ANNUAL REPORT

move to change S P SETIA BHD

Wisma S P Setia 1, Jalan Bandar Satu, Pusat Bandar Puchong (19698-X) 47100 Puchong, Selangor Darul Ehsan, www.spsetia.com.my Dynamics of Change

The only constant in life is change. By harnessing its power, raw imagination transforms into astoundingly creative outcomes and true potential is released into beneficial tangible results. As change is a necessary consequence of growth, we at S P Setia warmly embrace its positive aspects throughout every facet of our organisation, while staying true to the corporate values which have brought us much success thus far. Contents Corporate Profile...... 2 Group Financial Summary...... 4 Higher Threshold of Excellence...... 6 Chairman’s Statement...... 10 Group Managing Director’s Report...... 14 Review of Operations...... 20 Corporate Responsibility Charter...... 30 Corporate Responsibility...... 32 Corporate Calendar...... 36 Corporate Information...... 46 Corporate Structure...... 48 Profile of Board of Directors...... 50 Corporate Governance Statement...... 58 Audit Committee Report...... 65 Internal Control Statement...... 68 Financial Statements...... 69 Analysis of Shareholdings...... 156 List of Properties Held by The Group...... 159 Performance Notice of Annual General Meeting...... 164 Statement Accompanying Notice of Highlights0 Annual General Meeting...... 167 7 Proxy Form RM1.2b Total Sales RM1.1b Total Revenues RM260m Profit After Tax 38.7sen Earnings Per Share Corporate Profile

 ANNUAL REPORT 07 Corporate Profile

S P Setia Berhad is today recognised as Malaysia’s leading listed real estate developer, with a proven track record of innovation-driven and standard-setting developments spanning the full spectrum of the property market – from master-planned townships to thriving commercial hubs. To date, S P Setia has won several coveted awards of international acclaim, as attested by our 3-year ranking as Malaysia’s No.1 Developer in The Edge Malaysia Top Property Developers Award, and Euromoney Real Estate Awards for the years 2005, 2006 and 2007.

Well-established in all three key economic centres of Malaysia, namely the Klang Valley, Bahru and Penang, the Group currently has 10 active projects under development, with another 8 new projects lined up for launching in the near future. The Group is broadening the breadth of its product offering with the introduction of investment-grade, integrated commercial space within vibrant and matured townships, and high-end condominiums in prime inner city locations.

In June 2007, S P Setia joined forces with Vietnam’s top state-owned conglomerate, Becamex IDC Corp, to develop its maiden residential project in Vietnam. Vietnam is the first cross-border investment destination for S P Setia, and marks the beginning of a new phase of growth to boost the Group’s international profile and enhance its stream of future earnings.

1. Dusk view of the stunning spa-villas at Setiahills, Ampang 1

S P SETIA BHD  Group Financial Summary

GROUP FIVE-YEAR SUMMARY

Year Ended 31 October 2007 2006 2005 2004 2003 (RM’000) Revenue 1,153,803 1,154,641 1,262,445 1,025,091 821,741 Profit Before Tax 328,491 319,949 #* 285,956 * 231,463 * 174,883 * Profit Attributable to Shareholders 260,070 238,234 # 203,384 161,198 126,031 Paid-Up Capital 504,454 498,513 490,734 568,048 559,422 Shareholders’ Funds 1,840,883 1,702,410 1,574,340 1,392,205 1,267,450 Total Assets Employed 2,882,032 2,625,927 2,435,156 2,624,977 ** 2,310,672 Total Net Tangible Assets 1,839,993 1,701,511 * 1,573,431 * 1,391,286 * 1,266,521 * Earnings Per Share (sen) 38.7 36.1 32.4 28.5 22.7 Gross Dividend Per Share (sen) 25 30 25 20 12 - Taxed Dividend 25 30 25 20 8 - Tax Exempt Dividend - - - - 4 Net Tangible Assets Per Share (RM) 2.74 2.56 2.41 2.45 2.27 Share Price - High (RM) 9.45 4.02 4.58 4.62 3.68 - Low (RM) 3.92 3.06 3.64 3.18 2.01

GROUP QUARTERLY SUMMARY

Quarter Ended 31 October 31 July 30 April 31 January (RM’000) 2007 2007 2007 2007 Revenue 317,158 294,637 286,802 255,206 Profit Before Tax 108,731 76,580 80,545 62,635 Profit Attributable to Shareholders 99,797 53,768 59,759 46,746 Paid-Up Capital 504,454 504,454 504,454 504,454 Shareholders’ Funds 1,840,883 1,790,187 1,736,419 1,774,860 Total Assets Employed 2,882,032 2,690,353 2,626,640 2,666,654 Total Net Tangible Assets 1,839,993 1,789,295 1,735,524 1,773,963 Earnings Per Share (sen) 14.84 7.99 8.88 6.98 Gross Dividend Per Share (sen) 15 - 10 - - Taxed Dividend 15 - 10 - Net Tangible Assets Per Share (RM) 2.74 2.66 2.58 2.64

# In compliance with Financial Reporting Standard 2 - Share-based Payment, profit before tax and profit attributable to shareholders have been restated to reflect the effect of adopting FRS2. * In compliance with new/revised Financial Reporting Standards adopted in FY 2007, the comparative figures have been restated. ** In compliance with Financial Reporting Standard 201 - Property Development Activities, total assets employed have been restated.

 ANNUAL REPORT 07 Group Financial Summary

GROUP FIVE-YEAR FINANCIAL HIGHLIGHTS

Revenue Profit before tax Profit attributable to shareholders Shareholders’ funds (RM Million) (RM Million) (RM Million) (RM Million)

328.49 1,262.45 260.07 1,840.88 319.95 238.23 1,154.64 1,702.41 1,153.80 285.96 203.38 1,025.09 1,574.34 231.46 1,392.21 161.20 821.74 174.88 1,267.45 126.03

‘03 ‘04 ‘05 ‘06 ‘07 ‘03 ‘04 ‘05 ‘06 ‘07 ‘03 ‘04 ‘05 ‘06 ‘07 ‘03 ‘04 ‘05 ‘06 ‘07

GROUP QUARTERLY FINANCIAL HIGHLIGHTS

317.16 108.73 1,840.88 294.64 99.80 1,790.19 286.80 80.55 1,774.86 76.58 255.20 62.63 1,736.42 59.76 53.77

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31 Jan 30 Apr 31 Jul 31 Oct 31 Jan 30 Apr 31 Jul 31 Oct 31 Jan 30 Apr 31 Jul 31 Oct 31 Jan 30 Apr 31 Jul 31 Oct ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07

S P SETIA BHD  Higher Threshold of Excellence

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K C 2007 2006 •A Malaysia Best Property Developer in •H Malaysia Best Property Developer in Euromoney Euromoney Real Estate Awards 2007 Real Estate Awards 2006

•B World’s Best Master Plan Development •I Best Master Plan Development for Setia Eco Park in for Setia Eco Park in FIABCI International FIABCI Malaysia Property Awards 2006 Prix d’Excellence Awards 2007 •J Best Low-Rise Residential Development for Duta •C Ranked No.1 in The Edge Malaysia Top Nusantara in FIABCI Malaysia Property Awards 2006 Property Developers Awards 2007 •K Ranked No. 1 in The Edge Malaysia Top Property •D Tan Sri Liew Kee Sin voted Property Man Developers Awards 2006 of the Year in FIABCI Malaysia Property Awards 2007 •L Forbes Asia’s Best Under US$1 Billion Award for 2006

•M Top Ten for Corporate Governance Survey Report •E Top Ten Best-Managed Companies in 2006 by MSWG Malaysia in FinanceAsia’s Asia Best

Companies 2007 •N 2006 Johor State Landscape Award (Neighbourhood Park Category) for Johor •F Top Ten Best Corporate Governance

in Malaysia in FinanceAsia’s Asia Best •O 2006 Johor State Landscape Award (Private Office Companies 2007 Building Category) for Setia Tropika Johor

G • Top Ten Best Investor Relations in Malaysia •P LAMAN Lifestyle Gold Award at The Malaysia in FinanceAsia’s Asia Best Companies 2007 International Landscape & Garden Festival 2006

 ANNUAL REPORT 07 Higher Threshold of Excellence

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S P SETIA BHD  evolve to brilliance

Woven into the fabric of the Group’s existence is the constant desire to test and evolve its core competencies, to ensure that S P Setia sets and delivers increasingly greater goals as the ‘Builder of Distinction’.

Chairman’s Statement

Dear Valued Shareholders I am pleased to report that we achieved an all-time high profit after tax of RM260 million on the back of revenues totalling RM1.1 billion. This stellar performance underscores the dynamism and robustness of S P Setia’s business model which has enabled it to consistently transform growth opportunities into tangible operating results.

10 ANNUAL REPORT 07 Chairman’s Statement

Rewarding our Shareholders In line with our excellent performance, I am pleased to announce that the Board of Directors has proposed a final dividend of 15 sen per share less tax at 26% for the financial year ended 31 October 2007. Based on the Company’s enlarged share base following its 1:2 bonus issue, the total dividend payout will account for approximately 62% of profit after tax versus 60% paid out in the previous financial year. As the Group expands, we remain committed to maintaining a high dividend payout policy of at least 50% of profit after tax to strike an optimal balance between the pursuit of growth and the need to continually 1. Illustration of a vibrant night scene at Setia Walk, reward shareholders. Puchong

Corporate Exercise During the year, the Group undertook a corporate exercise involving the issuance of redeemable serial bonds with detachable warrants along with the issuance of bonus shares. This corporate exercise will be completed by the first quarter of financial year 2008.

The RM500 million raised allows S P Setia to fund its plans to become an integrated regional real estate group efficiently by locking in low fixed interest rates whilst rebalancing the Group’s financing portfolio which was previously reliant on floating rates. Meanwhile, the enlarged share capital base better reflects the Group’s expanded scale of operations and enhances the liquidity of the Company’s shares.

Gaining Global Acclaim Apart from the solid financial performance achieved, I am delighted to share that S P Setia was again named Best Developer in Malaysia by The Edge Malaysia in its Top Property Developers Award 2007 and Euromoney in its Real Estate Awards 2007. This makes it the third consecutive year S P Setia has been conferred these dual honours.

We were particularly pleased that in 2007, S P Setia also succeeded in claiming the top spot based on qualitative attributes in The Edge’s ranking after coming in second over the last two years. This hard-won accolade, which is measured based on five stringent criteria namely product quality, innovation and creativity, value creation for buyers, image and market perception and management expertise, is something 1 we truly value.

S P SETIA BHD 11 Chairman’s Statement

The S P Setia Foundation has raised some RM35 million over the last eight years that has been actively deployed to meet the needs of the underprivileged in society and various deserving causes.

We also celebrated the success Engaging Our Stakeholders philanthropy alone. To increase of our Setia Eco Park project being At S P Setia, we have always placed the depth and breadth of our CR voted the World’s Best Master Plan great importance on fulfilling our involvement, we have formed a CR Development in the prestigious corporate responsibilities towards Think-Tank chaired by Mr Khor Chap Federation of International Real society as a whole. In the past, our Jen, one of our Executive Directors Estate (FIABCI) Prix d’Excellence commitment was mainly expressed and staffed by senior members Awards 2007 held in Barcelona, through our charitable trust, the of the management team. As a Spain. This momentous achievement S P Setia Foundation. Since its first step, our CR Think-Tank has greatly strengthened S P Setia’s establishment in year 2000, the drafted a Corporate Responsibility brand name and catapulted us onto S P Setia Foundation has faithfully Charter which expresses our goals the international stage. nurtured a “virtuous” cycle through and aspirations in this area. We numerous efforts and projects that have included this in our 2007 While acknowledging that awards are largely philanthropic in nature. annual report, to share in greater are by no means the only yardstick Including the funds raised at the detail our thoughts on this subject by which to measure performance, charity dinner 2007, the S P Setia with all our stakeholders. we believe that the recognitions Foundation has raised some RM35 we have been privileged to receive million over the last eight years that speak volumes about our unfaltering has been actively deployed to meet Acknowledging Contributions commitment towards quality, the needs of the underprivileged in On behalf of the Board of Directors, excellence and innovation. society and various deserving causes. I wish to express my sincere appreciation to YBhg Tan Sri Dato’ However, we recognise that Zaki Tun Azmi for his immense Corporate Responsibility (CR) contribution and valuable counsel covers a much wider spectrum than to the Group during his tenure as a

12 ANNUAL REPORT 07 Chairman’s Statement

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Non-Independent Non-Executive Director with S P Setia. We wish I must also place on record my sincere thanks him all the best in his new capacity as the President of the Court to all shareholders and other stakeholders for of Appeal of Malaysia. My deepest gratitude and appreciation also your continued support and belief in us. To all goes to Mr George Anthony Dass, our Independent Non-Executive the ladies and gentlemen of Team Setia, I salute Director who retired from the Board on 30 June 2007. you for staying the course with the Company – let’s continue to charge ahead together as we On another note, I wish to warmly welcome Mr Chang Khim Wah and move on to exciting new ventures in the coming Mr Teow Leong Seng who were both appointed as Executive year. Most important of all, my thanks go to all Directors, and Tan Sri Lee Lam Thye who joined us as a Non- our customers for your steadfast loyalty to the Independent Non-Executive Director in 2007. The contributions of S P Setia brand. these outstanding individuals will greatly strengthen the Board’s effectiveness in directing the Company as it expands rapidly both within Malaysia and internationally. Tan Sri Abdul Rashid Abdul Manaf Chairman I also wish, on behalf of the Board and every member of Team Setia, to convey my heartiest congratulations to Tan Sri Dato’ Sri Liew Kee Sin for being named FIABCI Malaysia’s Property Man of the Year 2007, in recognition of his extensive contributions to the property industry as well as the community at large. This is indeed a fitting tribute to the man who has energetically steered S P Setia to become the foremost developer in Malaysia with his vision of excellence and continued innovation. He truly personifies 1. An elegantly-appointed spa-villa in Setiahills, Ampang 2. The colourful shades of an attractive show unit in the Company’s vision “To be the Best in All We Do” and we are , tremendously proud of him.

S P SETIA BHD 13 Group Managing Director’s Report

2007 has been a remarkable year for the S P Setia Group. This is the second time we have managed to double-up our profit after tax in the 10 years since the Company changed its focus from construction to property development.

The year also saw the Group actively acquire land bank with a total of eight pieces of land secured, including one in Vietnam. This exercise is crucial to drive S P Setia’s product diversification, expand our geographic reach and enhance future growth. The newly acquired lands are located in prime areas and will, in most cases, be developed on a joint venture basis with existing landowners. The willingness of both our local and foreign partners to entrust choice land bank to us on favourable terms for joint development is indeed a testament to S P Setia’s branding prowess and proven execution abilities.

Building for the Future With all the factors of production in place, 2008 is set to be an exciting year as we lay the foundation to transform the Group from a premier Malaysian landed residential developer to a fully integrated regional real estate group. Underpinned by our core Setia, Eco and Duta residential brands, we aim to add greater breadth and depth to our activities by venturing into the luxury high-rise residential market, increasing the scope of our involvement in the commercial sub-sector and expanding overseas.

In line with the above objective, we acquired two 6-acre pieces of prime land in Kuala Lumpur to strengthen our share of the high-end market. The first is situated on Jalan Tun Razak within a 2km radius of KLCC. This will be the site of our first luxury condominium project under the Sky Residences brand. The second 6-acre piece is located in the prestigious Kenny Hills residential area. Here we intend to develop Duta Grandé, an ultra luxurious boutique enclave with only 15 bespoke mansions. Our target is to set breakthrough prices of RM30 million per unit by offering an entirely custom-built and personalised 1

14 ANNUAL REPORT 07 Group Managing Director’s Report

experience. This is to cater to the we will be developing two 5-acre individual needs and tastes of this parcels of commercial land in Klang very select group of buyers, thus town based on the same concept. elevating our Duta brand to the very To be named Setia Nexus 1 and pinnacle of the luxury homes market. Setia Nexus 2, both these projects will offer features which On the commercial front, we launched stay true to the Group’s intrinsic our first mixed used development, value proposition of enabling our Setia Walk, in our matured Pusat purchasers to ‘Live’, ‘Learn’, ‘Work’ Bandar Puchong township. This and ‘Play’ within a single location. hybrid development cleverly fuses commercial and residential We also plan to extend the reach components to create a distinctive of our existing brands which form lifestyle destination. Encouraged by the bedrock of the successes we 1. An artist’s impression of an opulent colonial- styled mansion in Duta Grandé, Kenny Hills the strong response for Setia Walk, have achieved to date. To this end,

S P SETIA BHD 15 Group Managing Director’s Report

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We are pleased that the “Setia” we purchased two parcels of township lands in the Iskandar Development Region (IDR), Johor Bahru and Cyberjaya brand has been so warmly respectively. Our upcoming project in Johor Bahru, to be known as Setia Eco Gardens, sprawls across 950 acres in Pulai close welcomed by Penangites as to the Johor State’s New Administration Centre in Bandar reflected in the strong sales Nusajaya and the Second Link to Singapore. This project will fuse the best elements of our Setia and Eco brands to cater generated by this project. to the price-sensitive market down south. In the Klang Valley, we acquired 156 acres of land in Cyberjaya as the site of a new Eco brand development to be named Setia Eco Villas. Here we intend to build on the award-winning formula of Setia Eco Park in Shah Alam to offer something new, interesting and yet familiar to appeal to the discerning Klang Valley homebuyer.

Up north in Penang, we made a notable debut with the well- received launch of our first project, Setia Pearl Island, in March 2007. We are pleased that the “Setia” brand has been so warmly welcomed by Penangites as reflected in the strong sales

16 ANNUAL REPORT 07 Group Managing Director’s Report

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generated by this project. With the implementation of the Northern pace of economic growth enjoyed by Vietnam Corridor Economic Region (NCER) initiatives, Penang has never over the past decade has generated huge looked more promising. Taking the cue from major infrastructure demands for planned housing. We are eager improvements in the state, we have lined up two new projects, Setia to be a part of this explosive growth. As such, View in Bayan Lepas and Setia Vista in Relau to further strengthen we are actively scouting for more land bank in our position in this robust property market. Vietnam to further expand our presence in this exciting country. The most significant milestone of the year has to be our foray into Vietnam, signalling the start of our international expansion drive. In June, we inked a joint venture agreement with our strategic partner, Becamex IDC Corp, one of Vietnam’s top conglomerates, to develop our maiden overseas project, EcoLakes at MyPhuoc, situated 40km north of Ho Chi Minh City. We plan to launch this 1. The three-storey terraced houses at the Isle of Life at Setia RM2.1 billion project in the early part of 2008 with the aim of building Pearl Island in Penang a significant presence there within a few years. It is our hope that 2. The unique man-made beachfront clubhouse at EcoLakes this comprehensively master planned eco-themed township in Vietnam 3. Serene water features meander through the busy town located in the industrial province of Binh Duong, will introduce new centre of EcoLakes standards of development to the Vietnamese market. The sizzling 4. An aerial view of the EcoLakes project

S P SETIA BHD 17 Group Managing Director’s Report

Grooming New Leaders At S P Setia, the future looks very promising indeed with a host of new projects to propel us into the next phase of sustained growth. But even the best laid plans can fail if we do not have the right people to execute, implement and turn them into reality.

18 ANNUAL REPORT 07 Group Managing Director’s Report

Our success thus far is due in great measure to the forward to exciting times in the coming year contributions of our talented and dedicated pool of with a favourable economic outlook supported employees. To ensure that we are able to perpetuate this by the continued roll-out of key infrastructure we are actively training, retraining and sharpening the projects. The Government’s landmark decision skill sets of our people. At the same time, we are working to allow monthly EPF withdrawals to fund hard to attract fresh talent of the highest calibre to be a mortgages, which is estimated to unleash part of Team Setia. some RM9.6 billion annually, will profoundly impact the property market. We expect Cognisant of the real challenge of retaining and recruiting this to spur demand for a wide spectrum of the right people, we undertook a group-wide salary as properties across the board as the 5 million EPF well as position review this year to ensure that S P Setia contributors take advantage of this flexibility to remains competitive as a choice employer. However, boost their purchasing power. Meanwhile, our apart from an attractive remuneration package, we believe locked-in progress billings of RM1 billion as people thrive in a performance-driven culture where at 31 October 2007 will provide a consistent they are treated with respect, valued for their views stream of earnings as we transition into a full- and rewarded based on merit. Balanced against this is fledged integrated real estate player. the need to maintain a conducive and caring workplace where our staff feel a high level of job ownership and are We are assured that our tried and tested constantly motivated to give their best. execution track record which has won both local and international accolades, will stand us in The rapid expansion of the Group has created plenty of good stead as we expand, diversify our product new opportunities for our staff to shine and take on new portfolio and increase our geographical scope. career challenges. To fast-track our employees’ As we grow, we will continue to stay faithful to development and ensure that they are ready the hallmarks of the S P Setia brand of quality to assume leadership for the next stage of products, service excellence, value creation S P Setia’s growth, we initiated the “Personal Best” and innovation. With a clear vision of where we programme in 2007. This programme seeks to identify are headed, coupled with a dynamic business staff with promising potential across all ranks in the model and committed management team, we company early in their career to be groomed as the believe we can weather the challenges ahead next generation of leaders for business continuity. and scale even greater heights. Selected high achievers are grouped based on seniority – each group is mentored by at least one Executive Director. These individuals will undergo Tan Sri Dato’ Sri Liew Kee Sin customised training modules specifically designed to Group Managing Director expose them to a variety of technical, managerial and leadership skills across various disciplines.

Riding the Wave of Growth We believe that the positive momentum enjoyed by the 1. Residents of Setia Sky Residences can enjoy the panoramic view of the KLCC Twin Towers from their property sector this year will continue in 2008. We look very own abode 1

S P SETIA BHD 19 Review of Operations

Boosted by favourable consumer sentiments and spillover benefits from the liberalisation of the property market, the Group sold 3,303 units of properties in 2007 with a total sales value of RM 1.2 billion. Our established projects continued to make significant headway whilst newly-introduced projects were well-received by the market.

The Group believes in strengthening its presence and brand Penang and Johor Bahru. These two equity through the strategic positioning of its products and events were the talk of the town with clear service differentiation. In 2007, this was expressed multitudes coming from near and far through country-wide festive celebrations with exciting to join in the celebrations at the cultural acts and mammoth concerts featuring homegrown various project sites. Apart from and international talents. this, we also held Hari Raya Aidilfitri celebrations at individual project Highlights of the year include the Chinese New Year sites with the event at Setia Alam Carnival, which featured the “Wind of Colourful Guizhou” showcasing local Idol Mawi and performance from China. Thereafter we organised a series vocal powerhouse Adibah Noor. of free concerts headlined by Hong Kong superstar Sally Yeh in three of our flagship projects in the Klang Valley,

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PROPERTY DEVELOPMENT Various key amenities were series of well-designed retail and completed and opened during the functional shop-offices connected by Maximising the Potential of year. SJK (C) Pin Hwa 1 – relocated wide pedestrian-friendly boulevards Established Projects to Setia Alam from Klang town and garden landscaping. Upon – opened its doors to its first completion, it will offer residents Setia Alam – Klang Valley batch of students, whilst the Setia yet another attractive destination Setia Alam has quickly carved a solid Badminton Academy (SBA) with its to fulfill their shopping, dining and reputation as one of the finest 16 Taraflex-fitted badminton courts entertainment needs. integrated townships in the Klang welcomed budding shuttlers. On Valley. Setia Alam’s core value the commercial front, the Eramas With the growing number of families proposition rests on its ability to shop-office strip fronting Jalan Meru, calling Setia Alam home, we have provide a first-rate living environment, Klang is fast becoming a convenient taken an active role in organising complete with excellent accessibility and vibrant neighbourhood hub with various community-centric events and extensive amenities. Building banks, restaurants, grocery stores, regularly throughout the year. These on its early successes which have clinics and tuition centres setting include gardening workshops, kids’ resulted in approximately 4,600 up shop. To complement the cookie-making classes, children’s arts properties worth RM1.2 billion TESCO hypermarket currently under and craft day and group outings to sold since its first launch in 2004, construction, we launched Setia places of interest. The enthusiastic Setia Alam continues to provide Avenue comprising 274 units of high- response of participants to these a rewarding home-ownership end shop-offices on the adjacent events has led to the formation of experience where its residents can land. This 12-acre commercial cum the Setia Alam Gardening Club and ‘Live’, ‘Learn’, ‘Work’ and ‘Play’. retail centre was conceived as a Kids Club.

RM1.2b worth of properties sold since 2004 in Setia Alam

1. The interesting alternating facade of shop- offices at Setia Avenue 2. A stunning view of warm hues at dusk of Setia Alam’s tranquil waterways 3. An inviting and cosy family area in a spacious show unit at Setia Alam, Klang Valley 3

S P SETIA BHD 21 Review of Operations

Setia Eco Park – Shah Alam

2007 was a momentous year for Setia Eco Park, which was named the World’s Best Master Plan Development in the Federation of International Real Estate (FIABCI)’s International Prix d’Excellence Awards 2007. This achievement underscores Setia Eco Park’s premier standing as 1 a pioneer of ecologically-attuned master-planned developments, not only in Malaysia but also at the international level.

Our ambitious vision to create a living environment woven around the eco theme was gradually unveiled over the course of the past year. The centrepiece of the stunning landscape tapestry is the 25-acre swan lake which was completed in February 2007. Other novel elements in this unique sanctuary include paddy terraces, a wind chime walk, bamboo crossings and a creek populated by butterflies. The numerous awards secured have greatly enhanced the profile of Setia Eco Park and sustained strong sales. Since its launch in 2004, some 800 units of high-end, semi-detached and 2 bungalow homes have been sold.

From the initial step of crafting an ecologically rich landscape, we are now moving to create eco-friendly homes. Utilising modern technology, Setia Eco Park will showcase the country’s first energy-efficient homes powered by the Building Integrated PhotoVoltaic (BIPV) solar technology promoted by the Malaysia Energy Centre (MEC). The initial pilot project comprising 59 units of energy-efficient Eco Villas were a sell-out success even before the official launch. Setia Eco Park also launched the Le Grandeur range of bungalow lots measuring a minimum of 20,000 sq. ft. in response to the demand for such products by its upmarket clientele. Prospective buyers were given the opportunity to check 3

22 ANNUAL REPORT 07 Review of Operations

4 out the site of their dream homes by first Tenby School was established helicopter or hot-air balloon. Located in Ipoh by British planters, miners on the highest grounds brimming with and soldiers. The integrated school 800 units flora and fauna biodiversity just next complex sits on 14 acres of land of high-end semi-detached and to the Bukit Cahaya Forest Reserve, next to Setia Eco Park and will provide pre-school, primary and bungalow homes in Setia Eco the prestigious bungalow lots of Le secondary education based on the Park sold since 2004 Grandeur carry a minimum price tag British and Malaysian curriculum. of RM2 million. The Tenby School in Setia Eco Park which will be able to accommodate Plans are also underway to create an 1,800 students is due to begin expatriate enclave specially tailored operations in 2009. for foreigners residing or working in Malaysia, with exclusive homes To add commercial vibrancy to this created by renowned architects from 1. A minimalist living room opens out into Singapore, Japan, Korea, Indonesia ecological sanctuary, a lifestyle a lush shady garden at Setia Eco Park business park is being constructed with 2. The Jacuzzi-fitted bathtub soothes tired and Australia. An agreement was muscles after a long day in Setia Eco Park also entered into with Tenby Educare a residents-only clubhouse, eateries 3. Luxuriate in the master bedroom with your to build an international school within and retailers. S P Setia’s new corporate private garden in the sky the development. Tenby Educare’s headquarters will also be relocated 4. The award-winning, sprawling and eco-inspired landscape tapestry at Setia history dates back to 1960 when the here in 2008. Eco Park

S P SETIA BHD 23 Review of Operations

Setia Tropika – Johor Bahru

Setia Tropika, the township that broke new grounds with its daring and Registration Department Office; Film imaginative modernistic architecture, continued to make progress in Johor Control Division Office; Registration of Bahru. The start of the year saw the opening of the Setia Tropika Exit 255B Societies Division Office; RELA Office Interchange on the North-South Highway (NSH) officiated by the Minister and three blocks of staff apartments. of Works, YB Dato’ Seri S. Samy Vellu. The RM18 million Interchange leads Upon completion, the vibrancy of directly to the Central Business District (CBD) of Livistonia Square, which Setia Tropika’s commercial hub will be when completed will house some 600 units of shops including banks, significantly increased along with the restaurants and lifestyle retailers. overall value of residential properties in this young township. This year also saw the successful hand-over of 1,000 units of homes to the first batch of housebuyers, ahead of schedule. In conjunction with the hand-over, an agreement was signed with Telekom Malaysia for the provision of the ‘Centrex Service’ which allows residents to enjoy immediate access to voice and broadband services. Other notable events include the award of a RM190 million contract by the Ministry of Home Affairs Malaysia (KHEDN) to relocate its Johor Bahru RM416m headquarters to a 16.7-acre piece of land right next to Setia Tropika’s CBD. The combined sales achieved in complex will comprise a 15-storey Immigration Office Tower; five-storey National Johor Bahru in 2007

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Bukit Indah – Johor Bahru location of this commercial hub has a lush tropical living environment, Our oldest project in Johor Bahru already attracted two retail giants, where it has sold over 6,400 celebrated its 10th Anniversary with namely AEON and TESCO. The properties since its launch in 2001. a grand carnival in May 2007. The AEON Shopping Centre, which will be During the year, Setia Indah partnered carnival saw a massive turnout with located on 38 acres of land purchased Southern Waste Management and residents coming out in full force to by AEON from Bukit Indah Johor, is the Johor Bahru Municipal Council enjoy the festivities. In conjunction expected to be ready by 2009, whilst to initiate a Recycling Campaign. It with this milestone, Bukit Indah the lease agreement with TESCO will is our hope that this event, details of underwent a rebranding exercise. see the construction of a hypermarket which are disclosed in the Corporate Sporting a modern new logo with the on approximately 9 acres of land Responsibility Section of this annual succinct tagline “The Address”, Bukit within the commercial hub. These report, will heighten environmental Indah is set to benefit tremendously exciting developments will greatly awareness among our residents and from its location at the gateway into enhance the value of the undeveloped the general public. Bandar Nusajaya, the heart of the land bank in Bukit Indah and provide Iskandar Development Region (IDR). a premium for the commercial and residential units that will be launched With approximately 9,000 homes in the future. sold over the last decade, Bukit Indah has a captive population to support Setia Indah – Johor Bahru 1. The newly completed homes at a thriving commercial centre. An 85- Even though Setia Indah is nearing the Setia Tropika, Johor Bahru acre site at the heart of the township tail-end of its development, this popular 2. The ground-breaking, ultra-modern architecture of a show bungalow in has been earmarked for development township continues to perform well Setia Tropika, Johor Bahru into an integrated commercial hub to thanks to its impeccable track record 3. Soothing water features lend a refreshing ambience to the show unit at Bukit Indah, be named Setia EcoCity. The prime in delivering quality properties set in Johor Bahru

S P SETIA BHD 25 Review of Operations

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Creating New Heights of Luxury Tapping the Commercial Sector Setiahills – Ampang Setia Walk – Puchong Having made our name in the high-end market Capitalising on the strong demand for quality commercial and with successful projects like Duta Nusantara investment grade properties, S P Setia introduced its first mixed used and Duta Tropika in Sri Hartamas, S P Setia development in the matured neighbourhood of Puchong. Setia Walk, once again raised the bar by introducing which is a creative hybrid of commercial and residential components, “tropical spa villas” in its latest luxury project. is situated on a 21-acre site which fronts and enjoys high visibility Known as Setiahills, this private sanctuary from the heavy traffic flow through the busy LDP Highway. A new is spread across a 15-acre hillock adjacent LRT station to be located directly opposite the site will further boost to the dense foliage of the Ampang Forest its commercial viability. The commercial area of this development is Reserve, just 20 minutes from the Kuala differentiated from conventional shop-offices in that it is organised Lumpur city centre and comprising only 45 into three different thematic zones for easy navigation and maximum spa-villas – each with its own dedicated spa visual impact. deck and exclusive swimming pool. A dusk launch was held in January to unveil the Setia Walk will be anchored by a business-class hotel and show bungalows, where guests were treated entertainment hub along with other components, which include to a delectable spread of international cuisine retail outlets, apartments, SOHO offices and an office tower. Iconic whilst being serenaded by a live jazz band. In landscaping and unique water features form its central spine, thus keeping with the spa-party theme, therapists enabling dual-frontage shop-offices to be created. Nearly all of the were present to provide shoulder and feet 506 retail units were pre-booked prior to the official launch in October massages, adding to the restful ambience 2007. Following the encouraging success of the shop-offices, the created within this urban enclave. residential component of the development comprising apartment units will be launched in 2008.

26 ANNUAL REPORT 07 Review of Operations

Growing Our Presence in Penang Setia Pearl Island Demand for Setia Pearl Island, the Group’s maiden project in Penang was inspiring with RM240 million sales achieved since its official launch in March 2007. Featuring spacious freehold three-storey terrace homes with modern façades set within the beautifully landscaped environment of the six distinctive “Isles”, Setia Pearl Island has been a runaway hit with homebuyers and investors alike.

INFRASTRUCTURE AND CONSTRUCTION During the year under review, our infrastructure unit was actively involved in upgrading works for the Highway in Johor Bahru. Construction is progressing on schedule and completion is expected by end 2008. Our precast RM240m construction unit also successfully delivered 958 units of apartments in Precinct sales achieved by Setia 9, Putrajaya. The division recorded total revenue of RM171.7 million for the year Pearl Island ended 31 October 2007.

1. A poolside bungalow overlooks the MANUFACTURING AND TRADING manicured exterior in the gated and guarded precinct of Setia Indah, Johor Bahru Setia Wood Industries, our wood-based manufacturing division also performed 2. The guest room at Setiahills spa-villa enjoys well, generating a pre-tax profit of RM13.9 million with a revenue of a scenic view of the pool 3. The hill-top, semi-detached Juniper homes RM27.4 million. The Company’s ISO9001:2000-certified wood products have in the Isle of Conifer at Setia Pearl Island earned the confidence of international customers, generating orders from 4. Imaginatively designed water features abroad. During the year, Setia Wood Industries secured an order to supply a transform Setia Walk into a comteporary lifestyle destination timber flooring system to the Hyderabad Badminton Academy in India.

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S P SETIA BHD 27 shift to action

A creative plan that challenges the norms and serves the needs of customers is important for success. However planning is nothing without execution. At S P Setia, we believe that greater heights can only be scaled when ‘We Get It Done’.

Corporate Responsibility Charter

At S P Setia, we have long recognised our obligations to actively contribute and work for the betterment of society as a whole and the community in which we operate. Much of the social work that we do is carried out through the S P Setia Foundation, our Charity Trust which is now in its eighth year of operations.

However, as we mature as a corporation, we want to not only grow our profits but also broaden the scope of our involvement and commitment to all our stakeholders. Our aspiration in this regard is reflective of our core business as a property developer and may be expressed through the statement:

“Building Sustainable Communities for All”

To provide greater focus for our efforts in the realm of corporate responsibility, we have coined the acronym “ECO”. This little green word represents both the areas we want to work on and the approach we intend to take in fulfilling our responsibilities as a corporate citizen:

30 ANNUAL REPORT 07 “E” “C” “O” stands for “Environment” means “Community” represents “Organisation”

Environment Community Organisation The reality of climate change is Our longstanding commitment to the community At S P Setia, we pride ourselves now a fact that no responsible has been the strongest part of our CR efforts in being a caring employer. individual or corporate member to date. Our goal, whether in philanthropy Over the years we have been of Planet Earth can ignore. As a or engagement with our customers is to blessed with talented, capable property developer, we want to Build Capacity. Passive giving is not our style. and committed employees Build Sustainability into every Instead, we aim to contribute actively by – without our TEAM SETIA, step of our business process. providing amenities and/or resources to our we would never have achieved From our approach in master- customers and beneficiaries in a manner which all that we have thus far. planning, including the design enables them to actualise their personal desires, However, in an increasingly of each park, recreational space, hopes and dreams. competitive and globalised individual home or other building, marketplace, continued market to the way in which we build and Our best example of this is the Setia Adoption leadership will require more select the materials used, we Programme run by the S P Setia Foundation. From than just hard work. Therefore, aim to: a small start of only 79 pupils in the year 2000, as we evolve further as an - Reduce wastage and our we have now managed to assist more than 5,090 organisation, our goal is to consumption of scarce disadvantaged primary and secondary school Build Creativity into our DNA. resources; pupils in getting a better start in life. This was done Amongst other things, we - Reuse whatever materials by providing financial resources along with the aim to do this by developing we can within our offices and support, guidance and coaching necessary to help our people, cutting red tape, building sites; and them excel in their studies. Another can be seen facilitating learning and sharing - Recycle what we cannot use in the way we build our townships to promote of knowledge both internally ourselves but can be used by healthy and secure community living. Apart from and externally. In line with our others providing good physical infrastructure, a secure objective of harnessing the We recognise that we are environment, ample recreational and community creative talents of our people, only at the very beginning of facilities, we also conduct numerous activities we target to be an originator a long journey to do our part in for the benefit of our residents. This enables our of ground-breaking ideas and addressing the challenges residents to interact with each other and other concepts in all our endeavours. posed by climate change. As members of the public, both to foster a strong This is the only way we will such, we seek to first educate neighbourhood spirit as well as to celebrate the be able to continue to set ourselves and as we learn, we great cultural diversity we are privileged to enjoy new benchmarks, challenge hope to share what we know and be a part of in Malaysia. the norm and make S P Setia with those within our circle of an entity all our stakeholders, influence. We firmly believe that To paraphrase an old saying – Many hands (well including our employees, are with teamwork, a little effort co-ordinated!) make light work. As we work to proud to be associated with. from every individual can go a improve what we can in the world in which we long way towards improving the live in we want also to collaborate with others. livability of our planet, both now That way, we can glean from those who are more and in the generations to come. experienced and help others who may be a little further behind the learning curve than we are.

S P SETIA BHD 31 Corporate Responsibility

Initiatives undertaken in 2007

1. Suria Project – Building energy-efficient homes in Setia Eco Park

As the Malaysian pioneer of ecologically attuned development master- Apart from incorporating BIPV planning, Setia Eco Park partnered with the Malaysian Energy Centre (MEC) technology, the architecture of the to develop the country’s first energy-efficient homes. MEC has embarked on energy efficient EcoVillas exude plans to develop energy-efficient townships powered by the BIPV (Building modernity with clean sophisticated Integrated PhotoVoltaic) solar technology in Malaysia, modelled after lines. Expansive rooftop tropical successes achieved in countries such as Japan and Germany. Knowing that gardens and elevated plunge pools the prohibitive cost of BIPV technology is the main stumbling block to its have been incorporated into the design mass commercialisation, MEC initiated the “Suria” grant to encourage more to help reduce heat and carbon dioxide developers to build BIPV homes. Setia Eco Park was given the privilege as emission. The strong take-up of all 59 one of the first developers to participate in this pilot project. units of EcoVillas in its pilot launch  provides us with the opportunity to The BIPV technology works by generating electricity from rooftop solar panels explore new ways to Build Sustainably for household consumption, while excess energy will be sold to the National to safeguard our planet for future Electricity Grid, allowing homeowners to do their part in conserving scarce generations to come. natural resources.

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32 ANNUAL REPORT 07 Corporate Responsibility

2. Cash for Trash – Setia Indah’s 3. Plant a Tree, Save the Planet – 4. What Do You Want To Be? – recycling campaign Honouring world environment S P Setia Foundation’s career day in Penang talk for secondary students Setia Indah Residence Club initiated a recycling campaign themed “Care Despite the heavy workload Now that it is in its eighth year for Your Environment” to inculcate required to successfully execute of operations, some of the Setia the awareness of environmental its maiden launch, Setia Pearl Adopted Children who have preservation among its residents and Island observed this year’s World been supported by the S P Setia the community at large. Teaming up Environment Day by shutting Foundation since its inception, with Southern Waste Management down its construction site for a have progressed to Forms 4 and and Johor Bahru Municipal Council, day. Contractors were given a 5. To prepare them for life after Setia Indah kicked off the meaningful day off to reduce air pollution school, the Foundation organised campaign on 9 September 2007. Under while staff got their hands dirty an inaugural career talk for these this campaign, household recyclables by planting a mini bougainvillea students. The speakers were can be exchanged with cash paid by garden to mark this meaningful none other than S P Setia staff Southern Waste Management. The day. This symbolic act came at who volunteered their time and most active participant will win an a price given that loss of work energy to make this event a award at the end of the three-month for the day cost the Company success. A total of 25 students campaign period. Response has RM100,000. However, the from various states took part in been tremendous with 1.3 tonnes of awareness created was well the 3-day seminar which included recyclables collected on the launch of worth the sacrifice of time, money two days of classroom activity the campaign and 15.81 tonnes in the and effort. and a day trip to places of interest subsequent week. in Kuala Lumpur.

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S P SETIA BHD 33 Corporate Responsibility

5. Remembering our Neighbours In Need 6. Disaster Relief – Cleaning up flood- – Setia Alam Community Project affected villages in Johor Bahru

The rising costs of living has greatly In the aftermath of the devastating floods increased the burden of daily living on that inundated Johor Bahru at the end of the hardcore poor. Realising this, Setia 2006, many of our staff in our Johor Bahru Alam launched a community project to offices pitched in to help clean up the lighten the hardship faced by low-income affected villages. This is in line with the local families living nearby the project. Group’s conviction that wherever possible, Under this programme, 83 deserving practical help should accompany monetary families were selected to receive contributions. sundry necessities such as groceries and foodstuff once every month. This 7. Rebuilding Homes of Victims in Johor project, which is sponsored by the Bahru and Pahang S P Setia Foundation provides an opportunity for Setia Alam staff and The flood calamity destroyed many homes residents to work together. Volunteers and public buildings in Johor Bahru and give of their time to ferry the recipients Pahang. S P Setia Foundation set aside to the project site to receive the goods RM200,000 to repair affected homes and and send them home or visit the schools in Johor Bahru. Meanwhile, in Bukit families at their homes to distribute the Serok Orang Asli Resettlement in Pahang, goods to them. homes were washed away by the flood and residents lost all their belongings in the blink of an eye. S P Setia Foundation stepped in and sourced for contractors to rebuild brick homes in place of the former wooden homes.

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34 ANNUAL REPORT 07 Corporate Responsibility

8. Grassroots Training for Budding 9. S P Setia Foundation Activities Shuttlers – Setia Badminton Academy During the year, the S P Setia Foundation continued with various Nothing unites a nation more than community and charitable activities in line with its mission to enhance international success achieved in a well- community well-being. Its core activity remains the Setia Adoption loved sport. However, sport stars are Programme. The total number of primary students adopted at any not born overnight. Recognising this, point in time is now capped at 2,300 in order to not overstretch its the Setia Badminton Academy (SBA) resources. At the secondary level, the number has grown to 128 helmed by chief coach, former world students since two years ago. This year also saw the earliest batch champion Han Jian, has started providing of students sitting for their SPM examination. In line with its aim to grassroots coaching for budding shuttlers. nurture a true Setia Scholar, the Foundation is now prepared to support S P Setia’s investment in constructing students who excel in their studies at the tertiary level. a brand new complex sited on 2.2 Other activities carried out by the Foundation during the year include: acres of land in Setia Alam provides SBA with an Olympic standard modern • Donation of computers to the Multi-Mutual Charity Association facility with 16 Taraflex-fitted badminton (which provides care to over 400 single-parent families in the Klang courts. To celebrate the opening of the Valley) to kick-start their computer training courses. new complex and attract enrolment, • Donation of furniture and fittings to Divine Life Society Orphanage the Inaugural S P Setia Badminton and in Kuala Kubu Baru. Basketball Tournament was held in May • Donation of table and chairs to SJK (C) Chien Chi, Johor Bahru and 2007. The basketball event drew 21 SJK (C) On Pong, Ampang. teams while the Badminton Tournament • Setting up the first Snoezelen Room in a government school – attracted nearly 400 participants. This SK Bandar Tasik Selatan, for children with special needs. annual sporting event will provide a • Scholarships for two deaf students to pursue their tertiary healthy platform for aspiring youngsters education. to hone their sporting skills. • Sponsorship of five powered wheelchairs to the needy disabled people.

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S P SETIA BHD 35