cover rationale - ChartNexus

The full financial year’s results represent a
significant improvement and successful
turnaround from the losses suffered by the
Group in financial year 2001. I believe this is
both a testament to and a just reward for the
hard work undertaken by the Board of
Directors, management and staff for and on
behalf of the shareholders.
The Group has also reported a RM115.5 million
share of profits from its associated companies,
compared to a loss of RM72.6 million in the
previous year. This was mainly due to NSTP
benefiting from the gain on its disposal of
shares in Commerce Asset Holding Berhad as
well as a fundamental improvement in its
operational performance.
CORPORATE AND OPERATIONAL
HIGHLIGHTS
During the financial year under review, MRCB
launched its turnaround initiative under a 3R
strategy: Restructure, Rationalise and
Rejuvenate. This initiative was in response to
the significant financial losses suffered by the
Group in recent financial years and the high
level of gearing in the face of uncertain market
conditions.
The Board of Directors and Management
strongly believe in this strategy as a critical
step towards building a platform for the long
term sustainability of Group operations as well
as delivering greater value to shareholders.
RESTRUCTURE
In October 2001, MRCB and Sistem Televisyen
Malaysia Berhad (‘TV3’) unveiled a joint
corporate and debt restructuring scheme which
will rescue TV3, address MRCB’s corporate
borrowings and demerge the Group into two
listed entities: MRCB and Media Prima Berhad
(formerly known as Profitune Berhad).
Following the proposed demerger, MRCB will
focus on Engineering, Construction and
Property Development while Media Prima
Berhad will become an integrated media
company – the first of its kind in the country –
with TV3 as a wholly-owned subsidiary and
NSTP as its associated company.
TV3’s heavy debts, which had come about as a
result of its diversification efforts prior to the
1997 economic crisis, has been restructured
under the auspices of the Corporate Debt
Restructuring Committee (CDRC). With the
successful restructuring of its debts, TV3 will be
able to enjoy significant savings in interest
expense and begin to generate healthy profits
in the coming financial years.
The proposed scheme continues to be a winwin
situation for all parties as it
comprehensively addresses the major issues
facing the Group. The demerger frees both
MRCB and TV3 from their crippling corporate
debt obligations, thus enabling the Group to
focus resources on revitalising and
strengthening their operations. It also unlocks
and returns the value of MRCB’s media
investments back to our shareholders through
the distribution in specie of Media Prima
Berhad shares.
The implementation of the demerger is taking
longer than originally expected due to the
delay in the completion of the disposal of
MRCB’s investment in RHB Berhad (RHB) given
regulatory requirements. Nevertheless, the
approval of TV3’s scheme creditors was
secured in February 2002 and regulatory
approvals from the Foreign Investments
Committee and the Securities Commission
have been obtained.
Accordingly, we remain confident that the
restructuring scheme can be successfully
completed within this coming financial year.
RATIONALISE
To address its high gearing levels and
strengthen the Group’s financial position,
MRCB has embarked upon an aggressive
strategy of disposing non-core assets, closing
non-viable businesses and reducing its overall
cost base.
In this respect, MRCB has completed the
disposal of its stake in Sepang Power Sdn Bhd
for RM115.0 million in May 2002, Fibrecomm
Network (M) Sdn Bhd for RM22.0 million in
August 2002, and RHB for RM504.6 million in
December 2002. MRCB has utilised the
proceeds of these disposals to address
borrowings at the corporate level and invest in
the working capital requirements of its
operations.
Laporan Tahunan 2002 Annual Report
LETTER FROM THE CHAIRMAN (CONTINUED)
59