12
Cover: TBM Tunnel inlet, Triang Water Supply Scheme in Jelebu, Negeri Sembilan
This page: Inside the TBM Tunnel, once completed the 12.5km tunnel with 3.5m internal diameter will be the longest of its kind in Malaysia.
Zecon Berhad annual report 2008
1
VisionTo be a world class corporation providing
excellent engineering and construction
services.
MissionWe will deliver excellent engineering and
construction services which meet our
customers’ requirements through good
corporate governance practices and
superior technologies. We also strive to have
an efficient, dedicated and trained workforce
to serve our customers.
2
Matang-Rambungan Expressway18km two-lane double carriageway
Zecon Berhad annual report 2008
3
Performance ReviewFinancial Highlights ................................................................. 05
Corporate ProfileCorporate Information ............................................................. 06
Corporate Structure ................................................................. 07
Chairman’s Statement .............................................................. 08
Group Managing Director / CEO’s Review ............................... 10
Profile of Directors .................................................................. 13
Corporate Governance ................................................ 21Corporate Governance Statement ............................................ 22
Statement of Directors’ Responsibility ...................................... 25
Statement on Internal Control .................................................. 26
Audit Committee Report .......................................................... 27
Additional Compliance Information ......................................... 30
Corporate Social Responsibility Reporting .......... 31
Directors’ Report & Audited Financial Statements ......................................................................... 35
Analysis of Shareholdings ....................................................... 100
Analysis of Warrant Holdings ................................................... 103
List of Properties ...................................................................... 105
Notice of Annual General Meeting .......................................... 107
Statement Accompanying Notice of Annual General Meeting .. 109
Proxy Form
CONTENTS
Tun Salahuddin Bridge leading to Zecon Toll7.56 million users in 200820,709 average daily users
Fina
ncia
l Hig
hlig
hts
2008
0
04
05
06
07
08
50 100 150 200 250 300
79
45
142
275
157
revenuerM’million
04
05
06
07
08
0 2 4 6 8 10
7.4
1.7
1.3
10.1
7.3
12
Profit Before TaxrM’million
04
05
06
07
08
0 2 4 6 8 10
5.7
11.4
11.5
3.7
0.9
12
Earning Per ShareSen
04
05
06
07
08
Total AssetsrM’million
0 200100 300 400 500
292
429
421
415
478
04
05
06
07
08
Shareholders’ EquityrM’million
200150100500
85
145
155
172
173
04
05
06
07
08
Net Asset Per SharerM
2.01.51.00.50.0
1.18
1.65
1.76
1.44
1.45
5
6
Corporate Information
Board of Directors Datu Dr. Hatta bin SolhiIndependent Chairman
Datuk Dr. Haji Yusof @ Josree bin Haji YacobDeputy Independent Chairman
Datuk Haji Zainal Abidin bin Haji AhmadGroup Managing Director/Chief Executive Officer
Haji Zainurin bin Haji AhmadDeputy Managing Director
Poh Lik Gan @ Poh Li ThongIndependent and Non-Executive Director
Dato’ Dr. Mohd Yahya bin NordinIndependent and Non-Executive Director
Dato’ Haji Hamzah bin Haji GhazalliIndependent and Non-Executive Director
Dato’ Abdul Majit bin Ahmad KhanIndependent and Non-Executive Director
Richard Kiew Jiat Fong Independent and Non-Executive Director
Ir. Hui Kok Yuan Executive Director
Ir. Haji Abg Azahari bin Abg OsmanExecutive Director
Jamil Bin JamaludinExecutive Director
Haji Saini bin Haji SainiExecutive Director
Ir. Ng Weng FattExecutive Director
Audit CommitteePoh Lik Gan @ Poh Li Thong (Chairman) Datu Dr. Hatta bin SolhiDato’ Dr. Mohd Yahya bin Nordin Richard Kiew Jiat Fong
Risk Management CommitteeHaji Zainurin bin Haji Ahmad (Chairman)Haji Abg Azahari bin Abg OsmanHaji Saini bin Haji AliJamil bin JamaludinRayan ak NarongBrandon Goh Mun Han
Remuneration & Nomination CommitteeDatu Dr. Hatta bin Solhi (Chairman)Poh Lik Gan @ Poh Li Thong Dato’ Dr. Mohd Yahya bin Nordin
Option CommitteeDatu Dr. Hatta bin Solhi (Chairman)Haji Zainurin bin Haji AhmadBrandon Goh Mun HanKoh Fee Lee
Company SecretariesKoh Fee Lee (MAICSA 7019845)Lim Poh Yen (MAICSA 7009745)
AuditorsMessrs Ernst & YoungRoom 300-303, 3rd Floor, Wisma Bukit Mata KuchingJalan Tunku Abdul Rahman, 93100 Kuching, Sarawak.Tel : 082-243233 Fax : 082-421287
Share RegistrarSymphony Share Registration Services Sdn Bhd (506293-D)Level 26, Menara Multi Purpose, Capital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala Lumpur.Tel : 03-2721 2222 Fax : 03-2721 2530
Principal BankerBank Muamalat Malaysia Berhad KAF Investment Bank BerhadAffin Investment Bank BerhadAmBank (M) BerhadEON Bank BerhadPublic Bank BerhadRHB Bank BerhadHSBC Malaysia BerhadMalayan Banking Berhad
SolicitorsReddi & Co. AdvocatesAzmi & AssociatesC.J. Eng AdvocatesHisham, Sobri & KadirMary Bolhassan, Noreda Ahmad & CoTang & Tang, Wahap & Ngumbang Advocates
Stock Exchange ListingBursa Malaysia Securities Berhad, Second BoardStock Code : 7028Stock Name : ZECON
Registered Office8th Floor, Menara Zecon No. 92, Lot 393, Section 5 KTLDJalan Satok, 93400 Kuching, Sarawak.Tel : 082-275555 Fax : 082-275500E-mail: [email protected]: www.zecon.com.my
Branch OfficeSuite 2A-11-2, Level 11, Block 2A, Plaza Sentral, Jalan Stesen Sentral 5, KL Sentral,50470 Kuala Lumpur.Tel : 03-22723118 Fax : 03-22743656
Zecon Berhad annual report 2008
7
Corporate Structure
ZECON BERHAD100% Zecon Toll Concessionaire Sdn Bhd
100% Zecon Geotechnical Services Sdn Bhd
100% Zecon Mutiara Sdn Bhd
100% Zecon Land Sdn Bhd
100% Zecon Australia Pty Ltd
100% Zecon Piling Sdn Bhd
100% Zecon International Limited
100% Zecon Water Corporation Sdn Bhd
100% Zecon Construction (Sarawak) Sdn Bhd
100% Matang Highway Sdn Bhd
100% Zecon Designtech Sdn Bhd
100% Zecon MidEast Limited
100% Zecon (Saudi Arabia) International Limited
100% Zecon Assets Sdn Bhd (formerly known as Zecon-ESEC Engineering Sdn Bhd)
96% Zecon Resources Sdn Bhd
70% Zecon Dredging Sdn Bhd
55% Teknik PS Sdn Bhd
51% Zecon Construction Sdn Bhd
51% Zecon Fab Sdn Bhd
51% Zecon Energy Sdn Bhd
50% NS Water-Zecon JV Sdn Bhd
35% L.C.S. Trading Co. Sdn Bhd
25.48% Halifax Capital Berhad
100% Agrowell Quarry Sdn Bhd
100% Zecon Demak Jaya Sdn Bhd51% Zecon Petra Jaya Sdn Bhd
100% IR Concept (M) Sdn Bhd100% ZPM Satu Sdn Bhd100% Zalpoint Tanah Putih Sdn Bhd
50.1% Sarmax Sdn Bhd
100% TPS Medicare Sdn Bhd
Subsidiary Companies
Associate Companies
Datu Dr. Hatta Bin Solhi
“During the year under review,
Zecon continued to venture
into new territories and
businesses. This is in line with
our diversification strategy
which started in 2006 towards
achieving the corporate
objectives of the Group which,
among others, are to remain
financially stable and returning
good value to our share-
holders.“
Chairman’s Statement
8
To our valuable shareholders, clients, partners, bankers, suppliers and friends
On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statement of Zecon Berhad (“Zecon”) and its Subsidiaries (“Group”) for the financial year ended 31 December 2008.
During the year under review, the Group continued to venture into new territories and businesses. This is in line with our diversification strategy which started in 2006 towards achieving the corporate objectives of the Group which, among others, are to remain financially stable and returning good value to our share-holders. Geographically, The Group intensified its efforts to secure projects in the Gulf Region with a number of preliminary and pre-feasibility studies being carried out for projects, both construction and petroleum-related in nature.
In line with the above strategy, Zecon Mid-East Limited and Zecon (Saudi Arabia) International Limited were incorporated for the purpose of spearheading potential operations in the Gulf Region. Our continued efforts resulted in the signing of the Memorandum of Understanding (“MOU”) between Zecon and Qatari Diar Real Estate Investment Company, a corporation wholly owned by Qatar Investment Authority, in January 2009, in Doha. We are honoured that the event was witnessed by the then Prime Minister, Tun Abdullah Ahmad Badawi. Follow-up discussions were made on a regular basis by Headquarters staff to translate the spirit of the MOU into reality.
Other significant events during the year were the successful issuance of the RM70 million SUKUK bonds in May 2008 both for refinancing purposes as well as for project implementation, the commencement of Water Tunnelling Project in Jelebu, Negri Sembilan and the signing of a contract for the Matang Revised Route Project in Kuching, Sarawak.
Financial Performance
The year 2008 saw a downward trend in the construction and property development industries in Malaysia. Zecon was not totally spared from the negative effects of economic slowdown; despite that, the Group was able to show its resilience and managed to record positive growth in revenue with a gross turnover amounting to RM157.17 million. This represents an increased of approximately RM78.6 million (or 100%) higher than the preceding year of RM78.56 million. However, due to the higher cost of sale (mainly cost of fuel and construction materials) and provision for impairment of investment in Halifax Capital Bhd, the Group recorded a smaller after tax profit of around RM1.010 million. During the year 2008, Zecon continued to focus its resources on the Group’s on-going infrastructure projects, which include the Matang-Rambungan Expressway in Kuching and the Triang Water Supply Scheme in Jelebu, Negeri Sembilan. These two projects contributed about 94% of the total revenue for the Group. At the same time, management had outlined several strategies in their bid to manage the cost of operation more efficiently; among others it includes the centralization of the assets and human resource management and establishing a centralized monitoring system to monitor the progress of project implementation to ensure projects are completed on schedule and cost efficient. On the balance sheet side, the Group registered a total asset of RM477.92 million representing a 15% increase as compared to preceding year; the largest increase being “cash and bank balances”. Another plus side of the Group’s assets is the existence of a land-bank worth around RM126 million which has good potential for mixed development once the national economic scenario starts to improve. With the above development, we can expect the near future operational inflows will further enhance the liquidity of the Group.
Corporate Social Responsibility
As a responsible developer and concessionaire, Zecon continues to carry out their business activities mindful of the communities and environment within which it operates. The ZECON CSR Framework which was developed and adopted in 2007 continues to be the guiding principle which the management strives to comply with. In education, Zecon continues to inspire scholars to excel in their studies, especially those in engineering field. Zecon Excellence Awards given to graduating engineering students at University Malaysia Sarawak (UNIMAS) and Curtin University of Technology Sarawak are highly regarded by the students and faculties of these universities. The Group also award three Scholarships to qualified engineering students at UNIMAS annually. This scholarship is meant for students from low income families who excel in their studies to continue their studies without being interrupted by financial problems. In sport, we continue to extend the sponsorship for Mohd Azlan Iskandar for another year. The sponsorship also includes performance-based incentives.
Besides the above annual academic awards, sport sponsorships and social activities were also carried out as listed in the table on page 33. Zecon also focuses on the environment in which our people are working in. Throughout the year, efforts had been made to ensure the safety of our workers of all ranks, whether in the office or construction sites, this matter is placed as the top priority. The safety man-hours without accident at Matang-Rambungan Expressway and the Triang Water Supply Scheme reached slightly over a million man-hours and 453,500 man-hours respectively.
In October 2008, a Smoke-Free campaign was implemented in the entire Menara Zecon building. The campaign aims to create a clean and healthy environment for those working at the office, besides complimenting the government’s “TAK NAK” campaign to eradicate smoking habit. Early this year, this restriction was implemented at our Kuala Lumpur office; all site offices will be covered by this restriction in the very near future.
The Board
On behalf of the Board of Directors, I am pleased to congratulate Haji Zainurin Haji Ahmad for his appointment as Deputy Managing Director and to welcome to the Board, Haji Saini Haji Ali as Executive Director, Richard Kiew Jiat Fong as Independent Non-Executive Director, Datuk Dr. Haji Yusof @ Josree bin Yacob as Deputy Chairman and Ng Weng Fatt as Executive Director. We believe that their invaluable experiences and expertise will bring more innovative ideas to the Board deliberation.
Remarks
Despite the uncertainty in the global economy, Asia, contributing nearly 30% of global Gross Domestic Product, still continues to be a vibrant place to do business, particularly in Malaysia, with a new Prime Minister who had just introduced a RM60 billion 2nd economic stimulus package to stimulate the economy. We are optimistic that the country can weather the storm very well. We are confident that Zecon is well positioned and ready to take on any opportunities, especially in the construction and property development sectors, that are made available by the stimulus package. In view of the above scenario, we are confident that the Group’s prospect will continue to be positive in the coming years. I can assure you that the Board of Directors and Management will be wary of the risk involved during this challenging time and will always put in place workable strategies, competent talents as well as prudent cost management to ensure that we continue to deliver high value to our shareholders.
Thank You
Datu Dr. Hatta Bin SolhiIndependent ChairmanDate: 26 May 2009
9
Datuk Haji Zainal AbidinBin Haji Ahmad
“We continue to actively
pursue opportunities to
diversify our business. On
21 January 2009, Zecon
signed a Memorandum of
Understanding with Qatari
Diar, one of the biggest
developers in Qatar which is
owned by Qatar Investment
Authority, to combine resources
and expertise and to exchange
technology know-how for
any potential development
projects in Qatar and the Gulf
region. The signing represents
the first step towards bringing
in potential projects in the
region.”
Group Managing Director / CEO’s Reviews
10
