Excellence In Progress ANNUAL REPORT 2013 About Us Pasdec Holdings Berhad (“PASDEC”) is a leading government linked company based in Pahang listed on the Main Board of Bursa Malaysia Securities Berhad (Stock Code : 6912) under the property counter since 27 October 1997. PASDEC is responsible for coordinating and marketing Pahang’s vast resources to create new opportunities for growth and prosperity. Its present authorised and paid up capital is RM500 million and RM205.9 million respectively. As an investment holding company, PASDEC through its subsidiaries and associate companies is principally involved in property development, project management, civil and building construction, manufacturing of electrical wiring harness, seat components and catalytic converters for the automotive industry in South Africa, renewable energy, installation of UniFi, telecommunication services and provision of data centre services. PASDEC is actively seeking for new business ventures and acquisition to expand its investment portfolio. Contents 2 Chairman’s Statement 11 Group Financial Summary 12 Corporate Information 13 Corporate Structure 14 Profile of Directors 23 Profile of Chief Executive Officer 24 Top Management 26 Statement on Corporate Governance 34 Statement of Directors’ Responsibilities 35 Audit Committee Report 37 Statement on Risk Management and Internal Control 39 Additional Compliance Information 40 Corporate Events 45 Analysis of Shareholdings 48 List of Properties 54 Financial Statements 162 Notice of Annual General Meeting 164 Statement Accompanying Notice of Annual General Meeting Proxy Form 2 PASDEC HOLDINGS BERHAD • Annual Report 2013 Chairman’s Statement Dear Valued Shareholders, On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of Pasdec Holdings Berhad (PASDEC) and its subsidiaries (Group) for the financial year ended 31 December 2013. Dato’ Sri DiRaja Haji Adnan Bin Haji Yaakob Chairman Annual Report 2013 • PASDEC HOLDINGS BERHAD 3 Chairman’s Statement OPERATING ENVIRONMENT The global economy expanded at a modest pace in 2013 RM13.1 amid an uneven growth environment across economies. Strong domestic demand as well as increased private million profit consumption and investment drove the Malaysian economy attributable in 2013, but weak external demand and subdued public investment moderated the growth in the country’s gross to owners domestic product (GDP) to 4.7%, as compared with 5.6% in 2012. FINANCIAL PERFORMANCE The on-going initiatives under the Government’s Economic The Group’s revenue stood at RM133.0 million for the Transformation Programme (ETP) which are gaining financial year ended 31 December 2013, compared to momentum as the country’s economy strengthens RM162.0 million for the previous financial year ended 31 supported the growth. December 2012 whilst profit attributable to owners of the parent increased notably to RM13.1 million over RM8.8 The property market in 2013 saw a 10.9% contraction in million last year. total transaction with an increase of 6.7% in value. There were 381,130 transactions valued at RM152.37 billion, The revenue for the year was largely derived from the compared to 2012 which recorded 427,520 transactions property, manufacturing and construction sectors. The valued at RM142.84 billion. In July 2013, Bank Negara drop in revenue was mainly due to the lower contribution Malaysia announced measures to control excessive of the property sector in year 2013 at RM58.0 million, 36% household debt levels and reinforce responsible lending lower than the previous financial year caused largely by practices, including a maximum tenure of 35 years for new the stringent guidelines in approving end financing by the mortgages and 10 years for personal loans, and the longer banks. Profit increased from last year mainly due to disposal term impact of these new initiatives remains to be seen. of quoted securities by the Group during the year. Earnings per ordinary share for the year stood at 6.34 sen. We are pleased to note that during the financial year ended 31 December 2013, the Group had settled its obligations under the RM150 million Rainbow Exchangeable Bonds (REBs). 4 PASDEC HOLDINGS BERHAD • Annual Report 2013 Chairman’s Statement OPERATIONS REVIEW Property Development and Construction The commercial and residential segments of the Group’s property development did considerably well in the financial year 2013 despite a slowing down of activity in the first half of the year due to uncertainties of the general elections outcome. During the year under review, the Group generated a turnover of RM68.7 million from the sales of development properties within its on-going projects. The Group’s flagship residential and commercial developments at Bandar Putra, Pasdec Damansara, Balok Perdana, and Chendor Utama in Kuantan, continued to progress well in construction and sales, with new phases launched during the year. During the financial year, the Group launched Phase 1 of Package 3 and Package 4 of Pasdec Damansara comprising 62 units of double-storey linked houses and 164 units of single and double-storey linked houses respectively, which todate have recorded strong sales with Package 3 being fully sold within months of its launch. At Balok Perdana, we launched 56 units of single storey houses and 51 units of single and double storey shop office catered largely for those working around the Gebeng Industrial Estate. In 2013, we commenced the construction of 54 units of DIVIDEND high-end, spacious double storey and two-and-a-half storey semi-detached houses at Bandar Putra targeted In appreciation of our shareholders, I am pleased to largely toward buyers looking to upgrade their homes or announce that the Board has proposed a first and final single enhance the value of their purchase. Another phase within tier dividend of 4.0 sen per ordinary share for shareholders’ Bandar Putra launched during the year was 222 units linked approval at the forthcoming Eighteenth Annual General houses of single, double, two-and-a-half and three storeys. Meeting, translating into a total pay-out of RM8.24 million. Annual Report 2013 • PASDEC HOLDINGS BERHAD 5 Chairman’s Statement Our Pasdec Pesona and Phase 1 of Vista Verde (Spanish Our construction arm, Pasdec Bina Sdn. Bhd., has on-going for ‘A Beautiful Panorama’) developments progressed order book worth RM110 million. The largest contract worth steadily during the year and are expected to be delivered RM57.9 million is the construction of a 9-storey specialist with Certificate of Completion and Compliance in the third hospital in Kuantan for Pahang Specialist Hospital Sdn. and fourth quarters of 2014 respectively. Sales have been Bhd. which until end of the year had progressed to 78%. very encouraging so far. As part of our commitment with UMS Link Holdings Sdn. The Group also commenced the development and sales Bhd. (UMS Link) to develop an educational hub and related of a new residential project in Temerloh known as Pasdec facilities for University Malaysia Sabah (UMS) in Sabah, the Idaman, offering 101 units of modern contemporary Group vide its wholly owned subsidiary, Pasdec Corporation designed double-storey linked houses, located strategically Sdn. Bhd., purchased 6.86 acres of land in Kuala Menggatal, at the vicinity of Hospital Sultan Haji Ahmad Shah and Kota Kinabalu, Sabah from Lintasan Mayang Development several primary and secondary schools. Sdn. Bhd. for a total cash consideration of RM24,802,193 in 2013 to be developed through purchase, build, lease and transfer (PBLT) concept 6 PASDEC HOLDINGS BERHAD • Annual Report 2013 Chairman’s Statement Manufacturing in South Africa Despite the undeniably low investor confidence in South Our wiring harnesses manufacture and supply subsidiary, Africa due to labour unrest, low productivity, increased costs Pasdec Automotive Technologies (Pty) Ltd. (PAT), had and South African Rand (ZAR) volatility, the automotive since 2012 embarked on a programme of acquiring new component manufacturing division’s revenue grew by technology and assets towards increasing capacity and 14.9% to ZAR177 million from the previous year’s revenue exploring new business opportunities. Towards this end, of ZAR154 million. A significant portion of the growth in in December 2013, a regenerated Cut and Crimp plant revenue was contributed by the new business generated (Plant 2) which included a state-of-the-art laboratory for from the full introduction of the Volkswagen South Africa analysis of crimping and producing micrograph report as (VWSA) PQ25 in 2013. per customer’s requirement, was officiated. We are proud to announce that the investment in new technology was Operating profit for the division declined by 17.5% to fundamental in PAT clinching the multi-million Rand VWSA ZAR9.5 million compared to last financial year, mainly due GP 250 contract, commencing full production in April 2014. to lost sales volumes amounting to ZAR14.8 million, high labour and energy costs and foreign exchange losses due to weakness in Rand in contrast with Euro zone based suppliers. Pasdec’s electrical wiring harnesses and metal seats supplied to above car models. Annual Report 2013 • PASDEC HOLDINGS BERHAD 7 Chairman’s Statement Other Divisions Pursuant to the Group’s venture into renewable energy Upon completion and commencement, the plants at Sungai through small hydro power generation at two rivers in Benus and Sungai Sia will generate and supply to Tenaga Pahang, Sungai Benus in Bentong and Sungai Sia in Raub, Nasional Berhad (TNB) 5 Megawatt (MW) and 2MW power we are currently finalising the funding of the construction of respectively for a period of 21 years. the power plants by the appointed Engineering, Procurement and Construction (EPC) contractors with the bank. The Group has identified a parcel of industrial land in Gambang Halal Park as suitable for the development of In view of several glitches involved in the process of the proposed halal gelatine plant and has undertaken obtaining endorsement for site possession from the State negotiations with the East Coast Economic Region Forestry Department, the construction of the plants had Development Council (ECERDC) on the matter.