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RANHILL-Annualreport2007 Transforming Challenges into Opportunities Annual Report 2007 Contents 2 Chairman’s Statement 4 Message to Shareholders 6 Group Financial Highlights 8 Our Global Reach 10 At a Glance 12 Oil & Gas 14 Power 16 Water 18 Infrastructure 24 Corporate Information 25 Board of Directors 26 Directors’ Profile 29 Ranhill Leadership 31 Reports and Statutory Statements Form of Proxy “From the plants that power nations, to the water that children drink; from the bridges that link cities, to the hospitals that shelter nursing mothers; we’ve had a hand in creating these, and more. Whatever we set out to do, we do it to the best of our abilities. And what’s more, we deliver on our promises. That’s the basic premise of our business and that’s why clients keep coming back to Ranhill.” Chairman’s Statement Dear Shareholders, ones throughout Asia and Africa. Leveraging upon our E&C capability, On behalf of the Board of Directors, I am pleased to present the Annual we continued to expand dynamically into the development, operation Report and Financial Statements of Ranhill Berhad (“Ranhill” or “the and ownership of assets in the Energy and Infrastructure sectors. Group”) for the financial year ended 30 June 2007. Exciting new developments on the exploration and production side hold much promise for the future growth of our Oil & Gas Division PERFORMANCE HIGHLIGHTS especially in the light of continuing high demand for hydrocarbons. Our Ranhill turned in a sterling performance for the year under review. Water Division, spearheaded by Ranhill Utilities, has strengthened its Not only did we accomplish record highs on the financial front, we position as a top ranking regional water utilities player and is poised to strengthened our position as a premier engineering and construction make the most of water and wastewater opportunities under the Ninth player in the Oil & Gas, Power, Water and Infrastructure sectors, Malaysian Plan and the nation’s new water regulatory regime. expanded our asset base, and made exciting inroads into new and In the Power business, we continue to pursue our strategy of expanding existing markets. our regional power generation capacity through power plant conversion Our focus on ensuring strong project execution, establishing sound and asset acquisition. The Infrastructure Division has kicked off its engineering and construction (“E&C”) capabilities in key geographic maiden USD1.8 billion infrastructure project in Libya and is undertaking locations and investing astutely in strategic assets, continues to pay EPC works for Malaysia’s landmark Women and Children’s Hospital off handsomely. For the period under review, the Group registered net as well as design and build for 30 community and sports complexes profit attributable to shareholders of RM116.8 million on the back of throughout Malaysia. revenue of RM1.47 billion. As we set our sights on growing our core businesses in a concerted Over the course of the financial year, we continued to build up our manner and bolstering our capabilities around the globe, it is with engineering services and engineering, procurement and construction confidence that I can say Ranhill is all set to move up to the next level (“EPC”) portfolio by completing existing projects and embarking on new of growth. Ranhill Berhad (430537-K) 3 CHAIRMAN’S STATEMENT CORPORATE GOVERNANCE In line with the Government’s call for companies to be more proactive Ranhill steadfastly subscribes to the tenets of integrity, transparency and in their CSR efforts, Ranhill has registered itself as one of the founding accountability in all our dealings. To ensure the long term viability of our members of the Institute of Corporate Responsibility (“ICR”) Malaysia. businesses and to create sustainable shareholder value, we undertake This platform gives us the opportunity to engage with ICR member exemplary corporate governance practices in the management of companies on CSR best practices. the business and affairs of the Group. For the period under review, we continued to align our corporate governance controls in line with APPRECIATION the best practices identified in the Malaysian Code on Corporate On behalf of Ranhill’s Board of Directors, I wish to express our Governance. heartfelt gratitude to our business partners, bankers and financiers, the authorities, our customers and shareholders for their continued HUMAN CAPITAL DEVELOPMENT confidence in Ranhill. At Ranhill, we are continuously exploring opportunities that will enhance The Group’s outstanding performance this year is largely owing to the the value of our human capital and establish the Ranhill Group as an efforts of the dedicated team at Ranhill that continues to raise the bar “employer of choice”. As part of our continuous efforts to optimise the on excellence and drive the Group forward. To our employees, the skills sets of the Group’s employees, Group Human Resources has set management team and my colleagues on the Board, please accept up a training and development unit that has been tasked with ensuring my heartfelt gratitude for your loyalty, perseverance and efforts. our employees have access to high quality personal, technical and professional training opportunities. By offering employees long-term On behalf of the Board, I wish to thank Terence Francis Mahony career development opportunities, we aim to encourage employee who resigned from the Board on 25 May 2007, for his invaluable retention and infuse on-the-job satisfaction. contributions to Ranhill during his tenure. We wish him every success in his future endeavours. I would also like to take this opportunity to In cooperation with Group Management Information Systems, the welcome onboard Nadzru Azhari who was appointed to the Board on unit has put together a Training Management System which includes 16 August 2007. a comprehensive listing of various training programmes across all job skills and training needs analysis for both strategic organisational Last but not least, my sincere thanks to my fellow Board Members training and personal training. for their sound advice and guidance. I look forward to your invaluable support and continued commitment in driving Ranhill forward. As we focus on taking Ranhill to new heights of success, I trust that COMMITMENT TO CSR all stakeholders will continue to support us in our endeavours. To underscore Ranhill’s commitment to Corporate Social Responsibility (“CSR”), the Board has approved a new CSR framework for the Group. Based on Bursa Malaysia’s recommendations, this framework will outline CSR initiatives under the perspectives of the Environment, Community, Marketplace and Workplace. We have also begun to realign our diverse CSR activities and focus our efforts on issues pertaining to the environment as this has a direct impact on our businesses. Tan Sri (Dr) Sallehuddin Mohamed Chairman 4 Ranhill Berhad (430537-K) Message to Shareholders Dear Shareholders, are helping the Libyan Government meet the critical demand for I am pleased to report that your Company has delivered a very housing and infrastructure, where we have been awarded the successful year. We owe much to the hard work and dedication engineering and construction of 40,000 units of houses and the of our 4,500 employees whose efforts have produced this strong related infrastructure. Work has started at Tajura, a suburb of financial year and further increased the value of the Company. Tripoli. With the opportunities available to us, we are poised to experience In India, we are helping the Indian government meet the acute unprecedented high growth in the coming years in all the sectors shortage in power. We are commencing work in engineering and that we serve, with significant and major contributions coming from construction of two coal fired power plants, a 300MW and a 2 x outside Malaysia. 350MW, employing modern and clean technology. Ranhill has turned the challenges of the previous year into In Sudan, despite the difficulties and challenges we encountered, opportunities. In financial year 2007, net earnings turned around we completed a state-of-the-art 220,000 barrel per day (“bpd”) oil and increased by 134% to RM117 million, producing record processing facility that has been operating successfully since we earnings per share of 19.56 sen, despite the slight drop in revenue handed it over in 2006. Our client, a joint venture between China by 8% to RM1.47 billion. Our cash flow was positive in 2007 and National Petroleum Company and Petronas, has acknowledged we finished the year with RM937 million in cash. We have increased our good work by awarding us the contract for the expansion shareholders’ funds to RM1.042 billion with your Company’s net of the plant to 300,000 bpd with a provisional sum for water assets recorded at RM1.5 billion. injection facilities of estimated, 200,000 bpd capacity and costing We started 2008 by increasing our backlog by more than 50% approximately USD166.8m. This award is part and parcel of a to RM15 billion. Our huge backlog reflects our strong position settlement agreement. We are confident that the cost overruns in relation to the world’s growing demand for engineering, incurred to date will be fully recovered by virtue of the revenue procurement, construction, operation and maintenance activities as earned from the additional scope of work. well as investments in the oil & gas, power, water and infrastructure Our joint venture with WorleyParsons, a world engineering major sectors that we serve. Our backlog is spread across many regions, in engineering services for oil & gas, now in its twelfth year, has from South East Asia, China, India, the Middle East to Africa, and experienced unprecedented growth with a 40% increase in revenue across all the sectors we serve, thereby reducing our risk and to RM284 million whereby more than 50% is derived from outside vagaries of the region and market cycle. This augurs well for the Malaysia.
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