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KNM GROUP BERHAD I Annual Report 201213Chairman’s Message (cont’d)Renewable EnergyFYE2012 saw the Group completing the £25 million acquisition of Poplar Investments Limited, the special purposevehicle that owns the site for the proposed 80MWe Waste to Energy Project in Peterborough, United Kingdom. Withplanning approvals already in place, we are continuing with our efforts to secure financial close for the project. Inview of the size and complexity of the proposed development, the Group plans to execute the development in phasesto better address and mitigate the development and construction risks usually associated with a project of this size.While we remain confident that the project will have a positive effect on the Group’s financials in the long run, theproject financing is taking more time than expected due to other factors such as the economic uncertainty in Europe.Total SolutionsThe Group is also continuing with its effort to diversify its operations from being a traditional process equipmentmanufacturer to a provider of total solutions for modular process units in the oil and gas processing and energy sectors.On this note, the Group continues to sign in more orders in Engineering & Supply Contracts for Lukoil in Uzbekistanand Titan in Malaysia. The award of the contract by TAIF-NK for its Sulphur Recovery Unit for the Heavy ResidueConversion Complex located at Nizhnekamsk, Republic of Tatarstan, Russian Federation in February 2013 witha contract value of about USD100 million serves as a welcome boost for the Group in respect of this businesssegment. The contract is expected to contribute positively towards the Group’s future earnings and further reinforceour reputation as a global player with potential for growth in this business segment.Further in respect of this business segment, the Group is aggressively prequalifying for the Petronas’ Refinery andPetrochemical Integrated Development (“RAPID”) EPCC Projects on the Refinery and the Cogeneration Plant withreputable partners such as Sinopec, HQCEC, Mitsui and GS E&C and will also continue to prequalify for otherpackages.CORPORATE GOVERNANCEThe Board of Directors would like to assure our shareholders that the Group is fully committed to maintaining thestandards of corporate governance as set out in the Malaysian Code on Corporate Governance 2012.The Board believes that sustainable growth and long-term shareholder value can only be attained with high standardsof corporate governance, comprising the practices of transparency, accountability, integrity and the highest standardsof professionalism, expertise and technical know-how.These measures are further described in the Corporate Governance Statement section of this Annual Report.FUTURE PROSPECTSAs at the close of FYE2012, the Group’s order book stood at RM4.8 billion out of which RM2.7 billion are for projectsrelated to waste to energy that are pending financial close. With a tender book of about RM19 billion in the pipelineexcluding prospective contracts from the RAPID projects, the Group can look forward to a healthy revenue stream inthe years to come. Having said this, we need to continue with our efforts to rationalise our plant operations worldwideand to further improve on efficiency and better management of our existing resources in order to extract maximumreturns from our traditional equipment manufacturing business. We will also seek to grow our total solutions andmodular process units business by strengthening our resources, knowledge and experience in EPCC related works.The proposed renewable energy project in Peterborough, United Kingdom also serves as an interesting prospectfor the Group as we take measured steps towards the development of our own plant and with prudence and carefulrisk management, we can look forward to establishing a new revenue stream for the Group in the future.As far as the market for our product and services are concerned, the oil and gas industry outlook remains positivewith sizeable investments being made by major oil and gas players to cater for the growing demand. The RAPIDproject is one that is poised to become a major oil and gas hub in the region. Located in Pengerang, the SouthEastern tip of the State of Johor, RAPID is a prime project on 2,000 hectares of land which will be larger than allthe other PETRONAS hubs in Kerteh, Melaka and Gebeng combined. With KNM’s comprehensive knowledge andcapability coupled with well-versed international experience, we believe that KNM is well positioned to capitalise onarising opportunities from this mega project as well as other opportunities around the world.
14KNM GROUP BERHAD I Annual Report 2012Chairman’s Message (cont’d)APPRECIATIONOn behalf of the Board, I wish to express our thanks and appreciation to the management and staff who throughtheir hard work and dedication, has helped the Group to navigate a turnaround from the disappointing results ofFYE2011 as we call upon them to ensure that the positive results in FYE2012 can be sustained and improved uponin the years to come.To our valued Shareholders, the Board of Directors and I thank you for your continued support, confidence and trustin us. We will continue to persevere, strive and work hard for the creation and preservation of shareholder value inthe Group.A note of thanks and appreciation is also in order as we say farewell to YBhg Datuk Karunakaran who has leftthe Board in February 2013 as he took up an appointment on the Board of Bursa Malaysia. At the same time, wewelcome the latest addition to the Board, Ms Soh Yoke Yan who is an accomplished accountant as our independentnon-executive director. We look forward to her contribution both as a Board member as well as a member of theGroup’s Audit, Remuneration and Nomination Committees. Ms Soh’s profile can be found in the Director’s Profilesection of this Annual Report.YBhg Dato’ Ab Halim bin Mohyiddin, DPMSChairman
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