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as extracted from Annual Report 2016

Chairman's Statement

Dato' Seri
(Dr.) Goh Eng Toon

Chairman

Dear Shareholders,
It gives me great pleasure to present to you the Annual Report and Audited Financial Statements of Salcon Berhad (“Company”) and its group of companies (“Group”) for the financial year ended 31 December 2016 on behalf of the Board of Directors.

Malaysi'’s economy has maintained a steady growth rate in 2016 despite falling revenue from a weaker commodities market. In this current economic environment, Salcon has maintained a resilient performance and improved shareholder value by expanding and diversifying into strategic business opportunities whilst fortifying our role as the premier water and wastewater infrastructure provider in Malaysia and overseas.

REWARDING OUR SHAREHOLDERS

In view of the Group’s steady performance this year, I am pleased to announce that the Board has recommended a final dividend of one (1) treasury share for every eighteen (18) existing ordinary shares held in the Company.

The dividends will be paid by way of distribution in specie of shares.

GROWING LONG TERM SHAREHOLDER VALUE

Creating shareholder value is a key priority for the Group and, going forward, we will continue to invest in the business to support growth via a 3 pronged strategy of strong execution of projects, rebalancing our portfolio and maintaining an appropriate risk profile in order to generate sustainable returns.

The Group will continue to capitalize on its’ more than 40 years of experience in the water and wastewater industry in Malaysia and overseas to cement its position as the premier water and wastewater company in the region. We are proud to be the lead partner in the single largest water contract in Malaysia, the Langat 2 Water Treatment Project which will assist to alleviate water supply in the Klang Valley, upon its completion. We will continue to develop and execute projects using global best practices that ensure consistent project returns.

The Group will maintain a strong focus and has the capability to evaluate growth opportunities where long-term shareholder value can be created. In this regard, we seek to balance our portfolio to complement our traditional core business in key growth markets such as technology services and China tourism e-commerce. This diversification has resulted in a unique portfolio of businesses which gives the Group a significant opportunity to grow in new markets, new technologies and new geographies.

By maintaining an appropriate risk profile, in the long term, the Group is confident of the growth opportunities of our diversified business model and the potential for further revenue growth, margin improvement, as well as continued returns to shareholders through dividends.

As we look forward, the opportunities for further improvement and value creation remain attractive. We are confident that our business model and strong balance sheet will form the foundation for our future progress and position Salcon well to deal with today’s challenging economic and financial conditions.

COMMITMENT TO SUSTAINABLE BUSINESS PRACTICES

As part of our strategies in creating long term value for all stakeholders, we remain committed to prudently manage the impact of our business on the environment, to uplift the communities in which we operate in and to maintain an inclusive, respectful, and progressive working environment for our people.

The Group’s performance in the areas of environmental, economic and governance has once again been clearly acknowledged by the market. For the second consecutive year, the Group has been included as a constituent of the FTSE4Good Bursa Malaysia Index.

Additionally, the Group was also awarded Asia’s Best CSR Communication within Annual Report Award by the Asia Sustainability Reporting Awards 2016 in Singapore. Salcon was also shortlisted for the ACCA Malaysia Sustainability Reporting Awards (MasRa) 2016 held at Sime Darby Convention Centre. These recognitions are a clear testament of the Group’s strong culture of corporate governance and we will continue to strive towards greater transparency and sustainability.

APPRECIATION

On behalf of the Board, I would like to extend our sincere gratitude to the Salcon management team and employees for their dedication and hard work over the past year. I would also like to thank the Group’s investors, business partners, consultants, suppliers and customers for their continued support.

The Board and I would also like to extend our appreciation to the Ministry of Energy, Green Technology and Water (KETTHA), Pengurusan Aset Air Berhad (PAAB), Suruhanjaya Perkhidmatan Air Negara (SPAN) and to other various agencies for their co-operation and facilitation in growing our businesses.

We will continue to dedicate our highest quality services and apply business best practices in Salcon to reach our goals in the future with confidence and enthusiasm.

Yours Sincerely,

Dato' Seri (Dr.) Goh Eng Toon

Chairman
Salcon Berhad