DIALOG Annual Report 2018
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(178694-V) DIALOG GROUP BERHAD (178694-V) MyKasih Foundation is a non-profit organisation that provides food aid, health awareness, children's education, financial literacy programmes and skills training programmes to less fortunate Malaysians. ANNUAL REPORT 2018 ANNUAL REPORT Food Aid and Education Programme Cashless Bursary Programme For The Underprivileged For Underprivileged Students SUSTAINING GROWTH www.mykasih.com l MyKasihFoundation - ANNUAL REPORT 2018- A LEADING INTEGRATED TECHNICAL SERVICE PROVIDER FOR THE OIL, GAS AND PETROCHEMICAL INDUSTRY OUR VALUES HSE COMPETENCY QUALITY EXCELLENCE OUR VISION To be the leading integrated technical service provider to the upstream, midstream and downstream sectors in the oil, gas and petrochemical industry in Malaysia and internationally. OUR MISSION To continuously enhance competitiveness, competence and leadership in the provision of our services. We shall honour our commitment to quality and timely job completion as well as unfailing protection of health, safety and the environment. We shall, as responsible and caring corporate citizens, actively support the Nation’s aspirations and serve the best interests of the communities in which we work and live in. We shall continuously develop and retain a highly skilled, motivated and professional workforce to generate the dynamics that will propel our business into strategic growth areas with global reach and a diversified sustainable earnings base. With the continuous support of the Malaysian Government, DIALOG and its THE partners have turned what began as a dream in 2007, into a reality more than 10 years on. The successful promotion of the Pengerang Deepwater Terminals ("PDT") to domestic and international investors has led to the development of PENGERANG the Pengerang Integrated Petroleum Complex and attracted more than RM100 billion in investments to date. Yet, the Pengerang Story is far from complete. STORY Phase 1, an independent terminal with an oil storage capacity of 1.3 million m3 complete with a dedicated deepwater jetty facility, commenced operations in “BUILDING THE April 2014 and is currently being expanded by another 430,000 m3. FUTURE, TODAY” PHASE 1 N PT2SB PITSB PLNG2 FUTURE PHASE1 CURRENT STORAGE COMMENCED CAPACITY EXPANSION CAPACITY OPERATIONS IN PROGRESS 1.3 MIL M3 2014 430,000 M3 In Phase 2, the dedicated petroleum and petrochemicals terminal with an estimated storage capacity of 1.3 million m3, commenced construction in 2015 and will be fully completed by 2019. On 22 September 2018, a historic milestone was achieved for Pengerang Terminals (Two) Sdn Bhd ("PT2SB") when it received its first Very Large Crude Carrier, the MT Navarin at Jetty 2 of PDT. Meanwhile, the Liquefied Natural Gas ("LNG") regasification facilities with 2 units of 200,0003 m LNG storage tanks commenced operations in November 2017. In building towards the long term vision for Pengerang, DIALOG initiated the next chapter in Pengerang’s developing story with the launch of PDT’s Phase 3 in April 2018. The initial stages of Phase 3 will be developed on approximately 300 acres of land within PDT, and will involve the development of common tankage facilities (including shared infrastructure) and deepwater marine facilities (Jetty 3) to support and promote petroleum and petrochemical storage and handling. Land reclamation activities commenced in May 2018 and the Group is now securing potential customers for Phase 3. PHASE 2 N PT2SB PITSB PLNG2 FUTURE PHASE2 - PHASE 2A: PETROLEUM & PETROCHEMICAL TERMINAL - - PHASE 2B: LNG TERMINAL - STORAGE TARGET STORAGE COMMENCED CAPACITY COMPLETION CAPACITY OPERATIONS 1.3 MIL M3 2019 400,000 M3 2017 The remaining 500 acres of land comprising reclaimable land and the buffer zone have already been earmarked for the further development of Phase 3 and future phases. This in turn, will have the potential to attract another refinery and petrochemicals complex, as well as additional development of industrial land for downstream petrochemical activities. Together with our partners, our steadfast and continued commitment to the development of Pengerang will enable it to become a petroleum downstream manufacturing centre and to fully realise our collective vision of transforming Pengerang into an international oil and gas hub of the future. PHASE 3 N PT2SB PITSB PLNG2 FUTURE PHASE3 LAND INITIAL COST OF AREA INVESTMENT 300 ACRES RM2.5 BIL 7 ANNUAL REPORT 2018 DIALOG GROUP BERHAD This Annual Report is available at TABLE OF www.dialogasia.com CONTENTS 1 DIALOG's 10-Year Financial 33 Management Discussion and 75 Enhancing Shareholder Value Summary Analysis 76 Shareholdings Information 2 Executive Chairman’s Statement 45 Technology Partners 79 List of Top Ten Properties 8 Corporate Information 46 Sustainability Report 81 Group Corporate Directory 9 Corporate Profile 50 • Economic Performance 83 Notice of the Thirtieth Annual 10 Corporate Structure 51 • Health, Safety and General Meeting and Dividend Environment Entitlement 11 Organisation Structure 55 • Our People 88 Statement Accompanying the 12 Calendar of Events Notice of the Thirtieth Annual 58 • Learning & Development 14 Awards and Accolades General Meeting of the Company 60 • Corporate Social 15 Media Highlights Reponsibility • Proxy Form 16 Board of Directors 64 Corporate Governance 17 Board of Directors’ Profile Overview Statement 21 Key Senior Management’s 70 Audit Committee Report Profile 72 Statement on Risk Management 22 Management Team’s Profile and Internal Control (Malaysia) 74 Share Performance 28 Management Team’s Profile (International) VENUE: Ballroom 1, 1st Floor, Sime Darby Convention Centre, TH 1A, Jalan Bukit Kiara 1, 30 60000 Kuala Lumpur, Malaysia ANNUAL DATE: 14 November 2018, GENERAL Wednesday MEETING TIME: 10.00 a.m ANNUAL REPORT 2018 DIALOG GROUP BERHAD 2. 1. Included inthedividend paymentabovewere: (sen) Net AssetsPerShare (sen) Net EarningsPerShare (RM’million) Revenue ‘09 ‘09 9.5 2.0 1,105 Special share dividend of one treasury share for every one hundred andtwenty fiveor foreveryonehundred share dividend ofonetreasury Special share or foreveryfifty share dividend ofonetreasury Special share ‘10 ‘10 10.3 2.6 1,139 ‘11 ‘11 12.6 3.3 1,208 ‘12 ‘12 25.0 3.7 1,634 ‘13 ‘13 27.8 4.0 2,237 ‘14 ‘14 31.8 4.4 2,552 ‘15 ‘15 39.8 5.5 2,358 ‘16 ‘16 46.7 5.7 2,534 dinary shares held in respect ofFY2009. heldinrespect dinary shares ‘17‘16‘15‘14‘13‘12‘11‘10‘09 ‘17 ‘17 57.8 6.9 3,393 ‘18 ‘18 ‘18 62.1 9.1 3,111 ‘09 Shareholders’ Equity Shareholders’ (RM’million) Tax After Tax &Profit Before Profit (RM’million) Dividend Payment Equity & ReturnOnShareholders’ dinary shares held in respect ofFY2014. heldinrespect dinary shares ‘09 62 441 22 102 124 Profit aftertax Profit tax before Profit Return Equity onShareholders' Equity Shareholders' ‘10 55 478 26 125 150 ‘11 61 583 29 160 201 ‘12 74 1,194 20 182 225 FINANCIAL SUMMARY ‘13 80 1,352 15 (RM’million) 185 232 DIALOG’S 10-YEAR ‘14‘13‘12‘11‘10‘09 ‘14‘13‘12‘11‘10 ‘14 102 1,560 15 229 277 ‘15 ‘16 ‘15 ‘16 ‘15 113 1,980 16 285 370 (%) ‘16 117 2,415 13 301 369 ‘17 149 3,111 13 373 449 ‘18 ‘18‘17 ‘18‘17 180 3,501 15 528 628 1 2 ANNUAL REPORT 2018 DIALOG GROUP BERHAD EXECUTIVE CHAIRMAN’S STATEMENT Dear Valued Shareholders, On behalf of the Board of Directors, it gives me great pleasure to present the Annual Report for DIALOG Group Berhad ("DIALOG" or "the Group") for the financial year ended 30 June 2018 ("FY2018"). TAN SRI DR NGAU BOON KEAT Executive Chairman ANNUAL REPORT 2018 3 DIALOG GROUP BERHAD EXECUTIVE CHAIRMAN’S STATEMENT KEY OUR PERFORMANCE I am delighted to report that DIALOG delivered yet another commendable result for the financial year ended 30 June 2018. MESSAGE Despite the 8.3% decline in revenue to RM3.11 billion, net profit after tax expanded by 41.6% to RM528.3 million from the previous financial year. Net profit attributable to shareholders after non-controlling interests also grew to RM510.4 million, an increase of 37.7% against the last financial year. The net profit after tax for FY2018 included a RM65.6 million fair value gain from the acquisition and conversion of a jointly controlled entity into a wholly owned subsidiary in September 2017. The acquisition also resulted in the consolidation of the Langsat NET PROFIT Terminals’ results, which further contributed to the Group’s strong AFTER TAX financial performance for the financial year under review. INCREASED 41.6% Our Malaysian operations continued to deliver strong performances from midstream and downstream activities, particularly in engineering, construction and plant maintenance. Upstream activities also contributed to the overall Group performance INCREASING TOTAL following higher oil prices throughout the period under review. SHAREHOLDER RETURN In line with the Group’s sustained growth, I am equally pleased to report that our balance sheet continued to strengthen with total assets expanding by 9.4% to RM6.37 billion from RM5.82 billion SUSTAINABILITY a year ago. Total shareholders’ equity as at 30 June 2018 stood at RM3.5 billion and return on shareholders’ equity for FY2018 was 15.4%. The Board appreciates the support and trust of our shareholders, and it remains committed to increasing the value of the Company, ensuring its sustainability as well as rewarding shareholders with attractive returns on their investment. For FY2018, the Board recommends a final cash dividend of 1.8 sen per ordinary share amounting to approximately RM101 million. The dividend is in addition to the payment of the interim cash dividend of 1.4 sen per ordinary share amounting to RM79 million in June 2018. Upon obtaining shareholders’ approval for the final dividend, the Group will be paying a total cash dividend of approximately RM180 million for FY2018, as compared to RM149 million in the previous financial year. This is in line with the Group’s dividend payout ratio policy of at least 40% of profits attributable to shareholders of RM444.8 million (which excludes the fair value gain on deemed disposal of a joint venture of RM65.6 million).