ANNUAL REPORT BUILDING 2013 Lafarge Malaysia Berhad (formerly known as BETTER CITIES Lafarge Malayan Cement Berhad) IN MALAYSIA PROFILE Lafarge Malaysia Berhad is a leader of the Malaysian construction industry, contributing towards building better cities. Our solutions provide cities and townships with more housing, making them more compact, more durable, more beautiful and better connected. Headquartered in the Klang Valley, Lafarge Malaysia has facilities that include three integrated cement plants in Langkawi, Kanthan and Rawang, a grinding station in Pasir Gudang, more than 30 ready-mixed concrete batching plants and 6 aggregates quarries throughout Peninsular Malaysia. These facilities are supported by a wide network of depots, terminals and distribution facilities, connected by road, rail and sea. Contents 1 5 Financial Highlights Corporate Governance Financial Highlights 004 Corporate Governance Statement 046 Five-Year Financial Statistics 006 Statement on Internal Control 052 Report of the Audit Committee 054 2 6 Group Overview Financial Statements Chairman’s Statement 008 CEO’s Review 012 Directors’ Report 058 Management’s Discussion & Analysis 018 Statement by Directors 064 Commercial Differentiation 020 Declaration by the Director 064 Primarily Responsible for the Financial Management of the Company Independent Auditors’ Report 065 Statements of Profi t or Loss and Other 067 Comprehensive Income Statements of Financial Position 069 3 Statements of Changes in Equity 071 Statements of Cash Flows 073 Sustainability Overview Notes to the Financial Statements 075 Disclosure on Realised and Unrealised Profi ts 145 People Development 022 Health & Safety 024 Environmental Footprint 032 Community Outreach 034 7 Shareholders, Share Capital 4 and Other Information Corporate Information Analysis of Shareholdings 146 Top 10 List of Properties 149 Corporate Information 038 Notice of Annual General Meeting 150 Board of Directors’ Profi le 039 Form of Proxy Executive Committee 044 LAFARGE MALAYSIA BERHAD - ANNUAL REPORT 2013 001 Milestones OUR 60 YEAR JOURNEY HAS BEEN DEFINED BY THE PURSUIT OF EXCELLENCE 1963 The Kanthan plant, located in Kinta Valley, 1950 Perak, is commissioned to meet increasing domestic demand for cement. The Sultan Malayan Cement Berhad of Perak lays the foundation stone on (now known as Lafarge Malaysia 28 December, in a ceremony to mark the Berhad), a subsidiary of commencement of construction. Blue Circle Industries PLC, 1997 United Kingdom, is incorporated in then Malaya, with the task The Pasir Gudang Plant with a rated capacity of of constructing Malaya’s first 1967 cement plant. 800,000 TONNES PER ANNUM 1993 is commissioned. Malayan Cement Berhad also Malayan Cement Berhad’s cement launches its Schools Project, a Corporate Social business merges with Pan Malaysia The Rawang and Kanthan kilns are Responsibility initiative to provide bursaries and 1958 Cement Works to form Associated Pan upgraded, bringing their respective excellence awards to high achievers and low income Malaysia Cement Sdn Bhd (APMC). production capacities to 1.5 million families from schools in the vicinity of the company’s To cater to increasing domestic demand and 1.0 million tonnes per annum. plants in Rawang, Kanthan, Langkawi and for cement, the Rawang Works Extension RAWANG & KANTHAN KILNS Pasir Gudang. Since its inception, 3,500 students is commissioned, increasing the plant’s have benefitted from the programme, with production to 240,000 tonnes per annum. 1.5 Million & Lafarge contributing more than RM2 million RAWANG PLANT 1984 1.0 Million to this programme. TONNES PER ANNUM 240,000 The Langkawi Plant is TONNES PER ANNUM commissioned and begins operations. 1989 Lafarge Malayan Cement 1998 1964 launches Mascrete, the company’s first differentiated The Rawang and Kanthan plants are awarded bulk product. 1951 KANTHAN PLANT the ISO 14001 certification. Lafarge becomes the first cement company in Malaysia to achieve Construction of the 500,000 ISO 14001 certification. Rawang plant, TONNES PER ANNUM Malaya’s first cement The Kanthan plant is inaugurated by plant, commences. the first Prime Minister of Malaysia, Tunku Abdul Rahman – the plant’s annual production capacity is 500,000 1995 tonnes per annum, a quantity sufficient 1953 to meet the cement needs of Malaya at The Rawang and Kanthan plants are the time. awarded the ISO 9002 certification The Rawang plant (now known as ISO 9001:2000). commences operations, producing 110,000 tonnes of cement per annum, which is marketed under the brand 1961 name ‘Tiger Cement’. Malayan Cement is listed on the then Malayan Stock Exchange, RAWANG PLANT the precursor to the Kuala Lumpur Stock Exchange (KLSE) on 110,000 17 MARCH 1961 TONNES PER ANNUM 002 LAFARGE MALAYSIA BERHAD - ANNUAL REPORT 2013 Milestones (continued) 2010 Lafarge Malayan Cement’s Mascrete LH and Phoenix, which are manufactured using pulverised fuel ash, receive the coveted Singapore Green Label certification from the Singapore Environmental Council. Lafarge Malayan Cement is the first Malaysian cement company to receive the certification. Lafarge Malayan Cement is further honoured with the “Technology Innovation Award for Sustainable Production of Cement” by Frost & Sullivan at the Green Excellence Awards for its firm commitment 2003 to sustainable development. Malayan Cement Berhad officially changes its name to Lafarge Malayan Cement Berhad as part of its integration into the global Lafarge group. In the same year, the company launches the 2012 Young Engineers Programme, the first cement professional development programme in Malaysia designed to develop fresh Greenbuild Asia 2012 selects Hydromedia, graduates from local universities into skilled engineers. Lafarge’s revolutionary new concrete product as the winner of the Best New Product (Building Material Concrete) Award. 2001 2007 The company becomes part of Lafarge The Kanthan plant records a historic Group following acquisition of Blue new high in production of Circle PLC in the United Kingdom. In the same year, the company 2013 celebrates the launch of its innovative 3.0 Million fly ash bag cement, Phoenix. TONNES PER ANNUM Reflecting a greater level of integration with the global Lafarge group, the company changes its name from Lafarge Malayan Cement Berhad to Lafarge Malaysia Berhad and officially launches its new corporate tagline: Building Better Cities. 2013 Lafarge Malaysia celebrates 60 years of operations in Malaysia. 2000 2008 The Rawang and Kanthan plants Lafarge Malayan Cement is honoured become the first cement plants to by the Starbiz-ICR Malaysia receive OHSAS 18001 certification, Corporate Responsibility Awards as affirming the company’s one of the top five public listed commitment to occupational health companies in Malaysia for Workplace 2011 and safety management. and Marketplace Awards. Mascrete LH and Phoenix receive Green Building Product certification from the Singapore Green Building Council. This makes Mascrete LH and Phoenix the first Malaysian 2006 cement products to secure both Green Building Product and Green Label certification. Lafarge Malayan Cement revenue hits Mascrete LH and Phoenix are also awarded RM2 billion for the first time in the the Eco-Label from SIRIM in the same year. company’s history. The company also launches Mascrete LH, a new differentiated bulk product. LAFARGE MALAYSIA BERHAD - ANNUAL REPORT 2013 003 Financial Highlights Statement of Comprehensive Income Revenue in RM’000 EBITDA margin % PBIT in RM’000 23.2% 22.6% 513,961 472,982 2,852,400 +4.1% 2,740,062 +2.7% +8.7% 2012 2013 2012 2013 2012 2013 Statement of Financial Positions Total equity in RM’000 Market capitalisation in RM’000 3,219,629 7,281,886 +1.5% 3,172,620 -10.9% 8,174,066 2012 2013 2012 2013 Dividend and Earnings Per Share Earnings per share (sen) Net dividend per share (sen) Dividend yield % 4.8% 3.8% 43.15 41.00 41.07 37.00 +5.1% +10.8% +26.3% 2012 2013 2012 2013 2012 2013 004 LAFARGE MALAYSIA BERHAD - ANNUAL REPORT 2013 Financial Highlights (continued) 1 Statement of Cash Flow Net cash from operating Capital expenditures Operating working capital activities in RM’000 in RM’000 % of revenue 8.8% 10.0% 53,650 50,092 454,127 455,199 -0.2% +7.1% +13.6% 2012 2013 2012 2013 2012 2013 Financial Ratios PBIT/Total equity PAT/Revenue 16.0% 12.9% 14.9% 12.8% +7.4% +0.8% 2012 2013 2012 2013 Total Equity - includes non-controlling interest EBITDA - Earnings before interest, tax, depreciation and amortisation (excludes share of results of associates) PBIT - Profi t before interest and tax (excludes share of results of associates) LAFARGE MALAYSIA BERHAD - ANNUAL REPORT 2013 005 Five-Year Financial Statistics 2009 2010 2011 2012 2013 RM’000 RM’000 RM’000 RM’000 RM’000 Operating Results Revenue 2,483,106 2,324,888 2,552,564 2,740,062 2,852,400 Profi t from operations 460,854 362,419 417,002 472,982 513,961 Profi t before tax 441,914 345,397 414,647 469,752 514,890 Profi t for the year 406,215 291,098 317,647 349,490 367,118 Key Balance Sheet Data Share capital 849,695 849,695 849,695 849,695 849,695 Total equity 3,214,644 3,101,767 3,125,074 3,172,620 3,219,629 Net borrowings/(cash) (54,245) (156,932) (244,355) (352,295) (450,362) Net tangible assets 2,005,904 1,891,699 1,915,303 1,963,298 2,011,171 Share Information and Financial Ratios Net gearing ratio (times) – – – – – Net tangible assets per share (RM) 2.36 2.23 2.25 2.31 2.37 Net earnings per share (EPS) (sen) 48.51 34.76 37.41 41.07 43.15 Net dividend per share (sen) 38.00 34.00 34.00 37.00 41.00 Share price