SIME DARBY BERHAD ● ANNUAL REPORT 2011 THE GLOBAL HORIZON The seeds of Malaysia’s largest multinational were planted in a colonial outpost in Malacca at a time when Malaysia did not exist and rubber was the plant of choice. The year was 1910 and the hopeful planters were a Scotsman and an English aristocrat. Sime Darby’s founding fathers would have had no inkling of just how far their little plantation company would go. Today, the Group’s geographical reach spans fi ve continents where more than 100,000 people work as part of the global Sime Darby family in any one of six business sectors. It is one of the largest companies in Malaysia, a global player in the Plantation industry and a leading supplier of Caterpillar equipment and luxury cars such as BMW. The Group’s initial trading activities took it beyond Malaysian shores but today, it is a homegrown and diversifi ed multinational with more than 60 percent of revenues derived from overseas operations. The world map on this cover highlights this reach and showcases the magnitude of the Group’s operations. SIME DARBY BERHAD ● ANNUAL REPORT 2011 THE SIME DARBY GROUP In November 2007, Kumpulan Sime Darby Berhad, Golden Hope Plantations Berhad and Kumpulan Guthrie Berhad merged to become the world’s largest listed plantation company as well as a diversifi ed multinational with operations in over 20 countries. The core businesses of the Sime Darby Group are plantation, property, industrial, motors, energy & utilities and healthcare. Sime Darby is one of the largest listed companies on Bursa Malaysia with a market capitalisation of RM55.47 billion as at 30 June 2011. Employing over100,000 people worldwide, Sime Darby is committed to sustainable growth and development in all aspects of its business operations. OUR VALUES INTEGRITY Uphold high levels of personal and professional values in all our business interactions and decisions RESPECT AND RESPONSIBILITY Respect for the individuals we interact with and the environments that we operate in (internally and externally) and commitment to being responsible in all our actions EXCELLENCE Stretch the horizons of growth for ourselves, our businesses and our people through our unwavering ambition to achieve outstanding personal and business results ENTERPRISE Seek and seize opportunities with speed and agility, challenging set boundaries SIME DARBY BERHAD ● ANNUAL REPORT 2011 OUR VISION To be a leading multinational corporation delivering sustainable value to all stakeholders OUR MISSION • Sime Darby is committed to developing a winning portfolio of sustainable businesses • We subscribe to good corporate governance and high ethical values • We continuously strive to deliver superior fi nancial returns through operational excellence and high performance standards • We provide an environment for our people to realise their full potential SIME DARBY BERHAD ● ANNUAL REPORT 2011 CONTENTS Notice of Annual General Meeting 1 - 3 Five-Year Financial Summary 4 - 9 Group Structure 11 Corporate Information 13 - 15 Profi le of Directors 16 - 20 Management Team Profi le 21 - 24 Report on the Governance & Audit Committee 25 - 30 Statement on Corporate Governance 31 - 50 Statement on Internal Control 51 - 54 Chairman’s Message 56 - 59 President & Group Chief Executive’s Review 60 - 62 Operations Review 64 - 97 Corporate Social Responsibility 99 - 111 Corporate Diary 112 - 115 Statement on Directors’ Responsibility 117 Reports & Financial Statements 118 - 266 Analysis of Shareholdings 268 - 270 Financial Calendar & Share Price Movement 271 Global Business Presence 272 - 273 Properties of the Group 274 - 290 Form of Proxy SIME DARBY BERHAD ● ANNUAL REPORT 2011 1 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting of Sime Darby Berhad will be held at the Grand Ballroom, First Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia on Thursday, 10 November 2011 at 10.30 a.m. for the following purposes:- AS ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the fi nancial year ended 30 June 2011 together with the Reports of the Directors and the Auditors thereon. (Resolution 1) 2. To declare a fi nal single tier dividend of 22 sen per ordinary share for the fi nancial year ended 30 June 2011. (Resolution 2) 3. To approve the annual remuneration for the Non-Executive Directors at an amount not exceeding RM6,000,000 in aggregate. (Resolution 3) 4. To re-appoint Tun Musa Hitam as a Director of the Company and to hold offi ce until the conclusion of the next Annual General Meeting pursuant to Section 129(6) of the Companies Act, 1965. (Resolution 4) 5. To re-appoint Tan Sri Dato’ Dr Wan Mohd Zahid Mohd Noordin as a Director of the Company and to hold offi ce until the conclusion of the next Annual General Meeting pursuant to Section 129(6) of the Companies Act, 1965. (Resolution 5) 6. To elect the following Directors who retire in accordance with Article 104 of the Company’s Articles of Association:- i. Tan Sri Dato’ Sri Hamad Kama Piah Che Othman (Resolution 6) ii. Tan Sri Datuk Dr Yusof Basiran (Resolution 7) iii. Puan Zaiton Mohd Hassan (Resolution 8) iv. Encik Azmi Mohd Ali (Resolution 9) v. Dato’ Mohd Bakke Salleh (Resolution 10) 7. To re-elect the following Directors who retire by rotation in accordance with Article 99 of the Company’s Articles of Association:- i. Tan Sri Samsudin Osman (Resolution 11) ii. Dato’ Henry Sackville Barlow (Resolution 12) 8. To re-appoint PricewaterhouseCoopers as Auditors of the Company for the fi nancial year ending 30 June 2012, and to authorise the Directors to fi x their remuneration. (Resolution 13) AS SPECIAL BUSINESS 9. To consider and, if thought fi t, pass the following Ordinary Resolution:- Proposed Renewal of Shareholders’ Mandate for Existing Recurrent Related Party Transactions and Proposed New Shareholders’ Mandate for Additional Recurrent Related Party Transactions of a Revenue or Trading Nature “THAT, subject always to the Companies Act, 1965 (Act), the Articles of Association of the Company, other applicable laws, guidelines, rules and regulations, and the approvals of the relevant governmental/regulatory authorities, approval be and is hereby given to the Company and/or its subsidiary companies to enter into all arrangements and/or transactions involving the interests of the Related Parties as specifi ed in Section 2.2 of the Circular to Shareholders dated 18 October 2011, provided that such arrangements and/or transactions are:- i. recurrent transactions of a revenue or trading nature; ii. necessary for the day-to-day operations; iii. carried out in the ordinary course of business on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public; and iv. not detrimental to the minority shareholders of the Company (the Mandate); 2 SIME DARBY BERHAD ● ANNUAL REPORT 2011 AND THAT, the Mandate, shall continue in force until:- i. the conclusion of the next Annual General Meeting (AGM) of the Company following this AGM, at which time the Mandate will lapse, unless by an ordinary resolution passed at that meeting, the Mandate is renewed; or ii. the expiration of the period within which the next AGM is required to be held pursuant to Section143(1) of the Act, (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Act); or iii. the Mandate is revoked or varied by ordinary resolution passed by the shareholders of the Company in general meeting, whichever is the earliest; AND THAT, the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Mandate.” (Resolution 14) 10. To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965. DATE OF ENTITLEMENT AND PAYMENT OF A FINAL SINGLE TIER DIVIDEND NOTICE HAS BEEN GIVEN ON 25 August 2011 that subject to the approval of Members at the Annual General Meeting to be held on 10 November 2011, a fi nal single tier dividend of 22 sen per ordinary share for the fi nancial year ended 30 June 2011 will be paid on 15 December 2011 to depositors whose names appear in the Record of Depositors on 1 December 2011. A depositor shall qualify for entitlement to the dividend only in respect of:- i. shares deposited into the depositor’s securities account before 12.30 p.m. on 29 November 2011 in respect of shares which are exempted from mandatory deposit; ii. shares transferred into the depositor’s securities account before 4.00 p.m. on 1 December 2011 in respect of transfers; and iii. shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. By Order of the Board Kuala Lumpur Norzilah Megawati Abdul Rahman 18 October 2011 Group Secretary Notes:- 1. A Member entitled to attend and vote at the Meeting is entitled to appoint not more than two (2) proxies to attend and vote on his/her behalf. Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless he specifi es the proportion of his shareholdings to be represented by each proxy. A proxy need not be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. Where a Member of the Company is an Authorised Nominee as defi ned in the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.