From the great outdoors to our homes.
An everyday necessity that all living creatures require to survive, the world across enjoys fresh, clean water that Salcon strives to make safe and of the utmost quality. Via precise engineering and careful treatment, Salcon touches lives by providing clean and quality water for a sustainable future.
vision to be a world leader in water
and sanitation services
02 l Company Profile 04 | Corporate Information 05 | Corporate Structure 06 | Financial Highlights
08 l Heartiest Congratulations to Our Executive Deputy Chairman 10 | Board of Directors
12 | Profile of Directors 16 | Chairman’s Message
24 | Corporate Responsibility Report
40 | Corporate Governance Statement 47 | Audit Committee Report
51 | Internal Control Statement 53 | Financial Statements
149 | Particulars of Group Properties
150 | Analysis of Shareholdings and Warrantholdings 155 | Notice of Annual General Meeting
157 | Statement Accompanying
Notice of Annual General Meeting Appendix I
Proxy Form
to provide quality water and sanitation services through
innovation and capable human resource whilst upholding our corporate responsibilities
contents
mission
vision
company profile
Salcon Berhad (“Salcon”) is the leading water and wastewater engineering company in Asia, offering value-added services in the investment, design, construction, commissioning, operation and maintenance of water and wastewater treatment plants and ancillary facilities.
Since April 1974, Salcon via its wholly owned subsidiary, Salcon Engineering Berhad has successfully completed more than 500 water treatment and 300 wastewater projects in Malaysia, Sri Lanka, Thailand, Vietnam and China. Currently, Salcon owns and operates 7 water, 2 wastewater and 1 industrial wastewater concession in Changle County, Nanan City, Haining City, Linyi City, Yizheng, Changzhou in China and Ho Chi Minh City in Vietnam.
Salcon, in managing water resources on behalf of its municipal clients, aims to produce clean water that is necessary for sustainable development while minimizing impact to the environment and conserving the resources for future generations. Wastewater
which is produced is then collected and treated to meet international standards for re-use or return to the ecosystem safely.
As a leader in this water and wastewater industry, Salcon envisions itself to be in the forefront of future projects in other parts of Asia and is currently looking for other countries in the region, which has tremendous growth for expansion.
As part of the Salcon’s Green Venture strategy, we have also invested in the renewable energy sector via the installation of solar photovoltaic systems in the southern area of United Kingdom. We look forward to contribution from this new business segment which is expected to generate sustainable returns to our shareholders.
Our core values reflect who we are and continually guides us in our priorities and actions.
• Commitment
• Teamwork
• Professionalism
• Respect
• Results
Commitment
We are committed to delivering consistent and high quality products and services through the most efficient and optimum use of available resourcescorporate information
AUDIT COMMITTEE Ho Tet Shin (Chairman)
Dato’ Dr. Freezailah bin Che Yeom Dato’ Seri (Dr.) Goh Eng Toon NOMINATION COMMITTEE
Dato’ Seri (Dr.) Goh Eng Toon (Chairman) Dato’ Dr. Freezailah bin Che Yeom Ho Tet Shin
REMUNERATION COMMITTEE
Dato’ Seri (Dr.) Goh Eng Toon (Chairman) Dato’ Dr. Freezailah bin Che Yeom Ho Tet Shin
EXECUTIVE COMMITTEE
Dato’ Seri (Dr.) Goh Eng Toon (Chairman) Tan Sri Dato’ Tee Tiam Lee
Dato’ Leong Kok Wah
RISK MANAGEMENT COMMITTEE Ho Tet Shin (Chairman)
Dato’ Leong Kok Wah
Jamiluddin Amini Bin Sulaiman Ooi Cheng Swee @ Wee Kwee Swee ESOS COMMITTEE
Tan Sri Dato’ Tee Tiam Lee (Chairman) Dato’ Leong Kok Wah
Law Woo Hock
COMPANY SECRETARIES Ng Yen Hoong (LS 008016) Lim Poh Yen (MAICSA 7009475) REGISTERED OFFICE
15th Floor, Menara Summit Persiaran Kewajipan, USJ 1 47600 UEP Subang Jaya Selangor Darul Ehsan Tel : 603-8024 8822 Fax : 603-8024 8811
HEAD OFFICE
15th Floor, Menara Summit Persiaran Kewajipan, USJ 1 47600 UEP Subang Jaya Selangor Darul Ehsan Tel : 603-8024 8822 Fax : 603-8024 8811 AUDITORS
KPMG (AF 0758) Chartered Accountants Level 10, KPMG Tower 8 First Avenue, Bandar Utama 47800 Petaling Jaya
Selangor Darul Ehsan PRINCIPAL BANKERS Hong Leong Bank Berhad Malayan Banking Berhad
Standard Chartered Bank Malaysia Berhad United Overseas Bank (Malaysia) Berhad SHARE REGISTRAR
Tricor Investor Services Sdn Bhd Level 17, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur
Tel : 603-2264 3883 Fax : 603-2282 1886
STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad
(Listed since 3 September 2003) Sector: Trading/Services
Stock Name: SALCON Stock Code: 8567 WEBSITE
www.salcon.com.my
BOARD OF DIRECTORS
Dato’ Seri (Dr.) Goh Eng Toon Chairman, Non-Independent Non-Executive Director
Tan Sri Dato’ Tee Tiam Lee Executive Deputy Chairman Dato’ Leong Kok Wah Executive Director
Dato’ Dr. Freezailah bin Che Yeom Independent Non-Executive Director Ho Tet Shin
Independent Non-Executive Director Dato’ Choong Moh Kheng Independent Non-Executive Director
99.99%
Salcon Fujian (HK) Limited
100%Salcon Environmental Services Sdn Bhd
100%Salcon Corporation Sdn Bhd
100%Salcon Power Sdn Bhd
100%Salcon-Centrimax Engineering Sdn Bhd
100%Salcon (Sarawak) Sdn Bhd
100%Salcon Water International Pte Ltd
99.99%
Salcon Shandong (HK) Limited
100%Salcon Jiangsu (HK) Limited
100%Shandong Changle Salcon Water Company Limited
100%Salcon Capital Sdn Bhd
100%Changle Salcon Raw Water Company Limited
65%Nan An Salcon Water Company Limited
99%Salcon Water (HK) Limited
60%Haining Salcon Water Company Limited
99.99%
Salcon Zhejiang (HK) Limited
100%Precise Metal Sdn Bhd
51.3%
Eco-Coach &
Tours (M) Sdn Bhd
100%Salcon Development Sdn Bhd (formerly known as Salcon Infrastructure Sdn Bhd)
100%Salcon Water International Limited
51%Integrated Water Services (M) Sdn Bhd
100%Salcon Engineering Berhad
99.99%
Salcon Linyi (HK) Limited
60%Linyi Salcon Water Company Limited
100%Linyi Runcheng Water Supply Project Company Limited
99.99%
Salcon Services (HK) Limited
66.67%
Jiangsu Salcon Water & Environmental Development Company Limited
1%
1%
60%SALCON WATER (ASIA) LIMITED
60%Envitech Sdn Bhd
100%Salcon Power (HK) Limited (formerly known as Kingstone Enterprise Group Limited)
100%Changzhou Salcon Wastewater Treatment Company Limited
50% + 1 Share
Azitin Venture Sdn Bhd
100%Salcon Changzhou (HK) Limited
100%Yizheng Rong Xin Wastewater Treatment Company Limited
100%Salcon Investment Consultation (Shanghai) Company Limited
100%Salcon Alliance Corporate Management
& Consultancy (Shanghai) Pte Ltd
100%Tanjung Jutaria Sdn Bhd
40%Salcon (Perak) Sdn Bhd
100%Salcon Holdings (Mauritius) Limited
99%Salcon Engineering (India) Pte Ltd
60%Eagle Metalizing Coatings Company Sdn Bhd
100%Skeel Engineering Sdn Bhd
100%Bumi Tiga Enterprise Sdn Bhd
100%Salcon Building Services Sdn Bhd
50%Gliterria Sdn Bhd
100%Salcon Engineering Vietnam Company Limited
100%
Salcon Green Energy (UK) Limited
100%Salcon Resources Sdn Bhd
40%Emas Utilities Corporation Sdn Bhd
90%Binh An Water Company Limited
1 Share
Operating Companies Dormant Companies
corporate structure
as at 25 April 2012
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
223,395 425,200
290,283 467,720
467,720 473,548 315,516
323,105
389,398 474,308
Turnover
RM (,000)
Shareholders’ Fund
RM (,000)
Profit Before Tax
RM (,000)
Number Of Shares Issued
(,000)
financial highlights
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
134,600 -5,138
252,501 16,029
369,873 33,458
549,879 44,064
472,462 29,053
2007 2008 2009 2010 2011
Turnover (RM,000) 134,600 252,501 369,873 549,879 472,462
Profit Before Tax (RM,000) -5,138 16,029 33,458 44,064 29,053
Shareholder’s Fund (RM,000) 223,395 290,283 315,516 323,105 389,398 No. of Shares Issued (,000) 425,200 467,720 467,720 473,548 474,308
Net Assets per share (RM) 0.53 0.62 0.67 0.68 0.82
Teamwork
We believe that mutual accountability and unified efforts bring about greater synergy and productivity in our pursuit for excellenceTan Sri Dato’ Tee Tiam Lee
Heartiest Congratulations
to our Executive Deputy Chairman
On his conferment of Darjah Kebesaran Panglima Setia Mahkota (P.S.M.) which carries the title “Tan Sri” by Seri Paduka Baginda Yang Di-Pertuan Agong on 30th June 2011.
We are truly proud of Tan Sri Dato’ Tee Tiam Lee on his conferment of Darjah Kebesaran Panglima Setial Mahkota (P.S.M.) which carries the title “Tan Sri” by Seri Paduka Baginda Yang di-Pertuan Agong Al- Wathiqu Billah Tuanku Mizan Zainal Abidin Ibni Al- Marhum Sultan Mahmud Al-Muktafi Billah Shah on His Majesty Birthday on 4th June 2011.
Born in 1957 in Alor Gajah, Melaka, Tan Sri Dato’
Tee started from humble beginnings. Despite not completing his formal
education, Tan Sri Dato’
Tee made his mark in the insurance industry through sheer hard work and determination and has more than 30 years experience in this field.
Other than this, Tan Sri Dato’ Tee has wide ranging businesses and hold interests through privately held companies in property, water, palm oil, hotel and timber.
In Salcon, Tan Sri held the position of Senior Adviser of Salcon Berhad since 1st July 2005 and was subsequently appointed as Executive Deputy Chairman of the Group on
1st January 2010. Under Tan Sri Dato’ Tee’s dynamic leadership, Salcon grew by leaps and bounds and had notable achievements in penetrating the China water and wastewater market. Tan Sri’s business acumen and excellent relations with Chinese water authorities ensured a good and harmonious relationship in Salcon’s Chinese ventures with local government agencies. Today, Salcon owns and operates 9 water
and wastewater concessions in Zhejiang, Jiangsu, Fujian and Shandong provinces in China.
As a testament to Tan Sri’s outstanding contribution to the water industry, in particular in Haining City, Zhejiang Province, China, Tan Sri Dato’ Tee was conferred “Haining Honorary Citizen” by 13th Standing Committee of Haining Municipal Government for having significant contribution in water industry and improving the quality of life in Haining City.
Despite his busy schedule, Tan Sri is very active in non-government and non- profit associations. He holds the position of Director of Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), Committee Member in Malaysia-China Chamber of Commerce (MCCC) and Adviser of MCCC Terengganu Branch.
Tan Sri is also President of The Mines Resident Association.
Tan Sri strongly believes in the philosophy of giving back to the society. He is active in helping the needy as he understands that a better society will lead to a better nation. Tan Sri donates to numerous charity organizations, foundations, schools and other foundations. He is particularly generous in the educational field, contributing not only money but time and leadership and was appointed as Honorary Adviser for board of directors, Parent Teacher Association (PTA) and alumni association of Sekolah Jenis Kebangsaan (Cina) Kuala Sungai Baru Yoke Sin.
board of directors
1 Dato’ Choong Moh Kheng 2 Ho Tet Shin
3 Dato’ Seri (Dr.) Goh Eng Toon
1 2 3
board of directors
< cont’d
4 Tan Sri Dato’ Tee Tiam Lee 5 Dato’ Leong Kok Wah
6 Dato’ Dr. Freezailah bin Che Yeom
4 5 6
profile of directors
Dato’ Seri (Dr.) Goh Eng Toon
Chairman, Non-Independent Non-Executive Director Dato’ Seri (Dr.) Goh Eng Toon, aged 78, was appointed to the Board of Salcon Berhad (“Salcon”) on 15 June 2005 as the Vice Chairman. He was appointed the Chairman of Salcon on 18 October 2007.
He holds a Cambridge General Certificate of Education and is a Fellow of the Institute of Bankers Malaysia.
Dato’ Seri (Dr.) Goh started his banking career with Midland Bank in the United Kingdom in the early fifties and Malayan Banking Berhad from 1960 to 1973. In 1973, he was appointed the Chief Executive Officer (“CEO”) of Ban Hin Lee Bank Berhad, Director and CEO in 1978, Acting Chairman and CEO in 1986 and became its Chairman and CEO from 1990 until the merger of Ban Hin Lee Bank Berhad and Southern Bank Berhad in July 2000. He was a Director of Southern Bank and its Group: Southern Finance Berhad, SBB Mutual Berhad (formerly known as BHLB Pacific Trust Management Berhad), BHLB Asset Management Sdn Bhd and BHL Venture Berhad until 2004, when he retired from the Bank and the Group.
He was also the Chairman of BHLB Trustee Berhad until December 2005.
He also served on the Board of Aviva Insurance Berhad (“Aviva”) as its Chairman. He was also the Chairman of the Audit, Risk Management, Nomination and Remuneration Committees of Aviva. He retired from Aviva in September 2006 when it merged with MSIG Insurance Berhad.
Dato’ Seri (Dr.) Goh was a Director and Chairman of Rockwills Trustee Berhad until 5 May 2011.
He presently serves on the Board and as the Chairman of Pulau Pinang Clinic Sdn. Bhd. (Gleneagles Medical Centre, Penang). He is also a Director of Heng Lee
& Co. Sdn Bhd and its Group of Companies. He also serves as trustee in many charitable homes, institutions and associations.
In recognition of Dato’ Seri (Dr.) Goh’s contribution to nation building in economic, social and education sector, he was conferred the Doctor of Laws, honoris causa from Wawasan Open University on 23 October 2010.
Dato’ Seri (Dr.) Goh is currently the Chairman of the Executive Committee, Nomination Committee and Remuneration Committee and a member of the Audit Committee of the Company.
Tan Sri Dato’ Tee Tiam Lee
Executive Deputy Chairman
Tan Sri Dato’ Tee Tiam Lee, aged 55, was appointed to the Board of Salcon on 1 January 2010.
Tan Sri Dato’ Tee has an extensive career and has vast experience in various industries including insurance, water engineering/treatment, hotel management, property investment and oil palm plantation business.
He began his career in insurance in 1976 after finishing his secondary education and has more than 30 years experience in this industry to-date.
Tan Sri Dato’ Tee was a Director, members of Remuneration Committee, Risk Management Committee and Underwriting Committee of MUI Continental Insurance Berhad.
He is also a Director of several private limited companies including Hotel Sri Hoover Sdn Bhd which deals in hotel management, and Tabir Arena Sdn Bhd, Jouta Plantation Sdn Bhd and Evergreen Comfort Sdn Bhd, which deal in oil palm plantation business in the east coast of West Malaysia.
He is the Chairman of The Mines Residents Association (MRA) and is also a Director of the Chinese Chamber of Commerce in Terengganu since 1995.
Tan Sri Dato’ Tee is the Chairman of ESOS Committee and a member of the Executive Committee and a major shareholder of the Company. He was a senior adviser of the Company.
profile of directors
< cont’d
Dato’ Leong Kok Wah
Executive Director
Dato’ Leong Kok Wah, aged 58, was appointed to the Board of Salcon on 1 January 2010.
He holds a Master’s degree in Business Administration (MBA) from University of Hull, United Kingdom (“UK”) and is a member of Institute of Bankers (UK), Institute of Credit Management (UK), Institute of Marketing (UK) and Institute of Bankers Malaysia.
Dato’ Leong has an extensive career and held senior positions in the banking industry. He has vast experience in stock broking, asset management and options and futures trading. He sits on the Board of various companies in Malaysia.
Dato’ Leong is an Independent Non-Executive Director and a member of Audit Committee, Nomination Committee and Remuneration Committee of S P Setia Berhad. He also sits on the Board of MUI Continental Insurance Berhad and is a member of its Audit Committee and Investment Committee.
He is a member of the Executive Committee, Risk Management Committee and ESOS Committee of the Company.
Dato’ Dr. Freezailah bin Che Yeom
Independent Non-Executive Director
Dato’ Dr. Freezailah bin Che Yeom, aged 72, was appointed to the Board of Salcon on 21 July 2003.
He holds a First Class Honours degree in Forestry and a Doctor of Philosophy in Ecology from the University of Edinburgh, United Kingdom.
Dato’ Dr. Freezailah has more than 40 years of experience in various fields of the forestry sector including holding several senior management positions. In 1987, he was elected to serve as the founding Executive Director of the UN-Sponsored International Tropical Timber Organisation (“ITTO”) based in Yokohama, Japan with the rank of Assistant Secretary-General on the UN-Scale. He provided leadership to the 57-member-country ITTO and nurtured its growth and development into a respected global body to promote the conservation, sustainable management and utilisation of the world’s tropical forests. In recognition of his contributions to the forestry sector, the ITTO created the “Freezailah Fellowship Fund” on his retirement in 1999 and he was conferred “Award of Excellence” by the Commonwealth Forestry Association.
He was also conferred the “Order of the Rising Sun, Gold Rays with Neck Ribbon” by His Majesty the Emperor of Japan. He is a Fellow of the Institute of Foresters Malaysia and Honorary Member of the Society of American Foresters. He has also addressed many important forestry fora. He was a council member of Wawasan Open University College.
Dato’ Dr. Freezailah is currently the Chairman of the Malaysian Timber Certification Council. He is also a member of the Board of Trustees of Yayasan Tunku Abdul Rahman and Yayasan Salam. Dato’ Dr.
Freezailah is active in various national and international organisations and initiatives dealing with forestry, conservation, environmental issues and related technological advances.
Dato’ Dr. Freezailah is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company.
profile of directors
< cont’d
Dato’ Choong Moh Kheng
Independent Non-Executive Director
Dato’ Choong Moh Kheng, aged 56, was appointed to the Board of Salcon on 3 January 2011.
He holds a Bachelor of Science (Honors) Civil Engineering from Manchester University, United Kingdom and obtained his post-graduated degree in Master of Business Administration from Golden Gate University, San Francisco, United States of America.
Dato’ Choong has an extensive working experience in both Civil and Building works include Astrid Meadows luxurious Condominium Project, Singapore (S55.1 million), Gleneagles Hospital Extension, Singapore ($150 million) and North-South Interurban Toll Expressway, Sungkai to Slim River, Perak (RM332 million).
Dato’ Choong is currently the Managing Director of Pembinaan Punca Cergas Sdn Bhd (“PPC”). He is also the founder director and Joint Managing Director of PPC group of companies. His active involvement in the industry includes being the Honorary Treasurer of the Road Engineering Association of Malaysia (REAM).
Ho Tet Shin
Independent Non-Executive Director
Mr. Ho Tet Shin, aged 61, was appointed to the Board of Salcon on 5 August 2005.
He is a member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Accountants, as well as a Fellow of the Institute of Chartered Accountants in England and Wales.
Mr. Ho started his accountancy training with KPMG London and qualified as a Chartered Accountant in 1974. He then joined KPMG Kuala Lumpur and played a leading role in its Receivership and Insolvency Department for two (2) years before he left to pursue a career in commerce and industry.
He has since held senior management positions in a wide range of businesses, including manufacturing, banking, telecommunications and stock broking.
His current interest is in the deployment of micro- algae based technologies for waste water treatment, renewable transport fuels and food production.
Mr. Ho is the Chairman of the Audit Committee and Risk Management Committee, and a member of the Nomination Committee and Remuneration Committee of the Company.
Notes:-
1. All Directors are Malaysian.
2. There is no family relationship between the Directors and/or major shareholders of the Company except the following:-
(a) Datin Seri Kee Seok Ai, who is a major shareholder of the Company by virtue of her interest in Naga Muhibah Sdn Bhd, is the spouse of Dato’ Seri (Dr.) Goh Eng Toon;
(b) Datin Goh Phaik Lynn, who is a major shareholder of the Company by virtue of her interest in Naga Muhibah Sdn Bhd, is the spouse of Dato’ Leong Kok Wah and a daughter of Dato’ Seri (Dr.) Goh Eng Toon and Datin Seri Kee Seok Ai; and
(c) Dato’ Leong Kok Wah is a son-in-law of Dato’ Seri (Dr.) Goh Eng Toon and Datin Seri Kee Seok Ai.
3. None of the Directors has entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company.
4. None of the Directors has been convicted for offences (other than traffic offences) within the past 10 years.
Professionalism
We believe in the highest level of competence, integrity and throughness in achieving distinction in all aspects of our workchairman’s message
On behalf of the Board of Directors of Salcon Berhad, I am delighted to present the Annual Report and Audited Financial Statements of the Group and Company for the financial year ended 31 December 2011
“ “
Dato’ Seri (Dr.) Goh Eng Toon
Chairman
chairman’s message
< cont’d
In 2011, volatile global economic conditions, led by the euro zone debt crisis have weighed down on the region’s growth and outlook. In Malaysia, although GDP grew at 5.1 per cent in the first 3 quarters, growth in the last quarter of 2011 was much lower on account of these external developments. Against this backdrop, the Group was able to deliver a resilient set of results with another year of profitability, albeit, not surpassing last year’s numbers.
FINANCIAL PERFORMANCE
The Group’s financial statements for financial year ended 2011 takes into account the adoption of the new IC Interpretation 12 in compliance with Financial Reporting Standards in Malaysia, which applies to all service concessions. The Group’s financial performance for financial year ended 2010 has also been restated to be in line with the IC 12. This analysis is based on the Group’s restated results after taking into account the impact of IC 12.
After recording five years of continuous growth, the Group registered a revenue decrease to RM472.5 million from RM549.8 million in 2010 or 14% drop compared to the previous year. Consequently, the pre tax profit and profit after tax declined from RM44 million in 2010 to RM29 million in 2011 and from RM35.4 million to RM25.3 million respectively.
The reductions in underlying revenue and operating profit arose mainly as a result of lower order books and competitive construction margins. Share of profits also dropped due to increased minority interest as a result of the divestment of a 40% interest in Salcon Water (Asia) Limited to Challenger Emerging Market Infrastructure Fund (EMIF) in FY2011, bringing the basic earnings per share to 3.09 sen compared to 5.72 sen in 2010.
Nevertheless, the Group managed to sustain its profitability with contributions from its long term concessions which provide a steady recurring income.
Through its resilient 2011 results, the Group has demonstrated that its strategic long term investment strategy has paid off by proving that it can weather through challenging market conditions. As at 31 December 2011, the Group recorded RM389.4 million of shareholders’ funds and cash and cash equivalents of RM214.5 million.
Furthermore, the Group has a strong financial position with a manageable gearing ratio of 0.16 (net of cash). These strong fundamentals leave the Group well positioned to invest in the future growth of the business.
Flocculation tanks and air saturation vessels at Sg. Labu Water Treatment Plant with total nominal capacity of 105 MLD
chairman’s message
< cont’d
REWARDING OUR SHAREHOLDERS
In line with the Group’s dividend practice to reward our shareholders, the Board is proposing a first and final single tier dividend of 1.5 sen per share equivalent to RM7.1 million.
The Group will continue to allocate and balance our financial resources for viable and high yield investments both locally and internationally.
AWARDS AND RECOGNITION
The Group is honored to be awarded Best Structured Trade Deal – Malaysia for 60 million Ringgit structured term loan by The Asset Triple A Award, Asia’s defining recognition for excellence in the industry.
Standard Chartered Bank is the underwriter, structuring and hedging bank of the term loan. The judging panels comprising The Asset’s Board of Editors who collectively have several decades’ worth of evaluating industry awards in Asia.
MILESTONE DEVELOPMENTS
The Group’s competency and excellent track record have enabled us to venture into various growth markets which deliver higher yields to our stakeholders. During the year under review, the Group has made significant strides in the countries where we operate in which further strengthens our track record in delivering effective and viable solutions for our clients’ water and wastewater needs.
Left:
Recognition from The Asset Asian Awards Right:
Mr. Ooi Cheng Swee (right), Chief Operating Officer of Salcon Berhad received The Asset Asian Awards together with Mr.
Lim Chek Wee, Head of Structured Trade Finance, Southeast Asia, Standard Chartered Bank
chairman’s message
< cont’d
China – Expanding Concessions Portfolio
The Group strengthened its presence in China with the completion of two major projects - a 100,000 cubic meter per day water treatment plant and a 100,000 cubic meters per day raw water transfer project in Changle County, Shandong Province, China. Salcon is currently the sole integrated water and wastewater solutions provider in Changle County, China.
The Group marked another milestone in its concessions portfolio, clinching its first industrial wastewater concession in Changzhou City, China, to acquire, upgrade, operate and maintain the Southeast Industrial Wastewater Treatment Plant (SIWTP) for a period of 30 years. The SIWTP and related facilities is located at Tian Ning District, Changzhou City, Jiangsu Province, PRC and is acquired on TOT (Transfer- Operate-Transfer) basis. The acquisition is expected to contribute positively to the company’s future earnings
and is estimated to generate total revenues of RMB 1.0 billion throughout the entire concession period.
To date, the Group owns, operates and maintains 7 water, 2 wastewater and 1 industrial wastewater concession in China and Vietnam with a total combined capacity of more than 1,200 million litres per day and serves more than 3.0 million customers daily.
Top:
Completion ceremony of 100 MLD Water Treatment Plant and 100 MLD raw water transfer project in Changle County, Shandong Province, China Bottom:
Salcon’s first industrial wastewater concession - Southeast Industrial Wastewater Treatment Plant at Changzhou City, Jiangsu Province, China
The Group marked another milestone in its concessions portfolio, clinching its first
industrial wastewater concession in Changzhou City, China.
“ “
chairman’s message
< cont’d
Geographical Expansion – Thailand and India The Group, via its joint venture company – Hydrotek- Salcon Consortium sealed a deal with Metropolitan Waterworks Authority (MWA) for the construction of reservoirs for Phet Kasem and Rat Burana distribution pumping stations and related works in Bangkok, Thailand. The project, valued at approximately RM21.9 million, falls under the Eight Bangkok Water Supply Improvement Project and is funded by Japan International Cooperation Agency (JICA).
In India, the Group successfully won a project from Davanagere City Corporation, Karnataka, India for the laying of raw water pumping mains and related ancillary works with total project value of approximately RM16.2 million.
Although relatively small, these two projects nevertheless mark the Group’s strategic expansion of its portfolio overseas which will help to diversify its risks and create better synergies and opportunities in new high growth markets.
INDUSTRY OUTLOOK
The Malaysian economy is expected to grow between 5.0% - 6.0% this year with projects under 10th Malaysia Plan and Economic Transformation Programme acting as the catalyst for the year to boost growth and business confidence. Under Budget 2012, the Government has allocated RM29.8 billion for investment in infrastructure, industrial and rural development.
In terms of water and wastewater opportunities, Pengurusan Aset Air Bhd (PAAB), a Malaysian government-owned water asset management company under the Minister of Finance Inc., expects to spend more than 50 billion Ringgit (about 13.8 billion USD) on capital expenditure over the next 30 years. Currently, the water assets of 5 out of 12 states in the Peninsula – Johor, Malacca, Negri Sembilan, Penang and Perlis – have been taken over by PAAB.
All these augur well for the Malaysian water industry as the Government seeks to achieve better efficiency and quality, as well as to ensure sustainability of the industry.
Aerial view of Labu Water Treatment Plant, implenmented by Salcon under the second economic stimulus package for Pengurusan Aset Air Berhad (PAAB)
chairman’s message
< cont’d
Another niche market which the Group is actively involved is the reduction of Non-Revenue Water (NRW). Minister of Energy, Green Technology and Water Malaysia, Dato’ Sri Peter Chin has emphasised the need for more concrete steps to be taken in every state to look at the problem of NRW seriously as the national NRW average rate is still high at more than 35%. Currently the Group provides NRW solutions in Nilai and Seremban in Negeri Sembilan, Sandakan in Sabah and the whole state of Kelantan. Being a leader in this field and based on the Group’s good track record, experience and proven expertise, we are well positioned to meet the demand as a holistic NRW solution provider.
In China, severe water pollution and water scarcity continue to plague the country. It is expected that total wastewater will continue growing due to rapid urbanisation and industrialisation, reaching 79 billion tons by 2015. The current wastewater treatment infrastructure is still inadequate and there will be continued construction of new facilities and upgrading of existing ones, resulting in a large demand for investment.
The Chinese government has also announced that it would make water conservation and sustainable water use a national priority. The country aims to double its average annual spending on water conservation over the next 10 years from RMB200 billion in 2010 to RMB400 billion, investing a total of RMB4 trillion (US$608 billion) in projects during the next decade.
Elsewhere, the Group is active and currently operates in countries which have been identified as 3G countries or Global Growth Generators ie India, Indonesia, Sri Lanka and Vietnam whose economies are driven by population and income growth. The demand for safe, clean and reliable water and wastewater solutions in these countries are expected to grow in tandem with the high growth prospects in these countries.
Top:
Aerial view of Changle Wastewater Treatment Plant, Shandong Province, China Bottom:
Sludge treatment facilities at Hambantota Water Treatment Plant, Sri Lanka
chairman’s message
< cont’d
BUSINESS PROSPECTS
Whilst Malaysia remains a core market for the Group, we will continue to expand to other high growth markets and leverage on our expertise and track record to diversify our income base.
Moving forward, the Group seeks to urgently replenish its order books to ensure sustainability of its revenues and profit. In order to do this, the Group’s 4 pronged strategy is to aggressively pursue new construction projects, grow recurrent income streams through strategic investments, focus on the efficient execution of the balance of contract works and implement prudent cost cutting measures.
The Group will continue to capitalise on its more than 10 years of experience in the Chinese market to further expand out concessions portfolio and seek strategic partnerships to achieve our aim of tapping into the equity markets for a cheaper source of funds.
The Group’s joint venture with EMIF provides us the standing and platform to pursue further opportunities in the Chinese water and wastewater market. With a strong financial position, the Group is confident of implementing its strategic initiative to grow a stable and recurrent income stream via prudent and lucrative concession investments in key growth markets such as People’s Republic of China and Vietnam.
In the Group’s overseas ventures, Indonesia, India.
Sri Lanka and Vietnam remain long term key growth markets with its vast opportunities and strong demand for clean water solutions. The Group is confident of securing projects in these markets for the coming years, having the construction track record and an established presence in these countries.
Green Venture – Powering Ahead with the Sun As part of the Group’s Green Venture strategy, we have also invested in the renewable energy sector via the installation of solar photovoltaic systems in the southern area of United Kingdom (UK). This investment aims to bring clean and renewable energies to UK consumers whilst tapping into the attractive feed-in-tariffs introduced by the UK government. We look forward to contribution from this new business segment which is expected to generate sustainable returns to our shareholders.
CORPORATE RESPONSIBILITY
Salcon’s emphasis on its corporate governance reflects its belief that a high standard of corporate governance under the leadership of the Board is the most fundamental duty for sustainable growth. The Statement of Corporate Governance and other related reports can be found in the relevant sections of this Annual Report.
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by relevant regulatory bodies in 2011.
ACKNOWLEDGEMENTS
On behalf of the Board, I would like to record our sincere appreciation to the management team and all our employees for their contribution, dedication and commitment over the years.
I also wish to thank all our shareholders, clients, suppliers, bankers, business partners and subcontractors for your great and invaluable support.
We value this continuous relationship as we go towards new undertakings.
Last but not least, I thank my fellow board members for their invaluable advice and contributions to the Group.
Installation of solar photovoltaic systems in the UK
Respect
We respect our employees regardless of gender, race or religion and inspire them to be the best they can becorporate responsibility report
Corporate Responsibility (CR) at Salcon is embedded into everything we do. We consider the socio-economic impact of our actions as part of our efforts in creating value for all stakeholders. Ensuring responsible operations can contribute and indeed sustain long- term business growth.
In reporting our CR milestones in the planning and conduct of operational activities, we have made references to the Bursa Malaysia CR Framework and the Global Reporting Initiative (GRI) Reporting Guidelines which focus on four main pillars namely Marketplace, Workplace, Environment and Community. This Report covers our worldwide operations and includes data from the Group’s subsidiaries in Malaysia, China, Sri Lanka and Vietnam.
OUR CR CHARTER
Ethical Statement
We operate our businesses in an environmentally and socially responsible manner. Our CR policy and principles guide our decisions and actions in all aspects of our business to ensure positive contributions to the Group’s efficiency, corporate profile, the interest of all stakeholders and the long-term performance and future of the Group. Integrity and a high standard of ethics are fundamental to our beliefs and we
are committed to doing what is right and deterring wrongdoing. In dealings with our customers, suppliers and fellow employees, we:
• Conduct ourselves in a forthright and honest manner
• Are fair and considerate in all dealings
• Maintain professional behaviour in all relationships
• Only make commitments which we know we can deliver
• Respect the rights and dignity of all individuals
• Comply with all relevant laws and legislation Code of Ethics and Conduct
We expect our team members to adhere to a high standard of ethics and comply with all laws and regulations that govern our businesses. We aim to create a working environment in which ethical behaviour is a must and treat all persons fairly regardless of race, religion, gender, disability, age or national origin.
These guidelines and standards have been formalised in our ‘Code of Ethics and Conduct’ and are grouped under section headings that emphasise the fundamental and overriding principles that guide our behaviour. This ensures all employees act in a manner that serves the best interests of the Group and its stockholders, preserves confidential information where necessary and avoids conflicts of interest.
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Conflicts Of Interest
A ‘conflict of interest’ occurs when an individual’s private interest interferes with the interests of the Group. At Salcon, employees have a duty of undivided and unqualified loyalty to the Company and are prevented from using their positions improperly for their benefit. All employees are expected to conduct themselves in a manner so as to avoid any conflicts and communicate material transactions or relationships that may give rise to a conflict of interest to the Human Resource Department.
ECONOMIC PERFORMANCE AT A GLANCE
The 2011 financial summary shows a downturn in the overall performance due to the completion of major construction projects. Nevertheless, the Group’s financials have remained profitable and have recorded a net value added of RM22.463 million whilst maintaining a consistent dividend payout to our shareholders.
Economic Data - Group Level
2009 2010 2011
RM ‘000 RM ‘000 RM ‘000
Direct Economic Value Generated
Revenue 369,873 549,879 472,462
Other income and interest income 7,042 19,843 24,912
Gross Value Generated 376,915 569,722 497,374
Economic value distributed to:
Our suppliers : operation costs 313,731 489,619 416,630
Our employees : salaries & benefits 26,610 32,686 39,071
Our lenders : payment to lenders (financial cost) 6,661 6,747 15,134
The Government : payment to Governments:
Malaysia 4,831 5,760 2,357
Outside Malaysia 2,554 2,842 1,341
The Rakyat : Community Investments 245 249 378
Net-value added 22,283 31,819 22,463
Our shareholders : payment to shareholders 4,291 7,015 7,115
Our Future : Economic Value Retained 17,992 24,804 15,348
Revenue by Region
During the year under review, revenues earned in Indonesia and Vietnam decreased compared to 2010. This is because our revenue in Indonesia was derived from Salcon Centrimax which ceased operations in the middle of the 2011. The two projects in Vietnam, CP2 and Dong Tam were completed in 2010.
No Revenue 2009 2010 2011
RM ‘000 RM ‘000 RM ‘000
1 Malaysia 203,289 273,046 288,626
2 Vietnam 72,137 28,960 (3,303)
3 China 60,706 198,122 166,859
4 Sri Lanka 31,174 48,997 20,066
5 Indonesia 2,567 715 214
6 Others (Singapore) - 39 -
TOTAL 369,873 549,879 472,462
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We strive to achieve the highest levels of employee satisfaction by providing career development and training programmes. Employees receive a competitive remuneration and benefits package which may be rated to be above the sector average. Due to the nature of our business, safety is never compromised in any area of our operations. Salcon delivers great opportunities to its employees to grow while enjoying a balanced life. We pride ourselves on having a diverse workforce locally and internationally.
Training and Career Development
At Salcon, we understand the importance of career development and the education of our employees as being fundamental to their satisfaction and performance on which our success as a Group, depends. Employees are eligible for paid Examination Leave up to a maximum of four working days per calendar month. The Group has also introduced an Education Assistance Scheme, providing interest-free study loans to employees who have been confirmed in their positions who wish to pursue training courses relevant to their job functions.
A total of 58 different training courses were conducted in 2011. These include safety and health training, ISO 9001, a Water and Wastewater Management Conference, Operational Auditing and Environmental Quality Act-related trainings. The average number of hours of training per year per employee in 2011 was 7.47 hours.
Performance Measurement
In meeting our business goals and objectives, we fully appreciate the role of appraising the performance
Workplace
Top:
Fireman from Bomba USJ outlined the use of the fire extinguisher to our safety
committee Bottom:
First aid and CPR training provided to safety committee
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appraisals of our employees. Such appraisals can also indicate the extent and nature of training needed for their professional and career development. At Salcon, appraisals are conducted annually and also upon confirmation of employment. The appraisal process is interactive and requires input from both the appraiser and appraisee and is designed to reduce subjectivity.
The appraisal process covers 10 assessment areas, each of which can be awarded a score of two, four, six, eight or ten. Attributes covered consist of job knowledge and skills; acceptance of responsibilities;
quality and quantity of work; communication; problem solving; discipline level; confidentiality; co-operation and teamwork skills; and participation in Company activities and functions. A total score is provided and a promotion may be recommended by the head of department based on this score and the discretion of the management.
Rewards and Benefits
We believe in rewarding employees for their achievements and dedication to their work. The Group offers a competitive benefits package as it increases its chances of retaining excellent employees.
A number of schemes have been introduced to retain talent. On 23 June 2010, the Group established an Employees’ Share Option Scheme (ESOS) for eligible directors and employees of Salcon and its subsidiaries in Malaysia. As at 31 December 2011, the Group has issued 759,500 new ordinary shares of RM0.50 each at the option price of RM0.57.
Healthy Culture at the Workplace
Salcon believes that there are significant business benefits from promoting and embracing a real commitment to work-life balance. We all have responsibilities and interests inside and outside of work and staff will be more effective if they can achieve a reasonable balance between these commitments.
Various talks have been organised for the personal development of the employees such as grooming talks, wealth management talks and health talks such as Metabolic Syndrome and Lifestyle Disease talks.
As part of the effort to encourage our employees to lose weight healthily, the Salcon Biggest Loser Challenge was organised over a period of six months with 24 participants forming 12 teams of two to motivate each other for the weight losing contest. The participants’
firm determination helped them lose weight and adopt a healthier lifestyle.
Promoting Local Talent and Remuneration As we are committed to contributing to the welfare and well-being of the local communities in areas where we operate, it is common practice within Salcon to grant preference to locals when hiring in Malaysia and at our overseas operations. This allows the Group to make socio-economic contributions to members of local communities. We pride ourselves on offering competitive remuneration packages to all employees.
The Group uses the MEF Salary Survey for Executives and Non Executives 2008 Report as a baseline to guide compensation package for our employees.
Employee Engagement and Notice Period for Operational Change
We are confident that dedicated employees act in a way that furthers the organisation’s interests. As such, we engage with our employees through the eAdmin system and Company notice board. The Salcon Recreation Club (SRC) plays an important role in this by fostering closer relationships between the management and employees through various interactive activities such as a Family Day at Fraser’s Hill, an Annual Dinner, a Badminton Tournament, a Bowling Tournament, a Futsal Tournament and an Annual Trip to Phuket and Phi Phi Island.
Participants of Salcon Biggest Loser Challenge Contest
Annual trip to Phuket & Phi Phi Island, Thailand in 2011
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Staff and family members at the family day in Fraser’s Hill Due to the nature of business, operational change is sometimes inevitable. In order to provide stable working conditions for our employees, the Group provides adequate notice period of usually more than one month for any operational changes.
Discrimination and Grievances
The Group is committed to providing an environment free from discrimination and harassment. The diversity and loyalty of our employees is a tremendous asset.
Fair and equitable treatment of employees, customers and suppliers and other persons is crucial to fulfilling the Company vision and goals. One of our core values is “Respect” and any discrimination is prohibited including race, colour, religion, gender, ethnic origin, sexual orientation, age and disability. The recruitment, hiring, training, promoting, assigning, transferring, discharging, recalling and terminating of employees can be based only on their own ability, achievements, experience, conduct or other legitimate business reasons. Other unprofessional actions such as derogatoriness are seriously viewed and handled by management.
The Group has developed a standardised formal grievance procedure to be followed when an employee makes a complaint or has a problem. If the employee’s immediate superior is unable to solve the complaint it is referred to the Head of Department, Human Resource Department and ultimately the Management.
A Safe and Healthy Workplace
We are committed to the continuous improvement of our Safety and Health Practices to ensure a safe and healthy work environment for all employees, customers, contractors, visitors and the community in all our business operations.
In pursuing this commitment to prevent and eliminate work related accidents and occupational illnesses, we:
• Comply with the applicable safety and health legislation and other requirements.
• Set and monitor measurable objectives and targets to continuously improve our performance
• Provide relevant Safety and Health training to all employees, suppliers and subcontractors.
• Implement effective systems for eliminating or controlling risks where possible.
Occupational Safety and Health Management System
We have formalised our safety and health, principles and policies though the establishment and implementation of an Occupational, Safety and Health Management System (OSHMS). Our OSHMS complies with the internationally recognised OHSAS 18001 standards which our operations have been certified with.
Management Commitment and Organisation The management is committed to the development and continuous improvement of the OSHMS. The guiding principles are transformed into the establishment of S&H Policy and OSH Objectives and Targets which are communicated throughout the organisation.
These are determined and reviewed during the OSH Management Committee meetings. Our Vietnam office has introduced the 5S training in addition to their Health and Safety training to ensure a safe working environment.
The CEO chairs the OSH Management Committee. The other members consist of Project Directors and Heads of Department. A Management Representative has been appointed to ensure that the OSH management system is properly implemented and meet to requirements. Approximately 70% of employees are represented by this committee.
The committee oversees initiatives such as safety committee meetings; department and management review meetings; internal and external training, site visits and inspection, internal and external audit, OHSAS and ISO implementation; and safety campaigns and promotions.
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Diversity at the Workplace
Total Employees from 2009 to 2011
Breakdown by Gender from 2009 to 2011
Due to the nature of our operations, the ratio of male employees is always higher than female employees.
We do not tolerate any form of discrimination and we continue to empower our female employees by promoting equal opportunities and providing assistance to help them balance their role at work and at home.
Achievement in meeting zero LTI for the past 3 years
Particulars 2009 2010 2011
Target man hours without Lost Time Injury (LTI) 1,000,000 2,500,000 4,500,000
Achievement 1,504,771 3,703,581 6,154,632
Achievement in % 150.48% 148.14% 136.77%
The Group has set increasingly ambitious Safety and Health targets for the last three years. We have surpassed each target by a greater margin each year which is testament to our stringent Safety and Health processes.
991 1150 1094
1100 1050 1000 950 900
1107
2009 2010 2011
63.37% 64.44% 62.78%
36.33% 35.56% 37.22%
100%
50%
0%
2009 2010 2011
Female Male
The table below presents the diversity of our workforce in terms of age, gender, nationality and ethnicity. Being a Company which is recognised internationally, we acknowledge the benefits that diversity brings to our business. We also play an important role of developing the local community at the same time. Therefore, in sourcing talent, we accord priority to members of the local community where possible.
2009 2010 2011
Total number of Employees
Malaysia 420 454 464
Overseas 571 640 643
991 1094 1107 Workforce by Category
Malaysia
Executive 199 223 221
Non-Executive 221 231 243
Overseas
Executive 164 147 129
Non-Executive 407 493 514
Age group
Malaysia
<30 165 188 185
30-50 233 239 211
>50 22 27 68
Overseas
<30 110 121 100
30-50 434 479 493
>50 27 40 50
Diversity (Malaysia)
Malay 242 270 280
Chinese 130 137 137
Indian 31 27 27
Others 17 20 20
Employee Turnover (number)
Malaysia 58 82 94
Overseas 19 43 57
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The Group does its utmost to be a caring corporate citizen through community services and activities aimed at creating a positive impact on the local communities.
We are committed to educating and raising awareness of the value of water as a precious resource within the community through effective partnerships in collaboration with relevant organizations. This is achieved through organising seminars, site visits, interactive activities and conferences. During 2011, Salcon conducted various community events.
Educating youths
We understand the importance of educating children as they are the leaders of tomorrow. We conducted a number of youth education programmes during 2011.
Children from four orphanages in the Klang Valley had a fun and exciting day learning the importance of water and river conservation through a river awareness programme organised by the Group together with Water Watch Penang (WWP) and Malaysia Environmental NGO (MENGO) and Pengurusan Aset Air Berhad (PAAB) on 16 April 2011. The objective of this programme was to raise awareness of river
water protection and conservation amongst school children in the Klang valley. 56 children aged from six to18 years and four wardens participated in this programme at the Klang river. The children learned how to conduct water samplings and conduct checks on micro-organisms found in the river to understand its eco-system. This is the second time that we conducted such programmes.
Blood Donation Drive
The Group was also involved in activities to promote health and saving of lives through blood donation drive especially following the good response from last year. A Blood Donation Campaign was held on 6 and 7 May 2011 at the Summit USJ Shopping Complex. The blood donation was made possible with the collaboration of the National Blood Bank and the Summit USJ. A total of 154 staff members and the registered as donors during the two-day campaign.
100 pints blood were collected, a 25% increase from the previous year. The objective of the campaign is to increase the awareness of blood donations as a most precious gift to save lives.
Community
56 children from four orphanage houses participated in a Water
& River Awareness Education Programme organised by Salcon Berhad in collaboration WWP, MENGO and PAAB
Charity Support
The Group continues to contribute to good causes by participating in various charitable events.
The Group supported the Edge - Bursa Malaysia Kuala Lumpur Rat Race, which was held on 20 September 2011, by contributing RM15,000 and providing a team of runners for the third consecutive year. The Group also participated in the Standard Chartered KL Marathon 2011 for the second year by contributing funds to charity homes.
Sports and Healthy Living
As part of our commitment to nurture a healthy lifestyle among the local community, we supported the Negeri Masters 2011 Invitational for the fifth consecutive year. This prestigious yearly tournament was organised by Negeri Sembilan Golf Association at Seremban International Golf Club (SIGC) from 7 July 2011 to 10 July 2011. 144 players participated in this professional event which gave away a total of RM500,000 in cash prizes. The Group supported the event by sponsoring RM100,000 to develop and promote sports in Malaysia.
Helping the less fortunate
The Group continued to help the less fortunate through philanthropic activities. In 2011, we purchased muruku from the low income families of Bukit Rotan, Kuala Selangor. The sales proceeds provided them with additional income. The muruku was then distributed to our employees during the Deepavali celebrations
During 2011, our Vietnam operations were involved in the Terry Fox Run where money raised was contributed to the less fortunate. In addition, as part of their commitment to give back to the local community, this office has extended in-kind contributions to the needy people in Binh Thang Community
50 children ranging from five to 18 years old and three wardens from Ti-Ratana were invited to watch the latest blockbuster movie - Transformers: Dark of the Moon at GSC, Summit, USJ together with 100 employees and families of Salcon. Salcon employees visited the home to spend time with the children prior to the movie and contributed items such as school uniforms, stationery, groceries, clothes and RM600 in cash. In return, the children treated the guests to a song and dance performance. Fun activities such as a colouring competition and games were also enjoyed by all.
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Cheer leading team and runners supported The Edge- Bursa Malaysia Kuala Lumpur Rat Race for the third consecutive year
Participated in Terry Fox Run on 27 November 2011 to raise funds for Cancer Research Programme
After visiting Ti-Ratana Welfare Society, Salcon staff watched a Transformers movie with the orphans Salcon Berhad deputy chairman Tan Sri Dato’ Tee Tiam
Lee (left) at the launching of the Negeri Sembilan Masters Invitational in Seremban
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The Group is committed to strengthening environmental practices in our business operations. The Quality Assurance and Health, Safety and Environment (QA/SHE) Divisions were created to ensure the implementation and maintenance of the Environmental Management Standard ISO 14001: 2000 systems in our offices and projects which is renewed each year.
Our environmental management policy and practices are strategized to conserve resources, protect the environment, reduce pollution and hazards, and manage material wastes more effectively.
Environmental Policy
We are committed to minimizing and mitigating adverse environmental impact in our business operations by:
• Ensuring our operations and processes comply with relevant environmental legislations and regulations and the ISO 14001 standard;
• Ensuring continual improvement in preventing pollution;
• Promoting and educating our workforce and subcontractors on environmental protection; and
• Saving energy and conserving resources through recycling and waste reduction activities.
Environmental Impact from Operations Energy Management
Employees are encouraged to save energy when using company vehicles, electrical items and computers.
The Group launched a number of initiatives to reduce energy consumption throughout its business operations. Routine and timely maintenance has been introduced to detect and minimise inefficiencies.
Scheduled maintenance improves the efficiency of machinery and old equipment is overhauled or replaced to reduce power consumption.
Plant equipment is also scheduled to run during off- peak hours whenever possible which results in reduced national day-time energy demand as more night-time energy is utilised. As fewer power plants will need to be turned on, it is good for the environment while reducing our energy costs.
Other measures to reduce energy consumption include controlling raw and auxiliary materials and energy; optimising our processes; and maintaining and updating our equipment. We also concentrate on waste recovery and recycling processes. The Group also met clean production audit requirements as required by the Environmental Protection department for our overseas concessions in China.
Environment
View of our new 100 MLD Changle Water Treatmnet Plant, Changle County, Shandong Province, China
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Our new 100 MLD water treatment plant in Changle uses gravity to supply water without the need for additional energy. It is expected that this 100MLD waterworks will operate with substantial electricity savings estimated at RMB2 million per year.
Our water treatment plant in Haining has installed DOSCON, an auto chromate solution dosing system.
DOSCON helps to ensure the chromate solution during treatment will not be overdosed resulting in greater efficiency.
A dedicated team and committee was established in 2009 at our Sg. Terip Water Treatment which is responsible for minimising energy usage. The committee consists of six members and ensures that the plant operates in accordance with procedures such as Plan-Do-Check-Act (PDCA) and Total Quality Management Tool (TQMT).
The Group places great emphasis on energy saving initiatives which is included in our yearly plan as the major KPI. Employees cultivate energy saving habits when using company vehicles, electrical items and computers. They learn how to conserve energy in their daily work.
Electricity used (kWh) to deliver 1 m3 of water from 2009 to 2011*
* data from Sg. Terip and Kuala Jelai, Malaysia; Linyi, Changle and Haining, China; Binh An, Vietnam
The electricity consumption required to deliver 1 m3 of water increased slightly during 2011 compared to 2010. This increase of 0.03kWh was due to the energy used to develop the second phase of Haining water treatment plant which was fully operational last year. We continually seek opportunities to reduce energy consumption wherever possible while delivering efficient and sufficient water supply to all our consumers.
Water Management
To ensure a proper water management process including usage and discharge, we comply fully with the Local Authority standards such as DOSH (Department of Occupational, Safety and Health); DOE (Department of Environment Malaysia); BKSA (Badan Kawal Selia Air); MOH(Ministry of Health); SPAN (Suruhanjaya Perkhidmatan Air Negara); Water Services Industry Act 2006 and other regulatory bodies.
Water lost from plant (m3 millions)*
* data from Sg. Terip and Kuala Jelai, Malaysia; Linyi, Changle and Haining, China; Binh An, Vietnam
The Group lost less water from its plants in 2011. This was achieved through considerable efforts to reduce losses by optimising filter usage and stringently controlling the consumption of service water.
There have been no penalties imposed on the Group for environmental non-compliance regarding water disposal or discharge.
Environmental Impacts from Transportation Environmental impact from transportation can be significant as it is a major user of energy. Salcon has introduced a vehicle management system which improves the efficiency of vehicle operation. Turnout times have also reduced. Trucks and lorries can contribute to dusty air pollution and muddy access roads in surrounding areas. We mitigate this problem by washing vehicle tyres in special troughs before leaving the site. Water is also sprayed to remove dust from the air.
Our Haining Water Treatment Plant in China encourages workers to use non-motor vehicles and has purchased two battery cars for official use of short distances.
0.310 0.313
0.341 0.350
0.340 0.330 0.320 0.310 0.300 0.290
2009 2010 2011
2.18 2.34
1.78 2.50
2.00 1.50 1.00 0.50
0.00 2009 2010 2011
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Emissions Management
Although our operations do not release much emissions into the air, we recognise that our site vehicles do contribute to such emissions. As such, we service our site vehicles regularly to ensure minimal engine oil leaks and smoke emissions. Vehicles with high engine oil leaks or high smoke emission are serviced at a reputable workshop or replaced.
Noise Management
Noise has been identified as an environmental impact from our operations. We generate noise due to construction activities associated with excavation and land clearing works, piling works, general fabrication works, movement of vehicles at site and operation of general equ
