ranhill berhad (430537-K) 1
Contents
Notice of Annual General Meeting 2 Corporate Responsibility 50
Statement Accompanying the Economic 52 Notice of Annual General Meeting 3 Social 53 Group Financial Highlights 4 Environmental 54 Corporate Profile 6 Calendar of Events 56 Corporate Data 7 Reports & Financial Statements 61 Corporate Information 8 Directors’ Report 62 Corporate Structure 9 Financial Statements 67 Board of Directors 10 Statement by Directors 145 Directors’ Profiles 12 Statutory Declaration 145 Performance Review 17 Report of the Auditors 146 Chairman’s Statement 18 Analysis of Shareholdings 147 President & Chief Executive’s Review 22 Share Performance 149 Corporate Governance 35 Properties Held by the Group 150 Statement on Corporate Governance 36 Form of Proxy Audit Committee Report 44
Terms of Reference of the Audit Committee 46
Statement on Internal Control 48 2 ranhill berhad (430537-K) Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Ninth Annual General As Special Business: Meeting of the Company will be held at the Ballroom 1, Level 2, 8. To consider and if thought fit, pass the following ordinary Nikko Hotel, 165 Jalan Ampang, 50450 Kuala Lumpur on Friday, resolution:- 28 October 2005 at 5.00 p.m. for the transaction of the following Authority to Allot Shares pursuant to Section 132D of the businesses: Companies Act, 1965 AGENDA “THAT pursuant to Section 132D of the Companies Act, 1965 and subject always to the approval of the relevant authorities, As Ordinary Business the Directors be and are hereby empowered to issue shares in 1. To receive the financial statements for the financial year ended the Company from time to time and upon such terms and 30 June 2005 and the Reports of the Directors and Auditors conditions and for such purposes the Directors may deem fit thereon. Resolution 1 provided that the aggregate number of shares issued pursuant 2. To approve the payment of a first and final gross dividend of to this resolution does not exceed 10% of the issued share 1.5 sen per share, less income tax at 28%, for the financial capital of the Company for the time being and that the year ended 30 June 2005. Resolution 2 Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so 3. To approve the payment of the Non-Executive Directors’ fees of issued on the Bursa Malaysia Securities Berhad and that such RM288,000.00 for the financial year ended 30 June 2005. authority shall continue in force until the conclusion of the next Resolution 3 Annual General Meeting of the Company.” Resolution 9 4. To consider and if thought fit, pass the following resolution 9. To transact any other business of which due notice shall have pursuant to Section 129 of the Companies Act, 1965:- been given in accordance with the Companies Act, 1965. Re-Appointment of Director “THAT Tan Sri Sallehuddin Mohamed, a director who retires in compliance with Section 129 of the Companies Act, 1965 be NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT and is hereby re-appointed a Director of the Company to hold NOTICE IS ALSO HEREBY GIVEN THAT a first and final gross office until the next Annual General Meeting.” Resolution 4 dividend of 1.5 sen per share, less income tax at 28% in respect of the financial year ended 30 June 2005 if approved by the 5. To re-elect the following Director who is retiring pursuant to shareholders at the Ninth Annual General Meeting, will be paid on Article 83 of the Company’s Articles of Association:- Tuesday, 13 December 2005 to Depositors registered in the Record Resolution 5 Sharif Lough Abdullah of Depositors at the close of business on Tuesday, 15 November 2005. 6. To re-elect the following Directors who are retiring by rotation pursuant to Article 100 of the Company’s Articles of Association:- A Depositor shall qualify for entitlement only in respect of: 6.1 Tan Sri Hamdan Mohamad Resolution 6 (a) Shares transferred to the Depositor’s Securities Account before 4.00 p.m. on Tuesday, 15 November 2005 in respect of ordinary 6.2 Kamarulzaman Omar Resolution 7 transfers; and 7. To re-appoint Messrs PricewaterhouseCoopers as Auditors and (b) Shares bought on the Bursa Malaysia Securities Berhad on a to authorise the Board of Directors to fix their remuneration. cum entitlement basis according to the Rules of the Bursa Resolution 8 Malaysia Securities Berhad.
By Order of the Board
DATO’ AMDAN MAT DIN (LS NO. 0004779) LAU BEY LING (MAICSA 7001523) Company Secretaries
Kuala Lumpur 6 October 2005 ranhill berhad (430537-K) 3
NOTICE OF ANNUAL GENERAL MEETING
Notes: 6. The instrument of proxy, together with the power of attorney (if any) 1. A member of the Company entitled to attend and vote at the above under which it is signed or a certified copy thereof, shall be deposited Meeting is entitled to appoint a proxy or proxies to attend and vote on with the Company’s Registrar, Symphony Share Registrars Sdn Bhd his behalf. (formerly known as Malaysian Share Registration Services Sdn Bhd), Level 26, Menara Multi Purpose, Capital Square, No. 8, 2. A proxy or attorney or corporate representative need not be a member Jalan Munshi Abdullah, 50100 Kuala Lumpur, not less than forty of the Company and the provisions of Section 149(1) of the Companies eight (48) hours before the time appointed for holding the Meeting or at Act, 1965 shall not apply to the Company. any adjournment thereof. 3. A member of the Company shall not be entitled to appoint more than 7. Pursuant to Paragraph 8.28(2) of the Bursa Malaysia Securities Berhad two (2) proxies to attend and vote at the same meeting provided that Listing Requirements, the details of Directors standing for re-election where a member of the Company is an authorised nominee as defined as in Agenda 4 to 6 of the Notice of the Annual General Meeting are in accordance with the provisions of the Securities Industry (Central set out in the Directors’ Profile appearing on pages 12 to 15 in the Depositories) Act, 1991, it may appoint at least one (1) proxy in respect Annual Report. of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Explanatory Notes on the Special Business: 8. Ordinary Resolution No. 9 - Authority to Allot Shares pursuant to 4. Where a member appoints two (2) proxies, the appointments shall be Section 132D of the Companies Act, 1965 invalid unless the proportion of the holding to be represented by each The ordinary resolution no. 9 proposed, if passed, will give the Directors proxy is specified. of the Company, from the date of the General Meeting, authority to 5. The instrument appointing a proxy shall be in writing under the hand of allot and issue ordinary shares from the unissued share capital of the the appointor or his attorney duly authorised in writing, or if the appointor Company up to an aggregate amount not exceeding 10 percent of the is a corporation, either under its common seal or under the hand of an issued share capital of the Company for the time being. This authority officer or attorney duly authorised. unless revoked or varied at a General Meeting will expire at the next Annual General Meeting.
Statement Accompanying the Notice of Annual General Meeting
Statement accompanying the Notice of the Ninth Annual Pursuant to Article 100 of the Company’s Articles of Association General Meeting of the Company to be held at the Ballroom 1, i) Tan Sri Hamdan Mohamad Level 2, Nikko Hotel, 165 Jalan Ampang, 50450 Kuala Lumpur on ii) Kamarulzaman Omar Friday, 28 October 2005 at 5.00 p.m.
Details of Directors standing for re-appointment and re-election 1. Details of Directors who are standing for re-appointment are set out in the Profile of Directors on pages 12 to 15 of the or re-election Annual Report. Pursuant to Section 129 of the Companies Act, 1965
i) Tan Sri Sallehuddin Mohamed 2. Details of Attendance of Directors at Board Meetings held during the financial year ended 30 June 2005 Pursuant to Article 83 of the Company’s Articles of Association The details of attendance of Directors at Board meetings are i) Sharif Lough Abdullah disclosed under the Statement on Corporate Governance on page 37 of the Annual Report. 4 ranhill berhad (430537-K) Group Financial Highlights
Revenue Profit before taxation Net profit Basic earnings RM'000 RM'000 for the financial year per ordinary share RM'000 sen
01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 6.27 10.95 15.53 15.67 13.62 49,659 82,860 81,838 75,637 95,848 34,062 55,221 55,705 48,429 33,134 424,895 620,754 770,577 792,944 1,492,251
2001 2002 2003 2004 2005 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue 424,895 620,754 770,577 792,944 1,492,251
Profit before taxation 49,659 82,860 81,838 75,637 95,848
Net profit for the financial year 34,062 55,221 55,705 48,429 33,134
Weighted average number of ordinary shares (’000) 311,0901 355,5001 355,5002 355,5002 528,378
Basic earnings per ordinary share (sen) 10.95 15.53 15.67 13.62 6.27
Note: 1 Adjusted for the 1-for-2 bonus issue in 2003 and 2-for-1 bonus issue in 2005 2 Adjusted for the 2-for-1 bonus issue in 2005 ranhill berhad (430537-K) 5
GROUP FINANCIAL HIGHLIGHTS Segmental Reporting
Revenue RM’000 Results RM’000
(11,728) 6,954 43,268 29,064
361,553 (15,154) 2005 150,320 2005 858,396 78,678
177,275
Assets RM’000 Liabilities RM’000
891,138 22,699 564,795 260,091 413,896 96,152 142,534 73,824
2005 5,658,345 2005 7,998,484
Engineering, procurement, construction, Power generation, Manufacturing Water Others construction management services and transmission and project management services distribution (“EPC & EPCM/PMC”)
The above segment revenue, segment results, segment assets and segment liabilities are determined before intra-group balances and intra-group transactions are eliminated, except to the extent that such intra-group balances and transactions are between operating units within a single segment. Segment revenue and segment results exclude dividends from within the group.
2001 2002 2003 2004 2005 RM’000 RM’000 RM’000 RM’000 RM’000 Total Assets 462,333 582,182 755,896 1,342,544 10,524,246 Shareholders’ Funds 158,151 206,520 252,423 300,703 953,623 Borrowings Short term 13,440 58,757 114,692 422,402 277,066 Long term 70,744 67,287 113,126 215,187 2,507,097 Hire purchase and finance lease 4,114 5,842 5,262 5,803 9,832
Total 88,298 131,886 233,080 643,392 2,793,995 The borrowings are analysed as follows: With recourse 19,041 64,611 168,638 313,791 445,270 Non recourse 69,257 67,275 64,442 329,601 2,348,725 Total 88,298 131,886 233,080 643,392 2,793,995 Debt/Equity Ratio Total borrowings (times) 0.56 0.64 0.92 2.14 2.93 Excluding non recourse borrowings (times) 0.12 0.31 0.67 1.04 0.47 Net tangible assets per share (RM) 2.00 2.61 2.13 2.54 1.54 6 ranhill berhad (430537-K) Corporate Profile
Ranhill stands for excellence as engineers and constructors with a rapidly expanding global presence, and as owners and developers of energy, water and infrastructure facilities.
We have built a reputation as a premier engineering and construction corporation, focusing on industry sectors essential to nation-building. Having started out as engineering consultants, we have expanded into turnkey construction, responsible for landmark projects in Malaysia and around the world.
We provide total engineering and construction solutions to a wide range of industries, from initial conceptual studies through to detailed engineering, procurement, construction and commissioning.
Our eternal quest to enhance stakeholder value has seen Ranhill branch out into synergistic, asset-based businesses whose stable and recurrent income is not subject to economic cycles. Today, we have substantial assets in the energy, water and infrastructure sectors.
We have built the critical mass required to capitalise on global business opportunities. We are rapidly expanding our already extensive worldwide portfolio and developing a healthy mix of local and overseas concessions and services. Our foray into the global market began in the early 1980s and has seen our involvement in projects in Southeast Asia, Pakistan, India, the Middle East and Africa.
We have a proven track record in managing and executing technically complex projects. Together with our skilled personnel, substantial financial resources and strong strategic alliances with leading multinational players, we believe we have the vision, drive, commitment and resources to achieve greater international heights. 10 ranhill berhad (430537-K)
BOARD OF
Seated, from left
Tan Sri Hamdan Mohamad Tan Sri Sallehuddin Mohamed
Standing, from left
Kamarulzaman Omar Datuk Ramli Ibrahim Amran Awaluddin Datuk Chandrasekar Suppiah Datuk Razman Md Hashim Che Din Md Hashim Sharif Lough Abdullah ranhill berhad (430537-K) 11 Directors 12 ranhill berhad (430537-K) Directors’ Profiles
Tan Sri Sallehuddin Mohamed, a Malaysian, aged 73, was Tan Sri Hamdan Mohamad, a Malaysian, aged 49, was appointed appointed to the Board of Ranhill on 14 February 2001. to the Board of Ranhill on 15 November 2000. He is the President
He holds a Bachelor of Arts in Economics (Honours), from and Chief Executive of Ranhill. University Of Malaya, Singapore in 1959. He was conferred an He started his engineering career as a civil/structural engineer, Honorary Doctorate in Management from Universiti Teknologi seconded to Rankine & Hill in Sydney, Australia, from Ranhill Malaysia in 1997. He joined the Malaysian Civil Service in 1959 Bersekutu Sdn Bhd.
(now known as the Administrative and Diplomatic Service) and He obtained a Bachelor of Engineering degree in Civil Engineering had held various senior positions in the Federal Government. from the University of Western Australia in 1981, and a Master of Amongst these, were the senior positions in the Ministry of Science degree in Advanced Concrete Structures in 1986 from Finance (1965-1982), the Director General, Economic Planning the Imperial College of Science and Technology, London, United Unit, Prime Minister’s Department (1982-1984) and the Chief Kingdom. He is a Fellow Member of the Institution of Engineers, Secretary to the Government of Malaysia until he retired from the Malaysia and the Institute of Civil Engineers, United Kingdom and Government Service in 1990. After retirement, he was appointed also a Member of the Institution of Engineers, Australia and the initially as Non-Executive Chairman, and subsequently as Executive International Association of Bridge & Structural Engineers. He is a Chairman of the Employees’ Provident Fund where he served until Professional Engineer registered with the Board of Engineers, end of January 2000. Malaysia and a Chartered Engineer registered with the Institute of He has also served in the capacity of Chairman of the Board of a Civil Engineers, United Kingdom. number of statutory bodies and Government-owned companies Tan Sri Hamdan Mohamad sits on the Board and is a major including Lembaga Letrik Negara (now known as Tenaga Nasional shareholder of Ranhill Power Berhad and Ranhill Utilities Berhad. Berhad), Industrial Bank of Malaysia, Institut Teknologi MARA Currently he serves as a Non-Independent Executive Director/ (now known as Universiti Teknologi MARA - “UiTM”) and Universiti President of Ranhill Power Berhad and Ranhill Utilities Berhad. Teknologi Malaysia. He has had considerable exposure to business He also sits on the Board of several private limited companies by virtue of his association either in the capacity as Chairman or including Ranhill Corporation Sdn Bhd and Lambang Optima Sdn Member of the Board of a number of public as well as private Bhd where he is also a major shareholder. companies. Attendance for Board meetings: Tan Sri sits on the Board of Ranhill Utilities Berhad as the Non- 11 out of 11 (for financial year ended 30 June 2005) Independent Non-Executive Director/Chairman. He also sits on the Board of several private limited companies. Attendance for Audit Committee meetings: 6 out of 8 (for financial year ended 30 June 2005) Attendance for Board meetings: 11 out of 11 (for financial year ended 30 June 2005)
Attendance for Audit Committee meetings: 8 out of 8 (for financial year ended 30 June 2005) ranhill berhad (430537-K) 13
DIRECTORS’ PROFILES
Kamarulzaman Omar, a Malaysian, aged 51, was appointed to Datuk Ramli Ibrahim, a Malaysian, aged 65, was appointed to the Board of Ranhill on 15 November 2000. He was redesignated as the Board of Ranhill on 1 December 2000.
Non-Independent Non-Executive Director on 15 September 2005. Datuk Ramli is a Fellow of the Institute of Chartered Accountants, He undertook a Bachelor of Engineering (Mechanical Engineering) Australia and also a member of the Malaysian Institute of degree at the University of Western Australia and Tasmanian Accountants. He was the Senior Partner of KPMG Malaysia until College of Advanced Education (now known as Maritime 1995. He also serves on the Boards of Aeon Co. (M) Berhad University of Tasmania) in 1980 and a Masters Course in (formerly known as Jaya Jusco Stores Berhad) and Measat Global Administration (Business) from Monash University in Melbourne, Berhad, both listed on the Main Board of the Malaysia Securities Australia. He is a Professional Engineer registered with the Board Exchange Berhad. He is also a Board member of HSBC Bank of Engineers, Malaysia and is a Member of the Institution of Malaysia Berhad and Malaysian National Insurance Berhad.
Engineers, Malaysia and a Graduate Member of the Institution of Datuk Ramli also sits on the Board of several private limited Engineers, Australia. companies. He worked for BP Australia Ltd, Melbourne, Australia, Sime Crest Attendance for Board meetings: Sdn Bhd, Brown & Root (Malaysia) Sdn Bhd, Ranhill Bersekutu Sdn 11 out of 11 (for financial year ended 30 June 2005) Bhd and Protek Engineers Sdn Bhd before joining Ranhill Worley Engineering Sdn Bhd in 1995. Attendance for Audit Committee meetings: 8 out of 8 (for financial year ended 30 June 2005) He also sits on the Board of several private limited companies.
Attendance for Board meetings: 11 out of 11 (for financial year ended 30 June 2005) 14 ranhill berhad (430537-K)
DIRECTORS’ PROFILES
Datuk Razman Md Hashim Che Din Md Hashim, a Malaysian, Datuk Chandrasekar Suppiah, a Malaysian, aged 43, was aged 66, was appointed to the Board of Ranhill on 25 February appointed to the Board of Ranhill on 25 February 2002 as an 2002. Executive Director. He is the Senior Vice-President, Group Business Development of Ranhill. He was appointed as a Non-Independent Datuk Razman attended his early secondary education in Australia Non-Executive Director of Ranhill Power Berhad with effect from and on completion, studied banking where he is a Member of the Australian Institute of Bankers. 29 August 2005.
Datuk Razman started his career with the Standard Chartered In 1991 he obtained a Bachelor of Law degree from the University Bank as an Officer Trainee in 1967. Throughout his 34 years of of Buckingham, United Kingdom. banking, he served in various capacities including secondments Datuk Chandrasekar has held a number of top-level executive to the Bank’s branches in London, Europe, Hong Kong and posts in large companies including: Singapore. He held various senior positions and was appointed as • Managing Director of Pro Majestic Sdn Bhd (a subsidiary of Deputy Chief Executive/Executive Director of Standard Chartered Pembinaan Redzai Sdn Bhd who are the owners and operators Bank Malaysia Berhad in 1994 until he retired in 1999. In June of Westport). His exposure at an International level to key 1999, he was appointed by Bank Negara Malaysia as Chairman of government officials, construction conglomerates, banking MBF Finance Berhad until December 2001 when the finance institutions, and reputed consultants, was instrumental in the company was sold to the Arab Malaysian Group. company being awarded two large power projects in India, as Datuk Razman current directorships in other public companies owners and developers, namely a 500MW plant in North include Multi-Purpose Holdings Berhad, Sunway City Berhad, Madras and a 1320MW plant in Cuddalore. Sunway Infrastructure Berhad, Affin Bank Berhad and OYL • Managing Director of Kampar Resources Sdn Bhd, a company Industries Berhad. He also sits on the Board of several private providing telecommunications infrastructure services to Digi limited companies. and Maxis.
Attendance for Board meetings: • Executive Director of Pan Sejati Developments (M) Sdn Bhd, 9 out of 11 (for financial year ended 30 June 2005) a PKK registered class A civil contractor, whose road building and construction experience spans over a decade.
• Director of Diperdana Holdings Berhad one of the major haulage/transportation companies in Malaysia and listed on the Bursa Malaysia Securities Berhad.
Attendance for Board meetings: 9 out of 11 (for financial year ended 30 June 2005) ranhill berhad (430537-K) 15
DIRECTORS’ PROFILES
Amran Awaluddin, a Malaysian, aged 36, was appointed as Chief Sharif Lough Abdullah, a British with permanent resident in Financial Officer of Ranhill in November 2002. Effective from Malaysia, aged 53, was appointed to the Board of Ranhill on 1 September 2004, he was appointed as an Executive Director 22 September 2005 as a Non-Independent Non-Executive Director. and Chief Operating Officer of Ranhill. He is also a Fellow Gemological Association of Great Britain and He graduated in 1992 with a Bachelor of Science (Honours) a Member of The National Association of Goldsmiths London. In degree in Industrial and Business Economics from London School 1985, he joined the Melewar Group as the Group Executive Director. of Economics, University of London. He is a Chartered Accountant He is currently a director of PWE Industries Berhad and M3Nergy of the Malaysian Institute of Accountants and an Associate of the Berhad (formerly known as Trenergy (Malaysia) Berhad), both public Chartered Institute of Management Accountants. companies listed on the Second Board of the Malaysia Securities Exchange Berhad. He is the Executive Director of the Mediconsult He started his professional career as a Consultant with the Strategy and Operations Department at Kassim Chan Management Group of Companies and also holds other directorships in several private companies, including MediGlobal Malaysia Sdn Bhd, which Consultants Sdn Bhd in 1993. He later joined the Privatisation and is a subsidiary of Ranhill. Project Advisory Department, RHB Sakura Merchant Bankers Berhad in 1996 where he was involved in several privatisation and Attendance for Board meetings: project advisory exercises. Appointed to the Board on 22 September 2005
Attendance for Board meetings: 8 out of 9 (for financial year ended 30 June 2005)
Other Information of Directors
Any family relationship with any Directors and/or major shareholders of Ranhill Berhad: There are no family relationships between the Directors and/or major shareholders of the Company.
Conflict of interest: Save as disclosed in the related party transactions on page 139 to page 143 (Note 48 of the Financial Statements) of the Annual Report and the Circular to the Shareholders (Recurrent Related Party Transaction) dated 12 October 2005, none of the other Directors have any conflict of interest with the Company during the financial year ended 30 June 2005.
List of convictions for offences within the past 10 years other than traffic offences: All Directors maintain a clear record with regard to convictions for offences. ranhill berhad (430537-K) 7
Corporate Information 8
Corporate Structure 9
Board of Directors 10
Directors’ Profiles 12 CORPORATE Data 8 ranhill berhad (430537-K) Corporate Information
BOARD OF DIRECTORS Remuneration Committee Messrs Zaid Ibrahim & Co. • Tan Sri Sallehuddin Mohamed • Tan Sri Sallehuddin Mohamed (Chairman) Level 19, Menara Milenium Independent Non-Executive Chairman • Datuk Razman Md Hashim Pusat Bandar Damansara Che Din Md Hashim (Member) 50490 Kuala Lumpur Tel: (603) 2087 9999 • Tan Sri Hamdan Mohamad • Datuk Ramli Ibrahim (Member) Fax: (603) 2094 4888/2094 4666 Executive Director/President & Chief Executive (appointed on 15.09.05) Messrs Zul Rafique & Partners • Kamarulzaman Omar Donations Committee Suite 17.01, 17th Floor, Non-Independent Non-Executive Director • Tan Sri Sallehuddin Mohamed (Chairman) Menara Pan Global • Datuk Ramli Ibrahim (Member) • Datuk Ramli Ibrahim 8, Lorong P. Ramlee Independent Non-Executive Director 50250 Kuala Lumpur CORPORATE INFORMATION Tel: (603) 2078 8228 Fax: (603) 2034 1913 • Datuk Razman Md Hashim Company Secretaries Che Din Md Hashim Dato’ Amdan Mat Din (Chief Corporate Officer) Independent Non-Executive Director Registrar Lau Bey Ling Symphony Share Registrars Sdn Bhd • Datuk Chandrasekar Suppiah (formerly known as Malaysian Share Executive Director/Senior Vice-President, Registered Office Registration Services Sdn Bhd) 36th Floor, Empire Tower Group Business Development Level 26, Menara Multi Purpose No. 182, Jalan Tun Razak Capital Square • Amran Awaluddin 50400 Kuala Lumpur No. 8, Jalan Munshi Abdullah Tel: (603) 2171 2020 Executive Director/Chief Operating Officer 50100 Kuala Lumpur Fax: (603) 2164 2235 Tel: (603) 2721 2222 • Sharif Lough Abdullah Fax: (603) 2721 2530 Website Non-Independent Non-Executive Director www.ranhill.com.my (appointed on 22.09.2005) Principal Bankers • Affin Bank Berhad Email BOARD COMMITTEES [email protected] • AmMerchant Bank Berhad Audit Committee • Bank Muamalat Malaysia Berhad • Datuk Ramli Ibrahim (Chairman) Auditors Messrs PricewaterhouseCoopers • BNP Paribas • Tan Sri Sallehuddin Mohamed (Member) 11th Floor, Wisma Sime Darby • Bumiputra-Commerce Bank Berhad • Tan Sri Hamdan Mohamad (Member) Jalan Raja Laut, 50350 Kuala Lumpur Tel: (603) 2693 1077 • Commerce International Merchant Nomination Committee Fax: (603) 2693 0997 Bankers Berhad (CIMB) • Tan Sri Sallehuddin Mohamed (Chairman) • DBS Bank Ltd • Datuk Razman Md Hashim Solicitors Che Din Md Hashim (Member) Messrs Abu Talib Shahrom • EON Bank Berhad No. 39-43, Jalan Desa, Taman Desa • Datuk Ramli Ibrahim (Member) • Malayan Banking Berhad (appointed on 15.09.2005) Off Jalan Kelang Lama 58100 Kuala Lumpur • RHB Bank Berhad Tel: (603) 7984 4833 • Standard Chartered Bank Malaysia Berhad Fax: (603) 7982 8179
Stock Exchange Listing Main Board of Bursa Malaysia Securities Berhad Stock name: Ranhill Stock code: 5030 Listing date: 15 February 2001 ranhill berhad (430537-K) 9 Corporate Structure
as at 28 September 2005
Water 70% Ranhill Utilities Berhad (525082-K) 100% SAJ Holdings Sdn Bhd (76718-H)
Ranhill KWI Sdn Bhd (303007-H) 70% (formerly known as KWI Far East Sdn Bhd)
100% Ranhill Water Services Sdn Bhd (681858-H)
Power 80.9% Ranhill Power Berhad (12351-K) 80% Ranhill Powertron Sdn Bhd (330342-K)
51% # Laraib Energy Limited (I-01781) Ranhill Berhad 70% Ranhill Power O&M Sdn Bhd (417928-T) (430537-K)
**Senai-Desaru Expressway Berhad Infrastructure * Ranhill Infrastructure Sdn Bhd (612633-A)
PT Bumi Parahyangan Ranhill Energy 100% Ranhill Energy Sdn Bhd (635376-A) 60% Energia Citarum (09.03.1.11.46334) Oil & Gas Exploration and Production Ellipse Energy Jatirarangon 49% Wahana Limited (32745)
Engineering & Construction Ranhill Engineers and Constructors 100% Sdn Bhd (220264-W) 100% Ranhill Bersekutu Sdn Bhd (72416-T) Ranhill WorleyParsons Sdn Bhd 51% (635376-A) (formerly known as Ranhill Worley Sdn Bhd)
100% Ranhill Civil Sdn Bhd (366660-X)
* To be incorporated before the full conversion of the ICULS. ** Ranhill to subscribe for RM215 million nominal value Irredeemable Convertible Unsecured Loan Stocks (ICULS) to be issued by Senai-Desaru Expressway Berhad (SDE). Upon full conversion of the ICULS, Ranhill shall effectively hold a majority stake of 50% in SDE.
# Shareholdings as per the Amended and Restated Shareholders’ Agreement and the Amended and Restated Subscription Agreement signed on 18 July 2005.
Note: The above structure depicts Ranhill Berhad’s principal subsidiaries and associates. 16 ranhill berhad (430537-K) ranhill berhad (430537-K) 17
PERFORMANCE Review
Chairman’s Statement 18
President & Chief Executive’s Review 22 18 ranhill berhad (430537-K) Chairman’s STATEMENT
On behalf of the Board of Directors, I am FINANCIAL PERFORMANCE pleased to present the Annual Report and For the financial year in review, revenue Financial Statements of Ranhill Berhad jumped 88% to RM1.492 billion from (“Ranhill”) for the financial year ended 30 RM792.944 million. Net profit attributable June 2005. to shareholders was RM33.134 million, down 31.6% from RM48.429 million the OVERVIEW year before. This dip can be attributed to a reduction in contribution from the EPC For the past 12 months, across the board, business as a result of completion of the construction industry in Malaysia shrunk several projects and slower replenishment by 1.9% as a result of completion of major and start of new projects. Retained profits privatised projects as well as lower increased from RM179.422 million to Government spending on new large RM198.222 million, while net tangible infrastructure projects. Cognisant of this, assets grew to RM918.153 million from the Company made a conscious effort to RM300.569 million. Basic earnings per expand our investment base by diversifying share dropped from 14 sen to 6 sen. into asset ownership and aggressively Shareholder funds registered RM953.623 pursuing opportunities overseas to ensure million as at 30 June 2005. sustainable earnings from the acquired assets in the medium to long-term. The In light of the results, the Board is acquisition of Ranhill Utilities Berhad recommending a first and final gross (“Ranhill Utilities”) and Ranhill Power Berhad dividend of 1.5 sen per share, less income (“Ranhill Power”) are already showing tax at 28%. results and are generating stable revenue for the Group whilst strategic investments in the engineering, procurement and construction (“EPC”), power and oil & gas (“O&G”) sectors in the Southeast Asia and West Asia regions are starting to bear fruit. For the financial year in review, revenue jumped 88% to RM1.492 billion from RM792.944 million. 20 ranhill berhad (430537-K)
CHAIRMAN’S STATEMENT
CORPORATE ACTIVITIES of Ranhill Power on 27 June 2005. MANAGING HUMAN CAPITAL In order to bring the capital base of the Proceeds from the issuance of RM540 As the Group continues to expand its company in line with the value of the million Islamic Medium Term Notes (“MTN”) business influence globally, it is vital that underlying assets employed and to reward have been put towards the full redemption we have the human capital to support this shareholders for their continued confidence of Ranhill Powertron’s bridging loan facility growth. For this reason, Ranhill commits in, and support for, the Company, a two for of RM260 million and to partly fund the extensively; in cash and in kind, to one bonus issue was effected. This resulted conversion of its Teluk Salut power plant in manpower development at all levels of the in Ranhill’s issued and paid-up share Sabah from a 120MW open cycle to a organisation, to arm our workforce with the capital being increased from 118,500,000 190MW combined cycle. relevant soft and hard skills required to ordinary shares of RM1.00 each to carry out their responsibilities professionally 597,264,816 ordinary shares of RM1.00 In line with our strategy of becoming a and ethically, wherever they are assigned. each. The new ordinary shares were global player, we have set up Ranhill subsequently listed on Bursa Malaysia on Middle East FZE in Dubai, United Arab Towards this end, two key initiatives were 22 February 2005. To facilitate the bonus Emirates as the Group’s regional developed during the year in review for issue, Ranhill’s authorised capital was headquarters for the Middle East and the introduction in the new financial year. They in turn increased to RM2,000,000,000 surrounding region. The company’s task are a group-wide Job Competency Model comprising 2,000,000,000 shares of will be new business development and that will be the basis of all developmental RM1.00 each from RM500,000,000 of procurement, sourcing for financing and programmes within the Group and a 500,000,000 shares of RM1.00 each. managing funds, and to execute and Rewards Linked Performance Management market projects in the region. System to compensate employees in On 25 October 2004, Ranhill Utilities’ accordance with their performance and subsidiary, SAJ Holdings Sdn Bhd (“SAJH”) The year under review also saw Ranhill’s contribution. issued RM1,280 million Bai Bithaman Ajil major involvement in transportation, namely Islamic Debt Securities (“BaIDS”) from which toll highway concession. This follows the We continue to see positive outcomes in the net proceeds have been used to redeem award on 16 June 2005 by Senai-Desaru the various Six Sigma projects. SAJH’s the SAJH’s existing RM680 million BaIDS Expressway Bhd (“SDEB”) for the design success was recognised when it came and to part-finance the second phase of and construction of the Senai-Pasir first in the Best Workplace Practices the construction and upgrading of water Gudang-Desaru Expressway project. category in the Asian Corporate Social treatment plants, improvement of distribution To cement our foothold in the highway Responsibility Awards 2005. A subsidiary network systems and systematic asset toll concession business, Ranhill has of Ranhill Utilities, SAJH was one of 91 replacement programme. undertaken to subscribe for 215,000,000 companies from 12 countries vying for of the Irredeemable Convertible Unsecured awards in five categories. For Ranhill A similar debt security exercise was carried Loan Stocks (“ICULS”) at a nominal value Utilities and Ranhill Power, Six Sigma out and completed by Ranhill Powertron of RM215 million in SDEB. The ICULS, processes have already shown savings Sdn Bhd (“Ranhill Powertron”), a subsidiary upon full conversion will result in SDE in four and two projects respectively. being a 51% subsidiary of Ranhill. ranhill berhad (430537-K) 21
CHAIRMAN’S STATEMENT
Last but not least, Ranhill was the proud Ranhill Utilities’ 30-year concession, which On this note, I would like to welcome a recipient of the 2004 KPMG Shareholder expires in 2029, will see the group investing new member to the Board of Ranhill - Value Award for the Construction & over RM13 billion on capital expenditure Sharif Lough Abdullah, who was appointed Property Sector for the third-year running. works to increase treatment and distribution on 22 September 2005. capacity during the concession period. I also thank my fellow Board members for MILESTONES In 1995, Ranhill partnered with Worley their advice and counsel in the course of The year in review marked two significant Parsons (then known as Worley) to set up the year and may it continue in the new milestones; Ranhill Utilities’ 5th year as the Ranhill Worley to provide project execution financial year. concessionaire for handling water from services to Malaysia’s resource sector. source to tap for Johor state, and the The partnership subsequently expanded On behalf of my fellow Directors, I extend 10th anniversary of Ranhill WorleyParsons to encompass Middle East clients. That thanks and appreciation to the management Sdn Bhd (formerly known as Ranhill Ranhill Worley Parsons is today one of and staff for their hard work and contributions Worley Sdn Bhd), our joint-venture with the largest engineering groups in Malaysia to the Group’s continued success; at home WorleyParsons. is testimony of how both joint-venture and abroad. partners have grown together and evolved For Ranhill Utilities, the water shortage in the past 10 years. We look forward to And to our shareholders, customers, experienced by Johor during the first six continuing this successful partnership into suppliers, business partners and the various months of the financial year just past also the next decade and more. authorities, our thanks and gratitude to you marked the first time a private water for your confidence in, and support of, company had been faced with a drought. Ranhill in our endeavour to achieve our ACKNOWLEDGEMENTS The incident reiterated the importance of aspiration of becoming a respected global the public-private partnership philosophy I would like to thank Datuk Khoo Eng enterprise. whereby industry and regulators must Choo and Datuk Zakaria Abdul Hamid, continue to work in tandem in order to who resigned from the Board on 30 June strike a balance between reasonable tariff 2005 and 1 July 2005 respectively, for their for consumers and reasonable investment service on the Board. Your guidance and returns for the business. support are much appreciated and will be missed.
Tan Sri Sallehuddin Mohamed Chairman