Page 1

Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

DRIVING DIVERSITY, FORGING SUSTAINABILITY AN N UAL RE P O RT 2 017

A


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

AT A GLANCE ACHIEVED PRE-TAX PROFIT IN FISCAL YEAR 2016

RM11.02m RM43.67m GARNERING REVENUE OF

ACTIVELY INVESTING IN NEW MARKET ACCESS IN BOTH DOMESTIC ASEAN REGION

VIETNAM

MYANMAR

INDONESIA

RM100b RM120b PRIVATE SECTOR RM8.97m THE RINGGIT SUKUK MARKET REMAINS DRIVEN BY ISSUANCES FROM THE

56% B

RATED OF

SUKUK PROGRAMMES IN THE MARKET

PROFIT AFTER TAX ATTRIBUTABLE TO SHAREHOLDERS

VOTED MALAYSIA BY THE ASSET

RATING AGENCY OF THE YEAR 2016


ANNUAL GENERAL MEETING

RAM HOLDINGS BERHAD (208095-U)

WHAT’S INSIDE

27

TH

Annual Report 2017

4

Key Corporate Milestones

6

Corporate Information

8

Notice of Annual General Meeting

10

Board of Directors

14

Rating Committee

15

Our People

11.00 AM 24 May 2018 (Wednesday) The Gardens Hotel & Residences Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur, Malaysia

18

Chairman’s Statement

22

From the Desk of the Group Chief Executive Officer

27

Products & Services

28

Activities’ Round-up 2017

By realizing the importance of managing natural resources and the environment within the context of socio-economic development, cover design is demonstrating RAM in its effort to synchronizes every of it businesses and products aspects and cultivate the sustainability rating to support Malaysia’s green growth agenda. RAM is on its way of transformation towards sustainable growth, aspire to become a benchmark for ESG in Asean and Asia.

30

In the News

31

Financial Statements

Proxy Form 1


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

Corporate reorganisation – RAM Holdings Berhad, RAM Rating Services Berhad & RAM Consultancy Services Sdn Bhd formed Launched the annual Banking Bulletin

2

Launched nation’s 1st Sukuk Handbook

Rated 1st Sukuk in Malaysia

Assigned 1st state rating

1997 Recognised by the Asian Development Bank as the best domestic rating agency in the APEC region Rated 1st insurance company

2010

1994

1993 Rated 1st financial institution

2009

2007

Established by Bank Negara Malaysia as the 1st rating agency in Malaysia

2008

1990

KEY CORPORATE MILESTONES

RAM’s 20th Anniversary & 1st Corporate Social Responsibility event


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

Voted Most Outstanding Credit Rating Agency for Sukuk by KLIFF Voted Best Research in Islamic Finance by CPI Financials, Dubai Voted Best Islamic Rating Agency by Islamic Finance News

Voted Best Islamic Rating Agency of 2012 by Global Islamic Finance Awards, London, UK Released Leading ASEAN Corporates

Voted Most Outstanding Islamic Rating Agency by KLIFF Launched Global and ASEAN - scale ratings 1st regional CRA to publish sovereign ratings Released Leading ASEAN Banks & ASEAN

Published RAM’s Leading Global Corporates Report Accepted by Dubai-based Gulf Bond and Sukuk Association as an associate member

Rated 1st partnershipbased Sukuk

Named Runnerup for Best Islamic Rating Agency 2015 by Islamic Finance News Voted Rating Agency of the Year, Malaysia 2015 by The Asset Triple A Awards

2006 Voted World’s 2nd Best Islamic Credit Rating Agency by Islamic Finance News

2016

2005

2004 Initiated RAM League Awards

2015

Launched the Islamic Finance Bulletin in support of Islamic Finance development

2014

2003

2002 Polled as the most influential rating agency in the region by The Edge

2013

2011

Released 1st corporate default study report

2012

2000

KEY CORPORATE MILESTONES

Voted Rating Agency of the Year, Malaysia 2016 by The Asset Triple A Awards Named Best Islamic Rating Agency 2016 by Islamic Finance News

3


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

CORPORATE INFORMATION BOARD OF DIRECTORS

REGISTERED OFFICE

Ybhg Tan Sri Dato’ Seri Siti Norma Binti Yaakob

Suite 20.01, Level 20 The Gardens South Tower, Mid Valley City Lingkaran Syed Putra, 59200 Kuala Lumpur Tel: +603 7628 1000 / +603 2299 1000 Fax: +603 2711 1701

Independent Non-Executive Chairman

Ybhg Datuk Seri Dr Govindan A/L Kunchamboo Group Chief Executive Officer & Executive Director

COMPANY NUMBER

Ybhg Tan Sri Amirsham Bin A Aziz

208095 – U

Independent Non-Executive Director

Ybhg Tan Sri Datuk Yong Poh Kon Independent Non-Executive Director

Ybhg Tan Sri Dato’ Sri Dr Wan Abdul Aziz Bin Wan Abdullah Independent Non-Executive Director

Ms Bhartidevi R C Seth Independent Non-Executive Director

4

COMPANY SECRETARIES Nazela Binti Ahmad Shahniza Anom Binti Elias

AUDITORS PricewaterhouseCoopers Level 10, 1 Sentral Jalan Rakyat, Kuala Lumpur Sentral PO Box 10192, 50706 Kuala Lumpur


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

SUSTAINABILITY RATING SERVICE We offer recognition to sustainable companies and aspiring sustainable companies through Sustainability Ratings. The Sustainability Rating team consists of analysts who are dedicated in providing in-depth research, analysis and benchmarking of the sustainability performance of companies.

5


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

BOARD OF DIRECTORS RAM HOLDINGS BERHAD 1 Tan Sri Dato’ Seri Siti

Norma Binti Yaakob Independent Non-Executive Chairman

6

7

2 Datuk Seri Dr Govindan

A/L Kunchamboo Group Chief Executive Officer / Executive Director

4

3 Bhartidevi R C Seth

Independent Non-Executive Director

4 Tan Sri Dato’ Sri Dr Wan

Abdul Aziz Bin Wan Abdullah Independent Non-Executive Director 5 Tan Sri Datuk Yong Poh Kon

Independent Non-Executive Director

6 Tan Sri Amirsham Bin A Aziz

Independent Non-Executive Director

RAM CONSULTANCY SERVICES SDN BHD Datuk Seri Dr Govindan A/L Kunchamboo Non-Independent Non-Executive Director Nazela Binti Ahmad Non-Independent Non-Executive Director

6

5


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

BOARD OF DIRECTORS

RAM RATING SERVICES BERHAD 1 Tan Sri Dato’ Seri Siti

8

Norma Binti Yaakob Independent Non-Executive Chairman

9

2 Datuk Seri Dr Govindan 3

A/L Kunchamboo Group Chief Executive Officer / Executive Director 7 Choy Khai Choon

2

Independent Non-Executive Director

8 Ng Hon Soon 1

Independent Non-Executive Director

9 Dato’ Dr Lee Chee Kuon

Independent Non-Executive Director

RAM SOLUTIONS SDN BHD Tan Sri Dato’ Seri Siti Norma Binti Yaakob Non-Independent Non-Executive Director Datuk Seri Dr Govindan A/L Kunchamboo Non-Independent Non-Executive Director

7


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

1

4

7

10

2

5

8

11

3

6

9

12

OUR PEOPLE

1

2

3

Chong Kwee Siong Technical Advisor Group Ceo’s Office Chief Executive Officer Ram Solutions Sdn Bhd

General Manager Legal And Corporate Affairs

6

Francis Ng

Datuk Seri Dr Govindan A/L Kunchamboo

Senior General Manager Group Accounts And Administration

General Manager Business Development

7

Zurina Binti Zulkifli Head Training

Anisah Binti Yunus

Group Chief Executive Officer / Executive Director 8

Nazela Binti Ahmad

Sazalina Binti Kamarudin

Head Group It Support

4

5

8

Chris Lee Wai Kit

Senior General Manager Group Ceo’s Office Chief Executive Officer Ram Consultancy Services Sdn Bhd


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

OUR PEOPLE

13

16

14

17

19

15

18

20

9

Padthma Subbiah

Senior General Manager Group Corporate Communications & Training

10 Rohanita Binti Ahmad Head Group Accounts

11 Gladys Chua

Head Sustainability Ratings

12 Foo Su Yin Chief Executive Officer

13 Awang Za’aba Awang Mahmud Chief Compliance Officer

14 Esther Lai

Head Sovereign Ratings

15 Denise Thean Deputy Chief Executive Officer

16 Siew Suet Ming

Senior General Manager Structured Finance Ratings

17 Kevin Lim

Head Consumer & Industrial Ratings

18 Promod Dass Deputy Chief Executive Officer

19 Julie Ng

Senior General Manager Data & Analytics Publications & Editorial Investor Relations

20 Wong Yin Ching Co-Head

Financial Institutions Ratings

9


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

CHAIRMAN’S STATEMENT

TAN SRI DATO’ SERI SITI NORMA BINTI YAAKOB Independent Non-Executive Chairman

DEAR SHAREHOLDERS, On behalf of the board of directors, I am pleased to present the annual report for ram holdings berhad for the financial year ended 31 December 2017. We would like to thank you for your continued support in 2017.

10

RAM has come a long way since its establishment in 1990. The Company at its inception depended totally on its domestic business. We have now grown to become a regional player in the rating business. As RAM continues to make steady progress into the global market place, it will face greater challenges from rising competition, market liberalisation and disruptive technology. Despite this ‘burning platform’, we will continue to forge ahead by introducing bold and transformational changes to grow RAM as the first domestic rating agency in the country to become a successful player in the regional and global arena. The past year saw challenging economic conditions across the globe. In 2016, the global economy registered tepid growth for the sixth year with market volatility exacerbated by political shocks such as Brexit and the results of the US presidential elections. These developments posed threats particularly to export-oriented and small, open economies such as ours. However, Malaysia’s economy, bolstered by resilient domestic demand supported by sustained private consumption and investment growth, has weathered the downside risks to grow by 4.2% in 2016.


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

CHAIRMAN’S STATEMENT

DELIVERING STEADY FINANCIAL PERFORMANCE In the face of significant challenges, we have made good progress on our strategy, delivering strong operating performance and cost efficiencies, as well as encouraging returns. These results are commendable given the headwinds plaguing the global capital markets. I am pleased to report that the RAM Group achieved a pre-tax profit of RM11.02 million in fiscal year 2016 garnering revenue of RM43.67 million. Profit after tax attributable to shareholders came up to RM8.97 million. In the same year, the Group’s subsidiary, RAM Rating Services Berhad successfully completed 21 new ratings, with an aggregate proposed gross issuance value of RM59.58 billion.

RAM’S JOURNEY CONTINUES RAM’s transformation is a journey to capitalise on new opportunities, strengthen our business, accelerate innovation and sharpen our organisational structure. In this, the way forward is to re-energise growth in business and income with strong cost and risk management. The objective is to continue to grow earnings and maintain a high level of returns over the long term. We have a clear strategy, a strong business plan and dedicated staff who will execute the plan with discipline and pace. We will focus on streamlining and strengthening our ratings and non-ratings product portfolio, improving productivity and cost structure, building the foundation for stronger top-line growth and strengthening our organisation and work culture.

RATED OF

56% SUKUK PROGRAMMES IN THE MARKET

RAM GROUP ACHIEVED PRE-TAX PROFIT

RM11.02 MILLION

Ram’s transformation is a journey to capitalise new opportunities, strengthen our business, accelerate innovation and sharpen our organisational structure. In this, the way forward is to re-energise growth in business and income with strong cost and risk management. The objective is to continue to grow earnings and maintain a high level of returns over the long term.

EXITING INVESTMENTS IN HONG KONG In 2008, RAM Holdings Berhad invested a total of RM27,660 for 30% shareholdings of two Hong Kong incorporated companies, RAM & HK-SAR Rating Services (Holdings) Limited and RAM & HK-SAR (Holdings) Limited. In our 2014 Annual Report, we reported that we have written off the entire investment in the two Hong Kong-incorporated companies as the businesses of these companies never commenced. Subsequently, we discovered that these two companies had changed their names to RAM Rating Services (Holdings) Limited and RAM Holdings Limited respectively. RAM Holdings Berhad is not represented on the Board of Directors or on the management of these two Hong Kong incorporated companies. Shareholders were informed in our 2015 Annual Report that we have appointed lawyers to commence winding up proceedings against the two Hong Kong incorporated companies. We appointed a Hong Kong law firm, M/s Boase Cohen and Collins, who advised us to file Winding-up Petitions in June 2016 against the said companies. The legal process is underway in the High Court of the Hong Kong SAR. 11


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

FROM THE DESK OF THE GROUP CHIEF EXECUTIVE OFFICER

DATUK SERI DR GOVINDAN A/L KUNCHAMBOO Group Chief Executive Officer / Executive Director

In 2017, the external environment remained challenging to the malaysian economy, amid moderate growth for the global economy. Several important key events and policy shifts in major economies will continue to pose uncertainties in 2017; key among these are the policy stance of the us under the trump administration, the timing and quantum of the us federal reserve’s (the fed) rate hikes and outcome of the brexit negotiations. 12


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

FROM THE DESK OF THE GROUP CHIEF EXECUTIVE OFFICER

Despite the tough market conditions and lacklustre sentiment in the domestic economy last year, RAM Ratings kept its resilience against the challenging Malaysian debt market. We were able to cement our leadership in the domestic bond market with 75% of the total rated programme value in 2016. We closed the year with a 101.8% y-o-y jump in the value of RAM-rated new debt issues, to RM121.1 billion. However, the issued value of our rated portfolio declined 19.3% y-o-y to RM12.1 billion (2015: RM15.0 billion). Last year, the ratings of RM92.1 billion of these bond issues were announced. The majority of the issuers were from the financial services sector (83% by value), followed by infrastructure & utilities (7%) and industrial products (5%). Issuance activity in the Malaysian corporate bond market got off to a rather slow start in 2016, akin to what was observed in 2015. There was an upsurge in issuance in August, attributable to large issues from the infrastructure & utilities sector. Confronted by a challenging landscape, the corporate bond market ended the year with a relatively similar level of issuance to 2015. In 2016, gross issuance of corporate bonds amounted to RM85.65 billion (2015: RM86.35 billion), i.e. slightly above our projection of RM75.0 billion- RM85.0 billion. This translates into a marginal 0.8% y-o-y contraction from the RM86.35 billion the year before. Of the total corporate bonds issued in 2016, about 52.1% comprised rated issues compared to 65.2% in 2015 (-20.6% y-o-y). The financial services sector remained the chief driver of

CORPORATE BOND ISSUANCE (2006-2016)

ISLAMIC FINANCE NEWS’ (IFN) for 2016

MALAYSIA BY THE ASSET in 2016

BEST ISLAMIC RATING AGENCY

RATING AGENCY OF THE YEAR

corporate bond issuance, followed by infrastructure & utilities, which each contributed 44.6% and 25.2%, respectively. Despite the choppy market and the debut of non-traditional markets (i.e. Turkey, Pakistan and Bangladesh), Malaysia retained the lion’s share (41.1%) of global sukuk issuance in 2016. This translates into a 1.5% y-o-y decline to USD29.9 million as at endDecember 2017 (end-December 2015: USD30.4 billion). On the home front, sukuk constituted the bulk (75.7%) of corporate bond issuance last year (2015: 66.7%). Value-wise, it was 12.6% higher y-o-y at RM64.8 billion (2015: RM57.6 billion). The Malaysian government’s pump-priming efforts through infrastructure-led projects have been a boon to the sukuk market, and are likely to remain a key catalyst.

New Issues of Corporate Bond and/or Sukuk (excluding Cagamas Bonds) Net Issues of Corporate Bond and/or Sukuk (excluding Cagamas Bonds)

150,000 121,123

RM MILLION

120,000 83,685

90,000 69,356 60,000

38,887

7,369 0

49,658

58,575 26,536

30,000

2006

85,502

85,639

85,298

69,561

13,174

15,637

2007

2008

2009

63,384

52,128

18,358

2010

44,875 24,508

2011

22,240

2012

2013

31,033

2014

28,080

2015

2016

13


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

BEST RESEARCH IN ISLAMIC FINANCE 2011 CPI Financials Dubai, UAE

BEST ISLAMIC RATING AGENCY 2012 Global Islamic Finance Awards London, UK

BEST ISLAMIC RATING AGENCY 2011 Red Money Group Kuala Lumpur

Excellence in

SUKUK To learn more about our services, visit RAM.COM.MY

14


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

BEST ISLAMIC RATING AGENCY 2016 Islamic Finance News

MOST OUTSTANDING RATING AGENCY FOR SUKUK 2011 Kuala Lumpur International Islamic Finance Forum

MOST OUTSTANDING ISLAMIC RATING AGENCY 2013 Kuala Lumpur Islamic Finance Forum

A Major Player in the GLOBAL SUKUK MARKET RAM has been the leading sukuk credit rating agency in the ASEAN region for more than two decades. We have been rating sukuk since 1994 and have grown in tandem with the development of the global sukuk market. Our experience with global sukuk issuance has equipped us with insights and knowledge, thus positioning us as a major player in the global sukuk market. Since 2008, we have rated numerous companies from the GCC who have raised sukuk in Malaysia.

As an influential global sukuk credit rating agency, we strive to maximise our potential and raise our profile on the global front. With an in-depth understanding of the sukuk market, underscored by our established credit rating methodologies, we aspire to rise alongside the growing Islamic financial landscape and play a significant role in shaping the global sukuk market.

15


ACTIVITIES ROUND-UP 2017

RAM HOLDINGS BERHAD (208095-U)

16

Annual Report 2017

JANUARY

APRIL

► Release of RAM’s Bond Market Monthly January issue

► RAM’s participation in the IFN Forum 2016 in Jakarta ► RAM’s 2016 Investor Briefing 1 ► Release of RAM’s Bond Market Monthly April issue

FEBRUARY

MAY

► Chinese New Year 2016 Celebration ► Launch of the Investment Account Platform (IAP) at Sasana Kijang. RAM Solutions Sdn Bhd was appointed as the provider of credit opinions on ventures listed on the IAP ► Release of RAM’s Economic Outlook ► Release of RAM’s Bond Market Monthly February issue

► Participated in the Global Islamic Finance Forum organised by AIBIM ► RAM League Awards ► Release of RAM’s Bond Market Monthly May issue

MARCH

JUNE

► RAM Ratings Voted “Best Rating Agency, Malaysia” by The Asset Triple A Rating Agency of the Year Awards, 2016 ► Release of RAM’s 2016 Sukuk Outlook report. ► Release of the 2016 Banking Bulletin ► Release of RAM’s Bond Market Monthly March issue

► Participated in the Capital Market Dialogue Series - SRI Fixed Income Roundtable ► RAM’s 25th Annual General Meeting ► Release of RAM’s Bond Market Monthly June issue


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

FINANCIAL STATEMENT 32 Directors’ Report

40 Statement of Cash Flows

35 Statement of

42 Notes to the Financial Statements

Comprehensive Income

36 Statement of Financial Position 38 Consolidated Statement

of Changes in Equity

92 Statement by Directors 92 Statutory Declaration 93 Independent Auditors’ Report

39 Company Statement

of Changes in Equity 17


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

DIRECTORS’ REPORT The Directors are pleased to submit their annual report to the members together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2016.

PRINCIPAL ACTIVITIES The Company’s principal activities are to conduct training and seminars and to provide management services. There has been no significant change in the nature of these activities during the financial year. The principal activities of the Group consist of provision of approved credit rating services, provision of economic, strategic and management consultancy services and investment holding. The nature of the Group’s principal activities has been expanded into providing independent credit opinion on ventures listed in the Investment Account Platform (IAP) and Sustainability Ratings of companies in the areas of Environment, Social and Governance during the financial year.

FINANCIAL RESULTS Profit for the financial year attributable to owners of the Company

Group Company RM RM 8,969,885 3,784,347

DIVIDENDS Dividends paid, declared or proposed since 31 December 2016 are as follows: RM In respect of the financial year ended 31 December 2016 as shown in the Directors’ Report for that year: –

First and final single-tier dividend of 60 sen per share on 10,000,000 ordinary shares, paid on 8 July 2017

6,000,000

The Directors now recommend the payment of a first and final single-tier dividend of RM0.35 per share on 10,000,000 ordinary shares, amounting to RM3,500,000 for the financial year ended 31 December 2016. The proposed dividend is subject to the approval of members at the forthcoming Annual General Meeting of the Company. The financial statements for the current financial year do not reflect the final dividend. The dividend payment will be accounted for in the shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2016.

RESERVES AND PROVISIONS All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

18


Annual Report 2017

RAM HOLDINGS BERHAD (208095-U)

STATEMENT OF COMPREHENSIVE INCOME For the financial year ended 31 Decevmber 2017 Note 2017 2016 2017 2016 RM RM RM RM Revenue 4 43,667,030 47,403,234 16,778,979 17,792,991 Other operating income 8,214,331 7,769,001 5,734,598 5,068,126 Staff costs 5 (30,848,562) (30,113,332) (12,267,385) (12,463,787) Seminars and publications expenses (1,247,038) (1,126,155) (1,252,038) (1,126,155) Consultants’ cost 0 (11,376) 0 0 Depreciation of property, plant and equipment (558,727) (573,698) (444,650) (503,993) Depreciation of investment properties (362,239) (362,198) (362,239) (362,198) Amortisation of intangible assets (16,709) (6,453) 0 0 Utilities (122,161) (121,954) (69,227) (82,264) Repairs and maintenance expenses (917,826) (881,817) (732,719) (744,761) Unrealised gain/(loss) on financial asset at fair value through profit or loss 98,869 (104,288) (13,363) 0 Telecommunication and travelling expenses (1,026,770) (1,097,273) (171,341) (235,049) Training expenses (184,248) (336,186) (39,756) (56,712) Rental of office premises (2,772,180) (2,772,000) (1,656,000) (1,656,000) Advertisement expenses (24,490) (17,225) (8,000) (570) Impairment of trade receivables (448,219) (198,950) 0 0 Impairment loss on subsidiaries 0 0 (271,829) 0 Other operating expenses (3,437,717) (4,155,186) (1,429,380) (2,101,208) GST expenses (44,254) (43,333) (11,303) (39,643) Share of results in associated companies 1,053,637 590,820 0 0 Profit before taxation Tax expense

6 11,022,727 13,841,631 3,784,347 3,488,777 8 (2,052,842) (3,294,669) 0 0

Profit/Total comprehensive income for the financial year

8,969,885

10,546,962

3,784,347

3,488,777

Profit for the financial year attributable to: Owners of the Company

8,969,885

10,546,962

3,784,347

3,488,777

Total comprehensive income for the financial year attributable to: Owners of the Company

8,969,885

10,546,962

3,784,347

3,488,777

Earnings per share attributable to the equity holders of the Company during the financial year (sen)

9

90

105

19


RAM HOLDINGS BERHAD (208095-U)

Annual Report 2017

www.ram .com .my

RAM HOLDINGS BERHAD (208095-U) Suite 20.01, Level 20 The Gardens South Tower Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Tel : +603 7628 1000 Fax : +603 2711 1701 20

RAM AR2017 Proposal  
RAM AR2017 Proposal  
Advertisement