Redzuan Bin Rauf Independent Non-Executive Director 12
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Registered Office Lot 767, Block 8, Muara Tebas Land District Demak Laut Industrial Estate Phase III CABLE BERHAD SARAWAK SARAWAK Jalan Bako, 93050 Kuching, Sarawak, Malaysia CABLE Tel : +6 082 434 311 BERHAD Fax : +6 082 435 311 (Company No. 456400-V) (Company No. 456400-V) (Company No. Annual Report 2016 Quality Reliability Sustainability www.sarawakcable.com Annual Report 2016 Contents our Mission Corporate Profile 02 We aim to be the Chairman’s Statement 04 leading provider of Message from Group Managing Director / 06 total/integrated power Chief Executive Officer and, Management Discussion and Analysis solutions, creating Group Corporate Structure 14 sustainable value for Corporate Information 15 our stakeholders, and Profile of Directors 16 Key Management Profile 22 the communities in Statement of Directors’ Responsibility 24 which we operate. Achievements and Milestones 25 Corporate Social Responsibility 26 Financial Review 29 Audit Committee Report 30 our Values Statement on Corporate Governance 33 INTEGRITY Statement on Risk Management & Internal Control 42 TRUST Additional Compliance Information 45 TEAMWORK Financial Statements 47 INNOVATION PERFORMANCE Analysis of Shareholdings 128 List of Properties 132 CUSTOMER/CLIENT Notice of Annual General Meeting 133 FOCUS CARING Form of Proxy Sarawak Cable Berhad annual report 2016 1 Corporate Profile Sarawak Cable Berhad (“SCB” or “Sarawak Cable” or “the Company” or “the Group”) is Malaysia’s leading ‘One- Stop Manufacturing And Integrated Power Solutions Provider’; incorporated in 1998. Since SCB listing on Bursa Malaysia Securities Berhad’s Main Market on 25 May 2010, we have expanded our humble portfolio from a power cable manufacturer to providing fabricated steel structures, transmission line construction and various spin-off services. Today, with the successful integration of two leading cable manufacturing entities; we are the largest Power Cable Manufacturer in South East Asia and the sole manufacturer of 275kV underground power cables within Malaysia. What We Do We produce comprehensive range of power cables, wires, steel structure and galvanized products, along with extensive power-related services, such as construction of transmission lines, civil works for substations and other infrastructure development which has augured well for our Group’s development to date. In exploiting opportunities in Indonesia with high demand for electricity, we also ventured into the renewable energy sector with our very first mini-hydro power plant located in North Sumatera, now under construction. In a nutshell, SCB’s core business can be broadly categorized into two main divisions, namely MANUFACTURING & SALES and PROJECTS & ENGINEERING. These divisions are synergistic to each other and are fundamental in providing us a competitive edge as an integrated power solution provider; while enabling sustainable growth. Manufacturing & Sales Our competitive edge lies in our capability in continuously manufacturing quality products that meet the market’s diverse requirements. SCB products and testing facilities are certified by prominent local and international accreditation bodies, such as KEMA (Netherlands), CESI (Italy), ABS (USA), Llyods (UK), Kinetics (Canada), TUV- PSB (Singapore) and others. These have kept us on par with the standards of globally renowned cable & wire manufacturers. Projects and Engineering SCB’s experienced project management/technical team undertakes construction of power transmission lines and sizeable projects involving Design, Supply, Delivery, Installation, Testing and commissioning. To date, we have successfully completed transmission line projects worth more than RM1 billion with proven track records in both Peninsular and East Malaysia. 2 Sarawak Cable Berhad annual report 2016 Power Generation - Renewable Energy Equipped with Power Purchase Agreement (“PPA”) for a concession period of twenty (20) years, construction of our mini-hydro power plant (11MW Kombih III MHEPP), on Built-Operate-Transfer (“BOT”) basis, is to be completed in 2017. Helicopter services & Corporate We also involves in leasing of aircrafts and providing aviation services to government authorities as well as niche market in private sector. SCB also renders management cum consultancy services to foreign partners who seek to familiarize themselves with local regulatory and legislative requirements in order to participate in Malaysia’s projects. THE JOURNEY AHEAD In moving forward, SCB is constantly seeking to fortify our position as Malaysia’s leading integrated power solutions provider. In retrospect, we have garnered numerous awards and most recently received the Brand Laureate Best Brands Awards for Most Sustainable Brand in Manufacturing Power and Telecommunications Cable category, along with the Sin Chew Daily Business Awards. We strive to improve productivity while tapping into new technologies, while providing full range power cables and comprehensive packages to end users. In addition to our existing export markets, we are looking to further enhance our presence in Indonesia, Philippines, Cambodia and Thailand. As the power and development sector in Malaysia is rapidly expanding, SCB hopes to continue catering to the increased demands for power cables, transmission lines and substations. Besides, rollout of Mass Rapit Transit (“MRT”) packages which is Malaysia’s largest infrastructure development to-date, and High Speed Rail projects shall benefit our cable & projects division greatly in the upcoming year. Our participation in Tenaga Nasional Berhad (“TNB”) and Sarawak Energy Berhad (“SEB”)’s latest transmission line projects, along with the supply and potential installation portion of the Pan Borneo Highway Development project is certainly on- going. With high quality products and services tailor-made to market demands, SCB is confident that our capabilities will continue to position us as a key player in this sector. Sarawak Cable Berhad annual report 2016 3 Chairman’s Statement Dear Valued Shareholders, We have transformed a small cable manufacturer into a leading integrated power solutions provider in Malaysia. We hope to continue as a primary catalyst for growth in the power industry as we push for the long term sustainability. GROWTH & ACHIEVEMENT Since the inception of Sarawak Cable Berhad (“SCB”) as a small cable manufacturer which was listed six (6) years ago on the Main Market of Bursa Malaysia Securities Berhad in 2010, we have progressed to become a leading power solutions provider in Malaysia and now the largest cable manufacturer in the South East Asian region. Being a Sarawak-based company, SCB is always at the forefront of the Sarawak State Government’s effort in accelerating development and economic growth which requires substantial power in the next five to ten (5 to The most recent award is the highly coveted “Brand 10) years. Power & telecommunication is essential for the Laureate Best Brands Awards” received in 2016 for The on-going infrastructure development within the country Most Sustainable Brand in the Manufacturing Power and as well as in the neighbouring countries. This continuous Telecommunications Cable category. demand creates goodwill for our core business. Our Projects and Engineering divisions are targeting sizeable In addition, the Group has also received the Sin transmission lines projects in the region. Chew Business Excellence Award for Product/Service Excellence. It is with pride that I announce the numerous achievements and awards that SCB has received for We will continue to maintain these high standards in the Quality and Excellence in our products and services. years to come. 4 Sarawak Cable Berhad annual report 2016 GROUP PERFORMANCE A more detailed and insightful analysis of our financial performance is shown in our CEO’s message in this Annual Report. I wish to highlight that notwithstanding the challenging and occasionally turbulent business environment for 2016, the Group has performed reasonably well especially in our cable manufacturing segment. This segment accounted for 66% of the Group’s total revenue in 2016. With our strategic focus on the cable business and our mega projects nearing completion stage, the Group managed to achieve an overall Profit After Tax (“PAT”) of RM20.01 million for FY2016 which translated to an Earnings Per Share of 6.03 sen. Net Assets per share is at 1.03 while Shareholders’ funds stands at RM329.43 million. DIVIDENDS SCB is committed to deliver sustainable earnings and we have consistently paid dividends to our shareholders since listing. For the year 2016, The Board of Directors (“the Board”) has recommended a final single-tier dividend of 3.0 sen per ordinary share pending shareholders’ approval at the forthcoming annual general meeting. CORPORATE GOVERNANCE & SOCIAL RESPONSIBILITY Risk is an inevitable factor in today’s dynamic and competitive business environment. Our commitment to sustainability has been exhibited through transparent decisions and managing risks in an accountable manner, thus ensuring business continuity in the long-term. The Group’s Enterprise Risk Management unit has been established to monitor, review and strengthen our risk management structure. While focusing on business growth and income generation, we have not forgotten the lives of the community around us. We have highlighted some of our corporate social activities and programs in the relevant sections of this Annual Report. The Group will continue to uphold our corporate social responsibility (“CSR”) motto “With