Human Capital 64 Materiality 34 Reaching out to Communities 68 Risk Management 36

This year’s cover visual represents the Boustead Group’s commitment to ensure that the principles RATIONALE of sustainability fully permeate our operations across the Group’s six Divisions. THE SUSTAINABILITY REPORT 2018 CONTENTS

03 ECONOMIC Products & Services 40 Providing Business Opportunities 46 01 OVERVIEW About Boustead Group 4 Financial Highlights 6 Message from the Board Sustainability Committee 8 Sustainability Highlights 14 ENVIRONMENT Awards 15 04 Protecting the Environment 52 OUR APPROACH TO 02 SUSTAINABILITY Overview 18 Sustainability Journey 20 Scope of Reporting 22 SOCIAL Group Sustainability Policy 24 05 Sustainable Development Goals 26 Health & Safety 60 Governance Structure 28 Stakeholder Engagement 32 Human Capital 64 Materiality 34 Reaching Out to Communities 68 Risk Management 36

Scan to view or download our Annual Report 2018 here 2 BOUSTEAD Holdings Berhad 01

Pharmaniaga delivering medicine to rural areas Sustainability Report 2018 3 01 OVERVIEW

About Boustead Group 4 Financial Highlights 6 Message from the Board Sustainability Committee 8 Sustainability Highlights 14 Awards 15 4 BOUSTEAD Holdings Berhad

ABOUT BOUSTEAD GROUP Established over 190 years ago, Boustead Holdings Berhad has evolved and reinvented itself from a modest trading company to now a well diversified home-grown conglomerate. Boustead is involved in six key sectors of the Malaysian economy, namely Plantation, Property, Pharmaceutical, Heavy Industries, Finance & Investment and Trading & Industrial.

Driven by a strong talent pool of more than 17,000 employees, the Group’s total assets amount to RM18.8 billion while shareholders’ funds stand at RM5.4 billion. Sustainability Report 2018 5 PLANTATION ProPerty PHARMACEUTICAL

As one of the most experienced The Group’s Property Division is an The Pharmaceutical Division and established upstream oil palm established leader in the property provides an extensive range of plantation players in Malaysia, the sector, involved in key areas services and products catering Plantation Division is backed up by including property development, to the pharmaceutical and a strong track record in plantation property investment, property healthcare industries. Counting both management spanning decades. management, hotel operations Government and private entities The Division manages a substantial and project management. The as clients, the Division is growing land bank throughout Peninsular Division features a strong portfolio its regional presence with its core Malaysia, Sabah as well as Sarawak of assets including award-winning businesses spanning logistics and is a strong proponent for townships, a prominent chain of and distribution, manufacturing sustainable agronomic practices. hotels in addition to commercial and of generic pharmaceuticals residential developments. and medical devices, sales and marketing, distribution of medical products and hospital equipment as well as retail pharmacy.

HEAVY INDUSTRIES FINANCE & INVESTMENT TRADING & INDUSTRIAL

The Heavy Industries Division’s Led by financial services Apart from being the owner and diverse maritime and aerospace conglomerate, the AFFIN Bank, the operator of Malaysia’s only other interests encompass the defence, Finance & Investment Division’s home-grown retail petroleum enforcement and security as well strong portfolio of businesses offer network, the Trading & Industrial as commercial and energy sectors. a wide range of financial solutions Division is also involved in the The Division’s participation in these comprising consumer banking, manufacturing and distribution of sectors involves a wide range of investment banking, Islamic banking building materials and Industrialised products and services including along with finance and insurance. Building System (IBS). The Division shipbuilding of naval vessels, The Division is also invested in other also provides project management fabrication for the oil and gas key sectors of the economy including expertise for construction work. industry, aviation support services, education, travel and tourism. ship repair and maintenance, repair and overhaul services. 6 BOUSTEAD Holdings Berhad

TOTAL ASSETS SHAREHOLDERS’ 2018 EQUITY RM18.8 billion RM5.4 billion

REVENUE CAPEX & ACQUISITION

RM10.2 billion RM1.0 billion FINANCIAL HIGHLIGHTS

EBITDA NET ASSETS per share

RM220 million 265 sen

DIVIDEND YIELD LOSS BEFORE TAXATION 3.5% RM388 million Sustainability Report 2018 7

Maintaining the environment at Royale Chulan Cherating Resort 8 BOUSTEAD Holdings Berhad

MESSAGE FROM THE board ECONOMIC sustainability commITTEE ENVIRONMENT

As a diversified conglomerate, Boustead Holdings Berhad is committed to excellence in sustainability by integrating sustainable practices into all aspects of our business activities. The Group is heartened to note that our efforts in balancing economic prosperity, environmental protection and social SOCIAL responsibility have had a positive impact. Sustainability Report 2018 9

SOCIAL

Bousteadians, champions of sustainability

Following through from our efforts in 2017, we further streamlined our material issues to focus on six key matters in relation to our Group’s business operations based on stakeholder priorities.

We also determined our materiality assessment plan for future Sustainability Reports. With this new plan, we will review the materiality matrix and material issues based on the risk, opportunities and impact of the Group annually while a complete revision of the materiality matrix, if necessary will be undertaken every two years following comprehensive stakeholder engagement.

Our inaugural standalone Sustainability Report will offer a holistic overview of the Group’s sustainability efforts for the year. 10 BOUSTEAD Holdings Berhad MESSAGE FROM THE BOARD SUSTAINABILITY COMMITTEE

ECONOMIC

The Group is committed to continuous We are passionate about strengthening the Almost investment in research and development local economy by prioritising surrounding (R&D) to ensure that our products and communities for employment as well as services are relevant and meet the needs business opportunities. of our customers. The Pharmaceutical Division offers In 2018 alone, the Pharmaceutical Division prospects for growth and skill enhancement 40 registered almost 40 new products of to local vendors and entrepreneurs through various dosage forms while developing several successful programmes including NEW PRODUCTS phytomedicine with scientifically proven its Bumiputera Vendor Development medicinal claims, set to shine a spotlight on Programme and RoyalePharma Alliance the appeal of local herbs as phytomedicine. Programme which positively impacted almost 300 vendors and entrepreneurs 2,984 The Heavy Industries Division’s R&D during the year. registered VENDORS initiatives during the year was focused on the implementation of advanced technology The Heavy Industries Division has to produce state-of-the-art products and 2,984 registered vendors in its business services. ecosystem.

As a result of the Group’s long-term In addition, our Plantation Division agronomic R&D initiatives, our Segaria awarded 200 landowners with contract CONTRACTS FOR and Sungai Jernih mills have consistently work over the years. surpassed the national average oil extraction rate of their respective regions 200 since 2009, demonstrating our ability to LAND OWNERS produce more with less. Sustainability Report 2018 11 MESSAGE FROM THE BOARD SUSTAINABILITY COMMITTEE

ENVIRONMENT

As a diversified conglomerate, we are conscious of how much the environment is a part of the Group’s overall business ecosystem. Our goal has and will always be to continuously safeguard the environment while pursuing growth.

In line with our commitment to environmentally friendly business practices that promote the preservation of the environment, our Plantation Division has in place several sustainability policies including, Best Environmental Management Practices, Good Agricultural Practices (GAP) and Good Milling Conserving a natural waterfall at Sg. Jernih Estate, Pahang Practices (GMP) which govern the Division’s daily operations. Our Property Division’s Mutiara and vehicles are maintained regularly Damansara township is home to a Green to minimise emissions and maximise Building Index Gold Rating and Multimedia energy efficiencies. Super Corridor Status office tower, the WE ARE COMMITTED Nucleus Tower. BHPetrol conducts Environmental Impact Assessment (EIA) studies for all new TO ENVIRONMENTALLY All our shipyards within the Heavy projects to determine environmental Industries Division have a stringent zero impact while continuous monitoring burning policy in place and are equipped is conducted on the quality of effluent FRIENDLY BUSINESS with controls to prevent oil and water discharge and its effect on the environment. spillage. In addition, waste and scrap PRACTICES are segregated to prevent rubbish or Environmentally friendly measures are waste from being disposed into the implemented across the Pharmaceutical sea while all equipment, machineries Division including recycling, energy saving, waste reduction, anti-pollution and water harvesting. 12 BOUSTEAD Holdings Berhad MESSAGE FROM THE BOARD SUSTAINABILITY COMMITTEE

In 2018, the Trading & Industrial Division Across the Group, we are committed to collaborated with the Department of create and sustain an engaged work culture Occupational Safety and Health Malaysia that attracts, retains and motivates our (DOSH) on a weeklong programme to employees through fair and competitive SOCIAL highlight the significance of individual compensation together with competitive responsibility in adhering to Occupation, benefits and allowances. Health & Safety (OHS) requirements. Beyond economic growth, the Group The Heavy Industries Division is committed is conscious of the importance of We are committed to upholding high to compliance with the relevant HSE enhancing the lives of communities we standards of occupational health and national laws and regulations through operate within by integrating corporate safety across our multiple operations. regular audits and continual communication social responsibility initiatives that with the authorities including DOSH and the prioritise healthcare, education and the As part of our efforts to ensure that our Department of Environment. welfare of Malaysians throughout our employees operate in a safe and conducive business operations. work environment, our Plantation Division Building a team of engaged, highly has appointed dedicated Safety and Health motivated, diverse and empowered During the year, we provided accessible and Officers to oversee overall health and safety talent is a fundamental driver of our free healthcare services to the general public provisions in all our estates and mills. continued success. All six of our Divisions in suburban and rural areas via our community provide employees with opportunities health programme, Skuad Operasi Sihat. In line with our Pharmaceutical Division’s to continuously enhance capabilities We also assisted to repair the homes of two strong commitment to the objectives of through various talent development and needy families in Rantau Panjang, Kelantan. OHSAS 18001 Occupational Health and training programmes. As part of our consecutive 7th year Di Celah- Safety Management Certification, the Celah Kehidupan (DCCK) programme in Division has undertaken several safety The Group is guided by the backdrop collaboration with Radio Televisyen Malaysia related campaigns including the Do It Right of our core values namely Respect, (RTM), we provided cash donations to 20 Always campaign, which was organised to Integrity, Teamwork and Excellence which Armed Forces retirees’ families through the develop a strong safety culture. we constantly instil in our employees Group and public contributions. via employee engagement initiatives. The Property Division places great Employee relations is also strengthened The Group is committed to empowering importance on ergonomics and safety at the through team building activities and bright young minds through various workplace while its hotel business organised festive celebrations, amongst many others. educational initiatives. To this end, we multiple Health, Safety and Environment Moreover, employees are encouraged provided sponsorship for schools, financial (HSE) programmes comprising training with awards for overall excellence in assistance for underprivileged youths and sessions for chemical handling, fire drill and the workplace, diligence, long service sponsorship of essential school items as first aid training. and honesty. well as funding of school activities. Sustainability Report 2018 13 MESSAGE FROM THE BOARD SUSTAINABILITY COMMITTEE

Investing in our future leaders at the University of Nottingham Malaysia

Operating sustainably requires balancing risks and opportunities. It is clear that our future success relies on our sustainability While we are proud of our achievements thus far, we are mindful of practices. Looking to the future, we believe there are many more the need to continue addressing key material issues in Economic, opportunities to Building a Legacy of Sustainable Growth as a Environment and Social areas. Leading Diversified Conglomerate.

Board Sustainability Committee BOUSTEAD HOLDINGS BERHAD 14 BOUSTEAD Holdings Berhad SUSTAINABILITY HIGHLIGHTS 4.1% ECONOMIC VALUE RM216 million REDUCTION Awarded to in Carbon Emissions Generated RM10.2 billion per 1,000 FFB MT BHIC VENDOR 1,566,088m3 Distributed RM10.8 billion Development REDUCTION in Methane programme Gas Emissions

365 hours FATALITY Loss Time Injury RATE 0 (LTI) REDUCTION

CONTRIBUTED

RM62 million RM5 million RM6 million for invested in INVESTED IN LEARNING & DEVELOPMENT COMMUNITY R&D INVESTMENT Sustainability Report 2018 15 AWARDS

2018

Malaysian Palm Oil Industry Award Putra Brand Awards 2018 Sungai Jernih Palm Oil Mill BHPetrol National Highest Oil Extraction Rate Category Bronze Award Winner for Automotive Sector

GHP Pharmaceutical Manufacturing & Packaging Social Media Excellence Awards Awards 2018 BHPetrol Pharmaniaga Berhad Winner for Digital Media in Oil & Gas Industry Award for Excellence in Product Development

Malaysia Top Achiever Awards 2018 Hotels.com Pharmaniaga Berhad Royale Chulan Damansara Industry Excellence in Pharmaceutical Winner for Loved by Guests Award 2018

Malaysia’s 100 Leading Graduate Employers Agoda Award 2018 Pharmaniaga Berhad Royale Chulan Damansara Most Popular Graduate Employer of the Year 2018 Gold Circle Winner 16 BOUSTEAD Holdings Berhad

02 Sustainability Report 2018 17 OUR APPROACH TO SUSTAINABILITY

Overview 18 Sustainability Journey 20 Scope of Reporting 22 Group Sustainability Policy 24 Sustainable Development Goals 26 Governance Structure 28 Stakeholder Engagement 32 Materiality Matrix 34 Materiality Assessment 35 Risk Management 36 18 BOUSTEAD Holdings Berhad OVERVIEW

In tandem with our drive to create greater value not only for the Group, but also the communities in which we operate, our sustainable business practices take into consideration economic, environmental and social pillars.

Oil palm nursery Sustainability Report 2018 19

REFERENCE & GUIDELINE

The Group’s inaugural standalone Sustainability Report was prepared in compliance with Part III, Practice Note 9 of the Main Market Listing Requirements – Risk Management and Internal Control, Corporate Governance and Sustainability Statement.

SUSTAINABILITY REPORTING PERIOD

The primary objective of this Sustainability Report is to disclose the Group’s collective sustainability efforts. Our Sustainability Report covers the VISION Group’s efforts and initiatives undertaken in the Building a legacy of sustainable growth as a leading financial year ended 31 December 2018. diversified conglomerate.

OUR AIM

Our aim with this dedicated report is to provide SUSTAINABILITY a more balanced, comparable and meaningful account outlining the material economic, environmental and social risks and opportunities facing the Group. This report should be read MISSION jointly with our Annual Report 2018 in order to obtain a comprehensive view of the Group’s Our approach to sustainability covers material issues holistic performance. in the following four core areas of impact:

SOCIAL SOCIAL ECONOMIC ENVIRONMENT (HUMAN CAPITAL) (OUR COMMUNITY)

Ensuring the sustainable Protect the environment Strengthen our reputation Reaching out to growth of our businesses by embracing greener and as an employer of choice communities in which we is in line with our drive to more eco-friendly practices by investing in our people operate by giving back to stay relevant and bring and developing their those in need, facilitating about positive economic talents to unlock greater access to education, youth impact extending to local value empowerment and active communities engagements 20 BOUSTEAD Holdings Berhad SUSTAINABILITY JOURNEY

• Rollout of Sustainability Policy vis-à-vis • Numerous sustainability • Setting the framework Business Plans for sustainability awareness sessions for Middle Managers • Report is in further • Inaugural Sustainability compliance with Bursa Report with overview of • Launch of Boustead Malaysia Guidelines key sustainability Sustainability Policy initiatives

• Sustainability Policy fully embedded in Business Plan

• Report is in further compliance with GRI Standards

• Multiple sustainability awareness sessions for Senior Management

• Commence engagement with stakeholders

• Development of material issues reported with baseline indicators Sustainability Report 2018 21

• Sustainability Policy fully embedded in Business Plan

• Report is in further compliance with GRI Standards

• Multiple sustainability awareness sessions for Senior Management

• Commence engagement with stakeholders

• Development of material issues reported with baseline indicators 22 BOUSTEAD Holdings Berhad SCOPE OF REPORTING

The scope of reporting for the Group’s Sustainability Report 2018 and management approaches in a fruitful manner. The Group is includes all local and overseas subsidiaries located mainly in able to exert Management control only on majority owned and Indonesia and London. controlled subsidiaries. The entities excluded from the scope of reporting are all The scope of reporting has been extended from the Group’s associates and non-controlling Joint Venture (JV) companies. Sustainability Report in 2017 which mainly covered major The scope of reporting is determined based on the Group’s goals subsidiaries located in Malaysia. to influence the implementation of the Group Sustainability Policy

PLANTATION PROPERTY PHARMACEUTICAL HEAVY INDUSTRIES TRADING & INDUSTRIAL FINANCE & INVESTMENT DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION

BOUSTEAD BOUSTEAD LANGKAWI BOUSTEAD BOUSTEAD PHARMANIAGA PHARMANIAGA UAC BERHAD THE UNIVERSITY OF HEAVY INDUSTRIES SHIPYARD SDN BHD PLANTATIONS PROPERTIES BERHAD BIOMEDICAL NOTTINGHAM IN CORPORATION BERHAD BERHAD SDN BHD MALAYSIA SDN BHD BERHAD

BOUSTEAD BOUSTEAD BOUSTEAD BOUSTEAD MUTIARA RINI PHARMANIAGA PT MILLENNIUM BHIC DEFENCE PENANG SHIPYARD PETROLEUM CRUISE CENTRE ESTATES SDN BHD LOGISTICS PHARMACON TECHSERVICES SDN BHD INTERNATIONAL SDN BHD SDN BHD MARKETING SDN BHD AGENCY SDN BHD SDN BHD

BOUSTEAD BOUSTEAD PHARMANIAGA BOUSTEAD BHIC MARINE BOUSTEAD BUILDING BOUSTEAD TRAVEL TELOK SENGAT CURVE MANUFACTURING NAVAL SHIPYARD TECHNOLOGY MATERIALS SERVICES SDN BHD SDN BHD BERHAD SDN BHD ACADEMY SDN BHD SDN BHD SDN BHD

BOUSTEAD BOUSTEAD IDAMAN PHARMA MHS AVIATION BHIC ALLIED BOUSTEAD BOUSTEAD CREDIT RIMBA NILAI HOTELS & MANUFACTURING BERHAD DEFENCE GLOBAL SDN BHD SDN BHD RESORTS SDN BHD TECHNOLOGY RISK SOLUTION SDN BHD SDN BHD SDN BHD

BOUSTEAD BOUSTEAD PHARMANIAGA DOMINION BHIC SUBMARINE PELITA REALTY LIFE SCIENCE DEFENCE & ENGINEERING KANOWIT SDN BHD SDN BHD INDUSTRIES SERVICES SDN BHD SDN BHD SDN BHD

BOUSTEAD BOUSTEAD PHARMANIAGA BHIC PELITA TINJAR WELD COURT RESEARCH NAVALTECH SDN BHD SDN BHD CENTRE SDN BHD SDN BHD Sustainability Report 2018 23

ENTITIES INCLUDED

PLANTATION PROPERTY PHARMACEUTICAL HEAVY INDUSTRIES TRADING & INDUSTRIAL FINANCE & INVESTMENT DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION

BOUSTEAD BOUSTEAD PHARMANIAGA DOMINION BHIC SUBMARINE PELITA REALTY LIFE SCIENCE DEFENCE & ENGINEERING KANOWIT SDN BHD SDN BHD INDUSTRIES SERVICES SDN BHD SDN BHD SDN BHD

BOUSTEAD BOUSTEAD PHARMANIAGA BHIC PELITA TINJAR WELD COURT RESEARCH NAVALTECH SDN BHD SDN BHD CENTRE SDN BHD SDN BHD 24 BOUSTEAD Holdings Berhad GROUP SUSTAINABILITY POLICY Sustainability Report 2018 25 POLICY STATEMENT

At Boustead, we are committed to sustainable We provide a safe and healthy workplace environment development through simultaneous focus 03 for employees by adhering to global health and safety on economic, environmental and social standards. Moreover, we are dedicated to maintaining responsibilities with the intention of a productive workplace by ensuring that our work contributing to long-term growth in shared environment is safe from all occupational hazards while maintaining our zero-fatality rate and reducing our injury value. We define our commitment to sustainable rate. To this end, our employees regularly undergo training decision-making through the following on risk assessment and control, hazard identification and sustainability policy statements: emergency response. We enforce a zero-tolerance policy at the workplace to avoid any form of discrimination and violation of human rights while implementing social The Group looks to increase efficiency and productivity policies that nurture healthy communication between our 01 while improving our products and services by leading the employees. charge on innovation. We aim to ensure all our products and services are relevant to the needs of customers and Our people are our greatest assets and we are committed market demand through frequent customer engagements to creating a work environment where our employees and monitoring of market conditions. Keeping in mind the 04 are not only engaged and motivated, but strive to deliver need to conserve precious resources, we aim to optimise work to the best of their ability against the backdrop of our growth by carefully utilising available resources our core values of Respect, Integrity, Teamwork and while tapping on the knowledge and experience of Excellence. Respect for human rights is an integral part our employees as well as collaborations with the right of our responsibility as a corporate entity. We strongly partners. condemn forced labour and discrimination, while practising fair working hours and remuneration, providing We recognise the importance of environmental protection a safe workplace and environment as well as encouraging 02 for business sustainability and we are committed to freedom of association. business processes, practices and products that are environmentally friendly and work towards minimising We are focused on leveraging on the strength of our core the impact of climate change and reducing Greenhouse business units to address the specific needs of society. Gas (GHG) emissions. The Group aims to ensure that 05 As part of our social cause, we look to provide business all activities undertaken by the Group comply with all opportunities to local vendors and entrepreneurs. At applicable legal environmental requirements while the same time, we aim to promote healthy and active encouraging employees to embrace a sustainable culture lifestyles in the communities we operate within while in daily operations. conducting community health programmes that provide complimentary health education, counselling services and basic medical screening. We also look to provide learning opportunities to schools, universities and underprivileged families through the extension of financial aid, facilities improvement and the supply of items that aid in learning. 26 BOUSTEAD Holdings Berhad

SUSTAINABLE DEVELOPMENT GOALS

In 2015, the United Nations (UN) adopted 17 sustainable development goals (SDGs) as part of the 2030 Agenda for Sustainable Development, which endeavours to address the urgent environmental, political and economic challenges facing our world.

Mr. Stefan Priesner, UN Resident Coordinator delivering his keynote speech at Boustead Sustainability Day 2018 Sustainability Report 2018 27

The SDGs were built on the success of the Millennium The SDGs strategic plan focuses on key areas including poverty Development Goals (MDGs), which started a global effort in alleviation, democratic governance and peacebuilding, climate 2000 to tackle the indignity of poverty. The MDGs established change and disaster risk and economic inequality. measurable and universally-agreed objectives for tackling extreme poverty and hunger, preventing deadly diseases, and Achieving the SDGs will require the partnership of governments, expanding primary education to all children, amongst other private sector, civil society and citizens alike to ensure that we development priorities. leave a better planet for future generations. Hence, the Group has taken our first step to incorporate the SDGs into our Sustainability The SDGs came into effect in January 2016, and will continue to Management Plan. We have also mapped the progress of our guide United Nations Development Programme (UNDP) policy sustainability journey against the SDGs. and funding until 2030. As the lead UN development agency, UNDP is uniquely placed to help implement the Goals through its work in some 170 countries and territories. UNDP provides support to governments to integrate the SDGs into their national development plans and policies. 28 BOUSTEAD Holdings Berhad

GOVERNANCE STRUCTURE

The Group has established a governance structure to drive and Through this structure, we have established a clear direction manage sustainable practices across our various operations. and introduced well-defined policies for the Group’s sustainable development journey.

SUSTAINABILITY SUSTAINABILITY BOARD MANAGEMENT SECRETARIAT SUSTAINABILITY COMMITTEE COMMITTEE

TENDER COMMITTEE BOARD REMUNERATION COMMITTEE

GROUP BOARD OF MANAGING DIRECTORS DIRECTOR DIVISIONAL OPERATING DIRECTORS UNITS

BOARD RISK NOMINATING MANAGEMENT COMMITTEE COMMITTEE

MANAGEMENT HEAD OF AUDIT INTERNAL COMMITTEE BOARD AUDIT AUDIT COMMITTEE

Sustainability Report 2018 29

BOARD SUSTAINABILITY COMMITTEE

BOARD SUSTAINABILITY COMMITTEE MEMBERS

Name Meeting Tan Sri Dato’ Seri Lodin Wok Kamaruddin (Chairman)* 4/4 Dato’ Wira (Dr) Megat Abdul Rahman Megat Ahmad 4/4 Datuk Francis Tan Leh Kiah 4/4

* Board Member until 31 December 2018

The duties of the Board Committee are:

To provide oversight and input to the Management To receive updates from the Management Committee Committee on establishing Group objectives, principles as required and review the effectiveness of the Group’s and policies on sustainable development sustainability framework, policies and initiatives implemented

To oversee and approve the direction of the Group’s To approve the Sustainability Report sustainability framework as established and prior to publication implemented by the Management Committee 30 BOUSTEAD Holdings Berhad sustainability MANAGEMENT COMMITTEE

SUSTAINABILITY MANAGEMENT COMMITTEE MEMBERS

Name Role Entity

En. Fahmy Ismail (Chairman) Chief Operating Officer / Boustead Holdings Berhad Group Finance Director

Ms. Cheah Swee Choo Chief Financial Officer Boustead Properties Berhad

Pn. Nawal Hanafiah Senior General Manager, Boustead Holdings Berhad Group Human Capital Management

Tn. Hj. Sharudin Jaffar Director of Operations Boustead Plantations Berhad

Dr. Badarulhisam Abdul Rahman Deputy Director, Pharmaniaga Berhad Product Development

En. Ahmad Nordin Mohamad Chief Financial Officer Boustead Heavy Industries Corporation Berhad

En. Ahmad Fazril Fauzi Head, Group Internal Audit Boustead Holdings Berhad and Risk Management

Mr. Loon Peng Wai Financial Controller UAC Berhad

Ms. Wong Siew Yoon Financial Controller Boustead Petroleum Marketing Sdn Bhd (BHPetrol)

En. Fakril Zamani Mahmud (Secretariat) General Manager, Boustead Holdings Berhad Corporate Planning Sustainability Report 2018 31

The duties of the Management Committee for Sustainability Reporting are:

To establish and drive the implementation of the Group’s 01 sustainability framework.

To advise on action steps to be taken by the Group’s subsidiary 02 companies and business units, based on pertinent Economic, Environmental and Social considerations in areas where the Group operates and throughout the Group’s value chain.

To receive regular updates as required from the various business 03 units on sustainability progress and initiatives.

To review and report to the Board sustainability Committee on the 04 performance of the Group vis-à-vis meeting sustainability targets and goals, and on the management of sustainability-related risks.

To provide oversight and input on the development of the annual 05 Sustainability Report.

06 To recommend adoption by Board sustainability Committee. 32 BOUSTEAD Holdings Berhad

STAKEHOLDER ENGAGEMENT

STAKEHOLDER Engagement Type STAKEHOLDER CONCERNS FREQUENCY

Regulatory • Dialogue sessions • Legal and regulatory compliance • Quarterly Bodies • Meetings • Environmental stewardship • Correspondences • Anti-corruption • On-site inspections • Fair trade practices • Supporting local businesses • Partnership with stakeholders

Board of • Meetings • Maximising shareholder value • Quarterly Directors • Correspondences • Governance and operational strategy • Mitigating business risks • Investment and expansion strategy • Financial performance

Shareholders • General meetings • Return on investment • Quarterly & Investors • Quarterly reporting • Market presence • Annual Report • Industry benchmarking • Sustainability Report • Succession planning • Announcements • Sustainable earnings • Analyst briefings • Company reputation

Employees • Employee surveys • Work-life balance • Ongoing • Internal communications • Equal career development • Employee engagement opportunities initiatives • Rewards and remuneration • Sports & recreational • Healthy and safe work environment activities • Training and development • Profitability • Company vision and objectives Sustainability Report 2018 33

STAKEHOLDER Engagement Type STAKEHOLDER CONCERNS FREQUENCY

Customers • Dialogue sessions • Reliable supply chain and trade • Ongoing • Customer engagement processes surveys • Providing business opportunities • Feedback forms • Products and services

Suppliers • Periodic meetings • Licensing and certification • Ongoing & Business • Dialogue sessions • Fair trade practices Partners • Sustainability of the Company’s operations • Shared growth through partnerships • Emergency response management • Profitability and liquidity of Company • Energy efficiency • Customer satisfaction index

Local • Periodic meetings • Safety and security • Ongoing Communities • Dialogue sessions • Employment opportunities • Supporting local businesses • Healthy competition • Technological development • Development of infrastructure • Social and welfare contribution • Preservation of biodiversity and natural resources • Pollution • Waste management • Water conservation • Emergency response management 34 BOUSTEAD Holdings Berhad

MATERIALITY MATRIX

Strengthening Reaching Providing Business Multicultural Constant Out to

HIGH Opportunities Communities Engagement with Communities Stakeholders Products & Services Labour Issues Human Capital )

S Employment and Job Protecting the Environment Opportunities Development Health & Safety of Facilities and Eco-Friendly Infrastructure Products Increasing Asset Value

A K E HOLD ER( Minimising Delays in Emergency Delivery of Products ST Fertiliser Management Response and Services M E DIUM Management to to Waste Management a nc e t Infrastructure Problems I mpo r Economic Environment Social LOW LOW MEDIUM HIGH

IMPORTANCE TO GROUP Sustainability Report 2018 35

MATERIALITY ASSESSMENT

In 2017, we determined key material issues in relation to our Group’s business operations based on stakeholder priorities. In doing so, we were conscious of the need to continually review and assess the issues based on feedback and views from our stakeholder engagement initiatives.

In 2018, we were able to put in place a materiality assessment plan for future Sustainability Reports as follows:

Annually Every two Years

Review of materiality matrix and Complete revision of materiality matrix, material issues based on the risk, if necessary following comprehensive opportunities and impact of the Group. stakeholder engagement.

We reviewed our materiality matrix, taking into account the latest developments and have further streamlined our focus to the following six key issues:

SIX key issues

Products & Providing Protecting Health & Human Reaching Services Business the Enviroment Safety Capital Out to Opportunities Communities

Key Changes from Sustainability Report 2017:

• Business Continuity has been placed under Products & Services as the Management believes that both issues are interrelated • Legal and Regulatory Compliance has been incorporated into every material issue • A Performance-Driven Culture has been renamed to Human Capital to set a better context for the Group’s sustainability initiatives with regards to our workforce 36 BOUSTEAD Holdings Berhad

RISK MANAGEMENT

MATERIAL CONTEXT RISKS & OPPORTUNITIES OUR COMMITMENT ISSUE

As a leading conglomerate with • The Group has put in place a comprehensive risk To continuously invest our varied businesses across six management system to ensure that risks are contained resources in ensuring our products key sectors of the economy, the across all business sectors. This includes the risks and services are relevant and meet Group is focused on providing identified in the Group’s Statement on Risk Management the needs of our customers. products and services that are and Internal Control outlined in our Annual Report. not only innovative and of quality • Through a strong commitment to innovation, the Group’s Products & but also relevant to the needs of multitude of products and services remain relevant amidst Services the market. the fast-paced and competitive economic landscape. • In addition to a strong focus on R&D, the Group is also committed to the highest standards of integrity and professionalism in all business dealings which is maintained through stringent Code of Ethics and Conduct which states the ethical principles, values and behaviour expected of all employees across the Group. • R&D not only leads to more innovative products and quality solutions, it also helps mitigate the risk of losing relevance in the market. • As a reflection of our commitment, anti-corruption and prevention initiatives are regularly scheduled for employees. • In addition, the Group and our subsidiary companies are signatories to the Malaysian Anti-Corruption Commission (MACC) Corruption-Free Pledge. • The Group conducts the necessary internal and external audits to ensure we meet all applicable standards and requirements across all business units to ensure full compliance with all relevant rules and regulations.

Given the strong correlation • A strong and capable support system is instrumental in To strengthen communities and between the Group’s business ensuring the sustained growth of the Group. contribute towards the enrichment growth and strong support • Inefficient supply chain management and poor of our society by prioritising from local businesses within our performance of vendors and suppliers could delay flow opportunities given to local value chain, ensuring that these along the supply chain, affect productivity, cause delay in businesses. businesses are able to develop completion of tasks and projects, and increase the cost of and grow is a key priority for the products and services. Providing Group. • Without competent support, the Group would not be able Business to function optimally and it would ultimately impact our Opportunities value and profitability. • In addition, the Group’s support enables local businesses to function more effectively. Sustainability Report 2018 37

MATERIAL CONTEXT RISKS & OPPORTUNITIES OUR COMMITMENT ISSUE

As a diversified conglomerate, • Without the responsible utilisation of natural To be fully committed we are conscious of how much resources, there is the real risk of depletion, which to environmentally friendly the environment is a part of could lead to irreversible negative impact to the business practices towards the the Group’s overall business ecosystem. conservation and preservation ecosystem. Our goal has and • Climate change presents a substantial threat to the of the environment. will always be to continuously world with unprecedented potential impact making Protecting safeguard the environment carbon footprint reduction a key priority. the Enviroment while pursuing growth.

We are committed to Division Key Risks To ensure that our employees upholding high standards of operate in a safe and conducive occupational health and safety Plantation Exposure to palm harvesting tools work environment. across our multiple operations as well as oil extraction machinery in a manner that ensures the Property Exposure to building and health and safety of our people construction related risks Health & and those who are involved Heavy Exposure to heavy metals and Safety directly as well as indirectly in Industries heavy machinery our operations. Industrial Exposure to dust particles and heavy machinery utilised for manufacturing Pharmaceutical Exposure to chemical manufacturing related risks Trading Exposure to environment that deals with petroleum products

Building a team of engaged, • Given the highly competitive labour market, we To continuously create and highly motivated, diverse are conscious that creating a conducive work sustain an engaged work and empowered talent is a environment, providing attractive rewards as well as culture that attracts, retains, and fundamental driver of our remuneration are key selling points that require focus motivates our employees. continued success. in order to prevent talent attrition. • Moreover, a demotivated workforce will not be able to Human perform to their fullest potential. Capital • It is also important to arrest redundancies in human capital in order to avoid productivity lapses. • With a sound human capital approach in place, opportunity costs can be minimised.

Beyond economic growth, • Underprivileged communities, particularly those in To strengthen communities the Group is conscious of rural parts of the country often suffer from a lack of and contribute towards the the importance of enhancing resources and assistance. enrichment of our society by the lives of communities we • These communities are also often underequipped in integrating corporate social operate within. terms of basic community infrastructure. responsibility initiatives • The Group is committed to ensuring that we are able that encompass healthcare, Reaching to competently meet the objectives of our community education and welfare of Out to initiatives. Malaysians throughout our Communities business operations. 38 BOUSTEAD Holdings Berhad 03 Sustainability Report 2018 39

ECONOMIC

Products & Services 40 Providing Business Opportunities 46 40 BOUSTEAD Holdings Berhad

PRODUCTS & SERVICES

DECENT WORK AND ECONONIC GROWTH OVERVIEW

STAKEHOLDERS CONCERNED

Board of Shareholders Directors & Investors

As a market leader in the diverse economic sectors our business units are involved in, the Group Employees Customers is committed to delivering products and services that drive our progress towards sustainability while contributing to the sustainability journey of our various stakeholders. We Suppliers Local & Business Communities continually invest in research Partners and development (R&D) in order to meet the high requirements expected of the Group’s products and services. Sustainability Report 2018 41

INDICATORS

Economic Value Generated (RM mil) Economic Value Distributed (RM mil) Economic Value Retained (RM mil) 53.1 8,371 10,238 10,186 8,659 10,233 10,770 5 (288) (584)

FY2016 FY2017 FY2018

Details FY2018 FY2017 FY2016 RM mil RM mil RM mil Economic Value Generated (A) 10,186 10,238 8,371 Operating Expenses 9,589 8,791 7,138 (including Cost of Goods Sold) Staff Costs 702 760 766 Payment of Finance Costs 272 254 294 Payment of Dividends 101 223 305 Payment of Tax 100 198 151 Community Investments 6 7 5 Economic Value Distributed (B) 10,770 10,233 8,659 Economic Value Retained (A - B) (584) 5 (288)

Formula based on reporting requirements from GRI 201-1 Economic Performance 2016

Investment in Research & Development (RM mil)

62 Heavy Industries 30 Plantation 15

41 Pharmaceutical 14 Finance & Investment 3 38

2016 2017 2018 42 BOUSTEAD Holdings Berhad

OUR POSITIVE IMPACT

PROPERTY PHARMACEUTICAL TRADING & INDUSTRIAL

• Drives higher gross • The Pharmaceutical • Facilitating property sector investments Division’s R&D is focused on • Job opportunities and • Encourage customer providing high quality, safe developing entrepreneurs spending leading to and efficacious products to • Encouraging small economic growth the pharmaceutical market businesses and traders • Increasing asset base in • A constant commitment • Constructing high quality local homes to advancement allows commercial centres that will • Multiplier effect on the Group to be a segment encourage economic activity surrounding businesses leader, driving innovative and communities change in the industry for the overall benefit of the sector, the Group as well as patients HEAVY INDUSTRIES PLANTATION • The Heavy Industries Division’s R&D initiatives • The sustainability of the FINANCE & INVESTMENT contribute to economic Plantation Division’s business sustainability through a practices has a positive impact focus on innovation and the on economic growth for the • Boosting investment adoption of high technology Group and the nation as well • Supporting tourism activities to deliver state-of-the-art as the livelihoods of the • Job opportunities products and services larger community • Knowledge transfer • Safeguarding naval • One of our key sustainability • Improving quality of defence systems commitments is to ‘produce higher education • Security of Malaysian waters more with less’ via our • Curbing illegal trade and continued investment in R&D other illicit businesses via and transfer of technology at Malaysian waters our plantations • Producing more with less enables us to leave a smaller footprint on the environment, as a result of higher productivity per unit of land use Sustainability Report 2018 43

Newly launched double storey terrace houses at Taman Mutiara Rini, Johor Bahru 44 BOUSTEAD Holdings Berhad

NEW PRODUCTS & SERVICES

PROPERTY

• Launched 419 units of double storey terrace houses in Taman Mutiara Rini, Johor • 448 units of condominiums in Jalan Cochrane, Kuala Lumpur (One Cochrane Residences)

TRADING & INDUSTRIAL

• Decowood Premium (1st pigment fibre cement decking in Malaysia which reduces scratch visibility)

PHARMACEUTICAL

KEY PRODUCTS • Citrex Ginkgo Biloba 120mg Tablet • Citrex Ginkgo Biloba 40mg Tablet • Actimol 650mg • ActiMol menstrual, Paracetamol 500mg and Pamabrom 25mg • Leucovarine Calcium injection 50mg/ 5ml UAC’s latest product, Decowood Premium • Bupivacaine inj. 0.5% in 20ml • Perozin • Circabor • Dandee • Baby Nadif

SERVICES • Long-term medication supply services to Boustead employees Sustainability Report 2018 45

Management Approach

hEAVY INDUSTRIES PHARMACEUTICAL PLANTATION

The Group’s involvement in the The Pharmaceutical Division is focused on The Plantation Division works in tandem construction of Littoral Combat Ships R&D efforts aimed at the development of with Applied Agricultural Resources Sdn (LCS) and Littoral Mission Ships (LMS) for high-quality cost-competitive pharmaceutical Bhd (AAR) on R&D to improve plant the Royal Malaysian Navy (RMN) through products of various dosage forms as well as breeding and seed production, which its Heavy Industries Division provides for various therapeutic segments. Improving ensures that we utilise the latest planting the Group with various opportunities to the sustainability of products through materials in our estates across the country. promote innovation and the adoption lifecycle management is a key commitment As a result of the Group’s extensive long- of high technology in shipbuilding. In for the Group. One of our major focuses for term R&D into breeding, we are now addition, the Group is jointly involved in 2018 has been our continuous research able to clone candidate palms with good conceptual and basic design development into the development of new products that oil yield potentials and other desirable for shipbuilding, which involves transfer will assist in wound healing. In 2018 alone, characteristics utilising tissue culture to of technology and know-how from the Group registered almost 40 products produce ramets with high oil content and industry experts. The Group’s newly locally and internationally as part of the FFB yield. Some of the Group’s clonal gained knowledge and experience in Group’s 10-year development programme to palms boast high oil to bunch ratios of shipbuilding are subsequently utilised for formulate over 250 new products of various up to 34%. Our ability to produce more follow-on works in terms of in-service dosage forms. The Group’s pharmaceutical with less is clearly demonstrated by the support of ships post-delivery as well as arm is also developing phytomedicines high oil extraction rate (OER) of two Maintenance, Repair and Overhaul (MRO) with scientifically proven medicinal claims, of our most productive palm oil mills, services. The Heavy Industries Division is Kacip Fatimah and Patawali. The Group’s Segaria and Sungai Jernih. From 2009 also undertaking R&D efforts to improve phytomedicine R&D is set to boost the onwards, both mills have consistently the design of the second batch of New appeal of local herbs as phytomedicine. surpassed the national average of their Generation Patrol Vessels (NGPV) for the respective regions. RMN. 46 BOUSTEAD Holdings Berhad

PROVIDING BUSINESS OPPORTUNITIES

DECENT WORK AND ECONONIC GROWTH OVERVIEW

Suppliers, vendors, contractors, customers and entrepreneurs are STAKEHOLDERS CONCERNED key stakeholders that play a crucial role in our business activities. By providing employment and business opportunities, we are able to support the development of surrounding communities. In addition, through Board of Shareholders Directors & Investors our various vendor development initiatives, we foster the creation and development of viable ecosystems to support the business activities of subsidiaries, associate companies and joint venture companies. The spillover Suppliers benefit of our various business Customers & Business Partners operations and its contributions to local businesses has a positive impact on the Malaysian economy. Sustainability Report 2018 47

INDICATORS

NUMBER OF ENTREPRENEURS Note 1 NUMBER OF SUPPLIERS Note 2

Pharmaceutical Pharmaceutical Close to 300 1,899 Property PROPERTY 1,014 4,362 Trading & Industrial Heavy Industries 240 2,984

Note 1 Note 2 Local entrepreneurs benefiting directly from the Divisions’ specific entrepreneurial Drugs and medical services companies, food and beverage suppliers, cleaning programmes via alliances with pharmacies, tenancy in malls and hotels; and Dealer companies and vendors providing shipbuilding and ship repair services working Owned-Dealer Operated (DODO) petrol stations. with the specific Divisions.

Heavy Industries Vendor Development Programme (VDP) Value Generated

RM216 mil 2016-2018 2,211 RM104 mil Total number of contracts awarded

RM30 mil 1,471 4,297

Total RM million value 615 350

2016 2017 2018 48 BOUSTEAD Holdings Berhad Management Approach

PHARMACEUTICAL HEAVY INDUSTRIES PLANTATION

As part of the Pharmaceutical Division’s The Heavy Industries Division’s operations Our Plantation Division prioritises commitment to provide opportunities for facilitate a vibrant ecosystem of vendors its surrounding communities in growth and upskilling to local vendors and including marine industry and support both employment as well business entrepreneurs, the Division has several service enterprises consisting of logistics opportunities. Over 200 landowners successful programmes in place including companies, equipment suppliers, marine have been awarded a variety of contract its Bumiputera Vendor Development engineering service providers, naval work over the years at all six of the Programme, Bumiputera Pharmacy architects as well as steel, wood and plastic Group’s estates in Kanowit, Sarawak. In Development Programme as well as the manufacturers, amongst others. Vendors addition, in line with the Group’s efforts to RoyalePharma Alliance Programme. As are key stakeholders of the Group, providing encourage entrepreneurship, the Division part of this support structure, local vendors crucial support to our business activities. also contributes to the growth of farmers’ and entrepreneurs are provided with much The Division is committed to encouraging markets, sundry shops and canteens in needed training to improve their service as the growth of vendors especially amongst both Sabah and Sarawak. In line with the well as product quality. In addition, in order SMEs by recruiting and developing them Group’s initiative to boost smallholder to boost the sustainability of vendors further, to become reliable and competent local development, the Division purchases vendors are provided with a list of contacts vendors in the defence, shipbuilding as well crops from smallholders with over 13% of for common items or services which can as ship repair industries. The Division’s the Division’s total external crop coming be procured at a cheaper price point. Our Vendor Development Programme assists from smallholders surrounding our mills. Pharmaceutical Division also assists vendors in nurturing the abilities and expanding the to engage with Government agencies in businesses of 31 out of 2,984 registered relation to application for grants as well as vendors. The Division is keen to encourage transfer of technology. the creation of new entries in high-tech industries such as marine, defence & Annual site visits to vendor plants are also security, aviation as well as oil and gas. arranged to facilitate discussions as well as assist vendors with problem solving. Vendor performance is also monitored in terms of product delivery and quality on a quarterly basis through the Division’s Quarterly Vendor Excellence Monitoring Programme (QVEMP) report. By monitoring vendor performance, the QVEMP acts as an incentive for vendors to perform at their best. It also creates a sense of healthy competition amongst the vendors. Sustainability Report 2018 49

One of the vessels in Royal Malaysian Navy’s fleet maintained by the Heavy Industries Division 50 BOUSTEAD Holdings Berhad

The Sustainability Management Committee launching Boustead Sustainability Day 2018 04 Sustainability Report 2018 51

ENVIRONMENT

Protecting the Environment 52 52 BOUSTEAD Holdings Berhad

PROTECTING THE ENVIRONMENT

OVERVIEW The Group has identified the following Divisions for review given the nature of the businesses these units are involved in and their potential:

Division Business Operations

STAKEHOLDERS CONCERNED Oil palm plantations Plantation & mills

Property development & Property investment

Regulatory Bodies Heavy Industries Shipbuilding and ship repair

Manufacturing of building Industrial materials

Marketing and distribution of Customers Trading petroleum products

Manufacturing and distribution Pharmaceutical of medicine

Local Communities Sustainability Report 2018 53

INDICATORS

The Group has taken the approach to measure our environmental consumption and report the significant Divisions and Business Units that contribute to carbon emissions during our baseline year of reporting. We will be reporting on Scope 1 and 2 emissions as below:

SCOPE 2

INDIRECT SCOPE 3

INDIRECT SCOPE 1 Purchased Electricity Business for Own Use Travel DIRECT

Outsourced Activities Waste Disposal Company Owned Vehicles

Production of Fuel Combustion Product Use Contractor Purchased Owned Materials Vehicles

Source: Adapted from GHG Protocol Corporate Standard Accounting and Reporting Standard 54 BOUSTEAD Holdings Berhad

INDICATORS

The Group has identified two main areas which are key sources of carbon emissions as follows:

KEY SOURCES OF CARBON EMISSIONS

Note 1 Total Carbon Emissions (tCO2-e)

138,088.18 10,428.77 2018 2018 Electricity 132,744.08 9,534.80 Petrol from Grid 2017 2017 Consumption

CONSUMPTION/INTENSITY

Indicators 2018 2017 kWh kWh

Electricity consumption by business segment Note 2 • Pharmaceutical 43,111,547 37,362,161 • Heavy Industries 8,336,687 8,469,618 • BHPetrol 846,436 855,490 • UAC 38,929,733 36,238,511 • Boustead Curve & e-Curve 29,106,583 30,404,926 • Boustead Hotels 40,342,818 39,844,195 • Plantations 5,133,055 6,190,064

Indicators 2018 2017 litres litres

Petrol consumption by business segment Note 2 • Pharmaceutical 45,304 23,542 • UAC 4,335,826 3,973,171 • Boustead Hotels 18,503 20,523 • Plantations 46,802 43,536 Sustainability Report 2018 55

Indicators Note 1 2018 2017 tCO2-e tCO2-e

Electricity consumption by business segment Note 3 • Pharmaceutical (per 1,000 kg output) 4.910 4.370 • Heavy Industries (per RM million revenue) 4.635 3.776 • BHPetrol (per 1,000 metric tonne) 0.937 0.994 • UAC (per 1,000 standard metre) 0.978 0.948 • Boustead Curve & e-Curve (per 1,000 visitors) 0.702 0.766 • Boustead Hotels (per 1,000 rooms sold) 111.661 84.773 • Plantations (per 1,000 FFB MT) 4.517 4.712

Petrol consumption by business segment Note 3 • Pharmaceutical (per 1 million kg output) 16.210 8.650 • UAC (per 1,000 standard metre) 0.342 0.326 • Boustead Hotels (per 1,000 rooms sold) 0.161 0.137 • Plantations (per 1,000 FFB MT) 0.129 0.104

tCO2-e = Total Carbon Emissions measured in tonne (equivalent to one Global Warming Potential) Note 1 Note 2

The conversions into tCO2-e is according to the MYCarbon Greenhouse Gas (GHG) Total consumption of electricity (kWh) and petrol (litres) per annum. Reporting Guidelines published by Ministry of Natural Resources and Environment (NRE) Malaysia in partnership with United Nations Development Programme (UNDP) Note 3 Malaysia as at 18 April 2014. Intensity of electricity and petrol consumption per unit of output produced by the

particular Division / Business Unit measured in tCO2-e. 56 BOUSTEAD Holdings Berhad Management Approach

PLANTATION PROPERTY

The principle of sustainable agriculture has The Group is committed to zero burning We aim to nurture and instil sound been ingrained in our Plantation Division’s at all our plantations. In line with environmental practices amongst our operations through the adoption of several this commitment, our Zero-Burning employees through the implementation sustainability policies including, Best Technique, which involves the mechanical of sustainable policies at the workplace Environmental Management Practices, pulverisation of oil palm biomass, is including recycling, energy saving and Good Agricultural Practices (GAP) and an environmentally friendly technique rainwater harvesting. The Property Good Milling Practices (GMP) to ensure that contributes to sustainable palm Division boasts a Green Building Index that sustainable agricultural practices oil production through the recycling of Gold Rating and Multimedia Super that promote environmental protection palm biomass nutrients from pulverised Corridor Status office tower in the newly- and conservation of biodiversity are biomass, thereby producing zero waste. completed Nucleus Tower in our Mutiara an intrinsic part of the Division’s daily Damansara township. operations. The Division is committed to the full utilisation of all oil palm and mill by- The protection and conservation of two products through the repurposing of empty of the most important natural resources fruit bunches, decanter cakes and sludge for a plantation, soil and water is a key cakes as organic mulch or fertiliser in the concern for the Plantation Division. fields. This in turn reduces the requirement HEAVY INDUSTRIES As part of our GAP and in line with our for mineral fertilisers. In line with our GAP, focus to conserve natural resources as we undertake the cultivation of vigorous We practise zero burning at all our well as prevent soil degradation and leguminous cover-crop at the time of shipyards. In addition, all our shipyards environmental pollution, the Group’s replanting which results in minimum top are equipped with controls in place to estates have constructed conservation soil losses, while enriching the soil with prevent oil leakage as well as water terraces at 30-meter intervals along the biological nitrogen fixation and microbial spillage in line with environmental contour of slopes between 6° and 10°. diversity in addition to improving soil regulations to prevent pollution. All For slopes above 10°, terrace planting is structures with better organic matter and equipment, machineries and vehicles utilised to reduce the length of the slope, reduced soil temperature. used at shipyards and other premises which then intercepts surface runoff, are maintained on a regular basis to thereby minimising soil erosion. We are able to achieve a reduction in GHG minimise emissions and maximise emissions as a result of our biogas plant at energy efficiencies. The segregation the Telok Sengat Mill in Kota Tinggi, Johor of waste and scrap is implemented which captures 1,566,088 m³ of biogas per to ensure that no rubbish or waste is annum, thereby minimising the Group’s disposed of into the sea. carbon footprint. Sustainability Report 2018 57

trading & industrial

BHPetrol has various controls in place to minimise environmental impact. This includes an overspill protection system when filling road tankers at our terminal as well as measures to prevent and contain any spillage. To minimise discharge and disposal of sludge, we installed a water separator tank for water drainage, as well as an oil interceptor at our terminals and service stations. To detect any leaks in the underground pipelines, we installed leak detectors at our service stations. Our service station dealers also monitor their stock balance on a daily basis to ensure there are no leakages. In addition, we are fully compliant with waste disposal regulations by the Department of Environment and have a secure scheduled waste storage area.

PHARMACEUTICAL

Ensuring the optimal utilisation of resources is a key priority at our Pharmaceutical Division. Resources including electricity, water, paper and other materials are utilised as efficiently as possible. Environmentally-friendly measures are implemented across the Division in order to reduce our carbon footprint including recycling, energy saving, waste reduction, anti-pollution and water harvesting.

The newly completed Nucleus Tower in Mutiara Damansara is accredited with GBI and MSC status 58 BOUSTEAD Holdings Berhad

BHPetrol Orange Run raising funds for charitable causes 05 Sustainability Report 2018 59

SOCIAL

Health & Safety 60 Human Capital 64 Reaching Out to Communities 68 60 BOUSTEAD Holdings Berhad

HEALTH & SAFETY

OVERVIEW

STAKEHOLDERS CONCERNED

Board of Regulatory Directors Bodies Lack of attention to health, safety and environment (HSE) issues at the workplace and the resulting potential harm in terms of accidents, injuries and fatalities can negatively impact the welfare of Employees Customers staff as well as their families. It could also disrupt the flow of work and reduce productivity levels thereby affecting the entire ecosystem depended on the Group. In addition, customer confidence in Boustead and our reputation as an Suppliers Local & Business Communities employer of choice are also on the Partners line if safeguards are not in place to ensure that optimal health and safety requirements are met at the workplace. Sustainability Report 2018 61

INDICATORS

2018 2017 2016

Group-wide injury rate 3.50 4.61 4.80 (per 1,000 employees) Note 1 Group-wide fatality rate 0 0 0

Total loss time injury (LTI) hours Note 2 4,064 4,429 Not Available

Note 1 The injury rate is based on reported serious injuries which required hospitalisation.

Note 2 The LTI assumes standard working hours of 8 hours per day.

National OccupationAL 3 Accident & Fatality Rate 2

The Group is aware of the National 1 Occupational Accident & Fatality Rate and strives to continuously reduce our injury 0 rate and maintain our zero fatality rate. 2017 2016 2015 2014

Accident Rate Fatality Rate

Source : Department of Occupational Safety & Health Malaysia

Note Occupational Accident Rate per 1,000 workers and Occupational Fatality Rate per 100,000 workers 62 BOUSTEAD Holdings Berhad Management Approach

PLANTATION PROPERTY

Dedicated Safety and Health Officers who oversee overall health and safety provisions Ergonomics and safety at workplace have been appointed for the Peninsular Malaysia, Sabah and Sarawak regions. are primary concerns for the Division. Awareness programmes are organised for staff across the board pertaining to the In particular, the hotel business sees importance of safety and health practices in the workplace every year along with multiple HSE programmes including annual training programmes organised across all our estates and mills. training sessions for chemical handling, fire drill and first aid training. To facilitate our initiatives, OSHA committee meetings are held every month while PHARMACEUTICAL emergency response team meetings are held annually. In line with its commitment to OHSAS 18001 Occupational Health and Safety Management Certification, the Pharmaceutical Division has set in place various safety TRADING & INDUSTRIAL related campaigns including the Do It Right Always campaign focused on developing the right culture on safety across the board. The Division’s Do It Right Always week UAC World OSH Day was organised by was organised to spread awareness as well as provide exposure and training to the Division to promote a safe and healthy all employees. workplace environment. In collaboration with DOSH, the Division held a weeklong The Division collaborated with various agencies to conduct trainings including with the programme to inculcate the importance Social Security Organisation (SOCSO) on claim management, the National Institute of individual responsibility in adhering of Occupational Safety and Health (NIOSH) on Employee’s Health and Safety as well and complying with OHS matters. as the Department of Environment (DOE) on environmental awareness. In addition to Activities included departmental the Do It Right Always campaign, various initiatives were organised for staff in 2018 toolbox talk, Hazard Identification, Risk including environmental health and safety assemblies, road safety talks, first aid Assessment and Determining Control training, fire drills, chemical compatibility programmes, machinery safety assessment, (HIRADC) briefing as well as workplace Quality, Environmental, Safety and Health week and workplace inspections. audits. Safety committee meetings are also undertaken on a regular basis.

HEAVY INDUSTRIES

The Heavy Industries Division is committed to the objectives Compliance with the relevant HSE national laws and regulations of OHSAS 18001. The Division’s HSE Unit continually analyses as well as other related requirements are high priority for the critical competencies to ensure compliance with confined Division with regular audits conducted in addition to continual space requirements. The Division also conducted programmes communication with authority bodies including the Department to prevent injuries, disabilities, fatalities, ill health, near misses, of Occupational Safety and Health Malaysia (DOSH) and DOE. property damages as well as environmental damages. The Division places importance in ensuring that employees participate in the HSE programmes through regular audits as well as HSE introduction sessions for newcomers. HSE objectives are reviewed frequently with new objectives identified through the HSE Unit’s continuous improvement programme. Sustainability Report 2018 63

Adhering to high safety standards at one of our shipyards 64 BOUSTEAD Holdings Berhad

HUMAN CAPITAL

OVERVIEW

At Boustead, business sustainability and growth are premised on a STAKEHOLDERS CONCERNED strong commitment to a thriving human capital culture. The Group’s performance-driven culture is anchored on core values of respect, integrity, teamwork and excellence. Employees are Board of empowered with multifold career Regulatory Directors Bodies development opportunities. In addition, every year, we expand our investment in our employees through attractive remuneration packages as well as relevant rewards. Our human capital Employees Customers strategy, commitment to high quality of work and conducive working environment allows the Group to engage, attract and retain bright minds as an employer of choice. Local Communities Sustainability Report 2018 65

INDICATORS

TOTAL EMPLOYEES GENDER COMPOSITION

2018 2018 2018 17,152 32% 68% 2017 2017 2017 17,265 30% FEMALE MALE 70%

AGE COMPOSITION Investment in Learning & Development 55% 19% 20% 55% RM RM

16% Under 36 years old 5 4 16% 36-40 years old Million Million 41-50 years old Above 50 years old 2018 2017 10% 2018 9% 2017

Comparative entry level salaries

Executive*

Non-Executive* Non-Executive* 1.16 1.20 1.23 1.28 2018 2017 1.32 1.31 2018 2017 2018 2017

* The entry level executive rate was averaged using salary data from pharmaceutical, heavy industries, trading, industrial, hospitality and plantation industries extracted from JobStreet Salary Report 2018 whereas the non-executive salary rate is based on minimum wage regulations. 66 BOUSTEAD Holdings Berhad

Management Approach

We are conscious of the importance of conducive communication in the workplace. as such, open interaction between employees and management is highly encouraged.

Our Divisions are involved in multiple sectors of the Malaysian economy where we face strong competition for skilled workforce. To this end, we are committed to empowering employees and ensuring that they are provided with opportunities to continuously enhance capabilities through various talent development and training programmes. Apart from internal training programmes, employees also took part in external training, seminar and trade fair. All training initiatives are reviewed and appraised to determine relevance to job requirements as well as competency development.

We are conscious of the importance of conducive communication in the workplace. As such, open interaction between employees and management is highly encouraged. Employee engagement is achieved through various communication channels, comprising periodic town hall meetings, social media platforms and annual performance reviews. These engagements allow us to strengthen employee relations, keep employees updated as well as respond to employee concerns and feedback. Sustainability Report 2018 67

Apart from active engagements with employees through formal platforms, we are heavily invested in interactive engagement activities that propagate a sense of camaraderie amongst employees. Various programmes were initiated during the year including festive gatherings, celebrations and teambuilding exercises.

Employees are recognised and rewarded for their contribution to the Group’s success. In addition to a solid performance-based incentive programme, the Group also honours employees with encouraging awards for overall excellence in the workplace, diligence as well as long service.

We strive to offer employees a fair and competitive compensation together with attractive benefits and allowances. We understand the many responsibilities our employees may have outside the workplace and over the years, we have tailored our benefits to meet these needs including providing meal subsidies, allowances, tuition subsidies, welfare benefits, marriage leave and paternity leave as well as Hajj leave, amongst many others. 68 BOUSTEAD Holdings Berhad

REACHING OUT TO COMMUNITIES

OVERVIEW

As a responsible corporate citizen, the Group is dedicated to preserving a legacy centred on improving the lives of our surrounding communities. To this end, we are conscious of the need to direct our STAKEHOLDERS CONCERNED resources in a way that provides those in need with practical support. This will consequently enable people to improve their own lives, thereby helping communities achieve real and lasting social Shareholders Employees & Investors development. Moreover, by empowering communities, we foster greater harmony and cooperation between the surrounding community and our Local business units, which ultimately Customers Communities leads to sustainable growth for the Group.

Senior Management repairing homes of the needy Sustainability Report 2018 69

KEY STATISTICS ON HOUSEHOLD INCOME & EXPENDITURE 2016 MALAYSIA*

5 out of 10 households received RM5,228 per month or less*

Median INCOME MEAN INCOME INCIDENCE OF POVERTY RM5,228 2016 RM6,958 decreased from 0.6% in 2014 to RM4,585 2014 RM6,141 6.6%** 6.2%** 0.4% in 2016

Median & Mean household income by household group* B40 M40 T20

2014 2016 2014 2016 2014 2016 Median household Median household Median household income income income RM2,629 RM3,000 RM5,465 RM6,275 RM11,610 RM13,148

Mean household Mean household Mean household income income income RM2,537 RM2,848 RM5,662 RM6,502 RM14,305 RM16,088

* Source : Department of Statistics Malaysia ** Compounded Annual Growth Rate (CAGR) 70 BOUSTEAD Holdings Berhad

INDICATORS

Total Amount Contributed Towards B40 Group

7% 6% 4% 8% 4,571 85% Scholarships to children of armed forces RM6 mil RM 5 mil INITIATIVE VALUE 90% RM 90,141 Education Health Welfare 49 6,000 2018 2017 PROGRAMMES participants 232 450 cERAH CERIA BERSAMA GRADUATES TRAINED PROGRAMME STUDENTS

RM 40,000 DISBURSEMENT OF FUNDS FOR ORANGE RUN PINTAR PROGRAMME CONTRIBUTED DI CELAH-CELAH KEHIDUPAN RM30,000 DCCK PROGRAMME TO CHARITIES PER RM 600,000 ANNUM Sustainability Report 2018 71

Management Approach

Our team bringing cheer to children with special needs

The Pharmaceutical Division’s community health programme, Through Yayasan LTAT, the Group provided scholarships to Skuad Operasi Sihat provides accessible healthcare to the children of Armed Forces personnel who excelled in their general public in suburban and rural areas, including to Orang examinations during the year. We also sponsored the education Asli communities through health education, counselling services of five refugee students at University of Nottingham Malaysia. as well as basic medical screening on a purely complimentary The Group’s various Back to School programmes saw our basis. different business units assisting schools and underprivileged families with monetary assistance as well as essential school In 2018, as part of the Di Celah-Celah Kehidupan (DCCK) items. Understanding the importance of keeping our children safe, programme, we assisted two needy families in Rantau Panjang, the Group undertook the Cerah-Ceria initiative for primary school Kelantan by repairing their homes. We also assisted Armed children to inculcate positive road safety habits amongst primary Forces veterans as part of the DCCK programme. The Group also school students. donated fibre cement boards to help reconstruct the roofing of homes of less fortunate members of the public in Perak that were During the year, the Boustead Graduate Internship Programme damaged by heavy rain and strong winds. empowered young talents to better their career prospects and enhance employability through practical on-the-job training. We are conscious of the importance of access to quality Additionally, a plant tour was organised at Pharmaniaga education and its far-reaching impact on not only individuals Manufacturing Berhad in Bangi for schoolchildren to expose but more importantly, the community as well as the nation. them to the medicine manufacturing processes. They were also Over the past year, the Group contributed to empowering young briefed on various career opportunities available within the Malaysians through various education related initiatives including pharmaceutical industry. sponsorship for schools, financial assistance for underprivileged youths, sponsorship of essential school items as well as funding of school activities. FOR MORE INFO PLEASE CONTACT

Boustead Sustainability Secretariat Corporate Planning Department 20th Floor, Menara Boustead 69 Jalan Raja Chulan 50200 Kuala Lumpur

[email protected] 03-21419044 ext. 617 / 625 www.boustead.com.my Boustead Sustainability

WHISTLEBLOWING Our whistleblowing channels are as below:-

1-800-800-2040 [email protected]

REPORT SUSTAINABILITY 2018

BOUSTEAD HOLDINGS BERHAD 3871-H SUSTAINABILITY REPORT 2018 SOCIAL ENVIRONMENT ECONOMIC 3871-H BOUSTEAD HOLDINGS BERHAD Menara Boustead 28th Floor, 69 Jalan Raja Chulan Lumpur 50200 Kuala Malaysia www.boustead.com.my