About Sime Darby
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COVER RATIONALE The impact of the whole is far greater than the sum of its parts. As an organisation grounded in the principles of sustainable development, this is a truth we understand and a responsibility we accept. Our operations span across almost 30 countries, employing more than 100,000 people, but the impact of what we do and how we do it, ripples far beyond. This year, in our maiden effort at integrated reporting, we have tried to capture those ripples as we strive towards continuous improvement in everything we do. ABOUT THIS REPORT This Report represents the Group’s first step towards integrated reporting. The Group is adopting this evolving area of best practice as part of our journey and commitment towards sustainability, transparency and effective corporate reporting. This Report acknowledges the relationship between economic, environmental and social considerations and the impact on the Company while it pursues sustainable value creation. Therefore, the performance metrics for this Report will not only cover financial capital but also other facets based on salience and materiality. This Report aims to provide: a) An insight as to how our strategic objectives create and sustain value for us and our various stakeholders b) How we have performed against our targets c) An indication of where we aim to be and how we plan to meet and address these targets, expectations and challenges This Report should be read in conjunction with the Sime Darby Plantation Division Sustainability Report 2014 and the Yayasan Sime Darby Annual Report 2014. Further information can also be found on our website: www.simedarby.com ABOUT SIME DARBY Sime Darby is a Malaysia-based diversified multinational involved in key growth sectors, namely, plantation, industrial equipment, motors, property and energy & utilities. Founded in 1910, its business divisions seek to create positive benefits in the economy, environment and society where it has a presence. Sime Darby is committed to building a sustainable future for all its stakeholders. It is one of the largest companies on Bursa Malaysia with a market capitalisation of RM58.6 billion (USD 17.9 billion) as at 30 June 2014. www.simedarby.com MISSION VALUES 5KOG &CTD[ KU EQOOKVVGF VQ FGXGNQRKPI C YKPPKPI INTEGRITY portfolio of sustainable businesses Uphold high levels of personal and professional values in all our business interactions and decisions 9G UWDUETKDG VQ IQQF EQTRQTCVG IQXGTPCPEG CPF JKIJ ethical values RESPECT AND RESPONSIBILITY Respect for the individuals we interact with and the 9G EQPVKPWQWUN[ UVTKXG VQ FGNKXGT UWRGTKQT ¯PCPEKCN environments that we operate in (internally and externally) returns through operational excellence and high and commitment to being responsible in all our actions performance standards EXCELLENCE 9G RTQXKFG VJG GPXKTQPOGPV HQT QWT RGQRNG VQ TGCNKUG Stretch the horizons of growth for ourselves, our their full potential businesses and our people through our unwavering ambition to achieve outstanding personal and business results ENTERPRISE Seek and seize opportunities with speed and agility, VISION challenging set boundaries 6Q DG C NGCFKPI OWNVKPCVKQPCN EQTRQTCVKQP FGNKXGTKPI sustainable value to all stakeholders CONTENTS ABOUT SIME DARBY PERFORMANCE REVIEW & PROGRESS 006 Sime Darby Group Overview 093 Sime Darby Group Performance Overview – Group Financial Review 007 Corporate Information – Group Safety and Health Review – Group Carbon Management Review – Group Process Improvement Review FOREWORD TO SHAREHOLDERS – Group Social Performance Review – Sustainable Thought Leadership 010 Chairman’s Message 117 Divisional Operations Review 014 President and Group Chief Executive’s Review – Plantation – Industrial – Motors CREATING AND ENSURING SUSTAINABLE – Property VALUE CREATION – Energy & Utilities – Other Businesses 017 5-Year Group Strategy Blueprint 020 Group Business Model FINANCIAL REPORTS 021 Global Trends Impacting Our Businesses 164 Statement on Directors’ Responsibility 022 Creating Value Through Sustainability 165 Reports and Financial Statements and Corporate Responsibility – Principles and Management Approach OTHERS – Progress to Date 368 Notice of Annual General Meeting – Stakeholder Engagement 374 Analysis of Shareholdings – Material Sustainability and 377 Additional Compliance Information Corporate Responsibility Issues 380 Share Price Movement and Financial Calendar GOVERNANCE & STEWARDSHIP 381 Properties of the Group 032 Statement on Corporate Governance INDEX & ANNEXES 064 Profile of Directors 398 Notice to Shareholders Under the Personal Data 072 Management Team Profile Protection Act 2010 077 Report on the Governance and 400 United Nations Global Compact (UNGC) Audit Committee Communication on Progress 084 Statement on Risk Management and 401 Global Reporting Initiative Content Index Internal Control – Enterprise Level Risks 404 Independent Assurance Report Form of Proxy Notice to Proxies Under the Personal Data Protection Act 2010 006 ANNUAL REPORT 2014 SIME DARBY GROUP OVERVIEW SIME DARBY TODAY A Diversified Multinational with 5 CORE BUSINESSES in Key Growth Areas EMPLOYEES PROFIT CONTRIBUTION OF EACH DIVISION (FY2014) Over Others 103,507 45% 24% 15% 14% 1% 1% COUNTRIES AND TERRITORIES 26 Australia Brunei China Christmas Germany Hong Kong Darussalam Island India Indonesia Japan Liberia Macau Malaysia Maldives New New Papua Singapore Solomon Caledonia Zealand New Guinea Islands South South Taiwan Thailand The United Africa Korea Netherlands Kingdom United Vietnam States of America REVENUE PROFIT BEFORE NET EARNINGS MARKET FY2014 INTEREST AND TAX FY2014 CAPITALISATION * FY2014 RM RM43.9 RM4.2 RM3.35 RM58.6 BILLION BILLION BILLION BILLION * As at 30 June 2014 SIME DARBY BERHAD 007 CORPORATE INFORMATION AS AT 29 SEPTEMBER 2014 BOARD OF DIRECTORS REGISTERED OFFICE Tan Sri Dato’ Abdul Ghani Othman VJ(NQQT9KUOC5KOG&CTD[ Independent Non-Executive Chairman Jalan Raja Laut 50350 Kuala Lumpur, Malaysia Tan Sri Dato’ Sri Hamad Kama Piah Che Othman Non-Independent Non-Executive Deputy Chairman Tel : +(603) 2691 4122 Fax : +(603) 2719 0044 Tan Sri Samsudin Osman Email : [email protected] Non-Independent Non-Executive Director 9GDUKVGYYYUKOGFCTD[EQO Tan Sri Dato’ Sri Dr Wan Abdul Aziz Wan Abdullah Non-Independent Non-Executive Director SHARE REGISTRAR Tan Sri Dato’ Dr Wan Mohd Zahid Mohd Noordin Tricor Investor Services Sdn Bhd (Company No. 118401-V) Non-Independent Non-Executive Director Level 17, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra Tan Sri Datuk Amar (Dr) Tommy Bugo @ Hamid Bugo 59200 Kuala Lumpur, Malaysia Independent Non-Executive Director Tel : +(603) 2264 3883 Tan Sri Datuk Dr Yusof Basiran Fax : +(603) 2282 1886 Non-Independent Non-Executive Director ePortal Address : http://my-etricor.com/ Dato’ Henry Sackville Barlow Senior Independent Non-Executive Director AUDITORS Datuk Zaiton Mohd Hassan PricewaterhouseCoopers (AF 1146) Non-Independent Non-Executive Director Chartered Accountants Dato Sri Lim Haw Kuang Level 10, 1 Sentral, Jalan Travers Independent Non-Executive Director Kuala Lumpur Sentral 50706 Kuala Lumpur, Malaysia Dato’ Azmi Mohd Ali Non-Independent Non-Executive Director Tel : +(603) 2173 1188 Fax : +(603) 2173 1288 Dato’ Rohana Tan Sri Mahmood Independent Non-Executive Director (Appointed with effect from 24 June 2014) FORM OF LEGAL ENTITY Ir Dr Muhamad Fuad Abdullah Incorporated on 7 November 2006 as a private company Independent Non-Executive Director limited by shares under the Companies Act, 1965 and converted into a public company limited by shares on Tan Sri Dato’ Seri Mohd Bakke Salleh 5 April 2007 Executive Director STOCK EXCHANGE LISTING PRESIDENT & GROUP CHIEF EXECUTIVE Listed on the Main Market of Bursa Malaysia Securities Berhad since 30 November 2007 Tan Sri Dato’ Seri Mohd Bakke Salleh Stock Code : 4197 Stock Name : SIME SECRETARY Puan Norzilah Megawati Abdul Rahman PLACE OF INCORPORATION AND DOMICILE (LS 0009247) Malaysia 010 ANNUAL REPORT 2014 CHAIRMAN’S MESSAGE Dear Shareholders, On behalf of the Board of Directors, it gives me great pleasure to present to you the Sime Darby Annual Report for the financial year ended 30 June 2014 (FY2014). Over the years, your Company has grown to become synonymous with long-term growth, financial strength and sustainable development. The strength and depth of the Group’s diversified portfolio and strong competitive positions in its key businesses is a cornerstone of its success. 9G CTG KPFGGF RTQWF QH VJG %QORCP[©U GXQNWVKQP VJCV started from a mere 500-acre rubber plantation in 1910 to become one of Malaysia’s leading companies and one of Southeast Asia’s largest diversified multinationals today with a market capitalisation of RM58.6 billion*. The Board is ever mindful that we cannot rest on our laurels and thus, we continue to innovate and improve, to seek investments that will ensure a sustainable profit growth trajectory in order to maintain market leadership in all its businesses. Sime Darby has remained competitive in the course of more than a century, supported by its strong professional Management team, highly driven and committed workforce and the ability to proactively respond to the expectations of stakeholders and the increasingly stringent regulatory framework. The Board continues to remain focused on ensuring the need to manage the balance between current and future returns and to deliver value VQQWTUJCTGJQNFGTU9GJQNFVTWGVQVJKUIQCNKPCNNQHQWT deliberations and investment evaluations. FINANCIAL RESULTS I took office as your Chairman a little