ANNUAL REPORT ANNUAL REPORT IT ALL BEGINS HERE Infinitepossibilities ’04 www.malaysiaairports.com.my MALAYSIA AIRPORTS HOLDINGS BERHAD (487092-W) Head office Sultan Abdul Aziz Shah Airport, 47200 Subang, Selangor Darul Ehsan, Malaysia MALAYSIA AIRPORTS HOLDINGS BERHAD AIRPORTS MALAYSIA ANNUAL REPORT (487092-W) 04 From friendly service From borderless technology From the preservation of our environment Many possibilities to tears of joy to business opportunities to shopping satisfaction for infinite demands MALAYSIA AIRPORTS HOLDINGS BERHAD ’04 ANNUAL REPORT DISCOVER The Airport City 40 66 94 186 18 54 84 114 COVER RATIONALE Fulfilling dreams and achieving new possibilities for our customers once used to be a challenge but not anymore. We at Malaysia Airports are now able to offer the most comprehensive state-of-the-art facilities and services rivaled by none. Determination, commitment and imagination have given us the drive to forge ahead with optimism. Perseverance and hard work have propelled our progress beyond limitations. In realising our past success and achievements, the one thing that mattered most was our ability to comprehend and respond to our customer’s unwavering demands. We pride ourselves on being able to provide solutions to all expectations and every moment in our airport city is truly an experience, which in many ways will continue to touch the lives of everyone, everywhere. 2-3 Inside At A Glance . .3 Mission Statement . .3 Awards In 2004 . .4 From The Boards Chairman’s Statement . .6 Managing Director’s Review Of Operations . .20 Calendar Of Significant Events . .42 Safety & Security: Our Paramount Concerns . .56 Occupational Safety And Health In Malaysia Airports . .58 Towards Organisational Excellence . .61 Green Globe 21: Blazing A Trail . .64 Our Contributions To The Nation . .68 Corporate Information Corporate Information . .70 Directors’ Profile . .72 Group Senior Management . .82 TH Annual General Meeting 6 Management Team Profile . .86 Group Corporate Structure . .90 ● The Pan Pacific Hotel, MAHB Group Organisation Structure . .92 Kuala Lumpur International Airport, Statement On Corporate Governance . .96 ● Thursday, 26 May 2005 Risk Management . .104 Board Audit Committee Report . .106 ● 11.00 am Terms Of Reference Board Audit Committee . .108 Statement On Internal Control . .111 Financial Report Group 5-Year Summary . .116 5-Year Financial Highlights . .117 Group Segmental Analysis . .118 Airports Operated By The Group . .119 Financial Statements . .120 Malaysia Airports Statistics . .188 Shareholdings Statistics . .230 List Of Properties . .233 Group Corporate Directory . .236 Results Notice Of Annual General Meeting . .238 Statement Accompanying Notice Of Annual General Meeting . .240 Proxy Form MALAYSIA AIRPORTS HOLDINGS BERHAD ’04 ANNUAL REPORT AT A GLANCE KL International Airport (KLIA) • Asia Pacific’s Premier Air Transportation and Cargo Transhipment hub • The distance between the Main Terminal Building and the Satellite •A greenfield site covering 10,000 hectares. Building, comprising 1.2km, is linked by aerotrains. • Environmental conscious and themed “An Airport in the Forest and • 85 retail and 24 food and beverage outlets await visitors. Forest in the Airport”. •Available from within the terminal is the Airside Transit Hotel with •Total annual capacity of 25 million passengers per annum and 80 rooms and The Pan Pacific Hotel Kuala Lumpur International 1.2 million tonnes of cargo (1st phase). Airport with 441 rooms. •2 full service runways, 106 aircraft stands and 46 gates. • The Total Airport Management System (TAMS) links more than • 216 check-in counters and 26 custom counters. 42 systems, which interfaces and integrates communication network. MISSIONSTATEMENT To provide aviation gateway to Malaysia with a network of airports that will facilitate development of tourism, and the economy as a whole, through providing a cost effective aviation infrastructure and services at the highest international standards, meeting the needs of all customers. 4-5 Awards in 2004 •KLIA received the “Gold Award” for the Advertising Award by Air Transport World (ATW) 1 magazine. The award was based on the Integrated for Ease advertising campaign, which was created for the marketing of KLIA. •KLIA was ranked 5th in the Airport of the Year 2004 survey organised by Skytrax Research, a British based air travel industry research company. BESTAirport 2 KLIA was 3rd for the Best Airport Worldwide in a survey by AETRA, a customer satisfaction benchmarking programme. The service element on “Overall Satisfaction with the Airport-All Passenger” consolidates all 27 service elements to decide on the best performing airport. Previously, the survey was known as IATA Global Airport Monitor. 1 KLIA received the Aerodrome Certification from the 3 Department of Civil Aviation (DCA). It is a new mandatory requirement by the International Civil KLIA was the first airport in the Asia Pacific Region and the first Travel and Tourism Aviation Organisation (ICAO) which requires all organisation in Malaysia to be Green Globe 21 certified, which requires the international airports open for public use to provide commitment to continual identification, control and improvement of the uniform safety conditions for all aircraft. 2 environmental and social impacts of the airport’s operations. 3 MALAYSIA AIRPORTS HOLDINGS BERHAD ’04 ANNUAL REPORT BESTEmerging 4 FAVOURITE AsianAirport 8 5 6 7 9 BESTRetail BESTAirport Hotel Malaysia Airports Training Centre, Penang, received the KLIA received the Creativity and Innovation Award 2004 organised by Malaysia Design & MS ISO 9001:2000 Quality Management System from Innovation Centre. SIRIM Berhad for provision of aviation security and fire rescue services training. 4 KLIA is third in the Favourite Asian Airport category for the TIME Readers’ Choice Awards survey. 6 ERAMAN Malaysia, a wholly-owned subsidiary of Malaysia Airports is the first airport retailer to achieve International KLIA is second in the Best Airport category of the Telegraph Travel Award 2004, the most Superbrands Status by Superbrands International. significant study of the travel tastes and habits of British consumers, based on the annual poll of selected readers of The Daily Telegraph and The Sunday Telegraph. 7 ERAMAN received MS ISO 9001:2000 Quality Management System from SIRIM Berhad under the provision of front line Malaysia Airports 2003 Annual Report received the Certificate of Merit in the National services for airport retail operation. 5 Annual Corporate Report Awards 2004 (NACRA). 8 In the 5th ASEAN Energy Award, KLIA was first runner-up The Pan Pacific Hotel Kuala Lumpur International Airport been awarded “Best Airport for the ASEAN Energy Efficiency and Conservation Hotel in Asia 2004” by Business Asia Magazine and Bloomberg TV. 9 (EE&C) Best Practices Competition for Energy Efficient Buildings (New and Existing Buildings). MALAYSIA AIRPORTS HOLDINGS BERHAD ’04 ANNUAL REPORT CHAIRMAN’S STATEMENT DEAR SHAREHOLDERS, It is my pleasure to present this Annual Report and audited Financial Statements of Malaysia Airports Holdings Berhad at the Group and Company level for the financial year ended 31 December 2004. Tan Sri Datuk Dr. Aris Othman Chairman 8-9 Chairman’s Statement (cont’d.) ‘ INFINITE POSSIBILITIES’ We look back on the year under review with The challenge for MAHB in the coming years is to satisfaction and a sense of achievement. In many transform these possibilities into realities. But as our respects, the year 2004 was a significant watershed in achievements of the past year amply demonstrate, the development of MAHB. Record operating and given the will, commitment and hard work, we can financial results were posted, bearing testimony to the rise to the challenge and succeed. MAHB stands resilience of the industry and the immense efforts we poised for a new phase of growth. It will definitely be have invested in responding to the challenges of an exciting journey, and barring any unforeseen 2003. Passenger movements at airports operated by events, it may also well be a rewarding one. I invite the MAHB Group grew by 17.7% in 2004, to 39.4 million you to join us on this journey as we strive to bring passengers. Cargo traffic also rose during the year, MAHB to new heights of achievement. while MAHB’s retail operations achieved its best performance ever. All these factors contributed towards a 14.6% growth in Group revenue, surpassing Financial Performance MAHB’s financial the RM1.0 billion mark for the first time. performance for the financial year ended 31 December 2004 set a new record when Group From this new position of strength, and with the consolidated revenue breached the RM1.0 billion industry returned to health, the MAHB Group is moving level for the first time. For the year, MAHB posted a forward with confidence to chart its own destiny. The consolidated revenue of RM1,024.7 million, an momentum has been established, and as barriers increase of 14.6% from RM894.0 million recorded continue to fall and the global village becomes a in the previous corresponding period. The Group reality, the possibilities open to us to forge ahead in achieved a consolidated profit before tax of RM195.6 the new liberalised marketplace are infinite. MAHB million, which represents a 29.0% growth from RM151.6 has the prerequisites by way of its experience and million achieved previously. expertise in the business. Following the restructuring exercise undertaken last year, the platforms are in place to tap opportunities coming our way. By knowing our strengths and inherent advantages, we are mapping out cogent strategies to consolidate the gains we have made the past year. MALAYSIA AIRPORTS HOLDINGS BERHAD ’04 ANNUAL REPORT MAHB’s commendable performance on the financial front was attributed to an improvement in aviation traffic during 2004, as well as an increase in other business activities of the Group, notably the retail business segment. However, aeronautical activities remained by far the largest contributor, accounting for 65% of MAHB’s airport services revenue. In line with traffic growth, the Group’s retail subsidiary also had a bumper year. Malaysia Airports (Niaga) Sdn.