporate Governance Overview
141 Compliance Information
143 Directors’ Responsibility Statement

F I N A N C I A L S TAT E M E N T S
146 Directors’ Report
156 Statement by Directors
OUR VISION 157 Statutory Declaration
158 Independent Auditors’ Report
The Prefer red Healt hcare Pr ovi der 164 Statements of Comprehensive Income
Our fundamental purpose is the delivery of exceptional health 166 Statements of Financial Position
treatment, care and diagnosis to all our patients. We are 168 Consolidated Statement of
dedicated to being the preferred provider of care, with innovative Changes in Equity
use of technology, experienced doctors and well-trained staff 172 Company Statement of Changes in Equity
who collaborate to offer the best diagnosis and treatment plans. 174 Statements of Cash Flows
177 Notes to the Financial Statements

A D D I T I O N A L I N F O R M AT I O N
OUR MISSION
269 Shareholdings Statistics

Del iver Q ual it y Healt hcare Ser vices 272 Warrantholdings Statistics
274 Classification of Shareholders
Our mission is to improve the health of the people and the 274 Classification of Warrantholders
communities we serve. Led by skilled and caring medical staff,
275 List of Top 10 Properties
we are consistently focused on clinical excellence and innovative
technology for superior patient outcomes. 276 Notice of Annual General Meeting
282 Statement Accompanying Notice of
Annual General Meeting
• Proxy Form
2 K PJ HEALT HCARE BERHAD

ABOUT THIS REPORT

KPJ HEALTHCARE
BERHAD (KPJ) HAS A
FULL SUITE
OF REPORTING
PUBLICATIONS WHICH
ADHERE TO
T HE GUIDELINES LAID
DOWN BY BURSA
MALAYSIA’S MAIN
MARKET LISTING
REQUIREMENTS.

D E T E R M I N I N G M AT E R I A L I T Y
Our Annual Report aims to provide a transparent, balanced and accessible narrative
and analysis of our strategy, performance and prospects in relation to material
financial, economic, social, environmental and governance issues.

Our reporting approach undertakes to With regards to our sustainability reporting, our sustainability performance and
provide our stakeholders with a clear and disclosures are monitored closely by our Sustainability and Risk Committee (SRC),
informed view of KPJ’s performance in the led by our President & Managing Director. Our Sustainability Statement is prepared
Financial Year 2017. Our leadership seeks by our Sustainability Coordinators, working closely with the SRC.
to share KPJ’s business and operational
deliveries, along with an account of the value This year we have reviewed our material sustainability matters and there are no
we have created as measured against our significant changes from 2016. The content of this report is based on our identified
strategy and outcomes therefore, taking into material topics. There is no necessary restatement from last year’s report. There also
account the opportunities and challenges have been no significant changes to our organisation during the reporting period.
inherent in market landscape developments.
The material issues and developments which are covered in the rest of the report
Our reporting scope and boundaries cover were determined by taking into account the following considerations:
and is limited to the reporting period between
January 2017 and December 2017, covering 01 02 03 04 05
KPJ operations in Malaysia, Indonesia,
Thailand, Bangladesh and Australia. The All material issues and developments thereof for the reporting year under review
Sustainability Statement included in this can be found within the Chairman’s Statement on pages 12 to 15 of this Annual
Report covers our Malaysian hospital Report, the Management Discussion and Analysis on pages 20 to 44, Statement on
operations, within the period of January to Risk Management and Internal Control on pages 94 to 99, and Principle Risks on
December 2017, which contributes 97% of pages 100 to 103.
the Group’s revenue.

A N N UA L R E PO RT 2017
KP J H E ALT H CARE B ER H A D 3

ABOUT THIS REPORT

A S S U R A N C E A N D A P P R O VA L
The Board of Directors approved the contents of the Annual
Report in accordance to the requirements of the Malaysian Code
on Corporate Governance 2017 (MCCG 2017), and the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad
and Sustainability Guidelines. Our financial reporting is audited
by an independent third party, PricewaterhouseCoopers PLT, who
also audited our Financial Statements and approved them free of
qualification.

With regards to our Sustainability Statement, it was prepared


according to Bursa Malaysia Securities Berhad’s Main Market
Listing Requirements relating to Sustainability Statements in
Annual Reports. We currently have no formal policy with regard
to external assurance for our sustainability reporting. However, as
we embark on our Integrated Reporting journey, we envisage that
external assurance could be part of the process going forward.

FEEDBACK
Our reporting process is intended to move beyond compliance to
generate meaningful and inclusive discourse with our stakeholders
01 through a culture of transparency which engenders trust. Our aim
is to inform our stakeholders of our strategy and value creation
QUANTITATIVE AND QUALITATIVE
CRITERIA AND FACTORS endeavours within our business. Our Sustainability Statement is
available at our Corporate Website at http://kpj.listedcompany.
com/sustainability.html. We welcome any feedback on this report
02
on any aspect of our sustainability performance. Comments
MATTERS CRITICAL TO ACHIEVING OUR STRATEGIC and feedback can be sent to our Investor Relations Unit at
OBJECTIVES AND CREATING VALUE IN THE LONG http://kpj.listedcompany.com/contact.html.
TERM FOR OUR STAKEHOLDERS
F O R W A R D L O O K I N G S TAT E M E N T S
03
Certain statements in this report regarding KPJ Healthcare
MATTERS COVERED IN REPORTS SUBMITTED Berhad’s operations may constitute forward-looking statements.
TO THE BOARD OF DIRECTORS FOR These statements can be identified by key words such as “believes”,
DISCUSSION OR APPROVAL “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, “plans”,
“outlook” and other words of similar meaning in connection with

04
a discussion of future operating or financial performance. These
statements relate to the plans, objectives, goals, strategies, future
MATERIAL RISKS IDENTIFIED BY operations and performance of KPJ. Actual results and outcomes
OUR RISK MANAGEMENT PROCESS may differ materially from those projected in any forward looking
statements due to various events, risks, uncertainties and other
factors. We neither intend to nor assume any obligation to update
05 or revise any forward looking statements, whether as a result of
new information, future events or otherwise.
OUR KEY STAKEHOLDERS’ INTERESTS

w w w. kp j h ea l t h . c o m . m y
4 K PJ HEALT HCARE BERHAD

AT A G L A N C E

H O S P I TA L S
25 in Malaysia

1,022
M E D I C A L C O N S U LTA N T S
2 in Indonesia

1 in Bangladesh

1 in Thailand

INPAT IENT S OUT PAT IENT S


286,465 2,473,851

1
UNIVER SIT Y
COLLEGE

& 2 Br anc he s

13,422
EMPLOYEES
RETIREMENT &
AGED CARE CENTRES
33 programmes
in in INCLUDING MASTERS
1 Australia
3 Malaysia AND PHD

20
By Malaysian
Society For
Quality In Health
(MSQH)

4
By Joint
Commission
3,052
A CC REDITED HOS P ITA LS International (JCI) OPER AT ING BE DS

A N N UA L R E PO RT 2017
KP J H E ALT H CARE B ER H A D 5

C O R P O R AT E I N F O R M AT I O N

R E GIS T E R E D OF FI C E P R I N C I PA L BAN KERS REGI STRAR STOCK EX CHANGE LISTING

KP J H e a lt h c a re B er h a d M a l a y a n B a nking Berhad Johor Corporat ion Bursa Malaysia Se c u ritie s


(24 70 79 - M) Wisma Lee Kay Huan, Level 16, Berhad Main Marke t
Level 16, Lot 14408, Menara KOMTAR, (Listed since 29 November 1994)
Menara KOMTAR, Jalan Genting Klang, Setapak, Johor Bahru City Centre, Stock code: KPJ (5878)
Johor Bahru City Centre, 53200 Kuala Lumpur, Malaysia. 80000 Johor Bahru,
80000 Johor Bahru, Johor, Malaysia.
Johor, Malaysia. H S B C A ma n a h (Malay s ia) T (607) 226 7692 COMPANY SECRETARIES
T (607) 219 2692 Berhad F (607) 223 3175
F (607) 223 3175 No. 2, Lebuh Ampang, Salmah Abd Wahab
P. O. Box 10244, (LS 002140)
50912 Kuala Lumpur, Malaysia. AUDI TOR
C OR P OR AT E OF F I C E Hana Ab Rahim @ Ali
PricewaterhouseCoopers PLT (MAICSA 7064336)
KP J H e a lt h c a re B er h a d Level 10, 1 Sentral, Jalan Rakyat,
Level 12, Menara KPJ, Kuala Lumpur Sentral,
238, Jalan Tun Razak, P. O. Box 10192,
50400 Kuala Lumpur, Malaysia. 50706 Kuala Lumpur, Malaysia.
T (603) 2681 6222
F (603) 2681 6888
E kpj@kpjhealth.com.my

C o m pa n y
S e c re t a rie s

S a lm a h Ab d Wa h a b (left)
H a n a Ab R a h im @ A l i (right)

w w w. kp j h ea l t h . c o m . m y
6 K PJ HEALT HCARE BERHAD

C O R P O R AT E S T R U C T U R E

K P J H E A LT H C A R E B E R H A D

100% 100%
J O H O R S P E C I A L I S T H O S P I TA L S D N B H D K U M P U L A N P E R U B ATA N ( J O H O R ) S D N B H D
(KPJ Johor Specialist Hospital)

100%
B A N D A R D AT O ’ O N N S P E C I A L I S T H O S P I TA L S D N B H D
(KPJ Bandar Dato’ Onn Specialist Hospital)

A M P A N G P U T E R I S P E C I A L I S T H O S P I TA L S D N B H D S I B U M E D I C A L C E N T R E C O R P O R AT I O N S D N B H D
100% (KPJ Ampang Puteri Specialist Hospital) 100% (Sibu Specialist Medical Centre)

B A N DA R B A R U K L A N G S P E C I A L I S T H O S P I TA L S D N B H D S M C H E A LT H C A R E S D N B H D
100%
100% (KPJ Klang Specialist Hospital) (KPJ Sabah Specialist Hospital)

B D C S P E C I A L I S T H O S P I TA L S D N B H D 100% AMITY DEVELOPMENT SDN BHD


100% (BDC Specialist Hospital)

100% U T M K P J S P E C I A L I S T H O S P I TA L S D N B H D
K A J A N G S P E C I A L I S T H O S P I TA L S D N B H D
100% (KPJ Kajang Specialist Hospital)
K O TA K I N A B A L U S P E C I A L I S T H O S P I TA L S D N B H D
97% (Damai Specialist Hospital)
M A H A R A N I S P E C I A L I S T H O S P I TA L S D N B H D
(KPJ Bandar Maharani Specialist Hospital)
100% (KPJ Seremban Specialist Hospital) K U C H I N G S P E C I A L I S T H O S P I TA L S D N B H D
70% (Kuching Specialist Hospital)

100% MASSIVE HYBRID SDN BHD M I R I S P E C I A L I S T H O S P I TA L S D N B H D


70% (KPJ Miri Specialist Hospital)
P A S I R G U D A N G S P E C I A L I S T H O S P I TA L S D N B H D
(KPJ Pasir Gudang Specialist Hospital) P A H A N G S P E C I A L I S T H O S P I TA L S D N B H D
100% (KPJ Puteri Specialist Hospital) 70% (KPJ Pahang Specialist Hospital)

P E N A N G S P E C I A L I S T H O S P I TA L S D N B H D P E R D A N A S P E C I A L I S T H O S P I TA L S D N B H D
(KPJ Penang Specialist Hospital) 61% (KPJ Perdana Specialist Hospital)
100% (Taiping Medical Centre)
P E R L I S S P E C I A L I S T H O S P I TA L S D N B H D
P U S AT P A K A R K L U A N G U TA M A S D N B H D 60% (KPJ Perlis Specialist Hospital)
100% (Kluang Utama Specialist Hospital)
S E L A N G O R S P E C I A L I S T H O S P I TA L S D N B H D
60%
R A W A N G S P E C I A L I S T H O S P I TA L S D N B H D (KPJ Selangor Specialist Hospital)
(KPJ Rawang Specialist Hospital)
(KPJ Damansara Specialist Hospital) 51% H O S P I TA L P U S R A W I S M C S D N B H D
100%

SENTOSA MEDICAL CENTRE SDN BHD 46% KEDAH MEDICAL CENTRE SDN BHD
100% (KPJ Sentosa KL Specialist Hospital)

M A L AY S I A N O P E R AT I O N S SUPPORT SERVICES O V E R S E A S O P E R AT I O N S D O R M A N T C O M PA N I E S

A N N UA L R E PO RT 2017
KP J H E ALT H CARE B ER H A D 7

C O R P O R AT E S T R U C T U R E

100% 100% 100% 98% 37%


PUTERI SPECIALIST POINT ZONE TAWAKAL HOLDINGS IPOH SPECIALIST AL-’AQAR
HOSPITAL (JOHOR) (M) SDN BHD SDN BHD HOSPITAL SDN BHD HEALTHCARE REIT
SDN BHD (KPJ Ipoh
Specialist Hospital)

100% 100%
PUSAT PAKAR TAWAKAL SRI MANJUNG SPECIALIST
SDN BHD CENTRE SDN BHD
(KPJ Tawakkal (Sri Manjung
Specialist Hospital) Specialist Centre)
(KPJ Tawakkal Health Centre)

K U A N TA N S P E C I A L I S T K P J H E A LTH C A R E
100% 100% 100% 100%
H O S P I TA L S D N B H D U N I VE R S I TY C O L L E G E
(KPJ Kuantan Specialist Hospital) SDN BHD K P J D H A K A ( P TE ) LTD DA M A NSA R A
(formerly known as Puteri (Sheikh Fazilatunnessa Mujib SPECIA L IST
Nursing College Sdn Bhd) H O SPITA L SD N B H D
Memorial KPJ Specialized
100% ADVA NCE D HE ALT H C ARE
Hospital & Nursing College)
SOL UTIONS S DN BHD K P J E D U C AT I O N ( M ) 100%
100%
SDN BHD SER EM B A N
100%
100% CROSSBORDER AIM (M) (formerly known as KFCH SPECIA L IST
SDN BHD Education (M) Sdn Bhd) PT AL-AQAR BUMI SERPONG DAMAI H O SPITA L SD N B H D

CROSSBORDER HALL (M) 100% 100%


100% 100% KPJ MEDIKTV SDN BHD
SDN BHD PT AL-AQAR PERMATA HIJAU TA IPING M ED ICA L
S I B U G E R I AT R I C H E A LT H & CENTR E SD N B H D
100%
KPJ EYECARE SPECIALIST NURSING CENTRE SDN BHD 80%
100%
SDN BHD 55%
P T K H I D MAT P E R AWATA N
(KPJ Pusat Pakar Mata 100% S TE R I L E S E R VI C E S S D N B H D J A S A ME D I K A B AYA N B A R U
Centre For Sight) (RS Medika Permata Hijau, Jakarta) SPECIA L IST
H O SPITA L SD N B H D
95% FABRICARE LAUNDRY SDN BHD
100% KPJ HEALT HS HOP P E S DN BHD 75%
100%
D I A P E R TE C H N O L O G Y P T K H A S A N A H P U TE R A
94%
100% LABLINK (M) SDN BHD J A K A RTA ME D I C A ENERGY EXCELLENT
I N D U S TR I E S S D N B H D
(RS Medika Bumi Serpong SDN BHD
Damai, Jakarta)
100% PHARMACARE SDN BHD 90% PRIDE OUTLET SDN BHD
100%
57% KPJ EDUCATION
70% HEALTHCARE IT SOLUTIONS
100% OPEN ACCESS SDN BHD SERVICES SDN BHD
SDN BHD JETA GARDENS (QLD) PTY LTD
(Jeta Gardens Retirement and Aged
100% PHARMASERV ALLIANCES Care Resort, Brisbane, Australia) 100%
70% S K O P YA K I N ( M ) S D N B H D
SDN BHD
PHARMACARE
100% SURGICAL
70% T O TA L M E A L S O L U T I O N TECHNOLOGIES
100% FP MARKETING (S)
SDN BHD JETA GARDENS AGED CARE (M) SDN BHD
P T E LT D (QLD) PTY LTD

65% T E R A J U FA R M A S D N B H D 80%
75% MA LAYSIAN IN S T IT UT E OF
100%
HEALTHCARE M AN AGE M E N T FREEWELL SDN BHD
SDN BHD 30% H E A LT H C A R E T E C H N I C A L JETA GARDENS MANAGEMENT
SERVICES SDN BHD (QLD) PTY LTD
75% MEDICAL S UP P LIE S
(SARAWAK) S DN BHD 23%
VEJTHANI PUBLIC
COMPANY LIMITED
(Vejthani Hospital, Thailand)

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
8 K PJ HEALT HCARE BERHAD

S T R AT E G I C
REPORT

10 Five Reasons to Invest in


KPJ Healthcare
12 Chairman’s Statement
16 Business Model
18 Our Strategy
20 Management Discussion
and Analysis
45 Group Financial Review
46 Group Financial Highlights
47 Group Operational
Highlights
48 Statement of Value Added
49 Investor Information
52 Group Quarterly
Performance
54 Sustainability Statement
94 Risk Management and
Internal Control
100 Principal Risks

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 9

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
10 K PJ HEALT HCARE BERHAD

F I V E R E A S O N S T O I N V E S T I N K P J H E A LT H C A R E

G CLINICAL
STRON
CE FRAMEW
V E RNAN ORK
F G O
L
O
T
EN

O
PO
PM

T
LO

EN

EX
FA
EVE

TA L

CEL
CIL
S U S TA I N A B L E D

PROFESSIONAL

LENT
ITIES
IN

&
FO

CR

ON

AS
R

VA
GY
E

TI

IN
PR

AT G O
LO

DE NN O
IV

E MA I N
HE ND CH
AL TE
TH
CAR
E

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 11

F I V E R E A S O N S T O I N V E S T I N K P J H E A LT H C A R E

Increasing Demand for Private Healthcare


Malaysia has seen the private healthcare sector flourish for more than 30 years and will continue to do so in the coming years,
driven by greater patient awareness and knowledge, rising affluence with expanding middle class and increasing medical
insurance penetration. KPJ’s large and expanding network of hospitals in Malaysia is well positioned to capitalise on market
opportunities.

Sustainable Development of Professional Talent Pool


KPJ has the largest pool of professional healthcare talents in the industry. This translates to an increasing
body of knowledge within the Group,. This results in an increasingly a wider range of clinical expertise.
Continuous workplace training and lifelong learning enable employees to adjust to an increasingly rapid
pace of change. This includes anticipating and building competencies for future needs. In addition, KPJ
empowers its talent by ensuring broad access to training opportunities, for both genders.

Strong Clinical Governance Framework


KPJ’s Medical Advisory Committee (MAC) oversees the Group’s Clinical Governance Framework,
to safeguard patients’ safety through sound and ethical practices. KPJ hospitals are also
accredited by the Malaysian Society for Quality in Health (MSQH) and Joint Commission
International.

International Standard Facilities and Services


KPJ’s hospitals are equipped with state of the art facilities and equipment that meet the needs of
both local and international patients. Consumer-focussed services, which form an integral part of our
business, are constantly upgraded and enhanced.

Innovation & Technology


Since the late 1990s, KPJ has been a firm believer in healthcare technology. The Group established its position as a
frontrunner in homegrown hospital information systems, which enhance operational efficiency.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
12 K PJ HEALT HCARE BERHAD

C H A I R M A N ’ S S TAT E M E N T

DATO’
KAMA R UZ Z AMAN DEAR SHAREHOLDERS
AB U K AS S IM A N D S TA K E H O L D E R S O F K P J,
I T G I V E S M E G R E AT P L E A S U R E T O P R E S E N T T O
CHAIRMAN
YO U K P J H E A LT H C A R E B E R H A D ’ S ( K P J O R T H E
G R O U P ) A N N U A L R E P O RT F O R T H E F I N A N C I A L
YEAR ENDED 31 DECEMBER 2017 (FY2017).

The year under review saw KPJ recording an improvement in terms of revenue
and profits. These were the result of focused strategies, proving once again that
we have a strong platform upon which we can further build a successful future.

During the year, we continued to make strategic moves to grow KPJ’s business
sustainably. We worked our capital, capabilities and capacities harder and smarter,
in order to seek the best possible returns. We further embraced innovation

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 13

C H A I R M A N ’ S S TAT E M E N T

to strengthen and enhance synergies As a result of our continuous efforts in the


throughout the Group’s operations. More healthcare realm of the highest quality of
importantly, KPJ is ultimately able to medical treatments and services rendered to
translate it all directly to shareholder value. our patients, we have strengthened our sterling
reputation in the sector, which is one we are
R E S I L I E N T I N DUSTRY extremely proud of as a Group. It heartens
The year 2017 was characterised by a me to share that in 2017, the Group received
buoyant Malaysian economy, with a Gross a host of local and international accolades
Domestic Product (GDP) growth of 5.9% for in recognition of our sterling efforts within
the year. Corresponding to this, Malaysia’s the areas of quality healthcare provision and
total healthcare industry spending stood at upholding strong corporate governance (CG).
RM52 billion at the end of the year, fuelled
by continuous consumer demand for KPJ Klang Specialist Hospital was named
quality healthcare services. the winner of the Prime Minister’s Industry
Excellence Award which was introduced by
A key development in the industry Ministry of International Trade and Industry
has been the increasing application of (MITI) to recognise outstanding Malaysian
medical and digital technology, triggered companies chosen from a selection of winners
by socioeconomic changes not only in across categories in the manufacturing and
Malaysia but also internationally. While a services sector. The awards is a recognition that
more globalised and digitally-connected KPJ is on track in its vision to become a leading
world has undoubtedly brought immense healthcare provider in the region.
social and economic benefits, it clearly also
impacts all segments of KPJ’s business, As a recipient of the Prime Minister’s Award,
from diagnostics, to treatment and the KPJ Klang received a cash prize of RM500,000
dispensing of pharmaceuticals. from the Malaysia Prime Minister, YAB Dato’ Sri
Mohammad Najib Tun Abdul Razak.
As part of this change, KPJ is enhancing
KEY HIGHLIGHTS its business strategies to be more patient The KPJ Group received a number of awards
and customer-centric. Our six key strategic at the MSWG-ASEAN Corporate Governance
initiatives keep us on course as we strive Recognition 2017 Awards, which identified the
The year 2017 was to increase our market share, identify Top 100 Malaysian Public Listed Companies
characterised by a
and implement new medical innovations, based on disclosures from 900 companies
buoyant Malaysian
economy
process enhancements and improvements, assessed during the year using the ASEAN
as well as digitise our operational and Corporate Governance Scorecard. The 2017
functional processes to remain ahead of assessment was more stringent than previous
the curve. years, using a revised Scorecard approved by
the ASEAN Capital Markets Forum (ACMF). KPJ
5.9% We deliver initiatives within our various was honoured to be ranked 33rd in the List of
hospitals and departments, aimed Top 100 Companies with Good Disclosures; 29th
at ensuring the highest standards of in the List Of Top 100 Companies For Overall
delivery within a sustainable business. A CG & Performance; and the Industry Excellence
comprehensive review of our strategic Award within the Healthcare category.
Gross Domestic
performance during the year can be found
Product (GDP)
within our Management Discussion and As testament of the high quality patient-centric
growth of 5.9%
Analysis on pages 20 to 44 of this Annual healthcare services we provide our customers,
for the year.
Report. KPJ was awarded the Global Health and Travel
APAC Award 2017 in Bali. As well as that, our

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
14 K PJ HEALT HCARE BERHAD

C H A I R M A N ’ S S TAT E M E N T

KPJ Klang Winner of the Prime Minister’s Award

enduring commitment to talent management and employee In line with the Malaysian Code on Corporate Governance
engagement saw us as the recipient of the Human Resource 2017’s requirements for annual shareholders’ approval
Vendor of the Year 2017. for independent directors serving beyond the nine-year
limit, we have established the criteria that the tenure of our
We also received further recognition with the EU-Malaysia independent directors shall not exceed the prescribed
Chamber of Commerce and Industry (EUMCCI) Sustainability nine-year period. Puan Zainah Mustafa who was appointed on
Award 2017 for Best Social Impact (Large Companies) as well as 1 December 2004, Datuk Azzat Kamaludin who was appointed
the Innovating Care Asia Pacific 2017 Award for Best in Patient on 1 September 1994 and Dr. Kok Chin Leong who was
Experience. On the domestic front, KPJ was also awarded the appointed on 7 July 2005 have expressed their intention not
Platinum Award from the KL Mayor’s Tourism Awards 2017. to seek for re-appointment as Independent Non-Executive
Directors at this AGM.
S T R E NGT H E NING O U R B O A R D C O M P O S I T I O N
The Board of Directors remains firmly committed to advancing EMBEDDI N G A STRON G CULTURE OF GOV ERNANCE
gender diversity on the Board as a means to promote better In FY2017, KPJ implemented a number of measures within our
leadership and governance, and enhancing Board and corporate governance framework and policies, which were
corporate performance. In January 2018, KPJ’s Board has aligned with the requirements of the Companies Act 2016, the
reaffirmed it commitment in this area with its target of reaching revision of the Main Listing requirements by Bursa Malaysia
30% women directors sitting on the Board by end of 2018. Berhad and the Malaysian Code on Corporate Governance
2017.
During the year under review, we witnessed some changes
in the composition of the Board. We bid farewell to Tuan We conducted both internal and external audits to review and
Hj Ahamad Mohamad and Dr Yoong Fook Ngian, both of approve the revised Audit Charter, as well as reviewing and
whom resigned from the Board in July 2017. On behalf of adopting the Strategic Business Plan for the Group for the
my colleagues on the Board, I would like to thank them for period of 2018 till 2022. Our Medical Advisory Committee
their years of dedicated service, in transforming KPJ into an remains firmly committed to ensure that our network of
internationally acknowledged healthcare brand. hospitals practice the best clinical governance activities, and
has conducted itself during the year to ensure the highest
In their place, we welcome Dr. Zaki Morad Mohamad Zaher and levels of compliance within all our hospitals.
Encik Mohd Sahir Rahmat. We look forward to their insightful
contributions, as we work together to steer the Group forward
to achieve greater performance.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 15

C H A I R M A N ’ S S TAT E M E N T

M O V I N G I N T O 2 0 1 8 , I B E L I E V E T H E F O U N D AT I O N S O F K P J ’ S
B U S I N E S S A R E V E R Y S T R O N G A N D W I L L O N LY B E S T R E N G T H E N E D
F U R T H E R . W E I D E N T I F I E D A N U M B E R O F I N I T I AT I V E S A L I G N E D W I T H
O U R K E Y S T R AT E G I E S T O C O N T I N U E O N O U R J O U R N E Y O F S U S TA I N E D
G R O W T H A N D P R O F I TA B I L I T Y.

FOR WAR D LOOKI N G S TAT E M E N T APPRECI ATI ON


Moving into 2018, I believe the foundations of KPJ’s business Our quest to transform KPJ into a world-class healthcare
are very strong and will only be strengthened further. We provider synonymous with providing patient-centric healthcare
identified a number of initiatives aligned with our key solutions and treatment would not have been possible without
strategies to continue on our journey of sustained growth and the ongoing support and cooperation of all parties concerned.
profitability.
On behalf of the Board of Directors, I wish to take this
The Group will be adopting our parent company Johor opportunity to express our heartfelt appreciation and gratitude
Corporation’s (JCorp) strategies, as a best practices benchmark to the governments of the various states in which our hospitals
against which to implement initiatives and measures throughout operate, the Ministry of Health and other health regulators
our network of hospitals to ensure our sustainable long-term and accreditation bodies, and all our stakeholders within our
growth and profitability. We believe that JCorp’s strategies, hospital network, including our suppliers and vendors.
which have augured well for the Corporation throughout the
years as it overcame various market and economic challenges I also wish to thank all our consultants, medical officers, nurses
to generate sustained growth, provide KPJ a proven strategic and all other medical and non-medical professionals whose
means by which we can identify new areas of growth to tap hard work and uncompromising dedication to caring for our
into in order to expand our reach and market share. patients has kept us at the forefront of the industry. As well as
that, I also wish to thank all our customers, for their continued
KPJ remains committed to its talent management drive, and faith in our quality healthcare delivery.
has identified new ways of engagement with our employees
as a key priority in ensuring high retention rates of our highly On a personal note, I would like to express my heartfelt
skilled talent base. Within KPJ Healthcare University College appreciation to my colleagues on the Board of Directors for
(KPJUC), we have identified measures which will strengthen its their invaluable guidance, wisdom and expertise in assisting
educational capacities in providing a talented pool of future Management to successfully steer our Group, and maintaining
medical professionals. KPJ’s leadership position in the healthcare sector.

Our digitisation goals remains on track, and we will


continue with our momentum in this area by harnessing new
technologies and advancements to upgrade our operational
and IT infrastructure in order to increase our service deliveries
and operational efficiencies. As well as that, we remain
committed to seeking out new areas in medical technology Dat o’ Kamaruz z aman Abu Kas s im
and bringing them into Malaysia, as a way to distinguish the Chairman
Group’s healthcare offerings from other service providers KPJ Healthcare Berhad
in the marketplace. As it always has been, our strategies are
based on our mission of providing patient-centric healthcare
services to our customers, within a compassionate and caring
hospital environment.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
16 K PJ HEALT HCARE BERHAD

BUSINESS MODEL

KPJ Healthcare Berhad’s (KPJ) business is founded on the vision of being the preferred healthcare provider in the region. We are
focused on delivering world-class quality healthcare services through our wide range of specialised healthcare solutions throughout
our regional footprint across five countries, namely Malaysia, Indonesia, Thailand, Bangladesh and Australia.

01 02 03

T R E AT ME NT OUR RESOURCES OUR RELATIONSHIPS


F UND ING To ensure the long-term sustainability of our business model, We manage and nurture our
KPJ is mindful we rely on the synergies of our interlinked resources. relationships to ensure that our
of the variuos customers are always placed first.
ways through R o b u s t Fi n a n ces
which treatment With a market capitalisation of RM4.1 billion, we have the Cont in u ou s De ve lop m e n t
is funded for our advantage of financial strength and stability, as a result of Hum an an d
patients. of revenue generation by our network of hospitals and I nt elle c tu al Cap ital
retirement and aged care centres throughout the region. Our staff are integral in the
delivery of customer-centric
O n e -S t o p H e a l t h c are Solut ions healthcare solutions. We prioritise
Our services cover a wide range of our patients’ healthcare the continuous professional
needs and medical needs. The synergies of our centres of development of our 13,422
excellence within clinical and medical specialties, coupled with employees, with focused
Healt hcare our ambulatory services, provide our patients with a one-stop investments in the training
Ins urance integrated healthcare services. and ongoing development
including continuous education
P r o f es s i o n a l E xp e rt s programmes opportunities, from
We have on board a highly qualified and vastly experienced Foundation level to PhD, for
team of people, from medical specialists, nurses and allied eligible staff.
Corporate health personnel, as well as the hospital CEOs, management
Cl i ent s and operation teams. Collaboration with In d u str y
L eade rs Ac ross Th e Re g ion
Integrated Network We engage in continuous
We benefit from the integration of our centralised hospital collaborative ventures with
systems, which afford us the benefits of: healthcare industry leaders to
Out of Pocket create sustainable long-term
• Efficient Administration – covering centralised billings, patient competitive advantage for our
records and feedback database which provides convenience Group.
and easy retrieval of information for individual customers and
corporate clients. Ancillar y Un its
Our extended support system
• Economics of Scale – advantages of bulk discounts, efficiencies provides our patients high
in inventory management and a uniformed distribution and quality assurance of products,
availability of pharmaceutical products throughout KPJ’s supplies and integrity of systems
network of hospitals. and processes such as IT and
inventory. These form the firmly
grounded foundations from which
we ensure efficient and smooth
operations within KPJ’s network
of hospitals and retirement and
aged care facilities.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 17

BUSINESS MODEL

04 05

OUR OP E R AT IN G M O D E L HOW WE CREATE VAL UE


Our focused investments on excellent medical Through our healthcare network, we create and deliver measurable
facilities and patient care, coupled with efficient value for our stakeholders. As at end 2017, we have:
administration and operations, have ensured that
we benefit from strong cashflows, which we are
able to recycle back into our business through
strategic investments, while providing shareholders
returns.
MEDICAL
In c re a sin g Ac c es s i b i l i t y C O N S U LTA N T S
As at year end 2017, our regional healthcare
network comprises:
1,022
25 hospitals 3 retirement and I N PAT I E N T S
aged care centres in Malaysia
286,465
2 hospitals 1 hospital
Bangladesh 1 Thailand
in in hospital in
Indonesia

1 care centre in Australia


retirement and aged

O U T PAT I E N T S
Qua lit y a n d S a f e t y C en t r ed C u l t u r e
2,473,851
Our network of hospitals have garnered acclaim
for their unyielding commitment to international
best practices. These include accreditation
NUMBER
by the Malaysian Society for Quality in Health O F O P E R AT I N G
(MSQH) and Joint Commission International BEDS
(JCI). KPJ hospitals have also been certified
in the areas of quality management (MS ISO
3,052
9001:2008), environment management (MS ISO
14001:2004) and occupational safety and health %
AVERAGE
(OHSAS 18001:2007), making them the preferred OCCUPANCY
healthcare provider in Malaysia. R AT E

In no va t io n 66
KPJ has invested significantly in healthcare
technologies such as the Internet of Things (IoT),
and bringing in new medical knowledge and
breakthrough into the country. This keeps us ahead
of the curve in terms of patient focused healthcare,
as we leverage on state-of-the-art technology in
our hospitals’ medical equipment, operations and
systems.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
18 K PJ HEALT HCARE BERHAD

O U R S T R AT E G Y

P U T T I N G O U R PAT I E N T S
AT T H E H E A R T O F
EVERYTHING WE DO
KPJ is committed to providing
01 CAPACITY
BUILDING
Strategic investments and
enhancements in project
development
comprehensive, patient centred care to all
stakeholders. The KPJ Group’s main aim is
to sustain its premier position in Malaysia’s
private healthcare industry.

Our 6 key
strategic focus
are as follows:

04 NEW
NICHES
Unlocking new sources of potential
and growth that contribute to overall
business development

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 19

O U R S T R AT E G Y

02 ENRICHED
CUSTOMER
RELATIONSHIP
Strategic measures are taken to attain
03 INNOVATION
@ THE CORE
Increased application of
medical technology, as well as
advancements in day-to-day
and strengthen market loyalty, built upon
management and operations
a patient-centric culture

05 TALENT
MANAGEMENT
Nurture dependable and high
integrity talents who are capable
of continuously drive positive
06 BUSINESS
PROCESS
IMPROVEMENT
Improve processes and systems to
effectively sustain high performance
performance

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
20 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

DEAR SHAREHOLDERS,
I AM PLEASED TO DELIVER
KPJ’S MANAGEMENT
DISCUSSION AND
ANALYSIS, DESCRIBING
OUR MANY ACHIEVEMENTS
THROUGHOUT THE YEAR
UNDER REVIEW.

DATO’ A MIR UD D IN The year 2017 saw us facing a myriad of challenges within a dynamically shifting
private healthcare landscape, both on the global and domestic fronts. Among the
AB D UL S ATAR main drivers of change were consumer sentiments driven by economic factors and
greater competition.

Nevertheless, economic forecasts have shown signs of recovery, with the Malaysian
PRESIDENT & MANAGING DIRECTOR economy expanding strongly by as much as 5.9% for the year, supported by domestic
demand, particularly through private sector spending. This has been an excellent
driver for the resilient Malaysian private healthcare industry.

Against this backdrop, KPJ’s strengthening position was evident in several respects.
KPJ’s solid strategies delivered on our strategic intent of continuous growth and
profitability, to achieve a market capitalisation of RM4.1 billion at end of 2017.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 21

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

GROUP FINANCIAL PERFORMANCE 2017 Our total assets base grew by almost 8% in 2017 to RM4.2 billion,
KPJ continued with its strong performance momentum in the driven by strategically focused investments we had made during
financial year ended 2017 (FY2017), achieving revenue in excess the year under review in the areas of modern technology, cutting
of RM3.0 billion for the second year in a row since our inception. edge medical equipment, and developing and upgrading our
Group revenue stands at RM3.18 billion, up from 2016 revenue facilities in order to provide our patients with the high quality of
of RM3.02 billion. In line with management’s plan to divest from healthcare they expect from KPJ.
aged care operations in Australia, the 2016 revenue has been
restated to RM2.97 billion, as per the requirement of MFRS 5: Our Malaysian operations were the largest contributor to our
Non-current Assets Held for Sale and Discontinued Operations. revenue at 97% or RM3.1 billion of total Group revenue. Hospital
Our sustained earning in challenging market conditions is proof and healthcare revenue continued to be the major revenue
of the effectiveness of our long-term strategies, coupled with generating segment, accounting for almost 97% of total Group
our fundamentally strong business model. revenue. This represented an increase of 7% from hospital and
healthcare revenue of RM2.9 billion recorded in 2016.
Earnings before interest, taxes, depreciation and amortisation
(EBITDA), has increased to RM441.6 million in 2017, compared During the year, KPJ also carried out a subdivision of shares
to RM430.2 million (restated). This was achieved despite higher exercise of every one ordinary share into four ordinary shares in
costs encountered in 2017 in some areas such as RM796.0 KPJ. The subdivision exercise was approved at the Extraordinary
million in appropriation to consultants, compared to RM779.0 General Meeting (EGM) held on 24 August 2017, effected on
million in 2016; and RM777.2 million in material costs for 2017, 26 September 2017 and completed with the listing and quotation
compared to RM707.5 million in 2016. We also saw higher costs of 4,280,627,292 Subdivided Shares and 259,226,010 Additional
in terms of repair and other capital expenditure as a result of Warrants on the Main Board of Bursa Malaysia Securities Berhad
our investment into developing world-class medical facilities in (Bursa Malaysia) on 27 September 2017.
tandem with the Group’s transformation objectives.
KPJ’s rationale in conducting the subdivision of shares exercise
Within the private healthcare sector, there is a typical three- was to reward our shareholders for their loyalty and continuing
to five-year gestation period for a hospital to turnaround and support through greater equity participation in terms of number
begin making profits. Bearing this in mind, we are confident our of shares held, whilst maintaining their percentage of equity
results will improve even further in the coming years, as the new interest. It was also to improve the trading liquidity of KPJ shares
hospitals we have opened in Malaysia which are coming to the so that a wider spread of investors could participate in the
end of their gestation cycle start to yield profits. growth and capital appreciation potential of the new subdivided
shares. Additionally, it provided a cheaper entry point for small
Our profit before zakat and tax (PBZT) stood at RM233.3 million, and retail investors as a result of the adjustment of KPJ’s share
up from RM220.7 million (restated in 2016). As a Group dedicated price pursuant to the subdivision of shares exercise.
to its zakat commitments, we contributed RM3.9 million in zakat
in 2017, compared to RM3.8 million in 2016. During the year, The increase in share price affordability is expected to also
another five companies within the Group has utilised the benefits improve the marketability of any future equity raising exercise
from tax losses and other tax incentives, resulting in deferred tax to be considered by the Group. The exercise is a cost effective
assets recognised during the year and kept the effective tax rate means by which KPJ is able to reward shareholders as there was
at almost the statutory tax rate of 24%. no utilisation of existing reserves of the Group to facilitate the
exercise.
Profit after tax (PAT) also increased Year on Year (YoY) by 7%
to RM166.9 million as a result of better cost management and A comprehensive financial review of our performance can be
reduction in the impairment losses taken up during the year. found in our Group Financial Review on page 45 of this Annual
Report.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
22 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

KPJ Healthcare adapts IBM Watson for cancer patients

S T R E N G T H E N I N G O U R P O S I T I O N A S M A L AY S I A’ S To ensure that our systems are safe, we have also upgraded


P R E F E R R E D H E A LT H C A R E P R O V I D E R our cybersecurity protocols, to ensure a strong foundation
In 2017, KPJ recorded a number of key strategic milestones of information technology, new software and hardware
which differentiated us as the preferred healthcare service which can support the rollout of MedTech and other clinical
provider in the marketplace. innovations.

In n o v a t io n- le d Tr a n s f o r ma t i o n Other plans in the pipeline include further improvements


• Innovation Centred Culture in an appointment system, an IT help desk; online payment
Ongoing commitments to create, develop and nurture an mechanisms for medical tourists; and online registration of
innovation-led work culture is borne through a number vendors to avoid the duplication of work and processes.
of initiatives aimed at bringing our people on board and
ensuring we are all on the same page. • Adopting Innovations in Medical Technology (MedTech)
A game changer for KPJ in 2017 was the adoption of IBM
• Upgrading of IT Infrastructure Watson for Oncology, a cognitive computing platform for
and Systems Improvements KPJ oncologists to utilise, as a decision - making support
In 2017, KPJ invested RM30 million for IT expenditure. This system in designing treatment plans for cancer patients.
covers several areas such as Cloud Computing, Information
Security and Cybersecurity, Disaster Recovery and Failover KPJ is the first private healthcare provider in Malaysia to
System for Business Continuity and Technology Refresh for bring in and utilise the Watson for Oncology platform.
existing hospitals. We also conducted systems improvements
by upgrading our KPJ Clinical Information System (KCIS) • Online Pharmacy
and Hospital Information System (HITS). We will be rolling The year under review saw KPJ launching our e-pharmacy,
out the final phase of the upgraded versions known as KCIS2 KPJ Healthshoppe (KPJHS) which is currently offering over-
and HITS2 to all our hospitals by end 2018. Both KCIS2 and the-counter products online. Having built the foundation for
HITS2 are significant enablers for our hospital network in this in 2017, our medium- to long-term plan is to extend our
terms of technological advancements, enabling a green capacities to subsequently provide e-prescription services.
paper free environment, with most transactions conducted
online and in real time.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 23

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

C o nt in uo u s Im p r o v emen t s i n C u s t o me r S e r v ices KPJ is positioning KPJ Sabah as a provider of choice for medical
We are developing a culture of continuous customer service tourists within our identified medical tourism target markets,
improvements throughout our hospital network with our Service including China. Another high value market is the Middle East,
Quality Management (SQM) system, which requires all our hospitals where Arabic speaking professionals cater to the needs of Arab
to submit their service initiatives on an ongoing basis. Within the patients who have been patronising KPJ hospitals for years.
SQM system, our Patient Communication Management System was
enhanced with a new reporting module in 2017, which enables us Sus t aining our Talent Management Ag e n d a
to manage and benchmark our complaints process. Additionally, We believe that people are the most essential asset to ensuring
the SQM External Customer Survey System enables us to conduct both good patient care and business sustainability. Good care
online surveys to track satisfaction, evaluate the patient experience has been taken to introduce strategic plans to strengthen the
and measure customer loyalty. Our sustained customer service team, create sustainable career development opportunities and
training programmes for staff are provided through a number of improve human resource (HR) processes to make integrated
different avenues, including our Service Quality Coach programme, systems much easier to implement. These include leave
which has progressed to the point where we now have coaches in applications, training programmes and schemes, employees’
hospitals throughout the KPJ network. declaration of assets and the evaluation of their performance, all
of which is primarily conducted online. The utilisation of online
Another key customer-centred initiative was the new KPJ Care processes has afforded our employees with a faster and more
Card which rewards customer loyalty. Up to 90% of all existing efficient means of conducting their work.
cards in phase one have been replaced. Phase two is planned
to link the loyalty function of the card to a good rewards We believe in looking after the wellbeing and welfare of our
redemption programme. staff, with strategic policies in place, including a Medical Top
Up Fund for inpatient and outpatient services. KPJ introduced
Comprehensive details of our customer services initiative and Flexi-Hour in 2017, a unique work hour system for our HQ staff
outcomes can be found within our Sustainability Statement, on which gives them the flexibility to work the hours that fit with
pages 62 to 64 of this Report. their family schedules and responsibilities.

Ma int a in in g o ur H o s p i t a l N e t w o r k E xp a n s i o n St rat egy


In the northern-most state, KPJ Perlis is now committed to open
by the second quarter of 2018.

In the south, KPJ Bandar Dato’ Onn in Johor is scheduled to


open in the third quarter of 2018.

The hospital in Bandar Dato’ Onn is KPJ’s sixth hospital in Johor.


It was completed on time, despite the many challenges. This
was made possible by the effective evaluation system which saw
KPJ’s technical team holding to higher standards of contactor
selection and tender evaluation processes.

Expa n ding o u r M e d i ca l To u r i s m R ea c h a n d Market


Medical tourism is one of the healthcare niches KPJ has identified
as a key enabler to sustain our long-term growth. In 2017, KPJ
recorded a 15% growth, in terms of health tourism revenue,
contributed by several new unconventional markets such as KPJ Healthshoppe new concept store
the Pacific Islands of Tuvalu and Fiji. The Ministry of Tuvalu has
appointed KPJ Hospitals as their preferred healthcare provider
for its citizens by sending complicated cases ranging from cancer,
orthopaedics, neurology, bariatric and eye surgeries.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
24 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

Our continuous training and development initiatives with regards C R E AT I N G V A L U E F O R O U R S H A R E H O L D E R S


to upskilling our employees continue to create value through THROUGH ROBUST REWARDS
our highly skilled and qualified talent base by encouraging It has always been KPJ Group’s belief to reward our shareholders
our employees to avail of continuous education opportunities and investors with valuable dividends in line with their investments
through sponsorships and corporate programmes with in the Group. Over the past number of years, we have remained
incentives for staff who attain higher education qualifications. consistent in our dividend pay outs of between 45% and 50% of
the annual net profit attributable to shareholders. In FY2017, the
In line with our commitment to diversity, a Diversity Committee Group declared a total dividend pay-out of RM74.7 million, or
was set up in 2017 with the aim of increasing our Group’s 1.78 sen per share, which represents a dividend pay-out of 45%.
employee diversity. We have in place a deliberate policy and
action plan aimed at improving diversity at all levels by taking K P J ’ S I N T E G R AT E D H E A LT H C A R E S E R V I C E S M O D E L
affirmative action in diversifying the ethnic base of our staff to At KPJ, we employ an integrated approach towards the
reflect the multi-racial diversity of our country and to serve our provision of healthcare delivery services. The organisation and
multi-cultural patient base of Malaysian and foreign patients. management of health services throughout our network of
hospitals and aged care centres is geared towards ensuring that
A deep dive into our strategic initiatives and outcomes in 2017 our patients obtain the care they need, when they need it, in
can be found further down within the ‘Strategic Progress 2017’ ways that are patient-centric and user-friendly, and achieve the
of this Management Discussion and Analysis, where we look at desired treatment outcomes while providing value for money.
how we have progressed in our six key strategies throughout our
hospital network and operations. We view integration as a continuum, where our various business
units work together collectively, bearing in mind their individual
areas of responsibility, to further the Group’s six key strategic
thrusts to drive our long-term growth and profitability.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 25

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

T H E K P J VA L U E E C O S Y S T E M
We have significantly invested in the creation and development of a healthcare service model which creates sustainable long-term value
for our stakeholders and investors. Each of our business units adds value to KPJ’s operations through its specialised functions.

Hospital Operations New Hospital Development Clinical Operations Ambulatory Care


Our Hospital Operations The New Hospital Development Our Clinical Operations unit The provision of outpatient
division plays an integral role in or Business Development Unit ensures that all the components services include the following:
supporting the smooth running is responsible for expanding of clinical governance is in • KPJ KL Dental Specialist
of our network of hospitals KPJ’s network of hospitals place, with the monitoring Centre
through: through adaptations or changes of compliance by the Group • KPJ KL Rehabilitation Centre
• Continuously reviewing and in the business model for new Medical Advisory Committee to • Haemodialysis services
streamlining processes hospital development, such as ensure best patient outcomes • Consultant clinical specialists
• Enhancing hospital systems design, build and lease models, and ascertaining that patients’ • KPJ Pusat Pakar Mata Centre
• Expanding existing hospitals’ or joint venture concepts to safety is not compromised. It For Sight
capacities to cater to market reduce gearing. also monitors the performance
demand outcomes of several procedures
• Structured professional which are then used to promote
development KPJ’s healthcare services as a
preferred healthcare provider.

Biomedical Services Senior Living Care Ancillary Services Education


Our Biomedical Services This segment provides Ensure the smooth operations • KPJ Healthcare University
division drives innovation customised packages at our of our network of hospitals College (KPJUC) provides a
and growth in KPJ through three senior living facilities in through: wide range of medical and
investments in cutting edge Malaysia and one in Australia. • Supply-distribution value healthcare qualifications.
medical technologies and chain • Malaysia College of Hospitality
equipment. • Reducing dependencies & Management (MCHM)
on outsourced third party trains professionals in Culinary
vendors and supplies Arts, Hotel and Restaurant
Management, as well as in
Early Childhood Education.

Medical Tourism
Positioning KPJ as the preferred provider among international health tourists, aimed at:
• Increasing Group revenue and patient loads by venturing into new markets like China, India and the Pacific Islands
• Boosting KPJ branding regionally and internationally
• Enhancing our patients’ healthcare experience and standards with selected KPJ hospitals having embarked on the patients’ experience quality process
• Promoting Malaysia as a preferred healthcare destination with our extensive network of hospitals nationwide

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
26 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

KEY HIGHLIGHTS OUR REGIONAL NETWORK AND FOOTPRINT

New hospitals opened


FY2017 FY2016 Variance (%)

25 25 0

Operating beds
FY2017 FY2016 Variance (%)

3,052 2,929 4.2

Occupancy rates (Malaysia)


FY2017 FY2016 Variance (%)

66.1% 66.2% (0.1)

Inpatients (Malaysia)
FY2017 FY2016 Variance (%)

286,465 279,794 2.4


Malaysia
Outpatients (Malaysia) 25
FY2017 FY2016 Variance (%)
3
2,473,851 2,464,704 0.4
1
Bangladesh
Occupancy rates (Indonesia)
1 Thailand
FY2017 FY2016 Variance (%)
1
37.4% 46.3% (19.2)

Inpatients (Indonesia)
FY2017 FY2016 Variance (%)

8,294 9,091 (8.8)


Indonesia
2
Outpatients (Indonesia)
FY2017 FY2016 Variance (%)

122,972 110,264 11.5

Occupancy rates (Bangladesh)


FY2017 FY2016 Variance (%)
Australia
52.8% 34.5% 53.0
1

Inpatients (Bangladesh)
FY2017 FY2016 Variance (%)

3,298 2,028 63

Hospital
Outpatients (Bangladesh)
FY2017 FY2016 Variance (%)
Retirement and aged care centre
91,304 43,609 109 University College

Occupancy rates (Thailand)


FY2017 FY2016 Variance (%)

39.9% 38.0% 5.0


Bangladesh Thailand Malaysia Indonesia Australia
Inpatients (Thailand)
FY2017 FY2016 Variance (%)

8,696 8,422 3.3

Outpatients (Thailand)
FY2017 FY2016 Variance (%)

291,316 273,118 6.7

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 27

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

S T R AT E G I C P R O G R E S S 2 0 1 7 KPJ Klang is scheduled to undergo a


Our long-term business strategy coupled renovation exercise in early 2018 to increase
with our strong business fundamentals are bed numbers by an additional 78 beds
the firm foundations upon which we continue bringing it to a total capacity to 145 beds. More RSMBSD
creating transformative growth. clinics will be added, while its haemodialysis
unit will receive an additional 18 dialysis chairs. AND RSMPH
We are driven by a relentless focus on quality The physiotherapy services also expanded. PA RTICIPATE
in everything we do, from the new hospitals
we are building, to the renovations, upgrading Our I ndones ia Foot print IN THE BPJS
and creation of additional capacities of our KPJ has two hospitals in Jakarta, Indonesia, KESEHATAN
existing hospitals. We regard the investments namely Rumah Sakit Medika Bumi Serpong
we make on buildings and equipment, and Damai (RSMBSD) and Rumah Sakit Medika SCHEME
on upskilling our staff and care givers, as
being fundamental to our future success.
Permata Hijau (RSMPH).
AND SERVE
The year 2017 saw both hospitals obtaining THE LARGE
We believe this approach will allow us to
capitalise on both inorganic and organic
their Accreditation status from the Komite
Akreditasi Rumah Sakit (KARS).
POPULATION
growth opportunities, while at the same OF INDONESIA
time ensuring that our team is able to access These KPJ hospitals participate in the BPJS
cutting edge medical technologies and Kesehatan scheme and serve the large
UNDER THIS
solutions to cater to the healthcare needs of population of Indonesia under this scheme. SCHEME.
our growing patient base. The aim of the BPJS Kesehatan is to provide
access to quality healthcare, regardless of
K E Y T H R U S T 1 : C A PA C I T Y B U I L D I N G their income bracket. Strong collaboration
with other local healthcare players will also
R e t ro f it t ing a n d E xp a n s i o n strengthen KPJ’s ability to serve and contribute
of E x is t ing H o sp i t a l s to the healthcare sector of Indonesia.
KPJ Rawang renovated is Paediatric ward on
the 5th floor, which was officially opened in For the year 2017, RSMBSD served more
February, while the Surgical ward on the 4th than 75,000 outpatients and more than
floor opened in August 2017. Haemodialysis 3,000 inpatients. It currently has 9 full
services commenced in March 2017. time specialist doctors and 36 sessional
specialists from various disciplines.
At the end of 2017, KPJ Johor completed the
renovation of its existing building. A second RSMBSD’s services include cardiology,
annex block, completed in Oct 2017, adds a nephrology and O&G services, with a
further 40 beds as well as other facilities. complete Cathlab facility and cardiac OT,
supported by 3 experienced Cardiologists
KPJ Damansara commenced its retrofitting and a team of competent personnel. It is
works to cater to patient demand in special operating at 66 beds currently and has a
care services for intensive care units, together four-bedded ICU facility that can cater for
with the special care nursery. the needs of the local community. Other
high technology facilities include 4-D O&G
Renovation of the Lablink building during ultrasound, 128-slices CT Scan, MRI 1.5 Tesla
the year further expanded and enhanced its and Mammogram. The Hospital also offers a
capabilities to offer international-standard wide range of health support services such
services. This project is expected to be as physiotherapy, laboratorium, endoscopy,
completed in February 2018. and radiology, as well as 16 dialysis
machines currently. The hospital plans to
add another 12 machines next year.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
28 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

KEY HIGHLIGHTS 2017

BANGLADESH
H E A LT H C A R E S E C T O R

RESIDENT
CONSULTANTS

increased by
67%
from 15 to 25

STAFF

grew by RSMPH also invested significantly in this, we have expanded our capacity in
28%
its operations, with the ultimate goal the country at our Sheikh Fazilatunnessa
from 251 to 322
of improving services to its customers. Mujib Memorial KPJ Specialized Hospital &
Primary hardware enhancements during Nursing College through the introduction
BED CAPACITY
the year included the installation of KPJ’s of new services such as urology, plastic
Picture Archiving and Communication surgery, ophthalmology and ENT surgery.
increased from
50 to 80 beds System (PACS) and Laboratory Information We have also added additional consultants
while professional team System (LIS). New medical equipment was in our existing services such as cardiology,
grew to 260 staff also brought in, including a new CT Scan general surgery, internal medicine,
and Ultrasound. Dialysis services were obstetrics and gynaecology, orthopaedics
1 ST IMS CERTIFIED expanded, from only four machines the surgery and paediatrics.
HOSPITAL previous year to 10 machines during the
and Nursing College in year under review. Growing Our Cap ac itie s in Ed u c ation
Bangladesh
Our education subsidiary KPJ Healthcare
Year 2017 saw the hospital serving University College (KPJUC) is a crucial enabler
more than 47,000 outpatients and 4,400 for our continuous growth, as the provider
inpatients. Supported by more than 200 of a ready talent pool of qualified medical
professional staff from various categories professionals to work in our extensive hospital
and 60 Medical Consultants (full-time and network. An important factor in the provision
part-time), RSMPH is committed towards of skilled and qualified medical professionals
delivering quality healthcare services to its is changing healthcare trends which are
customers. shaping healthcare service demands,
especially in terms of specialisations and sub-
While its facilities were being upgraded, specialisations. To remain as the preferred
RSMPH strengthened its working healthcare provider of choice, KPJ continues
relationship with third party providers, to expand the spectrum of its healthcare
including insurance companies, third party services and specialities in line with current
administrators, and general practitioners, and future healthcare needs.
with the ultimate goal of establishing a
sustainable network for the benefit and In line with this, KPJUC introduces relevant
ease of patients. academic programmes every year which
are tailored to meet market needs, while at
E x p a n d i n g our Capacit ies in Banglades h the same time fulfilling the requirements set
t o C a p t u re Market Opport unit ies by the respective Nursing/Medical Boards
The Bangladesh healthcare sector is a of Malaysia and Malaysian Qualification
growing one and presents us with promising Agency (MQA). In 2017, we introduced
potential long-term returns. In line with three new programmes approved by the

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 29

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

STATUS OF ACADEMIC PROGRAMME AT KPJUC

30 + 3
Existing Active New Active
Programmes Programmes

Note: Active programme : Ongoing programme with students enrolling every year
New Programme : Programmes newly approved by MQA and MOHE

STATUS OF STUDENTS ENROLLED IN KPJUC

SCHOOL OF MEDICINE December December Variance


2017 2016 (%)
Master of Otorhinolaryngology (Head and Neck Surgery) 4 7 (43)
Ministry of Higher Education (MOHE) Master of Radiology 7 6 17
Malaysia, comprising the Bachelor of Master of General Surgery 3 3 0
Business Management (Hons), Bachelor of Master of Orthopaedic 4 4 0
Occupational Therapy (Hons) and Bachelor TOTAL 18 20 (10)
of Psychology (Hons).
SCHOOL OF PHARMACY December December Variance
2017 2016 (%)
KPJUC continued with its reputation as one
Master of Science in Pharmaceutical Technology 2 3 (33)
of the leading providers of healthcare and Bachelor of Pharmacy (Hons) 101 115 (12)
medical education, achieving a number of Bachelor of Pharmaceutical with Health Sciences (Hons) 116 164 (29)
firsts in the industry in 2017. It produced Diploma in Pharmacy (Nilai) 341 323 6
its first two homegrown graduates of Diploma in Pharmacy (Penang) 149 157 (5)
Bachelor of Pharmacy (Hons) and Bachelor TOTAL 709 762 (7)
of Physiotherapy (Hons). The Bachelor of
Pharmacy (Hons) programme received its full SCHOOL OF NURSING December December Variance
2017 2016 (%)
accreditation in December 2017.
Doctor of Philosophy in Nursing 3 4 (25)
Master of Nursing Science (Research) 8 9 (11)
KPJUC also participated for the first time in
Bachelor of Science in Nursing (Hons) 24 21 14
the Malaysia Research Assessment Instrument
Certificate in Renal Nursing (Nilai) 20 20 0
(e-MyRA) and the Rating System for Malaysian Certificate in Renal Nursing (JB) 0 0 0
Higher Education Institutions (SETARA). Certificate in Paediatric Nursing 20 20 0
These ratings are important to determine the Professional Certificate in Critical Care Nursing 20 0 100
status of the KPJUC’s academic achievements Professional Certificate in Education & Teaching for 4 0 100
in research and academic programme Nursing Professionals
Post Basic Certificate in Orthopaedic Nursing (JB) 10 10 0
delivery. Furthermore, it measures student
Advanced Diploma in Midwifery Nursing 0 7 (100)
satisfaction of services provided by KPJUC
Diploma in Nursing (Nilai) 568 556 2
throughout their study period on campus.
Diploma in Nursing (JB) 328 308 6
The results of MyRA and SETARA for KPJUC
Certificate in Basic Patient Care Course for Healthcare 0 37 (100)
will be announced during KPJUC’s second Assistant (JB)
participation in 2018 and 2019. Certificate in Dialysis Technician 0 0 0
Certificate in Obstetric Care Assistant 0 0 0
As well as that, KPJUC is also firmly committed TOTAL 1,005 992 1

to developing the medical field in Malaysia


through sustained research and development
projects. More information on this is available
within our Sustainability Statement on page
73 of this Annual Report.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
30 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

SCHOOL OF December December Variance KEY THRUST 2 : ENRICHED CUSTOMER EXPERIENCE


HEALTH SCIENCES 2017 2016 (%)
Master of Physiotherapy 10 5 100
(Research)
Enhancing our Clinical Operations to Provide Patient Centric Care
Bachelor of Medical 32 35 (9) KPJ views patient-centric care management as a strong strategy
Imaging (Hons) to ensure continuous growth by leveraging on enriched
Bachelor of Physiotherapy 75 83 (10) customer engagements to build relationships of trust and
(Hons)
communication with our patients and their families.
Bachelor of Occupational 5 0 100
Therapy (Hons)
Diploma in Medical 140 165 (15) Our customer service delivery model is based on providing
Imaging the highest quality of patient care through a compassionate
Diploma in Physiotherapy 217 288 (25) approach, which takes into account the cultural sensitivities
Diploma of Higher 53 57 (7) of our multi-ethnic patient demographic base. To ensure this,
Education in Operating
Department Practise we have in place a comprehensive set of policies, systems
(in collaboration with and processes, which epitomise a culture of continuous
Liverpool John Moores
University, UK) improvement. In 2017, our Clinical services implemented a
TOTAL 532 633 (16) number of new measures aimed at enhancing the level of care
to our patients as follows:
SCHOOL OF BUSINESS December December Variance • Developed fact sheets for patient information and education
& MANAGEMENT 2017 2016 (%) • Implemented monitoring of “Level of Care” in the Intensive
Diploma in Health 37 61 (39) Care Unit (ICU)
Information Management
• Initiated documentation of “Early Warning Signs” that
Bachelor of Psychology (Hons) 6 0 100
identifies a patient at risk of deterioration whereby the
Bachelor of Business 4 0 100
Management (Hons) medical team can then identify the cause and address it
Bachelor of Arts (Hons) in 10 10 0 accordingly
Strategic and Corporate
Communication
Detailed information on these measures along with other
TOTAL 57 71 (20)
outcomes can be found within our Sustainability Statement on
pages 65 to 68 of this Annual Report.
CENTRE FOR GLOBAL December December Variance
PROFESSIONAL 2017 2016 (%)
Foundation In Science 15 22 (32) Boosting our Customer Service Deliveries
TOTAL 15 22 (32) Within our customer service segment, we have been focused
GRAND TOTAL 2,336 2,500 (7) on implementing initiatives, which augments our level of
customer service. These initiatives include setting up centres of
excellence to expand our capacity and improve our delivery of
care. Hospital operations are continuously integrated in terms
of service delivery, especially with regards to maximising our
services, as well as the operating systems and platforms, which
these are delivered on.

A key move in line with the digitalisation of our business is


to expand our customers’ access to medications and non-
pharmaceutical products through the setting up of our online
retail facility under KPJ HealthShoppe (KPJHS). This initiative
encompasses online prescriptions, online appointments and
an online pharmacy. KPJHS’ interactive online website enables
customers to shop via multiple channels, from the comfort of
their home or on the go. By utilising Search Engine Optimisation,
we are able to be among top rankings for customer searches
on web browsers. Our medium-term plan is to expand the
capabilities of the online pharmacy system to allow customers
to order new and refill prescriptions either through self-pick-up
at KPJ hospital or through mail delivery, and users to view their
prescription history securely online.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 31

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

We also optimised the KPJ customer to a particular clinical specialisation, which


experience through focused improvements can then be answered directly. KEY HIGHLIGHTS 2017
in Service Environment Audits (SEAs),
Standard People Practice (SPP) and SQM Enhancing Customer Service within our
External Survey Audits. The results of these Corporate Client Base
audits are used to generate initiatives Our Corporate Client Management (CCM)
and measures in a structured manner, division is primarily responsible for the 33 Customer Service
customised to cater to needs and gaps management of our corporate client base, Workshops
identified during the audit process. which is a significant revenue contributor conducted by external speakers
to our group’s earnings. Through a and attended by more than
Comprehensive details of our customer centralised CCM function, we are able to 1,000 staff
service initiatives and outcomes can be manage our corporate partnerships in
found within our Sustainability Statement a strategic manner, identifying different
on pages 62 to 65 of this Annual Report. means to enhance revenue in this segment.

New Products & Services to Enhance A key initiative in 2017 was the
SQM Mentoring Program certified
Communications between Patients and PruAmbassador programme, which is a 16 Mentors
Caregivers collaborative venture between Prudential while the Service Quality Coach
KPJ has a robust platform for our doctors Assurance (M) Berhad (PAMB) and Programme has certified
to provide a system for connecting with Prudential BSN (M) Berhad (PBTB). Through 53 coaches
patients and other caregivers such as this programme, a dedicated Prudential
general practitioners, which is seamlessly staff is stationed at selected panel
integrated for ease of communication and hospitals to provide assistance to patients
information exchange. Since then, 12 of with Prudential insurance coverage who
our hospitals are on the doctor portal. are seeking medical treatment.
Group-wide KPJ Care Card
implemented in Jan 2017 with
The system provides patients with a K E Y T H R U S T 3 : I N N O VAT I O N @ T H E C O R E discount card benefits
convenient way to generate appointments in Phase One
for treatment. Doctors can also use the Improving Cancer Treatment Outcomes with
portal to manage their individual web IBM Watson for Oncology
pages, which are developed to provide 2017 was a game changer for KPJ, as it
patients with more information on their marked our groundbreaking new venture
areas of specialisations, key strengths, and in becoming the first private healthcare SQM Portal implemented
areas of interests. provider in Malaysia to acquire and utilise 3 modules
IBM Watson for Oncology, a cognitive • Patient Communication
We rolled out a more integrated online Management System (PCMS)
computing platform for the treatment
• SQM External Customer Survey
appointment system through a pilot of cancer patients. The platform will be • Customer Initiative Knowledge
project involving 10 hospitals from our utilised at five KPJ specialist hospitals base
group. Since its inception, we have seen namely KPJ Damansara Specialist Hospital,
an increase in the utilisation of this system KPJ Ampang Puteri Specialist Hospital,
from both doctors as well as patients. The KPJ Johor Specialist Hospital, KPJ
online system helps patients choose their Ipoh Specialist Hospital and KPJ Sabah
appointment date and time as per the Specialist Hospital. 9,312 staff trained in 2017
doctor’s availability, which is visible on
our hospital websites. This initiative has Watson for Oncology summarises the
reduced waiting times for our patients, key medical attributes of a cancer patient
ensuring a more effective management of to an oncologist to assist in the delivery
appointment bookings in our hospitals. of cancer treatment options. It provides Total of 77,230.5
oncologists with information from more training hours
Patients can communicate with doctors than 300 medical journals, 200 textbooks,
through clinical assistants in managing and 15 million pages of text. Currently,
appointment requests as individual tickets. Customer Satisfaction Index (CSI)
it provides treatment options for breast,
summary performance – KPJ
Additionally, they can utilise the ‘Ask A lung, colorectal, cervical, ovarian, gastric, Group of Hospitals average of
Doctor’ tool to post questions pertaining prostate and bladder cancer. Utilising this 4.35 out of 5

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
32 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

technology, healthcare teams are building the new realigned bone at the precise
BENEFITS OF THE
a more patient-centric cancer care model, position. This new method has improved
PruAMBASSADOR
improving experiences for providers and patient outcome with an improved
PROGRAMME
patients alike, through the surfacing of alignment of facial bones/mandible which
relevant data, bridging disparate sources has significantly restored the patient’s face
• Ensures a smooth of information and identifying treatments to how it looked prior to the accident.
operational process where
that are personalised to each unique
appropriate advice is
patient’s needs. Following the success of this surgery, we
provided to the hospital on
conducted a knowledge sharing exercise
specific cases
For comprehensive details on this new with all KPJ hospitals in the Klang Valley
• Reduces complaint rates
MedTech platform and the benefits it offers so that they could explore the use of
through managing customer
KPJ and its patients, please refer to our this technology in other areas such as
expectations, educating
customers on processes, Sustainability Statement on pages 68 to 71 orthopaedics, cardiology and neurosurgery.
and reducing waiting times of this Annual Report.
• Reduces deferment rates as KEY THRUST 4: NEW NICHES
hospitals are able to confirm Conducting Groundbreaking Surgery
the documents required for Utilising 3D Printing Medical Touris m
submission Medical 3D printing is adding a whole new In 2017, the health tourism market in Malaysia
• Improves customer dimension to MedTech by opening new experienced a positive uptrend, recording
experience through doors to surgeons and researchers in terms increasing revenues as noted by the Malaysia
more efficient patient of treatment and diagnosis. KPJ achieved Healthcare Tourist Council (MHTC). MHTC has
management processes another first in terms of MedTech adoption been positioning Malaysia as the preferred
when we conducted innovative 3D surgery destination for world-class healthcare
at KPJ KL Dental Specialist Centre in KPJ services, and plays a huge role in promoting
international awareness of the strengths of
Tawakkal Health Centre within the specialist
Malaysian healthcare.
area of Oral and Maxillofacial surgery.

Within the industry, there have been strong


KPJ HOSPITALS WITH Oral and Maxillofacial surgery treats many
collaborations between the public and private
PruAMBASSADOR diseases, injuries and defects in the head,
sector which is driving growth. At KPJ, we
COUNTERS neck, face and jaws, as well the hard and soft
have been working on collaborative efforts
tissues of the mouth (Oral) and the jaws and with Malaysian Government Ministries and
face (Crania-maxillofacial). Our Consultant Agencies such as Economic Transformation
Oral and Maxillofacial and Implantology Programme (ETP), MHTC, MOH and Tourism
Surgeon at the facility utilised 3D printing in Malaysia which are aligned to our strategic
• KPJ Perdana a pilot project in 2017. objectives in this niche.
Specialist Hospital
• KPJ Johor 3D printing refers to the use of a digital KPJ’s two-pronged health tourism strategy
Specialist Hospital model to build an object of any size or shape focuses on strengthening our presence in
• KPJ Seremban by adding successive layers of material in a our existing markets of Indonesia, the Pacific
Specialist Hospital single continuous run. This layering capability Islands and Africa, and expanding into new
• Kuching Specialist Hospital allows the manufacturing of complex high potential markets such as China and India.
• KPJ Penang Specialist shapes, for example the intricate structure of
Hospital bones or vascular channels. We are pleased Our marketing initiatives are concentrated on
• Kedah Medical Centre to report that the surgery conducted was a both domestic and international endeavours.
• KPJ Selangor Specialist We have forged a strong relationship with
success, and we intend to continue with our
Hospital foreign embassies both within Malaysia and
innovative work in this area.
• KPJ Ampang Puteri abroad, as a base from which to spread word
Specialist Hospital of mouth recognition of the KPJ healthcare
In this particular case, it involved a patient
• KPJ Kajang Specialist brand. Throughout the year, we maintained
who had a disfigured facial structure as
Hospital a consistent and continuous schedule of
a result of an old accident causing the
external marketing activities which placed
defaced alignment of the mandible bone.
KPJ at international medical conferences
The procedure was performed using 3D
and overseas exhibitions, thus creating
Printed guides and precision surgery
international awareness of our capacities and
devices, with a 3D printed plate to hold
strengths.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 33

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

We also conducted continuous engagement activities such as


KEY MEDICAL TOURISM
Health Awareness Programmes with expatriate communities,
HIGHLIGHTS 2017:
embassies and international schools, referral arrangements with
D E N TA L S E R V I C E S
foreign doctors and health coordinators, and online marketing
PATIENTS VISITS
activities covering key niche services. Another strategy includes the
engagement of an Arabic speaking specialist to expand our base of TOTAL INCREASED
Arab patients who have been patronising KPJ hospitals for the past 7% (2017) 165,458
number of years.

8% In 2017, to spearhead our international marketing drive, we


commissioned marketing agents in our target markets of Indonesia,
(2016) 155,052

2017
China and the Middle East and North Africa (MENA). We also
REVENUE
developed inroads into new markets in the Pacific Islands and
attracting more high value patients from the Tuvalu Islands through TOTAL INCREASED
15%
(2017)
the Ministry of Health, Tuvalu. RM143,224,513
8% revenue
growth in 2017 for
2017 has seen a double digit growth in revenues for health tourism. (2016) RM124,230,778
dental services
The revenue growth was contributed by a few new markets that
have been successfully penetrated such as the Pacific Islands like
Tuvalu and Fiji. The Ministry of Health of Tuvalu has appointed KPJ
Hospitals as their preferred healthcare provider for its citizens by SENIOR LIVING CARE
sending complicated cases ranging from cancer, orthopaedics,
neurosurgery, bariatric, and eye surgeries to name a few. • KPJ Senior Living Care,

5 %
To facilitate this collaboration, KPJ implemented the Flywire Payment
KPJ Tawakkal
• Sibu Geriatric Centre
2017 Gateway at three KPJ Hospitals as a pilot project to facilitate online • Jeta Gardens, Brisbane,
Australia
payments from the Tuvalu Government and other healthcare tourism
• KPJ Kuantan Specialist
clients. In terms of treatments sought after by medical tourists, we Hospital (opened in
found the majority of patients from the Pacific Islands are seeking February 2018)
5% increase in cancer treatment, obstetrics and gynaecology services, and cardiac
visits by medical and urology treatments.
tourists for dental KEY HIGHLIGHTS 2017
care, totalling 822 In addition, we also opened up information centres in various global
locations which promote KPJ’s healthcare network to medical
patients
tourists. SENIOR LIVING CARE

We have distinguished ourselves from our competitors in the market


by offering a spectrum of value-added services to our medical • Increase in 2017 revenue to
tourist patients to ensure a pleasant and seamless healthcare cum RM19 million, from RM17
million in 2016
tourism experience. • Increase in occupancy
of residential aged care
S e n i o r L i v i n g C are segment to 96.7% in 2017,
With an increasing aging population demographic, we have from 85.9% in 2016
identified niche market opportunities in the aged and senior living • KPJ Senior Living Care (KPJ
Tawakkal Health Centre)
care segment. Our strategy within this niche segment employs a received 28 residents for
number of levers to drive growth. We are exploring collaborations high- and moderate-care in
with property developers to set up Senior Living Care centres or 2017
retirement villages with KPJ as the operator. Another strategy is to • KPJ KL Dental Centre and KPJ
offer memberships within retirement villages to the public. We are Centre for Sight provided
support to KPJ Senior
also looking into mutually beneficial affiliations with other aged care Living Care by providing
players, as well as leveraging on the KPJ Care Card to reach out comprehensive care for
to senior citizens. All our senior and aged care centres are staffed senior citizens with dental
by medical care professionals such as nurses and carers who are and/or vision impairment
trained in geriatric care.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
34 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

Expanding our Reach into the Home Nursing Segment


2018 PRIORITIES With the steady increase of the aging population demographic,
there is growing demand for home nursing services for senior
citizens. KPJ provides for this need through KPJ Klang Valley
HOME NURSING Central Home Nursing. Our home nursing services include
health assessments such as blood pressure monitoring and other
• Promoting home care vital signs, glucose monitoring, post-operation monitoring and
nursing through a central teaching about diseases and treatment and preventive measures,
brochure wound care, wound dressing and follow ups. Since the fourth
• Commencing services at KPJ quarter of 2016, KPJ Tawakkal Health Centre has been appointed
Rawang Specialist Hospital to become the coordinator of KPJ Klang Valley Central Home
in 2018 Nursing to further drive growth within this segment.
• Implementation of online
booking system
Strategic Partnership to Grow Lablink’s Pathology and
2018 PRIORITIES
Diagnostic Business
Lablink (M) Sdn Bhd (Lablink) is KPJ’s laboratory arm, the
first in Malaysia to be certified with Bio-Safety Level 3 (BSL3) LABLINK
K P J H O S P I TA L S facilities which allows testing of highly infectious diseases
IN CENTRAL HOME according to World Health Organisation (WHO) standards.
NURSING Equipped with state-of-the-art equipment and technology, • To provide integrated
laboratory support for all
Lablink has capabilities as a Tuberculosis Reference Centre,
diseases in the region
• KPJ Tawakkal Specialist
offering microscopy, culture, sensitivity and molecular testing
• To promote laboratory
Hospital of Mycobacterium. It also offers tests various speciality areas in
excellence in lab tests
• KPJ Ampang Puteri Specialist Medical Laboratory. and professional practice
Hospital
through quality standards,
• KPJ Sentosa Specialist Lablink manages KPJ’s network of 25 hospital laboratories, such as in laboratory
Hospital
• KPJ Damansara Specialist
more than 100 external non-KPJ hospitals and general accreditation MS 15189
Hospital practitioners clinics across Malaysia. Centralising our hospital and Joint Commission
• KPJ Selangor Specialist networks’ laboratory services has afforded KPJ the benefits International (JCI)
Hospital of standardised systems and methods, cost efficient bulk laboratory certification
• KPJ Kajang Specialist Hospital purchasing, and efficient comparison of results among the • To identify more sub-
• KPJ Klang Specialist Hospital specialty niche tests to
laboratories. As well as that, the Lablink Laboratory Information
complement existing
System (LIS) facilitates the online transfer of results which allows
disciplines
for quicker reference and retrieval by doctors in their diagnosis
• To explore new untapped
and treatment of patients. markets
• To forge strategic alliances
KEY HIGHLIGHTS 2017 In early 2018, Lablink entered into a strategic partnership with major international
with Quadria Capital to grow its pathology and diagnostics laboratories
businesses in Malaysia and explore new growth markets in • To be a recognised brand
HOME NURSING Southeast Asia in order to become the regional leader in by market penetration in
pathology and diagnostics services. The partnership also allows Southeast Asia

• 381 clients in total for capex burden to be shifted at the holding level with the
• 539 total visits: addition of a partner.
- 178 maternal KEY HIGHLIGHTS 2017
- 184 medical The partnership was initiated in January 2018 through a
- 177 surgical
proposed subscription and share purchase agreement with KL
Kappa Sdn Bhd and Kumpulan Perubatan (Johor) Sdn Bhd for LABLINK
the subscription of new shares in Lablink by KL Kappa and for
the purchase of some existing shares in Lablink by KL Kappa
• 2017 total revenue of
from KPJ. Under the agreement, the issuance of shares will
RM81 million, up 10%
collectively result in KL Kappa having a 49% stake in Lablink’s from 2016 revenue of
enlarged share capital, with the remaining 51% held by KPJ. RM73 million
• Increased Total Number
of Tests Run in 2017 by
7% to 14.9 million

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 35

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

Ta pp in g In t o S hi f t s i n H e a l t h c a r e Tr en d s t h r ough KPJ Wellnes s and L if es t y le Programme


2018 PRIORITIES
In more recent years, we have witnessed a global shift in lifestyle demographics, with more people
seeking healthy lifestyles in pursuing the age old adage that prevention is better than cure. The KPJ
Wellness and Lifestyle Programme leverages on this as an integrated solution offering our customers
regular healthcare screenings, designed to meet the needs of different individuals, couples and STERILE SERVICES
families. It utilises the KPJ network of hospitals’ advanced medical technology and expert medical SDN BHD
professionals to improve our customers health status through effective patient care.

Since its inception nine years ago, the programme has grown in strength in pursuing the KPJ tagline • To increase the number of
of Care For Life, and inspiring positive changes in individual lifestyles which contributes towards a surgical sets from KPJ hospitals
in the Klang Valley Hospital by
healthier society in general. Today, the programme has more than 19,000 subscribers nationwide and
80%
operates in 16 participating KPJ Specialist Hospitals.
• Standardising and acquiring
standard surgical sets from KPJ
During the fourth quarter of 2017, we conducted a strategic review to identify measures which would
Klang Valley hospitals, which
ensure it was well-positioned to transform with future needs. Among the strategies identified was a
can then be rotated among to
plan to attract new subscribers, and also to reward our existing valuable subscriber base in conjunction ensure a continuous supply of
with the programme’s 10th Year Anniversary in 2018. The programme also aims to expand its business clean surgical sets
by increasing the utilisation of technology in 2018, and attracting new business demographics and • Obtaining MSQH accreditation
corporate collaborations by leveraging on KPJ’s strong brand presence and wide network of hospitals. • Providing ongoing ad-hoc
services to Government
Gro w ing t he n ic h e s eg me n t o f r e h a b i l i t a t i v e t reat ment s hospitals
Rehabilitation treatments are being sought after by a greater portion of the population in line with • Initiating collaborations to
shifting healthcare trends. KPJ KL Rehabilitation Centre provides for this niche segment through purchase surgical instruments
a multi-disciplinary rehabilitation approach which combined physiotherapy, occupational therapy, from India and Pakistan, which
speech therapy and psychologist. It also focuses on neuro-rehabilitation for conditions such as offer greater cost efficiencies
multiple-sclerosis, Parkinson’s disease, Traumatic Brain Injury, Autism in children, adults and senior
citizens, post-stroke care and other areas.

Explo ring Ne w G r o w t h A r e a s i n S t e r i l i s a t i o n of Surgical I ns t rument s


Quality patient care can only be successfully achieved if the surgical instruments used to treat patients KEY HIGHLIGHTS 2017
are clinically clean. Through Sterile Services Sdn Bhd (SSSB), we are providing efficient and consistent
services to CSSD customers in conformance with the international quality standards.

R E H A B I L I TAT I V E
We have a CSSD centre located in Rawang which provides expert high quality sterile supply
administration and customer service, allowing our customers to focus on their core competencies T R E AT M E N T S
and other strategic initiatives. The sterilised surgical instruments are returned to hospitals within 24
hours to ensure there will be no shortages in surgical instruments. The centre is the first of its kind in
South East Asia, and provides services for the sterilisation of surgical instruments from both public and
private hospitals in the Klang Valley and Selangor, resulting in cost savings and greater efficiency. In
2017, we obtained a new external customer, Cardiac Vascular Sentral Kuala Lumpur (CVSKL), who rely
completely on our services for the sterilisation of their surgical instruments. 54%
2017
T OTA L NU M BER O F S T E RILIZE D S URGIC AL IN S T RUM E N T S E TS A S AT 31 D E C 2017
No. Hospital YTD Dec YTD Dec Var (%) BGT 2017 Var (%)
2017 2016
1. KPJ Tawakkal 4,598 3,991 15.2 5,535 (16.9) 54% increase in
2. KPJ Damansara 11,058 11,357 (2.6) 12,300 (10.1) revenue in 2017
3. KPJ Klang 2,598 2,350 10.6 4,305 (39.7)
4. KPJ Rawang 3,876 2,865 35.3 4,920 (21.2)
5. KPJ Ampang 1,758 3,162 (44.4) 4,920 (64.3)
6. KPJ Sentosa 225 10 2,150 0 100.0
7. KPJ Kajang 2,079 1,162 78.9 2,460 (15.5)
Sub Total KPJ 26,192 24,897 5.2 34,440 (23.9)
8. UiTM Sg Buloh 1,931 2,181 (11.5) 2,460 (21.5)
9. CVSKL 269 0 100.0 0 100.0
10. Others 594 1,362 (56.4) 0 100.0
Sub Total Non-KPJ 2,794 3,543 (21.1) 2,460 13.6
TOTAL 28,986 28,440 1.9 36,900 (21.4)

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
36 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

E x p a n d i n g int o N iche Out pat ient During the year, we began conducting
KEY HIGHLIGHTS 2017 S er v i c es wit h Cent re f or Sight roadshows in shopping malls to leverage
KPJ Pusat Pakar Mata Centre For Sight (CFS) on the high volume of Malaysians who
serves as a centre of excellence in eye care, frequent them. KPJ CFS had various booths
K P J P U S AT P A K A R M ATA providing quality clinical care at reasonable in selected popular shopping malls such in
CENTRE FOR SIGHT prices. Its range of specialty services extends the Klang Valley which resulted in a growth
from correcting vision defects using minimally of 20% in lasik services. Moving forward, we
invasive laser treatment known ReLEx will continue to venture into new shopping
SMILE, a flapless form of laser eye surgery to malls that are located in the heart of city and
cornea and vitreo-retinal surgery, glaucoma also urban and suburban townships. As well
treatment, cataract removal with premium lens as to accelerate the use of social media and
11% implants, oculoplastic surgery and paediatric
ophthalmology.
digital marketing platform to reach out to the
younger customers that fit the right profile for
2017 Lasik (aged 18-40 years).
CFS operates in three branches located in
Rawang, Petaling Jaya and Kuala Lumpur, with K E Y T H R U S T 5 : TA L E N T M A N A G E M E N T
Revenue grew 11% to its latest centre housed in Tawakkal Health
RM14.6 million in 2017 Centre equipped with the latest femtosecond Prov iding Opportu n itie s for Ou r
from RM13.1 million laser vision correction technique called ReLEx Employ ees t o Upskill Th e m se lve s
in 2016 SMILE stands for Small Incision Lenticule Talent management is one of our key
Extraction. strategies through which we are able to carve
a strong reputation for ourselves as a leading
In 2017, CFS that provides both inpatient and healthcare provider by having the best
NUMBER OF PATIENT:
outpatient daycare facilities has treated over talents in the healthcare industry on board at
19,000 patients and performed over 2,300 our network of hospitals. We are committed
Day patients procedures. A nominal but growing segment to nurturing our talent base, by providing
increased by 4%
of its cases came from health tourism, where it our employees continuous education
with 2,355 cases in 2017
treated 440 cases in 2017 comprising medical opportunities, both through programmes
tourists from 55 countries primarily from Asia available at higher level institutions of
Outpatients and the Middle East. learning, as well as continuous training and
increased by 5% development programmes at the workplace.
to 19,852 cases in 2017 The Centre continues to actively promote its We believe in motivating our employees,
services, via online marketing, TV billboards and have in place a number of initiatives and
at strategic locations, awareness talks with measures aimed at ensuring their wellbeing
eye screening to the general public and and personal growth.
corporates, co-branded bank promotional
packages tie-ups and roadshows.

S TAT IS T IC S S U R G E R I E S / P R O C E D U R E F O R 3 C E N TR E S

To ta l S u r ge r ie s / P r o c e dur e s f o r YTD ( 2013 - 2017)


1,112
1,101
1,007
993 972
966
899

744
728
700

236
208
194
180
129

2013 2014 2015 2016 2017

Phaco/Cataract Lasik Other Surgeries

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 37

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

KPJ provides opportunities to qualified Among the programmes in the pipeline


employees to further their studies through both to be offered in 2018 include the Master in KEY HIGHLIGHTS 2017
formal education programmes and shortterm Healthcare Business Management, Master
training based on our belief that a strong and of Anaesthesiology and Bachelor of Science
capable workforce is the cornerstone of our in Nursing (Postregistration), Bachelor in SUCCESSION PLANNING
sustainable long-term success. We support our Healthcare Management and Professional
staff in pursuing their medical education, from Certificate in Perioperative Nursing (Post
certificate to PhD level, both within KPJUC and Basic). 264 people
through collaborations with other universities. RECOMMENDED FOR
We also provide our employees further PROMOTION IN 2017
In 2011, KPJUC was the first private education education opportunities through
institution in Malaysia to be approved collaborations with external universities
by MOHE to train and produce medical and colleges. From our perspective, it
specialists. To graduate from these medical offers KPJ the benefits of networking with 76 Staff
specialist programmes, candidates need to renowned institutions of higher learning AWARDED THE
pass the final Conjoint Board examination, and international hospitals of excellence MERIT AWARD
supervised by panellists from Universiti such as the University of East London,
Kebangsaan Malaysia (UKM), Universiti United Kingdom and the University of South
Malaya (UM), Universiti Sains Malaysia (USM) Australia, Australia. Within Malaysia, KPJ has
and KPJUC. KPJUC was also the first private established firm links with public universities
nursing college to initiate the Diploma in such as Universiti Kebangsaan Malaysia.
SPAR Competency
ASSESSMENT FOR DEPUTY
Nursing Programme, as well as the first to MANAGERS AND ABOVE
have the Diploma in Nursing Programme For full details on our various measures, ALIGNED WITH JCORP AND
PILOTED AT KPJ HQ
accredited by Malaysian Qualification including work-life balance, benefits and
Agency (MQA). It enjoys a stellar reputation compensation, providing a safe workplace
in Malaysia as one of the leading private and promoting diversity and inclusion, please
education institutions in the provision of refer to our Sustainability Statement on pages
medical education courses. 87 to 93 of this Annual Report. 3 Participants
UNDERGOING
THE PRESTIGIOUS
A key achievement in 2017 was KPJUC C O N TI N U I N G E D U C ATI O N
JOHOR LEADERSHIP
producing its first two specialists from its P R O G R A MME S F O R K P J S TA F F PROGRAMME, WITH 9
Master of Otorhinolaryngology – Head Programme No. of GRADUATES FROM KPJ
Participants TO DATE
and Neck Surgery programme. There were
also 21 graduates from the Bachelor of MBA, Henley Business School, 7
University of Reading, UK
Pharmacy programme, 52 from the Bachelor
MBA in Healthcare Management, 36
of Pharmaceutical Science programme, Universiti Teknologi Malaysia
and 20 graduates each from the Bachelor Executive MBA, Universiti 5
200 young executives
HAVE UNDERGONE THE
of Health Science and Bachelor of Teknologi Malaysia
EXECUTIVE DEVELOPMENT
Physiotherapy programmes respectively. To Executive MBA, Asia e-University 1 PROGRAMME
date, 92 graduates of Masters in Business MBA, Universiti Kebangsaan 3
Malaysia
Administration and Masters in Nursing have
MBA with University of East 16
been sponsored within the Group. London, United Kingdom KPJ MANAGEMENT
Masters in Nursing (UniSA) 32 TRAINEE PROGRAMME
Additionally, the Bachelor of Pharmacy PhD 4
IN ITS SECOND YEAR OF
IMPLEMENTATION
programme had recently been accorded TOTAL 104
full accreditation by the Pharmacy Board
Malaysia and MQA. Our candidates are Ens uring Succes s ion Planning t o Fut ure 20 completed
therefore assured of the post of a Provisionally Proof Ours elv es the programme
Registered Pharmacist (PRP) in KPJ’s network At KPJ, we are committed to succession
of hospitals upon the completion of their
studies which affords them a competitive
planning through the appointment, training, 19 are undergoing
and determination of compensation levels training
edge over their peers. and, where appropriate, the replacement
of senior management. Our succession
Responding to changing healthcare planning agenda is an ongoing initiative,
trends and market demands, KPJUC has which is reviewed and discussed at various
expanded its programmes venturing high-level management and line function
into the field of healthcare management. leadership meetings within the Group.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
38 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

Cult iv at ing t he Spirit of I nnov at ion


KEY HIGHLIGHTS 2017 wit h Our I nt rapreneurs hip Approach
KPJ has adopted an ‘intrapreneurship’ approach towards cultivating
an innovation mind-set among our employees, whereby we offer
I N T R A P R E N E U R S AT K P J
them the support they require to start off on their own entrepreneurial
ventures. In the past number of years, this approach has resulted in the
Healthcare Engineering Services: Pride Outlet Sdn Bhd (POSB) development of six intrapreneur companies which offer their services
Established in 2014, POSB provides planned preventive
to KPJ’s network of hospitals. Through our ecosystem of intrapreneur
maintenance services for non-imaging medical devices in KPJ’s
network hospitals. In 2017, it recorded a revenue of RM628,000. companies, we are able to benefit from substantial cost savings to the
Group.
POSB is keeping up with global digital trends in radiography
by embarking into Digital Radiography (DR) products and Expanding Our Talent Management Philo sop h y
marketing these to new KPJ hospitals projects and hospitals To Our St akeholders To St rengt hen Our De live r y Ec osyste m
requiring systems upgrades. It expanded its services from KPJ
hospitals in the Central region, to hospitals in the northern and At KPJ, we believe in building the capacities of our ecosystem of
southern regions in 2017. vendors, as the basis upon which they will be able to maintain a high
standard of delivery of products and services which are aligned to our
Stationery and Printing Materials: Skop Yakin (M) Sdn Bhd strategic goal of providing the best quality healthcare services to our
Skop Yakin provides the Group with cost-effective supplies of patients. KPJ’s Vendor Development Programme (VDP) encompasses
stationery and printing materials for marketing and promotional
outsourced vendors such as our linen and laundry services, hospital
collaterals and hospital and office administrative documents.
It also provides event planning and management services and café, medical waste disposal, housekeeping services, home nursing,
plans to expand its reach beyond the Group to other third nursing agency, and ambulance services.
party clients, as well as extending its product range to include
premium and collateral items. The company charted a revenue Ens uring High Employ ee Ret ent ion Rat es
growth of 75% in 2017.
Within the competitive healthcare landscape, KPJ is mindful of talented
Pharmaceuticals:Teraju Farma Sdn Bhd (TFSB) staff being poached by our competitors. To ensure high retention rates
TFSB is involved in wholesale supply of pharmaceuticals and and low employee turnover, we have in place a number of work-life
healthcare-related products to the public and private medical balance initiatives such as our new Flexi-Hour work initiative, which
sector. In 2017, TFSB recorded a revenue of RM71.1 million, an allows for flexible working hours for staff in our headquarters.
increase of 22% from 2016. EBITDA increased from RM1.13
million to RM1.69 million, up by RM0.56 million despite
As well as that, we conducted a special salary adjustment for our
challenges from launching of new products in the market and
price competition. Profit Before Tax stood at RM1.66 million, nursing staff with post basic qualifications as required under the Private
increased by 49% from RM1.11 million during the same period Healthcare Facilities and Services Act (PHFSA). We also conducted a
last year. TFSB will also be focusing on the enhancement of salary rationalisation exercise for all employees due to the minimum
its IT systems and working closely with its business partners to wage adjustment in Malaysia. Other incentives during the year
penetrate new customer markets in relevant healthcare sectors.
included a KPJ Medical Top Up fund for inpatient services, and the
Hospital Catering: Total Meal Solution Sdn Bhd (TMSSB) standardisation of annual leave.
Founded in 2015, TMSSB initially provided inpatient meals to
KPJ Klang Specialist Hospital, and then expanded its coverage
to KPJ Rawang Specialist Hospital a year later. As at end 2017,
FLEXI-HOUR
TMSSB now provides inpatient meals for 6 hospitals in the KPJ
network.

• KPJ Klang • KPJ Seremban • KPJ Pahang Clock-in time is flexible between 7.30 am and 9.00 am
• KPJ Rawang • KPJ Sentosa • KPJ Tawakkal
Staff are required to fulfil minimum 8 working hours per day
work at any time (excluding Saturdays)
REVENUE OF ACCUMULATED
Earliest cut-off work time is 4.30 pm (Mondays to Fridays)
RM6 PROFIT OF

Million, RM300K Compulsory for staff to punch their clock-in and clock-out
UP BY 145%
INCREASE BY 200% FROM 2016
FROM 2016

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 39

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

Tr a nsf e rrin g S k i l l s a n d K n o w l ed g e R e g i o n a l ly This move has reduced technology investment costs in our
We have been using the synergies available throughout our hospitals by as much as 75% through reductions in hardware
network of aged care centres to transfer and share knowledge and software licensing costs over the next five years. Among the
and skills, thus ensuring that our senior care services are systems improvements are data virtualisation, new Microsoft.Net
aligned to international aged care living guidelines. In 2017, developments to revamp the client-server hospital information
we conducted a knowledge sharing and transfer programme system, and upgrading HITS and KCIS to second generation
from Jeta Gardens in Australia to our Malaysian operations. This cloud computing products, namely, HITS2 and KCIS2.
was conducted through continuous education programmes for
our staff to ensure they provide high quality assistive nursing This has enabled greater integration capabilities and a unified
care services with empathy and compassion. In the medium- to patient identity within a network information hub that maintains
longterm future, we intend to continue with our approach of the medical records and the medical history of any patient. HITS2
continuous transfer of knowledge within our regional network, and KCIS2 also provide capabilities to integrate with other third
as we set in motion plans to identify and launch new aged care generation products such IoT, IBM Watson, Artificial Intelligence
facilities and services. and other products that offer greater benefits through the
adoption of new medical technologies. HITS2 and KCIS2 delivers
KEY THRUST 6 : BUSINESS PROCESS IMPROVEMENT on data standardisation and consistency, with opportunities
to adopt and use Big Data for analytics purposes to predict
H a rn e ss in g t h e P o t e n t i a l o f I n d u s t r y 4 . 0 t o Creat e operational and business improvements, and improving the
Lo n g- t e rm B u s in e s s Va l u e accuracy and speed of management decisions.
Within the healthcare sector, patients are increasingly seeking
improved results within the healthcare delivery value chain. They We understand the risks and threats in private and public Clouds,
seek increased access to services, faster diagnosis and better and cybersecurity, information security and data protection is a
treatment outcomes within a healthcare delivery system which key priority to ensure data integrity. In line with this, we have
offers them greater convenience. To cater to these demands, invested heavily in cybersecurity to comply with ISO27001
KPJ needs to be innovative in the way it approaches the delivery pertaining to security policies to manage data security incidents
of patient-centric healthcare within our network of hospitals. and improve business continuity.

In order to remain ahead of the curve as an industry leader, KPJ is KPJIT is also exploring MedTech opportunities in the area of
moving towards becoming a fully innovative service provider, in wearable medical technology solutions to be launched in 2018.
line with the demands of the 4th Industrial Revolution or Industry These will improve our patients’ health outcomes by offering
4.0. Within the field of MedTech, Industry 4.0 leverages on continuous health monitoring capabilities with alerts by medical
digital data, interconnectivity, automation and a digital customer providers. Other technology improvements such as piloting
interface to open the doors to new sensor and data analytic MedTech products like IBM Watson and implementing robotic
operations, as well as remote surgical procedures, training, automation processes increases the efficiency of our operations
maintenance and service operations. and services. Our systems enhancements and technology
solutions create long-term value for our business by integrating
Through KPJ Information Technology Services (KPJIT), we the KPJ hospital network to create a culture which promotes a
are sharpening our focus on Industry 4.0. KPJIT has in place more effective and meaningful application of technology.
a 10 year strategic plan focusing on enhancing our Group’s
business processes through infrastructure improvements, Cloud Enhancing Our Cy bers ecurit y
Computing, Big Data, cybersecurity, Internet of Things (IoT), KPJ takes the protection of its data, especially patient details,
Systems Integration and Simulation. extremely seriously. We are in the process of strengthening our
capabilities and capacities in managing threats and vulnerabilities
In 2017, KPJIT upgraded its infrastructure by moving the entire in this area, especially with regards to enhancing our cybersecurity
network of KPJ hospitals onto the Cloud. By modernising our protocols. Our efforts are centred around the primary areas of
information infrastructure, we are able to capture opportunities Governance and Data Integrity. In line with this, KPJ’s framework
available through data virtualisation, and enhance our capabilities to safeguard Information Security, Cyber security and Data
to build and manage data integration and refine our processes. Protection is guided by the ISO/IEC27001: Security of information
and ISO9001 : Quality management systems.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
40 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

R a mp i n g Up Our information, e-pharmacy, e-ordering and


KEY HIGHLIGHTS 2017 C l i n i ca l Operat ions Proces s es clinical reporting. For patients, they are
Clinical operations form the base of our able to enjoy an integrated healthcare
healthcare services, and ensuring optimal experience, beginning from registration to
C L I N I C A L O P E R AT I O N S
efficiencies with regards to business process diagnosis to treatment and follow-up care,
improvement within our clinical operations as well as electronic orders.
• Developed standardised
remains a priority. We continuously monitor our
consent forms for the Group
• Reviewed KPJ By-Laws and clinical governance and processes to ensure KCIS has been integrated with the Electronic
Rules and Regulation for the that our operations are at maximum efficiency. Medical Record (EMR) system, which digitises
Medical Professional and centralises patient records for easier
• Developed new governing
policies: In 2017, we conducted the monitoring retrieval and access, allowing for more
- Guideline On Audio Video of compliance of clinical protocols, with efficient medical record maintenance. It is also
Recording regards to best practices in OTs, the Intensive integrated with Lablink Antibiogram, which
- ICU Enteral Feeding
Care Unit (ICU) and A&E, in order to ensure allows for the sharing of a bacteria’s profile
Guidelines For Adults
- Policy on Fertility Services that we are providing the best quality of in terms of susceptibility or resistance pattern
- Policy on Use of Entonox in healthcare to our patients. to a panel of antibiotics with clinicians, thus
Labour Room
ensuring better patient outcomes.
- Guideline for Cancer Marker
screening for the General We also developed and monitored the use of
Population Antibiogram for Urinary Tract Infection (UTI). In 2016, we upgraded KCIS to version 2.0,
UTIs are one of the most common forms of known as KCIS2, where new features were
nocosomial or Hospital acquired infections incorporated to further enhance the efficiency
KCIS (HAIs), which increases the cost of medical of the system. We began with a pilot project
care, extends hospital stays and reflects on at KPJ Kajang, and thereafter continued
• 1 hospitals on KCIS2 as at end the morbidity and mortality of the admitted with upgrading more hospitals with the
2017 patients. KPJ has always maintained a policy new system. Among the new features and
• 27 hospitals to be integrated
of reducing HAIs, details of which can be modules available in KCIS2 is an Electronic
into KCIS2 in 2018
• Completed the development found within our Sustainability Statement on Medical Record Application (EMRA), Risk
and User Acceptance Tests page 67 of this Annual Report. Management and Incident Reporting system,
(UAT) of KCIS2 and greater integration between healthcare
D i g i t a l i sat ion of our N et work services and its operations.
KPJ views the digitalisation of our integrated
HITS healthcare network as crucial to driving Enabling greater hospital network
growth by leading through innovation and integration with HITS
technology. Forming the bedrock of our IT- Introduced in 1997, HITS is an integrated
• 1 hospitals on HITS2 as at end
2017 based clinical service innovations is KCIS and hospital management system covering the
• 27 hospitals to be integrated HITS. Our digitisation drive is an ongoing complete range of patient service processes
with HITS2 in 2018
mission, as we continuously harness cutting from registration to billing. Its functionalities
• Completed the development
and User Acceptance Tests edge technology and IT platform upgrades also extend to financial and material
(UAT) of HITS2 to improve our systems to ensure a robust management modules, making it a highly
digitised business model. reliable and robust system to support our
hospital network operations.
Facilitating Seamless
Communications Through KCIS KCIS2 and HITS2 work together in a
Introduced in 2011, KCIS integrates the complementary manner, enabling greater
entire KPJ healthcare network to ensure that integration between our hospitals enterprise-
our patients are able to enjoy a seamless care wide with Mobility and IoT capability to enhance
experience by catering to the clinical activity healthcare management, care providers and
needs of our network of hospitals. The patient experience and expectations. It forms
platform facilitates seamless communication the main thrust of KPJ’s focused improvement
amongst clinical professionals through measures in the area of data warehousing
its key functionalities of patient clinical with second generation products and also

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 41

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

KEY HIGHLIGHTS 2017

PHARMASERV
ALLIANCES SDN BHD

• Received Lean Management


recognition from the Malaysia
Productivity Corporation
• Participated in KPJ Quality
Workshop and qualified for
2018 KPJ Innovative Creative
Circles
• Obtained IMS Certification
comprising ISO 9001 : 2015,
ISO 14001 : 2015,OHSAS
18001 : 2007
• Enhanced purchasing module
component of its inventory
system to increase efficiency
KCIS is a system that caters to the clinical activity needs of the hospitals to in stock management
facilitate seamless communication amongst clinical professionals. • Continuous improvements of
warehouse policies and flow
processed resulting in delivery
introduces Big Data Analytics to tap into network of hospitals and companies, as well of goods in a timely manner
thus meeting customer
the Group’s vast data network, providing as external clients within the government
expectations
greater insights for more robust and informed sector and other healthcare sector players.
decision-making processes. By employing volumetric purchases, PASB is
able to achieve profitable growth and retain
In 2016, we had upgraded the system to HITS2 a competitive edge by transferring cost 2018 PRIORITIES
through a pilot project at KPJ Pahang Specialist savings to customers.
Hospital and continued with upgrading other
hospitals in our network in 2017. HITS2 offers Over the years, it has recorded consistent PHARMASERV
greater integration of hospital operational growth in revenue and profitability. In 2017, ALLIANCES SDN BHD
processes such as accounting, centralised its revenue increased to RM420 million, from
billing, inventory, pharmacy and business RM387 million in 2016. Profit for 2017 stood • Offering cold chain storage
management. The platform is accessible by at RM2.9 million, almost 63% from 2016 and distribution services
wards, ancillary departments, pharmacies, profit before tax of RM1.8 million. • Directly sourcing from
manufacturers and importers
purchasing departments, clinics and our
such as Sole Distributors/
business office. As a real time platform, it I mprov ement s in Qualit y As s urance Product License Holders/
allows for data to be collected and analysed and Cert if icat ion Authorised Representatives
in a timely manner. HITS2 is operated within Our continuous improvements in our quality (AR) to obtain greater cost
optimisations in the purchase
strict accessibility protocols so as to ensure the assurance and certifications have garnered of medical devices
confidentiality and reliability of the information a number of external validations, reflecting • Setting up an E-Procurement
residing on the system. the marketplace’s trust and faith in our portal for the Group
• Focusing on digital marketing
network of hospitals. In 2017, KPJ conducted strategies to boost revenue,
Opt im isin g o ur M ed i ca t i o n D e l i v er y its first quality workshop with 20 hospitals maximise social media
S y s t e m s a n d C o s t s t h r o u g h P h a r ma s er v participating in it and presenting their influences and convert current
Allia n c e s website to an e-commerce
best practices for clinical and non-clinical
enabled platform
Established in 1965, Pharmaserv Alliances services. A total of 32 ideas were chosen as
Sdn Bhd (PASB) is KPJ’s centralised Best Practices for both categories. This new
wholesaler and distributor of pharmaceutical, platform enhances the Group’s ability to
medical disposables and other hospital harness benefits and adopt innovative new
related products. Its clients are the KPJ ideas through knowledge sharing.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
42 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

AWARDS Moving into 2018, we have identified the Within the intensely challenging private
following priorities to enhance our quality healthcare sector, we are witnessing more service
assurance commitments: providers join the market place, or existing
• ISO 9001:2015 and Lean Management service providers expanding their healthcare
– aiming for the implementation of the network in their bid to gain more market share.
ISO 9001:2015 certification and Lean With different healthcare companies vying for the
Management practices as the basis for services of talented and highly skilled medical
Prime Minister’s Industry continuous improvements in our Quality professionals, this presents us with the challenge
Excellence Award – KPJ Management Systems of finding the Right Fit in terms of attracting and
Klang Specialist Hospital • Green Environment Initiatives – the following retaining the right talent to drive our agenda of
was the winner of Malaysia
Prime Minister’s Award
targets have been identified for 2018: continuous growth and profitability.
- KPJ Rawang Specialist Hospital is
aiming for the Energy Management We are cognisant of the need to innovate
Gold Standard Under ASEAN Energy continuous change within the Group, as we
Management Scheme (EMGS AEMAS) strategically enhance our integrated healthcare
2 Star certification service model to retain our leadership position
- KPJ Seremban Specialist Hospital will as the largest healthcare provider in Malaysia.
be participating in the National Energy To remain as the preferred healthcare provider,
Asian Hospital Management and Green Technology Awards 2018 and to strengthen our brand presence regionally
Awards 2017 – Excellence (NEGTA) within the Energy Management and internationally, we have drawn up a set of
award given to KPJ in Buildings and Industries category for strategic initiatives for 2018 which are aligned to
Johor Specialist Hospital
under the Innovations in
Buildings consuming more than 2,000 our six key core strategies.
Healthcare Technology MWh per year
Project category • Best Practice Competition – To encourage 2018 STRATEGI ES F OCUS
innovative new ideas, KPJ will be conducting
an internal Best Practice Competition for the Adopt ing Focus e d Strate g ie s
entire KPJ Group of Hospitals as part of KPJ To Generat e Contin u ou s Growth
Quality Convention 2018 Moving into 2018, KPJ is acutely aware
that the competitive business landscape is
G R O U P F ORWARD MOVI N G STATEMEN T shifting. Innovation therefore will be a key
As we move forward into 2018, KPJ remains focus area for us, taking shape through further
Kuala Lumpur Mayor’s firmly committed to sustaining our business digitalisation of our services.
Tourism Awards 2017 – KPJ mission by leading the way through leveraging
KPJ Tawakkal Specialist
Hospital and KPJ Tawakkal
on innovation and technology. We are optimistic Digitalisation will enable greater access to
Health Centre obtained on our outlook for the year ahead, as we expect improved care for all Malaysians and health
the Platinum Award for the the reap the rewards of plans and initiatives we travellers alike. KPJ will continue to adopt the
Medical Tourism Category
have put in place as part of our overall strategy latest in technology for its operations, marketing
to stimulate organic and inorganic growth and and service delivery, with planned investments
strengthen our capacities. in improving our business and financial systems
and processes, thus driving efficiency and
We remain cognisant of the challenges 2018 improvement in financial reporting required to
brings for us. Within our corporate client base, support a fast growing business.
we are seeing companies reducing their
employee healthcare benefit budgets to achieve Our New Business Unit has been charged with
International Innovative and greater cost optimisations within their respective the task of identifying new areas of growth
Creative Circle – KPJ Pahang business models. Changes are also expected which will stimulate our competitiveness
Specialist Hospital
in the healthcare regulatory landscape, with within the healthcare sector and differentiate
MOH adopting new regulations pertaining to us from our competitors. A key way it intends
specialised manpower and specialists, which to achieve this is by focusing on developing
form the majority of our employee base in the our outpatient services by expanding its
provision of high quality healthcare services. market coverage, bearing in mind the
tremendous growth in terms of outpatient

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 43

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

numbers over the past few years. This initiative was selected for and non-healthcare training programmes. KPJUC will also conduct
implementation under KPJ Blue Ocean Strategy. In line with this, an aggressive marketing drive to increase its student enrolment
KPJ’s ambulatory or outpatient medical care services will identify numbers, and a total of RM1.5 million has been allocated to rebrand
how to enhance opportunities in the provision of outpatient KPJUC and to promote its academic programmes on the national
care, as well as expanding and upgrading our outpatient day and international stage.
care facilities to provide our customers with a more comfortable
healthcare experience. In order to record healthy and sustainable financial performance,
KPJUC will be conducting an efficiency drive with regards to the
By analysing healthcare market trends and identifying gaps in the management of its expenses to drive cost optimisation. Among the
market, we are exploring new markets both locally and overseas. We measures identified is the implementation of e-green technologies
are also investigating and evaluating potential strategic alliances with to reduce its utilities costs by 5% per annum, reducing rental costs
international players who complement our strengths and skill sets. by merging KPJ International College (KPJIC) and Malaysian
From a regulatory perspective, in order to maintain strict adherence College of Hospitality and Management (MCHM) facilities, and
to increasingly stringent MOH regulations in healthcare, we will be revising the Real Estate Investment Trust (REITS) rate of KPJUC Nilai.
maximising our current nursing manpower to adhere to these.
Aggressive and intelligent marketing on online and social media
Within our medical tourism segment, we are seeking to expand In an increasingly digitalised world, where consumers are seeking
our reach to the two new global superpower markets of China out service providers for almost all aspects of their life, it has become
and India, with their populations showing an increased preference a business imperative for companies to establish a strong digital
to seek private healthcare services abroad. Leveraging on the marketing presence through the utilisation of online and social media
synergies of our wide hospital network, we will be looking at cross- platforms. Responding to this, KPJ has embarked on a sustained
selling doctors and consultants’ medical services and treatments marketing campaign which is both aggressive and intelligent in
on an inter-hospital basis. identifying suitable online and social media platforms to reach out to
its target market.
In the past few years, we have been focusing more on niche and sub-
specialisation medical services as a way to differentiate ourselves Within the medical tourism segment of our business, we will be upping
in the marketplace, and within the medical tourism segment, will the ante on our digital marketing efforts, through more aggressive
be promoting these more aggressively by coming up with Group- online and social media marketing campaigns. Among them is the
wide packages. With regards to our medical packages, we will utilisation of the Doctors Portal to enhance the cross-selling and
be developing more targeted packages, especially in treatment promotion of our consultants’ medical specialities and sub-specialities.
areas that offer high margins. Within selected KPJ hospitals, We will also be developing a targeted plan to increase the number
we will be establishing a cohort of Healthcare Tourism Friendly of likes for each of our hospitals’ Facebook accounts, by focusing on
Hospitals, whose services and treatment packages are geared content which is relevant and interesting for users.
towards providing for medical tourists’ needs.
This entails the development of content-driven digital marketing efforts
C o nt in ue t o c re a t e emp l o y me n t which are more personalised and pushed towards the right target
op p o rt un it ie s f o r f u t u r e g e n e r a t i o n s audience, highlighting KPJ’s unique selling propositions by providing
KPJ’s job creation agenda is tied in to our growth strategy, with the relevant information about healthcare, disease and wellness. Our
expansion of our network and into new niche markets, specialities and marketing content will be expanded to include videos within the KPJ
sub-specialities acting as an enabler for the creation of talent pipeline TV and YouTube platform to develop, index and increase the number
employment opportunities for future generations. It is also borne of user likes and views in order to generate a viral marketing effect.
through the performance of our education arm KPJUC, as a talent
pipeline, providing medical and healthcare education for the younger Superior Cus t omer Ser v ice
generation. We remain committed to ensuring our network of hospitals
continue with their forward moving momentum to deliver superior
With regards to KPJUC, the plan has been put in motion to achieve customer service by focusing on patient-centric benefits. Within
full university status by 2020, and we are currently in the midst of our Clinical Operations unit, we have planned a number of new
strengthening our education delivery model in tandem with this. initiatives which will augment our healthcare delivery levels. These
We have also targeted enrolment of 2,800 students in its academic include a Stroke Management Centre, a Remote Healthcare Digital
programmes to ensure consistent growth of student numbers, along Monitoring System in collaboration with JCorp, the setting up of a
with actively promoting Continuous Professional Development (CPD) nursing initiative known as Magnet Hospital and embarking on the
programmes to internal and external clients for various healthcare mQuit Smoking Cessation Programme in collaboration with MOH.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
44 K PJ HEALT HCARE BERHAD

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

As well as that, we will begin QR coding our patients, from point In the medium- to long-term, we will be working on developing
of entry from Pharmaserv to hospital inventory, dispensing and the employee experience within an ecosystem that integrates
administration of medication. Our Doctors Portal will be updated the three core components of engagement, culture and
with information on Clinical Governance Policies, online medical performance management.
journals and reference materials, benchmark performances and
use of the Statistical Performance Control Chart reports, all of We are committed to digitalising the human resource function
which will assist our doctors offer better treatment outcomes for through the ongoing digitalisation of the workplace, as an
their patients. important element to improve the employee experience by
analysing employee data. We are looking at ways and means to
In 2018, we will be conducting a benchmarking exercise along incorporate the ‘Gig Economy’ into the KPJ way of working. The
with monitoring of performance measurements for nephrology, Gig Economy is a labour market characterised by the prevalence
ophthalmology and cardiology specialities. There will also be a of short-term contracts or freelance work, as opposed to
new Hospital Information Management System (HIMS) structure, permanent jobs. Within KPJ, we have identified that having
which will add to our operational efficiencies in providing the flexible work provisions will drive our value proposition as an
best level of clinical care for our patients. For our inpatients, employer to expand our candidate talent pool and retain highly
their hospital stay will be enhanced with a new menu which valued employees.
incorporates nutritional information with regards to their food
choices. Succes s f ul migrat ion t o KCI S2 and HITS2
Moving into 2018, we are determined to complete the successful
In line with ensuring our nurses receive continuous training and migration of our hospital systems to KCIS2 and HITS2. Our target
development to upskill themselves, we will be conducting a is to ensure successful migration within 28 hospitals in our Group.
number of workshops and seminars in 2018, such as KPJ Medical In the medium- to long-term, we will also be looking at different
Workshop, Nursing Workshop, Nursing Seminar – Forum with the and innovative ways to inject more automation and automated
Nurses, KPJ Antibiotic Awareness Week and Intensive Course in processes into the operations of our hospital network.
Obstetric Emergencies (iCOE).
We have identified several measures which will result in
Our Customer Service unit remains focused on the continuous substantial cost savings with regards to KCIS2 maintenance to
development of a strong service culture. The internalisation of the tune of €300,000 (approximately RM1.4 million, at a forex rate
the train-the-trainers programme is anticipated to be completed of RM4.81 to €1). Our aim is to implement these measures within
by 2019 with the intention of realising a KPJ Service Academy 13 hospitals by year end 2018 so we can benefit from greater
by 2021. The KPJ Customer Service Training Services Business cost efficiencies. As well as that, we are aiming for compliance
Unit will be able to produce qualified trainers, with updated and with ISO9001 and ISO27001 Standard Operating Procedures,
relevant content, and conduct service consulting. Staff will be and will be implementing the measures and actions identified in
equipped with the correct tools and appropriate knowledge on order to attain this.
excellent customer service deliveries with training by our Service
Quality Coaches and SQM Mentors. We are confident that through these set of focused strategic
initiatives, we will remain on course in our transformation journey,
To ensure efficient and effective Customer Communications as we aim to be a regionally and internationally acknowledged
Management, several SQM Portal enhancements are in the world-class healthcare service provider, as a key driver to ensure
pipeline including the introduction of additional workflow areas our sustained long-term growth and profitability.
that will improve service deliveries such as housekeeping, dietary
services and maintenance. Building on the success of the KPJ
Care Card, we will be introducing a self-managed loyalty system
for card holders whereby customers will be able to conduct
additional transactions with KPJ online.

Effective talent management is another means by which we can Dat o’ Amiruddin Abdul Sat ar
ensure superior customer service. Within this area, KPJ intends President & Managing Director
to effect a paradigm shift in the way we manage our talent, KPJ Healthcare Berhad
moving from employee engagement to employee experience.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 45

GROUP FINANCIAL REVIEW

G R OUP F I N AN C I AL H IGH L IGH TS


We are pleased to report the Group turned in a healthy 7% growth in revenue to RM3.2 billion in 2017 as CONTINUING
compared to revenue of RM3.0 billion in 2016. O P E R AT I O N S

The Group's profit before zakat and tax (“PBZT”) for 2017 was recorded at RM233.3 million a slight increase M A L AY S I A
in comparison to RM220.7 million in 2016.

In line with the revenue reported, the Group registered an increase in net profit, 6% to RM173.3 million as
compared to net profit of RM163.6 million in the preceeding year.
Variance
S EGM EN TA L F I N A NCIAL H IGH L IGH TS increase

The bulk of the Group's 2017 revenue was derived from continuing operation, mainly from the Malaysian 8%
segment which contributed 97% of the total revenue. Higher revenue recorded for the current year was
mainly attributed by the increase in number of episodes and complex cases per inpatient, in line with more
promotional activities and healthcare tourism effort.
2017: RM3,071.4 million
In 2017, the new hospitals within the Group, such as KPJ Klang, KPJ Rawang, KPJ Pasir Gudang, KPJ Bandar 2016: RM2,855.6 million
Maharani and KPJ Pahang has shown tremendous improvement and contributed significantly to the Group’s
revenue growth. This has also resulted to an increase in profit before zakat and tax by 6% in 2017 as compared
to 2016.
OTHERS
Revenue from Others segment reported a decrease from RM114.0 million in 2016 to RM108.6 million in 2017,
mainly due to the Indonesian operations. Others segment comprised of hospital services in Indonesia, Thailand
and Bangladesh, private university college of nursing and allied health and sale of hospital merchandise and
other similar activities. The decrease of revenue reported in this segment was mainly contributed by lower Variance
number of patients, particularly for Rumah Sakit Medika Permata Hijau, and also due to appreciation of Malaysian decrease
Ringgit towards end of the year has resulted to increase in foreign exchange loss. 5%
Revenue from discontinued operation segment (Australia segment) was reported at RM54.8 million, increased by 6%
as compared to revenue in the corresponding period of the preceding year which was reported at RM51.5 million.
This segment reported a negative EBITDA of RM3.1 million, an improvement of 35% as compared to the negative 2017: RM108.6 million
EBITDA of RM4.8 million reported in the corresponding period of the preceding year. 2016: RM114.0 million

D I VI DEN D
In respect of the financial year ended 31 December 2017, the Group declared and paid the following interim
payments:
DISCONTINUED
B e f ore share spl it O P E R AT I O N
• First interim single tier dividend of 2.20 sen per share on 1,048,780,787 ordinary shares, declared on
22 February 2017 and paid on 28 April 2017. AUSTRALIA
• Second interim single tier dividend of 1.80 sen per share on 1,050,642,255 ordinary shares, declared on
26 May 2017 and paid on 21 July 2017.
• Third interim single tier dividend of 1.50 sen per share on 1,054,566,823 ordinary shares, declared on
24 August 2017 and paid on 12 October 2017.
Variance
A ft e r share spl i t increase
• Fourth interim single tier dividend of 0.40 sen per share on 4,218,227,992 ordinary shares, declared on 6%
23 November 2017 and paid on 22 December 2017.
• The Directors did not recommend the payment of final dividend in respect of the financial year ended
wa31 December 2017.
2017: RM54.8 million
B e f ore share spl it 2016: RM51.5 million

Interim Date declared Date paid Cents per share No. of share RM’million
1 st
22-Feb-17 28-Apr-17 2.20 1,048,780,787 23.1
2nd 26-May-17 21-Jul-17 1.80 1,050,642,255 18.9
3 rd
24-Aug-17 12-Oct-17 1.50 1,054,566,823 15.8

A ft e r share spl i t
Interim Date declared Date paid Cents per share No. of share RM’million
4th 23-Nov-17 22-Dec-17 0.40 4,218,227,992 16.9

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
46 K PJ HEALT HCARE BERHAD

GROUP FINANCIAL HIGHLIGHTS

RE V E N U E PROFI T BEFORE ZAKAT AN D TAX NET PROFIT FOR THE FINANCIAL YEAR
R M ’0 0 0 R M’ 0 0 0 RM’000

3,179,998 233,326 163,633 173,296


2,969,603 218,084 220,697
2,847,593 209,608
147,246 145,129
2,639,136 159,557
2,331,648 110,365

2013 2014 2015 20161 2017 2013 2014 2015 20161 2017 2013 2014 2015 20161 2017

S H A R E C A P I TA L BASI C EARN I N GS PER SHARE DI VI DEND PER SHARE


’0 0 0 SEN S EN

4,281,413 14.06
13.04
7.50
10.40 7.00
6.00

1,054,492 1,063,569
1,030,748
981,910 3.78
3.53 1.78
1.20

2013 2014 2015 2016 20173 2013 2014 2015 20162 2017 2013 2014 2015 20162 2017

S H AR E HO L D E R S FU N D S N ET TAN GI BL E ASSETS N ET ASSET PER SHARE


R M ’0 0 0 R M’ 0 0 0 RM

1,726,795 1,575,774 1.40


1,595,088 1,439,162
1,307,899 1.27
1,471,583 1.11
1,105,478 0.40
1,259,360 936,463 0.37
1,085,636

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 20162 2017

REVENUE PER BED 1


The figure was restated for the effects of discontinued operation. The figure reported before
R M ’0 0 0 restatement will be as follows:

672
696 (RM’000)
646
- Revenue 3,021,094
609
- Profit before zakat and tax 210,171
548
- Net profit for the financial year 155,875

2
The comparative figure (FY2016 only) was adjusted following the subdivision of 1 ordinary share
into 4 ordinary shares pursuant to the share split exercise which was completed on
27 September 2017.

2013 2014 2015 2016 2017 3


Effect from adoption of Companies Act 2016 - transition to no-par value regime

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 47

G R O U P O P E R AT I O N A L H I G H L I G H T S

NO. O F K P J H O S P I TA L S I N M A L AYSI A N O. OF BEDS

23 25 25 25 25 2,714 2,851 2,912 2,929 3,052

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

OCCUPANCY RATE OUTPATI EN T S

66% 69% 68% 66% 66% 2,475,371 2,534,052 2,476,796 2,464,704 2,473,851

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

I N PAT I E N T S

261,697 280,667 279,419 279,794 286,465

2013 2014 2015 2016 2017

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
48 K PJ HEALT HCARE BERHAD

S TAT E M E N T O F VA L U E A D D E D

VALUE D IS T R IB UT I O N
The value that KPJ Healthcare Berhad creates for its stakeholders can either be in the form of financial return or in non-financial or
intangible forms.

The Statement of Value Added illustrates how KPJ Healthcare Berhad’s performance supports the Group’s ability to deliver financial value
to its stakeholders.

The financial value in the statement is based on the profit before finance costs, community investment expenses, zakat and tax, depreciation,
impairment & amortisation and staff costs.

2017 2016
RM’000 RM’000

Revenue 3,179,998 2,969,603


Purchase of goods and services (2,123,883) (1,961,257)
Value added by the Group 1,056,115 1,008,346
Other income 26,271 29,866
Finance income 13,637 15,131
Finance costs (79,950) (80,186)
Share of results of associates 39,540 33,647
Value added available for distribution 1,055,613 1,006,804

Distribution
To Employees: 693,929 630,110
To Government/Approved agencies: 60,030 57,064
To Shareholders:
Dividend 74,676 68,421
Non-controlling interest 7,742 10,016
Community investment 10,035 9,122
Retained for re-investment 143,839 155,789
Retained for future growth 65,362 76,282
Total distribution 1,055,613 1,006,804

No. of employees at the year end 13,422 12,635


Value added per employee (RM’000) 79 80
Wealth created per employee (RM’000) 79 80
No. of shares at year end (‘000 units) 4,281,413 4,254,276*
Value added per share (RM) 0.25 0.24
Wealth created per share (RM) 0.25 0.24

* The comparative figure was recomputed based on the enlarged number of ordinary shares in issue after the share split exercise, which
was completed on 27 September 2017, in accordance with MFRS 133 “Earnings per Share”.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 49

I N V E S T O R I N F O R M AT I O N

I N V E S T O R R E L ATI ON S ACTI VI TI ES
SHARE QUOTE
KPJ maintain equal access transparent and effective communication channel to keep its investors
informed and apprised of its financial performance and the business environment that the Group
Share Quote
Market : Main operates under.
Sector : Healthcare
Stock Code : 5878 Ty p e o f M eet ings
Share Price Year Meetings Tele-Conferences Investor Conferences
High : RM1.14
Low : RM0.90
2017 37 14 4
Close : RM0.97 2016 49 5 10

C o n f er e n c es and Roads hows


No. Date Events
1. 8 - 1 0 Ma rch CL SA ASE AN Foru m 2 0 1 7 , B a n g kok
2. 1 7 M arch D a iwa ASE AN H ea l thca re D a y, Sin g a pore
3. 22-23 May D a iwa’s ASE AN Corp orate D a y, Lon don
KPJ Healthcare Berhad
is a constituent of the 4. 2 5 & 2 6 Ju l y I n ves t M a l a ys ia , Ku a l a Lu mp u r
FTSE4Good Index since
20 June 2016 G e n e r a l M eet ings

Date Meetings Venue Agenda


The senior management
20 April 2017 24 Annual General
th
Puteri Pacific, Johor Bahru Re-election of Directors and
personnel involved in
the Investor Relations Meetings Presentation of Company’s
activities are: Performance

Dato’ Amiruddin 24 August 2017 Extraordinary Menara KOMTAR, Johor Proposed Subdivision
Abdul Satar General Meeting Bahru City Centre (JBCC)
President &
Managing Director
The Group has established a website at www.kpjhealth.com.my which shareholders can access. The
Aminudin Investor Relations team endeavours to ensure that the Investor Relations section of the corporate
Dawam website remained up-to-date with the latest Group disclosure.
Executive Director

Norhaizam Mohamad K P J S H A R E PERFORMAN CE


Vice President (II)
Group Finance Services
K P J v s FB M KL CI KPJ F BMKL CI

Khairul Annuar Azizi 15%


General Manager – 1,647 1 ,7 9 7
Risk, Compliance and 9 .1 %
Investor Relations 10%

5%

0%
( 6 .7 %)

-5%

-10%

1.04 0 .9 7
-15%
JAN-17 FEB-17 MAR-17 APR-17 M AY- 1 7 JUN-17 JUL-17 AUG-17 SEP-17 O C T- 1 7 NOV-17 DEC-17

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
50 K PJ HEALT HCARE BERHAD

I N V E S T O R I N F O R M AT I O N

K P J S h a re P ric e a n d Vo l u me Tr a d ed

SHARE PRICE V OL UME

1.20 13,000,000

1.10 12,000,000
1.00 11,000,000

0.90 10,000,000

0.80 9,000,000

0.70 8,000,000
0.60 7,000,000

0.50 6,000,000

0.40 5,000,000
0.30 4,000,000

0.20 3,000,000

0.10 2,000,000

0 1,000,000
JAN-17 FEB-17 MAR-17 APR-17 M AY- 1 7 JUN-17 JUL-17 AUG-17 SEP-17 O C T- 1 7 NOV-17 DEC-17

S ub div isio n o f Sh a r es
On 20 April 2017, KPJ announced the proposed subdivision of ordinary shares, which involved splitting 1 Ordinary Shares into
4 Split Ordinary Shares. The proposal was duly approved by shareholders during EGM on 24 August 2017. On 26 September 2017
(“Entitlement Date”), the total KPJ shares issued of 1,070,156,823 units were split into 4,280,627,292 Ordinary Shares. The KPJ
reference share price on Ex Date of 21 September 2017 was adjusted to RM1.07 per share.

KP J S ha re P ric e ( Q u a r t e r )
KPJ Share Price 4Q2017 3Q2017 2Q2017 1Q2017

Market Capitalisation (billion) 4,153 4,293 4,455 4,237


Daily Average 1,171,692 3,120,884 4,046,847 1,456,885
Closing Price 0.97 1.04 1.06 1.01
High 1.07 1.14 1.08 1.06
Low 0.90 1.03 0.99 0.96
Trading Range (sen) 17 11 9 10

KPJ Share Price YE2017 YE2016

Market Capitalisation (billion) 4,153 4,381


Daily Average 2,430,670 2,592,964
Closing Price 0.97 1.05
High 1.14 1.10
Low 0.90 1.02
Trading Range (sen) 24 8

FY2017 average daily trading volume decreased by 6% at 2.43 mil shares from the daily average of 2.59 mil shares seen in the
previous year. The traded prices fluctuated between a low of RM0.90 to a high of RM1.14.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 51

I N V E S T O R I N F O R M AT I O N

In d ivid ua l S h a re h o l d er s 4,597

The share split has attracted the interest of retail investors.


As at 31 December 2017, the number of Individual
shareholders increased by 37.4% to 4,597 shareholders 3,503 3,485
3,353
from 3,346 shareholders previously. There has been a net 3,346

buy of around 25.4 million shares, representing an increase


of 12.2% for this category.

Note: Shareholder analysis is available at Classification


of Shareholders, page 274 of this Annual Report.
2013 2014 2015 2016 2017

FOR E IGN S H AR E H O L D I N G

8.84% 7.45%

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%
JAN FEB MAR APR M AY JUN JUL AUG SEP OCT NOV DEC

S H AR E R E LAT E D K E Y FI G U R E S ( Y E A R E N D )
2017 2016 2015 2014 2013

Market CapitalIsation (billion) 4,153 4,381 4,384 3,814 3,810


Dividend per share 1.78 1.20 1.75 1.88 1.50
Closing Price 0.97 1.05 1.06 0.93 0.97
High 1.14 1.10 1.11 0.96 1.86
Low 0.90 1.02 0.90 0.89 0.96

Note: The above figures for the years prior to the Subdivision of Shares have been adjusted for meaningful comparison.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
52 K PJ HEALT HCARE BERHAD

G R O U P Q U A R T E R LY P E R F O R M A N C E

2017 First Second Third Fourth Year


(RM'000) Quarter Quarter Quarter Quarter End 2017

Continuing operations
Revenue 779,238 778,599 788,433 833,728 3,179,998

Gross profit 235,279 233,159 229,294 267,613 965,345

Operating profit 69,680 55,889 54,873 79,657 260,099


Finance income 2,374 4,247 3,165 3,851 13,637
Finance costs (20,871) (19,803) (16,780) (22,496) (79,950)
Share of results of associates 6,589 7,178 9,682 16,091 39,540

Profit before zakat and tax 57,772 47,511 50,940 77,103 233,326
Zakat (400) (1,811) (726) (973) (3,910)

Profit before tax 57,372 45,700 50,214 76,130 229,416


Taxation (14,173) (12,280) (16,542) (13,125) (56,120)

Profit for the financial year from continuing operations 43,199 33,420 33,672 63,005 173,296

Discontinued operation
Loss for the financial year from discontinued operation (3,143) (1,968) (583) (692) (6,386)
Net profit for the financial year 40,056 31,452 33,089 62,313 166,910

Net profit for the financial year attributable to:


Owners of the Company from
- continuing operations 40,064 33,286 30,887 61,317 165,554
- discontinued operation (1,792) (1,122) (332) (394) (3,640)
Non-controlling interests from
- continuing operations 3,135 134 2,785 1,688 7,742
- discontinued operation (1,351) (846) (251) (298) (2,746)
40,056 31,452 33,089 62,313 166,910

Basic EPS (sen)


- continuing operations 0.94 0.76 0.71 1.37 3.78
- discontinued operation (0.04) (0.03) (0.01) 0.00 (0.08)

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 53

G R O U P Q U A R T E R LY P E R F O R M A N C E

2016 First Second Third Fourth Year


(RM'000) Quarter Quarter Quarter Quarter End 2016

Continuing operations
Revenue 733,092 752,104 748,400 736,007 2,969,603

Gross profit 231,403 220,116 222,651 219,772 884,962

Operating profit 64,481 53,366 54,158 79,664 252,105


Finance income 2,693 2,434 5,241 4,763 15,131
Finance costs (20,703) (16,320) (17,817) (24,910) (80,186)
Share of results of associates 8,338 8,905 9,904 6,500 33,647

Profit before zakat and tax 54,809 48,385 51,486 66,017 220,697
Zakat (400) (740) (570) (2,097) (3,807)

Profit before tax 54,409 47,645 50,916 63,920 216,890


Taxation (14,398) (13,879) (14,234) (10,746) (53,257)

Profit for the financial year from continuing operations 40,011 33,766 36,682 53,174 163,633

Discontinued operation
Loss for the financial year from discontinued operation (3,388) (2,299) (2,403) 332 (7,758)
Net profit for the financial year 36,623 31,467 34,279 53,506 155,875

Net profit for the financial year attributable to:


Owners of the Company from
- continuing operations 36,104 31,644 33,867 52,002 153,617
- discontinued operation (1,931) (1,310) (1,370) 189 (4,422)
Non-controlling interests from
- continuing operations 3,907 2,122 2,815 1,172 10,016
- discontinued operation (1,457) (989) (1,033) 143 (3,336)
36,623 31,467 34,279 53,506 155,875

Basic EPS (sen)

- continuing operations 0.85 0.73 0.78 1.17 3.53


- discontinued operation (0.05) (0.03) (0.03) 0.01 (0.10)

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
54 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T

OUR COMMITMENT
TO SUSTAINABILITY
IS MANIFESTED
THROUGH A SLEW
OF ACTUATED
PRACTICES, EVERY
SINGLE DAY, IN EACH
AND EVERY ONE OF
OUR HOSPITALS, AND
RETIREMENT AND
AGED CARE CENTRES.

C R E AT I N G V A L U E T H R O U G H S U S TA I N A B I L I T Y In the exemplary work at our medical university, we are doing our


At KPJ Healthcare Berhad (KPJ), our sustainability ethos is part in nurturing future medical professionals in Malaysia. Going
guided by the value we seek to create for our ecosystem of green is the theme all responsible corporates and individuals
interconnected stakeholders. To ensure that the creation of have committed to, as we look for innovative means to minimise
value remains at the crux of all our efforts, we have embedded our carbon footprint in our bid to green the planet, a goal that
the Economic, Environmental and Social (EES) sustainability KPJ’s environmental initiatives are grounded on. Our social or
approach into our business and operations. people philosophy is tempered with the same compassion and
care we have for our patients, as evident through the various
Our commitment to sustainability is manifested through a slew community outreach programmes we participate in, along with
of actuated practices, every single day, in each and every one of the prioritisation of health and safety in our hospital network.
our hospitals, and retirement and aged care centres. It is evident
through our patient-centric clinical care, as we strive to deliver Our staff’s utmost dedication and commitment play a tremendous
safe and excellent services to our customers by ensuring we role in ensuring that our network of hospitals remain compliant
have the highest standards of clinical governance and processes with the highest accreditations and certifications standards in the
in place. healthcare sector. We believe in taking care of our employees,
to provide them the support and opportunities they require to
With advanced technology shaping medical breakthroughs continue doing their best on the job, bearing in mind the high
in this day and age, we seek to remain ahead of the curve by level of care they provide to a wide cross section of society on
leveraging on technology to improve our efficiencies and deliver a daily basis.
cutting edge healthcare and medical solutions. Equally important
is ensuring access to quality healthcare, as we enable people KPJ’s approach to sustainability goes beyond compliance. It is
to have quick and convenient access to both pharmaceutical how we differentiate ourselves from the pack, and remain an
and non-pharmaceutical products by expanding the reach and industry leader as the largest and most preferred healthcare
network of our pharmacy services. provider in Malaysia.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 55

S U S TA I N A B I L I T Y S TAT E M E N T

GOVERNANCE STRUCTURE

Provides Oversight
BOARD
OF DIRECTORS
• Reviews
sustainability
updates and
reporting
• Recommends
changes in
SUSTAINABILITY sustainability
& RISK COMMITTEE policies,
standards and
procedures
• Recommends
implementation
to the Board
SUSTAINABILITY • Key management
COORDINATORS personnel who
(HOSPITALS CEO/GM) meet at least four
times annually

For more information on our governance structure


for sustainability, please refer to our Corporate Governance Report on
our website www.kpjhealth.com.my

O U R S U S TA I N A B I L I T Y G O A L S

ADHERENCE TO ANTI-CORRUPTION RESPONSIBLE


REGULATORY REQUIREMENTS PRODUCTS AND SERVICES
Upholding the principles
Complying with local and of transparency and Ensuring that our products and
international healthcare related accountability, and fighting services positively impact lives,
quality and regulatory standards corruption in all we do especially in the areas of privacy,
health and safety

ETHICAL ENERGY AND RESOURCES COMMUNITY INVESTMENT


BEHAVIOUR MANAGEMENT
Creating positive social impact on
Preserving ethical business Reducing our carbon footprint communities by contributing to
practices across the Group while improving our management their socio-economic well-being
of resources

OCCUPATIONAL WORKFORCE INCLUSION TALENT MANAGEMENT


SAFETY AND HEALTH AND DIVERSITY Implementing effective talent
Anticipating, recognising, Building and nurturing a diverse management strategies to strengthen
evaluating and controlling hazards and inclusive workforce, including our workforce and ensuring
arising at the workplace that could at Board and Management level continuous succession planning, with
impair the health and well-being of a sharp focus on our consultants and
our people key healthcare professionals

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
56 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T

SUSTAINABILITY MATERIALITY FOR 2017

ECONOMIC
• Materiality Economic 1- Patient Satisfaction • Materiality Economic 4 - Access to Quality
• Materiality Economic 2 - Delivering Safe and Healthcare
Excellent Clinical Services • Materiality Economic 5 - Nurturing Future
• Materiality Economic 3 - Improving Efficiency Medical Professionals
with Technology • Materiality Economic 6 - Certification,
Accreditation and Standards

E N V I R O N M E N TA L

• • •
Materiality Environmental 1 Materiality Environmental 2 Materiality Environmental 3
- Waste Management - Water Management - Electricity Consumption

SOCIAL
• Materiality People 1 - Community Outreach • Materiality People 4 - Employee Benefits and
• Materiality People 2 - Our Workforce Welfare
• Materiality People 3 - Training and Career • Materiality People 5 - Employee Engagement
Development • Materiality People 6 - Diversity
• Materiality People 7 - Safety at the Workplace

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 57

S U S TA I N A B I L I T Y S TAT E M E N T

R E S P O N D I N G T O O U R S TA K E H O L D E R S
The evolving healthcare landscape presents a multitude of challenges for healthcare service providers such as KPJ. It is incumbent upon
us to adapt, innovate and refine our business model, healthcare services and clinical processes to mitigate the negative impact of these
challenges. These include the need to improve the patient experience in our quest to provide patient-centric medical services, as we
create value through medical technology innovations which cascade through our network of hospitals.

We also need to take on board external macroeconomic considerations, such as responding to healthcare policies and complex
regulations, within a world with changing disease patterns. Ultimately, we need to provide affordable and accessible healthcare for the
communities we provide our services to.

KPJ navigates this complex healthcare landscape through sustained engagement with our stakeholders, as we seek to understand various
groups’ needs, while sharing our perspectives with them.

O U R S TA K E H O L D E R E C O S Y S T E M

ACCREDITATION
QUALIFIED CLINICAL AND ALLIED
BODIES & INDUSTRY HEALTH PROFESSIONALS TO COMPLY
ASSOCIATION WITH ACCREDITATION PATIENT-CENTRIC CARE LOCAL
Joint Commission EMPLOYEES
International (JCI),
COMMUNITIES
Malaysian Society
for Quality in Health
(MSQH), etc CE
RT NT
IFI E ME
CA AG
CO TIO ED
LL
AB NS - B AS ENG
OR &A FAIR & CAREER ITY AN D
S
SE
R V AT I O CC EQUITABLE PROGRESSION UN CES ES
ICE N RE M M V I R EN
T DI BENEFITS & DEVELOPMENT CO S E R A
DE O I TA
TIO E AW
LIV MP R T H
ER RO NS CA AL
Y VE TH HE
E AL
H

SUPPLIERS PRODUCTS & SERVICES CONTINUOUS GROWTH &


Medical consultants, TO SUPPORT CLINICAL OUTCOMES KPJ GROUP FINANCIAL SUSTAINABILITY INVESTORS &
medical and SHAREHOLDERS
non-medical BUSINESS INTEGRITY AND ETHICAL OF HOSPITALS GOOD CORPORATE GOVERNANCE &
suppliers, etc. PROCUREMENT TRANSPARENT REPORTING

ES HE
L IN AL
DE NT TH
WITH REGULATORY

I CA
GU TIE
REQUIREMENTS

A RE
COMPLIANCE

S& EP PA SE
A RD R OV T IEN RV
ND ICE
A MP HEALTH MEDICAL TE SD
YS
T OI SERVICE TREATMENT XP
O R N S T TY CONTRACT PACKAGES
ER
IEN
EL
IVE
AT IO SAFE CE RY
G UL R AT
RE BO
O LLA
C
GOVERNMENT & INTERMEDIARIES
ACCESS TO AFFORDABLE
REGULATORS Employers, third party
Ministry of Health
administrators,
insurance companies,
HEALTHCARE
PATIENTS
(MOH), National REGULATORY STANDARDS AND managed care BILL PAYMENT CONVENIENCE
Specialist Register GUIDELINES organisations,
(NSR), etc. etc.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
58 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T

O U R S TA K E H O L D E R E N G A G E M E N T
In 2017, we conducted a thorough and detailed analysis of our key stakeholders, along with the areas of concern and our response to
stakeholder expectations.

Stakeholder Methods of Key Feedback/Expectations KPJ’s response to stakeholder


Relevance Engagement expectations

Patients are the • Customer • Delivery of quality healthcare • Standardised Customer Satisfaction
cornerstone of KPJ’s Satisfaction • Best possible clinical Index, to enable comparative
business and it is very Survey outcomes measurement of patient satisfaction
Patients
important to enhance • Corporate & • Facilities and technology of among KPJ’s hospitals and
the quality of life of our hospitals’ website international standards benchmark them with previous
patients by providing • Comprehensive • Patient experience years’ achievement
comprehensive high- integrated social • Respecting the needs and • The quality and safety of patient
quality healthcare media satisfaction levels of patients care is a material issue for KPJ
services. • Health-related • Health awareness and • KPJ contributes towards a
KPJ strives to be the information information sustainable healthcare system
most trusted provider magazines • Patient and family through improved patient access
of healthcare services • Health engagement during the and maximising the use of
in Malaysia. Awareness Day recovery process technology in patient safety to
• Brochure maintain patients’ loyalty
with hospital
information
Employees are a • Town hall • Training and development of • Fair and equitable benefits and
valuable human meeting such employees welfare provision
Employees capital and their trust as Corporate • Recognition and competitive • Every employee is committed to
and respect are vital Address remuneration ethical behavior set in the Group's
to KPJ’s success. We • Annual employee • Ethical leadership Code of Ethics and Business
listen and respond performance • Fair and equitable benefits Conduct.
to our employees review • Recruitment and retention of • Safety at the Workplace
needs and concerns • Staff wellness skilled staff • The Group aims to minimise KPJ’s
through effective and recognition • Provide positive workplace environmental impact and guides
communication. programmes culture and a safe workplace employees in the identification
KPJ invests in our • Talent and management of all risk and
employees welfare Management opportunities through sustainability
and programmes as a Day awareness program
preferred employer of • Employee
choice. Engagement
Survey
In order to deliver • Consultant - • Compliance with applicable • The Group is focused on streamlining
high quality healthcare Management regulatory requirements and and centralising our procurement
services, we are Meetings quality standards processes to improve efficiency and
Suppliers
dependent on a large • Regular Meetings • Availability of products cost effectiveness
and diverse range with medical and services and ability to • Formal procurement processes apply
of suppliers such as & non-medical provide support regarding tenders, contracting and
medical consultants suppliers • Cost effectiveness preferred supplier agreement
and medical and non- • Contract • Fair and transparent • Overall responsibility for clinicians lies
medical suppliers. negotiations negotiations with Clinical Governance Framework
The Group relies on • Product • Appropriate use of • Contracted vendors and suppliers for
its suppliers to deliver demonstrations technology medical and non-medical products
products and services and evaluations are required to adhere to KPJ's
of the highest quality Corporate Integrity Agreement
in line with internal, (CIA) and KPJ Safety, Health and
regulatory and Environmental policy
accreditation agency
standards.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 59

S U S TA I N A B I L I T Y S TAT E M E N T

Stakeholder Methods of Key Feedback/ KPJ’s response to stakeholder


Relevance Engagement Expectations expectations

Our business model relies • Licence applications • Cost of private • KPJ’s adherence to regulatory
on full compliance with • Inspection of facilities healthcare requirements and strategic
healthcare and other • Active engagement on • Enforcement to response to the healthcare
Government regulations. The Group healthcare legislation improve on patient market is embedded into our
& Regulators engages with various • Representation on safety (Malaysian Group’s management and
government bodies on a government bodies Patient Safety Goals) operations, and cascades down
continuous basis. eg: • Addressing training to all our business units
• Key government bodies i. Dean of School of needs and skills
include the Ministry of Nursing KPJUC shortage
Health (MOH), Department is appointed as • Regulatory reform
of Occupational, a Member on relating to hospital
Safety and Health Malaysian Nursing planning
(DOSH), Department Boards • Awareness on safety
of Environment (DOE), measure for employee
Ministry of Human • Promoting
Resources (MOHR), along Environmental
with Ministry of Higher Sustainability
Education (MOHE) for
KPJ’s education arm
KPJUC.
KPJ’s primary objective • Financial Results • Continued growth and • Consistent financial and non-
is to create value for our • Investor Relations financial sustainability financial performance
shareholders as the owners Presentations • Clear and transparent • Timely reporting of results,
Investors & and providers of equity • Corporate website reporting and statistics pertaining to
Shareholders capital to the business. The • Analyst meetings • Good Corporate operational and financial
Group is accountable to its • General Meetings Governance performance
stakeholders, and reporting (AGM/EGM) • Transparent disclosure of
to shareholders and the • Participation in corporate responsibility,
public by providing effective Investor Roadshows/ integrity and accountability as
communication of our conferences enshrined in Malaysian Code
Operational and Financial on Corporate Governance 2017
Performance.

KPJ is committed to • Klinik Waqaf An-Nur • Health awareness • Continuous investments


sustainable long-term (KWAN) • Affordable and in identified community
engagement with the • Static Clinic and accessible healthcare engagement programmes
Local communities within Mobile Clinic • Development of • Expanding reach of social
Communities which our network of • Baby Hatches communities with healthcare services targeting
healthcare services • Educating the Public solidarity, social welfare, urban poor and rural areas
operates. We practice an health and safety
engagement policy of
mutual understanding, trust
and reliability. Significant
investment in social
healthcare services and
education is made annually.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
60 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T

Stakeholder Methods of Key Feedback/ KPJ’s response


Relevance Engagement Expectations to stakeholder
expectations

All role players in healthcare funding, • Regular meetings • High quality of • Corporate Client
such as employers, third party regarding possible cost services rendered Management is a
administration, insurance companies savings, clinical quality in hospitals to fundamental part
Intermediaries and managed care organisations, with and healthcare delivery garner high patient of our Customer
privately insured patients remaining improvements satisfaction levels Service philosophy,
the Group’s largest client base. • Contract negotiations • The price/cost of particularly in relation
healthcare in private to intermediaries with
hospitals especially regards to activities
in medical treatment and performance
packages and • In terms of quality
services and patient safety,
• Revised contracts KPJ shares relevant
and agreements information to
address healthcare
intermediaries
concerns

• 20 of KPJ’s hospital are MSQH • Membership of industry • KPJ Policy approach • We complied with
accredited hospitals. and representation on to accreditation the MSQH 5th Edition
• MSQH is an accreditation body with the following bodies: of industry wide Accreditation
Accreditation the vision of advocating, promoting, i. KPJ’s Board serves as communicated Standard in
Bodies & and supporting continuous quality a President in MSQH through APHM relation to hospital
Industry improvements and safety in the ii. KPJ Senior vis-à-vis MOH, accreditation
Association Malaysian healthcare arena. Management serves MOF, etc.
• As at 7 March 2018, there are 62 a Treasurer in MSQH
accredited government hospitals iii. KPJ’s President &
and 56 accredited private hospitals Managing Director
in Malaysia. KPJ accounts for 36% of serves as a Vice-
the accredited private hospitals in President in APHM
Malaysia. iv. KPJ’s Board serves a
• 4 of KPJ’s hospitals are JCI Treasurer in APHM
accredited hospitals and KPJ v. KPJ Medical
represents 36.4% of the accredited Director and Senior
private hospitals in Malaysia. Management serves
• KPJ is a member of the Association as Board in APHM
of Private Hospitals Malaysia (APHM), vi. Group Chief Nursing
which plays an important role in Officer of KPJ
achieving the objective of raising of serves as Nursing
standards of medical care within the Committee Member
country. in APHM
vii. KPJ’s Board serves
as Specialty
Subcommittee
Medicine of Pediatric
Respiratory Medicine
in National Specialist
Register (NSR).
• Participation in
conferences as speakers
and sponsors.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 61

EC O NO MI C

LAUNCHED IBM WATSON FOR CUSTOMER


ONCOLOGY IN MALAYSIA SATISFACTION
First private healthcare provider in Malaysia
to launch the cognitive online platform 88 %
for cancer treatment. Customer Service Index score improved
from 86.1% in 2016.

ANTI-FALL SYSTEM TRAINING ON CUSTOMER SERVICE

Innovative anti-fall system developed by


Kedah Medical Centre resulted in 9,395 employee trained
decreased of patient falls. 70% of total employee in 2017 were
trained in customer service.

NEW ACCREDITED HOSPITAL

2 hospitals
achieved MSQH accreditation.

Our quest is to run a network of hospitals which focuses on creating value through patient-centric
benefits, as the long-term value proposition upon which our business model is founded.
w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
62 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

M AT E R I A L I T Y E C O N O M I C 1 - P AT I E N T S AT I S F A C T I O N
At KPJ, we place our patients at the heart of all we do, in tune with our patient-centric approach to healthcare, which is guided by heartfelt
compassion and the provision of the highest quality healthcare services. Patient satisfaction is an integral component of our business
model – it contributes value to our KPJ brand, making it synonymous with a high quality healthcare experience. To attain the high bar we
have set ourselves, we are keenly focused on improving teamwork amongst our employees, within a hospital and workplace culture that
emphasises continuous improvements in communication levels between patients and our clinical and administrative staff.

46%
1%
120,000 112,740
9,395
10,000 9,312 100,000

8,000 80,000 75,000 77,230.5


6,235
6,000 60,000

5,000 50,000

4,000 Total number 40,000 Total number


of staff trained of hours of
2,000 in customer 20,000 customer
service service training
0 0
2016 2017 2018 *70% of total 2016 2017 2018
Target staff in 2017 Target

To o l s f o r I m p r o v i n g S e r v i c e Q u a l i t y a t K P J
CUSTOMER To enhance our customer service quality, we continuously monitor our customer service levels through
FEEDBACK regular feedback mechanisms at the service unit level. Our practice is to collect feedback from patients upon
their discharge. Throughout the year under review, we conducted regular online customer surveys each
quarter, along with SQM External Survey audits on these surveys to ensure they are conducted according to
best practices and provide an accurate reflection of our quality of services. The Service Environment Audits
are also conducted to ensure that our hospitals’ facilities meet the highest healthcare industry service level
standards as performance indicators for our network of hospitals. In 2017, our customer satisfaction survey
recorded a summary result performance of an average of 87% for KPJ Group of hospitals.
Customer Service Index
'16 86.1%
'17 87.0%

CORPORATE Established in 2004, KPJ’s Corporate Client Management (CCM) division is focused on tapping into
CLIENT new corporate market segments to augment our revenue stream with healthcare coverage provided by
MANAGEMENT
employers. Centralised at Group-level, the CCM function is managed from end-to-end covering strategic
partnerships, client servicing, improving operational integration with insurance providers and third
party administrators. To add to the value proposition for our corporate clients, in 2017 the CCM team
conducted a total of 1,420 visits to directly engage with corporate clients and develop further business
opportunities. We also regularly conduct health screening activities with key clients such as physical tests
by physiotherapists, vision care tests, occupational, safety and health screenings, breast cancer awareness
with mammogram screening for their employees. In 2017, more than 1,600 CCM guests attended KPJ’s
annual corporate ‘Hari Raya’ open house.

KPJ SERVICE The KPJ Service Quality Coach programme is available in all of our hospitals, and allows for employees
QUALITY COACH to participate in intensive training focused on customer services. The training is conducted by external
PROGRAMME
consultants and produce a cohort of Service Quality Coaches who then proceed to train their fellow
colleagues within the respective departments and hospitals. Since its implementation, we have produced
a total of 53 dedicated Service Quality Coaches.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 63

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

CUSTOMER KPJ’s SQM division is primarily responsible for implementation and management of strategic measures to
SERVICE embed and cultivate a service oriented mindset amongst our employees through our culture and service
WORKSHOP
innovation. In progressing our customer service strategy, SQM also provides customer service training
for our staff. In 2017, a total of 33 workshops featuring external speakers were conducted, with more than
1,000 KPJ employees participating in them.

SQM MENTORING SQM has certified 16 mentors to guide and coach staff in excellence customer service delivery. It is a
PROGRAM structured programme designed to equip the candidate with the right mind set, tools and techniques to
conduct one to one mentoring and counselling.
SQM PORTAL Three training modules were implemented on the SQM Portal during the year, namely the Patient
Communication Management System, the SQM External Customer Survey and the Customer Initiatives
knowledge base. More details are available within this section of this Annual Report on page 64.

STANDARD Our Standard People Practice (SPP) is a manual outlining best practices in customer service and provides
PEOPLE KPJ Service Quality Coaches a reference point when they train their peers. In 2017, we began the process
PRACTICE
of converting our SPP Manual into accessible videos for our employees. We have also begun inroads into
developing a Grooming Programme with the aim of this being delivered by our Service Quality Coaches.
As well as that, an additional 14 new SPP recitals have been developed and are in the approval stage of
implementation.

KPJ CARE CARD KPJ Care Card, our loyalty programme card initiative was fully implemented in all hospitals in 2017 to offer
returning customers the rewards of frequent use of services. This initiative breeds customer loyalty and ensures
KPJ remains the preferred healthcare services provider of choice. In 2017, 22,367 customers signed up for
KPJ Care Card. The card in its initial phase, will served as a discount card.

PLANETREE The Planetree project was conducted to improve our service and employee engagement levels toward patient
centric care. Planetree, a non-profit organisation helps healthcare providers around the world to transform
healthcare delivery. Two KPJ hospitals have received Planetree affiliation, KPJ Ampang Puteri and KPJ
Damansara for actively practicing the 10 components, which are human interactions, human touch, nurtition
and nurturing, healthy community, architecture & design, information & education, healing arts, social support,
complimentary therapy, and spirituality.

PLANNED At KPJ, we utilise Planned Preventive Maintenance (PPM) approach in managing our network of hospitals to
PREVENTIVE ensure that our medical devices and equipment are well maintained and in prime condition. Since 2015, KPJ
MAINTENANCE
has engaged intrapreneur company Pride Outlet Sdn Bhd to conduct PPM activities for our hospitals. We began
the project with eight of our hospitals in the central region of Malaysia, and in 2017 expanded it to our hospitals
in the southern and northern regions as well. During the year, there were 4,836 PPM activities, an increase of
94% from 2,496 in 2016.

4,836
5,000

4,000

3,000 2,496
2,000 1,754

1,000 PPM
Activities
0
2015 2016 2017

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
64 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

SQM Portal
1 P a t i ent Communicat ion Management Sy s t em (PCMS)
To further improve patient satisfaction, in 2017 we focused on upgrading and refining our
Patient Communication Management System (PCMS) as a tool for the Group to achieve
CASE STUDY ON
higher levels of performance in our Service Level Management of complaints.
ADMISSION & DISCHARGE
AV E R A G E WA I T I N G T I M E
We have used PCMS to create an extremely important and useful knowledge base for our
hospital personnel to refer to when faced with similar cases of complaints and identifying
follow through actions. This ensures a consistently high level of service, attuned to the needs
of our patients in responding to the issues which are important to them.

Through PCMS, we are able to monitor the trend of complaints, along with the performance of
individuals, departments and hospitals with regards to the timeliness of complaints resolutions.
Study conducted on 18
In addition, we can detect whether complaint rates are decreasing, in which areas or issues,
KPJ hospitals on admission and
discharge waiting times and take the corrective actions and measures to achieve greater organisational efficiencies
across the board.

Bearing in mind the digital age we live in and our customers’ preference for online access,
in late 2017 we structured a plan which will link PCMS to the KPJ website. This move allows
2016 2017
our customers online access to our complaints process. Moving forward into 2018, we will
Comparison period of the first be putting the plan in motion and expect to further improve our workflow management and
half of 2016 against the first half enhance our customer service satisfaction levels.
of 2017
2 S Q M Ext ernal Cus t omer Sur v ey
The portal also contains the program called SQM External Customer Survey, whereby
automated surveys can be conducted. The majority of the Group's hospitals have already
begun using the online survey method.
Reduced average of waiting
time for cash paying patients Additional system enhancements will include the ability to conduct online surveys to track
patient satisfaction and measure patient loyalty through the use of net promoter score
2.24 hours 0.95 hours surveys. This is anticipated to be completed in 2018.
per patient for admission

1.64 hours 0.82 hours 3 C u s t o mer I nit iat iv es


per patient for discharge
The service initiatives module of the SQM system acts as a knowledge base to share hospitals’
service enhancements and promote innovation of initiatives throughout the Group. We plan
for SQM to have a similar program as the Quality Circle Competition, where hospitals will
showcase their best initiatives. This competition will be included in the next KPJ Quality
Reduced average waiting time Convention in 2018.
for non-cash paying patient

2.91 hours 1.50 hours “War Against Waiting Time”


per patient for admission
An inevitable reality of the healthcare sector is that patients will have to contend with waiting
time before they are able to see the clinicians or specialists they require, or access follow-up
2.84 hours 1.56 hours
per patient for discharge services and medicinal and non-pharmaceutical products. However, we are mindful to keep
waiting times as short as possible, and for our patients and their families not to end up wasting
their precious time in pursuing the quality healthcare service they seek.

To keep waiting times a comfortable proposition for our customers, each KPJ hospital comes
with facilities in the reception, lobby and other waiting areas providing for a pleasant space and
experience. We provide people with reading materials, complimentary coffee and tea, free WiFi
or TV entertainment, and other amenities to accommodate their needs as much as possible.

Our hospitals meticulously manage the flow of patients, with each staff given a specific role
within the patient journey, beginning from the patient’s arrival, till they seek treatment. This
process flow is based on LEAN Management principles, and is aimed at reducing waiting times

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 65

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

as much as possible. To ensure that our hospitals deliver on care, as a result of unforeseen events which cause, or has the
measurable improvements, each hospital has its own target to potential to cause, harm to a patient. These include patient falls
achieve with regards to the admission and discharge of both and medication-related incidents. Known as clinical incidents,
cash paying and non-cash paying patients. the underlying principle with regards to them for healthcare
service providers such as KPJ is to minimise the risk, or reduce
Through the rollout of our hospital network expansion strategy, the rate of these incidents.
we have increased our bed capacity in our hospital from 2,929
beds in 2016 to 3,052 beds in 2017. Our hospital expansions At KPJ, our staff are required to report all clinical incidents,
have also taken into account current patient trends where the and proper investigations or Root Cause Analysis (RCA) will be
demand for single rooms at some KPJ’s hospital at almost 90% carried out to determine the causes. Based on the outcome of
of occupancy rate. the investigation, we then implement corrective and preventive
actions in order to minimise or reduce these incidents
M AT E R I A L I T Y E C O N O M I C 2 - D E L I V E R I N G S A F E A N D throughout our network of hospitals. We ensure that the lessons
EXCELLENT CLINICAL SERVICES learnt from all incidents are communicated amongst the Group,
Within the healthcare sector, the delivery of clinical services both at management and staff levels, along with the corrective
comes with its attendant safety risks. Our commitment is to measures identified.
ensure that we deliver safe clinical services, in line with our
priority of offering excellent healthcare outcomes to our
Clinical Incidents 2017 2016 Var (%)
patients. We have in place extensive measures, processes and
per 1,000
procedures to ensure that we reduce, or at the very least limit
inpatient days
incident rates within the MOH and international benchmark.
Clinical Incidents 0.83 0.88 (5.68)
Our clinical governance processes also extend to reduce Inpatient Falls 0.21 0.22 (4.54)
incidents of patient safety related to medical errors and
patients who fall in the course of their stay at our hospitals. We Note: Restated to reflect changes in classification of certain
believe in mitigating the risks within the area of patient safety components of clinical incident indicator in 2017
by identifying the potential risks and implementing measures
which reduce the likelihood of these incidents occurring.

Clinical Incidents
Safety and quality form the central tenets of quality healthcare
delivery, revolving around the principle of causing no harm.
Despite this, clinical incidents do occur in the delivery of patient

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
66 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

Our next initiative to patient safety is Early Warning System/Sign (EWS). EWS helps to identify early
sign of deterioration to enable early intervention leading to fewer Code Blue.

With regards to ensuring the safety of infants within the hospital, we have begun using the Radio
REDUCING
Frequency Identification (RFID) programme for correct baby identification. The tag applied
P AT I E N T F A L L S
to a newborn to match the correct baby to the correct mother and the baby cot. RFID is being
implemented at the most popular hospitals for maternity services namely, KPJ Damansara Specialist
Hospital, KPJ Tawakkal Specialist Hospital, KPJ Sentosa KL Specialist Hospital and KPJ Seremban
Our assessment of patient
Specialist Hospital.
falls in our hospitals revealed
that the majority of high risk
inpatient falls boiled down to a Fall Prevention Innovation
number of contributing factors. Anti-fall Collar Sensor used for adult with high risk to fall patient is a home grown gadget to detect
risk to fall and enable early intervention to prevent patient fall. Since its pilot in Kedah Medical Centre
(KMC) there has been tremendous decrease in inpatient fall. This innovation has been cascaded to
all hospital within the Group.

PAT IE NT FAC T OR K M C A N T I - FA L L
Patient had sudden giddiness SYSTEM
/lost of balance/weaknesses
/patient feeling disoriented
/delirium/dementia
03
/failed to call for assistance.

01
S TAF F FAC T OR 02 Nurse call
bell will be
Not providing adequate
simultaneously
information and follow ups.
triggered once
the collar sensor
Based on the outcome of our is moved from
assessment, we came up with a its position.
number of strategies aimed at
reducing patient falls as follows:

• To continuously assess and


re-assess a patient’s fall risk
level especially after any
invasive procedure or changes
01 02 03
in their general condition
• Integrating fall prevention
measures into the nursing Patient’s room number
care plan will appear on the LED
• Engaging with consultants,
screen which is placed
patients and family members
Collar Sensor - Clip Cable connected to in front of the nurse
with regards to fall preventive
measures and safety initiatives
on patient’s collar patient’s call bell system counter
• Initiatives from the hospitals
such as anti-fall systems and
ongoing awareness campaigns
and programmes on the issue

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 67

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

Hospital Acquired Infections (HAI) Antimicrobial Stewardship (AMS)


The occurrence and undesirable KPJ uses Antimicrobial Stewardship as
complications from health care-associated one of the key strategies to overcome
infections have been well recognised in antimicrobial resistance. AMS is considered
M A L AY S I A N P AT I E N T
literatures for the last several decades. an essential practice element for healthcare
SAFETY GOALS
Intravascular device related infections and service providers in gate-keeping judicious
infections acquired through the respiratory antimicrobial use. It involves the careful and
tract are among the most common HAI in responsible management of antimicrobial
GOAL NO.1
critically ill patients with comorbidity. HAIs use, an issue which is becoming increasingly
To implement Clinical Governance
are worth preventing in terms of benefits in more important with antimicrobial resistance
morbidity, mortality, duration of hospital stay, having been identified as a major threat by GOAL NO.2
and cost. The hands of healthcare providers the World Health Organisation (WHO) due to To implement the WHO’s 1st Global
are the commonest vehicles by which a lack of new antibiotics in the development Patient Safety Challenge: “Clean
microorganisms are transmitted between pipeline coupled with infections caused Care is Safer Care”
patients and peers. by multi-drug resistant (MDR) pathogens
becoming very difficult to treat. GOAL NO.3
Infection control program are cost-effective To implement the WHO’s 2nd
and hand hygiene is accepted as the We began our work in this area back in Global Patient Safety Challenge:
single most important measure in infection September 2015 during a Medical Workshop “Safe Surgery Saves Lives”
control. The World Alliance for Patient Safety when KPJ made a decision to adopt 10
GOAL NO.4
advocates a “clean care is safer care” program, Antibiotic Stewardship Policy statements
To implement the WHO’s 3rd Global
hence we have embarked on educational adopted from MOH’s “Protocol on Antibiotic
Patient Safety Challenge: “Tackling
interventions promoting good hygiene Stewardship Program in Healthcare Facilities Antimicrobial Resistance”
and aseptic techniques that have generally 2014” with an additional two policy statements
proven to be successful. A creative approach specifically for KPJ’s network of hospitals. GOAL NO.5
to engage patient is to involve Patient for To improve the accuracy of patient
Patient Safety (PFPS) and one of the initiatives In 2016, a series of AMS workshops were identification
was to orientate and empower patients to ask organised for the Group’s Pharmacists
the healthcare provider whether they have and Lab Managers in order for them to GOAL NO.6
perform hand hygiene before rendering the develop KPJ’s Guidelines on Antibiotic To ensure the safety of transfusions
care due upon them. Panel Testing, Antibiogram Reporting and of blood and blood products
Antibiotic Usage Reporting. The Guideline
GOAL NO.7
Hand hygiene compliance rate for the Group focuses on surveillance and feedback
To ensure medication safety
achieved the target set by MOH at 75% and mechanisms on specific antibiotic resistance
more. Hand hygiene audit is conducted using and consumption. Its objective is to provide GOAL NO.8
WHO’s guideline on the 5 moments when practical recommendation on reporting To improve clinical communication
healthcare providers should perform hand antibiotic resistance and consumption by implementing a critical value
hygiene. surveillance. In 2017, the Group made further programme
inroads into this area by organising meetings
Malaysian Patient Safety Goals (MPSG) and workshops for all pharmacists and lab GOAL NO.9
Compliance to 13 MPSG among the hospital managers. To reduce patient falls
within the Group has shown improvement.
GOAL NO.10
However targets of zero for medication The implementation of the policies will be
To reduce the incidence of
error and near misses have not been met. divided into 2 phases over a period of 10 years.
healthcare associated pressure
Nevertheless, we remain committed to review ulcers
our current safety measures and identify ways
to enhance processes through innovation. GOAL NO.11
Data on the 13 MPSG have been submitted to To reduce Catheter-Related-
Malaysia Patient Safety Council on an annual Bloodstream Infection (CRBSI)
basis.
GOAL NO.12
To reduce Ventilator Associated
Pneumonia (VAP)

GOAL NO.13
To implement an Incident
Reporting and Learning System

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
68 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

P h a s e 1 – Ye a r 2 0 1 6 - 2 0 2 0 With the development and acquisition of new hospitals and centres,


Below are the policy statements which will be implemented in nurse leaders identify opportunities to develop successors to be ready
Phase One. Five policy statements are adopted from MOH and to take up new nursing leadership roles based on the established
two policy statements are specifically designed for KPJ Group career pathway.
of hospitals
Technology advancement through KCIS have drastically changed
how nurses manage data and deliver nursing care as they experience
No. Policy Statement
significant improvements due to the real-time information
1. Formulation of AMS team in each hospital. accessibility. This is achieved as KCIS allow nurses to retrieve patient
(AMS is part of the Hospital Infection and Antibiotic information faster than conventional methods, facilitating timely test
Control Committee (HIACC) scheduling and treatment.

2. Surveillance and feedback mechanism on specific


antimicrobial consumption
3. Streamlining antibiotic usage
4. Initiation of IV-to-Oral Switch Programme
5. Education on AMS program via CME antibiotic
awareness campaign

Additional 2 policy statements by KPJ hospitals

No. Policy Statement

1. Excellent diagnostic microbiology services in order to


support AMS
2. Comprehensive prevention and control of infection
(PCI) activities

Quality Nursing M AT E R I A L I T Y E C O N O M I C 3
Nurses form the biggest group of healthcare professionals and - IMPROVING EFFICIENCY WITH TECHNOLOGY
play a vital role in patient care. It is a known fact that Nurses, are Through the use of innovative technological advances, KPJ intends
the heart of healthcare. KPJ Nurses use their skills and knowledge to transform our healthcare service provision in order to become
to focus on improving the patient experience of care, improving an internationally acknowledged and recognised healthcare service
the health of populations and being cost effective. provider. Our adoption of technological innovations is the result of
KPJ Healthcare’s Digital Transformation and Innovation Programme
KPJ Nurses pave their career path by being awarded credentialing and spearheaded by our New Products and Services Unit established
privileges to work in specialized areas while awaiting post in 2016. In the long-term, the adoption of Information Technology
graduate certification programs. They pursue their commitment (IT) and the use of modern advanced technology-based healthcare
to enhance their nursing leadership skills and scope through solutions will drive the growth of the Group, as we deliver greater
continuous education through Degree, Master’s and PhD nursing positive outcomes to our patients.
programs.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 69

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

2016

3,834

2017

5,778
Oncology patients in Malaysia
seeking treatment at KPJ
hospitals.

IBM Watson for Oncology Year-on-Year Growth of

51%
2017 was a groundbreaking year for KPJ as we were the first private hospital in Malaysia to adopt
the innovate cognitive computing platform IBM Watson for Oncology to provide insights which will
help doctors deliver evidence-based cancer treatment options. in Oncology patients

We obtained licences for FIVE of our specialist hospitals to use the cognitive platform, namely,

01 02 03 04 05

KPJ Damansara KPJ Ampang Puteri KPJ Johor KPJ Ipoh KPJ Sabah
Specialist Hospital Specialist Hospital Specialist Hospital Specialist Hospital Specialist Hospital

Eight KPJ Oncology Consultants have been awarded licences by IBM to conduct the system.

The adoption of IBM Watson represents KPJ’s commitment to expand its Oncology services at its
leading hospitals. However, the cost of this investment not be passed down to our patients. Our
absorption of the costs is for the benefit of our patients specifically and our Oncologist in the Group.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
70 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

KPJ’s Clinical Information System (KCIS)


Introduced in 2009, KPJ’s Clinical Information System (KCIS) was
Quick Facts: one of our earlier technological investments aimed at reducing
IBM Watson for Oncology waiting times for our customers by providing them a seamless
- Developed by IBM in collaboration with Memorial Sloan patient experience covering registration, diagnosis, treatment,
Kettering Cancer Centre (MSK) in the US to summarise key follow-up care and electronic orders. Since its inception, a total
medical attributes of a patient and provide information to of 17 KPJ hospitals are now using the information management
oncologists to help them deliver treatment options based system. Benefits include increased efficiency at our hospitals,
on training from MSK oncologists. as well as improved patient safety through the reduction of
- Watson for Oncology ranks the treatment options, linking medication errors and the minimisation of risks. We have also
to peer-reviewed studies curated by MSK. adopted Electronic Medical Record (EMR) as part of a range of
- Provides physicians access to medical literature through its new IT solutions utilising cloud based technology. In 2017, we
database which contains more than 300 medical journals, upgraded the system from KCIS to KCIS2, that will be rolled out
200 textbooks and 100 million patient records which to all hospitals by end of 2018.
can provide doctors with insights on different treatment
options. Security in Patient Data
- Available as a cloud-based software-as-a-service In 2017, the upgrading of the security of patients’ data through User
technology which allows doctors to access it as needed. Access Matrix (UAM) had been discussed by the KPJ IT Strategic
- Part of the larger Watson platform and is the only Committee. It was determined that the UAM would be applied in
commercially available artificial intelligence (AI) platform KCIS2 (KCIS2 UAM) and management selected KPJ Kajang and KPJ
tackling a broad range of health challenges. Perlis for the pilot project for KCIS2 UAM in 2018. KCIS2 UAM is based
- Used in more than 80 hospitals in 11 countries around the on MOH User Access Policy (UA Policy) and guidelines in place since
world, now including Malaysia. December 2011. The purpose of the policy includes maintaining the
confidentially of electronic patient information and to set standard
Benefits of Adoption guidelines for system design and implementation.
IBM Watson for Oncology offers KPJ a host of benefits with
its adoption, as it allows for greater efficiencies and better The UA Policy fulfils the legal requirements of various laws,
treatment outcomes. It is currently available to help oncologists regulations, rules and circulars including The Medical Act 1971,
develop treatment plans for breast, lung, colorectal, cervical, The Malaysian Medical Council (MMC) Ethical and Guidelines and
ovarian, gastric, prostate and bladder cancers. By end 2018, Ministry of Health Circulars and Guidelines such as Management
90% of cancers will be covered by the system, thus offering of Patient Records in Hospitals and Medical Institutions (2010)
our cancer patients better treatment options to enhance and ICT Security Policy (2010). More information on KCIS can be
chances of recovery. found within the Management Discussion and Analysis on pages
39 to 40 of this Annual Report.
Benefit Area Cognitive Capability

Care Provides best evidence • Captures best known


Quality based treatment practice to provide
personalised, evidence
based treatment
recommendations
Promotes Patient Safety • Accounts for
comorbidities
• Extracts and visualises
precautions and
contraindications
Standardised care • Scales oncology
expertise with all
oncologists

Efficiency Reduces prep time • Natural language


processing through
cancer-specific patient
summarisation

Reduces senior • Literature and treatment


oncology oversight ranking and scoring

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 71

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

M AT E R I A L I T Y E C O N O M I C 4 -
NURTURING FUTURE MEDICAL
E M B R AC I N G I N N OVATI O N PROFESSIONALS

01
KPJ Healthcare University College (KPJUC)
3D P rint in g is the vehicle through which KPJ is
3D printing is a rapidly expanding area of medical technology which has demonstrated contributing towards building capacities
huge potential in the provision of medical healthcare services. In 2016, we had identified in the medical profession in Malaysia
areas we intended to explore within the new burgeoning specialty, namely the use of through medical and healthcare education.
the technology at KPJ KL Dental Specialist Centre, a first in Malaysia. More details on the The institution, which has been providing
outcomes this project can be found within our Management Discussion and Analysis on education for healthcare professionals
page 32 of this Annual Report. for 27 years, offers 33 programmes from
foundation to postgraduate level of
studies such as Masters in Medicine, PhD
Online Appointment Booking System 02 in nursing and other allied health courses.
Introduced in May 2016, our online appointment booking system is now operational in 12
KPJ hospitals as at end 2017. The benefits of the system includes reduced waiting times for Academic Healthcare Centre
patients, as well as greater efficiencies within our hospitals. As a healthcare-focussed university college,
we emphasised hands on skills training in
In 2017, we integrated our KPJ Healthcare mobile application into the system. The the real clinical environment at KPJ hospitals.
mobile app assists our customers to book appointments with doctors at KPJ hospitals. This is the hallmark of our programme and is
an invaluable asset for our students, offering

Innovation And Initiatives 03 them the opportunity to put their theoretical


knowledge into practice.
To encourage an innovation led culture within KPJ, a key component of the performance
requirement for our hospitals since 2014 is to deliver on service innovations and initiatives. In 2017, we propose a new initiative to adopt
We introduced a service initiative database in 2016 to maintain a record of all our hospitals’ the concept of an Academic Health Center
initiatives on a single platform. This allows for knowledge sharing within the Group, and for (AHC) in KPJ hospital. An AHC is an institution
our hospitals to adopt service innovations across the board. In 2017, we recorded more that integrates a medical school, one or more
than 1,400 service innovations and initiatives across the group. other health professional schools and one or
more teaching hospitals or health systems.
In 2017, KPJ joined the Value Innovation Platform (VIP) Malaysia program spearheaded It is proposed that KPJ Seremban Specialist
by Malaysia Digital Economy Corporation (MDEC) in collaboration with Rainmaking Hospital (KPJ Seremban) to be the first
Innovation UK. The VIP program is a government initiative to assist corporations plan their private hospital to adopt this AHC concept.
digital innovation and transformation strategies our collaboration with MDEC will facilitate KPJUC and KPJ Seremban will collaborate
KPJ’s digital innovation initiatives in the coming years. to transform the hospital into an integrated
center with tripartite mission i.e. excellent

Online Pharmacy 04 healthcare services, education and research.

By bringing KPJUC’s academics and KPJ


In 2017, we introduced our online pharmacy with non-pharmaceutical products going
live for online purchasing. Our plan for 2018 is to extend our online pharmacy to allow Seremban clinical professionals together,
for e-prescription for the purchase of pharmaceuticals. Patients who access the online we can have a greater impact in fostering
pharmacy will be able to request for their prescriptions to be refilled. It also allows patients excellent healthcare initiatives and
to view their prescription history securely online. Once the request has been verified, increasing the innovation pipeline. Through
patients are then able to self-collect their medications at the nearest KPJ hospital KPJ enhancement of research at KPJ Seremban,
Healthshoppe, or opt for mail delivery, whichever is more convenient for them. More we can create an environment for quicker
details on this initiative can be found in our Management Discussion and Analysis on page translation of research to human health.
30 of this Annual Report. Through education activities, we will be
able to train future health professionals with

05
new competencies that impact population
E m p l o y e e I n n o v a t i o n D a y Ta l k s healthcare delivery. There are also immense
Inculcating an innovated mindset and culture forms a crucial thrust of our transformation evidence that adopting the AHC concept,
strategy. A key way we encourage the adoption of an innovation led culture within KPJ is will result in long term financial benefits for
through our monthly Innovation Day talks which we continued with in 2017. the hospitals.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
72 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

Programmes under AHC

Department/ Proposed Activity/ Benefits


School Involvement
H O W D O E S I T C R E AT E
VA L U E F O R K P J ? Physiotherapy Clinical attachment KPJUC
(staff) • Enhancement of clinical skills
• Outpatient services
KPJ Seremban
• To have more manpower on certain days at the
rehab centre

AHC Medical Continuous KPJUC


Q U I C K FA C T S Imaging Professional • Provides training to all radiographers
Development (CPD) • To obtain more CPD trainings
1. Brings together academics training
KPJ Seremban
and healthcare professionals • Save valuable time in providing training for
in a real world setting radiographers
2. Through the AHC, KPJ is
Pharmacy Outpatient KPJUC
playing its role as a leading
• Counselling provided • Students to use it as an observation platform for
academic medical center in for medication clinical practice in certain modules
the region • Staff can enhance their medication counselling
3. Allows for scientific skills
and clinical expertise
KPJ Seremban
engagement in healthcare • Improve services on advising patients on their
delivery medication
4. Allows KPJ to identify and
KPJUC
overcome unmet medical/
• Students exposed to real life scenarios
healthcare needs
5. Integrates big data into our KPJ Seremban
healthcare delivery system • Better patient management with the
implementation of multidisciplinary ward rounds
through the use of patient
data, biological materials Nursing Home nursing KPJUC
and other information for • Assist the hospital • Students able to enhance home nursing skills
database capabilities in providing home
6. Allows students access to nursing services (staff) KPJ Seremban
• Ability to overcome inadequacy of staff numbers
cutting-edge technologies, Staff Attachment for home nursing
treatment modalities and • Update on National
Nursing Audit and KPJUC
informatics • Staff are regularly updated on the latest policy and
7. Benefits hospital through Patient Safety Goals
audit processes
greater prominence and
long-term financial benefits Business CPD training KPJUC
Management • Training medical • More CPD courses and revenue
record staff
KPJ Seremban
KCIS • Less focus in providing training for medical record
• Access for KCIS staff

Centre CPD training KPJUC


GOVERNANCE AND for Global • Focus on soft skills • More CPD points and revenue
STRUCTURE Professional training
and Social KPJ Seremban
Development • Less focus on providing all SPP/ SBAR and related
(CGPS) training
• KPJUC and KPJ Seremban
to set up a special
Committee to oversee the
running of AHC
• Representatives from
KPJUC Schools/Centres to
participate in some of the
hospital’s Committees

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 73

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

135
ongoing research
projects

46
research completed

23
medical research
published
in local and
international
publications:

Research & Development


Medical research and development is how a healthcare services provider such as KPJ can
differentiate itself from its competitors and remain ahead of the curve. As well as that, insights IN 2017,
85% of
gleaned from research and development activities also benefit the healthcare industry in general.
A total of RM50,000 is allocated for new research annually, excluding external grants requested
by the medical school or project teams throughout the year. In 2017 KPJUC completed its first KPJUC students
KPJ Online Journal which showcases the publications of research output from its lecturers and received PTPTN
consultants. An additional of RM80,000 was allocated in 2017 for new research projects as a sign of loans as the main
our ongoing commitment to herald breakthroughs in medical innovations in Malaysia. financial source
to fund their
Education Sponsorship education.
At the same time, we offer support to talented and ambitious young people who wish to establish a
career for themselves in the field of Nursing. Among these supports are our full and partial scholarship
programmes for staff from hospitals who have consistently performed in their daily tasks. In 2017, we
sponsored a total of 281 staff and students from various programmes. Of these, 93 sponsorships However, they also had the
were allocated for staff to continue their studies in Post-Basic Nursing Programme. opportunity to be sponsored by
KPJ Hospitals and other sponsors
throughout their studies.
Post-Basic Nursing Programme
3 40 13 17 7 93
T O TA L

Professional Professional Certificate in Certificate in Advanced


Certificate Certificate in Renal Nursing Peadiatrics Diploma in
in Education Critical Care Nursing Midwifery
Teaching for Nursing Nursing
Nursing &
Professional

3 Post-Basic Certificate in Renal 10 Post-Basic Certificate in


Nursing (Johor Bahru Campus) Orthopaedic Nursing

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
74 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

No. Financial Aids Dec Dec Var No. Financial Aids Dec Dec Var
2017 2016 (%) 2017 2016 (%)

1. KPJ Group – fully sponsored 266 243 9 5. PTPTN 1,998 2,262 (12)

2. KPJ Group – partial with PTPTN 11 16 (31) 6. MARA 33 33 0

3. KPJ Group – partial with self-sponsored 1 3 (67) 7. Others 124 158 (21)

4. KPJ Group (85 % only) 3 2 50 Total 2,436 2,717 (10)

Secured Employment
Since the inception of KPJUC, 75% of our graduates have secured employment in our hospitals and other subsidiaries. Our graduates are
also sought after by our local and international competitors. As we continue with the expansion and upgrading of our network of hospitals in
line with our growth strategy, our need for suitably qualified healthcare professionals will grow in tandem. Through KPJUC, we are ensuring
continuous and sustainable access to a ready talent pool of trained and qualified graduates with established knowledge of KPJ operations
and standards.

Summary Graduate Employment 2011 – 2017


No. School Total Graduates Employer

KPJ Hospitals Private Hospital/Clinic Other Employer

1. School of Medicine 3 3 - -
2. School of Nursing 1,296 1,177 59 57

3. School of Pharmacy 720 64 86 434

4. School of Health Sciences 744 72 122 527

5. School of Business and Management 40 13 5 6

Total 2,803 1,329 272 1,024

* Inclusive of Diploma, Degree and Master students

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 75

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

M AT E R I A L I T Y E C O N O M I C 5 - A C C E S S T O Q U A L I T Y H E A LT H C A R E
Ensuring access to comprehensive, quality healthcare services is of paramount importance in the promotion and maintenance of health,
and the prevention and management of disease. In line with this, Malaysia has identified achieving universal access to healthcare as one
of the focus areas of the 11th Malaysia Plan 2016 – 2020. As part of the healthcare ecosystem in Malaysia, private healthcare services
providers play an important role in achieving this goal through the expansion of capacities and increasing accessibility to healthcare.
Part of KPJ’s approach towards increasing access to quality healthcare lies in our strategic plans to expand our healthcare network in
Malaysia. However, we also work towards increasing healthcare access in other areas as laid out below.

Medical Air Services In line with ensuring the continuous adoption of IT in our
For rural communities living in remote areas, access to healthcare service provision, we have launched online kpjshoppe in 2017,
can prove to be difficult if they do not have a local health services where almost 800 items available for customers to purchase
clinic close by. Increasing access to quality healthcare for rural online with value differentiation on top of the standard over
communities is therefore vital in achieving universal access to the counter (OTC) and supplementary products. You can read
healthcare, where all segments of the population have access to more about this initiative on page 30 of this Annual Report,
quality healthcare regardless of their geographical location. within the Improving Efficiency with Technology section of our
Sustainability Statement.
In December 2017, KPJ Sabah Specialist Hospital (KPJ Sabah)
made inroads in expanding access to its healthcare services Caring for the Aged
through a strategic collaboration with a third party vendor to The ageing population demographic is a global trend and
provide medical air services to transport patients from Sandakan Malaysia is no exception. By 2050, it is estimated that 23.5% of
to KPJ Sabah, in Kota Kinabalu to seek treatment. The services the Malaysian population will be over 60 years old.* At KPJ, we
will be extended to transfer patient from Tawau and Lahad Datu foresaw the rising demand for healthcare services related to the
as well. As part of the service, a medical team from KPJ Sabah is aged care niche in 2011 along with the National Policy for Older
onboard the aircraft to accompany the patient during the flight, Person 2011 by the Ministry of Women, Family and Community
providing any necessary emergency and stabilising medical Development, and we commenced our Senior Living Care
treatments as required. initiative. Since then we have added senior living care homes to
our stable of services, with four facilities that provide assistive
The hospital received its' first patient on 16 December 2017, nursing care services within a home like atmosphere for senior
transferred from Sandakan to Kota Kinabalu. The maximum citizens. These services are available at the following:
capacity for the helicopter is one pilot, one medic and one patient
whereas the capacity for the light aircraft is one pilot, one medic,
No. Senior Living Care Initiatives Year of
one patient and three passengers. The maximum load is 647 kg Initiative
and the oxygen cylinder allowable weight is 5 kg per cylinder.
1. Jeta Gardens Retirement Resort, Brisbane, Australia 2011
Improving Access to Pharmacies
2. Sibu Geriatric Health and Nursing Centre, Sibu 2011
An integral element of the value proposition of accessing quality
healthcare is the creation of a long-term sustainable system of 3. KPJ Tawakkal Health Centre, Kuala Lumpur 2014
support services in the form of pharmacies for the dispensation
4. KPJ Kuantan Health Centre, Pahang** 2018
of medications and non-pharmaceuticals. Having effective and
efficient pharmaceutical services ensures the quality and safety
* Source : Global Age Watch Index 2015
of medicine authenticity and promotes high value and effective ** Opened in February 2018
care of our patients.

In 2017, KPJ expanded its network of retail pharmacies by No. Senior Living Care Residents by Age Group %
launching three new KPJ Healthshoppe that offer comprehensive (Malaysia)
and unique product range in a fresh welcoming ambience
1. 51-60 years 4%
with open concept that maximise interaction with customers
and merchandise. The outlets located at KPJ Selangor, KPJ 2. 61-70 years 13%
Damansara and KPJ Pahang. Moving on into 2018, we plan to
3. 71-80 years 40%
launch another four KPJ Healthshoppe at KPJ Penang, KPJ Ipoh,
KPJ Johor and KPJ Bandar Dato’ Onn. 4. 81-90 years 30%

5. 91-100 years 13%

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
76 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E C O N O M I C

H e a l t h To u r i s m M AT E R I A L I T Y E C O N O M I C 6 - C E R T I F I C AT I O N ,
Medical tourism has shown strong growth in Malaysia, largely due A C C R E D I TAT I O N A N D S TA N D A R D S
to the excellent healthcare services available here. Malaysia has KPJ is unreservedly committed to ensuring that its hospitals are
consistently been ranked as having among the best healthcare accredited by recognised bodies such as Joint Commission
in the world by various international organisations, for example, International (JCI) and Malaysian Society for Quality in Health (MSQH).
by International Living which ranked Malaysia as having the best As at end 2017, 18 KPJ hospitals have been MSQH-accredited and two
healthcare in the world in 2017.* newly accredited hospitals (KPJ Sabah and KPJ Pahang) were added
to the list in March 2018. Currently, we have 20 MSQH-accredited
At KPJ, medical tourism is one of the key growth drivers we have and four KPJ hospitals have been JCI-accredited. Our Integrated
identified as part of our strategic long-term growth plan. In line Management System (IMS) integrates the ISO 9001:2015 (Quality
with this, KPJ has developed medical tourism hubs comprising Management System), ISO 14001:2004 (Environmental Management
11 hospitals including KPJ Bandar Dato’ Onn, in Johor Bahru System) and OHSAS 18001:2007 (Occupational Safety and Health
spread across four regions across Malaysia – northern, central Management System) where all hospitals are fully certified.
and southern regions of Peninsular Malaysia, as well as Sabah,
and Sarawak. To ensure that our staff within KPJ’s medical We have in place robust processes to ensure that our hospitals are
tourism hubs are able to attentively provide for international compliant with accreditation requirements (e.g.MSQH 5th edition).
patients’ needs, we employ staff at the following hospitals who You can read more on this in the Principle Risks section on page
are able to communicate in foreign languages: 102 of this Annual Report.

• KPJ Ampang Puteri Specialist Hospital - Arabic, Korean and Personal Data Protection
French We believe that an integral part of a strong governance culture
• KPJ Tawakkal Specialist Hospital - Arabic is protecting the privacy of our customers’ data. As from 15
• KPJ Damansara Specialist Hospital - Japanese and Arabic November 2013 till end 2017, we have been in full compliance with
• KPJ Penang Specialist Hospital - Thai the legal principles pertaining to personal data protection under
• KPJ Johor Specialist Hospital - Bahasa Indonesia the Personal Data Protection Act 2010 (PDPA). More details on
activities aimed at ramping up our Governance and Data Integrity
* Source : https://internationalliving.com/countries-best can be found in our Management Discussion and Analysis on page
healthcare-world/ 39 of this Annual Report.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 77

ENV I RO NMENTA L

ENERGY AVERAGE ENERGY


Total electricity consumption CONSUMPTION

1 1 9 , 6 6 1 , 2 0 0 kwh 25.26 k w h pe r sq ft
for 4,764,109 sq ft. achieved target of not more than
27.69 kWh per sq ft.

WATER AVERAGE WATER


Total water usage CONSUMPTION

1,096,918 111m 3 p e r e mplo ye e


9,843 employees. achieved target of not more
than 111 m 3 per employee.

WASTE AVERAGE OF
Total waste collected and disposed WASTE GENERATED

1 , 1 9 0 , 8 8 8 kg 0.5 k g p e r p at ie nt
for 2,329,530 patients. achieved target of not more than
0.5 kg per patient.

Our commitment to environmental stewardship is grounded on the need to mitigate the healthcare sector’s environmental
impact by effective resource management in the the provision of medical services to the community.
w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
78 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E N V I R O N M E N TA L

M O N I T O R I N G O U R E N V I R O N M E N TA L I M P A C T
The healthcare industry is one which offers the public an essential service, and plays a substantial
role in the socio-economic development of a country. Healthcare services in its various
specialities and sub-specialities are consumed by a wide base of consumers from all segments
OUR WASTE of the population. With hospitals forming the major venue for the provision of these services, it is
MANAGEMENT inevitable that these have an environmental impact as a result of the various activities conducted
under its roof.
PRACTICES

Hospitals are typically large buildings, operating 24 hours a day, seven days a week. Its various
energy intensive activities result in both hazardous and non-hazardous waste, which could
contribute to a large carbon footprint if not vigilantly monitored. At KPJ, we are mindful of the role
• Training our nurses and we play as environmental stewards, and use and manage our resources in a responsible manner.
other hospital staff on Our initiatives within this area are designed to minimise our environmental aspect and impact
proper clinical waste through stringent compliance with all relevant regulations and best practices.
disposal methods
• Appointment of a clinical We believe in maintaining the highest standards of health and safety for our patients, employees
waste disposal contractor
and visitors, and comply with, if not exceed, all safety and health standards and requirements,
whose operations are in
along with fire safety and environmental regulations.
compliance with MOH &
DOE regulatory standards
The quantitative environmental data in this section for 2017 refers to the 18 MSQH accredited
• Recycling non-clinical waste
hospitals. Despite having 20 MSQH hospitals, only data from 18 hospitals were included as the
such as paper and other
recyclable items 2 newly accredited hospital was only added to the list in early 2018.
• Carrying out waste disposal
according to environmental
regulations
• The handling, labelling,
storage, packaging and
collection are conducted
according to Environmental
Quality Act 1974 (Act
127) and subsequent
amendments’ requirements,
as well as subsidiary
legislation referring to
scheduled waste
• Waste is removed daily by
dedicated vehicles and the
designated collection areas
are kept clean and locked

KPJ Penang supported the Largest Tecoma Tree Planting Event on 27 August 2017, organised by Seberang Prai
Municipal Council’s (MPSP) which earned it an entry in the Malaysia Book of Records (MBR). 50 employees of
KPJ Penang together with Government bodies, NGOs and the local community planted 3,000 Tecoma trees,
also known as Sakura Malaysia.

S A F E T Y, H E A LT H A N D E N V I R O N M E N T
The KPJ network of hospitals practise a robust Safety, Health and Environment (SHE) policy and
complies with the Integrated Management System (IMS) quality certification, which covers the
OHSAS 18001 standard for employee health and safety, the EMS 14001 environmental standard
and the ISO 9001 standard for quality management. To maintain our quality certifications, we
undergo internal and external audits annually.

Within our 20 MSQH-accredited hospitals, each has its own committee which oversees SHE policy
and all related procedures. Our SHE policy statement encompasses areas such as energy and
water consumption, as well as conventional and hazardous waste disposal.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 79

S U S TA I N A B I L I T Y S TAT E M E N T | E N V I R O N M E N TA L

M AT E R I A L I T Y E N V I R O N M E N TA L 1 - W A S T E M A N A G E M E N T
KPJ has in place comprehensive processes with regards to the management of waste generated
from our hospital activities. While the majority of waste produced is general waste, some clinical
waste is hazardous and requires stringent protocols in its disposal. We are mindful that the
improper disposal of waste at a healthcare facility could cause a health hazard or disease outbreak. HAZARDOUS WASTE
In protecting our patients, employees, visitors and the community at large, we ensure that all our
(Clinical waste)(kg)
waste is disposed of in a responsible manner.
FY2017 FY2016 FY2015

In 2017, the amount of hazardous waste produced from our hospitals increased from 1,170,870 kg 1,190,888 1,170,870 976,136
in 2016 to 1,190,888 kg in 2017 due to an increase in patients’ activities. However, our hazardous
waste generated per patient remained at 0.5 kg.

AIR QUALITY MANAGEMENT


Hospitals are complex environments and the management of indoor air quality (IAQ) requires
special attention to ensure healthy IAQ levels. A myriad of involved factors need to be considered
in maintaining healthful IAQ such as temperature, humidity, as well as chemical and biological
N O . O F P AT I E N T S S E R V E D
contaminants that can affect a person’s health and well-being.
FY2017 FY2016 FY2015

Our patients’ conditions result in them possessing air contaminants in their systems which 2,329,530 2.289,990 2,294,318

can lead to potential infections of the people who surround them, allergic reactions, viruses,
respiratory problems and other diseases and health issues. Airborne chemical and microbiological
contaminants are another area of concern.

Bearing all this in mind, KPJ has implemented stringent control and mitigation measures crucial to
ensure high IAQ levels through our various IAQ programmes such as:
T O TA L W A S T E
• Restricting air movement in and between various departments (kg/patient)
• Ensuring property humidity and temperature levels for various hospital areas
• Complying with specific requirements for ventilation and filtration to dilute and remove FY2017 FY2016 FY2015

contaminants from the air 0.51 0.51 0.43

• Regular upkeep of the Air Handling Units (AHU) by replacing filters in a timely manner
• Decontamination of ventilation ducts and making sure that all related mechanical aspects are
maintained in accordance with the hospital’s requirement and standards

R A D I AT I O N M A N A G E M E N T
A number of medical equipment used within a hospital’s premises emit radiation, such as Diagnostic
Imaging, Radiotherapy and Oncology Services. These pose to people within its vicinity the risk
of exposure to harmful levels of radiation which could result in radiation burn, acute radiation
syndrome and cancer.
KPJ is extremely mindful of the dangers associated with radiation exposure and has in place a set
of measures designed to comply with safety regulations such as:
• Compliance with the Atomic Energy Licensing Act 1984 (Act 304)
• Annual application for a Class C licence under the Radiation Protection (Licensing) Regulations
1986 from MOH to operate radiation emitting equipment
• A Quality Assurance Programme (QAP), guided by the Atomic Energy Licensing (Basic Safety
Radiation Protection) Regulations 2010, to ensure our performance and safety standards meet
specific requirements to provide a safe environment for our patients and staff

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
80 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | E N V I R O N M E N TA L

NOISE MONITORING
T O TA L W AT E R Noise is defined as unwanted sound, independent of loudness that can produce undesirable
physiological or psychological effect in an individual, and that may interfere with the social ends
CONSUMPTION
of an individual or group. High hospital noise levels hinder patient recovery.
( C u b i c m e t r e , m 3)
FY2017 FY2016 FY2015 Ambient noise includes all sounds present in the environment. We are guided by the requirements
1,096,918 1,021,647 1,025,804 of the Environmental Quality Act 1974, Part IV, regarding the Prohibition and control of pollution,
and Regulation 23 on Restrictions on noise pollution.

Limit
N O. O F Not Exceeding 65.0 dB(A) for Daytime
EMPLOYEES Not Exceeding 55.0 dB(A) for Nightime

FY2017 FY2016 FY2015


As stated in Guidelines for Environmental Noise Limits and Control by Department of Environment
9,062
(DOE) Malaysia and as per Guidelines for Control of Occupational Noise 2005 (DOSH).
9,843 9,189

The following parameters were measured:


T O TA L W AT E R - Equivalent Continuous Sound Level ( LAeq )
CONSUMPTION - Statistical Indices ( LA10, LA50 and LA90 )
( m 3/ e m p l o y e e ) - Maximum Noise Level ( LAmax )
- Minimum Noise Level ( LAmin )
FY2017 FY2016 FY2015

111 111 113
M AT E R I A L I T Y E N V I R O N M E N TA L 2 - W AT E R M A N A G E M E N T
It would be impossible for a hospital to operate efficiently and provide the high quality care patients
require without an adequate supply of water. Many of our hospital facilities are water intensive by
T OTAL E L E C T R I C I T Y nature, such as our cooling equipment, plumbing, cleaning and medical process rinses.
C ONS UM P T I O N
(kilowatt per At the same time, we are mindful of the pressures placed on municipal water supplies, and the
h o u r, k W h ) need to contribute to national environmental mitigation measures such as the reduction of energy
used to treat and deliver water supply. Therefore, KPJ encourages all its hospitals to proactively
FY2017 FY2016 FY2015
conduct water saving initiatives, not just to drive down costs, but also to contribute towards a
119,661,200 104,610,410 97,756,675
green culture.

Among our water saving initiatives are the monitoring and tracking of water leakages, as well
T OTAL A R E A O F as installation of water-flow limiters. In 2017, we retained our levels of water consumption per
employee of 111 cubic metre. For 2018, we maintain our target of water consumption of not more
KP J H O S P I TA L S
than 111 m3 cubic metre per employee.
(sq ft)
FY2017 FY2016 FY2015

4,764,109 3,966,948 3,966,948

T OTAL E L E C T R I C I T Y
C ONS UM P T I O N
(kWh/sq ft)
FY2017 FY2016 FY2015

25.12 26.37 24.64

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 81

S U S TA I N A B I L I T Y S TAT E M E N T | E N V I R O N M E N TA L

M ATERI A LI T Y EN V IRONMENTA L 3 - ELEC TRI CI T Y CONSUM P T ION


The nature of a hospital’s activities inevitably result in high electricity consumption patterns, as it serves the needs of patients, staff
and visitors, within a facility which is open 24/7. In a typical hospital, electricity is used within sophisticated heating, ventilation and air
conditioning (HVAC) systems to control temperatures and air flow. As well as that, many energy intensive activities occur in attending to
laundry, medical and lab equipment use, sterilisation, computer and server use, food service and refrigeration.

At KPJ, we have implemented measures to increase our energy efficiency, in order to improve our bottom line and free up funds to invest
in new technologies and improve patient care. We regularly run campaigns to increase staff awareness on energy efficiency and electricity
saving initiatives. Our e-idea platform encourages our employees to contribute their suggestions on energy conservation measures.

During the year, we initiated our pilot project focussing on energy saving systems at KPJ HQ . The upgrading of the chiller system at
KPJHQ was conducted with a total cost of RM3 million.

In 2017, our electricity consumption increased to 119,661,200 kWh from 104,610,410 kWh in 2016 due to an increase in the number of new
hospital service areas and the expansion of our hospital network. However, our average electricity consumption per sq ft decreased by
5% or 1.25kWh from 26.37 kWh to 25.12 kWh. Moving into 2018, our target is to limit our electricity consumption to not more than 26.37
kWh per sq ft.

I N I T I AT I V E S F O R T H E R E D U C T I O N O F E N E R G Y C O N S U M P T I O N
All hospitals are directed to adopt the sustainability strategies and initiatives on electricity management and reported and discussed at
the hospitals’ Board Meetings. The initiatives are scheduled and to be carried out systematically until 2019.

Initiatives Action

Upgrading chiller During the year, we initiated our pilot project focusing on energy saving systems at KPJ HQ. Consequently,
system electricity consumption decreased by 14% or 76,506 kWh between November 2017 and December 2017.

A few hospitals have planned to upgrade their chillers in 2018/2019.

Replacement of Most of the hospitals have started replacing the lighting system to LEDs since 2016. The high usage areas are the
light bulbs with lobby and corridor which require 24 hours lighting. This is also includes entrances and emergency exit signs.
LEDs

Installation of Hospitals identified areas and allocated shutdown schedule within every floor or area. The shutdown is controlled
timers by timers. For example, the electricity at Administration Services will be off from 6.00 pm till 8.00 am and the air
conditioning system will be shutdown from 8.00 pm till 8.00 am.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
82 K PJ HEALT HCARE BERHAD

SOCIAL

KLINIK WOMEN
WAQAF AN-NUR EMPOWERMENT

RM 1 3 MIL 30 %
provided services to 124,310 patients of management positions
from underprivileged communities. held by women.

EMPLOYEES TRAINING & DEVELOPMENT

11,594 R M12.2 M IL
in 25 hospitals. on employee training
and development programmes.

TRAINING HOURS

40 h o u r s
employees spent and average of 40 hours
on training, exceeding the mandatory 30
hours of training per year.

Our healthcare services form an important element of the communities we operate in. KPJ’s ‘Care for Life’ philosophy is founded on
community care and outreach, centred around a compassionate approach to their wellbeing.
A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 83

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

M AT E R I A L I T Y P E O P L E 1 - C O M M U N I T Y O U T R E A C H
All our community outreach programmes have been designed in tandem with Governmental policies
and efforts to engender community development, solidarity, social welfare, health and safety. Our
sustained initiatives cover complimentary basic health screenings, public health talks and campaigns
that promote healthy lifestyles and good hygiene for assisted orphanages, homes for senior citizens
and the underprivileged. We also make regular zakat (Islamic Tithes) contributions and donations. In
2017, KPJ’s community investment totalled RM8.4 million.

KLINIK WAQAF AN-NUR Community engagement is undertaken through our Klinik Waqaf An-Nur (KWAN) clinics, which is driven
by our Talent Management Services, and other community programmes planned by our individual
business units and departments. Funding for our community programmes are sourced from business
operation profits and local religious authorities, for example, The Zakat or Islamic Tithes Department,
partnerships with other institutions, as well as funds raised from the general public and employees.

Community Outreach Programme: KPJ Kajang’s CEO and team distributed bubur lambuk for berbuka puasa at Tol Sungai Ramal on 13 June 2017

KLINIK WAQAF AN-NUR (KWAN)


Our flagship initiative KWAN represents KPJ’s solution to provide We were able to expand the reach of our dialysis services with
quality healthcare services for poor and low-income households. the donation of four new dialysis machines from our partner Bank
Through KWAN, and other specialist healthcare facilities such as Muamalat in May 2017 to Hospital Wakaf An-Nur in Pasir Gudang.
dialysis, rehabilitation and medical testing lab centres in urban As at December 2017, 9 HWAN/KWAN dialysis centres with 75
areas, we are providing access to quality medical treatments machines provide dialysis services to 167 active haemodialysis
and diagnosis to a segment of the community who cannot afford patients.
private healthcare services.
As well as that, we worked in collaboration with three of our
KWAN provides charity outpatient clinics and dialysis centres for partners, namely Lembaga Zakat Selangor, Perbadanan Waqaf
underprivileged communities where patients are charged a fee Selangor with Bank Muamalat (Waqaf Selangor Muamalat) and
of only RM5 for a regular outpatient visit and a minimum of RM90 Yayasan Semesta Berdaftar to manage and operate our mobile
for dialysis services. Treatment is provided by qualified medical clinics which provide healthcare services to underpriviledged rural
consultants and includes the cost of any prescribed medications. and urban communities.

In ensuring the provision of charitable healthcare services in line To date, a total of 1 Hospital Waqaf An-Nur (HWAN) and 18 KWAN
with high Islamic values and culture, we identified 12 reputable are available throughout Malaysia. In 2017, KPJ spent approximately
partners from State Religious Authorities and leading non- RM13 million to provide clinical resources and medications to
governmental organisations (NGOs). In 2017, we initiated the KWAN.
creation and development of KWAN as an Islamic NGO through
a number of community activities such as “Majlis Sambutan Hari The list of KWAN hospitals can be found at our corporate website
Raya Bersama Masyarakat di Masjid”, “Majlis Berkhatan Sempena www.kpjhealth.com.my under CSR section.
Cuti Sekolah”, Medical Screening Programmes and health talks via
our identified network of partners.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
84 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

H W A N / K W A N L O C AT I O N S B Y S TAT E

S A R AWA K

2
PENANG K E L A N TA N

M A L AYS I A
1 1

PERAK
1
1st Launched JOHOR
1
in Johor in

1998 KUALA LUMPUR


at Galleria Kotaria
SELANGOR
1
5

1,351,185 2
Patients treated at all NEGERI
HWAN & KWAN since SEMBILAN
inception

2 JOHOR

Total 19
Hospital/Clinic 7

Total number of patients Total 5


treated in 2017 Mobile Clinic 1
124,310
increase by 22%
from 101,713 patients
treated in 2016. IN 2017
2017 patients exceeded our • KWAN facility in Seberang Jaya which is managed by KPJ Penang underwent upgrading
target of treating 110,000 works to enhance its services.
patients for • Opened 2 new mobile clinics
the year. – In joint venture with Waqaf Selangor Muamalat and managed by KPJ Perdana located in
Kota Bahru, Kelantan.
– Mobile clinic associated with Hospital Waqaf An-Nur in Pasir Gudang, Johor.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 85

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

K W A N / H W A N P AT I E N T S TAT I S T I C B Y L O C AT I O N & S E R V I C E S
22%
140,000
124,310
120,000
21% 101,713
100,000
22%
80,000
68,726
60,000 53,120 56,755
43,537
40,000
73.4%
20,000
2,464 1,421
0
OTHER STATES JOHOR MOBILE CLINICS TOTAL

2017
2016
K W A N / H W A N T O TA L P AT I E N T S TAT I S T I C
140,000 22%
124,310
120,000 38%
(0.8%) 101,713
100,000 (21%)
92,508 91,793
80,000 72,581
60,000

40,000

20,000

0
2013 2014 2015 2016 2017

P AT I E N T S N O . B Y M O B I L E C L I N I C S A S AT D E C E M B E R 2 0 1 7

No. Mobile Clinics Partner 2017 2016 Var (%)


1. KPJ Selangor Lembaga Zakat Selangor (LPZ) 474 664 (28.6)
2. KPJ Damansara Waqaf Selangor Muamalat (WSM) 447 340 31.5
3. KPJ Tawakkal Yayasan Semesta Berdaftar (YSB) 829 417 98.8
4. KPJ Perdana* Waqaf Selangor Muamalat (WSM) 705 .
5. HWAN Pasir Waqaf An-Nur Corporation (WanCorp) 9 0 -
Gudang**
Total 2,464 1,421 73.4

* Operational in July 2017


** Operational in December 2017

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
86 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

BABY HATCHES IN
9 KPJ HOSPITALS

• KPJ Ipoh Specialist Hospital


• KPJ Johor Specialist
Hospital
• KPJ Damansara Specialist
Hospital
• KPJ Tawakkal Specialist
Hospital
• KPJ Seremban Specialist
Hospital
• KPJ Penang Specialist
Hospital
• KPJ Perdana Specialist
Hospital
• KPJ Kuching Specialist
Hospital
• Damai Specialist Hospital

B A B Y H AT C H E S
It has been estimated that a baby is found abandoned in Malaysia once every four days.* Academics
and non-governmental organisations (NGOs) also surmise that the estimated rate of child
abandonment is increasing, along with the infanticide rate as many of these unwanted babies are left
in dangerous and unhealthy places.

In line with Governmental policy to provide an avenue for mothers or parents of unwanted babies to
safely absolve themselves of their parental responsibility, KPJ opened our first baby hatch in 2010. To
date, we now have baby hatches in nine KPJ hospitals throughout Malaysia.

The baby hatches are a collaborative endeavour with the Social Welfare Department (JKM) and
OrphanCare, a child protection NGO. Since its launch in 2010, we have received 28 babies through
our baby hatches. Babies found in the baby hatch are placed for adoption through a regulated
process overseen by OrphanCare and JKM in Peninsular Malaysia, whereas in East Malaysia, this
process is overseen by JKM only.

We also provide mothers, guardians or other family members who find it difficult to provide for the
baby and are considering abandoning them with help through discussion, sharing of information
and counselling from nurses or social care staff. This is conducted under a strict privacy protocols to
alleviate the social stigma attached to baby abandonment for adoptions.

* Source : Based on study conducted by Dr Salmi Razali, a psychiatrist and senior lecturer at Monash University,
titled “Estimated and Inferred Infanticide and Infant Abandonment Rates for Malaysia”, using police statistics
from 2007 to 2011.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 87

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

E D U C AT I N G T H E P U B L I C
Public education and awareness goes a long way towards the prevention and early detection of
KPJ WORKFORCE
disease and other health ailments. In this regard, KPJ is cognisant of its role in helping disseminate
IN 2017
information pertaining to healthcare through public education programmes. Our education and
awareness initiatives include public health screening sessions, health talks, safety and other events. • 11,594 employees serving
in 25 hospitals in Malaysia
We regularly hold talks and seminars in public venues, with booths that offer basic health screening • Provided healthcare services
to more than 2.7 million
services such as blood glucose and cholesterol tests, as well as blood pressure and body mass index
patients
(BMI) monitoring. Through our sustained efforts, we are doing our part in cultivating greater health • Invested RM 12.2 million
awareness amongst Malaysians. on employee training and
development programmes, an
In 2017, we conducted a number of safety and health awareness campaigns by our hospitals such as: increase of 18% from 2016.
• Global Hand Hygiene Celebration “Fight Antibody Resistance, It’s In Your Hands”
* Note: Total employees and
On 5 May 2017, the World Health Organisation launched a campaign themed “Fight Antibody respective calculations do
Resistance, It’s In Your Hands”. The objective of this annual campaign is to focus on the fight against not include specialist medical
consultants at KPJ Hospitals. Only
antibiotic resistance in the context of hand hygiene and infection prevention and control (IPC)
resident medical officers are
programmes. Hand hygiene is at the core of effective IPC to combat antibiotic resistance, and included in the total employee
awareness campaigns each year is one important aspect of improving behaviour in line with IPC count. It only covers employees in
KPJ hospitals in Malaysia.
best practices. In 2017, the campaign materials are all co-branded with ‘Antibiotics, handle with
care’ to demonstrate unity between antimicrobial resistance and IPC efforts.

• Due to a fire incident at Darul Quran Ittifaqiyah Tahfiz Center Tahfiz School, Kampung
Datuk Keramat, Kuala Lumpur in 14 September 2017 which killed more than 20 people, the Attrition level
Group encouraged all hospitals to organise Fire Safety Activities for Tahfiz Schools within their 2017 - 12%
own region. The Fire Safety Activities included fire drills, fire evacuation and the provision of
free extinguishers.
1,106
Female
• Regular blood donation drives to help sustain supplies at the National Blood Bank. Public Attrition
Breakdown by
response was very encouraging.
Gender
504
M AT E R I A L I T Y P E O P L E 2 - O U R W O R K F O R C E Male

Our employees present the face of our organisation in the dissemination of our healthcare services. It
is through their hard work and efforts that we are able to garner the reputation of being the healthcare
provider of choice in Malaysia. As the human capital driving our long-term growth strategies, we are
committed to remaining an employer of choice within the healthcare industry by providing them the
Attrition 1,059
support they require to upskill themselves and advance their career within the Group.
Breakdown by
79
Age Group
We have in place clear enunciated policies and procedures with regards to solving grievances. In 472
2017, we resolved all 74 employee complaints brought to our attention. To assist our employees
identify improvements which will further their career, we regularly conduct performance and
career development reviews.

To ensure their continuous professional growth and development, KPJ is singularly focused on
247
investments employing a holistic approach towards talent management through programmes such New Hires
as: Breakdown by 10
Age Group 1,868

• Fair and equitable benefits and welfare provisions


• Development growth through training and career programmes
• Engaging employees, encouraging a ‘speak up’ culture
• Cultivating a positive workplace culture and environment Under 30
30-50
• Facilitating work-life balance
Above 50
• Creating a safe workplace
• Promoting diversity and inclusion within the workplace

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
88 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

KPJ WORKFORCE
IN 2017

• Total KPJ workforce growth in 2017


(Malaysia): 13,054
– Full Time/Permanent employee
- Female: 10,348
- Male: 2,706
– Part Time/Non-Permanent: 16
– Contract Staff (Management
Training Program (MTP)) B U I L D I N G A C U LT U R E M AT E R I A L I T Y P E O P L E 3 - T R A I N I N G
- Female: 9
- Male: 5
O F C O R P O R AT E I N T E G R I T Y AND CAREER MANAGEMENT
– New Hires The maintenance of a corporate culture with We believe in providing our employees with
- Female: 1,250 the highest standards of governance lies opportunities for growth and development
- Male: 876 in a great part, in the way our employees to advance in their medical professions or
- Professional manpower*
conduct their duties and responsibilities on move up the ladder into management levels.
increased by 5% to 8.26
employees, to maintain optimal
the job. In line with KPJ’s Corporate Integrity
4:1 manpower-to-bed ratio pledge, we have emphasised on the need In 2017, KPJ invested a total of RM12.2 million
• 5,744 Gen Y employees with for our employees to conduct themselves in employee training and development
opportunity to engage with Senior with integrity, through ethical practices, programmes, an increase of 18% compared
Management
compliance and adherence to good corporate to RM10.3 million in 2016.
• 585 Employees on KPJ’s Living
Well Programme
governance practises in their dealings with
both internal and external parties. We have in place a number of programmes
* Professional manpower consists of
Medical Officers, Nurses and Allied Health
aimed at grooming the potential of our staff,
employees Our Code of Ethics and Business Conduct such as our Operations Manager programme,
sets out the standard of behaviour we expect a comprehensive, hands-on management
of our employees, and each member of and leadership training programme to groom
TRAINING HOURS our staff is expected to take an oath of the future hospital CEOs. The programme is open
“Service Pledge” declaration at our annual to employees from various backgrounds,
Employees received an average of
staff assembly or “PEDOMAN” (Perhimpunan, such as medical officers, nurses, allied health
40 hours of training, exceeding the
mandatory 30 hours of training per year. Dialog dan Anugerah Tahunan Anggota professionals as well as accountants and
Pekerja) held in our hospitals. As well as human resource professionals. It provides our
TRAINING HOURS BREAK- that, all our employees are also expected employees structured and informed access
DOWN BY GENDER
to acknowledge e-integrity pledge in the to further their career within the Group. KPJ
Employee Self Service (ESS) portal. While subscribes to the JCorp Succession Planning
FEMALE: at Group level, all hospitals and companies programme which ensures that successors
264,400 hours under the KPJ umbrella are requested to are identified for all managerial positions. This
(6,610 employees)
sign an Integrity Pledge with their suppliers, provides a pipeline of potential leaders who are
contractors and other related third parties. readily accessible whenever there is a suitable
MALE: position available as we continuously expand
62,040 hours In August 2017, we have introduced a new operations.
(1,551 employees)
Human Resource Information System (HRIS)
TRAINING HOURS BREAK- module, the “Declaration of Assets. It is To ensure our staff access continuous training
DOWN BY STAFF CATEGORY compulsory for all staff members to complete and development opportunities, we have made
two declaration of asset form of Initial it mandatory for each staff to undergo at least
declaration and Subsequent declaration, 30 hours of training per year, as well as making
MANAGER:
30,840 hours to submit via ESS or manual form. The training part of their Key Performance Indicator
(771 employees) declaration of asset is necessary to promote performance evaluation. These training
transparency and to prevent any conflict of programmes cover areas such as customer
interest, corruption and also mismanagement. services, fire safety and corporate culture, and
EXECUTIVE:
178,840 hours This is also a requirement by JCorp. are either conducted internally or through
(4,471 employees) external moderators. A total of 2,919 employees
For more information on how we ensure our at non-executives level also received training in
employees practise the principles of good 2017.
EXECUTIVE ASSISTANT
governance on their job, please refer to the
(NON-EXECUTIVES):
Principle Risks section on page 100 of this
116,760 hours
(2,919 employees) Annual Report.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 89

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

In 2017, our employees received an average of 40 hours of


training, exceeding the mandatory 30 hours of training per
year. Our total Human Resource Development Fund (HRDF)
utilisation was 82% for 2017, compared to 88% the previous year.
Although no new hospitals subscribed to the scheme, there were
expansions in our existing hospital network through increases
in the number of beds and introduction of new services which
resulted in new staff hires. This resulted in an overall increase in
subscription.

M AT E R I A L I T Y P E O P L E 4 -
E M P L OY E E B E N E F I T S A N D W E L FA R E
To remain an employer of choice, KPJ maintains a comprehensive
schedule of employee benefits and welfare, which is tied to
our staff’s contributions and level of productivity towards
achieving the Group’s objectives.

Besides competitive salaries and benefits we offer our full-time


employees the following:

• Annual medical screening for employees aged 45 and Advocating Work-Life Balance
above KPJ’s principle for work-life balance is grounded on the belief
• Inpatient and outpatient medical costs which cover spouses that it should provide all employees with the tools they require
and dependents (children) to successfully manage their work and family commitments. This
• Maintained employer EPF contribution up to 15% since goes a long way towards ensuring high employee satisfaction
2015 for employees that have been in service a minimum levels, and also contributes to our positive retention rates.
four years
• Employee Share Option Scheme (ESOS) for employees Among our ongoing work-life balance initiatives are:
• Flexible working hours
with at least three years of service in the Executive
• Onsite crèches for our staff’s children childcare which are open
category and above. To date, a total of 36,382,000
24/7 to accommodate nurses working on shifts
million shares have been allocated for the scheme.
• Promoting healthy living attitudes amongst our employees
Employees in Executive Assistant category are given
through voluntary wellness and health initiatives such as our
cash consideration each year over a five-year period
BMI programme
(2015-2019). • Since 2013, we have provided employees in certain functions
• Sponsorship as study support for employees’ children the option to work staggered hours and start the day later
pursuing higher education healthcare-related at KPJUC. • Time off for personal matters
A placement in KPJ hospitals upon graduation is provided • Special parking for pregnant employees
subject to their final result. • Work from home programme for employees in Information
Technology (IT) Services, for up to two days in a week. We are
We also provide parental leave for our employees, to support considering expanding this initiative to other departments.
them with their family duties and obligations. In 2017, 90 male
employees who were entitled to two days leave utilised their M AT E R I A L I T Y P E O P L E 5 - E M P L O Y E E E N G A G E M E N T
entitlement, compared to 64 in 2016. While within our female The healthcare sector is a people-intensive industry requiring
employee base, 1,018 women entitled to 60 days leave utilised medical care workers to employ a compassionate approach in the
their leave compared to 864 in 2016. provision of treatment and care for their patients. The emotional
commitment of our healthcare professionals forms the crux of their
In 2016, KPJ had introduced the Living Well programme for our discretionary effort in ensuring best patient healthcare outcomes
employees, to help those diagnosed with critical lifestyle-related by going the extra mile when they interact with our patients and
illness such as diabetes and hypertension, or those with BMI their families.
that fall within the Pre-Obese to Obese I – III category. Through
our programme, employees can access up to date information KPJ has maintained consistently high levels of employee
on their health status, thus empowering them to make better engagement in order to harness the benefits these offer our
lifestyle choices and decisions. In 2017, a total of 585 employees business. Underpinning our efforts is our desire to cultivate and
were on the programme, compared to 625 in 2016, indirectly encourage a sense of unity and solidarity among our people, as
showing an increase positive lifestyle. part of the larger KPJ family.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
90 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

Our employee engagement efforts centre around initiatives TM Roadshow 2017 – Our Group TM visited all KPJ hospitals
which tie in with life events and issues which are fundamental and companies in Malaysia to highlight new policies and
to our people. These include personalised birthday e-mail incentives for employees. An integrity talk focusing on integrity
messages, festive greetings, condolence messages in and ethics at the workplace, whistle blowing procedure,
the event of the passing of a loved one and group e-mails Corporate Integrity Agreement and employee declaration of
focusing on topics which are meaningful to our staff. assets was also conducted at the visits.

In 2017, we conducted a series of employee engagement KPJ Sports Carnival 2017 – KPJ organised the 15th KPJ Sports
programmes in order to enhance the employee experience at Carnival in December 2017. The KPJ Sports Carnival celebrates
KPJ as follows: teamwork and the spirit of competition amongst KPJ employees.
Six contingents consisting approximately 1,500 employees
Talent Management Open Day – The Talent Management took part in the five days event. The overall winner was the
Open Day is an annual event held at all hospitals and Team Wangsa Dragon from our Central group of hospitals with
companies as a way for employees to engage directly with the a gold medal tally of 15.
Talent Management (TM) team. We also invite companies and
government agencies to have their own open booths to provide KPJ Pedoman 2017 – This annual event is looked forward to
our employees with the opportunity to manage their personal by all our employees. Pedoman is an acronym for Perhimpunan
finances all within office premises. These include insurance Dialog dan Amanat, which has its’ beginnings at our parent
companies, banks, EPF, Tabung Haji, ASB, etc so employees company JCorp in 1985. This interactive sharing and
get a chance to manage their personal finances all within the communication platform, provides an avenue for employees
office premise. to share, give feedback and engage in a dialogue with the
President & Managing Director of KPJ Healthcare Berhad.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 91

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

KPJ Top Up Fund – In 2017 a medical top This programme allows for us to liaise
up fund was extended to employees under with a recruitment agency to increase our
DIVERSITY OF
the KPJ Group. The objective of the fund is pool of ethnic Chinese candidates for our
BACKGROUND
to ease the burden of excess medical bills workforce.
that employees and their dependents may
face due to unforeseen circumstances. As We have participated in campus job fairs
such, an allocation of up to RM1.5 million at private universities in the Klang Valley 36%
has been set aside for utilisation throughout to reach out to a more diverse pool of female representation in EXCO
the Group. potential job candidates. Among them are
New Era University, Monash University and
M AT E R I A L I T Y P E O P L E 6 - D I V E R S I T Y
At KPJ, we leverage on the skills, talents and
the Intercampus Career Fair. As well as this,
we have also reached out to students from
30%
female representation in HM
perspectives of our diverse workforce, as INTI University and Colleges, TAR College
an enabler of organisational improvements. and Taylors University. Beyond the Klang
The majority of our employees are women, Valley, we reached out to a pool of public
comprising a total of 81% of our workforce. university candidates by taking part in the AN INCLUSIVE
Of these, 30% are at management levels. SL1M (Skim Latihan 1Malaysia) Career Fair WORKFORCE
Basic salary ratio of Men to Women is 1.4:1. at University Malaysia Sabah in Sabah, and
University Pendidikan Sultan Idris in Perak.
To ensure high retention rates of our female
workforce, we have strong work-life balance In keeping up with the times, we are
2
programmes to help them manage their leveraging on digital platforms to reach Disabled staff
dual obligations to their job and their family. out to the Millennial Generation through
As at end 2017, our retention rate of women job advertisements on the KPJ Job Portal,
with at least five years of service with KPJ Linkedin and our Facebook page. In 2017, 11
stood at 51% or 5,294 employees. we received 2,016 expressions of interest Visually impaired
staff
from potential candidates through our
Other ongoing commitments in ensuring online job advertisement media. • 6 hospitals with onsite creches
a diverse workforce is embodied through • BMI programme resulted
programmes that celebrate diversity such as In ensuring inclusivity and diversity in terms in 4% decline in 2017 in the
the flexWorkLife.my initiative by TalentCorp of persons with disabilities and old age number of our employees
and the Ministry of Women, Family and pensioners, we have in place a Persons categorised as pre-obese and
Community Development. with Disabilities (Orang Kurang Upaya obese
or OKU) recruitment drive. This includes
The KPJ Employee Handbook provides a collaboration with SOCSO under the
guidance to our people on our recruitment “Return to Work Programme” to give the RETENTION RATE
and promotion pathways, which is based disabled and pensioners the opportunity to OF WOMEN WITH
return to work and share their experiences MORE THAN 5 YEARS
on merit and achievements and free of any
OF SERVICE
form of discrimination. We employ a strict and perspectives on the job.
approach in undertaking disciplinary action
against any employee that commits sexual We are equally committed to diversity at
51%
harassment at the workplace, regardless of Executive Committee (EXCO) and Hospitals’ 2017
whether it is on or outside of the company’s Management (HM) which include Medical
premises. Directors. As at end 2017, we have achieved
36% female representation on our EXCO
Through KPJ’s diversity policy, we aim to and 30% female representation on our 42%
increase the racial and ethnic diversity of Hospitals’ Management. 2016

our workforce, and have initiated a Diversity


and Inclusion Programme in line with this.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
92 K PJ HEALT HCARE BERHAD

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

DIVERSITY OF SPECIALIST CONSULTANTS

TOTAL 1,022
CONSULTANTS Malay (464)
46%
Male (812)
79% Chinese (348)
34%
Indian (179)
17%
Female (210)
21% Others (31)
3%

DIVERSITY OF EXECUTIVE COMMITTEE

TOTAL 14 EXCO

Malay (11)
Male (9)
79%
64%
Chinese (2)
14%
Female (5) Others (1)
36% 7%

DIVERSITY OF KPJ HOSPITALS’ MANAGEMENT

TOTAL 54 HM
Malay (38)
Male (38) 70%
70% Chinese (11)
21%
Female (16) Indian (3)
30% 5%
Malaysia Others (2)
hospital only 4%

DIVERSITY OF KPJ HOSPITALS’ EMPLOYEE (MALAYSIA)

TOTAL 11,594
EMPLOYEE Malay (9,223)
80%
Male (2,190)
Chinese (480)
19%
4%
Indian (1,061)
9%
Female (9,404)
81% Others (830)
7%

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 93

S U S TA I N A B I L I T Y S TAT E M E N T | S O C I A L

M AT E R I A L I T Y P E O P L E 7 - S A F E T Y AT T H E W O R K P L A C E Malaysia and have undergone DOSH-recognised safety training


The maintenance of the highest standards of health and safety programmes as provided by the National Institute of Occupational
at the workplace is of critical importance within the healthcare Health and Safety (NIOSH) Malaysia.
sector as the precursor towards providing high quality
healthcare services. Additionally, KPJ has adopted the Hazard Identification, Risk
Assessment and Risk Control (HIRARC) system to identify potential
KPJ’s health and safety initiatives are embedded into a large hazards, and to assess and control risks of injury or harm due to the
number of our policies and systems, and constitute an integral exposure of these hazards.
part of the way we manage and maintain our operations. These
can be found within the Integrated Management System of We conduct regular training programmes for our employees on
our JCI- and MSQH-accredited hospitals which covers OHSAS the latest OSH practices and procedures, sharing information
18001:2007. pertaining to this area across our network of hospitals, to ensure
greater adoption of preventive measures. This includes sharing
As well as that, our SHE Policy covers planned and preventive experiences of incidents such as fire and other emergencies, as
maintenance, safe and proper disposal of sharp and hazardous well as disaster action plans. Our contracted vendors and suppliers
materials, as well monitoring the exposure levels of staff working are also required to adhere to our health and safety standards.
within radiation and diagnostic imaging services. In addition
we have a vaccination policies for Thypoid and Hepatitis B for We diligently track our employee health and safety incidents
clinical and support services staff. and are committed towards achieving zero incidents. In 2017, we
recorded 13.2% decrease in OSH-related incidents. At present, all
Our Safety and Health Officers are registered with the our hospitals report their OSH-related incidents to DOSH.
Department of Occupational Safety and Health (DOSH)

2017 INITIATIVES TO REDUCE HEALTH AND SAFETY INCIDENTS IN KPJ HOSPITALS

No. Hospitals initiatives to reduce incidents


1. Promote staff to wear suitable footwear
2. Conduct awareness training on workplace safety
3. Good housekeeping practice i.e clear access way, signage for wet slippery areas
4. Improve lighting for safe movement
5. Limit access to high risk areas
6. Installation of mirrors at all corners
7. Safety campaigns with JKKP, JKJR, SOCSO, BOMBA. etc

8. Measures to reduce staff burn-out eg. Reschedule duty roster

OSH RATES
2017 2016 Var (%)
Fatality Rate 0 0 -
Incident Rate 12.5 14.4 (13.2)
Frequency Rate 5.1 5.8 (12.1)
Severity Rate 19.9 19.9 -
Occupational Poisoning and Disease Cases 0 0 -
Total man-hours worked 24,568,128 22,935,744

Note: Types of incidents recorded include slips and falls, fall from height, sharp injury, chemical spills, burns, electrical incidents and other office-related
incidents as required to be reported under OSH (Notification of Accident, Dangerous, Occurrence, Occupational Poisoning and Occupational
Disease) Regulations 2004.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
94 K PJ HEALT HCARE BERHAD

S TAT E M E N T O N R I S K M A N A G E M E N T A N D
INTERNAL CONTROL
(Persuant to Paragraph 15.26 (b) of the Bursa Malaysia Listing Requirements)

INTRODUCTION
The Board of Directors of KPJ Healthcare Berhad (KPJ) is pleased to provide the following statement on the state of risk management
and internal controls of the Group which has been prepared in accordance with the Statement on Risk Management & Internal Control –
Guidelines for Directors of Listed Issuers endorsed by Bursa Malaysia Securities Berhad.

BOARD RESPONSIBILITY
The Board affirms its overall responsibility for establishing the Group’s system of internal controls and risk management framework as well as
reviewing its adequacy, integrity and effectiveness. The Board has put in place a sound governance structure, risk management framework
and internal control system pursuant to Principle B(II) of the Malaysian Code on Corporate Governance 2017 to ensure effective oversight
of controls and risks in the Group.

The Audit Committee (AC) reviews the adequacy and effectiveness of internal controls system and risk management framework through
the internal audits and risk management reviews conducted by the Group Internal Audit Services and the Risk & Compliance Services
respectively. Issues raised and actions taken by Management to address these issues were deliberated in the AC meetings and the minutes
of the AC meetings were then presented to the Board.

MANAGEMENT RESPONSIBILITY
The Management is overall responsible for implementing the Board’s policies on risks and controls by allocating resources for the design and
implementation of policies and procedures on risk management and internal control system to facilitate the identification and evaluation of
significant risks faced by the Group and formulating adequate controls to manage these risks, according to the risk appetite set by the Board.
The principal objective of the risk management framework and internal control system is to identify and manage business risks effectively
and safeguard assets.

As the internal controls system is designed to manage and reduce risks rather than eliminating them, the system can only provide reasonable
assurance to the Board regarding the achievement of company objectives through:-
• effectiveness and efficiency of operations
• reliability of financial reporting
• compliance with applicable laws and regulations

The likelihood of achievement of the Group’s objectives is affected by limitations inherent in any internal control systems. The Management
therefore has to consider the cost of implementation of internal controls against the expected benefits to be derived.

RISK MANAGEMENT AND INTERNAL CONTROL STRUCTURE

Integrity and Ethical Values


The Group is committed to promote ethical behaviour culture in employees and medical consultants. At the annual staff assembly called
“Pedoman” (Perhimpunan, Dialog dan Anugerah Tahunan Anggota Pekerja), all employees and medical consultants are reminded of the five
Core Values adopted by the Group, which are Safety, Courtesy, Integrity, Professionalism and Continuous Improvement. These core values
guide all employees to achieve the Group’s vision and support the business mission and goals.

Employees are expected to be transparent in their conduct to promote high ethical values and reaffirm their commitment to the Group
through the Staff Integrity Pledge ceremony.

In addition, the Group also encourages employees to report directly to the Managing Director of any misconduct or unethical behaviour
committed by any staff of the Group through the annual Borang Peradaban declaration.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 95

S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

To complement this expectation, the Group also has in place a comprehensive Policy of Whistle-Blowing that outlines the Group’s commitment
to promote the highest standards of governance, ethics and integrity in all aspects of business dealings. The Policy covers, inter-alia, 3 tiers of
whistle-blowing reporting line, comprising of the Managing Director, the Chairman of the Audit Committee and the Chairman of the Board,
to facilitate whistle-blowing activities according to different possible circumstances. In order to encourage a conducive environment for
effective whistle-blowing, the Policy also provides assurances on the preservation of identity, confidentiality of information and protection of
whistle-blowers from possible retaliation. This policy provides an avenue for employees to raise genuine concerns internally or report any
breach or suspected breach of any law or regulation.

The Group is also a signatory to the “Malaysian Corporate Integrity Pledge” since 2011, introduced by the Malaysian Institute of Integrity (MII)
in support of the Government efforts to combat corruption and unethical practices.

The Group has put in place the “No Gifts and Entertainment” policy and “Annual Asset Declaration” policy applicable to all staff. The purpose
of these policies is to uphold ethical and responsible behaviour by all its employees and to avoid conflict of interest situation in any ongoing
or potential business dealings in the Group with various suppliers and service providers.

The Group has also established the “Corporate Integrity Agreement (CIA) for Vendors/Suppliers/Contractors since 2016 to strengthen our
integrity practices. The Group requires its Vendors/Suppliers/Contractors to adhere in all of their activities to the laws, rules and regulations.
The Group expects the Vendors/Suppliers/Contractors to abide by the integrity agreement when conducting business with or for the Group.

Control Structure
The Group adopts the COSO Internal Control Framework (COSO Internal Control Framework which was updated in 2017 – Enterprise Risk
Management Integrating with Strategy and Performance) as a guide to ensure an appropriate and sound system of internal controls are
in place, which encompasses five inter-related components i.e. the Control Environment, Risk Assessment Framework, Control Activities,
Information and Communication and Continuous Monitoring process. KPJ is moving towards ISO31000:2009 Risk Management as part of
KPJHB ISO Certification Programme that will be completed in 2018.

The Group’s operations is headed by the President/Managing Director, who is assisted by the Executive Director and five (5) Vice Presidents
for the following functions:
• Business Operations and Clinical Services
• Group Finance Services
• Project Management, Biomedical & International Operation Services
• Business Development Services
• Talent Management Services

All the hospitals within the Group are clustered into five (5) zones, whereby one hospital at each cluster will act as the control hub of the
other hospitals within the cluster. Each cluster is headed by an executive director who will oversee and control all the hospitals’ operations.
At the hospital level, the Executive Directors and the Chief Executive Officers are assisted by the Medical Directors who oversee all clinical
governance in the hospitals.

At the Corporate level, the Group exercises its governance oversight via the Medical Advisory Committee on clinical matters and the
Executive Committee (“EXCO”) on all hospital operations matters.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
96 K PJ HEALT HCARE BERHAD

S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

Assignment of Authority and Responsibility


The Board has delegated certain responsibilities to Board Committees which function with clearly defined terms of reference. The
functions and activities carried out by the Board Committees are set out in the Corporate Governance Report which is available at
www.kpjhealth.com.my.

The Board also assigns authority and responsibility mainly to the EXCO which is headed by the President/Managing Director, to manage
operations as well as discuss strategic issues pertaining to the delivery of services and business operations of the Group.

Several committees have been formed to identify, evaluate, monitor and manage the significant risks affecting the Group operations:-
1. Medical Advisory Committee (“MAC”)
MAC is the apex clinical committee that is responsible for the Group’s clinical governance framework and guidelines for sound and
ethical medical practices.
There are various sub-committees under the MAC; namely Clinical Governance Policy Committee, Clinical Governance Action
Committee, Clinical Ethics Committee and Research & Development Committee.
2. Clinical Risk Management Committee (“CRMC”)
CRMC is entrusted to review and oversee the effectiveness of the clinical ERM framework. All major clinical risk incidents related to
patient and staff safety are presented to CRMC.
3. Tender Evaluation Committee (“TEC”)
TEC is responsible for evaluating all tenders for purchases, acquisitions or disposals of assets, award of contracts and appointment of
project development consultants/advisors for the Group. TEC will make appropriate recommendation to the Tender Board Committee.

Note: The Terms of Reference (TOR) is available at www.kpjhealth.com.my.

Commitment to Continuous Learning


The Group, being in a service-oriented industry, recognises the importance of sustainable investment in improving the skills and competencies
of its management, medical consultants and employees. This is achieved through facilitating various training programs, seminars, workshops
and service quality initiatives.

To improve staff competency in delivering quality service, the Group spent RM12.2million in 2017 (2016:RM10.3million) on conducting staff
training and development programs. Each employee is mandated to undergo at least 30 hours of training per year on work related areas such
as customer service, clinical safety and leadership program, facilitated by the Group’s Talent Management Services in collaboration with KPJ
Healthcare University College’s (“KPJUC”) teaching professionals or external trainers.

To promote continuous learning and upgrading of knowledge, the Group has a sponsorship program for eligible executives to further their
studies in various post-graduate program in hospital management and clinical disciplines. Since this program was started in 2005, 93 staff have
benefited and obtained their Masters degrees from various universities such as Universiti Teknologi Malaysia, Asia E-University, University of
East London and KPJ University College.

Nurses, which represent around half of the Group’s total workforce, are also encouraged to further their studies either for the Degree in Nursing
or Masters in Science (Nursing) through collaboration with KPJUC, foreign universities or to take up post-basic courses in OT, ICU, CICU, renal
and midwifery to enhance their knowledge and skills. The Group also organises the KPJ Medical Conference, Medical Workshop and Nursing
Convention annually for the medical consultants, nurses and allied health staff to deliberate and discuss medical and clinical issues related to
their practices to promote patient safety and standardisation of clinical practices.

Currently, 20 hospitals in the Group have received their accreditation certifications from the Malaysian Society for Quality in Health (MSQH), out
of which 4 hospitals namely KPJ Johor Specialist Hospital, KPJ Seremban Specialist Hospital, KPJ Ampang Puteri Specialist Hospital and KPJ
Penang Specialist Hospital, have also been certified by the Joint-Commission International with the internationally recognised and prestigious
“JCI Accreditation”. It is the Group’s aspiration that all hospitals in its network would be accredited upon reaching operational maturity.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 97

S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

RISK MANAGEMENT FRAMEWORK

Group-Wide Objectives
The Board has established an organizational structure with clearly defined lines of accountability and responsibility to support the ideal
control environment. The Audit Committee’s responsibilities have been expanded to include the assessment of risks that the Group faces in
its operations.

The Group subscribes to the “Australian/New Zealand Standard 4360:1999 Risk Management” to guide its risk management activities and
adopted the “Australian/New Zealand Standard HB228:2001 Guidelines for Managing Risk in Healthcare” as its base framework in managing
its business risks, comprising as follows:-
• Patient Care
• Clinical Staff
• Employee
• Property
• Financial
• Corporate Governance
• Others

The Group has put in place an Enterprise-Wide Risk Management (“ERM”) framework for managing risks associated with its business and
operations. The ERM framework features a risk governance structure that comprises of 3 levels of defence with clear lines of responsibilities
and accountabilities as follows:-

Level 1 - Hospital-level Management and Board


Level 2 - Clinical Services & Risk Management Services at HQ
Level 3 - Group Internal Audit at HQ

Risk Coordinators are appointed at each hospital to co-ordinate and monitor the implementation of risk management activities across all
aspects of operations. All hospitals and subsidiaries are required to identify and mitigate relevant risks that may affect the achievement of
the Group’s objectives and report all significant risks arising from operations to their respective Boards.

The Group coordinates its risk management activities through a risk reporting & escalation framework called “Incident Reporting & Root Cause
Analysis”. This is to ensure that all risk incidents are documented, investigated and root causes are identified to prevent future recurrence and
ensure patient safety is given top priority. Our reporting of Incident & Root Cause Analysis is via Q-Radar online risk reporting system which
has been rolled-out to all hospitals in June 2017. Currently, all hospitals in Peninsular Malaysia have successfully reported incidents (clinical
and non-clinical) via this online risk reporting system and plan to implement to East Malaysia by June 2018.

As a healthcare service provider, clinical risk forms the biggest risk class the Group faces. Therefore, the Board has entrusted the CRM
committee which comprises of medical consultants of various disciplines to review and deliberate on all reported risk incidences. The
minutes and decisions of this committee are presented to the MAC, which is the apex-committee for all clinical matters of the Group.

Both clinical and non-clinical risk matters are also reported to the AC which has oversight authority on all risk management and internal
control issues of the Group.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
98 K PJ HEALT HCARE BERHAD

S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

CONTROL ACTIVITIES

Policies and Procedures


Policies and procedures are documented comprehensively, which are reviewed regularly to ensure relevance and compliance with the
current and applicable laws and regulations. These policies and procedures help to ensure that appropriate authority limits are in place,
business activities are carried out according to set standards and necessary actions are taken to address and minimise risks and ensure the
orderliness and continuity of business functions.

Segregation of Duties
The delegation of responsibilities by the Board to the Management and Operating Units are clearly defined and authority limits are strictly
enforced and reviewed regularly. Different authority limits are set for different categories of managers for the procurement of capital expenditure,
donations and approval of general and operational expenses. Similarly, cheque signatories and authority limits are clearly defined and enforced.

Key Performance Indicator (KPI)


KPIs with detailed balance scorecards are monitored and tracked to ensure the Group achieves the financial, strategic, operational and customer
perspective targets that were set at the beginning of the financial year. The KPIs are cascaded down to all the operating subsidiaries in the
Group.

I N F O R M AT I O N A N D C O M M U N I C AT I O N

I n f o r m a t i o n Te c h n o l o g y ( I T )
Information and Communication Technology (ICT) continue to evolve entering into Industry 4.0 age through Artificial Intelligence and Digital
Production, Internet of Things, Cloud Technology, Robotic Process Automation and Big Data. KPJ and its Corporate IT division align its ICT
strategies moving ahead for the next 5 years. Hospital Information Technology System 2 (HITS2) and KPJ Clinical Information System 2 (KCIS2)
as HIS 2nd Generation Products and Core Services provides cloud computing, hospital information system solutions and replace its 20 years old
client server application solutions for 27 hospitals in 2018.

Systems and processes are integrated and provide 3rd party integration, for instance, IBM Watson, Cognitive Machine Learning and Artificial
Intelligence. Greater possibility to integrate with insurance to improve approval and payment clearance with further possibility of improving
other payment methods through payment gateways. KPJ also has further plan in using AI Robotics to improve services and greater integration
between hospitals. Other technologies focus on wearable devices and integrate to HIS to improve wellness and care.

As cloud and cloud computing continue to advance in the enterprise environment widely, KPJ did not neglect its responsibility by investing into
Information Security, Cybersecurity and Data Protection compliance and conformity to ISO 27001 to ensure protection and minimize financial
and operational risk and threats.

Communication and Information Sharing


The Group promotes the culture of effective communication and information sharing amongst the hospitals and key subsidiaries through the
holding of functional group meetings and conferences. The objective behind these meetings and conferences is to share and reinforce key
business strategies, review performance, discuss current issues and communicate new policies and procedures.

Such meetings and conferences are held either on monthly, quarterly or annual basis, comprising of diverse functional groups such as hospital
management, chief nursing officers, finance managers, pharmacists and risk coordinators.

The Group conducts the Pedoman annual staff gathering at the beginning of every year, whereby achievements and challenges faced during the
previous financial year are shared with staff, new strategic initiatives, corporate KPI and business targets for the new financial year are also presented.

Insurance Coverage
The Group has in place an adequate insurance coverage to protect is major assets against any mishaps that could result in material loss. The
coverage is reviewed yearly taking into account the changes in risk profiles (acquisitions, claims and etc). All the staff in Group are covered by
the Group Personal Accident for injuries resulting from incident or accident.

All directors, medical officers and professionals of KPJ Group has been covered by the Liability Insurance (Medical Malpractice Policy and
Directors & Officers Policy) in respect of their potential exposure to any personal liability which may arise in the course of performing their duties.

The Management and Staff of KPJ Group are also covered by the Business Travel Protector Insurance for all their business travels.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 99

S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

CONTINUOUS MONITORING AND ASSURANCE

Ongoing Monitoring
The main assurance process of the Group is primarily undertaken by the Level 2 and Level 3 defence line functions. The effectiveness of internal
control systems implemented throughout the Group is assessed primarily by the Group Internal Audit through the conduct of regular audits
on the hospitals and key subsidiaries.

The assurance on the effectiveness of the ERM framework is provided primarily by the Clinical & Quality Services and Risk & Compliance
Services through on-site and off-site reviews. In 2017, 25 clinical audits and 5 risk & compliance reviews were conducted by these departments
respectively.

Reports generated by the Level 2 and Level 3 lines of defence mentioned above are presented to the Clinical Risk Management Committee and
Audit Committee respectively for deliberation.

The Group’s risk management framework and internal control systems do not apply to the associate companies where it does not exercise
management control over their operations. The Group’s interest are served through representation on the Board of Directors of these associate
companies as well as through regular review of management accounts that they provide to the Group. The Board is satisfied with the information
provided to assess the associates’ performance for informed and timely decision-making on the Group’s investments in these associates.

Independent Evaluation
All hospitals certified with the MSQH and JCI accreditation have to undergo stringent surveillance audit by the respective surveyors and audit
teams to ensure compliance with accreditation standards and requirements before accreditation certification can be renewed, usually every
three (3) years.

In 2017, MSQH conducted 10 hospital accreditation audits and JCI conducted 1 hospital audit as part of the accreditation process cycle.

Review of This Statement By The External Auditors


This Statement on Risk Management and Internal Control has been reviewed by the External Auditors as required by Paragraph 15.26 of the
Main Market Listing Requirements of Bursa Malaysia Securities Berhad for the inclusion in the Annual Report for the year ended 31st December
2017. The limited assurance review was performed in accordance with Recommended Practice Guide (RPG) 5 (Revised) issued by the Malaysian
Institute of Accountants. RPG 5 (Revised) does not require the External Auditors to form an opinion on the adequacy and effectiveness of the
risk management and internal control of the Group.

The External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that the statement is
inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of risk management and
internal controls systems of the Group.

ASSURANCE
The Board has received assurance from the Managing Director and Vice President (II) - Group Finance Services that the Group’s risk management
framework and internal control system are operating adequately and effectively, in all material aspects, during the financial year under review
and up to the date of approval of this Statement for inclusion in the Annual Report, based on the risk management and internal control system
adopted by the Group.

The Board is of the view that the system of internal controls instituted throughout the Group is sound and effective and provides a level of
confidence on which the Board relies for assurance. In the year under review and up to the date of this report, there was no significant control
failure or weakness that would result in any material separate disclosure in the Annual Report. The Board ensures that the internal control system
and the risk management practices of the Group are reviewed regularly to meet the changing and challenging operating environment.

The Board is therefore pleased to disclose that the system of internal control and risk management of the Group is sufficient, appropriate,
effective and in line with the Malaysian Code of Corporate Governance and the Statement on Risk Management and Internal Control – Guidelines
for Directors of Listed Issuers.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
100 K PJ HEALT HCARE BERHAD

PRINCIPAL RISKS

KPJ HEALTHCARE BERHAD’S (KPJ) FINANCIAL AND OPERATIONAL RISKS, HOW


T HEY HAVE CHANGED AND HOW THEY ARE MANAGED ARE DEPICTED BELOW.

Key: Risk Change

Risk increased Risk remained stable Risk decreased

Risk Theme Risk Description Risk Impact Risk How We Manage The Risk
Change
2017

Ensuring Growing demand for In order to ensure • KPJ focuses on staff retention, and pursues various
Availability of private healthcare profitable growth in training and productivity strategies to widen staff career
Key Medical services could line with KPJ’s long- opportunities to serve the Group.
Staff potentially lead term strategies, the • To ensure a strong talent pipeline, KPJ has KPJUC that
to a shortage of expansion of KPJ’s conducts various medical and healthcare courses from
suitably qualified and network of hospitals certificates to PhD level.
experienced staff and the upgrading
• Our wide network of hospitals that are equipped with
to provide patient- of existing hospitals
international standard facilities and equipment is a strong
centric care to our require additional
pulling factor for specialist doctors to join the Group.
customers. suitably qualified staff
to cater to growing • KPJ’s robust Clinical Governance Framework that
needs. promotes clinical safety and excellence offers a strong
safety net for healthcare professionals.

Code of Expectations of Non-compliance • Staff reaffirm their commitment to KPJ through the Staff
Conduct employees of the could affect KPJ’s Integrity Pledge Ceremony.
Group to adhere to reputation in the • Employees to report of any misconduct or unethical
the highest standards marketplace, thus behaviour by any staff member directly to the Managing
of ethical conduct diluting its brand Director.
and values, and value and market
• Comprehensive Whistle-Blowing Policy covering three
to avoid conflict appeal.
tiers of whistle-blowing reporting line ie , Managing
of interest in any
Director, Chairman of the Audit Committee, and
ongoing or potential
Chairman of the Board.
business dealings
in the Group with • KPJ is a signatory to the “Malaysian Corporate Integrity
various suppliers and Pledge”.
service providers. • No Gifts and Entertainment Policy applicable to all staff.
• Asset Declaration Policy applicable to staff of Manager
grade and above.
• Tender Evaluation Committee is responsible for
evaluating all tenders for purchases, award of contracts
and appointment of project development consultants/
advisors and makes its recommendation to the Tender
Board Committee.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 101

PRINCIPAL RISKS

Risk Theme Risk Description Risk Impact Risk How We Manage The Risk
Change
2017

Clinical Care Maintenance of high Failure to provide • Medical Advisory Committee (MAC) as the apex clinical
quality, customer patient-centric care, committee overseeing KPJ’s Clinical Governance
focused healthcare along with poor Framework and guidelines for sound and ethical medical
services to provide clinical outcomes, practices. The MAC has various sub-committees within its
for market needs and negative media purview namely Clinical Governance Policy Committee,
expectations. comment or patient Clinical Governance Action Committee, Clinical Ethics
dissatisfaction could Committee and Research & Development Committee.
reduce quality ratings, • Clinical Risk Management Committee (CRMC) to review
which could lead to and oversee the effectiveness of the clinical ERM
loss in earnings. framework, with all major clinical risks and incidents
related to patient and staff safety presented to CRMC.
• KPJ Patient Safety Goals under the purview of the MAC
are designed to ensure all KPJ hospitals are offering
patients the best care possible.

Framework for KPJ faces various The establishment • KPJ subscribes to the “Australian/New Zealand
Management risks in its ongoing of clear structures Standard 4360:1999 Risk Management” to guide its risk
of Risk regional operations of risk assessment management activities.
which need to be and management • KPJ has adopted the “Australian/New Zealand Standard
assessed, evaluated that KPJ faces in its HB228:2001 Guidelines for Managing Risk in Healthcare”
and mitigation regional operations is as its base framework in managing its business risks
measured identified necessary to ensure comprising clinical staff, employee, property, financial,
in a timely manner that risks are dealt corporate governance, and others.
and on a periodic with effectively to
• KPJ has in place an Enterprise-Wide Risk Management
basis. minimise its impact
(ERM) framework for managing risks associated with
on KPJ’s operations
its business and operations. ERM framework has three
and profitability.
levels of defence with clear lines of responsibilities and
accountabilities comprising :
Level 1 – Hospital Level Management and Board
Level 2 – Clinical Services and Risk Management
Services at HQ
Level 3 – Group Internal Audit at HQ
• Risk management activities are coordinated through a risk
reporting and escalation framework known as “Incident
Reporting & Root Cause Analysis” via Q-Radar portal.
• Working towards ISO:31000 Risk Management
certification by end 2018.

w w w. kp j h ea l t h . c o m . m y
STRATEGIC REPORT
102 K PJ HEALT HCARE BERHAD

PRINCIPAL RISKS

Risk Theme Risk Description Risk Impact Risk How We Manage The Risk
Change
2017

Government KPJ operates in a Failure to comply to • KPJ continues to strengthen its ERM framework and
Policy & highly regulated laws and regulations associated policies and procedures to ensure risks are
Compliance environment which could result in KPJ mitigated as far as possible.
with laws, includes laws passed being subject to • KPJ has in place significant Clinical Care processes
regulations by the Malaysian patient claims, fines, and policies overseen by MAC and CRMC to ensure
and other Government penalties, damage continuous compliance with existing laws, rules and
applicable pertaining to private to reputation, regulations.
requirements healthcare facilities suspension from
• KPJ continuously engage with the Ministry of Health
such as the Private the treatment of
Malaysia to remain up to date on any potential changes
Healthcare Facilities patients, loss of
in Government Policy.
and Services Act operating licence or
1998 (Act 586) and accreditation which
Occupational Safety would result in the
and Health 1994 Group not being able
(Act 514). to operate one or
more of its hospitals
thus causing a
reduction in profit.

Compliance KPJ’s hospital It is necessary • All hospitals with the MSQH and JCI accreditations have
with accreditations are to maintain to undergo stringent surveillance audits by the respective
Accreditation obtained from KPJ’s hospitals surveyors and audit teams to ensure compliance with
Requirements internationally accreditations in accreditation standards and requirements before
acknowledged order to remain accreditation certification can be renewed, usually every
bodies, namely a leader in the three years.
the Malaysian Society marketplace,
for Quality in Health thus ensuring its
(MSQH) and the profitability as
Joint Commission healthcare provider
International (JCI), of choice.
which puts its
hospitals on par
with international
hospital accreditation
standards.

Insurance KPJ, as with Any legal action • KPJ has in place adequate insurance coverage to protect
other healthcare could potentially its major assets.
companies, is lead to the payment • All specialists, medical officers and other healthcare
sometimes subjected of damages and professionals of KPJ Group are covered by Medical
to legal actions significant legal costs. Malpractice Insurance to mitigate against medico-legal
alleging negligence, risks in the course of performing their duties.
malpractice and other
claims.

A N N UA L R E PO RT 2017
STRATEGIC REPORT
KP J H E ALT H CARE B ER H A D 103

PRINCIPAL RISKS

Risk Theme Risk Description Risk Impact Risk How We Manage The Risk
Change
2017

Cybersecurity KPJ’s IT platform KPJ’s business • Dedicated team of IT Security professionals to protect
supports a number could be disrupted KPJ’s in-house developed integrated systems comprising
of management, if its information of Hospital Information Technology System (HITS) and
administrative and systems fail or if KPJ Clinical Information System (KCIS)
clinical processes its databases are • KPJ Information Technology team has put in placed the
which are crucial breached, destroyed following security protocols and procedures:-
for the smooth or damaged.
- Firewall systems to protect against unauthorised access
operations of the
Group. - Robust security access policies and protocols
according to various user types
- System security software is updated regularly as and
when available to defend against latest security threats

Readiness to During an emergency Failure to respond • KPJ has a Business Continuity Management (BCM) Plan
Respond to or an internal or in a measured in place to ensure that critical business processes can be
Major Internal external disaster, KPJ manner and ensure maintained or restored in the event of a major internal or
or External has to respond in smooth hospital external incident.
Incidents a timely manner to operations despite • KPJ has adopted the requirements of the Private
critical incidents. the emergency or Healthcare Facilities and Services Act 1998 (Act 586),
internal or external Occupational Safety and Health 1994 (Act 514), JCI and
disaster would lead MSQH in formulating the BCM.
to the disruption of
hospital operations.
This would cascade
down to impact the
Group’s reputation
in the marketplace,
and affect its future
profitability.

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
104 K PJ HEALT HCARE BERHAD

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 105

GOVERNANCE

106 Board of Directors


108 Directors’ Profile
119 Executive Committee
Members’ Profiles
126 Hospital Medical Directors
128 Corporate Governance
Overview
141 Compliance Information
143 Directors’ Responsibility
Statement

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
106 K PJ HEALT HCARE BERHAD

BOARD OF DIRECTORS

MO HD S A HIR R AH MAT 01 From left to right


Non-Independent Non-Executive Director

02 D R . KOK CH IN L EONG
Independent Non-Executive Director

DATU K AZ Z AT K A MAL UD IN 03
Independent Non-Executive Director

04 TAN SR I DAT IN PAD UKA


SIT I SA’D IAH SH B AKIR
Independent Non-Executive Director
DAT O ’ K A MA RUZ Z A MA N A BU KASSIM 05
Chairman

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 107

BOARD OF DIRECTORS

DATO’ AMIRUDDIN A BDU L SATAR 06 From left to right


President & Managing Director

07 AMINUD IN DAWAM
Executive Director

Z AIN AH M USTAFA 08
Independent Non-Executive Director

09 ZULKIFLI IB R AH IM
Non-Independent Non-Executive Director

P RO F DATO ’ DR. AZ IZI OMAR 10


Independent Non-Executive Director

11 DAT O’ D R . ZAKI MOR AD M OHAM AD ZAHE R


Independent Non-Executive Director

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
108 K PJ HEALT HCARE BERHAD

DIRECTORS’ PROFILE

DATO’
KAMARUZZAMAN
ABU KASSIM

CHAIRMAN,
NON-INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Present Appointment(s):


5/5
7 years Johor Corporation
• President & Chief Executive
Duration of Previous Appointment as
Non-Independent Non-Executive Past Directorship(s) and/or
Director: Appointment(s):
1 August 2006 - 1 January 2009 Johor Corporation
(2 years 5 months) • Senior Vice President, Corporate Services
& Finance (2009-2010)
Date of Last Re-election: • Chief Operating Officer (2006-2009)
2017 TOTAL 19 May 2016
MEETINGS
ATTENDED
Academic/Professional Qualification/
Membership(s):
DATE OF APPOINTMENT: • Bachelor of Commerce (Accountancy),
12 January 2011 University of Wollongong, New South
Wales, Australia
AGE:
54 Present Directorship(s):
Listed Entity:
GENDER: • E. A. Technique (M) Berhad
Male • Damansara REIT Managers Sdn Berhad,
the manager for 2 listed funds : Al-`Aqar
NATIONALITY: Healthcare REIT and Al-Salām Real Estate
Malaysian Investment Trust
Other Public Companies:
• Kulim (Malaysia) Berhad
• Johor Land Berhad
• Waqaf An-Nur Corporation Berhad
• Bistari Johor Berhad
• QSR Brands (M) Holdings Berhad

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 109

DIRECTORS’ PROFILE

DATO’
AMIRUDDIN
ABDUL SATAR

PRESIDENT &
MANAGING DIRECTOR

Length of Service (as at 31 January 2018): Present Appointment(s):


5/5
5 years KPJ Healthcare Berhad
• Chairman of:-
Duration of Previous Appointment as - Ampang Puteri Specialist Hospital Sdn Bhd
Executive Director: - Rawang Specialist Hospital Sdn Bhd
1 July 2011 - 31 December 2012 - SMC Healthcare Sdn Bhd
(1 year 6 months) - Johor Specialist Hospital Sdn Bhd
- Ipoh Specialist Hospital Sdn Bhd
Date of Last Re-election: - KPJ Healthcare University College Sdn Bhd
20 April 2017 - KPJ Education (M) Sdn Bhd
• Deputy Chairman of:- 2017 TOTAL
MEETINGS
Academic/Professional Qualification/ - Kedah Medical Centre Sdn Bhd
ATTENDED
Association of Private Hospitals of
Membership(s):
Malaysia (APHM)
• Master of Business Administration, Henley
• Vice President DATE OF APPOINTMENT:
Business School, University of Reading, UK
Association of Chartered Certified 1 January 2013
• Member of Association of Chartered
Accountants
Certified Accountants
• Member of Malaysia Advisory Committee AGE:
54
Present Directorship(s): Past Directorship(s) and/or
Listed Entity: Appointment(s): GENDER:
• Damansara REIT Managers Sdn Berhad, KPJ Healthcare Berhad Male
the manager for 2 listed funds : Al-`Aqar • Chief Operating Officer (2010-2012)
Healthcare REIT and Al-Salām Real Estate NATIONALITY:
Investment Trust Malaysian
Other Public Companies:
• Nil

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
110 K PJ HEALT HCARE BERHAD

DIRECTORS’ PROFILE

AMINUDIN
DAWAM

EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Present Appointment(s):


5/5
2 years 9 months KPJ Healthcare Berhad
• Chairman of Tender Evaluation Committee
Duration of Previous Appointment as • Chairman of:-
Non Independent Non-Executive Director: - Pasir Gudang Specialist Hospital Sdn Bhd
1 January 2014 - 30 April 2015 - Maharani Specialist Hospital Sdn Bhd
(1 year 4 months) - Perdana Specialist Hospital Sdn Bhd
- Kluang Utama Specialist Hospital Sdn Bhd
Date of Last Re-election: - Fabricare Laundry Sdn Bhd
20 April 2017 - Bandar Dato’ Onn Specialist Hospital Sdn Bhd
2017 TOTAL - Advanced Healthcare Solutions Sdn Bhd
MEETINGS
Academic/Professional Qualification/ - UTM KPJ Specialist Hospital Sdn Bhd
ATTENDED
Membership(s): - KPJ Healthshoppe Sdn Bhd
• Bachelor of Business Administration - KPJ Medik TV Sdn Bhd
DATE OF APPOINTMENT: (Finance) from Sam Houston State - Skop Yakin (M) Sdn Bhd
1 May 2015 University, Huntsville, Texas, USA
• Master of Business Administration, Sam Past Directorship(s) and/or
AGE: Houston State University, Huntsville, Texas, Appointment(s):
54 USA Johor Corporation
• Post-Graduate Diploma in Health Sciences • Senior Vice President, Business
GENDER: & Hospital Management at South Bank Development Division (2013-2016)
Male University, London, UK Pantai Holding Berhad
• Chief Operating Officer, Pantai Holding
NATIONALITY: Present Directorship(s): Berhad (2011-2013)
Malaysian Listed Entity:
• Nil
Other Public Companies:
• Nil

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 111

DIRECTORS’ PROFILE

TAN SRI
DATIN PADUKA
SITI SA’DIAH
SH BAKIR

INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Universiti Teknologi Malaysia (UTM)


5/5
2 years 9 months • Pro-Chancellor
KPJ Healthcare University College
Duration of Previous Appointment as • Pro-Chancellor
Non-Independent Non-Executive
Director: Past Directorship(s) and/or Appointment(s):
1 January 2013-1 May 2015 Bursa Malaysia
(2 years 4 months) • Independent Non-Executive Director
(2004–2012)
Date of Last Re-election: Chemical Company Malaysia Berhad
2017 TOTAL
28 May 2015 • Independent Non-Executive Director MEETINGS
(2014–2017) ATTENDED
Academic/Professional Qualification/ Kulim Malaysia Berhad
Membership(s): • Independent Non-Executive Director
• Bachelor in Economics, University Malaya DATE OF APPOINTMENT:
(2005–2016)
• Master of Business Administration, Henley 1 May 2015
KFC Holdings Berhad
Business School, University of Reading, UK • Independent Non-Executive Director
AGE:
(2010–2013) 65
Present Directorship(s): KPJ Healthcare Berhad
Listed Entity: • Corporate Advisor (2013-2014)
• CCM Duopharma Biotech Berhad (Chairman) GENDER:
• Managing Director (1993-2012) Female
• Nationwide Holdings Berhad (Chairman) • Chief Executive (1989-1993)
• OSK Holding Berhad KPJ Healthcare University College
Other Public Companies: NATIONALITY:
• Chairman and Pro-Chancellor (2011-2016) Malaysian
• Awqaf Holdings Berhad (Chairman) Johor Corporation
• Chief Executive of Kumpulan Perubatan
Present Appointment(s): (Johor) Sdn Bhd (1989–1994)
Malaysian Society for Quality in Health
(MSQH) Awards/Recognition/Past Experience:
• President • CEO of The Year 2009, News Straits Times
Razak School of Government (RSOG) Press and the American Express
• Member of Leadership • Launched biography “Siti Sa’diah: Driven
Development Committee by Vision, Mission and Passion” penned
Universiti Utara Malaysia (UUM) by Rokiah Talib, Penerbitan Universiti
• Chairman Kebangsaan Malaysia

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
112 K PJ HEALT HCARE BERHAD

DIRECTORS’ PROFILE

ZAINAH
MUSTAFA

INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Present Appointment(s):


5/5
13 years 2 months KPJ Healthcare Berhad
• Chairman of the KPJ Audit Committee
Duration of Previous Appointment as Damansara Realty Berhad
Non-Independent Non-Executive • Chairman of Audit Committee
Director: Johor Corporation
21 February 1994 -1 December 2004 • Member of Audit Committee
(10 years 11 months)
Past Directorship(s) and/or
Date of Last Re-election: Appointment(s):
2017 TOTAL 20 April 2017 Johor Corporation
MEETINGS
• Group Chief Financial Officer (1978-2002)
ATTENDED
Academic/Professional Qualification/
Membership(s):
DATE OF APPOINTMENT: • Fellow of the Association of Certified
1 December 2004 Chartered Accountants, UK

AGE: Present Directorship(s):


63 Listed Entity:
• Damansara Realty Berhad
GENDER: • Damansara REIT Managers Sdn Berhad,
Female the manager for 2 listed funds : Al-`Aqar
Healthcare REIT and Al-Salām Real Estate
NATIONALITY: Investment Trust
Malaysian Other Public Companies:
• Nil

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 113

DIRECTORS’ PROFILE

DATUK
AZZAT
KAMALUDIN

INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Present Appointment(s):


23 years 5 months • Nil
4/5
Date of Last Re-election: Past Directorship(s) and/or
20 April 2017 Appointment(s):
• Advocate and Solicitor of the
Academic/Professional Qualification/ High Court of Malaya (1979)
Membership(s): • Administrative and Diplomatic
• Barrister-at-Law, Middle Temple, London Officer with Ministry of Foreign Affairs
• Degrees In Law and International Law, (1970-1979)
University of Cambridge, United Kingdom • Member of the Securities Commission 2017 TOTAL
MEETINGS
(1993-1999)
ATTENDED
Present Directorship(s):
Listed Entity:
• Bousted Holdings Berhad DATE OF APPOINTMENT:
• Bousted Heavy Industry Corporation 1 September 1994
Berhad
Other Public Companies: AGE:
• Celcom Resources Berhad 72
• Malaysian Directors Academy
GENDER:
Male

NATIONALITY:
Malaysian

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
114 K PJ HEALT HCARE BERHAD

DIRECTORS’ PROFILE

ZULKIFLI
IBRAHIM

NON-INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Present Appointment(s):


5/5
4 years 1 month Johor Corporation
• Senior Vice President/Chief Executive,
Date of Last Re-election: Industrial Development Division of
20 April 2017 Johor Corporation
• Member of Group Top Management
Academic/Professional Qualification/ (Teraju)
Membership(s): • Deputy Chairman of Teraju Korporat
• Fellow of the Association of Certified Committee
Chartered Accountants, UK KPJ Healthcare Berhad
2017 TOTAL • Chairman of Tender Board Committee
MEETINGS
Present Directorship(s): TPM Technopark Sdn Bhd
ATTENDED
Listed Entity: • Managing Director
• Nil
DATE OF APPOINTMENT: Other Public Companies: Past Directorship(s) and/or
1 January 2014 • Kulim (Malaysia) Berhad Appointment(s):
• Johor Land Berhad Kulim (Malaysia) Berhad
AGE: • QSR Brands (M) Holding Berhad • Chief Operating Officer (2003-2012)
60 PJB Pacific Capital Group
• Chief Operating Officer (2001-2003)
GENDER: Antara Steel Mills Sdn Bhd
Male • Managing Director (1996-2000)
Sindora Berhad
NATIONALITY: • Financial Controller (1990-1996)
Malaysian

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 115

DIRECTORS’ PROFILE

DR. KOK
CHIN LEONG

INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Past Directorship(s) and/or Appointment(s):


5/5
12 years 7 months ASEAN Paediatric Federation (APF)
• President (2014-2017)
Date of Last Re-election: Malaysian Paediatric Association (MPA)
20 April 2017 • President (2013-2015)
Association of Private Hospital Malaysia
Academic/Professional Qualification/ (APHM)
Membership(s): • Board Member (2008-2010)
• Bachelor of Medicine and Bachelor of Malaysian Society for Quality in Health
Surgery (MBBS), Universiti Malaya (MSQH)
• Master of Medicine Paediatrics, Universiti • Board Member (2011-2013) 2017 TOTAL
MEETINGS
Kebangsaan Malaysia KPJ Puteri Specialist Hospital
ATTENDED
• Member of the Royal College of Physician • Medical Director (2000-2006)
of United Kingdom Government Hospitals
• Hospital Sultanah Aminah Johor Bahru-Senior DATE OF APPOINTMENT:
Present Directorship(s): Consultant Paediatrician (1993-1994) 7 July 2005
Listed Entity: • Batu Pahat Hospital - Head of Department
• Nil of Paediatrics (1991-1993) AGE:
Other Public Companies: • Hospital Sultanah Aminah, Johor Bahru- 60
• Nil Clinical Specialist in Paediatrics (1991-1992)
• Derby Children’s Hospital, United GENDER:
Present Appointment(s): Kingdom -Senior House Officer/Registrar Male
KPJ Healthcare Berhad (1990-1991)
• Audit Committee Member • Kuala Lumpur General Hospitals -Clinical NATIONALITY:
• Member of Medical Advisory Committee Paediatrics (1986-1990) Malaysian
• Chairman of Clinical Governance Policy
Committee Awards/Recognition/Past experience:
• Advisor for Clinical Information System • Project Coordinator/Chairman for the Batu
• Consultant Paediatrician at KPJ Puteri Pahat Rotary Club Haemodialysis Centre
Specialist Hospital (1991-1993)
• Malaysian Paediatric Association (MPA) • Southern Representative for Malaysian
Member, Executive Committee Paediatric Association and the Southern
Coordinator for Infant Touch Therapy
(2000-2004)

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
116 K PJ HEALT HCARE BERHAD

DIRECTORS’ PROFILE

PROF. DATO’
DR AZIZI HJ
OMAR

INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): KPJUC


5/5 2 years • Member Board of Directors of KPJUC
• Professor and member of Senate KPJUC
Date of Last Re-election:
19 May 2016 Past Directorship(s) and/or Appointment(s):
National
Academic/Professional Qualification/ • Chairman, Subspecialty Committee for Accreditation,
Membership(s): Paediatric Respiratory Medicine, National Specialist
• Bachelor of Medicine and Bachelor of Surgery Register. (2000-2016)
(MBBS), University of Tasmania, Australia • Member, Malaysian Medical Council (1995-1997)
• Postgraduate training in Paediatrics and Paediatric • President, Malaysian Paediatric Association (1997-1998)
Respiratory Medicine • Board Member, APHM & Association of Private Hospital
2017 TOTAL - Hospital Kuala Lumpur/ Universiti Kebangsaan (2000-2004)
MEETINGS Malaysia • Member, Conjoint Board for Postgraduate Training in
ATTENDED - Hospital for Sick Children, Great Ormond Medical Specialties (1995-1997)
Street, London • Member, Paediatric Conjoint Board (1995-2000)
- Birmingham Children Hospital • Member, Clinical Practice Guidelines Committee,
- Dudley Road Hospital, Birmingham. Academy of Medicine of Malaysia
DATE OF APPOINTMENT:
• Trained in paediatric flexible bronchoscopy • Chairman, Clinical Practice Guidelines on Paediatric
1 February 2016 - University of North Carolina (Chapel Hill, USA) Asthma (1996)
• Membership of the Royal Colleges of Physicians • Chairman, Clinical Practice Guidelines on Paediatric
AGE: of the United Kingdom Respiratory Infections (2000)
69 • MMedSc (Clinical Epidemiology) from Newcastle • Member, Clinical Practice Guidelines on Tuberculosis
University, NSW (1996)
• Fellow of Royal College of Physicians (FRCP) of • Member, Committee of Malaysian Thoracic Society of
GENDER: Edinburgh and Glasgow, Fellow of Academy of Malaysia (1997-1998)
Male Medicine Malaysia (FAMM) and Fellow of College • Editorial Board Member, Malaysian Paediatric Journal,
of Chest Physicians (USA)(FCCP) Malaysia (1990)
NATIONALITY: • Harvard Medical School Universiti Kebangsaan Malaysia (UKM)
Malaysian Certificate-SEA Healthcare Leadership Program • Deputy Dean (1995-1997)
• Head Department of Paediatrics (1994-1995)
Present Directorship(s): • Professor of Paediatrics (Respiratory Paediatrics and
Listed Entity: Clinical Epidemiology) (1993-1997)
• Nil Universiti Teknologi MARA (UiTM)
Other Public Companies: • Adjunct Professor of Paediatrics at Faculties of Medicine
• Nil of UITM (2009-2010)
Universiti Tunku Abdul Rahman (UTAR)
Present Appointment(s): • Adjunct Professor of Paediatrics at Faculties of Medicine
KPJ Healthcare Berhad of UTAR (2013)
• Head of KPJ R&D Committee and editor of KPJ
Medical Journal Awards/Recognition/Past experience:
• Member of Medical Advisory Committee • Established the Respiratory Paediatrics as a Paediatric
• Consultant Paediatrician and Paediatric subspecialty in Malaysia
Respiratory Physician, KPJ Damansara Specialist • Pioneered research in paediatric asthma and respiratory
Hospital illnesses in Malaysian children
• Published substantially in international and local journals

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 117

DIRECTORS’ PROFILE

MOHD
SAHIR
RAHMAT

NON-INDEPENDENT
NON-EXECUTIVE DIRECTOR
Length of Service (as at 31 January 2018) Present Appointment(s)
7 months Johor Corporation
• Member Executive Committee Vice
Academic/Professional Qualification/ President, Business Development 2/2
Membership(s) KPJ Healthcare Berhad
• Bachelor of Accountancy, Universiti • Member of Tender Board Commitee
Kebangsaan Malaysia
• Postgraduate Diploma in Health Services Past Directorship(s) and/or
and Hospital Management from the South Appointment(s)
Bank University, London KPJ Healthcare Berhad
• Master of Business Administration, Henley • Vice President of Corporate and Financial
Business School, University of Reading, UK Services (2013-2017)
• Member of Malaysian Institute of • Group Chief Financial Officer (2011-2013) 2017 TOTAL
Accountants • Director and Chairman to several hospitals MEETINGS
and companies ATTENDED
Present Directorship(s)
Listed Entity:
DATE OF APPOINTMENT:
• Nil
3 July 2017
Other Public Companies:
• Johor Land Berhad
AGE:
54

GENDER:
Male

NATIONALITY:
Malaysian

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
118 K PJ HEALT HCARE BERHAD

DIRECTORS’ PROFILE

DATO’
DR. ZAKI
MORAD
MOHAMAD
ZAHER

INDEPENDENT
NON-EXECUTIVE DIRECTOR

Length of Service (as at 31 January 2018): Past Directorship(s) and/or


2/2 7 months Appointment(s):
International Medical University
Academic/Professional Qualification/ • Professor of Medicine (2006-2008)
Membership(s): Ministry of Health
• Bachelor of Medicine and Bachelor of • Head of Ministry’s Clinical Research Centre
Surgery (MBBS), Universiti Malaya (CRC) (2000-2006)
• Postgraduate training in Nephrology • Head Nephrology Services (1987-2006)
- Royal Hallamshire Hospital, Sheffield, UK General Hospital Kuala Lumpur
- Guys Hospital, London • Head Department of Nephrology
- General Hospital Kuala Lumpur (1987-2006)
2017 TOTAL • Member of the Royal College of Physicians
MEETINGS
of United Kingdom Awards/Recognition/Past experience:
ATTENDED
• Fellow of the Royal College of Physician of • Malaysian Society of Nephrology
Edinburgh - President (1990-1992)
DATE OF APPOINTMENT: • Fellow of the Academy of Medicine of • Asian Society of Transplantation
3 July 2017 Malaysia - President (2001-2003)
• Asian Pacific Society of Nephrology
AGE: Present Directorship(s): - Secretary – General (2004-2006)
68 Listed Entity: • International Society of Nephrology
• Nil Pioneer Award for at the World Congress
GENDER: Other Public Companies: of Nephrology 2015, Cape Town South
Male • Nil Africa.
• Established the National Renal Registry in
Present Appointment(s): 1992
NATIONALITY:
KPJ Healthcare Berhad • Introduced the Malaysian Organ Sharing
Malaysian
• Chairman of Medical Advisory Committee System (Renal) waitlist system for allocation
• Member of Building Committee of cadaveric organs
• Consultant Nephrologist at KPJ Ampang
Puteri Specialist Hospital
National Kidney Foundation of Malaysia
• Chairman
Malaysian Medical Council
• Member
• Malaysian Society for Quality in Health
(MSQH)Chairman of MSQH Committee on
Chronic Dialysis Treatment Standards

Notes: None of the Directors have:


• Any family relationship with any Director and/ or major shareholder of KPJ. • Any conflict of interest with KPJ. • Any conviction for offences within the past five years (other than traffic offences).
• Any sanctions and/or penalties imposed on them by any regulatory bodies during the financial year ended 31 December 2017.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 119

EXECUTIVE COMMITTEE MEMBERS’ PROFILES

AGED AGED
54 54

DATO’ AMIRUDDIN ABDUL SATAR AMINUDIN DAWAM


PRESIDENT & MANAGING DIRECTOR, EXCO CHAIRMAN EXECUTIVE DIRECTOR

Date of Appointment: Date of Appointment:


1 January 2013 1 May 2015

Academic/Professional Qualification/Membership(s): Academic/Professional Qualification/Membership(s):


• Master of Business Administration, Henley Business • Bachelor of Business Administration (Finance) from Sam
School, University of Reading, UK Houston State University, Huntsville, Texas, USA
• Member of Association of Chartered Certified • Master of Business Administration, Sam Houston State
Accountants University, Huntsville, Texas, USA
• Post-Graduate Diploma in Health Sciences & Hospital
Present Directorship(s): Management at South Bank University, London, UK
Listed Entity:
• Damansara REIT Managers Sdn Berhad, the manager for Present Directorship(s):
two listed funds : Al-`Aqar Healthcare REIT and Al-Salām Listed Entity:
Real Estate Investment Trust • Nil
Other Public Companies: Other Public Companies:
• Nil • Nil

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
120 K PJ HEALT HCARE BERHAD

EXECUTIVE COMMITTEE MEMBERS’ PROFILES

AGED AGED
57 61

JASIMAH HASSAN DATO’ ABDOL WAHAB BABA


VICE PRESIDENT (I), VICE PRESIDENT (I),
BUSINESS OPERATIONS & CLINICAL SERVICES BUSINESS DEVELOPMENT SERVICES

Date of Appointment: Date of Appointment:


1 April 2013 1 January 2016

Academic/Professional Qualification/Membership(s): Academic/Professional Qualification/Membership(s):


• Bachelor of Science in Mathematics, Indiana University • Master of Business Administration, University of East
Bloomington, Indiana, USA London, (Twinning Programme with WIM College)
• Master of Business Administration (Finance), North Texas • Bachelor of Accountancy, Universiti Teknologi MARA
University, Texas, USA (UiTM)
• Honorary Treasurer for the Asian Society for Quality in • Post Graduate Diploma in Healthcare & Alumni of Harvard
Health (ASQUA) University
• Member of the Board of the Association of Private Hospital
Malaysia (APHM) Present Directorship(s):
Listed Entity:
Present Directorship(s): • Nil
Listed Entity: Other Public Companies:
• Nil • Nil
Other Public Companies:
• Nil Working Experience:
• Joined KPJ in 1990 and has held various positions in
Working Experience: companies and hospitals within the KPJ Group. Prior to
• Joined the banking industry upon graduation. After 8 his current position, he served as KPJ’s Chief Risk Officer
years, she joined KPJ Healthcare Berhad in 1993 as the (2003-2013).
General Manager of Tawakkal Specialist Hospital and
subsequently managed various hospitals and companies
in the KPJ Healthcare Group as the Executive Director,
Director, Deputy Chairman and Chairman. From year 2000
to 2012, she served as the Chairman of the Board of Puteri
Nursing College Sdn Bhd. At KPJ Healthcare University
College, she has been the Deputy Chairman since 2012.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 121

EXECUTIVE COMMITTEE MEMBERS’ PROFILES

AGED AGED
56 54

DATIN SABARIAH FAUZIAH JAMALUDDIN MOHD JOHAR ISMAIL


VICE PRESIDENT (II), VICE PRESIDENT (II) - PROJECT MANAGEMENT, BIOMEDICAL &
GROUP TALENT MANAGEMENT SERVICES COMMISSIONING & INTERNATIONAL OPERATIONS SERVICES

Date of Appointment: Date of Appointment:


1 January 2015 1 July 2015

Academic/Professional Qualification/Membership(s): Academic/Professional Qualification/Membership(s):


• Silver Medalist HR Leader by Malaysian Institute of Human • Bachelor of Accountancy (Hons),
Resource Management (MIHRM) Universiti Kebangsaan Malaysia
• Master of Business Administration, University of the • Post Graduate Diploma in Health Management,
Sunshine Coast, Australia South Bank University, UK
• Post Graduate in Health Services and Hospital
Management, London South Bank University, UK Present Directorship(s):
• Bachelor of Business Administration, Ohio University, USA Listed Entity:
• Diploma of Business Studies, Universiti Teknologi MARA • Nil
(UiTM) Other Public Companies:
• Nil
Present Directorship(s):
Listed Entity: Working Experience:
• Nil • Joined KPJ in June 1993 and has held various positions
Other Public Companies: in the KPJ Group. Currently he is the Chairman of six
• Nil hospitals, as well as the Executive Director of KPJ Dhaka.
He is also a Board member of five hospitals and several
Working Experience: support companies in the Group. Prior to joining KPJ he
• Joined KPJ in 1994 and has held various positions in was with Perbadanan Kemajuan Ekonomi Negeri Johor
companies and hospitals within the KPJ Group. Currently (PKENJ) as an Internal Auditor in 1988 and was seconded
she is the Chairman of a hospital and support companies. to the Johor State Economy Development Group (JSEDC)
She is also an Executive Director of KPJ’s education (1988-1993). Previous to his current position, he serves as
companies as well as a Director for three hospitals and a the Senior General Manager of Business Operations.
support company in the Group. Prior to joining KPJ, she
was with the banking industry for seven years.

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
122 K PJ HEALT HCARE BERHAD

EXECUTIVE COMMITTEE MEMBERS’ PROFILES

AGED AGED
45 55

NORHAIZAM MOHAMMAD AHMAD NASIRRUDDIN HARUN


VICE PRESIDENT (II), SENIOR GENERAL MANAGER,
GROUP FINANCE SERVICES GROUP STRATEGIC SUPPORT SERVICES

Date of Appointment: Date of Appointment:


20 April 2017 1 July 2011

Academic/Professional Qualification/Membership(s): Academic/Professional Qualification/Membership(s):


• Master of Business Administration, International Business • Master of Business Administration (MBA), Henley Business
with Merit from University of East London, London, UK School, University of Reading, UK
(Twinning Programme with Women Institute Malaysia) • Post Graduate Diploma in Health Services and Hospital
• Bachelor of Accountancy (Hons) from Manchester Management, Southbank University, UK
Metropolitan University, Manchester, UK • Degree of Accountancy, Universiti Teknologi MARA (UiTM)
• Diploma of Accountancy, Universiti Teknologi MARA
Present Directorship(s): (UiTM)
Listed Entity: • Fellow of Malaysian Society for Quality in Health (MSQH)
• Nil • Fellow of Malaysian Institute of Accountants (MIA)
Other Public Companies: • In recognition to his healthcare professional and sports
• Nil contributions to the state of Perak, he was awarded the
Ahli Mahkota Perak (A.M.P) by his Royal Highness Sultan
Working Experience: Dr Nazrin Muizzuddin Shah, Sultan of Perak in November
• Joined KPJ in 2008 and has held various positions in 2016.
companies and hospitals within the KPJ Group. Currently
she is the Director of two hospitals and a Board member Present Directorship(s):
of few support companies in the Group. Prior to joining Listed Entity:
KPJ she was with Utusan Melayu (M) Berhad (1996-1997) • Nil
and then served as a Manager of Audit and Business Other Public Companies:
Assurance at PricewaterhouseCoopers (1997-2007). • Nil

Working Experience:
• Joined KPJ in September 1995 and has held various
positions in companies and hospitals within the KPJ
Group. Currently he is the Chairman of three hospitals,
Executive Director for two hospitals and several support
companies. He is also serves as a Board member of two
hospitals.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 123

EXECUTIVE COMMITTEE MEMBERS’ PROFILES

AGED AGED
54 59

RAFEAH ARIFFIN MAH LAI HENG


SENIOR GENERAL MANAGER, GROUP MARKETING & SENIOR GENERAL MANAGER,
STRATEGIC COMMUNICATIONS SERVICES GROUP OPERATIONS SERVICES

Date of Appointment: Date of Appointment:


1 July 2011 1 July 2011

Academic/Professional Qualification/Membership(s): Academic/Professional Qualification/Membership(s):


• Master of Business Administration (MBA), Texas Women’s • Master of Business Administration, Henley Business
University, Denton, USA School, University of Reading, UK
• Bachelor of Business Administration, University of North • Advanced Critical Care Nursing, University South Australia,
Texas, Denton, USA Australia
• Certificate of Franchise Management, University of • Degree of Bachelor of Nursing Science (Honors Class II) -
California, USA Universiti Malaya
• Challenges of Leadership Program, INSEAD University, • Certificate of Midwifery (Division 1), Midwifery School,
France Hospital Ipoh
• Certificate of General Nursing, School of Nursing, Hospital Ipoh
Present Directorship(s):
Listed Entity: Present Directorship(s):
• Nil Listed Entity:
Other Public Companies: • Nil
• Nil Other Public Companies:
• Nil
Working Experience:
• Joined KPJ in 2007 as a Senior Manager, Group Marketing Working Experience:
and Strategic Communications. She had previously served • Joined Group KPJ Healthcare Berhad in 1996 as a Nursing
at the at Kelana Jaya Medical Centre (1999-2001), Pantai Tutor at KPJ’s Puteri Nursing College and has held various
Medical Centre (2001-2004). She later joined Pantai positions in the KPJ Group over the years including head
Holdings Berhad (2004-2007). of Clinical & Quality Services (2009-2015). Currently she is
an Executive Director of KPJ Hospitals in Sabah & Sarawak
and a Director of six hospitals and support companies in
the Group.

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
124 K PJ HEALT HCARE BERHAD

EXECUTIVE COMMITTEE MEMBERS’ PROFILES

AGED AGED
57 54

MOHD NASIR MOHAMED ROSLAN AHMAD


SENIOR GENERAL MANAGER, SENIOR GENERAL MANAGER,
GROUP OPERATIONS SERVICES GROUP OPERATIONS SERVICES

Date of Appointment: Date of Appointment:


1 March 2013 1 January 2016

Academic/Professional Qualification/Membership(s): Academic/Professional Qualification/Membership(s):


• Bachelor of of Accountancy, University of Abertay, • Master in Business Administration, Miami University, USA
Dundee, Scotland • Bachelor of Accountancy, University of Minnesota, USA
• Post Graduate Diploma in Healthcare Services and • Post Graduate Diploma in Hospital Management,
Hospital Management, South Bank University London, UK South Bank University London, UK

Present Directorship(s): Present Directorship(s):


Listed Entity: Listed Entity:
• Nil • Nil
Other Public Companies: Other Public Companies:
• Nil • Nil

Working Experience: Working Experience:


• Joined KPJ in 1993 and has held various positions in • Joined KPJ in 1996. Prior to joining KPJ, he was with the
companies and hospitals within the KPJ Group. Currently Malaysian Pineapple Industry Board in 1988 and served
he is the Executive Director of six hospitals and a Board its London office until 1995. Currently he is the Executive
member of several support companies in the Group. Director of five hospitals and a Board member of several
support companies in the Group.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 125

EXECUTIVE COMMITTEE MEMBERS’ PROFILES

AGED AGED
47 49

DR. MUBBASHIR IFTIKHAR ERIC SIM KAM SENG


GENERAL MANAGER, NEW PRODUCTS CHIEF INFORMATION OFFICER,
& SERVICES DEVELOPMENT INFORMATION TECHNOLOGY SERVICES

Date of Appointment: Date of Appointment:


28 January 2016 1 March 2016

Academic/Professional Qualification/Membership(s): Academic/Professional Qualification/Membership(s):


• Bachelor of Medicine and Bachelor of Surgery (MBBS), • Master of Business Administration, Asia e-University
University of Punjab, Pakistan • Degree of Business Management, Bolton University, UK
• The Data Scientist’s Toolbox, Johns Hopkins University, USA • Degree of Computer Science, NCC & University of
• Building Your Leadership Skills, HEC Paris, France Portsmouth, UK
• Internet History, Technology, and Security, University of • Financial Management, Institute of Financial Accountants, UK
Michigan, USA • Electrical Engineering, City Guilds, UK

Present Directorship(s): Present Directorship(s):


Listed Entity: Listed Entity:
• Nil • Nil
Other Public Companies: Other Public Companies:
• Nil • Nil

Working Experience: Working Experience:


• Joined KPJ as the Chief Information Officer (2011-2015) • Joined KPJ in 2008 and is focusing on KPJ’s ongoing
and initiated Cloud Enablement, KPJ Clinical Information move to become increasingly digitalised, including the
System (KCIS), Picture Archiving and Communication consolidation of KPJ’s entire clinical system through
Systems (PACS) and the web portals. Prior to joining KPJ, the Clinical Information System (KCIS), as well as KPJ’s
he was with the University of Punjab, Lahore, Pakistan as a transition to the Cloud.
Medical Doctor.

Notes: None of the Executive Committee Members have:


• Any family relationship with any Director and / or major shareholder of KPJ. • Any conflict of interest with KPJ. • Any conviction for offences within the past five years (other than traffic offences).
• Any sanctions and/or penalties imposed on them by any regulatory bodies during the financial year ended 31 December 2017.

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
126 K PJ HEALT HCARE BERHAD

H O S P I TA L M E D I C A L D I R E C T O R S

DATO’ DATUK
AMIRUDDIN DR. HUSSEIN
ABDUL SATAR AWANG
President & KPJ Tawakkal
Managing Director Health Centre

DR. CHAN PROF. (C) DR. R. DR.


KHENG KHIM DR. WAN HAZMY PADMANATHAN MAHAYIDIN
KPJ Tawakkal CHE HON KPJ Penang MUHAMAD
Specialist Hospital KPJ Seremban Specialist Hospital KPJ Perdana
Specialist Hospital Specialist Hospital

DATO’ DR. DR. MOHD DATO’ DR. DR. DAVID


KHALED HARRIS LU N. SIVAMOHAN LING SHENG TEE
MAT HASSAN KPJ Sentosa KPJ Klang KPJ Kuching
KPJ Kuantan KL Specialist Hospital Specialist Hospital Specialist Hospital
Specialist Hospital

PROF. DATUK DR. AB RAZAK DR. NOOR DR. LEE


DR. AJAZ SAMSUDIN HISHAM MIN CHUANG
AHMAD KPJ Pasir Gudang MANSOR Sri Manjung
NABIJAN Specialist Hospital KPJ Rawang Specialist Centre
KPJ Sabah Specialist Hospital
Specialist Hospital

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 127

H O S P I TA L M E D I C A L D I R E C T O R S

DR. RUSLI DR. LUIS DATO’ DR. DR. ROSLAN


ARSHAD CHEN SHIAN ABDUL WAHAB MAHAMUD
KPJ Johor LIANG ABDUL GHANI KPJ Damansara
Specialist Hospital KPJ Ipoh KPJ Ampang Puteri Specialist Hospital
Specialist Hospital Specialist Hospital

DR. DATO’ DR. PROF. (C) DATO’ DR. MOHD


BALAKRISHNAN KAMARUZAMAN DR. SHAHRUDIN ALI SALLEH
SUBRAMANIAM ALI MOHD DUN KPJ Puteri
KPJ Kajang Kedah Medical KPJ Selangor Specialist Hospital
Specialist Hospital Centre Specialist Hospital

DR. LIM DR. AHMAD DR. ONG DR. WONG


KEOK TANG FARID DAUD BOON TEIK CHYA WEI
KPJ Damai Kluang Utama Taiping Medical Sibu Specialist
Specialist Hospital Specialist Hospital Centre Medical Centre

DATO’ DR. DATO’ DR. DR. NORAZLINA


MAHMOOD NGUN KOK BACHIK NG
AWANG KECHIK WENG Clinical Director
KPJ Bandar Maharani KPJ Pahang KPJ Pusat Pakar Mata
Specialist Hospital Specialist Hospital Centre For Sight

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
128 K PJ HEALT HCARE BERHAD

C O R P O R AT E G O V E R N A N C E O V E R V I E W

This statement is prepared in compliance with Paragraphs B OAR D L E AD E R S H I P AN D E FFE CT IVE N E SS


15.08A(3) and 15.25 together with Practice Note 9 of Bursa
Malaysia Securities Berhad’s Main Market Listing Requirements BOARD’S RESPONSIBILITIES
on the preparation of the Nominating Committee statement All members of the Board contribute meaningfully in the areas
and Disclosure of Corporate Governance (CG) practices in the of formulation of strategic objectives and policies, governance,
Company and is to be read together with the CG Report that is performance monitoring, allocation of resources and compliance.
available on KPJ’s website:
Each director brings with him/her vast experience and astute
http://www.kpjhealth.com.my insights to enable the Board to function effectively in discharging
its duties and responsibilities as required of them with due care
The CG Report outlines in detail on how the Company has and diligence.
applied each Practice as set out in the Malaysian Code on
Corporate Governance 2017 (MCCG). The Group has documented clear policies for identifying and
separating the functions and responsibilities of the Board and
C O M M I T T E D T O T H E H I G H E S T S TA N D A R D S O F Management, Chairman as well as the President & Managing
C O R P O R AT E G O V E R N A N C E Director in ensuring the smooth running of the Group’s business
The Board strongly believes that good corporate governance and operations. These are enshrined in the Board Charter, which
practices adds value to the business of the Group and will help has been reviewed and updated to be in line with the practices
reinforce its sustainability. The Board sets the tone at the top of MCCG and the Companies Act 2016, a copy of which is made
and plays an active role in guiding the Management through available to all Directors of the Company.
its oversight role in steering the Group’s business direction and
strategy. The following are matters which are specifically
reserved for the Board:-
In line with this commitment, in November 2017 the Management
presented to the Board the Gap Analysis Report on the
Company’s existing CG practices and the standards as set out in
the MCCG. The CG Report documents in detail the Company’s
Approval of corporate plans and programmes;
CG practices and its adherence to all the Practices outlined in
MCCG, including the requisite action plans for areas where the
present CG practices need to be enhanced.

Approval of annual budgets, including major capital


THE BOARD STRONGLY commitments;
BELIEVES THAT GOOD
CORPORATE GOVERNANCE
PRACTICES ADDS VALUE
Approval of new ventures;
TO THE BUSINESS OF
THE GROUP AND WILL
HELP REINFORCE ITS
SUSTAINABILITY. Approval of material acquisitions and disposals of
undertakings and properties; and

Changes to the management and control structure


within the Company and its subsidiaries, including key
policies, delegated authority limit.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 129

C O R P O R AT E G O V E R N A N C E O V E R V I E W

The roles of the Chairman of the Board, President & Managing has the responsibility to execute and achieve them. It also forms
Director, Executive Director and the eight (8) Non-Executive the basis where the performance of Management will be assessed.
Directors (NEDs) are kept separate with a clear division of
responsibilities in line with best practices. The functions of the The Board has established the Corporate Governance Model for
Chairman as well as those of the President & Managing Director the Group where specific powers of the Board are delegated to the
are clearly segregated to ensure that there is a balance of power respective Board Committees which function with clearly defined
and authority. terms of reference.

Dato’ Kamaruzzaman Abu Kassim as the Chairman continues to The Board also assigns authority and responsibilities mainly to the
lead the Board by providing oversight leadership on the strategies Management Executive Committee (EXCO) which is headed by the
and business affairs of the Group. He is also the President and Chief President & Managing Director, to manage operations as well as
Executive of Johor Corporation (JCorp) and has never held the execute strategic initiatives pertaining to the delivery of services
position of President & Managing Director of the Company. and business operations of the Group.

Dato’ Amiruddin Abdul Satar, the President & Managing Director The Company Secretaries play an advisory role to the Board in
of the Company, is responsible for leading the Management in the relation to the Company’s constitution, Board’s policies, procedures
execution of broad policies, strategies and action plans approved and compliance with the relevant regulatory requirements,
by the Board. He regularly engages the Board to report and discuss including codes or guidance and legislations. The Company
the Group’s business performance and development, including all Secretaries support the Board in managing the Group’s Governance
strategic matters affecting the Group. Model, ensuring it is effective and relevant. Each Board member
has unrestricted access to the advice and services of the Company
The Board has also developed and approved the Corporate Secretaries.
Objectives for 2017, for which the President & Managing Director  

Assurance

Interna l Au d i t E xter n a l Audit R is k Ma na ge m e nt C linic a l a nd A c c re d i t at i on A u d i t b y


Fu n cti o n Fu n cti o n F unc t io n Q ua lit y A udit M SQ H an d J CI

Governance Structure

S ha r e ho lde r s

BOARD OF DIRECTORS

Clinical Committee Non-Clinical Committee

A u d it C ommitte e Medical Advisor y Committee Nomination and R emu n e ra tio n Co mmitte e

Internal Audit • Clinical Governance Policy Committee (CGPC) Building Committee


• Clinical Governance Action Committee (CGAC)
• Clinical Risk Management Committee (CRMC)
Te n d e r B o a r d C o m m i t t e e
• Clinical Ethics Committee (CEC)
• Research and Development Committee (R&D)
• Research Ethics Review Committee (RERC) Employees’ Share Option Scheme Committee

Management Executive Committee

Risk Management Clinical and Quality Sustainability and Risk Tender Evaluation Committee

KPJ Healthcare Berhad

Compliance

Laws and Reg u l a ti o n s M a i n M a rk et Lis t ing MC C G KPJ Clinical Governance K PJ Pol i c i e s an d


(eg.PH FS A 1 9 9 8 ) Req u i r em ent s 2017 Framework Proc e d u re s

BOARD COMMITTEE MANAGEMENT/WORKING COMMITTEE SERVICES UNIT

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
130 K PJ HEALT HCARE BERHAD

C O R P O R AT E G O V E R N A N C E O V E R V I E W

BOARD COMPOSITION
The composition of the Board of Directors is as follows:
• One (1) Non-Independent Non-Executive Chairman; • One (1) President & Managing Director; and
• Two (2) Non-Independent Non-Executive Directors (NINED); • One (1) Executive Director.
• Six (6) Independent Non-Executive Directors (INED);

The present size and composition remains well-balanced and is made up of professionals with a wide range of knowledge and experience
in business, operations and finance, all relevant to the direction of a large, expanding Group. The profiles of all Board Members, comprising
of their qualification, experience and calibre are disclosed on pages 108 to 118 of this Annual Report.

GEN D ER
BA L A N CE TENURE
D IVER SITY

Ch ai rm an 9% 1 0 -3 46% 5
E xe cu ti ve 18% 2 3 -6 18% 2
IN E D 55% 6 Male 82% 9 6 -9 9% 1
N IN E D 18% 2 Fem ale 18% 2 9+ 27% 3

The Board, through the Nomination & Remuneration Committee (NRC), undertakes a rigorous evaluation each year in order to assess how
well the Board, its Committees, the Directors and the Chairman are performing, including assessing the independence of Independent
Directors, taking into account the individual Director’s capability to exercise independent judgement at all times.

In November 2017, the Board has adopted the 9-year policy which limits the tenure of the Independent Director as enshrined in the
MCCG. The NRC at its meeting held in January 2018 has evaluated the shortlisted candidates for appointment as new Independent
Directors, which will ensure compliance with MCCG as well as achieve the diversity target of at least 30% women directors on the Board.
The Board also approved the NRC’s recommendation that the Board size will be increased from the present 11 directors.

The present long serving Independent Directors with more than 9 years tenure on the Board have expressed their desire not to seek
re-appointment at the coming 25th Annual General Meeting scheduled in April 2018.

The activities of the NRC are further elaborated in the CG Report under Practices 4.4 and 4.5 of the MCCG.

B O A R D R E M U N E R AT I O N
The Board has in place a Board Remuneration Policy governing the remuneration of directors and believes that the levels of remuneration
offered by the Group are sufficient to attract directors of calibre with sufficient experience and talent to contribute to the performance of
the Group. The Non-Executive Directors are remunerated based on fixed annual director’s fees and fixed meeting allowances. The current
Board Remuneration Policy was approved by the shareholders of the Company at the 24th AGM held in April 2017.

The remuneration framework applicable for the President & Managing Director and Executive Director has the underlying objective of
attracting and retaining an executive director needed to manage the Company successfully. The remuneration packages of the President
& Managing Director and Executive Director are structured to commensurate with the achievement of corporate targets set by the Board
and their individual performance. Their remuneration packages have been reviewed by the NRC and approved by the Board.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 131

C O R P O R AT E G O V E R N A N C E O V E R V I E W

ACCOUNTABIL I TY
ASSESSMENT OF EXTERNAL AUDITORS
The Board, through the Audit Committee, has maintained an
INTEGRITY OF FINANCIAL REPORTING appropriate relationship with the External Auditors as there
In presenting the annual financial statements and quarterly is a formal and transparent arrangement in the review of the
announcements to shareholders, the Board aims to present External Auditors’ audit plan, report, internal control issues and
a balanced and understandable assessment of the Group’s procedures. The Board is of the view that the External Auditors
position and prospects. This also applies to other price-sensitive are independent and they are reappointed annually at the AGM.
public reports and reports to regulators. Timely release of
announcements reflect the Board’s commitment to provide FRAMEWORK TO MANAGE RISKS
transparent information on the Group’s performances and The Board, as part of its leadership role coordinates and delegates
activities. specific responsibilities to several Committees to facilitate the
operations of the Group at the Board and Management level.
In the preparation of the financial statements, the Directors have Each Committee has written terms of reference defining its
taken necessary steps to ensure that the Group consistently scope, powers and responsibilities.
complied with all applicable Malaysian Financial Reporting
Standards, provisions of the Companies Act 2016 and relevant These Committees have the authority to examine particular
provision of laws and regulations in Malaysia, including the issues and report back to the Board with their findings and
respective countries in which the subsidiaries operate, and recommendations. The ultimate responsibility for the final
that the policies are supported by reasonable and prudent decisions and recommendations on all matters emanating from
judgement and estimates. This is to ensure a true and fair view these Committees, however, lies with the entire Board.
of the financial position of the Group and the Company at the
end of the financial year, and of the results and cash flows of the The Committees are divided into Board and Management
Group and Company for the financial year. Committees. The Board Committees comprises of six (6) main
Committees:
The Audit Committee assists the Board in ensuring that both the • Audit Committee;
annual financial statements and quarterly announcements are • Building Committee;
accurate and the preparation is consistent with the accounting • Medical Advisory Committee;
policies adopted by the Group. The quarterly reports, prior to • Nomination and Remuneration Committee;
tabling to the Board for approval, will be reviewed and approved • Tender Board Committee; and
by the Audit Committee. • Employees’ Share Option Scheme (ESOS) Committee.

In preparing the financial statements, the Directors have adopted There are two (2) Management Committees:
suitable accounting policies and applied them consistently; • EXCO
made judgement and estimates that are reasonable, prudent • Tender Evaluation Committee
and prepared the financial statements on a going-concern
basis; as the Directors have a reasonable expectation, having
made enquiries that the Group and Company have resources
to continue in operational existence for the foreseeable future.
The Directors have the overall responsibilities for taking such
steps necessary to safeguard the assets of the Group, as well as
prevent and detect fraud and other irregularities.

The Statement by Directors pursuant to Section 251(2) of the


Companies Act 2016 is set out in the Financial Statements on
page 156 of the Annual Report.

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
132 K PJ HEALT HCARE BERHAD

C O R P O R AT E G O V E R N A N C E O V E R V I E W

AUDIT COMMITTEE REPORT

1. C O M P O S I T I O N A N D AT T E N D A N C E

1.1 Composition
The Audit Committee (AC) members comprise of three (3) Independent Non-Executive Directors, all of whom are also members of the
Board of KPJ Healthcare Berhad. This meets the requirements of Paragraph 15.09 (1) (a) and (b) of the Bursa Malaysia Securities Berhad
Main Market Listing Requirements (MMLR). The Chairman of AC is appointed by the Board and is not the Chairman of the Board.

The composition of the Committee and the record of their attendance at AC meetings held during the financial year are as follows:

Name of Member Status of Directorship No. of Meeting Attended

Zainah Mustafa Independent Non-Executive Director 5/5


Chairman

Datuk Azzat Kamaludin Independent Non-Executive Director 4/5


Member

Dr. Kok Chin Leong Independent Non-Executive Director 5/5


Member

The Chairman of the Committee, Zainah Mustafa is a Fellow of the Association of Chartered Certified Accountants (FCCA). This
meets the requirement of Paragraph 15.09 (1) (c) of the MMLR which stipulates at least one of the Committee members fulfils the
financial expertise requisite.

Collectively, AC members are qualified individuals having the essential skills and expertise to discharge the Committee’s functions
and duties. AC’s financial literacy and ability to understand the financial reporting process have contributed to the AC’s discussion
in upholding the integrity of the Company’s financial reporting process and financial statements.

The annual review of the composition and performance of Audit Committee, including members’ tenure, performance and
effectiveness as well as their accountability and responsibilities, was duly assessed via the Board Effectiveness Evaluation.

1.2 Attendance respectively. Separate private sessions were also conducted


AC meetings for 2017 were pre-arranged in January 2017 without Management’s presence on 20 January 2017 and
and communicated to the members early to ensure their 10 August 2017.
time commitment. A minimum of four (4) meetings a year
shall be planned, although additional meetings may be Minutes of the AC meetings were circulated to all members
called at any time at the Chairman’s discretion. and extracts of the decisions made were escalated to
relevant process owners for action. The Chairman of AC
The quorum for all five (5) meetings held during financial meeting provides a report and highlights significant points
year 2017 was fulfilled. The meetings were held on 20 on the decisions and recommendations of AC to the KPJ
January 2017, 17 February 2017, 11 May 2017, 10 August Board.
2017 and 9 November 2017 respectively.
2. TERMS OF REFERENCE
The Company Secretaries act as the AC Secretary in all The duties and responsibilities of the AC is outlined in its Terms of
AC meetings. The President & Managing Director, Senior Reference which is available online in the Corporate Governance
Management together with Head of Internal Audit and section at www.kpjhealth.com.my.
External Auditors shall normally attend the meetings.
Other Directors, Executive Directors of the hospitals and 3. FOCUS AND ACTION PLAN
employee of the company and/or Group may attend any The AC received updates on key governance matters and issues
particular meeting upon invitation where appropriate. across the Group at each Committee meeting. Areas of the AC’s
focus during the Financial Year include:
In year 2017, the External Auditors attended three
(3) out of five (5) meetings which were held on 20
January 2017, 17 February 2017 and 10 August 2017

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 133

C O R P O R AT E G O V E R N A N C E O V E R V I E W

a) First time adoption of the Malaysian Financial Reporting iii) Evaluated the results of scheduled follow-ups,
Standards (MFRS) Framework and application of the investigations and special audits performed and
following standards in the first MFRS compliant financial confirmed the appropriate actions were taken to
statements: correct the weaknesses; and
i) MFRS 15 “Revenue from Contracts with Customers” iv) Assessed the status of audit activities as compared
(effective date: 1 January 2018) to the approved annual audit plan.
ii) MFRS 9 “Financial Instruments” (effective date:
1 January 2018) d) External Audit
iii) MFRS 16 “Leases” (effective date: 1 January 2019) i) Reviewed the audit plan, audit strategy and scope of
work for the year;
The preliminary financial impact of the first time adoption ii) Reviewed the results of the interim and annual audit,
on the above MFRS had been assessed accordingly as audit reports, Management Letter together with
the effects of the adoption are required to be applied Management’s response to their findings and “Key
retrospectively. Audit Matters”;
iii) Assessed the independence and objectivity of
b) New Companies Act 2016 and Malaysian Code on the external auditors during the year and prior to
Corporate Governance (MCCG) 2017 – Governance
appointment of the external auditors for adhoc
policies, processes and documents had been updated to
non-audit services. The Committee also received
remain effective, robust and aligned with the Companies
from the external auditors their policies and written
Act 2016 and MCCG 2017.
confirmation regarding their independence and the
measures used to control the quality of their work;
c) Recent development in tax laws and regulations.
iv) Deliberated on the updated development in
Financial Reporting and Regulatory Environment;
4. SUMMARY OF WORK
v) Assessed the performance of the External Auditors
During the year 2017, the Committee carried out the following
and recommended their appointment and
work:
a) Financial results remuneration to the Board of Directors; and
i) Reviewed the quarterly unaudited financial result vi) Met with the External Auditors without the presence
announcements before recommending the same of Management on 20 January 2017 and 10 August
to the Board for approval; 2017.
ii) Reviewed the Company’s compliance, in particular
the quarterly and year-end financial statements, with e) R e l a t e d P a r t y Tr a n s a c t i o n s
Malaysian Financial Reporting Standards, applicable Reviewed on a quarterly basis the related party transactions
disclosure provisions in the MMLR, and other and recurrent related party transactions entered into by
relevant legal and regulatory requirements; and the Group as well as any conflict of interest situation that
iii) Reviewed the impacts of any changes in accounting arises within the Group.
policies and adoption of new accounting standards
together with significant matters highlighted in the f) Annual Reporting
financial statements. Reviewed and recommended the Statement on Risk
Management and Internal Control, Audit Committee
b) Risk Management Report as well as Corporate Governance Report for Annual
i) Reviewed the system in place to identify, assess, Report to ensure compliance with relevant regulatory
mitigate and monitor Group-Wide Risk Assessment reporting requirements, prior to Board approval.
to promote and improve risk management
awareness and processes; and g) Other Matters
ii) Reviewed the risk profile of the Group and major i) Deliberated on the progress and status on IT
initiatives having significant impact on the business.
strategies issues.
ii) Reviewed and deliberated on the subsidiaries
c) Internal Audit
performance.
i) Reviewed and approved the annual audit plan for
the year 2016/2017 to ensure adequate resources,
h) Continuous Professional Development
competencies as well as comprehensive audit
For the year under review, the relevant Committee
scope and coverage over the significant and high
risk audit activities; members have attended various conferences, seminars
ii) Deliberated on the Internal Audit Reports that and trainings and the details of the training attended
were tabled and appraised the adequacy of are reported under the Corporate Governance Report,
Management’s responsiveness to the audit findings Practice 2.1 published on KPJ’s website.
and recommendations;

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
134 K PJ HEALT HCARE BERHAD

C O R P O R AT E G O V E R N A N C E O V E R V I E W

5. INTERNAL AUDIT FUNCTION The Internal Audit Department within its terms and reference
The in-house Internal Audit Department carries out KPJ’s had the following work undertaken for the financial year 2017:-
internal audit function in assisting the Board to oversee i) Reviewed and appraised the adequacy and integrity
that Management has in place a sound risk management, of the internal financial controls so as to ensure that it
internal control and governance systems. The Internal Audit provides a reasonable but not absolute assurance that
Department is headed by Khairol Badariah Basiron, a Certified assets are properly safeguarded;
Internal Auditor and a Professional Member of the Institute of ii) Ascertained the effectiveness of Management in
Internal Auditors Malaysia. She holds a Bachelor of Accounting identifying principal risks and managed such risks
from Universiti Teknologi MARA (UiTM). through the Risk Management Framework set-up by the
Group;
Internal Audit Department, as the third line of defense, reviews iii) Ascertained the level of compliance with Group’s
the effectiveness of the internal control structures over the plans, policies, procedures and adherence to laws and
Group activities focusing on high risk areas as determined using regulations;
a risk-based approach. All high risk activities in each auditable iv) Appraised the effectiveness of administrative and
area are audited annually in accordance with the approved financial controls applied and the reliability and integrity
Audit Plan. This is to provide reasonable assurance that such of data that is produced within the Group;
system continues to operate satisfactorily and effectively in the v) Performed follow-up reviews of previous audit reports to
Group. Internal Audit Department also carries out investigative ensure appropriate actions are implemented to address
audits where there are improper, illegal and dishonest acts control weaknesses highlighted;
reported. vi) Carried out investigations and special reviews requested
by the Committee and/or Management;
Internal Audit Department reports functionally to the Audit vii) Witnessed the tender opening process for project.
Committee and administratively to the President & Managing The witnessing process is to ensure the activities in the
Director, and is independent of the activities or operations of tendering process are conducted in a fair, transparent
other operating units. Internal Audit Department’s authority, and consistent manner; and
scope and responsibilities are governed by its Audit Charter viii) Prepared the Audit Committee Report for the Company’s
which is approved by the Audit Committee and aligned with Annual Report for financial year ended 31 December
the International Professional Practice Framework on Internal 2017.
Auditing issued by the Institute of Internal Auditors (IIA). All
Internal Audit personnel signed an Independence Statement During the financial year ended 31 December 2017, Internal
as well as a declaration on compliance to the Code of Ethics of Audit Department accomplished a total of 60 audits comprising
the IIA in carrying out their duties. scheduled financial and operational audits as well as IT audits
at the hospitals and support companies. This also includes due
The audit reports which provide the results of the audit diligence, special audits and ad hoc assignments. Reviews on
conducted are submitted to the Committee for review compliance with the established procedures, guidelines and
and deliberation. Key control issues, significant risks and statutory obligations are also performed.
recommendations are highlighted, along with Management’s
responses and action plans for improvement and/or Investigations were also made at the request of the AC and
rectification, where applicable. This enables the AC to execute Management on specific areas of concern to follow up in
its oversight function by reviewing and deliberating the audit relation to high risk areas identified in the regular reports. These
issues, audit recommendations as well as the Management’s investigations provided additional assurance on the integrity
responses to these recommendations. Where appropriate and robustness of the internal control systems.
and applicable, the AC directed the Management to take
cognisance of the issues raised and establish necessary steps All findings resulting from the audits were reported to the AC,
to strengthen the system of internal control based on Internal Senior Management and relevant management of operating
Audit’s recommendations. hospitals and support companies. Management of the
operating hospitals and support companies were accountable
The total costs incurred for maintaining the internal audit to ensure proper rectification of the audit issues and
function of 19 staff for the financial year ended 31 December implementation of action plans within the timeframe specified.
2017 is approximately RM2.2 million, comprising mainly Follow up by Internal Audit Department on the actions taken
salaries and incidental costs such as travelling, accommodation is updated in the subsequent audits. In addition, the Internal
and training cost. Various in-house training programmes and Audit Department played an advisory role in the course of
external courses were provided to staff members in the areas performing its audit activities.
of auditing skills, technical skills, business acumen, strategic
management and personal development to enhance the
desired competency level.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 135

C O R P O R AT E G O V E R N A N C E O V E R V I E W

MEDICAL ADVISORY COMMITTEE REPORT GROUP CLINICAL GOVERNANCE COMMITTEES


KPJ defines clinical governance as “A framework through which Quarterly Group Clinical Governance meetings are conducted to
organisations are accountable for continually improving the monitor clinical governance activities carried out at the hospitals,
quality of their services and safeguarding high standards of care in order to identify as well as review best practices that can be
by creating an environment in which excellence in clinical care will implemented Group-wide. Furthering from that, this is a platform
flourish.” to share learning points from adverse events and mortality and
morbidity reviews.
Safety is a priority at KPJ. We are committed to adjust culture
of safety in which employees are encouraged to come forward Other key components of clinical governance and progress made
when they or others make mistakes, allowing us the opportunity to during the year include:
improve the care we deliver and prevent potential errors.
1. New policies and guidelines that were approved, such as:
KPJ ensures that all our hospitals are continually in compliance a) Fertility Services;
with the highest level of quality care and patient safety standards b) Use of Entonox;
as set by the Malaysian Society for Quality in Health (MSQH), Joint c) Self-Prescribing;
Commission International (JCI), Integrated Management Systems d) Consent When Medication of Animal Origin is Prescribed;
(IMS) and other regulatory, licensing and accreditation agencies. e) Cancer Marker Screening;
f) Implementation of care standards in Nutrition for Patients
As such, we recognise the importance of maintaining high quality in Intensive Care Unit;
services whilst encouraging our staff to work independently, g) New clinical care pathways for management of asthma
demonstrating that leadership, teamwork and communication is and sepsis; and
as important to high-quality care as risk management and clinical h) With the increase in the number of post-graduate medical
effectiveness. students, nursing and allied health students from KPJUC,
the Guidelines for Student Posting or Attachment for Post
Whether we are a medical practitioner, nurse, support staff, Graduate and Undergraduate Students was reviewed.
receptionist, cleaner or porter, clinical governance concerns us all
- it is about patients and their carers receiving the right care at the 2. All policies were required to be review every three years. The
right time by the right person in a safe environment. following policies were reviewed in 2017:
a) List of Approved Abbreviations;
We have always encouraged a ‘being open’ policy with regards b) Informed Consent form and Obtaining Consent;
to the reporting of adverse incidents and it is good to see that c) Audio/Video Recording;
there has been a progressive fall in the number of reports in the d) Medical Records Guidelines; and
year 2017. e) Revision of patient information leaflets for common
surgical procedures.
The report outlines the main activities undertaken to develop and
promote clinical governance. 3. Liaison with external partners to continue to improve
discharge coordination for patients.
These include:
• Clinical effectiveness 4. Setting up of hospital Pain Management Committee to monitor
• Clinical surveys and avoid misuse of opioid (narcotic) based derivatives of
• Outcome indicators pain medications.
• Quality initiatives
• Clinical risk management 5. Credentialed and approved the appointment of 36 new
• Sharing of information consultants for the Group.
• Education and training

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
136 K PJ HEALT HCARE BERHAD

C O R P O R AT E G O V E R N A N C E O V E R V I E W

CLINICAL RISK MANAGEMENT Group Infection Control meetings creating a good forum for
KPJ has a well-developed system for adverse incident reporting developing practice and advice for clinical issues are conducted
and regular reports are produced relating to lessons learned. yearly.
A central database is used for adverse incident data entry and
report production. The nursing team also participates in a number of National Audits
such as administration of intravenous infusion; blood/ blood
Reported incidents included staff accidents, patient accidents, component transfusion; administration of oral medication; aseptic
clinical incidents and security incidents. The figures also include wound dressing and pain as the fifth vital sign.
reports of potential adverse events (i.e. near misses) and no-harm
events. There has been a significant reduction of clinical incidents Hand hygiene compliance audit is conducted regularly based on
compared with the previous year. Asia Pacific Hand Hygiene Excellence Award (APHEA) criteria with
involvement of the patient and the care giver.
All adverse incidents are investigated and viewed as an
opportunity to learn and improve. Recommendations and actions Knowledge and skills on intravenous fluid management was
plans from incident investigations are regularly discussed at the updated through workshops on setting intravenous (IV) line and
Hospital Risk, Safety and Quality Committee as well as Group monitoring IV site using Visual infusion Phlebitis (VIP) score.
Clinical Risk Committee meetings. They are also discussed at the
Group Medical Advisory Committee (MAC) quarterly meetings. PHARMACY SERVICES
This year, the following pharmacy policies were reviewed and
CLINICAL SURVEY revised:
The KPJ Clinical Survey is conducted annually in the third quarter 1. Medication reconciliation process in managing patient’s own
of the year. The Clinical Survey standards are reviewed annually medication during the admission;
in order to keep up-to-date to the requirements of current 2. Management of Look Alike Sound Alike and High Alert
accreditation standards, and additional scopes are added where Medication.
needed. This year two (2) new areas were added thus fourteen
(14) services are being surveyed. All medication related incidents reported are compiled and
analysed by pharmacy, nursing and related senior staff. Based on
The year 2017 was also a busy year for the survey team with their findings several initiatives and improvement activities have
nine (9) hospitals surveyed for MSQH and one hospital for JCI been implemented Group-wide:
recertification. As the MSQH standards were revised this year • In order to minimize the occurrence of adverse incidents one
there were many requests from the hospitals for training of the pharmacy staff is rotated as a permanent checker every 3 – 4
new standards. hour to minimise fatigue.
• Pharmacy and nursing team will practice Triangle Checking
This year two (2) new hospitals were assessed for MSQH before dispensing and administering of drugs to patients.
Accreditation certification, namely the new KPJ Pahang Specialist
Hospital and KPJ Sabah have been awarded full certification of CLINICAL GOVERNANCE COMMITTEES
four (4) years. Clinical Governance is about the quality and safety of patient
care and everything we do as individuals and as an organisation
NURSING SERVICES is to achieve high standards of clinical care. This includes the
The Nursing team has reviewed all the nursing policies and management of human resource and clinical governance.
procedures (Volume 1 – 3) and the new policies include:
1. Assessment of pain as the 5th vital sign based on the At KPJ hospitals, overall responsibility for clinical governance
components of the National Nursing Audit. lies with the hospital’s Medical Director. However, clinical
2. “Octenisan” bath prior to surgery to minimise risk of post- governance is the responsibility of every doctor and staff.
operative infection.
3. Placement of a ‘placard’ on the patient bed/trolley indicating At the Group level, the Group Medical Advisory Committee
site marking is required, as part of the safety drive towards (MAC) develops and monitors clinical governance activities at
Safe Surgery Saves Lives campaign. the hospitals whilst developing policies and guidelines for the
Group to improve safety and outcomes (Figure 1).

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 137

C O R P O R AT E G O V E R N A N C E O V E R V I E W

All hospitals conduct the Hospital Clinical Committee meetings as stipulated in the KPJ Medical Professional By-Laws. The reports from the
Hospital Clinical Committee meetings are collected, compiled and discussed during the various hospital meetings and finally presented
to the Hospital Board of Directors.

Management of Clinical Governance

KPJ BOARD

G R O U P M E D I C A L A D V I SORY HOSPI TAL


COMMITTEE (MAC) BOARD

M e d i ca l 1. Clinical Governance HOSPI TAL


D i r ect o r s ’ Policy Committee BOARD OF MAN AGEMENT
M e et i n g (CGPC)
2. Clinical Governance
Action Committee HOSPI TAL MEDI CAL AN D DE NTAL
(CGAC) ADVI SORY COMMI TTEE
3. Clinical Risk
Management
Committee (CRMC)
4. Research & Clinical Committees Hospital Committees
Development
Committee (R&D) 1. Credentialing & 1. Patient
5. Clinical Ethics Privileging, Peer Complaints &
Review, Ethics, Resolution
Committee (CEC)
Education & Audit 2. Consultant-
6. Research Ethics
2. Hospital Infection Management
Review Committee
& Antibiotic Meeting
(RERC) Control
3. Health
Information
Management
4. Mortality &
Morbidity Review
5. Pharmacy &
Therapeutics
6. Surgical
& Medical
Intervention
7. Risk, Quality &
Safety

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
138 K PJ HEALT HCARE BERHAD

C O R P O R AT E G O V E R N A N C E O V E R V I E W

GROUP MEDICAL ADVISORY COMMITTEE (MAC)


The MAC was formed in 2002, to initiate as well as to oversee clinical governance activities undertaken by the Group. The Chairman of
MAC is an Independent Non-Executive Director. The new Chairman, Dato’ Dr. Zaki Morad Mohamad, a Consultant Nephrologist was
appointed on 1 July 2017, replacing Dr. Yoong Fook Ngian has retired, the Chairman since 2011.

Another member Dato’ Dr. S Jenagaratnam, Consultant Anaesthesiologist from KPJ Ipoh a founder member of the Group Clinical
Governance Committees has also retired. We wish both of them a fond farewell and sincerely appreciate their contributions and guidance
during our clinical governance journey to improve patient care.

We would also like to welcome a new member, Dato’ Dr. Fadzli Cheah, Consultant Neurosurgeon from KPJ Ipoh.

The Committee meets four (4) times yearly as follows:

No. Members Meeting Attendance


25 Jan 10 May 3 Aug 3 Nov
1. Chairman √ √ - -
Dr. Yoong Fook Ngian *
Independent Non-Executive Director
2. Chairman √ √ √ √
Dato’ Dr. Zaki Morad Mohamad Zaher**
Chairman, Clinical Ethics Committee
Independent Non-Executive Director
3. Dato’ Amiruddin Abdul Satar √ √ √ √
President & Managing Director
4. Dr. Kok Chin Leong √ √ √ √
Chairman, Clinical Governance Policy Committee (CGPC)
5. Prof. (C) Dato’ Dr. Shahrudin Mohd Dun √ √ √ √
Chairman, Clinical Governance Action Committee (CGAC)
6. Datuk Dr. Hussein Awang X √ √ √
Chairman, Medical Directors’ Meeting
7. Prof. Dato’ Dr. Azizi Hj Omar √ √ √ √
Chairman, Research and Development Committee (R&D)
8. Dato’ Dr. Ngun Kok Weng √ √ √ √
Chairman, Clinical Risk Management Committee (CRMC)
9. Dato’ Dr. S Jenagaratnam*** √ - - -
Consultant Anaesthesiologist, KPJ Ipoh
10. Dato’ Dr. Fadzli Cheah √ √ √ √
Consultant Neurosurgeon, KPJ Ipoh
11. Dr. Mohd Hafetz Ahmad √ √ √ √
Chairman, Research Ethics Review Committee (CREC)
Consultant Obstetrician & Gynaecologist, KPJ Johor
12. Jasimah Hassan X √ √ √
Vice President (I), Business Operation and Clinical Services, KPJ
13. Gunavathy Kalee √ √ √ √
Deputy General Manager, Clinical Services KPJ

* Resigned as a Chairman on 30 June 2017


** Appointed as Chairman on 1 July 2017
*** Retired

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 139

C O R P O R AT E G O V E R N A N C E O V E R V I E W

The MAC is assisted by six (6) sub-committees. The function of each sub-committee is as follows:

1. Clinical Governance Policy Committee (CGPC)


CGPC was formed in 2002 to develop policies related to evidence based good clinical practice for maintaining and strengthening a
clinical governance framework or structure. KPJ Clinical Governance Policies arises from activities as shown below:
a. Quality Improvement activities
b. Established evidence based and best practices and assessment of new innovation and emerging technology;
c. Regulatory and National or International Professional Bodies and Academies;
d. Analytic Reports from Incident Reports, Indicators, and Complaints.
e. Requests from Medical Directors, Consultants, Hospital Management, and staff.

2. Clinical Governance Action Committee (CGAC)


CGAC is the committee that is responsible in monitoring progress of implementation of policies or programs approved by MAC. The
committee also identifies problems that are hindering implementation of the agreed policies or programs. All the agreed policies or
programs are analysed, evaluated and monitored in order to ensure quality in clinical care. CGAC oversees the implementation of
Clinical Survey, Mortality and Morbidity Review, Clinical Performance Indicators among others. CGAC also recommends training and
development of hospital clinical staff.

3. Clinical Risk Management Committee (CRMC)


The overall objective of CRMC is to enable achievement of clinical operational and strategic objectives such as:
a. Promote safety and excellence in patient care;
b. Identify, prioritize and manage risk arising from clinical care;
c. Ensure effective and efficient use of resources through evidence-based clinical practices; and
d. Protect the health and safety of the patients, healthcare providers and visitors.

CRMC aims to reduce the clinical risk to a minimum by improving the quality of care received by patients and to ensure the maintenance
of a safe environment for our patients, healthcare providers and visitors.

4. Clinical Ethics Committee (CEC)


The committee was formed in 2011 and the objective of CEC is to assist consultants, patients and family as well as hospital staff to resolve
clinically related ethical issues such as refusal of treatment, and end-of-life requests. The outcome should lead to the best interest of the
patient.

5. Research & Development Committee (R&D)


The committee was established in 2010 to facilitate research within the KPJ Hospitals for Clinicians and KPJ staff who would like to conduct
research involving clinical, quality, safety and/or healthcare related matters. The committee is responsible to promote the establishment of
quality assurance and improvement programmes in the hospitals. The committee also oversees the process of research governance.

The committee meets (physically or by circulation of papers) only whenever there is a need to review a research proposals. In 2017, the
Committee received two (2) research requests and both were approved.

6. Research Ethics Review Committee (RERC)


The RERC was set up in 2011 to review all proposals that are submitted to the Research and Development Committee (R&D) to conduct
research in the KPJ Group of Hospitals. The RERC reviews both the scientific merit and the ethical acceptability of the research proposal.
The committee is responsible to safeguard the rights, safety and well-being of the research subjects.

The committee only meets when a review is required otherwise discussions and approval are by circular resolution. This year, there was
only one request submitted to RERC which was subsequently approved.

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
140 K PJ HEALT HCARE BERHAD

C O R P O R AT E G O V E R N A N C E O V E R V I E W

REL ATIONS W I TH SH A R EH OL D ER S The Senior Management personnel involved in Investor Relations


activities are:
C O M M U N I C AT I O N W I T H S H A R E H O L D E R S • Dato’ Amiruddin Abdul Satar – President & Managing Director
The Group understands that one of its major responsibilities is to • Aminudin Dawam - Executive Director
provide sufficient and timely information as and when necessary • Norhaizam Mohamad – Vice President (II) – Group Finance
to its shareholders and investors, as this reflects good corporate Services
governance practice. It is imperative to maintain transparency, • Khairul Annuar Azizi – General Manager – Risk, Compliance &
build trust and understanding in the relationship through active Investor Relations
dialogue and communication with shareholders and investors.
ANNUAL GENERAL MEETING (AGM)
As part of the Group’s commitment to promote a high level of Pursuant to Paragraph 8.29A of the MMLR, all resolutions tabled
communication and transparency with the investment community, at a General Meeting are to be voted by poll.
experienced and senior level management personnel are directly
involved in the Group’s investor relations function. The President At the 24th AGM held on 24 April 2017, the Chairman informed
& Managing Director and senior management personnel hold the shareholders prior to the discussion of the resolutions on
discussions with analysts, investors and shareholders from time to the casting of votes by electronic poll voting. An Independent
time on the Group’s results and performance. scrutineer was appointed to validate the votes casted at the AGM.

Presentations are made, where appropriate, to explain the Group’s The Company obtained the shareholders’ mandate to allow the
strategies, performance and major developments. However, Group to enter into recurrent related party transactions as set out
any information that may be regarded as privileged material in the Notes of the Compliance Information on pages from 141 to
information about the Group will be safeguarded until such time 142. As required by the MMLR and the Company’s Constitution,
that such information has been announced to Bursa Securities directors who had an interest in the transactions abstained from
Malaysia as required by the MMLR. deliberation and voting on the relevant resolution in respect of
such transaction at the Board and AGM.
In addition, the Group has established a website at www.
kpjhealth.com.my which shareholders can access. The Group’s For further information on investor relations activities, please refer
quarterly and annual results announcements, including press to pages 49 to 51 of this Annual Report.
releases are posted in the Investor Relations page on the Group’s
website immediately after announcements are made on the Bursa This Corporate Governance Overview Statement was approved
Malaysia’s website. This website also sends out alerts to investors by the Board of Directors on 25 February 2018.
who opted to get this service for free on any announcement by
the Company to Bursa.

Other than the website, the Group continues to produce and


enhance its Annual Report, Corporate Brochures and Fact Sheets
to provide sufficient details to the shareholders and stakeholders.
Other than that, the Group also makes regular announcements via
Bursa Malaysia Securities to provide stakeholders with important
information which may affect their investment decisions, thus
enhancing the level of transparency.

As part of the Group’s commitment to an effective investor relations


function, the Company hosted meetings, tele-conferencing and
briefings to analysts and investors via participation in events
organised by investment banks or research houses in Malaysia
and abroad.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 141

C O M P L I A N C E I N F O R M AT I O N

In conformance with the Bursa Malaysia Securities Berhad Listing Requirements, the following information is provided:

1. U T I L I S AT I O N O F S U K U K P R O G R A M M E
In year 2015, Point Zone (M) Sdn Bhd has raised RM1,500.00 million to be utilised for refinancing outstanding amount of previous
Islamic Commercial Papers/Islamic Medium Term Notes Programme and to finance the expansion and to be utilise for the KPJ Group’s
working capital requirements and general corporate exercises, and/or to finance future investment and/or capital expenditure and/or
to refinance debt obligations (whether in whole or part).

Amount up to (RM Million)


At 1 January 2017 900.0
Issued during the financial year 0.0
At 31 December 2017 900.0

2. TREASURY SHARES
During the financial year, the Company repurchased 687,000 ordinary shares of its issued share capital from the open market for
RM634,000 at an average price of RM0.92 per share. The repurchase transactions were financed by internally generated funds.

As at 31 December 2017, the Company held a total of 63,047,000 of its 4,281,413,272 issued ordinary shares as treasury shares. Such
treasury shares are held at a carrying amount of RM55,411,213.

3. O P T I O N S, WA R R A N T S O R C O N V E RT I B L E S E C U R I T I E S
On 29 January 2014, Warrants 2014/2019 were issued for free to the subscribers of the renounceable rights issue of 43,637,326 new
ordinary shares of RM0.50 each in the Company’s Rights Shares on the basis of one (1) Rights Share for every fifteen (15) existing shares
held by the entitled shareholders of the Company, together with 87,274,652 free detachable new warrants (“Warrants 2014/2019”) on
the basis of two (2) Warrants 2014/2019 for every one (1) Rights Share subscribed at an issue price of RM4.01 per Rights Share (“Rights
Issue”).

On 27 September 2017, following the share split exercise, 259,226,010 of additional warrants were issued.

Each new warrant (2014/2019) is entitled at any time during the exercise period, to subscribe for one (1) new ordinary share at the
exercise price of RM4.01. During the year, each warrant has been adjusted to RM1.0025 each pursuant to the share split exercise.

4. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME


During the financial year, the Company did not issue any ADR or GDR programme.

5. I M P O S I T I O N S O F S A N C T I O N S / P E N A LT I E S
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant
regulatory bodies.

w w w. kp j h ea l t h . c o m . m y
GOV E RN A N C E
142 K PJ HEALT HCARE BERHAD

C O M P L I A N C E I N F O R M AT I O N

6. NON-AUDIT FEES
During the financial year, the amount of non-audit fees paid or payable for services rendered to the Group amounted to RM909,703.

7. P R O F I T E S T I M AT E , F O R E C A S T O R P R O J E C T I O N S
The Company did not make any release on the profit estimate, forecast or projections for the financial year.

8. PROFIT GUARANTEE
There is no profit guarantee given by the Company in respect of the financial year.

9. M AT E R I A L C O N T R A C T S
There is no material contract by the Company and its subsidiaries, involving Directors’ and major shareholders’ interest substituting at
the end of the financial year.

1 0 . R E C U R R E N T R E L AT E D P A R T Y T R A N S A C T I O N S S TAT E M E N T
At Annual General Meeting (AGM) held on 20 April 2017, the Company obtained a shareholders’ mandate to allow the Group to enter
into recurrent related party transactions of revenue or trading nature with the following parties:

Party Transacted with Nature of Transactions Actual aggregate Frequency of


value from transactions
20 April 2017
to 31 December
2017
RM’000
Johor Corporation Secretarial fees payable 381 Monthly
Pro Corporate Management Services Sdn Bhd Registrar fees payable 225 Monthly
HC Duraclean Sdn Bhd Housekeeping contract fees payable 11,628 Monthly
Healthcare Technical Services Sdn Bhd Fees payable for project management and 3,046 Contract basis
maintenance of non-medical equipment
Teraju Fokus Sdn Bhd Security services fees payable 4,121 Monthly
MIT Insurance Brokers Sdn Bhd Insurance coverage payable 3,417 Contract basis
Damansara Assets Sdn Bhd Building management service fees payable 800 Monthly
Metro Parking (M) Sdn Bhd Rental income for renting of land for car park 1,059 Monthly
Al-’Aqar Healthcare REIT Rental payable for renting of retirement 7,625 Monthly
village building and aged care facility in
Australia
Al-Salam Real Estate Investment Trust Rental payable for renting Malaysian 1,688 Monthly
College of Hospitality and Management
33,990

The relationships with the transacting parties is as disclosed in the circular in relation to the Proposed Shareholders’ Mandate that
the resolution of which to be tabled at the upcoming AGM.

A N N UA L R E PO RT 2017
GOV ER N A N C E
KP J H E ALT H CARE B ER H A D 143

D I R E C T O R S ’ R E S P O N S I B I L I T Y S TAT E M E N T

The Directors are required by the Companies Act 2016 to prepare the financial statements for each financial year which have been made
out in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act 2016 in Malaysia, and the Bursa Malaysia Securities Berhad Listing Requirements.

The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the Group and of
the Company at the end of the financial year, and of the results and cash flows of the Group and of the Company for the financial year.

In preparing the financial statements, the Directors have adopted suitable accounting policies and applied them consistently. The Directors
have also made judgements and estimates that are on going concern basis as the Directors have a reasonable expectation, having made
enquires, that the Group and Company have resources to continue in operational existence for the foreseeable future.

The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose the financial position
of the Group and of the Company with reasonable accuracy, enabling them to ensure that the financial statements comply with the
Companies Act 2016.

The Directors are responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and of the
Company, and to detect and prevent fraud and other irregularities.

w w w. kp j h ea l t h . c o m . m y
FINANCIAL
S TAT E M E N T S

146 Directors’ Report


156 Statement by Directors
157 Statutory Declaration
158 Independent Auditors’
Report
164 Statements of
Comprehensive Income
166 Statements of Financial
Position
168 Consolidated Statement of
Changes in Equity
172 Company Statement of
Changes in Equity
174 Statements of Cash Flows
177 Notes to the Financial
Statements
F I N A N C I A L STAT E ME NTS
146 K PJ HEALT HCARE BERHAD

DIRECTORS’ REPORT

DIRECTORS’ REPORT

The Directors are pleased to submit their report and the audited financial statements of the Group and of the Company for the financial year
ended 31 December 2017.

DIRECTORS

The Directors in office during the financial year and during the period from the end of the financial year to the date of the report are:

Dato’ Kamaruzzaman bin Abu Kassim (Chairman)


Dato’ Amiruddin bin Abdul Satar (Managing Director)
Tan Sri Datin Paduka Siti Sa’diah binti Sh Bakir
Aminudin bin Dawam (Executive Director)
Datuk Azzat bin Kamaludin
Zainah binti Mustafa
Dr Kok Chin Leong
Zulkifli bin Ibrahim
Prof Dato’ Dr Azizi bin Haji Omar
Mohd Sahir bin Rahmat (Appointed on 3 July 2017)
Dato’ Dr Zaki Morad bin Mohamad Zaher (Appointed on 3 July 2017)
Ahamad bin Mohamad (Resigned on 3 July 2017)
Dr Yoong Fook Ngian (Resigned on 3 July 2017)

In accordance with Article 96 of the Articles of Association, Tan Sri Datin Paduka Siti Sa’diah binti Sh Bakir and Prof Dato’ Dr Azizi bin Haji
Omar, retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.

In accordance with Article 97 of the Articles of Association, Mohd Sahir bin Rahmat and Dato’ Dr Zaki Morad bin Mohamad Zaher, retire at
the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.

The names of the Directors of subsidiaries are set out in the respective subsidiaries’ financial statements and the information is deemed
incorporated herein by such reference and made a part hereof.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services to subsidiaries. The principal activities
of the subsidiaries are mainly the operation of specialist hospitals.

Details of the principal activities of the subsidiaries are set out in Note 21 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year other than the discontinued operation as
disclosed in Note 14 to the financial statements.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 147

DIRECTORS’ REPORT (CONTINUED)

FINANCIAL RESULTS

Group Company
RM’000 RM’000

Profit before zakat and taxation 233,326 84,328


Zakat (3,910) (300)
Taxation (56,120) (1,155)
Profit for the financial year from continuing operations 173,296 82,873
Loss for the financial year from discontinued operation (6,386) -
Net profit for the financial year 166,910 82,873

Net profit for the financial year attributable to:


Owners of the Company from
- continuing operations 165,554 82,873
- discontinued operation (3,640) -
Non-controlling interest from
- continuing operations 7,742 -
- discontinued operation (2,746) -
Net profit for the financial year 166,910 82,873

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

SHARE SPLIT

At an Extraordinary General Meeting held on 24 August 2017, the shareholders of the Company approved the subdivision of every issued
ordinary share of the Company into 4 ordinary shares (“Share Split” or “Subdivision of shares”). The Share Split was effected on 26 September
2017 and completed with the listing and quotation for 4,280,627,292 Subdivided Shares and 259,226,010 additional warrants on the Main
Board of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) on 27 September 2017.

TREASURY SHARES

On 20 April 2017, at the Annual General Meeting, the shareholders of the Company renewed their approval for the Company to buy-back
its own shares of up to ten percent (10%) of the issued and paid-up share capital of the Company.

During the financial year, the Company repurchased 687,000 ordinary shares of its issued share capital from the open market for RM634,000
at an average price of RM0.92 per share. The repurchase transactions were financed by internally generated funds.

As at 31 December 2017, the Company held a total of 63,047,000 of its 4,281,413,272 issued ordinary shares as treasury shares. Such
treasury shares are held at a carrying amount of RM55,411,213.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
148 K PJ HEALT HCARE BERHAD

DIRECTORS’ REPORT (CONTINUED)

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company’s issued share capital was increased by:

(a) Before Share Split

i. RM668,964 through the issuance of 166,824 ordinary shares by way of the conversion of Warrants 2014/2019 at an exercise price
of RM4.01 per warrant.

ii. RM22,116,670 through the issuance of 6,421,448 ordinary shares pursuant to the exercise of the Employee Share Option Scheme
(“ESOS”) at an exercise price of RM3.64 per option.

(b) After Share Split

i. RM715,242 through the issuance of 785,980 ordinary shares pursuant to the exercise of the Employee Share Option Scheme
(“ESOS”) at an exercise price of RM0.91 per option.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

As at the date of this report, the total issued share capital of the Company is RM736,068,688. The Companies Act 2016 which came into effect
on 31 January 2017 has repealed the Companies Act 1965. The Companies Act 2016 (the “Act”) has abolished the concept of par or nominal
value of shares and hence, the share premium and authorised capital are abolished. In accordance with section 618 of the Act, any amount
standing to the credit of the Company’s share premium account become part of the Company’s share capital upon commencement of the
Act. Notwithstanding this provision, the Company may within 24 months from the date of the Act came into effect, use the amount standing
to the credit of its share premium accounts totaling RM179,480,000 for purposes as set out in Section 618 of the Act. There is no impact on
the number of shares in issue or the entitlement of the holders of the Company’s shares.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 149

DIRECTORS’ REPORT (CONTINUED)

EMPLOYEES’ SHARE OPTION SCHEME

The Company implemented an employee’s share option scheme (“ESOS”) in 2015 for a period of 5 years for eligible employees and Directors
of the Group. Details of ESOS are set out in Note 35 to the financial statements.

The Company was granted an exemption by the Companies Commission of Malaysia via a letter dated 12 February 2018 from having to
disclose in this report the names of the persons to whom less than 720,000 options (after share split) have been granted and details of their
holdings pursuant to Section 253 (Para 5, Part 1, Fifth Schedule) of the Companies Act 2016. Other than the Directors, the persons to whom
720,000 and more options have been granted comprise the following:

Number of options over ordinary shares


Total
granted
Adjusted options
Granted/ for Share Granted/ adjusted
At (Exercised At Split on (Exercised At for Share
1.1.2017 & Lapsed) 26.9.2017 27.9.2017 & Lapsed) 31.12.2017 Split

Jasimah bt
Hassan 190,000 (10,000) 180,000 720,000 (60,000) 660,000 1,000,000
Dato’ Abdol
Wahab bin
Baba 135,000 15,000/ - - - - 900,000
(150,000)
Sabariah
Fauziah bte
Jamaluddin 206,000 - 206,000 824,000 - 824,000 880,000
Ahmad
Nasirruddin
bin Harun 200,000 - 200,000 800,000 - 800,000 800,000
Mohd Nasir bin
Mohamed 150,000 - 150,000 600,000 - 600,000 800,000
Mah Lai Heng 190,000 (10,000) 180,000 720,000 - 720,000 800,000
Roslan bin
Ahmad 195,000 - 195,000 780,000 - 780,000 780,000
Norita binti
Ahmad 195,000 - 195,000 780,000 (780,000) - 780,000
Tan Sri Dato’ Dr.
Yahya Awang 50,000 - 50,000 200,000 - 200,000 800,000
Dr Yoong Fook
Ngian 200,000 - 200,000 800,000 - 800,000 800,000

A complete list is filed with the Companies Commission of Malaysia.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
150 K PJ HEALT HCARE BERHAD

DIRECTORS’ REPORT (CONTINUED)

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors’
remuneration as disclosed in Note 11 to the financial statements) by reason of a contract made by the Company or a related corporation
with the Director or with a firm of which the director is a member, or with a company in which the Director has a substantial financial interest.

Neither during nor at the end of the financial year was the Company or any subsidiaries a party to any arrangement whose object was to
enable the Directors to acquire benefits through the acquisition of shares in, or debentures of the Company or any other body corporate,
other than the Company’s ESOS (see note 35 to the financial statements).

DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES

According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act 2016, none of the Directors
who held office at the end of the financial year held any shares, debentures, warrants or options over ordinary shares in the Company or its
subsidiaries or its holding corporation or subsidiaries of the holding corporation during the financial year except as follows:

Number of ordinary shares


Adjusted
for Share
At Acquired/ At Split on Acquired/ At
1.1.2017 (Disposed) 26.9.2017 27.9.2017 (Disposed) 31.12.2017

KPJ Healthcare Berhad


Dato’ Kamaruzzaman - 50,000 50,000 200,000 54,500 254,500
bin Abu Kassim
Dato’ Amiruddin bin Abdul Satar 6,266 - 6,266 25,064 - 25,064
Aminudin bin Dawam 11,197 - 11,197 44,788 - 44,788
Tan Sri Datin Paduka Siti Sa’adiah 1,200,000 - 1,200,000 4,800,000 - 4,800,000
binti Sh Bakir
- Indirect 2,083 (2,083) - - - -
Datuk Azzat bin Kamaludin 94,000 200,000 294,000 1,176,000 24,000 1,200,000
Zainah binti Mustafa 200,000 - 200,000 800,000 200,000 1,000,000
Dr Kok Chin Leong 280,100 149,000/ 379,100 1,516,400 - 1,516,400
(50,000)
Mohd Sahir Bin Rahmat 90,000 150,000/ 190,000 760,000 - 760,000
(50,000)
Dato’ Dr Zaki Morad 20,000 - 20,000 80,000 - 80,000
Mohamad Zaher

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 151

DIRECTORS’ REPORT (CONTINUED)

DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES (CONTINUED)

According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act 2016, none of the Directors
who held office at the end of the financial year held any shares, debentures, warrants or options over ordinary shares in the Company or
its subsidiaries or its holding corporation or subsidiaries of the holding corporation during the financial year except as follows: (continued)

Number of ordinary shares


At At
1.1.2017 Acquired (Disposed) 31.12.2017

E.A. Technique (M) Berhad


Dato’ Kamaruzzaman bin Abu Kassim 25,000 320,000 (225,000) 120,000

Number of Warrants of 2014/2019

Adjusted
for Share
At Granted/ At Split on Granted/ At
1.1.2017 (Exercised) 26.9.2017 27.9.2017 (Exercised) 31.12.2017

KPJ Healthcare Berhad


Dato’ Kamaruzzaman bin Abu 24,000 - 24,000 96,000 127,000 223,000
Kassim
Dato’ Amiruddin bin Abdul Satar 532 - 532 2,128 - 2,128
Tan Sri Datin Paduka Siti Sa’adiah 109,498 - 109,498 437,992 - 437,992
binti Sh Bakir
- Indirect 1,666 (1,500) 166 664 - 664
Datuk Azzat bin Kamaludin 8,000 - 8,000 32,000 - 32,000
Dr Kok Chin Leong 21,200 - 21,200 84,800 - 84,800
Mohd Sahir Bin Rahmat 11,200 - 11,200 44,800 - 44,800

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
152 K PJ HEALT HCARE BERHAD

DIRECTORS’ REPORT (CONTINUED)

DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES (CONTINUED)

According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act 2016, none of the Directors
who held office at the end of the financial year held any shares, debentures, warrants or options over ordinary shares in the Company or
its subsidiaries or its holding corporation or subsidiaries of the holding corporation during the financial year except as follows: (continued)

Number of options over ordinary shares


Adjusted
Granted/ for Share Granted/
At (Exercised)/ At Split on (Exercised)/ At
1.1.2017 (Lapsed) 26.9.2017 27.9.2017 (Lapsed) 31.12.2017

KPJ Healthcare Berhad


Dato’ Amiruddin bin Abdul Satar 500,000 - 500,000 2,000,000 - 2,000,000
Aminudin bin Dawam 200,000 - 200,000 800,000 - 800,000
Datuk Azzat bin Kamaludin 200,000 (200,000) - - - -
Dr Kok Chin Leong 149,000 (149,000) - - - -
Prof Dato’ Dr Azizi bin Haji Omar 82,500 - 82,500 330,000 - 330,000
Mohd Sahir Bin Rahmat 250,000 (150,000) 100,000 400,000 - 400,000

DIVIDENDS

The dividends paid or declared by the Company since 31 December 2016 are as follows:

In respect of the financial year ended 31 December 2017:


RM

(a) Before share split


First interim single tier dividend of 2.20 sen per share on 1,048,780,787 ordinary shares, declared on 22 February
2017 and paid on 28 April 2017. 23,073,175
Second interim single tier dividend of 1.80 sen per share on 1,050,642,255 ordinary shares, declared on 26 May 2017
and paid on 21 July 2017. 18,911,560
Third interim single tier dividend of 1.50 sen per share on 1,054,566,823 ordinary shares, declared on 24 August
2017 and paid on 12 October 2017. 15,818,499

(b) After share split


Fourth interim single tier dividend of 0.40 sen per share on 4,218,227,992 ordinary shares, declared on 23 November
2017 and paid on 22 December 2017. 16,872,909
74,676,143

The Directors did not recommend the payment of a final dividend in respect of the financial year ended 31 December 2017.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 153

DIRECTORS’ REPORT (CONTINUED)

DIRECTORS’ REMUNERATION

Details of Directors’ remuneration are set out in Note 11 to the financial statements.

ULTIMATE HOLDING CORPORATION

The Directors regard Johor Corporation, a body corporate established under the Johor Corporation Enactment No. 4, 1968 (as amended by
the Enactment No. 5, 1995), as the ultimate holding corporation.

INDEMNIFYING DIRECTORS, OFFICERS OR AUDITORS

No indemnities has been given or insurance premium paid, during or since the end of the year, for any person who is or has been director,
officer and auditor of the Company.

OTHER STATUTORY INFORMATION

(a) Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps:

(i) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts
and satisfied themselves that all known bad debts had been written-off and that adequate provision had been made for doubtful
debts; and

(ii) to ensure that any current assets, which were unlikely to be realised in the ordinary course of business including the values of
current assets as shown in the accounting records of the Group and of the Company, had been written down to an amount which
the current assets might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances:

(i) which would render the amounts written-off for bad debts or the amount of the provision for doubtful debts inadequate to any
substantial extent; or

(ii) which would render the values attributed to the current assets in the financial statements of the Group and of the Company
misleading; or

(iii) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
154 K PJ HEALT HCARE BERHAD

DIRECTORS’ REPORT (CONTINUED)

OTHER STATUTORY INFORMATION (CONTINUED)

(c) At the date of this report:

(i) there are no charges on the assets of the Group or of the Company which have arisen since the end of the financial year which
secures the liability of any other person; and

(ii) there are no contingent liabilities in the Group and in the Company which have arisen since the end of the financial year.

(d) No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within the
period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the
Company and its subsidiaries to meet their obligations when they fall due.

(e) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial
statements of the Group and of the Company which would render any amount stated in the respective financial statements misleading.

(f) In the opinion of the Directors:

(i) the results of the operation of the Group and of the Company during the financial year were not substantially affected by any item,
transaction or event of a material and unusual nature; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event
of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for
the financial year in which this report is made.

SUBSIDIARIES

Details of subsidiaries are set out in Note 21 to the financial statements.

AUDITORS’ REMUNERATION

Details of auditors’ remuneration are set out in Note 9 to the financial statements.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 155

DIRECTORS’ REPORT (CONTINUED)

AUDITORS

The auditors, PricewaterhouseCoopers PLT (LLP0014401 – LCA & AF 1146), have expressed their willingness to accept re-appointment as
auditors.

PricewaterhouseCoopers PLT (LLP0014401 – LCA & AF 1146), was registered on 2 January 2018 and with effect from that date,
PricewaterhouseCoopers (AF 1146), a conventional partnership was converted to a limited liability partnership.

This report was approved by the Board of Directors on 25 February 2018. Signed on behalf of the Board of Directors:

DATO’ KAMARUZZAMAN BIN ABU KASSIM DATO’ AMIRUDDIN BIN ABDUL SATAR
DIRECTOR DIRECTOR

Johor Bahru

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
156 K PJ HEALT HCARE BERHAD

S TAT E M E N T B Y D I R E C T O R S
Pursuant to Section 251(2) of the Companies Act 2016

We, Dato’ Kamaruzzaman bin Abu Kassim and Dato’ Amiruddin bin Abdul Satar, two of the Directors of KPJ Healthcare Berhad, do hereby
state that, in the opinion of the Directors, the accompanying financial statements set out on pages 164 to 268 are drawn up so as to give
a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and financial performance of the
Group and of the Company for the financial year ended 31 December 2017 in accordance with the Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 25 February 2018.

DATO’ KAMARUZZAMAN BIN ABU KASSIM DATO’ AMIRUDDIN BIN ABDUL SATAR
DIRECTOR DIRECTOR

Johor Bahru

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 157

S TAT U T O RY D E C L A R AT I O N
Pursuant to Section 251(1) of the Companies Act 2016

I, Norhaizam binti Mohammad, the officer primarily responsible for the financial management of KPJ Healthcare Berhad, do solemnly and
sincerely declare that, the financial statements set out on pages 164 to 268 are, to the best of my knowledge and belief, correct and I make
this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1960.

NORHAIZAM BINTI MOHAMMAD

Subscribed and solemnly declared by the above named Norhaizam binti Mohammad

At: Johor Bahru

On: 25 February 2018

Before me:

COMMISSIONER FOR OATH

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
158 K PJ HEALT HCARE BERHAD

INDEPENDENT AUDITORS’ REPORT


To the members of KPJ Healthcare Berhad
(Incorporated in Malaysia)
(Company No. 247079 M)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

In our opinion, the financial statements of KPJ Healthcare Berhad (“the Company”) and its subsidiaries (“the Group”) give a true and fair view
of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and their cash flows
for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act 2016 in Malaysia.

What we have audited

We have audited the financial statements of the Group and of the Company, which comprise the statements of financial position as at
31 December 2017 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity
and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, as set out on pages 164 to 268.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our
responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section
of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and other ethical responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the
Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Our audit approach

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements of
Group and the Company. In particular, we considered where the directors made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits,
we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a
whole, taking into account the structure of the Group and of the Company, the accounting processes and controls, and the industry in which
the Group and the Company operate.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 159

INDEPENDENT AUDITORS’ REPORT

To the members of KPJ Healthcare Berhad (Continued)


(Incorporated in Malaysia)
(Company No. 247079 M)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

Key audit matter

Key audit matter is the matter that, in our professional judgement, was of most significance in our audit of the financial statements of the
Group and of the Company for the current year. This matter was addressed in the context of our audit of the financial statements of the Group
and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

Key audit matter How our audit addressed the key audit matter
Valuation of investment properties External valuations

Refer to Notes 2.9, 2.35, 6 and 18 to the financial statements. We read the valuation reports for all investment properties and
discussed the reports with each of the valuers. We found that the
The Group carries its investment properties at fair value. Investment valuation approach for each property was performed in accordance
properties carried at fair value as at 31 December 2017 amounted to with MFRS 13 “Fair value measurement” and suitable for use in
RM274.21 million. determining the fair values of investment properties as at 31
December 2017.
The valuation of the Group’s investment properties is inherently
subjective due to, among other factors, the individual nature of each From our discussions with management and the valuers and our
property, its location and the expected future rental income for that understanding of the valuation reports, we noted that the valuers
particular property. have considered factors related to each property’s individual
characteristics and its overall quality, geographic location and
The existence of significant estimation uncertainty, coupled with the desirability as a whole in arriving at the fair value. There was no
fact that only a small percentage difference in individual property evidence of management bias or influence on the values in relation
valuation assumptions, when aggregated, could result in material to these factors.
misstatement, is why we have given specific audit focus and attention
to this area. We evaluated the valuers’ competence, capabilities, and objectivities
by checking the valuers’ qualifications to their website and their
The valuations were carried out by independent professional valuers registration to the Board of valuers, Appraisers, Estate Agents
which were engaged by the Group. and Property Managers Malaysia website. We read their terms of
engagement with the Group to determine whether there were
any matters that might have affected their objectivity or may have
imposed scope limitations upon their work. We also considered
other engagements which might exist between the Group and the
valuers. We found no evidence to suggest that the objectivity of any
valuers in their performance of the valuations was compromised.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
160 K PJ HEALT HCARE BERHAD

INDEPENDENT AUDITORS’ REPORT

To the members of KPJ Healthcare Berhad (Continued)


(Incorporated in Malaysia)
(Company No. 247079 M)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

Key audit matter (continued)

Key audit matter How our audit addressed the key audit matter
Valuation of investment properties (Continued) External valuations (Continued)

Assumptions

The valuation of the Group’s most significant investment property (at


fair value of RM209.83 million) is based on the investment method.
We carried out procedures to test the data inputs underpinning the
valuation by agreeing them back to tenancy agreements to confirm
the lettable area and agreeing outgoings to actual expenses incurred
during the financial year. We also assessed the reasonableness of the
term yield, void rate, average rental and outgoing used by the valuer
with reference to comparable peers.

For other investment properties at fair value of RM64.38 million, we


noted that the valuers have used comparable market information
with adjustments made for accessibility, visibility, size and tenure to
arrive at the fair value.

We have also assessed the adequacy of disclosures in the financial


statements.

Based on the procedures performed, we did not identify any material


exceptions.

There are no key audit matters in relation to the financial statements of the Company.

Information other than the financial statements and auditors’ report thereon

The Directors of the Company are responsible for the other information. The other information comprises Directors’ Report and contents in
the 2017 Annual Report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any
form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the
Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 161

INDEPENDENT AUDITORS’ REPORT

To the members of KPJ Healthcare Berhad (Continued)


(Incorporated in Malaysia)
(Company No. 247079 M)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

Responsibilities of the Directors for the financial statements

The Directors of the Company are responsible for the preparation of the financial statements of the Group and of the Company that give a true
and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements
of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary
to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due
to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic
alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing
in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and of the Company’s internal control.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the Directors.

(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report.
However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
162 K PJ HEALT HCARE BERHAD

INDEPENDENT AUDITORS’ REPORT

To the members of KPJ Healthcare Berhad (Continued)


(Incorporated in Malaysia)
(Company No. 247079 M)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

Auditors’ responsibilities for the audit of the financial statements (continued)

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the
disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events
in a manner that achieves fair presentation.

(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and
to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial
statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in
our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have not acted as
auditors, are disclosed in Note 21 to the financial statements.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 163

INDEPENDENT AUDITORS’ REPORT

To the members of KPJ Healthcare Berhad (Continued)


(Incorporated in Malaysia)
(Company No. 247079 M)

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia
and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS PLT SHIRLEY GOH


LLP0014401-LCA & AF 1146 01778/08/2018 J
Chartered Accountants Chartered Accountant

Kuala Lumpur
25 February 2018

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
164 K PJ HEALT HCARE BERHAD

S TAT E M E N T S O F C O M P R E H E N S I V E I N C O M E
For the financial year ended 31 December 2017

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000
Note Restated

Continuing operations
Revenue 7 3,179,998 2,969,603 161,475 188,121
Cost of sales (2,214,653) (2,084,641) - -
Gross profit 965,345 884,962 161,475 188,121
Administrative expenses (731,517) (662,723) (58,670) (64,652)
Other income 26,271 29,866 - -
Operating profit 260,099 252,105 102,805 123,469
Finance income 8 13,637 15,131 - -
Finance costs 8 (79,950) (80,186) (18,477) (15,011)
Finance costs - net (66,313) (65,055) (18,477) (15,011)
Share of results of associates 39,540 33,647 - -
Profit before zakat and tax 9 233,326 220,697 84,328 108,458
Zakat 12 (3,910) (3,807) (300) (280)
Taxation 13 (56,120) (53,257) (1,155) 454
Profit for the financial year from continuing operations 173,296 163,633 82,873 108,632
Discontinued operation
Loss for the financial year from discontinued operation 14 (6,386) (7,758) - -
Net profit for the financial year 166,910 155,875 82,873 108,632

Other comprehensive income:


Item that may be subsequently reclassified to profit or loss
from continuing operations:
- Currency translation differences (3,035) (71) - -

Items that will not be reclassified to profit or loss from


continuing operations:
- Gains on revaluation of land and building 17 13,432 19,692 - -
- Deferred tax on revaluation surplus 13 (3,224) (4,172) - -
Other comprehensive income for the financial year, net of tax 7,173 15,449 - -
Total comprehensive income for the financial year 174,083 171,324 82,873 108,632

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 165

S TAT E M E N T S O F C O M P R E H E N S I V E I N C O M E

For the financial year ended 31 December 2017 (Continued)

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000
Note Restated

Net profit for the financial year attributable to:

Owners of the Company from


- continuing operations 165,554 153,617 82,873 108,632
- discontinued operation 14 (3,640) (4,422) - -
Non-controlling interests from
- continuing operations 7,742 10,016 - -
- discontinued operation 14 (2,746) (3,336) - -
166,910 155,875 82,873 108,632

Total comprehensive income for the financial year


attributable to:

Owners of the Company from


- continuing operations 172,727 169,066 82,873 108,632
- discontinued operation 14 (3,640) (4,422) - -
Non-controlling interests
- continuing operations 7,742 10,016 - -
- discontinued operation 14 (2,746) (3,336) - -
174,083 171,324 82,873 108,632

Earnings per share attributable to Owners of the Company:*

Basic (sen) from 16(a)


- continuing operations 3.78 3.53
- discontinued operation (0.08) (0.10)
Diluted (sen) from 16(b)
- continuing operations 3.32 3.08
- discontinued operation (0.07) (0.09)

* The comparative figure was recomputed based on the enlarged number of ordinary shares in issue after the share split exercise, which
was completed on 27 September 2017, in accordance with MFRS 133 “Earnings per Share”.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
166 K PJ HEALT HCARE BERHAD

S TAT E M E N T S O F F I N A N C I A L P O S I T I O N
As at 31 December 2017

Group Company
2017 2016 2017 2016
Note RM’000 RM’000 RM’000 RM’000

ASSETS
Non-current assets
Property, plant and equipment 17 2,206,013 1,966,535 - -
Investment properties 18 274,205 280,436 - -
Intangible assets 19 239,437 245,567 - -
Investments in subsidiaries 21 - - 1,026,448 1,016,201
Investments in associates 22 405,984 391,540 - -
Available-for-sale financial assets 23 4,678 2,146 4,396 1,864
Deferred tax assets 24 24,682 18,757 - -
Trade and other receivables 25 - 34,621 - -
3,154,999 2,939,602 1,030,844 1,018,065

Current assets
Inventories 26 51,084 47,119 - -
Trade and other receivables 25 624,896 555,518 10,641 35,384
Amounts due from subsidiaries 25 - - 474,817 390,355
Tax recoverable 28,560 33,861 6,275 7,724
Deposits, bank and cash balances 27 200,542 359,399 3,903 4,112
905,082 995,897 495,636 437,575
Assets held for sale 28 173,827 - - -
1,078,909 995,897 495,636 437,575
Total assets 4,233,908 3,935,499 1,526,480 1,455,640

EQUITY AND LIABILITIES


Current liabilities
Trade and other payables 29 452,847 490,922 18,354 16,233
Amounts due to subsidiaries 29 - - 157,136 174,280
Current tax liabilities 6,896 12,047 - -
Borrowings 30 350,369 333,445 257,000 160,000
Deferred revenue 31 68,464 76,804 - -
Dividend payable - 15,720 - 15,720
878,576 928,938 432,490 366,233
Liabilities associated with assets held for sale 28 190,564 - - -
1,069,140 928,938 432,490 366,233
Net current assets 9,769 66,959 63,146 71,342

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 167

S TAT E M E N T S O F F I N A N C I A L P O S I T I O N

As at 31 December 2017 (Continued)

Group Company
2017 2016 2017 2016
Note RM’000 RM’000 RM’000 RM’000

Non-current liabilities
Trade and other payables 29 30,299 - 200,359 241,269
Borrowings 30 1,242,340 1,242,313 - -
Deferred tax liabilities 24 60,206 63,041 - -
Provision for retirement benefits 32 2,616 2,548 - -
Deposits 33 14,096 13,930 - -
1,349,557 1,321,832 200,359 241,269
Total liabilities 2,418,697 2,250,770 632,849 607,502
Net assets 1,815,211 1,684,729 893,631 848,138

Equity attributable to Owners of the Company


Share capital 34 736,069 531,784 736,069 531,784
Share premium - 178,141 - 178,141
Less: Treasury shares (55,411) (54,777) (55,411) (54,777)
Reserves 1,046,137 939,940 212,973 192,990
1,726,795 1,595,088 893,631 848,138
Non-controlling interests 88,416 89,641 - -
Total equity 1,815,211 1,684,729 893,631 848,138
Total equity and liabilities 4,233,908 3,935,499 1,526,480 1,455,640

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
168 K PJ HEALT HCARE BERHAD

C O N S O L I DAT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y
For the financial year ended 31 December 2017

Ordinary Non-
share Share Treasury Other Retained controlling Total
capital premium shares reserves earnings Total interests equity
(Note 34) (Note 36)
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
At 1 January 2017 531,784 178,141 (54,777) 164,199 775,741 1,595,088 89,641 1,684,729

Comprehensive income:
Net profit for the
financial year - - - - 161,914 161,914 4,996 166,910
Other comprehensive
income:
Currency translation
differences of foreign
subsidiaries - - - (3,035) - (3,035) - (3,035)
Revaluation surplus - - - 10,208 - 10,208 - 10,208
Total other comprehensive
income - - - 7,173 - 7,173 - 7,173
531,784 178,141 (54,777) 171,372 937,655 1,764,175 94,637 1,858,812

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 169

C O N S O L I DAT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y

For the financial year ended 31 December 2017 (Continued)

Ordinary Non-
share Share Treasury Other Retained controlling Total
capital premium shares reserves earnings Total interests equity
(Note 34) (Note 36)
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
Transactions with Owners:

Issue of share capital:


- Warrants 730 1 - (61) - 670 - 670
- ESOS 24,075 1,338 - (1,324) - 24,089 - 24,089
- Share buy-back - - (634) - - (634) - (634)
24,805 1,339 (634) (1,385) - 24,125 - 24,125

ESOS expenses during the


financial year - - - 13,171 - 13,171 - 13,171
Lapsed ESOS - - - (769) 769 - - -
Dividends on ordinary
shares (Note 15) - - - - (74,676) (74,676) - (74,676)
Dividends paid to non-
controlling interests of
subsidiaries - - - - - - (6,221) (6,221)
Total transactions with
Owners 24,805 1,339 (634) 11,017 (73,907) (37,380) (6,221) (43,601)
Transfer pursuant
to Section 618 of
Companies Act 2016* 179,480 (179,480) - - - - - -
At 31 December 2017 736,069 - (55,411) 182,389 863,748 1,726,795 88,416 1,815,211

* Pursuant to Section 618 of the Companies Act 2016, any outstanding Share Premium accounts shall become part of Ordinary Share
Capital.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
170 K PJ HEALT HCARE BERHAD

C O N S O L I DAT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y

For the financial year ended 31 December 2016

Ordinary Non-
share Share Treasury Other Retained controlling Total
capital premium shares reserves earnings Total interests equity
(Note 34) (Note 36)
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
At 1 January 2016 527,246 147,827 (54,777) 156,708 694,579 1,471,583 88,442 1,560,025

Comprehensive income:
Net profit for the
financial year - - - - 149,195 149,195 6,680 155,875
Other comprehensive
income:
Currency translation
differences of foreign
subsidiaries - - - (71) - (71) - (71)
Revaluation surplus - - - 15,520 - 15,520 - 15,520
Reclassification of
unrealised gain
in relation to an
associate (Note 22) - - - (33,572) - (33,572) - (33,572)
Total other comprehensive
income - - - (18,123) - (18,123) - (18,123)
527,246 147,827 (54,777) 138,585 843,774 1,602,655 95,122 1,697,777

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 171

C O N S O L I DAT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y

For the financial year ended 31 December 2016 (Continued)

Ordinary Non-
share Share Treasury Other Retained controlling Total
capital premium shares reserves earnings Total interests equity
(Note 34) (Note 36)
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
Transactions with Owners:

Issue of share capital:


- Warrants 1 1 - (1) - 1 - 1
- ESOS 4,537 30,313 - (1,815) - 33,035 - 33,035
4,538 30,314 - (1,816) - 33,036 - 33,036

ESOS expenses during the


financial year - - - 27,818 - 27,818 - 27,818
Lapsed ESOS - - - (388) 388 - - -
Dividends on ordinary
shares (Note 15) - - - - (68,421) (68,421) - (68,421)
Dividends paid to non-
controlling interests of
subsidiaries - - - - - - (5,481) (5,481)
Total transactions with
Owners 4,538 30,314 - 25,614 (68,033) (7,567) (5,481) (13,048)
At 31 December 2016 531,784 178,141 (54,777) 164,199 775,741 1,595,088 89,641 1,684,729

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
172 K PJ HEALT HCARE BERHAD

C O M PA N Y S TAT E M E N T O F C H A N G E S I N E Q U I T Y
For the financial year ended 31 December 2017

Ordinary Share
share Share Treasury Warrant option Retained Total
capital premium shares reserves reserves earnings equity
(Note 34)
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Company
At 1 January 2017 531,784 178,141 (54,777) 31,692 50,111 111,187 848,138

Net profit for the financial year - - - - - 82,873 82,873

Transactions with Owners:


Issue of share capital:
- Warrants 730 1 - (61) - - 670
- ESOS 24,075 1,338 - - (1,324) - 24,089
- Share buy-back - - (634) - - - (634)
24,805 1,339 (634) (61) (1,324) - 24,125

Dividends on ordinary shares (Note 15) - - - - - (74,676) (74,676)


ESOS - expense during the financial year - - - - 13,171 - 13,171
Lapsed ESOS - - - - (769) 769 -
Total transactions with Owners 24,805 1,339 (634) (61) 11,078 (73,907) (37,380)
Transfer pursuant to Section 618 of
Companies Act 2016* 179,480 (179,480) - - - - -
At 31 December 2017 736,069 - (55,411) 31,631 61,189 120,153 893,631

* Pursuant to Section 618 of the Companies Act 2016, any outstanding Share Premium accounts shall become part of Ordinary Share
Capital.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 173

C O M PA N Y S TAT E M E N T O F C H A N G E S I N E Q U I T Y

For the financial year ended 31 December 2016

Ordinary Share
share Share Treasury Warrant option Retained Total
capital premium shares reserves reserves earnings equity
(Note 34)
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Company
At 1 January 2016 527,246 147,827 (54,777) 31,693 24,496 70,588 747,073
Net profit for the financial year - - - - - 108,632 108,632

Transactions with Owners:


Issue of share capital:
- Warrants 1 1 - (1) - - 1
- ESOS 4,537 30,313 - - (1,815) - 33,035
4,538 30,314 - (1) (1,815) - 33,036
Dividends on ordinary shares (Note 15) - - - - - (68,421) (68,421)
ESOS - expense during the financial year - - - - 27,818 - 27,818
Lapsed ESOS - - - - (388) 388 -
Total transactions with Owners 4,538 30,314 - (1) 25,615 (68,033) (7,567)
At 31 December 2016 531,784 178,141 (54,777) 31,692 50,111 111,187 848,138

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
174 K PJ HEALT HCARE BERHAD

S TAT E M E N T S O F C A S H F L O W S
For the financial year ended 31 December 2017

Group Company
2017 2016 2017 2016
Note RM’000 RM’000 RM’000 RM’000

Operating activities
Profit/(loss) before zakat and tax
- continuing operations 233,326 220,697 84,328 108,458
- discontinued operation 14 (8,050) (10,526) - -
225,276 210,171 84,328 108,458
Adjustments for:
Share of results of associates (39,540) (33,647) - -
Finance income 8 (13,948) (16,298) - -
Finance costs 8 82,260 83,137 18,477 15,011
Dividend income from subsidiaries - - (108,388) (141,546)
Trade receivables:
- Impairment 25 15,484 11,113 - -
- Reversal of impairment loss 25 (1,682) (957) - -
Impairment of goodwill 20 - 16,356 - -
Share based payments 13,171 27,818 1,785 4,300
(Gain)/loss on fair value on investment properties 18 (2,313) 92 - -
Gain on disposal of shares in associates (net) (1,524) (13,960) - -
Property, plant and equipment:
- Depreciation 17 127,875 129,874 - -
- Written-off 12 10,398 - -
- Loss/(gain) on disposal 614 (9,886) - -
Inventories written-off 213 186 - -
Amortisation of software development expenditure 19 3,090 2,145 - -
Operating profit/(loss) before working capital changes 408,988 416,542 (3,798) (13,777)
Changes in working capital:
Inventories (4,178) 748 - -
Receivables (61,017) (46,459) 24,729 (7)
Payables 131,264 (146,766) (2,176) (2,402)
Deferred revenue (8,340) (2,045) - -
Related companies - - (136,546) (102,124)
Cash flows generated from/(used in) operations 466,717 222,020 (117,791) (118,310)
Zakat paid (3,910) (3,807) (300) (280)
Income tax refund 2,187 8,907 - 108
Income tax paid (68,477) (83,898) (226) (454)
Net cash generated from/(used in) operating activities 396,517 143,222 (118,317) (118,936)

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 175

S TAT E M E N T S O F C A S H F L O W S

For the financial year ended 31 December 2017 (Continued)

Group Company
2017 2016 2017 2016
Note RM’000 RM’000 RM’000 RM’000

Investing activities
Additions to property, plant and equipment (450,796) (258,035) - -
Additions to intangible assets 19 (9,288) (11,942) - -
Purchase of available-for-sale financial assets 23 (2,532) (1,864) (2,532) (1,864)
Proceeds from disposal of property, plant and equipment 17 2,061 23,195 - -
Acquisition of subsidiaries, net of cash acquired 21 - 69 - -*
Subscription of share capital of subsidiaries 21 - - - (15,805)
Proceeds from sale of interest in subsidiaries - 254 - -
Proceeds from disposal of shares in associates 8,739 75,101 - -
Interest received 13,948 16,298 - -
(Increase)/decrease in deposits with licensed banks with
maturity of more than 3 months 27 (4,941) 2,519 - 528
Advances from subsidiaries - - - 20,162
Dividends received from associates/subsidiaries 23,390 22,889 108,388 141,546
Net cash (used in)/generated from investing activities (419,419) (131,516) 105,856 144,567

Financing activities
Grant income received 17 2,731 5,467 - -
Dividends paid to non-controlling interests (6,221) (5,481) - -
Issue of shares:
- Warrants 670 1 670 1
- ESOS 24,089 33,035 24,089 33,035
- Share buy-back (634) - (634) -
Borrowings:
- Drawdown 118,837 164,386 97,000 30,000
- Repayments (102,666) (132,208) - -
Interest paid (82,260) (83,137) (18,477) (15,011)
Dividends paid to shareholders (90,396) (70,882) (90,396) (70,882)
Designated account 27 3,001 (474) - -
Net cash (used in)/generated from financing activities (132,849) (89,293) 12,252 (22,857)

* Represents RM1

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
176 K PJ HEALT HCARE BERHAD

S TAT E M E N T S O F C A S H F L O W S

For the financial year ended 31 December 2017 (Continued)

Group Company
2017 2016 2017 2016
Note RM’000 RM’000 RM’000 RM’000

NET CHANGE IN CASH AND CASH EQUIVALENTS (155,751) (77,587) (209) 2,774

CURRENCY TRANSLATION DIFFERENCES 5,473 275 - -

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE


FINANCIAL YEAR 335,125 412,437 4,112 1,338
CASH AND CASH EQUIVALENTS AT END OF THE
FINANCIAL YEAR 27 184,847 335,125 3,903 4,112

NON-CASH TRANSACTIONS

Non–cash movement
Foreign
At Cash exchange New At
1.1.2017 flows movement leases 31.12.2017
RM’000 RM’000 RM’000 RM’000 RM’000

Current borrowings 320,832 28,820 (4,546) 3,169 348,275


Non-current borrowings 1,242,313 (12,649) - 12,676 1,242,340
1,563,145 16,171 (4,546) 15,845 1,590,615

Cash and cash equivalents (other than bank


overdrafts) (347,738) 170,838 (10,041) - (186,941)
Bank overdrafts 12,613 (10,519) - - 2,094
Cash and cash equivalents (335,125) 160,319 (10,041) - (184,847)
1,228,020 176,490 (14,587) 15,845 1,405,768

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 177

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For the financial year ended 31 December 2017

1 GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa
Malaysia Securities Berhad (“Bursa Malaysia”).

The address of registered office of the Company is Level 16, Menara KOMTAR, Johor Bahru City Centre, 80000 Johor Bahru, Johor.

The address of principal place of business of the Company is Level 12, Menara KPJ, Jalan Tun Razak, 50400 Kuala Lumpur.

The Directors regard Johor Corporation, a body corporate established under the Johor Corporation Enactment No. 4, 1968
(as amended by the Enactment No. 5, 1995), as the ultimate holding corporation.

The principal activities of the Company are investment holding and provision of management services to subsidiaries. The principal
activities of the subsidiaries are mainly the operation of specialist hospitals. The details of the principal activities of the subsidiaries are
disclosed in Note 21 to the financial statements. There have been no significant changes in the nature of these activities during the
financial year other than the discontinued operation as disclosed in Note 14.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution on 25 February 2018.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with the Malaysian Financial
Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in
Malaysia.

The financial statements have been prepared under the historical cost convention except as disclosed in the summary of
accounting policies below.

The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires
Directors to exercise their judgement in the process of applying the Group and the Company’s accounting policies. Although
these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual results may differ.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 6.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000)
except when otherwise indicated.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
178 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Standards, amendments to published standards and interpretations that are effective

The Group has applied the following amendments for the first time for the financial year beginning on 1 January 2017:

• Amendments to MFRS 107 ‘Statement of Cash Flows – Disclosure Initiative’


• Amendments to MFRS 112 ‘Income Taxes – Recognition of Deferred Tax Assets for Unrealised Losses’
• Annual Improvements to MFRSs 2014 – 2016 Cycle: MFRS 12 ‘Disclosures of Interests in Other Entities’

The adoption of the Amendments to MFRS 107 has required additional disclosure of changes in liabilities arising from financing
activities. Other than that, the adoption of these amendments did not have any impact on the current period or any prior period
and is not likely to affect future periods.

2.3 Standards and amendments that have been issued but not yet effective

A number of new standards and amendments to standards and interpretations are effective for financial year beginning after
1 January 2017. None of these is expected to have a significant effect on the consolidated financial statements of the Group,
except the following set out below:

• MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace MFRS 139 “Financial Instruments: Recognition
and Measurement”.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement
categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive
income (“OCI”). The basis of classification depends on the entity’s business model and the cash flow characteristics of the
financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable
option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument
is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent
principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most
financial liabilities, with bifurcation of embedded derivatives. The main change are:

• For financial liabilities classified as fair value to profit and loss, the fair value changes due to own credit risk should be
recognised directly to other comprehensive income. There is no subsequent recycling to profit or loss.
• When a financial liability measured at amortised cost is modified without this resulting in the recognition, a gain or
loss, being the difference between the original contractual cash flows and the modified cash flows discounted at the
original effective interest rate, should be recognised immediately in profit or loss.

MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS
139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit
losses are recognised.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 179

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3 Standards and amendments that have been issued but not yet effective (continued)

• MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace MFRS 139 “Financial Instruments: Recognition
and Measurement”. (continued)

The Group’s assessment of the impact of MFRS 9 is set out below:

Description Explanation

Nature of change MFRS 9 addresses the classification, measurement and de-recognition of financial assets
and financial liabilities, introduces new rules for hedge accounting and a new impairment
model for financial assets.

Impact The Group has reviewed its financial assets and financial liabilities and expected no
material impact upon the adoption of the standard except for the following:

The new impairment model

The standard requires the recognition of impairment provisions based on expected


credit losses (“ECL”) rather than only incurred credit losses as is the case under MFRS
139. It applies to financial assets classified at amortised cost, debt instruments measured
at fair value through OCI, contract assets under MFRS 15 Revenue from Contracts
with Customers, lease receivables, loan commitments and certain financial guarantee
contracts. Based on the assessments undertaken to date, the Group expects a small
increase in the loss allowance for trade receivables.

The new standard also introduces expanded disclosure requirements and changes
in presentation. These are expected to change the nature and extent of the Group’s
disclosures about its financial instruments particularly in the year of the adoption of the
new standard.

Date of adoption by the Group Mandatory for financial years commencing on or after 1 January 2018. The Group will
apply the new rules retrospectively from 1 January 2018, with the practical expedients
permitted under the standard. Comparatives for 2017 will not be restated.

• MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January 2018) replaces MFRS 118 ‘Revenue’ and MFRS
111 ‘Construction contracts’ and related interpretations.

The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to
the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct
the use of and obtain the benefits from the goods or services.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
180 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3 Standards and amendments that have been issued but not yet effective (continued)

• MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January 2018) replaces MFRS 118 ‘Revenue’ and MFRS
111 ‘Construction contracts’ and related interpretations. (continued)

A new five-step process is applied before revenue can be recognised:


(a) Identify contracts with customers
(b) Identify the separate performance obligations
(c) Determine the transaction price of the contract
(d) Allocate the transaction price to each of the separate performance obligations; and
(e) Recognise the revenue as each performance obligation is satisfied.

Key provisions of the new standard are as follows:

(a) Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the
contract price must generally be allocated to the separate elements.
(b) If the consideration varies (such as for incentives, rebates, performance fees, royalties, success of an outcome etc),
minimum amounts of revenue must be recognised if they are not at significant risk of reversal.
(c) The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point
in time at the end of a contract may have to be recognised over the contract term and vice versa.
(d) There are new specific rules on licenses, warranties, non-refundable upfront fees, and consignment arrangements, to
name a few.
(e) As with any new standard, there are also increased disclosures.

The Group’s assessment of the impact of MFRS 15 is set out below:

Description Explanation

Nature of change The new standard is based on the principle that revenue is recognised when control of a
good or service transfers to a customer.

The standard permits either a full retrospective or a modified retrospective approach for
the adoption.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 181

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3 Standards and amendments that have been issued but not yet effective (continued)

• MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January 2018) replaces MFRS 118 ‘Revenue’ and MFRS
111 ‘Construction contracts’ and related interpretations. (continued)

The Group’s assessment of the impact of MFRS 15 is set out below (continued):

Description Explanation

Impact The Group has assessed the effects of applying the new standard to the Group’s financial
statements and believe that there will not be any material impact on tuition fee, rental
income, dividend income and management fee upon the adoption of the new standard
except for the following key areas:

• Recognition of revenue derives from new customers with no historical records.


The standard permits recognition of revenue, if it is probable that consideration
may be received. Without historical information and robust credit assessment
being carried out, revenue recognised from this group of customer may only be
recognised upon receipts of payment. This will result in non-recognition of revenue
despite services have been rendered.
• Recognition of revenue from packages. For this group of customer, revenue were
recognised upon services rendered. However, MFRS 15 requires allocation of
transaction prices to performance obligation (“PO”) after discounts and resulted in
revenue being deferred for PO yet to be satisfied. The accrued revenue recognised
monthly may be reduced after reflecting the elements of discounts as required by
the new standards.
• Presentation of contract assets and contract liabilities in the Statements of
Financial Position. MFRS 15 requires separate presentation of contract assets and
contract liabilities in the Statements of Financial Position. This will result in some
reclassifications as of 1 January 2018 in relation to contract with agents for bringing
customers to hospitals (Contract Asset) and contract liabilities in relation to POs yet
to be satisfied.

The new standard also expand the disclosure of movement in contract liability which
relates to the remaining POs that has yet to be satisfied to the customers.
Date of adoption by the Group Mandatory for financial years commencing on or after 1 January 2018. The Group
intends to adopt the standard using the modified retrospective approach which means
that the cumulative impact of the adoption will be recognised in retained earnings as of
1 January 2018 and that comparatives will not be restated.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
182 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3 Standards and amendments that have been issued but not yet effective (continued)

• Amendments to MFRS 140 ‘Classification on ‘Change in Use’ – Assets transferred to, or from, Investment Properties’ (effective
from 1 January 2018) clarify that to transfer to, or from investment properties there must be a change in use. A change in
use would involve an assessment of whether a property meets, or has ceased to meet, the definition of investment property.
The change must be supported by evidence that the change in use has occurred and a change in management’s intention
in isolation is not sufficient to support a transfer of property.

The amendments also clarify the same principle applies to assets under construction.

The effect of the above amendment is currently being assessed by the Directors.

• IC Interpretation 22 ‘Foreign Currency Transactions and Advance Consideration’ (effective from 1 January 2018) applies
when an entity recognises a non-monetary asset or non-monetary liability arising from the payment or receipt of advance
consideration. MFRS 121 requires an entity to use the exchange rate at the ‘date of the transaction’ to record foreign currency
transactions.

IC Interpretation 22 provides guidance how to determine ‘the date of transaction’ when a single payment/receipt is made,
as well as for situations where multiple payments/receipts are made.

The date of transaction is the date when the payment or receipt of advance consideration gives rise to the non-monetary
asset or non-monetary liability when the entity is no longer exposed to foreign currency exchange risk.

If there are multiple payments or receipts in advance, the entity should determine the date of the transaction for each
payment or receipt.

An entity has the option to apply IC Interpretation 22 retrospectively or prospectively.

The effect of the above interpretation is currently being assessed by the Directors.

• Amendments to MFRS 9 ‘Prepayment features with negative compensation’ (effective 1 January 2019) allow companies to
measure some prepayable financial assets with negative compensation at amortised cost. Negative compensation arises
where the contractual terms permit the borrower to prepay the instrument before its contractual maturity, but the prepayment
amount could be less than the unpaid amounts of principal and interest. To qualify for amortised cost measurement, the
negative compensation must be reasonable compensation for early termination of the contract, and the asset must be held
within a ‘held to collect’ business model.

The amendments will be applied retrospectively.

The effect of the above amendment is currently being assessed by the Directors.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 183

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3 Standards and amendments that have been issued but not yet effective (continued)

• MFRS 16 ‘Leases’ (effective from 1 January 2019) supersedes MFRS 117 ‘Leases’ and the related interpretations.

Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for
a period of time in exchange for consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases
(off balance sheet). MFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability
reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in MFRS 116 ‘Property, Plant and Equipment’ and the
lease liability is accreted over time with interest expense recognised in the income statement.

For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating
leases or finance leases and account for them differently.

The effect of the above new standard is currently being assessed by the Directors.

• Amendments to MFRS 128 ‘Long-term Interests in Associates and Joint Ventures’ (effective from 1 January 2019) clarify that
an entity should apply MFRS 9 ‘Financial Instruments’ (including the impairment requirements) to long-term interests in an
associate or joint venture, which are in substance form part of the entity’s net investment, for which settlement is neither
planned nor likely to occur in the foreseeable future.

In addition, such long-term interest are subject to loss allocation and impairment requirements in MFRS 128.

The amendments shall be applied retrospectively.

The effect of the above amendment is currently being assessed by the Directors.

• Annual Improvements to MFRSs 2015 – 2017 Cycle:

Amendments to MFRS 3 ‘Business Combinations’ (effective from 1 January 2019) clarify that when a party obtains control
of a business that is a joint operation, the acquirer should account the transaction as a business combination achieved in
stages. Accordingly it should remeasure its previously held interest in the joint operation (rights to the assets and obligations
for the liabilities) at fair value on the acquisition date.

Amendments to MFRS 11 ‘Joint Arrangements’ (effective from 1 January 2019) clarify that when a party obtains joint control
of a business that is a joint operation, the party should not remeasure its previously held interest in the joint operation.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
184 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3 Standards and amendments that have been issued but not yet effective (continued)

• Annual Improvements to MFRSs 2015 – 2017 Cycle (continued):

Amendments to MFRS 112 ‘Income Taxes’ (effective from 1 January 2019) clarify that where income tax consequences of
dividends on financial instruments classified as equity is recognised (either in profit or loss, other comprehensive income
or equity) depends on where the past transactions that generated distributable profits were recognised. Accordingly, the
tax consequences are recognised in profit or loss when an entity determines payments on such instruments are distribution
of profits (that is, dividends). Tax on dividend should not be recognised in equity merely on the basis that it is related to a
distribution to owners.

Amendments to MFRS 123 ‘Borrowing Costs’ (effective from 1 January 2019) clarify that if a specific borrowing remains
outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

• IC Interpretation 23 ‘Uncertainty over Income Tax Treatments’ (effective 1 January 2019) provides guidance on how to
recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment.

If an entity concludes that it is not probable that the tax treatment will be accepted by the tax authority, the effect of the
tax uncertainty should be included in the period when such determination is made. An entity shall measure the effect of
uncertainty using the method which best predicts the resolution of the uncertainty.

IC Interpretation 23 will be applied retrospectively.

The effect of the above interpretation is currently being assessed by the Directors.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting
date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared
for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar
circumstances.

The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (such as existing rights that give it the current ability to direct the relevant activities of the investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 185

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.4 Basis of consolidation (continued)

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing
whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
(ii) Potential voting rights held by the Company, other vote holders or other parties;
(iii) Rights arising from other contractual arrangements; and
(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses
control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-
group transactions are eliminated in full.

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted
to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in retained
earnings and attributed to Owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value
of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and
liabilities of the subsidiary and any non-controlling interest, is recognised in the income statement. The subsidiary’s cumulative
gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to the income
statement or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former
subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

2.5 Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling
interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests
in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred
are expensed and included in administrative expenses.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in
accordance with MFRS 139 either in the income statement or as a change to other comprehensive income. If the contingent
consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances
where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate
MFRS.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
186 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.5 Business combinations (continued)

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value
and any resulting gain or loss is recognised in the income statement.

Business combinations involving entities under common control are accounted for by applying the merger method. The assets
and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements
of the controlling holding company. Any difference between the consideration paid and the share capital of the ‘acquired’ entity
is reflected within equity as merger reserve/deficit. The income statement reflects the results of the combining entities for the
full financial year, irrespective of when the combination takes place. Comparatives are presented if the entities had always been
combined since the date the entities had come under common control.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration
is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in the income statement. The
accounting policy for goodwill is disclosed in Note 2.10.

Gains or losses on disposal of subsidiaries include the carrying amount of goodwill relating to the subsidiaries sold.

2.6 Subsidiaries

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts are included in the
income statement.

Subsidiaries are consolidated using the acquisition method of accounting except for Johor Specialist Hospital Sdn Bhd and Ipoh
Specialist Hospital Sdn Bhd which were consolidated using the merger method of accounting as disclosed in Note 2.5.

2.7 Investments in associates

An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not control or joint control over those policies.

The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.

On acquisition of an investment in an associate, any excess of the cost of investment over the Group’s share of the net fair value
of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the
investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the
cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination
of the Group’s share of the associate’s income statement for the period in which the investment is acquired.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 187

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.7 Investments in associates (continued)

An associate is equity accounted for from the date on which the investee becomes an associate.

Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount of the investment is
adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to
the associate is included in the carrying amount of the investment and is not tested for impairment individually.

The income statement reflects the Group’s share of the results of operations of the associate. Any change in OCI of those
investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of
the associate, the Group recognises its share of any changes, when applicable, in other comprehensive income. Unrealised gains
and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the
associate.

Dividends received or receivable from an associate is recognised as a reduction in the carrying amount of the investment.

The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the income statement outside
operating profit and represents the income statement after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments
are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its
investment in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment
in the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between
the recoverable amount of the associate and its carrying value, then recognises the loss as ‘Share of profit of an associate’ in the
income statement.

2.8 Property, plant and equipment

Property, plant and equipment are initially stated at cost, net of the amount of goods and services tax (“GST”), except where the
amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the
Government, the GST is recognised as part of the cost of acquisition of the property, plant and equipment.

The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Cost also includes
borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset. See accounting
policy for borrowing cost disclosed in Note 2.22.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
188 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.8 Property, plant and equipment (continued)

Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated depreciation
and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise,
when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement
if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the income statement as incurred.
Freehold land, long leasehold land and buildings are measured at fair value less accumulated depreciation on long leasehold
land and buildings and impairment losses recognised after the date of the revaluation. Valuations are performed with sufficient
regularity to ensure that the carrying amount does not differ materially from the fair value of the freehold land, long leasehold
land and buildings at the reporting date.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation
reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the income
statement, in which case the increase is recognised in the income statement. A revaluation deficit is recognised in the income
statement, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the
net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in
respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.

Freehold land is not depreciated as it has an infinite life. Other property, plant and equipment are depreciated on the
straight-line method to allocate the cost or the revalued amounts, to their residual values over their estimated useful lives,
summarised as follows:

Buildings 2%
Renovation 8% - 20%
Medical and other equipment 7.5% - 33.33%
Furniture and fittings 10% - 20%
Vehicles 10% - 20%
Computers 10% - 20%

Capital work-in-progress included in plant and equipment are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at of each financial reporting period, and adjusted
prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss on derecognition of the asset is included in the income statement in the period the asset is
derecognised.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 189

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.9 Investment properties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment
properties are measured at fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference
to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an
appropriate recognised professional qualification and recent experience in the location and category of the properties being
valued. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in
the period in which they arise.

The fair value of investment property reflects, among other things, rental income from current leases and other assumptions that
market participants would make when pricing the property under current market conditions.

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property
basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating
lease classified as an investment property is carried at fair value.

Investment properties are derecognised either when they have been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal
of an investment property is recognised in the income statement in the period of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to
owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer
from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy
for property, plant and equipment set out in Note 2.8 up to the date of change in use.

2.10 Intangible assets

(a) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment
losses. For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the
Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually according to the basis
set out in Note 2.11 and whenever there is an indication that the cash-generating unit may be impaired, by comparing the
carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-
generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment
loss is recognised in the income statement. Impairment losses recognised for goodwill are not reversed in subsequent
periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed
of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on
the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of
the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance
with the accounting policy set out in Note 2.33.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
190 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.10 Intangible assets (continued)

(b) Other intangible assets



Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either
finite or indefinite. Intangible assets with finite lives are amortised on the straight-line basis over the estimated economic useful
lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible asset with a finite useful life are reviewed at each reporting date.

Software development expenditure

Software development is stated at cost less accumulated amortisation and impairment losses. The expenditure represents development
work carried out in developing specialised software packages for use in the Group’s business and is capitalised if the product is technically
feasible and the Group has sufficient resources to complete the development. It is amortised over the straight-line basis over a period of
5 to 10 years. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.11. The expenditure
capitalised includes cost to purchase the software and direct cost such as salaries and hardware usage costs specifically attributable to
each project. Cost incurred in software development which have ceased to be technically viable, are written off.

2.11 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill of intangible assets not ready to use, are not subject to amortisation and are tested
annually for impairment.

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an
annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value- in-use. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value-in-use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect
of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then,
to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in the income statement except for assets that are previously revalued where the revaluation was taken to
other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous
revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer
exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is
increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognised previously. Such reversal is recognised in the income statement unless the asset is measured at revalued
amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 191

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.12 Financial assets

(a) Classification

Financial assets are recognised in the statement of financial position when, and only when, the Group and the Company become a party
to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus,
in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include loans and
receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired.

(1) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains
and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the
amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting
date which are classified as non-current.

(2) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified as financial assets
at fair value through profit or loss, loans and receivables or held-to-maturity investments.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value
of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and
losses on monetary instruments and interest calculated using the effective interest method are recognised in the income statement.
The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a
reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method
is recognised in the income statement. Dividends on an available-for-sale equity instrument are recognised in the income statement
when the Group’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after
the reporting date.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a
financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative
gain or loss that had been recognised in other comprehensive income is recognised in the income statement.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally
established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are
recognised or derecognised on the trade date that is, the date that the Group and the Company commit to purchase or sell the asset.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
192 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.12 Financial assets (continued)

(b) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell
the asset.

Financial assets are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset
for all financial assets not carried at fair value through profit or loss. Financial assets at fair value through profit or loss are initially recognised
at fair value, and transaction costs are expensed in the income statement.

(c) Subsequent measurement – gains and losses

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and
receivables and held-to-maturity financial assets are subsequently carried at amortised cost using the effective interest method.

Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interest and
dividend income are recognised in the income statement in the period in which the changes arise.

Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income, except for impairment losses
(see accounting policy Note 2.11) and foreign exchange gains and losses on monetary assets (Note 2.33).

Interest and dividend income on available-for-sale financial assets are recognised separately in the income statement. Interest on available-
for-sale debt securities calculated using the effective interest method is recognised in the income statement. Dividends income on
available-for-sale equity instruments are recognised in the income statement when the Group’s right to receive payments is established.

(d) Subsequent measurement - Impairment

Assets carried at amortised cost

The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets
is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence
of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty,
default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation,
and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash
flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The
carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement. If ‘loans and receivables’ or a
‘held-to-maturity investment’ has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest
rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value
using an observable market price.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 193

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.12 Financial assets (continued)

(d) Subsequent measurement - Impairment (continued)

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in the income statement.

When an asset is uncollectible, it is written-off against the related allowance account. Such assets are written-off after all the necessary
procedures have been completed and the amount of the loss has been determined.

Assets classified as available-for-sale

The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or a group of financial
assets is impaired.

For debt securities, the Group uses criteria and measurement of impairment loss applicable for ‘assets carried at amortised cost’ above.
If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in the income statement, the impairment loss is reversed through
profit or loss.

In the case of equity securities classified as available-for-sale, in addition to the criteria for ‘assets carried at amortised cost’ above, a
significant or prolonged decline in the fair value of the security below its cost is also considered as an indicator that the assets are impaired.
If any such evidence exists for available-for-sale financial assets, the cumulative loss that had been recognised directly in equity is removed
from equity and recognised in the income statement. The amount of cumulative loss reclassified to the income statement is the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income
statement. Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed
through profit or loss in subsequent periods.

(e) De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and
the Group has transferred substantially all risks and rewards of ownership.

Receivables that are factored out to banks and other financial institutions with recourse to the Group are not derecognised until the
recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received
from the financial institutions is recorded as borrowings.

When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other comprehensive income are
reclassified to the income statement.

2.13 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event
of default, insolvency or bankruptcy.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
194 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.14 Financial guarantee contracts

Financial guarantee contracts are contracts that require the Group or Company to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially
measured at fair value and subsequently at the higher of the amount determined in accordance with MFRS 137 “Provisions,
contingent liabilities and contingent assets” and the amount initially recognised less cumulative amortisation, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual
payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount
that would be payable to a third party for assuming the obligations.

2.15 Leases

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased
item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the
minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged to the income statement.

Leased assets are depreciated over the estimated useful lives of the assets. However, if there is no reasonable certainty that
the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated
useful life and the lease term.

Operating lease payments are recognised as an expense in the income statement on the straight-line basis over the lease
term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the
lease term on the straight-line basis. Contingent rents, if any, are charged as expenses in the periods in which they are
incurred.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating
leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same bases as rental income.

2.16 Trade and other receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Other receivables generally arise from transactions outside the usual operating activities of the Group. If collection is expected
in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are
presented as non-current assets.

Trade and other receivables are recognised initially at fair value. Trade and other receivables are recognised initially at fair
value, with the amount of goods and services tax (“GST”) included. The net amount of GST recoverable from the government is
presented as GST receivable within other receivables in the statement of financial position.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 195

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.16 Trade and other receivables (continued)

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows which are recoverable
from, or payable to, the government are classified as operating cash flows.

After recognition, trade and other receivables are subsequently measured at amortised cost using the effective interest method,
less provision for impairment. See accounting policy Note 2.12(d) on impairment of financial assets.

2.17 Non-current assets (or disposal groups) classified as assets held for sale

Non-current assets (or disposal groups) are classified as assets held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly
probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance
with applicable MFRS. Then, on initial classification as held for sale, non-current assets (other than investment properties, deferred
tax assets, employee benefits assets, financial assets and inventories) are measured in accordance with MFRS 5 that is at the lower
of carrying amount and fair value less costs to sell. Any differences are included in the income statement.

The amendments to MFRS 12 clarified that disclosure requirements of MFRS 12 “Disclosures of Interests in Other Entities” in the
Annual Improvements to MFRSs 2014 – 2016 Cycle are applicable to interests in entities that are classified as held for sale (i.e.
subsidiaries, joint ventures and associates), except for summarised financial information in MFRS 12.B10 to B16.

2.18 Inventories

Inventories are stated at the lower of cost (determined on the weighted average basis) and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.

Costs of purchased inventory are determined after deducting rebates, discounts and the amount of goods and services tax
(“GST”), except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is
not recoverable from the government, the GST is recognised as part of the cost of purchased inventory.

2.19 Cash and cash equivalents

For the purpose of the statement of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments
rather than for investment or other purposes. Cash and cash equivalents comprise cash on hand, deposits held at call with financial
institutions, other short term, highly liquid investments with original maturities of 3 months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

In the statement of financial position, banks overdrafts are shown within borrowings in current liabilities.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
196 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.20 Trade payables

Trade payables represent liabilities for goods or services provided to the Group prior to the end of reporting period which are
unpaid. Trade payables are classified as current liabilities unless payment is not due within 12 months after the reporting period.
If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value, with the amount of goods and services tax (“GST”) included. The net amount
of GST payable to the government is presented as GST payable within accruals in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows which are recoverable
from, or payable to, the government are classified as operating cash flows.

2.21 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of
a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the
Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified
as either financial liabilities at fair value through the profit or loss or other financial liabilities.

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the
hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value,
with any resultant gains or losses recognised in the income statement. Net gains or losses on derivatives include exchange
differences.

The Group and the Company have not designated any financial liabilities at fair value through profit or loss.

(b) Other financial liabilities

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at
amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in the income statement when the liabilities are derecognised,
and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 197

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.22 Borrowings and borrowing costs

(a) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred.

Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the
redemption amount is recognised in the income statement over the period of the borrowings using the effective interest
method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To
the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as
a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Where the terms of a financial liability are renegotiated and the Company issues equity instruments to a creditor to extinguish
all or part of the liability (debt for equity swap), a gain or loss is recognised in the income statement, which is measured as
the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the end of the reporting period.

(b) Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to
the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the period they are incurred. Borrowing costs consist of interest and other costs
that the Group and the Company incurred in connection with the borrowing of funds.

2.23 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by
the reporting date.

Current taxes are recognised in the income statement except to the extent that the tax relates to items recognised outside
the income statement, either in other comprehensive income or directly in equity.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
198 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.23 Income taxes (continued)

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the
timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused
tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary
differences, and the future carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred
tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the
reporting date.

Deferred tax relating to items recognised outside the income statement is recognised outside income statement. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in
equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 199

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.24 Employee benefits

(a) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the period in which the associated
services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual
leave are recognised when services are rendered by employees that increase their entitlement to future compensated
absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences
occur.

(b) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The
Malaysian companies in the Group make contributions to the Employees Provident Fund in Malaysia, a defined contribution
pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in
which the related service is performed.

2.25 Share-based payments - Employee options

The Group operates an equity-settled, share-based compensation plan under which the entity receives services from employees
as consideration for equity instruments (options) of the Group. The fair value of the options granted in exchange for the services
of the employees are recognised as employee benefit expense with a corresponding increase to share option reserve within
equity. The total amount to be expensed is determined by reference to the fair value of the options granted:

- including any market performance conditions (for example, an entity’s share price);
- excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth
targets and remaining an employee of the entity over a specified time period); and
- including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding of
shares for a specific period of time).

Non-market vesting conditions and service conditions are included in assumptions about the number of options that are expected
to vest.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of the reporting period, the Group revises its estimates of the number of options that are expected
to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding adjustment to share option reserve in equity.

In circumstances where employees provide services in advance of the grant date, the grant date fair value is estimated for the
purposes of recognising the expense during the period between service commencement period and grant date.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share premium when the options are exercised. When options are not
exercised and lapse, the share option reserve is transferred to retained earnings.

In its separate financial statements of the Company, the grant by the Company of options over its equity instruments to the
employees of subsidiary in the Group is treated as a capital contribution to the subsidiary. The fair value of options granted to
employees of the subsidiary in exchange for the services of the employees to the subsidiary are recognised as investment in
subsidiary, with a corresponding credit to equity of the Company.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
200 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.26 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated
reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an
outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of
money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the
liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.27 Resident upfront contributions

Resident upfront contributions are measured at the principal amount less any accumulated deferred management fees. Resident
upfront contributions are non-interest bearing and are payable at the end of the resident contract. Average tenure periods for
residents are for an extended period of time greater than one year, however, they are classified as current liabilities because the
resident may exit the contract at any point of time.

2.28 Contingent liabilities

The Group does not recognise contingent liabilities but discloses their existence in the notes to the financial statements. A
contingent liability is a possible obligation that arises from past events whose crystallisation will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not
recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability
also arises in the extremely rare circumstances where there is a liability that is not recognised because it cannot be measured
reliably. However, contingent liabilities do not include financial guarantee contracts.

2.29 Current versus non-current classification

The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is
current when it is:

(i) expected to be realised or intended to be sold or consumed in normal operating cycle;


(ii) held primarily for the purpose of trading;
(iii) expected to be realised within twelve months after the reporting period; or
(iv) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.

All other assets are classified as non-current.

A liability is current when:

(i) it is expected to be settled in normal operating cycle;


(ii) it is held primarily for the purpose of trading;
(iii) it is due to be settled within twelve months after the reporting period; or
(iv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 201

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.30 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after
deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the fair value of proceeds received, net of directly attributable incremental transaction costs.
Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are
declared.

2.31 Treasury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration
paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total
equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of treasury shares. When
treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in
equity.

2.32 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(a) Sale of goods and rendering of services

Revenue from hospital operations comprises inpatient and outpatient hospital charges, consultation fees, and sales of
pharmaceutical products, medical supplies and surgical products. These are recognised when services are rendered and
goods are delivered, net of discounts, rebates and returns.

(b) Wellness subscription fees

Wellness subscription fees are recognised in the period the services are provided.

(c) Tuition fees

Revenue from tuition fees are recognised over the period of instruction whereas non-refundable registration and enrolment
fees are recognised on a receipt basis.

(d) Aged care revenue

(i) Management fees represent amounts charged to residents at the retirement village under the long-term management
agreements. Deferred management fees are recognised upon performance of services, calculated in accordance with
terms stipulated in resident contracts.

(ii) Resident fees received from services rendered are recognised in the income statement only when it is probable that
the economic benefits associated with the transactions will flow to the Group.

(iii) Subsidies that compensate the subsidiary for expenses incurred are recognised in the income statement as the
services are rendered.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
202 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.32 Revenue recognition (continued)

(e) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

(f) Management fees

Management fees represent fees charged to subsidiaries for assisting in the management of the subsidiaries and these are
recognised upon performance of services.

(g) Interest income

Interest income is recognised on the accrual basis using the effective interest method.

(h) Rental income

Rental income receivable under operating lease is recognised on the straight-line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the total rental income over the term of the lease. Contingent rentals
are recognised as income in the reporting period in which they are earned.

2.33 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in
Ringgit Malaysia (RM), which is also the Company’s functional currency.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries
and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the
transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange
ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are
translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign
currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are
recognised in the income statement except for exchange differences arising on monetary items that form part of the Group’s
net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under
foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to the
income statement of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in the income
statement for the period except for the differences arising on the translation of non-monetary items in respect of which
gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also
recognised directly in equity.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 203

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.33 Foreign currency (continued)

(c) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date
and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising
on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative
amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve
relating to that particular foreign operation is recognised in the income statement.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of
the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing
rate at the reporting date.

2.34 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which
are independently managed by the respective segment managers responsible for the performance of the respective
segments under their charge. The segment managers’ report directly to the Executive Committee, the chief operating
decision maker, who regularly reviews the segment results in order to allocate resources to the segments and to assess the
segment performance.

2.35 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:

(i) In the principal market for the asset or liability, or

(ii) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participant act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset
in its highest and best use.

The Group uses valuation techniques that appropriate in circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
204 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.35 Fair value measurement (continued)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

(i) Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

(ii) Level 2 – Valuation techniques for the lowest level input that is significant to the fair value measurement is directly or indirectly
observable.

(iii) Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For the purposes of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the assets or liabilities and the level of the fair value hierarchy as explained above.

2.36 Government grants

Grants from the government are recognised at their fair values where there is a reasonable assurance that the grants will be
received and the Group will comply with all attached conditions.

Government grants relating to costs are recognised in the income statement over the periods to match the related costs for which
the grants are intended to compensate.

Government grants relating to the purchase of assets are presented as a reduction of the carrying amount of the related assets.
The government grant is recognised in the income statement over the life of the related property, plant and equipment as a
reduced depreciation expense.

2.37 Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:


- the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares
- by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements
in ordinary shares issued during the year and excluding treasury shares.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
- the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.

2.38 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the
entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 205

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key
financial risks include credit risk, liquidity risk, interest rate risk and foreign currency exchange risk.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the
objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations.
The Group’s and the Company’s exposure to credit risk arises mainly from trade and other receivables, cash and cash equivalents,
and deposits with financial institutions. Risk arising from these are minimised through effective monitoring of receivable accounts
that exceeded the stipulated credit terms. Credit limits are set and credit history is reviewed to minimise potential losses. The
Group has no significant concentration of credit risk with any single customer.

The Group seeks to invest cash assets safely and profitability and buys insurance to protect itself against insurable risk in this regard,
counterparties are assessed for credit limits that are set to minimise any potential losses. The Group’s cash and cash equivalents
and short term deposits are placed with creditworthy financial institutions and the risks arising there from are minimised in view
of the financial strength of these financial institutions.

The Company provides unsecured financial guarantee to banks in respect of banking facilities granted to a subsidiary. The
Company monitors on an ongoing basis the results of the subsidiary and the repayment made by the subsidiary. As at the
reporting date, there is no indication that the subsidiary would default on repayment. The financial guarantees have not been
recognised since the fair value on initial recognition is not material.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of
each class of financial assets recognised in the statement of financial position. In addition, the Company is exposed to credit risk
arising from the financial guarantee contracts as disclosed in Note 3(b).

Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 25.

Financial assets that are either past due or impaired

Information regarding trade receivables that are either past due or impaired is disclosed in Note 25. Apart from those disclosed
above, none of other financial assets is either past due or impaired.

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage
of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial
assets and liabilities.

Cash flow forecasting is performed by Group finance. Group finance monitors rolling forecasts of the Group’s liquidity requirements
to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed
borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities.
Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance and compliance with internal
statements of financial position ratio targets.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
206 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(b) Liquidity risk (continued)

Surplus cash held by the subsidiaries over and above balance required for working capital management are transferred to the
Group treasury. Group treasury invests surplus cash in financial instruments with appropriate maturities or sufficient liquidity to
provide sufficient headroom as determined by the abovementioned forecasts.

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and of the Company’s liabilities at the reporting date based on
contractual undiscounted repayment obligations.

On demand
or within Over
1 year 1 - 5 years 5 years Total
2017 RM’000 RM’000 RM’000 RM’000

Group
Trade and other payables 452,847 30,299 - 483,146
Borrowings* 364,465 1,046,750 280,312 1,691,527
Deposits - - 14,096 14,096
Provision for retirement benefits - - 2,616 2,616
Total undiscounted financial liabilities 817,312 1,077,049 297,024 2,191,385

Company
Trade and other payables 18,354 - - 18,354
Amounts due to subsidiaries 157,136 213,553 3,498 374,187
Borrowings 269,182 - - 269,182
Financial guarantee contracts** 966,815 - - 966,815
Total undiscounted financial liabilities 1,411,487 213,553 3,498 1,628,538

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 207

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(b) Liquidity risk (continued)

Analysis of financial instruments by remaining contractual maturities (continued)

On demand
or within Over
1 year 1 - 5 years 5 years Total
2016 RM’000 RM’000 RM’000 RM’000

Group
Trade and other payables 490,922 - - 490,922
Borrowings 335,280 539,828 806,724 1,681,832
Deposits - - 13,930 13,930
Provision for retirement benefits - - 2,548 2,548
Total undiscounted financial liabilities 826,202 539,828 823,202 2,189,232

Company
Trade and other payables 16,233 - - 16,233
Amounts due to subsidiaries 174,280 246,289 5,327 425,896
Borrowings 166,464 - - 166,464
Financial guarantee contracts** 979,825 - - 979,825
Total undiscounted financial liabilities 1,336,802 246,289 5,327 1,588,418

* Excludes borrowings presented in liabilities associated with assets held for sale
** Related to Islamic Medium Term Notes (Note 30)

The Group has total undrawn borrowing facilities amounting to RM0.81 billion (2016: RM0.93 billion) as at 31 December 2017.

(c) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of the Group’s and of the Company’s financial instruments will
fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily from their borrowings. The Group’s policy is to
manage interest cost using a mix of fixed and floating rate debts.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 25 basis points (2016: 10 basis points) lower/higher, with all other variables held
constant, the Group’s profit for the financial year would have been RM929,459 (2016: RM407,229) higher/lower, arising mainly
as a result of lower/higher interest expenses on floating rate loans and borrowings. The assumed movement in interest rate for
interest rate sensitivity analysis is based on the currently observable market environment.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
208 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(d) Foreign currency exchange risk

Foreign currency exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group does not face significant exposure from foreign currency exchange risk.

(e) Offsetting financial assets and financial liabilities

There is no offsetting of financial assets and financial liabilities during the year for the Group and Company.

4 CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and health capital ratios
in order to support its business, maximise shareholder value and comply with its financial covenants.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust
the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Group monitors capital using a gross gearing ratio, which is total borrowings divided by shareholders’ funds.

The Group’s gross gearing ratios as at 31 December 2017 and 2016 were as follows:

Group
2017 2016
RM’000 RM’000

Current borrowings* 350,369 333,445


Non-current borrowings* 1,242,340 1,242,313
Total borrowings (Note 30) 1,592,709 1,575,758

Shareholders’ funds 1,726,795 1,595,088

Gross gearing ratio (%) 0.92 0.99

* Exclude borrowings presented in liabilities associated with assets held for sale

The Group has complied with all material external financial covenants during the financial year as disclosed in Note 28 and 30.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 209

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

5 FAIR VALUE OF FINANCIAL INSTRUMENTS

(a) Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable
approximation of fair value:

Current asset/liability Note

Trade and other receivables and amounts due from subsidiaries 25


Deposits, cash and bank balances 27
Trade and other payables and amounts due to subsidiaries 29
Borrowings 30
Deposits 33

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-
term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The fair values of long term receivables and payables, which primarily comprise advances to or from subsidiaries, are estimated by
discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangement
at the reporting date.

(b) Fair value measurement

Qualitative disclosures fair value measurement hierarchy for assets and liabilities are as follows:

Level 1 Level 3
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Group
Available-for-sale financial assets 1,864 1,864 2,814 282
Property, plant and equipment (Note 17):
- Freehold land - - 190,506 234,881
- Long leasehold land - - 150,435 139,523
- Buildings - - 687,651 670,054
Investment properties (Note 18) - - 274,205 280,436
1,864 1,864 1,305,611 1,325,176

Company
Available-for-sale financial assets 1,864 1,864 2,532 -

The Group and the Company do not have any financial liabilities carried at fair value nor any financial instruments classified as
Level 2 as at 31 December 2017 and 31 December 2016.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
210 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

6 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date.
However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the
carrying amount of the asset or liability affected in the future.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Impairment of goodwill

The Group tests goodwill for impairment annually whether goodwill has suffered any impairment, in accordance with its
accounting policy stated in Note 2.11. More regular reviews are performed if events indicate that this is necessary.

The recoverable amounts of cash-generating units have been determined based on fair value less cost to sell calculations. The
calculations require the use of estimates as set out in Note 20.

(b) Income tax

Significant estimation is involved in determining the provision for income taxes. There are certain tax allowances for which the
ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax
issues based on estimates of whether taxes will be claimable. Where the final tax outcome of these matters is different from the
amount that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made. Details of income tax expense are disclosed in Note 13.

(c) Valuation of investment properties

The Group carries its investment properties at fair values. These require the use of external valuers and assumptions that are
based on unobservable inputs.

The key assumptions are as disclosed in Note 18 to the financial statements.

7 REVENUE

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Hospital and healthcare charges 3,083,619 2,873,200 - -


Tuition fees 47,922 48,983 - -
Rental income 36,434 36,080 - -
Wellness revenue 8,123 9,521 - -
Dividend income 125 - 108,388 141,546
Management fees 1,526 - 48,014 43,240
Interest income - - 2,669 2,348
Other revenue 2,249 1,819 2,404 987
3,179,998 2,969,603 161,475 188,121

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 211

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

8 FINANCE INCOME AND COSTS

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Finance costs
Continuing operations
Profit sharing on Islamic financing:
- Islamic Medium Term Notes 52,648 49,698 - -
- Term loans 29,871 30,619 - -
- Revolving credits 10,084 8,742 8,058 5,268
- Finance lease liabilities 1,529 2,488 - -
- Bank overdrafts 225 26 - -

Interest expense on conventional financing:


- Term loans 130 2,285 - -
- Revolving credits - 236 - -
- Finance lease liabilities 578 2,402 - -
- Interest on advances from subsidiaries - - 10,347 9,740
- Others - - 72 3
95,065 96,496 18,477 15,011
Less: Interest expense capitalised in:
- Property, plant and equipment (Note 17) (15,115) (16,310) - -
79,950 80,186 18,477 15,011
Discontinued operation
Others (Note 14) 2,310 2,951 - -
82,260 83,137 18,477 15,011

Finance income
Continuing operations
Profit sharing from deposits with licensed banks (11,560) (13,171) - -
Accretion of receivables (2,077) (1,960) - -
(13,637) (15,131) - -
Discontinued operation
Profit sharing from deposits with licensed banks (311) (1,167) - -
(13,948) (16,298) - -
Net finance costs 68,312 66,839 18,477 15,011

The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 6%. (2016: 5%)

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
212 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

9 PROFIT BEFORE ZAKAT AND TAX

Profit before zakat and tax is arrived at after charging/(crediting):

Group Company
2017 2016 2017 2016
Note RM’000 RM’000 RM’000 RM’000

Auditors’ remuneration:
- Statutory audits
- PricewaterhouseCoopers PLT 1,580 1,528 266 275
- Non-PricewaterhouseCoopers PLT 596 602 - -
- Other services
- PricewaterhouseCoopers PLT 872 2,022 632 267
- Non-PricewaterhouseCoopers PLT 37 13 - -
Trade receivables:
- Impairment charge for the year 25 15,484 11,113 - -
- Reversal of impairment loss 25 (1,682) (957) - -
Contribution to Klinik Waqaf An-Nur 37 3,174 3,498 - -
Directors’ remuneration 11 3,829 3,229 3,634 3,040
Consultants fees 796,038 779,005 - -
Cost of medical supplies 777,195 707,484 - -
External lab services 10,015 7,978 - -
Inventories written-off 213 186 - -
Professional fees 5,308 2,126 1,326 620
Repair and maintenance 73,151 65,093 805 327
Investment properties:
- Rental income (14,090) (15,458) - -
- Direct operating expenses 4,481 9,500 - -
Property, plant and equipment:
- Depreciation 17 125,265 127,132 - -
- Written-off 12 10,398 - -
- Loss/(gain) on disposal 580 (9,806) - -
Rental expense of land and buildings 110,736 105,865 3,254 2,559
Rental of equipment and vehicles 5,615 4,838 171 393
Employee benefits costs 10 693,929 630,110 36,661 42,413
Amortisation of software expenditure 19 3,090 2,145 - -
Impairment of goodwill 19 - 16,356 - -
(Gain)/loss on fair value of investment properties 18 (2,313) 92 - -
Gain on disposal of shares in associates (net) - (11,864) - -

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 213

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

10 EMPLOYEE BENEFITS COSTS

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Staff costs (excluding Directors’ remuneration):


- Salaries, allowances and bonuses 616,598 542,919 32,019 35,704
- Contributions to defined contribution plan 63,890 59,123 2,857 2,409
- Share-based payments - ESOS 13,171 27,818 1,785 4,300
- Provision for retirement benefits (Note 32) 270 250 - -
693,929 630,110 36,661 42,413

11 DIRECTORS’ REMUNERATION

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Managing and Executive Directors:


- Fees 275 150 175 100
- Salaries, allowances and bonuses 2,001 1,214 2,001 1,214
- Contributions to defined contribution plan 266 162 266 162
- Benefits-in-kind 21 32 21 32
2,563 1,558 2,463 1,508

Non-Independent Non-Executive Directors:


- Fees 300 375 300 375
- Allowances 50 53 50 53
350 428 350 428

Independent Non-Executive Directors:


- Fees 458 705 450 660
- Allowances 437 517 350 423
- Benefits-in-kind 21 21 21 21
916 1,243 821 1,104
3,829 3,229 3,634 3,040

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
214 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

11 DIRECTORS’ REMUNERATION (CONTINUED)

The number of Directors of the Company whose total remuneration during the financial year fell within the following bands is analysed
below:

Number of directors
2017 2016

Managing and Executive Directors:

RM1 - RM100,000 - -
RM900,001 - RM1,000,000 1 -
RM1,500,001 - RM2,000,000 1 1

Non-Executive Directors:

RM1 - RM100,000 3 3
RM100,001 - RM200,000 1 1

Independent Non - Executive Directors

RM100,001 - RM200,000 3 4
RM200,001 - RM300,000 4 -
RM300,001 - RM400,000 - 1
RM400,001 - RM500,000 - 1
13* 11

* Including 2 Directors that have resigned during the financial year.

12 ZAKAT

Zakat expense is zakat provided and paid during the financial year.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 215

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

13 TAXATION

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Malaysian income tax:


- In respect of current financial year 69,120 62,455 - -
- In respect of prior financial years (2,941) (2,227) 1,155 (454)
Foreign income tax:
- In respect of current financial year 261 370 - -
66,440 60,598 1,155 (454)
Deferred tax (Note 24) (11,984) (10,109) - -
Income tax expense/(credit) recognised in the income
statement 54,456 50,489 1,155 (454)

Income tax attributable to profit from:


- continuing operations 56,120 53,257 1,155 (454)
- discontinued operation (Note 14) (1,664) (2,768) - -
Income tax expense/(credit) recognised in the income
statement 54,456 50,489 1,155 (454)

Deferred tax related to


other comprehensive income (Note 24):
- Net surplus on revaluation of land and buildings 3,224 4,172 - -

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
216 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

13 TAXATION (CONTINUED)

A reconciliation of taxation applicable to profit before tax after zakat at the Malaysian statutory income tax rate to taxation at the
effective income tax rate of the Group and of the Company is as follows:

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Profit before tax after zakat from:


- continuing operations 229,416 216,890 84,028 108,178
- discontinued operation (8,050) (10,526) - -
221,366 206,364 84,028 108,178

Tax at Malaysian statutory tax rate of 24% (2016: 24%) 53,128 49,527 20,167 25,962

Tax effects of:


- Different tax rates 227 224 - -
- Income not subject to tax (3,476) (13,434) (26,481) (34,620)
- Expenses non-deductible for tax purposes 21,960 10,217 5,323 7,918
- Share of results of associates (688) (569) - -
- (Over)/under provision of prior years income tax (2,941) (2,227) 1,155 (454)
- Temporary differences and tax losses not recognised 5,843 6,751 991 740
- Recognition of deferred tax previously not recognised (19,597) - - -
Income tax expense/(credit) 54,456 50,489 1,155 (454)

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 217

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

14 DISCONTINUED OPERATION

Following the approval by the Directors to dispose of Jeta Gardens (Qld) Pty Ltd and its subsidiaries, management has commenced
discussion with potential buyers in connection with this disposal. The disposal is subject to the approval by the relevant authorities
and is expected to be completed in 2018. Consequently, the associated assets and liabilities have been presented as a disposal group
which is classified as held for sale as at 31 December 2017 (Note 28).

(a) Statement of comprehensive income of the discontinued operation is as follows:

Jeta Gardens (Qld) Pty Ltd


2017 2016
RM’000 RM’000

Revenue 54,816 51,491


Cost of sales (43,231) (38,421)
Gross profit 11,585 13,070
Administrative expenses (22,621) (25,121)
Other income 4,985 3,309
Operating loss (6,051) (8,742)

Finance income 311 1,167


Finance costs (2,310) (2,951)

Finance costs - net (1,999) (1,784)


Loss before tax (8,050) (10,526)
Taxation 1,664 2,768
Net loss for the financial year (6,386) (7,758)
Loss for the financial year attributable to:
Owners of the company (3,640) (4,422)
Non-controlling interests (2,746) (3,336)
(6,386) (7,758)
Total comprehensive loss for the financial year attributable to:
Owners of the company (3,640) (4,422)
Non-controlling interests (2,746) (3,336)
(6,386) (7,758)

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
218 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

14 DISCONTINUED OPERATION (CONTINUED)

(b) Statement of cash flows of the discontinued operation is as follow:

Jeta Gardens (Qld) Pty Ltd


2017 2016
RM’000 RM’000

Net cash used in operating activities (5,034) (12,099)


Net cash generated from investing activities 9,851 7,842
Net cash generated from financing activities (6,305) 19,741
Net changes in cash and cash equivalents (1,488) 15,484

Cash and cash equivalents at the beginning of the year 27,329 11,845
Cash and cash equivalents at the end of the year 25,841 27,329

(c) Included in the income statement are the following expenses/(income):

Jeta Gardens (Qld) Pty Ltd


2017 2016
RM’000 RM’000

Auditors’ remuneration:
- Statutory audits 384 350
- Other services 360 460
Directors’ remuneration 325 172
Professional fees 2,062 1,836
Repair and maintenance 813 834
Property, plant and equipment:
- Depreciation (Note 17) 2,610 2,742
- Loss on disposal 34 80
Rental of building 11,220 11,921
Employee benefits costs 40,620 36,125
Gain on disposal of shares in available-for-sale financial assets (net) (1,524) (2,096)
Finance income (311) (1,167)
Finance cost 2,310 2,951

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 219

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

15 DIVIDENDS

Group and Company


2017 2016
RM’000 RM’000

Declared in 2017 in respect of:

Financial year ended 31 December 2017

First interim single tier dividend of 0.55 sen per ordinary share paid on 28 April 2017* 23,073 -

Second interim single tier dividend of 0.45 sen per ordinary share paid on 21 July 2017* 18,912 -

Third interim single tier dividend of 0.38 sen per ordinary share paid on 12 October 2017* 15,818 -

Fourth interim single tier dividend of 0.40 sen per ordinary share paid on 22 December 2017 16,873 -

74,676 -

Declared in 2016 in respect of:

(i) Financial year ended 31 December 2015

Fourth interim single tier dividend of 0.44 sen per ordinary share paid on 15 April 2016* - 18,212

(ii) Financial year ended 31 December 2016

First interim single tier dividend of 0.45 sen per ordinary share paid on 21 July 2016* - 18,788

Second interim single tier dividend of 0.38 sen per ordinary share paid on 18 October 2016* - 15,701

Third interim single tier dividend of 0.38 sen per ordinary share paid on 11 January 2017* - 15,720

- 68,421

The Directors did not recommend the payment of a final dividend in respect of the financial year ended 31 December 2017.

* The respective dividend per share was adjusted following the subdivision of ordinary shares into 4 ordinary shares during the
year.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
220 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

16 EARNINGS PER SHARE

(a) Basic earnings per share

Basic earnings per share of the Group is calculated by dividing the profit/loss attributable to ordinary equity holders of the
Company for the financial year by the average number of ordinary shares in issue during the financial year.

Group
2017 2016

Continuing operations
Profit attributable to Owners of the Company (RM’000) 165,554 153,617
Weighted average number of ordinary shares in issue (‘000) 4,378,914 4,347,889
Basic earnings per share (sen)* 3.78 3.53

Discontinued operation
Loss attributable to Owners of the Company (RM’000) (3,640) (4,422)
Weighted average number of ordinary shares in issue (‘000) 4,378,914 4,347,889
Basic earnings per share (sen)* (0.08) (0.10)

(b) Diluted earnings per share

For the diluted earnings per share calculation, the average number of ordinary shares in issue is adjusted to assume conversion
of all dilutive potential ordinary shares. The dilutive potential ordinary shares for the Group are the warrants and ESOS.

For the warrants issued and ESOS granted to employees issued, a calculation is done to determine the number of shares that could
have been acquired at fair value (determined as the average share price of the Company’s shares) based on the monetary value
of the subscriptions rights attached to outstanding warrants and ESOS. The number of shares calculated as above is compared
with the number of shares that would have been issued assuming the exercise of the warrants and ESOS. The difference is added
to the denominator as an issue of ordinary shares for no consideration. This calculation serves to determine the "bonus" element
in the ordinary shares outstanding for the purpose of computing the dilution. No adjustment is made to the profit for the financial
year for the warrants and ESOS calculation.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 221

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

16 EARNINGS PER SHARE (CONTINUED)

(b) Diluted earnings per share (continued)

Group
2017 2016

Continuing operations
Profit attributable to Owners of the Company (RM’000) 165,554 153,617

Weighted average number of ordinary shares in issue (‘000) 4,378,914 4,347,889


Assumed shares issued from the exercise of warrants (‘000) 345,635 346,302
Assumed shares issued from the exercise of ESOS (‘000) 260,007 299,704
Weighted average number of ordinary shares in issue (‘000) 4,984,556 4,993,895
Diluted earnings per share (sen)* 3.32 3.08

Discontinued operation
Loss attributable to Owners of the Company (RM’000) (3,640) (4,422)

Weighted average number of ordinary shares in issue (‘000) 4,378,914 4,347,889


Assumed shares issued from the exercise of warrants (‘000) 345,635 346,302
Assumed shares issued from the exercise of ESOS (‘000) 260,007 299,704
Weighted average number of ordinary shares in issue (‘000) 4,984,556 4,993,895
Diluted loss per share (sen)* (0.07) (0.09)

* The comparative figure was recomputed based on the enlarged number of ordinary shares in issue after the share split
exercise, which was completed on 27 September 2017, in accordance with MFRS 133 “Earnings per Share”.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
222 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

17 PROPERTY, PLANT AND EQUIPMENT

Furniture,
fittings,
Long Medical motor Capital
Freehold leasehold and other vehicles and work-in-
land land Buildings Renovation equipment computers progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
2017
At 1 January
- Cost 5,900 - - 248,609 752,760 359,011 276,717 1,642,997
- Valuation 228,981 140,249 678,538 - - - - 1,047,768
234,881 140,249 678,538 248,609 752,760 359,011 276,717 2,690,765

Exchange differences (1,008) (4,703) (5,081) (799) (2,734) (1,071) (16) (15,412)
Additions - 18,678 52,781 36,784 54,716 23,002 280,680 466,641
Disposals - - (443) (342) (13,313) (5,084) - (19,182)
Written-off - - - (331) (9,679) (4,282) - (14,292)
Reclassification – cost - - 22,959 - - - (22,959) -
Transfer to investment
properties
(Note 18) (3,900) - (193) - - - - (4,093)
Transfer from
intangible assets
(Note 19) - - - - - 12,328 - 12,328
Transfer to assets held
for sale (Note 28) (39,467) - (54,120) (4,184) (2,540) (1,133) (1,162) (102,606)
Revaluation surplus - - 13,432 - - - - 13,432
Elimination of
accumulated
depreciation on
revaluation - - (9,921) - - - - (9,921)
190,506 154,224 697,952 279,737 779,210 382,771 533,260 3,017,660

At 31 December
- Cost - - - 279,737 779,210 382,771 533,260 1,974,978
- Valuation 190,506 154,224 697,952 - - - - 1,042,682
190,506 154,224 697,952 279,737 779,210 382,771 533,260 3,017,660
Less: Government
grant received - - - - - - (2,731) (2,731)
190,506 154,224 697,952 279,737 779,210 382,771 530,529 3,014,929

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 223

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

17 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Furniture,
fittings,
Long Medical motor Capital
Freehold leasehold and other vehicles and work-in-
land land Buildings Renovation equipment computers progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
2017
Accumulated
depreciation
At 1 January - (726) (8,484) (86,749) (417,289) (210,982) - (724,230)
Exchange differences - 7 112 20 1,779 563 - 2,481
Charge for the
financial year
(Note 9) - (3,070) (12,063) (20,238) (54,364) (38,140) - (127,875)
Disposals - - 213 108 12,060 4,126 - 16,507
Written-off - - - 141 9,828 4,311 - 14,280
Elimination of
accumulated
depreciation on
revaluation - - 9,921 - - - - 9,921
At 31 December - (3,789) (10,301) (106,718) (447,986) (240,122) - (808,916)

Net carrying
amounts
- Cost - - - 173,019 331,224 142,649 530,529 1,177,421
- Valuation 190,506 150,435 687,651 - - - - 1,028,592
At 31 December 190,506 150,435 687,651 173,019 331,224 142,649 530,529 2,206,013

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
224 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

17 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Furniture,
fittings,
Long Medical motor Capital
Freehold leasehold and other vehicles and work-in-
land land Buildings Renovation equipment computers progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
2016
At 1 January
- Cost 46,700 - 33,300 223,757 770,653 377,261 293,288 1,744,959
- Valuation 174,694 124,226 499,563 - - - - 798,483
221,394 124,226 532,863 223,757 770,653 377,261 293,288 2,543,442

Exchange differences 4,727 1,120 3,926 1,087 2,748 - - 13,608


Additions 5,900 1,056 12,162 33,276 49,418 15,198 143,915 260,925
Acquisition of a
subsidiary - - - - 37 - - 37
Revaluation surplus 2,860 15,555 1,277 - - - - 19,692
Disposals - - - (11,184) (14,440) (6,751) - (32,375)
Written-off - - (3,124) - (65,837) (36,800) - (105,761)
Reclassification – cost - - 138,529 1,673 10,181 10,103 (160,486) -
Elimination of
accumulated
depreciation on
revaluation - (1,708) (1,628) - - - - (3,336)
234,881 140,249 684,005 248,609 752,760 359,011 276,717 2,696,232

At 31 December
- Cost - - - 248,609 752,760 359,011 276,717 1,637,097
- Valuation 234,881 140,249 684,005 - - - - 1,059,135
234,881 140,249 684,005 248,609 752,760 359,011 276,717 2,696,232
Less: Government
grant received - - (5,467) - - - - (5,467)
234,881 140,249 678,538 248,609 752,760 359,011 276,717 2,690,765

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 225

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

17 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Furniture,
fittings,
Long Medical motor Capital
Freehold leasehold and other vehicles and work-in-
land land Buildings Renovation equipment computers progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
2016
Accumulated
depreciation
At 1 January - (12) (837) (58,040) (431,975) (220,629) - (711,493)
Exchange differences - 1,494 - 533 (2,150) (505) - (628)
Charge for the
financial year
(Note 9) - (3,916) (12,399) (33,071) (51,760) (28,728) - (129,874)
Disposals - - - 3,829 10,974 4,263 - 19,066
Written-off - - 3,124 - 57,622 34,617 - 95,363
Elimination of
accumulated
depreciation on
revaluation - 1,708 1,628 - - - - 3,336
At 31 December - (726) (8,484) (86,749) (417,289) (210,982) - (724,230)
Net carrying
amounts
- Cost 5,900 - - 161,860 335,471 148,029 276,717 927,977
- Valuation 228,981 139,523 670,054 - - - - 1,038,558
At 31 December 234,881 139,523 670,054 161,860 335,471 148,029 276,717 1,966,535

Revaluation of land and buildings

The Group’s land and buildings, except for those under constructions, were fully revalued as at 31 December 2015. As at year end,
the Group assess whether there is an indication that the carrying values of these assets have defer materially from its fair value. Where
an indication exist, revaluations were carried out and the carrying value of these assets were updated to reflect its fair value based
on independent valuation. Certain land and buildings that were completed and commenced operations during the year were also
revalued as at year end.

Land and buildings comprise mainly those that are used by the Group as purpose-built private specialist hospitals. Land and buildings
that were revalued on 31 December 2017 were based on the Cost Method, which entails separate valuations of the land and buildings
to arrive at the market value of the subject property. The lands were valued by reference to transactions of similar lands in the
surrounding with adjustments made for difference in accessibility, terrain, size and shape of the land, tenure, title restrictions if any and
other relevant characteristics. The buildings were valued by reference to their depreciated replacement costs, i.e. the replacement cost
new less an appropriate adjustments for depreciation or obsolescence to reflect the existing condition of the buildings at the date of
valuation .The book values of the land and buildings were adjusted to reflect the revaluation and the resultant surpluses were credited
to revaluation reserve. These were all Level 3 in the fair value hierarchy.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
226 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

17 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Revaluation of land and buildings (continued)

The valuations were carried out by independent firms of professional valuers, Messrs CH Williams Talhar & Wong Sdn Bhd, Messrs
Raine & Horne International Zaki + Partners Sdn Bhd, Messrs IM Global Property Consultants Sdn Bhd, Messrs Cheston International
(KL) Sdn Bhd and Messrs Knight Frank Ptd Ltd (“the Valuers”).

If the total amounts of the land and buildings had been determined in accordance with the historical cost convention, they would have
been included at:

Group
2017 2016
RM’000 RM’000

Cost
Freehold land 96,482 135,949
Leasehold land 60,158 41,480
Buildings 306,029 279,394
462,669 456,823
Accumulated depreciation
Leasehold land (608) (248)
Buildings (6,121) (5,588)
Net carrying amounts 455,940 450,987

The net book value of assets under finance leases as at 31 December 2017 is RM70,902,000 (2016: RM71,296,000).

The net book value of property, plant and equipment pledged for borrowing facilities as at 31 December 2017 is RM389,100,000
(2016: RM338,784,000) as disclosed in Note 30.

During the financial year, a subsidiary received a government grant in relation to the construction of a hospital building amounting to
RM2,731,000 (2016 : RM5,467,000). The amount has been set-off against the cost of building included in capital work-in-progress.

Capitalisation of borrowing costs

The capital work-in-progress includes borrowing costs arising from general and specific borrowings. During the financial year,
borrowing costs capitalised as part of capital work-in-progress amounted to RM15,115,000 (2016: RM16,310,000).

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 227

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

18 INVESTMENT PROPERTIES

Group
2017 2016
RM’000 RM’000

At fair value:
At 1 January 280,436 279,833
Exchange differences (123) 695
Gain/(loss) on fair value recognised during the year (Note 9) 2,313 (92)
Transfer from property, plant and equipment 4,093 -
Transfer to assets held for sale (Note 28) (12,514) -
At 31 December 274,205 280,436

The valuations were carried out by third party valuers, Messrs CH Williams Talhar & Wong Sdn Bhd.

The fair value of the properties was estimated at RM274,205,000 (2016: RM280,436,000) based on valuations performed by independent
professionally qualified valuers, using either the comparison or investment method as described below.

Fair value hierarchy disclosures for investment properties are in Note 5.

The balance is in Level 3 fair value hierarchy.

Description of valuation techniques used and key inputs to valuation on investment properties.

Valuation Significant
technique unobservable inputs Range (weighted average)
2017 2016

Location, visibility,size
Land and buildings Comparison method and tenure - -

(Carrying value as at 31 December 2017 of RM64,377,000 (2016 : RM 66,855,000))

Office Investment Estimated rental value per


properties method sqft per month RM3.80 – RM5.50 RM3.80 – RM5.00
Outgoings per sqft
per month RM1.50 – RM1.54 RM1.50 – RM1.52
Void rate 7.5% 7.5%
Term yield 6.0% - 6.25% 6.0% - 6.25%

(Carrying value as at 31 December 2017 of RM209,828,000 (2016 : RM210,654,000)).

Inter-relationship between significant unobservable inputs and fair value measurement

(a) Comparison method

Generally a location and visibility that is relatively more prominent will result in a higher fair value. A longer tenure will have the
same effect.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
228 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

18 INVESTMENT PROPERTIES (CONTINUED)

Inter-relationship between significant unobservable inputs and fair value measurement (continued)

(b) Investment method

Increases/(decreases) in estimated rental value per sqft in isolation would result in a higher/(lower) fair value of the properties.
Increases/(decreases) in the long-term vacancy rate (void rate) and discount rate (term yield) in isolation would result in a lower
(higher) fair value.

Generally, a change in the assumption made for the estimated rental value is accompanied by a directionally similar change in
the rental value per sqft and an opposite change in the void rate and term yield.

A sensitivity analysis has been performed on the significant assumptions that impact the fair value of the office properties. Arising
thereof, the impact of a 10 basis points increase/decrease in the term yield will result in a lower/higher fair value change by RM4.5
million, while a void rate of 10% will result in a lower fair value change by RM4.0 million.

19 INTANGIBLE ASSETS

Software
expenditure
Software under
Goodwill expenditure development Total
RM’000 RM’000 RM’000 RM’000

2017
Cost
At 1 January 2017 195,891 28,386 43,086 267,363
Additions - 1,600 7,688 9,288
Transfer to property, plant and equipment (Note 17) - - (12,328) (12,328)
Reclassification - 10,350 (10,350) -
At 31 December 2017 195,891 40,336 28,096 264,323

Accumulated amortisation
At 1 January 2017 - (5,440) - (5,440)
Amortisation charge for the year (Note 9) - (3,090) - (3,090)
At 31 December 2017 - (8,530) - (8,530)

Accumulated impairment
At 1 January / 31 December 2017 (16,356) - - (16,356)

Net carrying amount


At 31 December 2017 179,535 31,806 28,096 239,437

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 229

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

19 INTANGIBLE ASSETS (CONTINUED)

Software
expenditure
Software under
Goodwill expenditure development Total
RM’000 RM’000 RM’000 RM’000

2016
Cost
At 1 January 2016 195,891 28,386 31,144 255,421
Additions - - 11,942 11,942
At 31 December 2016 195,891 28,386 43,086 267,363

Accumulated amortisation
At 1 January 2016 - (3,295) - (3,295)
Amortisation charge for the year (Note 9) - (2,145) - (2,145)
At 31 December 2016 - (5,440) - (5,440)

Accumulated impairment
At 1 January 2016 - - - -
Impairment charge during the year (Note 9) (16,356) - - (16,356)
At 31 December 2016 (16,356) - - (16,356)

Net carrying amount


At 31 December 2016 179,535 22,946 43,086 245,567

20 IMPAIRMENT OF INTANGIBLE ASSETS

Impairment tests for goodwill and software expenditure under development

Group
2017 2016
RM’000 RM’000

Malaysia:
- goodwill 177,913 177,913
- software expenditure under development 28,096 43,086
Others 1,622 1,622
207,631 222,621

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
230 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

20 IMPAIRMENT OF INTANGIBLE ASSETS (CONTINUED)

Recoverable amount based on fair value less costs to sell

Malaysia

The recoverable amount of the CGU is determined based on fair value less cost to sell calculation (level 3 fair value hierarchy). These
calculations use cash flow projections based on financial budgets approved by the Directors covering a five-year period.

Aged care facility

In prior financial year, the Group’s investment in its Aged care facility has been written down to its net recoverable value resulting in a
full impairment of the goodwill of RM16,356,000 that has been charged in the income statement.

The key assumptions used are as follows:

Malaysia
2017 2016
% %

Revenue1 6 - 12 16 - 20
EBITDA margin 2
13.3 – 15.7 12.5 – 13.7
Discount rate3 12 12
Terminal growth rate4 5 5

Assumptions:

1
Based on revenue range
2
EBITDA margin over the budget period
3
Post-tax discount rate applied to the cash flow projections
4
Terminal growth rate used to extrapolate cash flows beyond the budget period

The Directors have determined the revenue and EBITDA margin based on expectations of market development. The post-tax discount
rates used are based on comparable healthcare companies and adjusted for projection risk. The terminal growth rate does not exceed
the long-term average growth rate for the relevant group of CGUs.

Management believes that any reasonable change to the above key assumptions would not cause the carrying value of the CGU to
materially exceed its reasonable amount.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 231

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries is made up as follows:

Company
2017 2016
RM’000 RM’000

Cost 964,424 948,618


Addition and subscription during the financial year - 15,805
Preference shares 300 300
Capital contribution reserve on share based payments 61,724 51,478
Unquoted shares 1,026,448 1,016,201

The following are subsidiaries of the Company:

Group’s effective interest


Country of 2017 2016
Name of company incorporation % % Principal activities

Kumpulan Perubatan (Johor) Sdn Bhd Malaysia 100 100 Managing and investment holding
company for Medical sector

Point Zone (M) Sdn Bhd Malaysia 100 100 Providing treasury management
services to the companies within the
group

Tawakal Holdings Sdn Bhd* Malaysia 100 100 Investment holding company

Johor Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Ipoh Specialist Hospital Sdn Bhd Malaysia 98 98 Operating as a specialist hospital

Puteri Specialist Hospital (Johor) Sdn Bhd# Malaysia 100 100 Dormant

Subsidiaries of Kumpulan Perubatan (Johor)


Sdn Bhd

Ampang Puteri Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Bandar Baru Klang Specialist Hospital Malaysia 100 100 Operating as a specialist hospital
Sdn Bhd

Kajang Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Maharani Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
232 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The following are subsidiaries of the Company (continued):

Group’s effective interest


Country of 2017 2016
Name of company incorporation % % Principal activities

Subsidiaries of Kumpulan Perubatan (Johor)


Sdn Bhd (continued)

Pasir Gudang Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Penang Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Pusat Pakar Kluang Utama Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Rawang Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Sentosa Medical Centre Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Sibu Medical Centre Corporation Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

SMC Healthcare Sdn Bhd Malaysia 100 100 Operating as a specialist hospital

Kota Kinabalu Specialist Hospital Sdn Bhd Malaysia 97 97 Operating as a specialist hospital

PT Khidmat Perawatan Jasa Medika* Indonesia 80 80 Operating as a specialist hospital

PT Khasanah Putera Jakarta Medica* Indonesia 75 75 Operating as a specialist hospital

Kuching Specialist Hospital Sdn Bhd Malaysia 70 70 Operating as a specialist hospital

Pahang Specialist Hospital Sdn Bhd Malaysia 70 70 Operating as a specialist hospital

Perdana Specialist Hospital Sdn Bhd Malaysia 61 61 Operating as a specialist hospital

Selangor Specialist Hospital Sdn Bhd* Malaysia 60 60 Operating as a specialist hospital

Advanced Health Care Solutions Sdn Bhd* Malaysia 100 100 Providing healthcare information
system services

Crossborder Aim (M) Sdn Bhd* Malaysia 100 100 Investment holding company

Crossborder Hall (M) Sdn Bhd* Malaysia 100 100 Investment holding company

KPJ Dhaka (Pte) Ltd* Bangladesh 100 100 Providing management services to a
specialist hospital

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 233

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The following are subsidiaries of the Company (continued):

Group’s effective interest


Country of 2017 2016
Name of company incorporation % % Principal activities

Subsidiaries of Kumpulan Perubatan (Johor)


Sdn Bhd (continued)

KPJ Eyecare Specialist Sdn Bhd* Malaysia 100 100 Providing medical and consultancy
services

KPJ Healthcare University College Sdn Bhd Malaysia 100 100 Operating as a private university
(formerly known as Puteri Nursing College college of nursing and allied health
Sdn Bhd)

KPJ HealthShoppe Sdn Bhd* Malaysia 100 100 Operating as pharmacy retail outlet

Kuantan Specialist Hospital Sdn Bhd Malaysia 100 100 Operating as a dialysis centre

Lablink (M) Sdn Bhd Malaysia 100 100 Providing pathology and laboratory
services

PharmaCARE Sdn Bhd* Malaysia 100 100 Providing human resource, training
services and rental of human
resource information system

Pharmaserv Alliances Sdn Bhd Malaysia 100 100 Marketing and distributing medical
and pharmaceutical products

PT Al-Aqar Bumi Serpong Damai* Indonesia 100 100 Operating as building management
company

PT Al-Aqar Permata Hijau* Indonesia 100 100 Operating as building management


company

Sibu Geriatric Health & Nursing Centre Malaysia 100 100 Operating and managing an aged
Sdn Bhd care facilities

Sterile Services Sdn Bhd* Malaysia 100 100 Providing sterile services

Fabricare Laundry Sdn Bhd* Malaysia 95 95 Providing laundry services

Diaper Technology Industries Sdn Bhd Malaysia 94 94 Providing information technology


related services and rental of
software

Pride Outlet Sdn Bhd* Malaysia 90 90 Providing maintenance services for


medical equipment

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
234 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The following are subsidiaries of the Company (continued):

Group’s effective interest


Country of 2017 2016
Name of company incorporation % % Principal activities

Subsidiaries of Kumpulan Perubatan (Johor)


Sdn Bhd (continued)

Healthcare IT Solutions Sdn Bhd* Malaysia 70 70 Providing healthcare information


technology services

Skop Yakin (M) Sdn Bhd* Malaysia 70 70 Marketing and distributing general
merchandise

Total Meal Solution Sdn Bhd* Malaysia 70 70 Providing central kitchen services

Teraju Farma Sdn Bhd Malaysia 65 65 Marketing and distributing medical


and pharmaceutical products

Jeta Gardens (Qld) Pty Ltd* Australia 57 57 Providing retirement village and
aged care facilities

BDC Specialist Hospital Sdn Bhd Malaysia 100 100 To be operating as a specialist
hospital

KPJ Medik TV Sdn Bhd* Malaysia 100 100 To be operating as medical service
provider

Massive Hybrid Sdn Bhd* Malaysia 100 100 To be operating as a specialist


hospital

UTM KPJ Specialist Hospital Sdn Bhd* Malaysia 100 100 To be operating as a specialist
hospital

Miri Specialist Hospital Sdn Bhd* Malaysia 70 70 To be operating as a specialist


hospital

Perlis Specialist Hospital* Malaysia 60 60 To be operating as a specialist


hospital

Damansara Specialist Hospital Sdn Bhd Malaysia 100 100 Dormant

Seremban Specialist Hospital Sdn Bhd Malaysia 100 100 Dormant

Taiping Medical Centre Sdn Bhd Malaysia 100 100 Dormant

Energy Excellent Sdn Bhd* Malaysia 100 100 Dormant

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 235

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The following are subsidiaries of the Company (continued):

Group’s effective interest


Country of 2017 2016
Name of company incorporation % % Principal activities

Subsidiaries of Kumpulan Perubatan (Johor)


Sdn Bhd (continued)

KPJ Education Services Sdn Bhd* Malaysia 100 100 Dormant

Pharmacare Surgical Technologies (M) Malaysia 100 100 Dormant


Sdn Bhd*

Freewell Sdn Bhd* Malaysia 80 80 Dormant

Bayan Baru Specialist Hospital Sdn Bhd Malaysia 55 55 Dormant

Subsidiary of Tawakal Holdings Sdn Bhd

Pusat Pakar Tawakal Sdn Bhd+ Malaysia 100 100 Operating as a specialist hospital

Subsidiary of Johor Specialist Hospital


Sdn Bhd

Bandar Dato Onn Specialist Hospital Malaysia 100 100 To be operating as specialist hospital
Sdn Bhd

Subsidiary of Ipoh Specialist Hospital


Sdn Bhd

Sri Manjung Specialist Centre Sdn Bhd* Malaysia 100 100 Operating as a specialist hospital

Subsidiary of Selangor Specialist Hospital


Sdn Bhd

Hospital Pusrawi SMC Sdn Bhd* Malaysia 51 51 Dormant

Subsidiary of SMC Healthcare Sdn Bhd

Amity Development Sdn Bhd Malaysia 100 100 Dormant

Subsidiary of PharmaCARE Sdn Bhd

Open Access Sdn Bhd* Malaysia 100 100 Dormant

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
236 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The following are subsidiaries of the Company (continued):

Group’s effective interest


Country of 2017 2016
Name of company incorporation % % Principal activities

Subsidiaries of Pharmaserv Alliances


Sdn Bhd

Medical Supplies (Sarawak) Sdn Bhd Malaysia 75 75 Marketing and distributing medical
pharmaceutical products

Malaysian Institute of Malaysia 75 75 Dormant


HealthcareManagement Sdn Bhd*

FP Marketing (S) Pte Ltd* Singapore 100 100 Dormant

Subsidiary of KPJ Healthcare University


College Sdn Bhd (formerly known as Puteri
Nursing College Sdn Bhd)

KPJ Education (M) Sdn Bhd (formerly known Malaysia 100 100 Operating as a college and training
as KFCH Education (M) Sdn Bhd) centre

Subsidiaries of Jeta Gardens (Qld) Pty Ltd

Jeta Gardens Aged Care (Qld) Pty Ltd* Australia 100 100 Operating and managing an aged
care facility

Jeta Gardens Management(Qld) Pty Ltd* Australia 100 100 Providing management to an aged
care facility

#
Direct equity holding by the Company is 84% (2016: 84%)
+
Direct equity holding by the Company is 14% (2016: 14%)
*
Audited by firms other than PricewaterhouseCoopers PLT, Malaysia

On 1 May 2016, KPJ Healthcare University College Sdn Bhd (formerly known as Puteri Nursing College Sdn Bhd), a wholly-owned
subsidiary of the Kumpulan Perubatan (Johor) Sdn Bhd acquired a 100% equity interest in KPJ Education (M) Sdn Bhd (formerly known
as KFCH Education (M) Sdn Bhd) for a total cash consideration of RM1.

There is no acquisition of subsidiary during the financial year ended 31 December 2017.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 237

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Summarised financial information of Perdana Specialist Hospital Sdn Bhd and Selangor Specialist Hospital Sdn Bhd which have non-
controlling interests that are material to the Group is set out below. The summarised financial information presented below is the
amount before inter-company elimination. The non-controlling interests in respect of other subsidiaries are not material to the Group.

(i) Summarised statements of financial position

Perdana Specialist Hospital Selangor Specialist


Sdn Bhd Hospital Sdn Bhd Total
2017 2016 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non-current assets 52,366 50,900 147,366 95,597 199,732 146,497


Current assets 19,572 26,920 48,724 100,042 68,296 126,962
Total assets 71,938 77,820 196,090 195,639 268,028 273,459
Current liabilities 17,834 30,401 46,908 40,229 64,742 70,630
Non-current liabilities 8,759 1,804 21,200 28,187 29,959 29,991
Total liabilities 26,593 32,205 68,108 68,416 94,701 100,621
Net assets 45,345 45,615 127,982 127,223 173,327 172,838
Net equity attributable 45,345 45,615 127,982 127,223 173,327 172,838
Equity attributable to owners of
the company 27,660 27,825 76,789 76,334 104,449 104,159
Non-controlling interests 17,685 17,790 51,193 50,889 68,878 68,679

(ii) Summarised statements of comprehensive income

Perdana Specialist Selangor Specialist


Hospital Sdn Bhd Hospital Sdn Bhd Total
2017 2016 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 89,437 89,178 164,932 155,666 254,369 244,844


Profit for the year 3,149 6,082 19,080 18,235 22,229 24,317
Profit attributable to the owners of the
company 1,921 3,710 11,448 10,941 13,369 14,651
Profit attributable to the non-controlling
interest 1,228 2,372 7,632 7,294 8,860 9,666
Total comprehensive income 3,149 6,082 19,080 18,235 22,229 24,317

Total comprehensive income attributable to


owners of the company 1,921 3,710 11,448 10,941 13,369 14,651
Total comprehensive income attributable to
the non-controlling interest 1,228 2,372 7,632 7,294 8,860 9,666
3,149 6,082 19,080 18,235 22,229 24,317
Dividends paid to non-controlling interests 623 623 4,800 4,800 5,423 5,423

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
238 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

21 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

(iii) Summarised statements of cash flows

Perdana Specialist Selangor Specialist


Hospital Sdn Bhd Hospital Sdn Bhd Total
2017 2016 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Net cash generated from operating


activities 7,212 17,784 34,426 9,987 41,638 27,771
Net cash used in investing activities (5,587) (17,877) (8,821) (3,476) (14,408) (21,353)
Net cash (used in)/ generated from
financing activities (3,979) 122 (27,716) (3,293) (31,695) (3,171)
Net changes in cash and cash equivalents (2,354) 29 (2,111) 3,218 (4,465) 3,247
Cash and cash equivalents at the beginning
of the year 3,172 3,143 10,395 7,177 13,567 10,320
Cash and cash equivalents at the end
of the year 818 3,172 8,284 10,395 9,102 13,567

22 INVESTMENTS IN ASSOCIATES

Group
2017 2016
RM’000 RM’000

Quoted ordinary shares in Al-’Aqar Healthcare REIT, at cost 234,982 315,564


Disposals (7,215) (47,010)
Transfer to assets held for sale (Note 28) (17,688) -
Unrealised gains** (Note 36) - (33,572)
210,079 234,982
Unquoted ordinary shares, at cost 65,229 65,229
Group’s share of post-acquisition reserves 130,676 91,329
405,984 391,540

Market value of quoted ordinary shares in Al-’Aqar Healthcare REIT 368,267 430,144

** This represents restricted profits arising from the disposal of assets in Al-’Aqar Healthcare REIT.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 239

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

22 INVESTMENTS IN ASSOCIATES (CONTINUED)

The associates of the Group are as follows:

Effective equity interest


Country of 2017 2016
incorporation % % Principal activities

Associates of Company

Damansara REIT Managers Sdn Bhd*# Malaysia - - Manager of Al-’Aqar Healthcare REIT

Al-’Aqar Healthcare REIT*^ Malaysia 37 38 Real estate investment trust

Associates of KPJSB

Kedah Medical Centre Sdn Bhd* Malaysia 46 46 Operating as a specialist hospital

Healthcare Technical Services Sdn Bhd* Malaysia 30 30 Providing management and


engineering maintenance services
for specialist hospital

Vejthani Public Company Limited* Thailand 23 23 Operating as an international


specialist hospital

^ Listed on the Main Market of Bursa Malaysia Securities Berhad.


* Audited by a firm other than PricewaterhouseCoopers PLT, Malaysia.
#
Entity over which the Company exercises significant influence by virtue of its’ board representation in Damansara REIT Managers
Sdn Bhd., which controls Al-’Aqar Healthcare REIT.

Summarised financial information in respect of the Group’s material associate is set out below. The summarised financial information
represents the amounts in the MFRS financial statements of the associate and not the Group’s share of those amounts.

(i) Summarised statement of financial position

Al-’Aqar Healthcare REIT


2017 2016
RM’000 RM’000

Non-current assets 1,459,703 1,424,360


Current assets 96,722 186,853
Total assets 1,556,425 1,611,213

Current liabilities 622,459 50,128


Non-current liabilities 10,676 665,017
Total liabilities 633,135 715,145
Net asset 923,290 896,068

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
240 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

22 INVESTMENTS IN ASSOCIATES (CONTINUED)

Summarised financial information in respect of the Group’s material associate is set out below. The summarised financial information
represents the amounts in the MFRS financial statements of the associate and not the Group’s share of those amounts (continued):

(ii) Summarised statement of comprehensive income

Al-’Aqar Healthcare REIT


2017 2016
RM’000 RM’000

Revenue 99,648 103,839


Profit before tax 86,154 63,986
Net profit for the financial year 84,644 63,440
Other comprehensive loss (2,442) (373)
Dividends received from associates during the year 20,482 13,789

(iii) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in material
associate

Al-’Aqar Healthcare REIT


2017 2016
RM’000 RM’000

Net assets at 1 January 896,068 879,826


Profit for the financial year 84,644 63,440
Other comprehensive loss (2,442) (373)
Dividend paid during the year (54,980) (46,825)
Net assets at 31 December 923,290 896,068

Interest in associates 37% 38%


Carrying value of Group’s interest 341,617 340,506

(iv) Aggregate information of associates that are not individually material

2017 2016
RM’000 RM’000

The Group’s share of profit before tax 10,387 8,691


The Group’s share of profit after tax 8,011 6,313
The Group’s share of total comprehensive income 8,011 6,313

(v) Commitments and contingent liabilities

There are neither commitment nor contingent liabilities relating to the Group’s interest in the associates.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 241

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

23 AVAILABLE-FOR-SALE FINANCIAL ASSETS

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

At 1 January 2,146 282 1,864 -


Purchased during the year 2,532 1,864 2,532 1,864
At 31 December 4,678 2,146 4,396 1,864
Analysed as follows:
- Listed equity securities in Malaysia 1,864 1,864 1,864 1,864
- Unlisted equity securities in Malaysia 2,814 282 2,532 -
4,678 2,146 4,396 1,864

The fair values of these available-for-sale financial assets do not materially differ from their carrying values. Refer to Note 5 for fair value
hierarchy disclosures.

24 DEFERRED TAX

Deferred tax assets and liabilities were offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting
are shown on the statements of financial position.

Group
2017 2016
RM’000 RM’000

Deferred tax assets 24,682 18,757


Deferred tax liabilities (60,206) (63,041)
At 31 December (35,524) (44,284)

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
242 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

24 DEFERRED TAX (CONTINUED)

The movement in the deferred tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) during the
financial year is as follow:

Group
2017 2016
RM’000 RM’000

At 1 January (44,284) (50,221)


Credit/(charged) to income statement (Note 13)
- Property, plant and equipment 443 22,041
- Investment properties (358) 30
- Trade and other receivables (1,028) (11,158)
- Unutilised tax losses 8,467 3,939
- Deferred revenue 2,975 (891)
- Trade and other payables 1,485 (3,852)
11,984 10,109
Charged to other comprehensive income (3,224) (4,172)
At 31 December (35,524) (44,284)

Subject to income tax:

Deferred tax assets (before offsetting):


- Unutilised tax losses 20,402 11,935
- Deferred revenue 21,008 18,033
- Trade and other payables 6,968 5,483
48,378 35,451
Offsetting (23,696) (16,694)
Deferred tax assets (after offsetting) 24,682 18,757

Deferred tax liabilities (before offsetting):


- Property, plant and equipment (48,411) (45,630)
- Investment properties (16,239) (15,881)
- Trade and other receivables (19,252) (18,224)
(83,902) (79,735)
Offsetting 23,696 16,694
Deferred tax liabilities (after offsetting) (60,206) (63,041)

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 243

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

24 DEFERRED TAX (CONTINUED)

The amount of unabsorbed capital allowance and unutilised tax losses for which no deferred tax asset are recognised on the statements
of financial position are as follows:

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Unabsorbed capital allowance 4,876 31,633 - -


Unutilised tax losses 40,220 70,771 25,047 20,916

No deferred tax assets are recognised as the above due to uncertainties of their recoverability. The availability of unused tax losses for
offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject to no substantial changes in shareholdings
of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the tax authority. The use of tax losses of subsidiaries
in other countries is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the
respective countries in which the subsidiaries operate.

25 TRADE AND OTHER RECEIVABLES AND AMOUNT DUE FROM SUBSIDIARIES

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Non-current:
Amount due from an associate - 34,621 - -

Current:
Trade receivables 457,561 412,129 - -
Less: Impairment of trade receivables (44,873) (34,621) - -
Trade receivables – net 412,688 377,508 - -
Amount due from ultimate holding corporation 2,790 1,936 6 5
Amounts due from related companies 5,325 1,634 5 5
Amounts due from associates 1,744 66,415 42 57
Other receivables 134,781 54,510 10,543 35,276
Deposits 47,592 33,341 45 41
Prepayments 19,976 20,174 - -
624,896 555,518 10,641 35,384
Amounts due from subsidiaries - - 474,817 390,355
Total 624,896 590,139 485,458 425,739

Credit terms of trade receivables range from 30 to 60 days (2016: 30 to 60 days).

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
244 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

25 TRADE AND OTHER RECEIVABLES AND AMOUNT DUE FROM SUBSIDIARIES (CONTINUED)

As at 31 December 2017, trade receivables of RM149,986,000 (2016: RM116,183,000) was neither past due nor impaired and
RM262,702,000 (2016: RM261,325,000) were past due but not impaired. These relate to a number of independent customers for
whom there is no recent history of default or secured by collateral from customers.

The non-current amount due from an associate was related to the deferred consideration arising from the disposal of two pieces of
lands, owned by a subsidiary of the Group, KPJ Healthcare University College Sdn Bhd (formerly known as Puteri Nursing College Sdn
Bhd) to Al-’Aqar Healthcare REIT for a total consideration of RM77,800,000, including deferred consideration which is payable in 2018.
The disposal was completed in 2015.

Amounts due from ultimate holding corporation and related companies are interest free and repayable on demand.

Included in amount due from subsidiaries are advances receivable from subsidiaries amounting to RM93,193,349 (2016: RM93,193,349)
which are unsecured, bearing effective weighted average interest rate of 5.85% (2016: 5.85%) per annum and with no repayment
terms.

Included in amounts due from associates in prior financial year was RM63,911,660 being an amount due from Al-’Aqar Healthcare REIT
for the cost of building land and construction, which will be reimbursed by Al-’Aqar Healthcare REIT once completed under Al-’Aqar
Development Agreement.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivable is as follows:

Group
2017 2016
RM’000 RM’000

Neither past due nor impaired 149,986 116,183

1 to 30 days past due not impaired 109,026 92,634


31 to 60 days past due not impaired 53,613 55,827
61 to 91 days past due not impaired 23,398 22,199
91 to 120 days past due not impaired 20,859 19,688
More than 121 days past due not impaired 55,806 70,977
262,702 261,325
Impaired 44,873 34,621
457,561 412,129

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 245

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

25 TRADE AND OTHER RECEIVABLES AND AMOUNT DUE FROM SUBSIDIARIES (CONTINUED)

As at 31 December 2017, trade receivables of RM44,873,000 (2016: RM34,621,000) were impaired and provided for. Movement in
allowance accounts:

Group
2017 2016
RM’000 RM’000

At 1 January 34,621 25,745


Charge for the financial year (Note 9) 15,484 11,113
Written-off (3,550) (1,280)
Reversal of impairment loss (Note 9) (1,682) (957)
At 31 December 44,873 34,621

The currency exposure profile of the receivables and deposits (excluding prepayments) are as follows:

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 592,734 543,799 485,458 425,739


Indonesian Rupiah 11,845 16,940 - -
Australian Dollar - 8,953 - -
Bangladesh Taka 323 260 - -
Singapore Dollar 18 13 - -
604,920 569,965 485,458 425,739

The other classes do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.

26 INVENTORIES

Group
2017 2016
RM’000 RM’000

At cost:
Pharmaceutical products 32,756 29,397
Medical supplies 14,638 14,388
Laboratory chemicals 2,032 1,675
Consumables and disposable items 945 874
Other supplies 713 785
51,084 47,119

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
246 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

27 DEPOSITS, BANK AND CASH BALANCES

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks 73,762 47,970 - -


Cash and bank balances 126,780 311,429 3,903 4,112
Total cash and bank balances 200,542 359,399 3,903 4,112

Less: Bank overdrafts (Note 30) (2,094) (12,613) - -


Deposits with licensed banks with maturity of
more than 3 months (8,496) (3,555) - -
Designated account (FSRA & DSRA) (5,105) (8,106) - -
Cash and cash equivalents 184,847 335,125 3,903 4,112

Included in the deposits with licensed banks of the Group is an amount of RM5,105,339 (2016: RM8,106,000) being minimum balance
required in the Financial Service Reserve Account (“FSRA”) and Deposit Service Reserve Account (“DSRA”) for loans purposes (Note 30).

The weighted average interest rate of deposits with licensed banks of the Group during the financial year is 2.90% (2016: 3.00%) per
annum. Bank balances are deposits held at call with banks and earn no interest.

Deposits of the Group and of the Company have maturity period that ranges from 1 to 180 days (2016: 1 to 180 days).

The currency exposure profile of deposits, cash and bank balances as at end of the reporting period is as follows:

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 183,320 304,210 3,903 4,112


Indonesia Rupiah 16,540 24,605 - -
Bangladesh Taka 371 170 - -
Singapore Dollar 311 405 - -
Australian Dollar - 30,009 - -
200,542 359,399 3,903 4,112

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 247

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

28 ASSETS HELD FOR SALE

As at 31 December 2017, the assets held for sale and liabilities associated with assets held for sale, relate to the subsidiary which the
Board had resolved to divest as state in Note 14 to the financial statements.

The Directors are of the view that the subsidiary is expected to be disposed of within the next twelve months.

Assets and liabilities of disposal group classified as assets held for sale are as follows:

Group
2017
RM’000

Assets held for sale:


- Property, plant and equipment 102,606
- Investment properties (Note 18) 12,514
- Available-for-sale financial asset (Note 22) 17,688
- Other receivables 12,458
- Deposits, cash and bank balances 27,780
- Deferred tax assets 781
173,827

Liabilities associated with assets held for sale:


- Trade and other payables 156,360
- Borrowings 34,204
190,564

Borrowings consist of the followings:

2017 2016
RM’000 RM’000

Current
Conventional financing:
- Term loans 28,283 40,976
- Finance lease liabilities 50 95
- Revolving credits 5,871 5,905
34,204 46,976*

The borrowings are denominated in Australian Dollar.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
248 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

28 ASSETS HELD FOR SALE (CONTINUED)

The finance rate and effective finance rate is as follows:

Effective
finance rate
at reporting
date
Finance rate (% p.a)

2017
Term loans Fixed/Floating 4.74
Finance lease liabilities Fixed 5.85
Revolving credits Fixed/Floating 4.60

2016
Term loans Fixed/Floating 5.76*
Finance lease liabilities Fixed 5.43*
Revolving credits Fixed/Floating 4.64*

The fair value of the borrowing is approximately at its carrying value.

The borrowing is secured by:


(a) a Letter of Undertaking cum Awareness
(b) a charge on the specific FSRA & DSRA

Jeta Gardens (Qld) Pty Ltd and its subsidiaries have to comply with the following covenants:
(i) Debt service current ratio to be maintained at a minimum of 1.5 times.
(ii) Gearing ratio to be maintained not more than 3.5 times;

* Comparative figures are adjusted in Borrowings (Note 30).

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 249

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

29 TRADE AND OTHER PAYABLES AND AMOUNT DUE TO SUBSIDIARIES

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Non-current:
Amounts due to subsidiaries - - 200,359 241,269
Other payables 30,299 - - -
30,299 - 200,359 241,269
Current:
Trade payables 184,837 196,794 - -
Other payables 33,392 75,122 468 3,583
Resident upfront contribution - 80,338 - -
Accruals 226,295 129,841 16,945 12,012
Amount due to ultimate holding corporation 1,183 2,219 584 219
Amounts due to related companies 3,378 5,940 357 419
Amounts due to associates 3,762 668 - -
452,847 490,922 18,354 16,233
Amounts due to subsidiaries - - 157,136 174,280
Total 483,146 490,922 375,849 431,782

Non-current other payables comprises of retention sum that is not repayable in the next 12 months.

Advances from subsidiaries are unsecured and bear an effective weighted average interest rate of 5.85% (2016: 5.85%) per annum and
are not repayable in the next 12 months.

Amounts due to ultimate holding corporation, subsidiaries and other related companies are unsecured, interest free and repayable on
demand.

Credit terms of trade payables ranges from 30 to 60 days (2016: 30 to 60 days). The currency exposure profile of payables is as follows:

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 472,805 325,814 375,849 431,782


Indonesian Rupiah 8,666 59,321 - -
Bangladesh Taka 1,626 10,644 - -
Singapore Dollar 49 71 - -
Australian Dollar - 95,072 - -
483,146 490,922 375,849 431,782

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
250 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

30 BORROWINGS

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Current
Islamic financing
- Term loans (secured) 22,853 26,082 - -
- Revolving credits (unsecured) 309,500 212,500 257,000 160,000
- Finance lease liabilities (secured) 13,794 28,475 - -
- Bank overdrafts (unsecured) 2,094 5,369 - -
348,241 272,426 257,000 160,000

Conventional financing
- Term loans (secured) 1,237 41,398 - -
- Revolving credits (unsecured) - 5,905 - -
- Finance lease liabilities (secured) 891 6,472 - -
- Bank overdrafts (unsecured) - 7,244 - -
2,128 61,019 - -
350,369 333,445 257,000 160,000
Non-current
Islamic financing
- Islamic Medium Term Notes (unsecured) 900,000 900,000 - -
- Term loans (secured) 323,166 330,333 - -
- Finance lease liabilities (secured) 15,803 9,086 - -
 1,238,969 1,239,419 - -

Conventional financing
- Term loans (secured) 1,188 2,375 - -
- Finance lease liabilities (secured) 2,183 519 - -
3,371 2,894 - -
1,242,340 1,242,313 - -
1,592,709 1,575,758 257,000 160,000

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 251

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

30 BORROWINGS (CONTINUED)

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Total borrowing
Islamic financing
- Islamic Medium Term Notes (unsecured) 900,000 900,000 - -
- Term loans (secured) 346,019 356,414 - -
- Revolving credits (unsecured) 309,500 212,500 257,000 160,000
- Finance lease liabilities (secured) 29,597 37,561 - -
- Bank overdrafts (unsecured) 2,094 5,369 - -

Conventional financing
- Term loans (secured) 2,425 43,774 - -
- Revolving credits (unsecured) - 5,905 - -
- Finance lease liabilities (secured) 3,074 6,991 - -
- Bank overdrafts (unsecured) - 7,244 - -
1,592,709 1,575,758 257,000 160,000

The maturity profile of borrowings is as follows:


Less than 1 year 350,369 333,445 257,000 160,000
Between 1 and 5 years 977,362 475,306 - -
More than 5 years 264,978 767,007 - -
1,592,709 1,575,758 257,000 160,000

Finance lease obligations


Group
2017 2016
RM’000 RM’000

Gross finance lease liabilities – minimum lease payments:


- due not later than 1 year 15,284 36,381
- due later than 1 year and not later than 5 years 18,657 9,924
33,941 46,305
Future finance charges (1,220) (1,753)
32,721 44,552
Transfer to liabilities associated with assets held for sale (Note 28) (50) -
Present value of finance lease liabilities 32,671 44,552

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
252 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

30 BORROWINGS (CONTINUED)

The present value of finance lease liabilities is analysed as follows:


Group
2017 2016
RM’000 RM’000

Current
Due not later than 1 year 14,722 34,947

Non-current
Due later than 1 year and not later than 5 years 17,999 9,605
32,721 44,552
Transfer to liabilities associated with assets held for sale (Note 28) (50) -
Present value of finance lease liabilities 32,671 44,552

The borrowings are denominated as follows:

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 1,554,606 1,479,915 257,000 160,000


Australian Dollar - 46,976 - -
US Dollar 38,103 48,867 - -
1,592,709 1,575,758 257,000 160,000

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 253

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

30 BORROWINGS (CONTINUED)

Effective
finance rate
at reporting
Finance date
rate (% p.a)

2017
Term loans Fixed/Floating 4.10 – 5.97
Finance lease liabilities Fixed 2.40 – 5.45
Islamic Medium Term Notes Fixed 5.70 – 5.95
Bank overdrafts Floating 6.85
Revolving credits Fixed/Floating 3.67 – 4.97

2016
Term loans Fixed/Floating 4.50 – 5.97
Finance lease liabilities Fixed 2.64 – 5.43
Islamic Medium Term Notes Fixed 5.70 – 5.95
Bank overdrafts Floating 6.85
Revolving credits Fixed/Floating 4.34 – 4.70

Stated below are the fair values of the Group’s financial instruments, other than those with carrying amounts that are reasonable
approximations of fair values:

Group
Carrying value Fair value
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Term loans 324,354 332,708 281,146 274,234


Finance lease liabilities 17,986 9,605 17,334 9,035
Islamic Medium Term Notes 900,000 900,000 718,116 663,783
1,242,340 1,242,313 1,016,596 947,052

The significant borrowings are secured by:

Term loan - Syariah compliant

A third party, first legal charge over certain investment property including the building with a carrying amount of RM209,828,606
(2016: RM210,654,000) (Note 18).

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
254 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

30 BORROWINGS (CONTINUED)

Other borrowings are secured by:

(a) a Letter of Undertaking cum Awareness;


(b) negative pledge;
(c) an assignment of the proceeds to be received from the disposal of the building and lease/rentals;
(d) fixed and floating charge over certain present and future assets;
(e) third party’s loan agreement cum assignment over certain leasehold land;
(f) jointly and severally guaranteed by certain directors of a subsidiary;
(g) Corporate Guarantee;
(h) assignment of all Rights & Benefits or its equivalent over the relevant Takaful cover;
(i) a charge on the specific FSRA & DSRA and all monies standing to the credit of certain subsidiaries.

Finance lease liabilities are secured by the related equipment and motor vehicles.

In connection with certain borrowings, the Group and its subsidiaries have to comply with the following significant covenants:

At Group level:

(i) Gearing ratio being not more than 1.5 times for Islamic Medium Term Notes;
(ii) Gearing ratio of not more than 1.25 times for revolving credit facility.

At subsidiaries level:

(i) Gearing ratio of not more than 1.5 times;


(ii) Dividend declared or paid not more than fifty percent (50%) of profit after tax;
(iii) Debt service current ratio not more than 4.0 times.

31 DEFERRED REVENUE

Group
2017 2016
RM’000 RM’000

At 1 January 76,804 78,849


Additions 44,490 52,196
Earned during the financial year (52,830) (54,241)
At 31 December 68,464 76,804
Represented by:
Tuition fees 8,270 11,751
Wellness 60,194 65,053
68,464 76,804

The Wellness programme provides healthcare service packages over various contracted periods and can be utilised at any point in
time, subject to full payment of all applicable fees. Consequently, the amounts are classified as current.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 255

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

32 PROVISION FOR RETIREMENT BENEFITS

The Group operates an unfunded lump-sum benefit plan for eligible employees at a subsidiary company.

The movements during the financial year in the amount recognised in the statement of financial position are as follows:

Group
2017 2016
RM’000 RM’000

At 1 January 2,548 2,298


Charged to income statement (Note 10) 270 250
Retirement benefits paid (202) -
2,616 2,548

The amount recognised in income statement is as follows:

Current service cost 133 126


Interest cost on benefit obligation 137 124
270 250

The principal assumptions used in respect of the defined benefit plan of the Group are as follows:

Group
2017 2016
% %

Discount rate1 5.4 5.4


Expected rate of salary increase
- Non-management staff2 5.0 5.0
- Management staff 2
5.0 5.0
Turnover3 Age related Age related
scale of 25% scale of 25%
per annum per annum
prior age 25, prior age 25,
gradually gradually
reducing to 0% reducing to 0%
per annum by per annum by
age 50. age 50.

1
Discount rate is reflective of 10-15 year yield for AAA rated bond
2
Expected rate of salary increase is as per industry average
3
Turnover rate is relatively influenced by average employee age

The above assumptions derived from the latest actuarial valuation of the plan.

The valuation was carried out by third party actuaries, Towers Watson (Malaysia) Sdn Bhd.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
256 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

32 PROVISION FOR RETIREMENT BENEFITS (CONTINUED)

2017 2016
RM’000 RM’000

1. A 1% increase in salary increment rate


a Increase on defined benefit obligation 2,869 2,800
b Increase in net defined liability 254 254

2. A 1% decrease in salary increment rate


a Decrease on defined benefit obligation 2,869 2,802
b Decrease in net defined liability 254 254

33 DEPOSITS

Deposits represent amounts received from consultants, which are repayable on death, retirement (at age 65) or disability of the
consultants. Deposits are forfeited on termination of a consultant’s practice either by the Group due to events of breach or on early
termination by the consultant unless approval to refund is obtained from the board of directors.

34 SHARE CAPITAL

Group/Company
2017 2016
RM’000 RM’000

Issued and fully paid ordinary shares:


At 1 January 531,784 527,246

Issued during the financial year:


- Exercise of warrants (2014/2019) 730 1
- ESOS 24,075 4,537
24,805 4,538

Transfer pursuant to Section 618 of Companies Act 2016 (Note (a))* 179,480 -
At 31 December 736,069 531,784

* Pursuant to Section 618 of the Companies Act 2016, any outstanding Share Premium accounts shall become part of Ordinary
Share Capital.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 257

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

34 SHARE CAPITAL (CONTINUED)

(a) Transition to no-par value regime on 31 January 2017 under the Companies Act 2016

The Companies Act 2016 which came into effect on 31 January 2017 has repealed the Companies Act 1965. The Companies
Act 2016 has abolished the concept of par or nominal value of shares and hence, the share premium and authorised capital are
abolished. In accordance with section 618 of the new Companies Act 2016, any amount standing to the credit of the Company’s
share premium account become part of the Company’s share capital upon commencement of the Act. Notwithstanding this
provision, the Company may within 24 months from the date of the Act came into effect, use the amount standing to the credit of
its share premium accounts of RM179,480,000 for purposes as set out in Section 618 of the Act.

(b) Share split

At an Extraordinary General Meeting held on 24 August 2017, the shareholders of the Company approved the subdivision of
every 1 ordinary share in the company into 4 ordinary shares (“Share Split exercise” or “Subdivision of shares”). The Share Split
was effected on 26 September 2017 and was completed with the listing and quotation for 4,280,627,292 Subdivided Shares and
259,226,010 Additional Warrants on the Main Board of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) on 27 September
2017.

(c) Warrants (2014/2019)

On 29 January 2014, Warrants 2014/2019 were issued for free to the subscribers of the renounceable rights issue of 43,637,326
new ordinary shares of RM0.50 each in the Company’s Rights Shares on the basis of one (1) Rights Share for every fifteen (15)
existing shares held by the entitled shareholders of the Company, together with 87,274,652 free detachable new warrants
(“Warrants 2014/2019”) on the basis of two (2) Warrants 2014/2019 for every one (1) Rights Share subscribed at an issue price of
RM4.01 per Rights Share (“Rights Issue”).

Each new warrant (2014/2019) is entitled at any time during the exercise period, to subscribe for one (1) new ordinary share at the
exercise price of RM4.01. During the year, each warrant has been adjusted to RM1.0025 each pursuant to the Share Split exercise
on 26 September 2017.

Set out below are details of the Warrants (2014/2019) issued by the Company during the financial year:

Number of Warrants 2014/2019
Exercise (Exercised)/
price 1.1.2017 Granted 26.9.2017
Issuance date Expiry date RM/share ‘000 ‘000 ‘000

Before share split:


29 January 2014 23 January 2019 4.01 86,575 (166) 86,409

Adjustment
Under Share
26.09.2017 Split 31.12.2017
‘000 ‘000 ‘000

After share split:


29 January 2014 23 January 2019 1.0025 86,409 259,226 345,635

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
258 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

34 SHARE CAPITAL (CONTINUED)

Details relating to warrants exercised during the financial year are as follows:

Group/Company
2017 2016
RM’000 RM’000

Ordinary share capital 730 1


Share premium 1 1
Warrants (2014/2019) (61) (1)
Proceeds from exercise of warrants 670 1

Fair value at exercise date of shares issued 711 1

The fair value of shares issued on the exercise of warrants is the mean market price at which the Company’s shares were traded on
Bursa Malaysia on the day prior to the exercise of the warrants.

(d) Treasury shares

On 20 April 2017, at the Annual General Meeting, the shareholders of the Company renewed their approval for the Company to
buy-back its own shares of up to ten percent (10%) of the issued and paid-up share capital of the Company.

During the financial year, the Company repurchased 687,000 ordinary shares of its issued share capital from the open market
at an average price of RM0.92 per share. The repurchase transactions were financed by internally generated funds. The shares
repurchased are held as treasury shares and accounted for in accordance with the requirement of Section 127 of the Companies
Act 2016.

As at 31 December 2017, the Company held a total of 63,047,000 of its 4,281,413,272 issued ordinary shares as treasury shares.
Such treasury shares are held at a carrying amount of RM55,411,213.

35 SHARE-BASED PAYMENTS

An Employees Share Option Scheme (“ESOS”) was implemented on 27 February 2015 for the benefit of senior executives and certain
employees of the Company. The ESOS shall be in-force for a period of 5 years. The fair value of each share option on the grant date is
RM1.01. The options are to be settled only by the issuance and allocation of new ordinary shares of the Company. There are no cash
settlement alternatives.

The exercise price of the share options granted under the ESOS is RM3.64 each. The options granted are divided into 5 equal tranches
which vest on 14 April 2015, 27 February 2016, 27 February 2017, 27 February 2018 and 27 February 2019. The vesting condition is
that the offeree must be an employee or director, as the case may be, of the Company or its subsidiaries on the respective vesting and
exercise dates. The options expire on 27 February 2020.

During the year, the company offered additional ESOS to eligible employees. The fair value of additional ESOS issued during the
financial year is RM1.01 and the exercise price is RM3.64 (2016: RM3.64).

Following the Share Split exercise which was completed on 27 September 2017, the exercise price of the share options granted under
the ESOS has been adjusted to RM0.91, while fair value is now RM0.25.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 259

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

35 SHARE-BASED PAYMENTS (CONTINUED)

Movement of share options during the financial year

The following table illustrates the number of, and movements in, share options of the Company during the financial year.

2017 2016
Unit ’000 Unit ’000

Number of share options at exercise price of RM 3.64 each:

Outstanding as at 1 January 74,926 88,009

- Granted 534 1,048


- Exercised (6,421) (9,075)
- Lapsed (2,658) (5,056)
Outstanding as at 26 September 2017/31 December 2016 66,381 74,926

Number of share options at exercise price of RM 0.91 each (Adjusted pursuant to the Share Split
on 26 September 2017)

Outstanding as at 27 September 2017 265,524 -

- Exercised (786) -
- Lapsed (4,731) -
Outstanding as at 31 December 2017 260,007 -

Exercisable at end of financial year 114,534 23,416

The fair value of the ESOS granted in which MFRS 2 applies, were determined using the Black–Scholes valuation model. The significant
inputs in the model are as follows:

Description of ESOS Before share split After share split

Fair value per option RM1.01 RM0.25


Exercise price RM3.64 RM0.91
Option life 5 years No changes
Weighted average share price at grant date RM4.04 No changes
Expected dividend yield 1.90% No changes
Risk free interest rates 3.35% to 3.62% No changes
Expected volatility 20% No changes

The amounts recognised in the financial statements is as disclosed in Notes 10 to the financial statements arising from the ESOS
granted to Directors and employees of the Group and the Company.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
260 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

36 OTHER RESERVES

Warrant Merger Exchange Revaluation Share option


reserve reserve reserves reserve reserve
(Note a) (Note b) (Note c) (Note d) (Note e) Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
At 1 January 2017 31,692 (3,367) (2,099) 87,862 50,111 164,199
Other comprehensive
income
Translation of foreign
subsidiaries - - (3,035) - - (3,035)
Revaluation surplus - - - 10,208 - 10,208

Total other comprehensive


loss - - (3,035) 10,208 - 7,173
31,692 (3,367) (5,134) 98,070 50,111 171,372
Transactions with owners:

Issue of share capital:


- warrants (61) - - - - (61)
- ESOS - - - - (1,324) (1,324)
(61) - - - (1,324) (1,385)

ESOS expenses during the


financial year - - - - 13,171 13,171
Lapsed ESOS - - - - (769) (769)
Total transactions with
Owners (61) - - - 11,078 11,017
At 31 December 2017 31,631 (3,367) (5,134) 98,070 61,189 182,389

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 261

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

36 OTHER RESERVES (CONTINUED)

Warrant Merger Exchange Revaluation Share option


reserve reserve reserves reserve reserve
(Note a) (Note b) (Note c) (Note d) (Note e) Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
At 1 January 2016 31,693 (3,367) (2,028) 105,914 24,496 156,708
Other comprehensive
income
Translation of foreign
subsidiaries - - (71) - - (71)
Revaluation surplus - - - 15,520 - 15,520
Reclassification of unrealised
gain in relation to an
associate (Note 22) - - - (33,572) - (33,572)
Total other comprehensive
loss - - (71) (18,052) - (18,123)
31,693 (3,367) (2,099) 87,862 24,496 138,585
Transactions with owners:

Issue of share capital:


- warrants (1) - - - - (1)
- ESOS - - - - (1,815) (1,815)
(1) - - - (1,815) (1,816)

ESOS expenses during the


financial year - - - - 27,818 27,818
Lapsed ESOS - - - - (388) (388)
Total transactions with
Owners (1) - - - 25,615 25,614
At 31 December 2016 31,692 (3,367) (2,099) 87,862 50,111 164,199

(a) Warrant reserve is a reserve arising from the fair value of the right issue discount. When the warrants are exercised, the related
amounts are transferred to share capital. When the warrants are not exercised and lapsed, the related warrant reserve is transferred
to retained earnings.

(b) The difference between the issue price and the nominal value of shares issued that arose from a merger was classified as merger
reserve.

(c) Exchange reserve is used to record exchange differences arising from the translation of financial statements of subsidiaries/
associate whose functional currency differs from the Group’s presentation currency.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
262 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

36 OTHER RESERVES (CONTINUED)

(d) Revaluation reserve (non-distributable)

Group
2017 2016
RM’000 RM’000

At 1 January 87,862 105,914


Revaluation surplus, net of tax 10,208 15,520
Reclassification of unrealised gain in relation to an associate* (Note 22) - (33,572)
At 31 December 98,070 87,862

The revaluation reserve represents surplus from the revaluation of the Group’s land and buildings.

* This relates to portion of unrealised gain from disposal of land and building to an associate in prior year.

(e) Share option reserve is a reserve created arising from the fair value of the employee services provided. When the ESOS options
are exercised, the related amounts are transferred to share capital. When options are not exercised and lapsed, the related share
option reserve is transferred to retained earnings.

37 SIGNIFICANT RELATED PARTY DISCLOSURES

The Group is a subsidiary of Johor Corporation, a body corporate established under the Johor Corporation Enactment No. 4, 1968
(as amended by the Enactment No. 5, 1995). During the ordinary course of business, the Group transacts with various state related
government agencies and departments, mainly relating to land premiums, utilities payments and administrative services. These are
based on normal commercial terms and are individually immaterial to warrant separate disclosure.

In addition to the related party disclosures elsewhere in the financial statements, set out below are other significant related party
transactions and balances. The related party transactions described below were carried out on negotiated terms.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 263

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

37 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)

(a) Significant related party transactions

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Type of transactions

Group and Company

Project management fee to associate - 5,481 - -


Proceeds receivable from disposal of carparks to an
associate* 13,000 - - -
Rental expense to an associate* 93,063 102,143 - -
Payments under Development Agreement (Note 25)
on behalf of an associate* - 6,466 - -
Management fee from subsidiaries - - (48,014) (43,240)
Dividend received (net) from subsidiaries - - (108,388) (141,546)
Interest expense to subsidiaries - - 10,347 9,740
Advances from subsidiaries - - - 20,162
Dividends received from associates 23,390 22,889 - -

*Al-’Aqar Healthcare REIT

Johor Corporation group of companies

Secretarial fee 427 1,245 56 151


Insurance premiums 2,910 5,147 - -
Dividend paid - - 27,226 23,900
Contribution to Klinik Waqaf An-Nur 3,174 3,498 - -
Purchase of land 12,060 - - -

Management fees charged to subsidiaries are in respect of operational and administrative function of the subsidiaries which are
performed by employees of the Company.

Information regarding outstanding balances arising from related party transactions as at the financial year end are disclosed in
Note 25 and 29.

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
264 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

37 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)

(b) Key management personnel compensation

Key management personnel are defined as those persons having authority and responsibility for planning, directing and
controlling the activities of the Company whether directly or indirectly. The key management personnel of the Company comprise
Directors and the Executive Committee of the Company. Details on the compensation for these key management personnel are
disclosed as below:

Group Company
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Directors’ remuneration (Note 11) 3,829 3,229 3,634 3,040


Salaries, allowances and bonuses 1,913 3,356 1,826 3,356
Contributions to defined contribution plan 250 369 250 369
Share based payments 84 187 84 187
6,076 7,141 5,794 6,952

38 NON-CANCELLABLE OPERATING LEASE COMMITMENTS

The future minimum lease payments under non-cancellable operating leases are as follows:

Group
2017 2016
RM’000 RM’000

Represented by:

Not later than 1 year 102,608 100,909


Later than 1 year and not later than 2 years 205,719 204,957
Later than 2 years and not later than 5 years 305,430 308,992
Later than 5 years 2,357,340 2,453,835
2,971,097 3,068,693

The Group has entered into contractual agreements with Amanah Raya Berhad (as Trustee for Al-’Aqar Healthcare REIT) and Damansara
REIT Managers Sdn Bhd to lease certain hospital land and buildings including certain equipment for a period of fifteen years, with an
option to renew for another fifteen years subject to terms and conditions as stipulated in the agreement.

The minimum lease payments above are also subject to an incremental rental payable every 3 years based on the adjusted risk free
government security rate but subject to a minimum yield of the market value of the property.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 265

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

39 CONTINGENT LIABILITIES

The Group is subject to litigations in the ordinary course of business, mainly arising from its subsidiaries hospital operations. The
Directors are of the opinion that, based on legal advice and malpractice insurance taken by the Group, no significant exposure will arise
that requires recognition.

40 CAPITAL COMMITMENTS

Capital expenditure not provided for in the financial statements is as follows:

Group
2017 2016
RM’000 RM’000

Approved by the Directors and contracted 187,065 235,874


Approved by the Directors but not contracted 273,337 159,297
460,402 395,171
Analysed as follows:
- Buildings 314,490 310,962
- Medical equipments 111,993 57,092
- Other property, plant and equipment 33,919 27,117
460,402 395,171

41 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) Disposal of carpark block to Al-’Aqar Healthcare REIT

On 11 December 2017, the Board of Directors of the Group had announced that the Group’s Subsidiary, KPJ Selangor Specialist
Hospital had entered into a Sale and Purchase Agreement (“SPA”) with the REIT Trustee, being the trustee of Al-’Aqar Healthcare
REIT to dispose a 5-storey carpark block together with a half basement level and an open roof level (building only) in Shah Alam
for a consideration of RM13,000,000. The Conditions Precedent stated in the Sale and Purchase Agreement had been fulfilled on
27 December 2017.

(b) Planned disposal of aged care of operation in Australia

During the year, the Directors have approved the divestment of aged care operations in Australia, by disposing its shares in Jeta
Gardens (Qld) Pty Ltd (“Jeta Gardens”) and its subsidiaries.

As of 31 December 2017, Jeta Gardens is in a net liability position of RM16.7 million.

The disposal is expected to be completed in 2018. The investment in Jeta Gardens has been presented as an asset held for sale
as at 31 December 2017 in the financial statements in accordance with the criteria set out in MFRS 5 “Non-current Assets Held For
Sale and Discontinued Operations” (Note 28).

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
266 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

42 EVENTS SUBSEQUENT TO THE END OF FINANCIAL YEAR

On 23 January 2018, the Board of Directors of the Group had announced that the Group’s wholly-owned subsidiary, Kumpulan Perubatan
(Johor) Sdn Bhd (“KPJSB”) and KPJSB’s wholly owned subsidiary Lablink (M) Sdn Bhd (“Lablink”), had entered into a Subsciption and
Share Purchase Agreement (“SSPA”) with KL Kappa Sdn Bhd (“KL Kappa” or “Investor”) for the subscription of new shares in Lablink by
KL Kappa and for the purchase of certain existing shares in Lablink by KL Kappa from KPJSB.

The proposed SSPA marks the beginning of the partnership between the company and KL Kappa to grow Lablink’s pathology and
diagnostics businesses in Malaysia and explore new growth markets in Southeast Asia to become the region’s leader in pathology and
diagnostics services. The SSPA involves the proposed issuance of new shares in Lablink to KL Kappa and the selling of existing Lablink
shares by KPJSB to KL Kappa that will collectively result in KL Kappa having a 49% stake in Lablink’s enlarged share capital, with the
remaining 51% held by KPJSB.

Subject to the adjustment mechanism contained in the SSPA, KL Kappa shall subscribe for new Lablink shares and purchase existing
Lablink shares from KPJSB for a total cash consideration of RM119,920,226.

43 SEGMENTAL REPORTING

Operating segments are reported in a manner consistent with the internal management reporting provided to the chief operating
decision maker (“CODM”), which is the Board of Directors (“BOD”). The BOD considers the business by geographical location. The
reportable segments for the financial year have been identified as follows:

Continuing operations

(i) Malaysia - All healthcare activities including the private hospitals, pathology and laboratory services and distribution of
pharmaceutical, medical and consumer healthcare products.
(ii) Others – Operating segments involved in provision of hospital services in Indonesia, Thailand and Bangladesh, private university
college of nursing and allied health and sale of hospital merchandise and other similar activities, none of which are individually
significant to warrant separate disclosure per quantitative thresholds required by MFRS 8.

Discontinued operation

(i) Australia - Providing retirement village and aged care facilities

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis.

The BOD assesses the performance of the operating segments based on EBITDA and profit before zakat and tax.

A N N UA L R E PO RT 2017
FI N A N C I A L STAT EM EN T S
KP J H E ALT H CARE B ER H A D 267

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

43 SEGMENTAL REPORTING (CONTINUED)

Continuing Discontinued
operations operation
Malaysia Others Sub-total Australia Total
RM’000 RM’000 RM’000 RM’000 RM’000

Year ended 31 December 2017


Revenue
Revenue from external customers 3,071,356 108,642 3,179,998 54,816 3,234,814
Year ended 31 December 2017
Results
EBITDA* 444,871 (3,240) 441,631 (3,130) 438,501
Profit/(loss) before zakat and tax 249,206 (15,880) 233,326 (8,050) 225,276
Total assets 3,747,427 312,654 4,060,081 173,827 4,233,908
Total liabilities 2,143,915 84,218 2,228,133 190,564 2,418,697
Additions to property, plant and equipment 461,099 5,524 466,623 18 466,641

* Earnings before interest, taxation, depreciation and amortisation (“EBITDA”)

Continuing Discontinued
operations operation
Malaysia Others Sub-total Australia Total
RM’000 RM’000 RM’000 RM’000 RM’000

Year ended 31 December 2016


Revenue
Revenue from external customers 2,855,588 114,015 2,969,603 51,491 3,021,094
Year ended 31 December 2016
Results
EBITDA* 411,729 18,431 430,160 (4,833) 425,327
Profit/(loss) before zakat and tax 214,242 6,455 220,697 (10,526) 210,171
Total assets 3,322,014 417,035 3,739,049 196,450 3,935,499
Total liabilities 1,683,370 358,270 2,041,640 209,130 2,250,770
Additions to property, plant and equipment 247,776 8,773 256,549 4,376 260,925

* Earnings before interest, taxation, depreciation and amortisation (“EBITDA”)

w w w. kp j h ea l t h . c o m . m y
F I N A N C I A L STAT E ME NTS
268 K PJ HEALT HCARE BERHAD

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

For the financial year ended 31 December 2017 (Continued)

43 SEGMENTAL REPORTING (CONTINUED)

The reconciliation of EBITDA to profit for the financial year is as follows:

2017 2016
RM’000 RM’000
Restated

Continuing operations:
EBITDA 441,631 430,160
Depreciation and amortisation (128,355) (129,277)
Finance cost (79,950) (80,186)
Profit before zakat and tax 233,326 220,697
Zakat and tax (60,030) (57,064)
Profit for the financial year 173,296 163,633
Discontinued operation:
Loss for the financial year (6,386) (7,758)

A N N UA L R E PO RT 2017
A D D I T I O N A L I N FO R M AT I O N
KP J H E ALT H CARE B ER H A D 269

S H A R E H O L D I N G S S TAT I S T I C S
as at 28 February 2018

Authorised Shares : 1,500,000,000


Issued Shares : 4,281,823,992 less 65,770,600 Treasury Shares = 4,216,053,392
Class of Shares : Ordinary Share

Voting Right of Shareholders

Every member of the Company present in person or by proxy shall have one vote on a show of hand and in the case of a poll shall have one
vote for every share of which he/she is the holder.

Break down of Shareholdings

No. of No. of
Size of Shareholdings Shareholders % Shares %

Less than 100 125 1.85 4,522 -


100 – 1000 646 9.53 351,423 0.01
1,001 – 10,000 2,684 39.61 14,460,449 0.34
10,001 – 100,000 2,632 38.84 82,067,582 1.95
100,001 to less than 5% of Issued Capital 682 10.07 1,568,062,704 37.19
5% and above of Issued Capital 7 0.10 2,551,106,712 60.51
TOTAL 6,776 100.00 4,216,053,392 100.00

w w w. kp j h ea l t h . c o m . m y
ADDI T I O N A L I N F OR MATIO N
270 K PJ HEALT HCARE BERHAD

S H A R E H O L D I N G S S TAT I S T I C S

as at 28 February 2018

Top Thirty Securities Account Holders

(Without aggregating the securities from different securities accounts belonging to the same depositor)

No. Name No. of Shares %

1. Citigroup Noms (T) Sdn Bhd - A/C Employees Provident Fund Board 534,868,380 12.69
2. Johor Corporation 443,962,269 10.53
3. Maybank Noms (T) Sdn Bhd - A/C Johor Corporation 425,560,000 10.09
4. Johor Corporation 377,499,780 8.95
5. Waqaf An-Nur Corporation Berhad 304,575,636 7.22
6. RHB Noms (T) Sdn Bhd - A/C Johor Corporation 252,028,247 5.98
7. AmanahRaya Trustees Berhad - A/C Amanah Saham Bumiputera 212,612,400 5.04
8. Lembaga Tabung Haji 151,900,000 3.60
9. AmanahRaya Trustees Berhad - A/C Amanah Saham Malaysia 100,000,000 2.37
10. Maybank Noms (T) Sdn Bhd - A/C Maybank Trustees Berhad for Public Ittikal Fund (N14011970240) 71,047,100 1.69
11. AmanahRaya Trustees Berhad - A/C Amanah Saham Bumiputera 2 70,000,000 1.66
12. AmanahRaya Trustees Berhad - A/C Amanah Saham Didik 68,193,600 1.62
13. AmanahRaya Trustees Berhad - A/C Public Islamic Dividend Fund 56,396,940 1.34
14. AmanahRaya Trustees Berhad - A/C Public Ittikal Sequel Fund 56,221,064 1.33
15. AmanahRaya Trustees Berhad - A/C Public Islamic Select Treasures Fund 51,835,572 1.23
16. Kumpulan Wang Persaraan (Diperbadankan) 50,164,000 1.19
17. AmanahRaya Trustees Berhad - A/C AS 1MALAYSIA 48,089,900 1.14
18. AmanahRaya Trustees Berhad - A/C Public Islamic Sector Select Fund 38,400,000 0.91
19. HSBC Noms (A) Sdn Bhd - A/C BBH and Co Boston for Vanguard Emerging Markets Stock Index Fund 36,377,600 0.86
20. Cartaban Noms (A) Sdn Bhd - A/C Exempt An for State Street Bank & Trust Company (WEST CLT OD67) 35,620,100 0.84
21. Johor Corporation 34,565,248 0.82
22. Cartaban Noms (T) Sdn Bhd - A/C PAMB for Prulink Equity Fund 32,113,200 0.76
23. Citigroup Noms (A) Sdn Bhd - A/C Exempt An for Citibank New York (NORGES Bank 9) 29,029,278 0.69
24. HSBC Noms (A) Sdn Bhd - A/C JPMCB NA for Vanguard Total International Stock Index Fund 27,566,760 0.65
25. AmanahRaya Trustees Berhad - A/C Public Islamic Equity Fund 26,786,544 0.64
26. AmanahRaya Trustees Berhad - A/C Public Islamic Select Enterprises Fund 26,094,484 0.62
27. Citigroup Noms (A) Sdn Bhd - A/C CBNY for DFA Emerging Markets Small Cap Series 21,715,000 0.52
28. AmanahRaya Trustees Berhad - A/C Public Islamic Opportunities Fund 18,964,100 0.45
29. Kulim (Malaysia) Berhad 18,938,600 0.45
30. HSBC Noms (A) Sdn Bhd - A/C JPMBL SA For Aviva Investors 17,244,600 0.41

A N N UA L R E PO RT 2017
A D D I T I O N A L I N FO R M AT I O N
KP J H E ALT H CARE B ER H A D 271

S H A R E H O L D I N G S S TAT I S T I C S

as at 28 February 2018

Substantial Shareholders

Direct Indirect
No. Name No. of Shares % No. of Shares %

1. Johor Corporation - 6 a/cs 1,533,915,544 36.38 325,979,376 7.73


2. Citigroup Noms (T) Sdn Bhd - A/C Employees Provident Fund 543,591,780 12.89 - -
Board - 3 a/cs
3. Waqaf An-Nur Corporation Berhad 304,575,636 7.22 - -
4. AmanahRaya Trustees Berhad - A/C Amanah Saham 212,612,400 5.04 - -
Bumiputera

Analysis of Shareholders

No. of No. of
Shareholders % Shares %

Malaysian
- Bumiputra 1,626 24.00 3,102,506,765 73.59
- Others 4,952 73.08 812,321,736 19.27
Foreigners 198 2.92 301,224,891 7.14
TOTAL 6,776 100.00 4,216,053,392 100.00

Directors’ Shareholding as at 28 February 2018

No. Name of Directors No. of Shares %

1. Dato’ Kamaruzzaman Abu Kassim 254,500 0.01


2. Dato’ Amiruddin Abdul Satar 25,064 -
3. Tan Sri Datin Paduka Siti Sa’diah Sh Bakir - 2 a/cs 4,800,000 0.11
4. Dr. Kok Chin Leong 1,516,400 0.04
5. Datuk Azzat Kamaludin 1,200,000 0.03
6. Zainah Mustafa 1,000,000 0.02
7. Mohd Sahir Rahmat 860,000 0.02
8. Dato’ Dr. Zaki Morad Mohamad Zaher 80,000 -
9. Aminudin Dawam 44,788 -
10. Zulkifli Ibrahim - -
11. Prof. Dato’ Dr. Azizi Haji Omar - -

w w w. kp j h ea l t h . c o m . m y
ADDI T I O N A L I N F OR MATIO N
272 K PJ HEALT HCARE BERHAD

WA R R A N T H O L D I N G S S TAT I S T I C S
as at 28 February 2018

Break down of Warrantholdings

No. of No. of
Size of Warrantholdings Warrantholders % Warrants %

Less than 100 39 2.61 1,021 -


100 – 1000 317 21.20 176,228 0.05
1,001 – 10,000 810 54.18 2,795,796 0.81
10,001 – 100,000 268 17.93 9,272,324 2.68
100,001 to less than 5% of Issued Capital 58 3.88 48,974,535 14.17
5% and above of Issued Capital 3 0.20 284,414,776 82.29
TOTAL 1,495 100.00 345,634,680 100.00

Top Thirty Securities Account Holders

(Without aggregating the securities from different securities accounts belonging to the same depositor)

No. Name No. of Warrants %

1. RHB Noms (T) Sdn Bhd - A/C Johor Corporation 145,677,976 42.15
2. Kulim (Malaysia) Berhad 119,493,800 34.57
3. CIMSec Noms (T) Sdn Bhd - A/C CIMB Bank for Liew Jun Kuan (MY0750) 19,243,000 5.57
4. Waqaf An-Nur Corporation Berhad 8,009,376 2.32
5. CIMSec Noms (T) Sdn Bhd - A/C CIMB Bank For Liew Jun Kuan (MH6869) 7,255,600 2.10
6. Amanahraya Trustees Berhad - A/C Public Islamic Dividend Fund 3,787,680 1.10
7. RHB Capital Noms (T) Sdn Bhd - A/C Sher Khan bin Khan Mohamad (CEB) 2,507,000 0.73
8. Maybank Secs Noms (A) Sdn Bhd - A/C Maybank Kim Eng Securities Pte Ltd for Poh Eng Choo 2,200,000 0.64
9. CIMSec Noms (T) Sdn Bhd - A/C For Koh Chong Hap (Penang-CL) 2,157,200 0.62
10. Amanahraya Trustees Berhad - A/C Public Islamic Equity Fund 2,021,488 0.58
11. Affin Hwang Noms (T) Sdn. Bhd. - A/C For Mohd Fauzy Bin Abdullah (M09) 1,600,000 0.46
12. Johor Corporation 1,370,800 0.40
13. RHB Capital Noms (T) Sdn Bhd - A/C For Nor Azizy binti Abdul Aziz (CEB) 1,343,800 0.39
14. HSBC Noms (A) Sdn Bhd - A/C JPMCB NA for Vanguard Total International Stock Index Fund 1,277,920 0.37
15. Lim Yong Hiang 1,233,100 0.36
16. Maybank Noms (T) Sdn Bhd - A/C Kek Lian Lye 1,102,000 0.32
17. Amanahraya Trustees Berhad - A/C Public Islamic Select Enterprises Fund 1,070,068 0.31
18. Sher Khan bin Khan Mohamad 980,000 0.28
19. Ahmad Suhaimee bin Mohammed Yassin 970,000 0.28
20. Mohd Firdauz bin Mohd Fauzy 960,000 0.28
21. Yeoh Siew Leng 919,200 0.27
22. Caroline Ang Chai Boon 464,000 0.13
23. Citigroup Noms (A) Sdn Bhd - A/C Exempt AN for Citibank New York (Norges Bank 1) 401,715 0.12
24. Lee Thian Chai 373,016 0.11
25. MERCSec Noms (T) Sdn Bhd - A/C For Mohd Fauzy bin Abdullah 372,000 0.11
26. Public Noms (T) Sdn Bhd - A/C For Cheong Yew Fatt (E-BPJ) 340,000 0.10
27. Yeoh Huat Chee 331,664 0.10
28. Liew Lee Kien 330,000 0.10
29. RHB Noms (T) Sdn Bhd - A/C For Lim Yong Kee 320,000 0.09
30. Yew Chee Yoon 300,000 0.09

A N N UA L R E PO RT 2017
A D D I T I O N A L I N FO R M AT I O N
KP J H E ALT H CARE B ER H A D 273

W A R R A N T H O L D I N G S S TAT I S T I C S

as at 28 February 2018

Substantial Warrantholders

No. Name No. of Warrants %

1. RHB Noms (T) Sdn Bhd - A/C Johor Corporation 145,677,976 42.15
2. Kulim (Malaysia) Berhad 119,493,800 34.57
3. CIMSec Noms (T) Sdn Bhd - A/C CIMB Bank for Liew Jun Kuan (MY0750) 19,243,000 5.57

Analysis of Warrantholders

No. of No. of
Warrantholders % Warrants %

Malaysian

- Bumiputra 363 24.28 324,883,736 93.99

- Others 1,095 73.24 16,027,913 4.64


Foreigners 37 2.48 4,723,031 1.37
TOTAL 1,495 100.00 345,634,680 100.00

Directors’ Warrantholding as at 28 February 2018

No. Name of Directors No. of Shares %

1. Dato’ Kamaruzzaman Abu Kassim 223,000 0.06


2. Dato’ Amiruddin Abdul Satar 2,128 -
3. Tan Sri Datin Paduka Siti Sa’diah Sh Bakir - 2 a/cs 437,992 0.13
- Indirect (Amy Nadzlina binti Mohamed) 664 -
4. Dr. Kok Chin Leong 84,800 0.03
5. Datuk Azzat Kamaludin 32,000 0.01
6. Zainah Mustafa - -
7. Mohd Sahir Rahmat 44,800 0.01
8. Dato’ Dr. Zaki Morad bin Mohamad Zaher - -
9. Aminudin Dawam - -
10. Zulkifli Ibrahim - -
11. Prof. Dato’ Dr. Azizi Haji Omar - -

w w w. kp j h ea l t h . c o m . m y
ADDI T I O N A L I N F OR MATIO N
274 K PJ HEALT HCARE BERHAD

C L A S S I F I C AT I O N O F S H A R E H O L D E R S
as at 28 February 2018

TOTAL BUMIPUTRA NON -BUMIPUTRA FOREIGN


ROD Holder Shares Holder Shares Holder Shares Holder Shares

Government Bodies 16 1,863,120,252 16 1,863,120,252 - - - -


Finance 32 1,027,727,396 27 1,010,246,132 5 17,481,264 - -
Investment Trust 6 1,240,576 6 1,240,576 - - - -
Nominees 1,471 1,052,209,912 772 150,315,881 567 607,770,088 132 294,123,943
Companies 79 25,690,648 33 18,779,704 41 5,404,044 5 1,506,900
Clubs / Association 1 1,770,000 1 1,770,000 - - - -
Co - Operatives 4 630,000 4 630,000 - - - -
Others 1 40 - - 1 40 - -
Individuals 5,166 243,664,568 767 56,404,220 4,338 181,666,300 61 5,594,048
TOTAL 6,776 4,216,053,392 1,626 3,102,506,765 4,952 812,321,736 198 301,224,891
% 100.00 100.00 24.00 73.59 73.08 19.27 2.92 7.14

C L A S S I F I C AT I O N O F W A R R A N T H O L D E R S
as at 28 February 2018

TOTAL BUMIPUTRA NON -BUMIPUTRA FOREIGN


ROD Holder Shares Holder Shares Holder Shares Holder Shares

Government Bodies 8 274,772,400 8 274,772,400 - - - -


Finance 4 6,884,564 4 6,884,564 - - - -
Investment Trust 2 27,192 2 27,192 - - - -
Nominees 357 43,954,719 189 35,976,672 144 3,528,328 24 4,449,719
Companies 28 1,221,120 18 925,000 10 296,120 - -
Clubs / Association 1 157,328 1 157,328 - - - -
Individuals 1,095 18,617,357 141 6,140,580 941 12,203,465 13 273,312
TOTAL 1,495 345,634,680 363 324,883,736 1,095 16,027,913 37 4,723,031
% 100.00 100.00 24.28 93.99 73.24 4.64 2.47 1.37

A N N UA L R E PO RT 2017
A D D I T I O N A L I N FO R M AT I O N
KP J H E ALT H CARE B ER H A D 275

LIST OF TOP 10 PROPERTIES

Latest Market NBV as at


date of value 2017 31.12.2017 Tenure & Area (in Age of
No. Company Location Description valuation RM million RM million expiry date sq metre) building

1. Kumpulan Menara KPJ, Land and 31-Dec- 231.5 231.5 Freehold land 51,505 19 years
Perubatan 238 Jalan Tun Razak, office 17
(Johor) 50400 Kuala Lumpur building
Sdn Bhd
2. SMC TL 017553221, Hospital 31-Dec- 186.1 186.1 NA 42,211 4 years
Healthcare Jalan Bersatu, building 16
Sdn Bhd Off Jalan Damai,
Luyang, Kota Kinabalu,
Sabah
3. Pahang Lot 105703 Land and 31-Dec- 83.6 83.6 Leasehold 12,940 2 years
Specialist (HSM 65652) hospital 16 land (99 years
Hospital Jalan Tanjung Lumpur, building expiring on
Sdn Bhd 26060 Kuantan, 17 April 2106)
Pahang Darul Makmur
4. Rawang PT 4156, Section 16, Land and 31-Dec- 80.0 80.0 Leasehold 33,771 5 years
Specialist Jalan Rawang, hospital 16 land (99 years
Hospital Bandar Baru Rawang, building expiring on
Sdn Bhd 48000 Rawang, 7 September
Selangor 2103)
5. PT Al-Aqar Jalan Letnan Soetopo, Land and 31-Dec- 70.5 70.5 Leasehold 34,172 12 years
Bumi Serpong Kav. Kom. IIIA No 07, hospital 17 land (20 years
Damai Serpong District, building expiring on
Tangerang, 15 July 2027)
15330 Banten,
Indonesia
6. Pasir Gudang Lot PTD 204781, Land and 31-Dec- 69.9 69.9 Leasehold 13,144 5 years
Specialist Mukim Plentong, hospital 16 land (99 years
Hospital Johor Bahru, Johor building expiring on
Sdn Bhd 28 December
2108)
7. Maharani Lot 2024, Land and 31-Dec- 65.0 65.0 Freehold land 30,224 4 years
Specialist Bandar Maharani, hospital 15
Hospital Muar, Johor building
Sdn Bhd
8. Amity TL 017553221, Land 31-Dec- 57.0 57.0 Leasehold 16,850 NA
Development Jalan Damai, 17 land (999 years
Sdn Bhd District of Kota expiring on
Kinabalu, Sabah 5 February
2910)
9. Selangor PT No. 2, Section 20, Land and N/A 52.8 52.8 Leasehold 18,984 1 year
Specialist Town of Shah Alam, hospital land (99 years
Hospital District Petaling, building expiring on
Sdn Bhd Selangor Darul Ehsan 1 July 2096)

10. Bandar Dato HSD 501209 Land 31-Dec- 47.0 47.0 Freehold land 54,034 NA
Onn Specialist PTD 163189, 15
Hospital Bandar Dato’ Onn,
Sdn Bhd Mukim Tebrau,
Daerah Johor Bahru

w w w. kp j h ea l t h . c o m . m y
ADDI T I O N A L I N F OR MATIO N
276 K PJ HEALT HCARE BERHAD

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Twenty Fifth (25th) Annual General Meeting (“AGM”) of KPJ Healthcare Berhad (“KPJ” or the “Company”)
will be held at Tanjung Puteri 302, Persada Johor International Convention Centre, Jalan Abdullah Ibrahim, 80000 Johor Bahru, Johor, on
Monday 23 April 2018 at 12.00 p.m. for the following purposes:-

AGENDA

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the year ended 31 December 2017 and the Reports of the Please refer Note (4)(i)
Directors and Auditors thereon.

2. To re-elect the following Directors of the Company who will retire in accordance with the Articles of
Association of the Company:-
Tan Sri Datin Paduka Siti Sa’diah Sh Bakir - Article 96 (Ordinary Resolution 1)
Prof Dato’ Dr. Azizi Hj Omar - Article 96 (Ordinary Resolution 2)
Mohd Sahir Rahmat - Article 97 (Ordinary Resolution 3)
Dato’ Dr. Zaki Morad Mohamad Zaher - Article 97 (Ordinary Resolution 4)

3. To approve the Proposed Directors’ fees of RM925,000 (“Proposed Directors’ Fees”) for the financial year (Ordinary Resolution 5)
ending 31 December 2018 (2017 : RM925,000). (Note (4)(ii))

4. To approve the payment of Directors’ Remuneration (excluding Proposed Directors’ Fees) to (Ordinary Resolution 6)
Non-Executive Directors (“NED”) for the period from 1 May 2018 until the conclusion of the next AGM of
the Company (“Relevant Period’). (Note (4)(ii))

5. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and to authorise the Directors (Ordinary Resolution 7)
to fix their remuneration.

SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions:

CONTINUING IN OFFICE AS INDEPENDENT NON-EXECUTIVE DIRECTORS

6. “THAT Zainah Mustafa who has served as an Independent Non-Executive Director of the Company for a (Ordinary Resolution 8)
cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director
of the Company until the conclusion of the next AGM.” (Note (5)(i))

7. “THAT Datuk Azzat Kamaludin who has served as an Independent Non-Executive Director of the (Ordinary Resolution 9)
Company for a cumulative term of more than nine (9) years, be hereby re-appointed as an Independent
Non-Executive Director of the Company until the conclusion of the next AGM.” (Note (5)(i))

8. “THAT Dr. Kok Chin Leong who has served as an Independent Non-Executive Director of the Company (Ordinary Resolution 10)
for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive
Director of the Company until the conclusion of the next AGM.” (Note (5)(i))

A N N UA L R E PO RT 2017
A D D I T I O N A L I N FO R M AT I O N
KP J H E ALT H CARE B ER H A D 277

NOTICE OF ANNUAL GENERAL MEETING

9. AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTION 75 OF THE COMPANIES ACT, 2016

“THAT pursuant to Section 75 of the Companies Act, 2016 (“Act”), and approvals of the relevant (Ordinary Resolution 11)
government and/or regulatory authorities, the Directors be and are hereby empowered to issue and allot
shares in the Company, from time to time, upon such terms and conditions and for such purposes as the
Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued
pursuant to this resolution does not exceed ten percent (10%) of the total number of issued shares of the
Company for the time being and that the Directors be and are also empowered to obtain the approval
for the listing of and quotation for the additional shares so issued on the Main Market of Bursa Malaysia
Securities Berhad (“Bursa Securities”) and that such authority shall continue in force until the conclusion
of the next AGM of the Company. (Note (5)(ii))

10. PROPOSED RENEWAL OF THE SHARE BUY-BACK AUTHORITY (“PROPOSED SHARE BUY BACK”)

“THAT, subject to Section 127 of the Act, the provisions of the Main Market Listing Requirements of the (Ordinary Resolution 12)
Bursa Securities (“Listing Requirements”) and all other applicable laws, rules, regulations and guidelines for
the time being in force, the Directors of the Company be and are hereby authorised, to make purchase(s)
of ordinary shares in the Company on Bursa Securities subject to the following:-

(a) The maximum number of shares which may be purchased and/or held by the Company shall not
exceed ten percent (10%) of the total number of issued shares of the Company for the time being
subject to the restriction that the issued capital of the Company does not fall below the applicable
minimum share capital requirement of the Listing Requirements;
(b) The maximum fund to be allocated by the Company for the purpose of purchasing its shares shall
not exceed the retained profits of the Company; and
(c) Upon completion of the purchase by the Company of its own shares, the Directors of the Company
are authorised to deal with the shares so bought-back in their absolute discretion in any of the
following manner:-
(i) cancel the shares so purchased; or
(ii) retain the shares so purchased as treasury shares and held by the Company; or
(iii) retain part of the shares so purchased as treasury shares and cancel the remainder; or,
(iv) distribute the treasury shares as dividends to shareholders and/or resell on Bursa Securities
and/or cancel all or part of them; or
(v) transfer all or part of the treasury shares for purposes of an employees’ share scheme, and/or
as purchase consideration; or

in any other manner as prescribed by the Act, rules, regulations and guidelines pursuant to the Act, the
Listing Requirements and other relevant guidelines issued by Bursa Securities and any other relevant
authority for the time being in force;

w w w. kp j h ea l t h . c o m . m y
ADDI T I O N A L I N F OR MATIO N
278 K PJ HEALT HCARE BERHAD

NOTICE OF ANNUAL GENERAL MEETING

AND THAT the authority conferred by this resolution shall continue to be in force until:-

(a) the conclusion of the next AGM of the Company at which such resolution was passed, at which
time the authority will lapse unless renewed by ordinary resolution passed at the AGM either
unconditionally or subject to conditions; or
(b) the expiration of the period within which the next AGM is required by law to be held; or
(c) revoked or varied by a resolution passed by the shareholders of the Company in a general meeting,

whichever is earlier, but not so as to prejudice the completion of the purchase(s) by the Company before
the aforesaid expiry date and in any event, in accordance with the provisions of the Listing Requirements
and other relevant guidelines issued by the Bursa Securities or any other relevant authorities.

AND THAT the Directors of the Company be and are authorised to take all such steps to implement,
finalise and give full effect to the Proposed Share Buy-Back with full power to assent to any conditions,
modifications, revaluations and/or amendments as may be imposed by the relevant authorities and with
full power to do all such acts and things thereafter in accordance with the Act, the Listing Requirements
and other relevant guidelines issued by Bursa Securities and any other relevant authorities.” (Note (5)(iii))

11. PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A


REVENUE OR TRADING NATURE (“ PROPOSED SHAREHOLDERS’ MANDATE”)

“THAT subject always to the provisions of the Act, the Listing Requirements or other regulatory authorities, (Ordinary Resolution 13)
approval be and is hereby given to the Company and/or its subsidiaries (“Group”), to enter into and give
effect to the Recurrent Related Party Transactions of a Revenue or Trading nature, all with the particulars
of which are set out in Part B of the Circular to Shareholders dated 22 March 2018 (“Circular”) with the
Related Parties as described in the Circular, provided that such transactions are:-

(a) recurrent transactions of a revenue or trading nature;


(b) necessary for the day-to-day operations of the Company and/or its subsidiaries;
(c) carried out in the ordinary course of business of the Company and/or its subsidiaries, made on an
arm’s length basis and on normal commercial terms not more favourable to the Related Parties than
those generally available to the public; and
(d) not detrimental to the minority shareholders of the Company;

AND THAT such authority shall continue to be in force until:-

(a) the conclusion of the next AGM of the Company following this AGM, at which time the authority will
lapse unless by a resolution passed at the AGM, such authority is renewed; or
(b) the expiration of the period within which the next AGM after the date that is required to be held
pursuant to Section 340(2) of the Act (but shall not extend to such extensions as may be allowed
pursuant to Section 340(4) of the Act); or
(c) revoked or varied by a resolution passed by the shareholders of the Company at a general meeting;

whichever is earlier;

AND THAT the Directors of the Company be authorised to complete and do all such acts and things
(including executing all such documents as may be required) as they may consider expedient or necessary
or give effect to the Proposed Shareholders’ Mandate.” (Note (5)(iv))

A N N UA L R E PO RT 2017
A D D I T I O N A L I N FO R M AT I O N
KP J H E ALT H CARE B ER H A D 279

NOTICE OF ANNUAL GENERAL MEETING

12. SPECIAL RESOLUTION


PROPOSED ADOPTION OF NEW CONSTITUTION OF THE COMPANY

“THAT approval be and is hereby given to adopt the new Constitution of the Company as set out in Part C (Special Resolution 14)
of the Circular to Shareholders dated 22 March 2018 accompanying the Company’s Annual Report 2017
in place of the existing Memorandum and Articles of Association of the Company with immediate effect.

By Order of the Board,


KPJ HEALTHCARE BERHAD

SALMAH BINTI HJ ABD WAHAB (LS 0002140)


HANA BINTI AB RAHIM @ ALI, ACIS (MAICSA 7064336)
Secretaries

Johor Bahru
Dated: 22 March 2018

NOTES:

(1) Members Entitled to Attend


Only members whose names appear on the Record of Depositors as at 16 April 2018 are entitled to attend, speak and vote at the
meeting.

(2) Appointment of Proxy


a. A member entitled to attend and vote at this meeting is entitled to appoint another person as his proxy to exercise all or any of
his rights to attend, participate, speak and vote at this AGM.
b. If a corporation is a member of the Company, the corporation may by resolution of its Board or other governing body authorize
a person or persons to act as its representative or representatives at this AGM.
c. A certificate of authorization by the corporation shall be prima facie evidence of the appointment or the revocation of the
appointment, as the case may be, of a representative under Section 333(5) of the Companies Act 2016 (“Act”) .
d. Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories)
Act 1991, (“SICDA”), it may appoint at least one (1) proxy in respect of each securities account it holds in ordinary shares of the
Company standing to the credit of the said securities account.
e. Where a member of the Company is an exempt authorized nominee, as defined under the SICDA, which holds 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 authorized nominee may appoint in respect of each omnibus account it holds.
f. Where a member appoints more than one (1) proxy, the proxies shall not be valid unless he/she specifies the proportion of his/
her shareholdings to be presented by each proxy.
g. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially
certified copy thereof, shall be deposited at the registered office of the Company at: KPJ HEALTHCARE BERHAD, Level 16, Menara
KOMTAR, Johor Bahru City Centre, 80000 Johor Bahru, Johor not less than twenty-four (24) hours before the time appointed for
the taking of the poll, and in default the instrument of proxy shall not be treated as valid.

(3) Voting by Poll


Pursuant to Paragraph 8.29A(1) of the Listing Requirements, all the resolutions set out in this Notice shall be put to vote by poll.

w w w. kp j h ea l t h . c o m . m y
ADDI T I O N A L I N F OR MATIO N
280 K PJ HEALT HCARE BERHAD

NOTICE OF ANNUAL GENERAL MEETING

(4) EXPLANATORY NOTES ON ORDINARY BUSINESSES:


(i) Agenda 1 – Audited Financial Statements
This item is meant for discussion only as the provision of Section 340(1)(a) of the Act does not require the Company to obtain
shareholders’ approval for its Audited Financial Statements. Henceforth, this Agenda is not put forward for voting.

(ii) Agenda 3 and Agenda 4


Pursuant to Section 230(1) of the Companies Act 2016 (“Act”) which came into force on 31 January 2017, the fees and benefits
(“Remuneration”) payable to the Directors of the Company will have to be approved by the shareholders of the Company at a
general meeting. In this respect, the Board of Directors of the Company hereby agree that the shareholders’ approval shall be
sought at the Twenty Fifth (25th) AGM commencing 1 May 2018 until the conclusion of the next AGM of the Company in 2019 .

The proposed Resolution 6, if passed, will allow the payment of the Directors’ Remuneration (excluding Directors’ fees) to the
NED of the Company on a monthly basis and/or as and when incurred within the Relevant Period.

The Board is of the view that it is just and equitable for the NED to be paid the Directors’ Remuneration on a monthly/quarterly
basis and/or as and when incurred, particularly after they have discharged their responsibilities and rendered their services to the
Company throughout the Relevant Period.

In the event that the Directors’ Remuneration (excluding Proposed Directors’ Fees) proposed is insufficient (e.g. due to more
meetings or enlarged Board size), approval of the shareholders of the Company will be sought at the next AGM for the additional
remuneration to meet the shortfall. The estimated amount of RM920,000 for the Relevant Period is derived from a total of
RM805,000 for FY2018 and a total of RM115,000 for the period from 1 January 2019 until the next AGM in 2019.

Details of the estimated Directors’ Remuneration for NEDs for the Relevant Period are as below:-

(a) Directors’ Fees

2018 2017

Non-Executive Chairman RM150,000 per annum RM150,000 per annum


NED RM75,000 per annum RM75,000 per annum

(b) Directors’ Remuneration (excluding Directors’ fees)

Description Chairman NED

Other Benefits Medical benefits Medical benefits and


company car for 1 NED

Meeting Allowance (per meeting) Chairman NED

Board of KPJ RM3,500 RM2,500


Audit Committee RM3,500 RM2,500
Medical Advisory Committee RM500 RM400
Nomination & Remuneration Committee RM1,000 RM500
Building Committee RM1,000 RM500
Tender Board Committee RM1,000 RM500

Allowance for Professional Advisory Services 2018


Monthly Allowance as Chairman of Medical Advisory Committee RM18,000
Monthly allowance on implementation of KPJ Clinical Information System RM7,000

A N N UA L R E PO RT 2017
A D D I T I O N A L I N FO R M AT I O N
KP J H E ALT H CARE B ER H A D 281

NOTICE OF ANNUAL GENERAL MEETING

(5) EXPLANATORY NOTES ON SPECIAL BUSINESSES:


(i) Agenda 6, Agenda 7 and Agenda 8 – Continuing in Office as Independent Non-Executive Directors
Zainah Binti Mustafa, Datuk Azzat bin Kamaludin and Dr Kok Chin Leong who seek shareholders’ approval on their re-appointment
as Independent Non-Executive Directors via proposed Ordinary Resolution 8, 9 and 10 respectively, have expressed their
intention not to seek for re-appointment. Hence, they will retire at the conclusion of the Twenty Fifth (25th) AGM.

(ii) Agenda 9 – Authority to Issue Shares Pursuant to Section 75(1) and 76(1) of the Act
The proposed Ordinary Resolution 11 if passed is primarily to give flexibility to the Directors of the Company to issue up to a
maximum amount not exceeding in total ten percent (10%) of the total number of issued shares in the Company for the time
being for such purposes as the Directors consider would be in the interest of the Company. This authority will, unless revoked or
varied by the Company in a general meeting, will expire at the conclusion of the next AGM or the expiration of the period within
the next AGM required by law to be held, whichever is earlier.
(i) The mandate sought under proposed Ordinary Resolution 11 is a renewal of an existing mandate particularly on the
conversion of KPJ ESOS and KPJ warrants into ordinary shares at the price of RM0.91 and RM1.01 per ordinary share
respectively.
(ii) The proceeds raised from the previous mandate were RM 24,758,277.
(iii) The proceeds were utilized for working capital purposes.
(iv) The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to
placement of shares, for the purpose of funding future investment(s), project(s), working capital and/or acquisitions.

(iii) Agenda 10 – Proposed Renewal of the Share Buy-Back Authority (“Proposed Share Buy Back”)
The proposed Ordinary Resolution 12 if passed will empower the Directors of the Company to utilise any of its surplus financial
resources to purchase the Company’s own shares through Bursa Malaysia at any time within the time stipulated by utilizing the
funds allocated out of the audited retained profit of the Company.

(iv) Agenda 11 – Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature
(“Proposed Shareholders’ Mandate”)
The proposed Ordinary Resolution 13 if passed, is primarily to authorise the Company and/its subsidiaries (“Group”) to enter into
arrangements or transactions with Related Parties, particulars of which are set out in the Circular to Shareholders dated 22 March
2018 (“Circular”) circulated together with this Annual Report, which are necessary for the day-to-day operations of the Group
and are based on normal commercial terms that are not more favourable to the Related Parties than those generally made to the
public.

The procurement of the Proposed Shareholders’ Mandate would reduce substantially administrative time, effort and expenses
associated with the convening of separate general meetings to seek shareholders’ approval as and when potential Recurrent
Related Party Transactions arise.

(v) Agenda 12 – Special Resolution – Proposed Adoption of New Constitution of the Company
Please refer to explanatory information in the Circular to Shareholders dated 22 March 2018.

w w w. kp j h ea l t h . c o m . m y
ADDI T I O N A L I N F OR MATIO N
282 K PJ HEALT HCARE BERHAD

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Pursuant to Paragraph 8.28(2) of the Listing Requirements of the Bursa Malaysia:-

1. The Directors who are retiring pursuant to Article 96 of the Company’s Articles of Association are as follows:-
Tan Sri Datin Paduka Siti Sa’diah Sh Bakir - Article 96
Prof Dato’ Dr. Azizi Hj Omar - Article 96

2. The Directors who are retiring pursuant to Article 97 of the Company’s Articles of Association are as follows:-
Mohd Sahir Rahmat - Article 97
Dato’ Dr. Zaki Morad Mohamad Zaher - Article 97

3. A total of five Board Meetings were held during the financial year ended 31 December 2017.

4. Details of Directors at Board Meetings held during the financial year ended 31 December 2017 are as follows:-

20 Apr
(Special Board
of Directors
Date 14 Feb 25 Feb Meeting) 24 Aug 21 Nov
Level 24, Level 24,
Menara Menara
Level 16, Level 16, Puteri Pacific KOMTAR, KOMTAR,
Menara Menara Hotel, Johor JBCC, Johor JBCC, Johor
Directors/Venue KPJ, KL KPJ, KL Bahru Bahru Bahru
Non Independent Non-Executive Director
Dato’ Kamaruzzaman Abu Kassim / / / / /
Ahamad Mohamad / / / - -
Zulkifli Ibrahim / / / / /
Mohd Sahir Rahmat - - - / /

Independent Non-Executive Director


Tan Sri Datin Paduka Siti Sa’diah Sh Bakir / / / / /
Zainah Mustafa / / / / /
Datuk Azzat Kamaludin / / - / /
Dr. Kok Chin Leong / / / / /
Dr. Yoong Fook Ngian / / / - -
Dato’ Dr. Azizi Hj Omar / / / / /
Dato’ Dr. Zaki Morad Mohamad Zaher - - - / /

Managing/Executive Director
Dato’ Amiruddin Abdul Satar / / / / /
Aminudin Dawam / / / / /

5. Particulars of Directors seeking re-election at the Annual General Meeting are set out in Directors’ Profile appearing in pages 108 to
118 of the Annual Report.

A N N UA L R E PO RT 2017
PROXY FORM

No. of ordinary shares held CDS account no.


Company No. 247079-M

I/We*
(Full name and NRIC No. /Company No. in block letters)

of
(Full address in block letters)

hereby appoint
(Full name and NRIC in block letters)

of
(Full address in block letters)

or failing him/her, THE CHAIRMAN of the meeting as my/our proxy to vote for me/us* on my/our* behalf at the Twenty Fifth (25th) Annual
General Meeting of the Company to be held at Tanjung Puteri 302, Persada Johor International Convention Centre, Jalan Abdullah Ibrahim,
80000 Johor Bahru, Johor on Monday 23 April 2018 at 12 p.m. and at any adjournment in respect of my/our holdings of shares in the manner
indicated below:

RESOLUTION DESCRIPTION FOR AGAINST


To Re-Elect Directors:
1 Tan Sri Datin Paduka Siti Sa’diah Sh Bakir
2 Prof. Dato’ Dr. Azizi Bin Hj Omar
3 Mohd Sahir Rahmat
4 Dato’ Dr. Zaki Morad Mohamad Zaher
5 To Approve Directors’ Fee
6 To Approve Payment of Directors’ Remuneration
7 To Re-Appoint Auditors
Any Other Business
11 Authority to Issue Shares
12 Proposed Share Buy Back
13 Proposed Shareholders’ Mandate
Special Resolution
14 Proposed Adoption of New Constitution

(Please indicate with a (√) in the appropriate box whether you wish your vote to be cast for or against the resolution. In the absence of specific
direction, your proxy will vote or abstain as he/she thinks fit.)

Signature(s)/Common Seal of Shareholder(s) Dated this day of 2018


Fold this flap for sealing

NOTE:

a. A member entitled to attend and vote at this meeting is entitled to appoint another person as his proxy to exercise all or any of his rights to attend,
participate, speak and vote at this AGM.
b. If a corporation is a member of the Company, the corporation may by resolution of its Board or other governing body authorize a person or persons
to act as its representative or representatives at this AGM.
c. A certificate of authorization by the corporation shall be prima facie evidence of the appointment or the revocation of the appointment, as the case
may be, of a representative under Section 333(5) of the Companies Act 2016 (“Act”) .
d. Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act 1991, (“SICDA”), it
may appoint at least one (1) proxy in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said
securities account.
e. Where a member of the Company is an exempt authorized nominee, as defined under the SICDA, which holds 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 authorized nominee may
appoint in respect of each omnibus account it holds.
f. Where a member appoints more than one (1) proxy, the proxies shall not be valid unless he/she specifies the proportion of his/her shareholdings to
be presented by each proxy.
g. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof,
shall be deposited at the registered office of the Company at: KPJ HEALTHCARE BERHAD, Level 16, Menara KOMTAR, Johor Bahru City Centre, 80000
Johor Bahru, Johor not less than twenty-four (24) hours before the time appointed for the taking of the poll, and in default the instrument of proxy
shall not be treated as valid.

Then fold here

Affix postage
stamp

KPJ HEALTHCARE BERHAD (247079-M)


Level 16
Menara KOMTAR
Johor Bahru City Centre
80000 Johor Bahru
Johor, Malaysia

1st fold here

A N N UA L R E PO RT 2017
W W W. K P J H E A LT H . C O M . M Y

KP J H EA LT H CA R E BER H A D (247079-M)

Level 12, Menara KPJ, 238 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia.
t (603) 2681 6222 | f (603) 2681 6888

Das könnte Ihnen auch gefallen