CONNECTING COMMUNITIES DELIVERING VALUE SUSTAINABILITY REPORT 2017 Our Vision Our Stakeholders Our Mission To be the PRIDE of Our Shareholders, Staff, P Producing Quality, On Spec & On Time Sarawak & Beyond Customers & Community R Respect & Integrity I Improving, Innovating & Investing in People D Delivering Sustainable Growth E Environmentally Conscious, Safe & Conducive Workplace TABLE OF CONTENTS 1 About this Report 2 Our Business 4 Corporate Information 5 Corporate Structure 6 Performance at a Glance 7 Financial Highlights 7 2017 Share Price Performance 8 Board of Directors 10 Senior Management Team 12 Message from Our Group Managing Director 16 Our Four Stakeholder Group Model 18 Materiality Mapping 19 Economic 24 Environment 36 Social: Labour Practices and Decent Work 53 Social: Society 66 Social: Product Responsibility 70 Ensuring a Sustainable Future About This Report This is Cahya Mata Sarawak Berhad’s (CMS or the Group) third Sustainability Report, which discloses our sustainability achievements in a transparent and objective manner in line with the Global Reporting Initiative or GRI Guidelines. This Report serves as a tool to demonstrate to our stakeholders and other interested parties how we continued to undertake our operations in a responsible and sustainable manner throughout 2017. Together with our Annual Report 2017, which highlights the financial aspects of our business, these two reports provide a clear, comprehensive and transparent representation of our performance in managing the Economic, Environmental and Social (EES) aspects of our operations. Outlined below is detailed information on the scope and criteria used when preparing this Report. There have been no changes to the boundaries of this Report from the previous Sustainability Report 2016. Connecting Communities Delivering Value REPORTING PERIOD The cover of Cahya Mata Sarawak Berhad’s • 1 January to 31 December 2017 2017 Sustainability Report portrays the Darul (Financial Year or FY 2017) unless specified Hana Bridge, Kuching’s iconic new landmark which connects the northern and southern REPORTING CYCLE parts of the city, and which CMS had a hand 2017 SUSTAINABILITY REPORT • Annually in constructing. Our cover also carries the theme ‘Connecting Communities. Delivering SCOPE Value’ which not only reflects the role that the bridge is playing in integrating communities • CMS’ Departments and Divisions: and delivering tangible value, it also serves as - Head Office Departments an expression of how CMS is doing its bit to - Cement Division connect communities and deliver real value. - Construction Materials & Trading Division As a leading proponent of the Sarawak’s - Construction & Road Maintenance Division growth story, CMS continues to identify - Property Development Division opportunities to help build and strengthen - Samalaju Development Division linkages between markets, businesses and • Note that the scope of this Report only covers the abovementioned communities, as well as create tangible Departments and Divisions that CMS has full management control over value for our key stakeholders. These include and which we are able to apply our Sustainability Agenda to. the host of infrastructure projects and • The activities of the Group’s associate companies are not covered in this related services required across the State Report due to the fact that at the associate level, CMS’ influence is at Board and the energy-intensive opportunities level only. At each associate company, the respective management teams under the Sarawak Corridor of Renewable are responsible for implementing their own sustainability agendas. Energy (SCORE) initiative. By continuously reinvesting into our core competencies • The scope of this Sustainability Report aligns with that of the Annual Report and expanding into related infrastructure to ensure consistency in the line of reporting and financial statements. facilitation activities, we continue to create a long-term, sustainable growth pathway REFERENCES AND GUIDELINES for both CMS and Sarawak, as well as good • Global Reporting Initiative (GRI) G4 Sustainability Reporting value for our stakeholders. As we maximise Guidelines our participation in the Sarawak growth • Bursa Malaysia’s Sustainability Reporting Guide story, CMS undoubtedly remain one of the • Association of Chartered Certified Accountants (ACCA) Malaysia best proxy-listed investments for Sarawak’s • Sustainability Reporting Awards (MaSRA) Guidelines for dynamic growth. Malaysian Companies • International Organisation for Standardisation (ISO) 26000:2010 Guidance on Social Responsibility 1 Our Business Cahya Mata Sarawak Berhad (CMS) is Sarawak’s leading infrastructure facilitator and Kuala a prime mover in Sarawak’s Lumpur growth story. Sabah Originally established as a cement manufacturer some 43 years ago, CMS has steadfastly grown from strength to strength amidst the challenges of the marketplace and successfully diversified into the manufacturing and trading of Cement and Construction Materials; Construction; Road Maintenance; Township, Property and Infrastructure Development; Education; Financial Services; and Alloys Smelting. In 2015, CMS bolstered its role as an infrastructure (21076-T) facilitator by venturing into the telecommunications infrastructure arena. CMS’ solid progress over the years is very much a reflection of Sarawak’s own Sarawak dynamic progress. As the State moves into a new era of growth with the Sarawak Cahya Mata Sarawak Berhad Corridor of Renewable Energy (SCORE), CMS’ expansion path too is moving into a new trajectory to take advantage of the business investment opportunities in energy-intensive industries and their infrastructure and related needs. Given the vast business potential within SCORE and throughout the State of Sarawak, CMS continues to leverage on its healthy balance sheet, local knowledge, an experienced management team, proven strategies and a synergised portfolio of Sarawak-based businesses, to maximise its participation in the Sarawak’s growth story. CMS’ Stable of Businesses: Ferrosilicon & Manganese Today, CMS is listed on the Main Market Cement & Clinker Alloys Smelting of Bursa Malaysia Securities Berhad (Bursa Malaysia), the Malaysian stock exchange. As of 31 December 2017, CMS’ Construction Financial Services market capitalisation stood at RM4.19 billion. Construction Materials Hotel & Workers’ Trading & Agencies Accommodation Industrialised Building System Education (IBS) Products & Solutions 2 Our Business KUCHING SIBU Batu Niah Tanjung Manis Samalaju Saratok Lawas Kota Samarahan Mukah MIRI Sarikei Limbang Marudi Lundu SUSTAINABILITY 2017 SUSTAINABILITY REPORT BINTULU Bau Tapah Mambong Betong Kapit Sg. Asap Sri Aman Simunjan Serian Township & Property Precast Concrete Products Steel Fabrication & Engineering Development Steel Pipe Manufacturing Premix Wire Mesh & Laying Project Management Stone Aggregates Road Maintenance Telecommunications Infrastructure 3 Corporate Information COMPANY NAME GROUP COMPANY SECRETARY AUDITORS Cahya Mata Sarawak Berhad Denise Koo Swee Pheng Ernst & Young COMPANY NUMBER REGISTERED OFFICE PRINCIPAL BANKERS Cahya Mata Sarawak Berhad 21076-T Level 6, Wisma Mahmud Bank Muamalat Malaysia Berhad Jalan Sungai Sarawak CIMB Islamic Bank Berhad DIRECTORS 93100 Kuching Hong Leong Bank Berhad Sarawak Kenanga Investment Bank Berhad Y A M Tan Sri Dato’ Seri Syed Maybank Islamic Berhad Anwar Jamalullail t +60 82 238 888 RHB Bank Berhad Y Bhg Dato Sri Mahmud Abu Bekir Taib f +60 82 333 828 Y Bhg Datuk Syed Ahmad Alwee Alsree w www.cmsb.com.my STOCK EXCHANGE LISTING Y D H Dato’ Richard Alexander John Curtis SHARE REGISTRAR Main Market Y Bhg Datuk Seri Yam Kong Choy Bursa Malaysia Securities Berhad Symphony Share Registrars Sdn Bhd Sector: Industrial Products Y Bhg Datu Hubert Thian Chong Hui Level 6, Symphony House Stock Code: CMSB Mr Chin Mui Khiong Pusat Dagangan Dana 1 Stock Number: 2852 Mdm Umang Nangku Jabu Jalan PJU 1A/46 47301 Petaling Jaya Selangor Darul Ehsan t +60 3 7849 0777 f +60 3 7841 8151 / 8152 4 Corporate Structure As at 12 March 2018 * CORE BUSINESS DIVISIONS STRATEGIC INVESTMENTS CEMENT DIVISION INFORMATION & COMMUNICATION 100% CMS Education Sdn Bhd TECHNOLOGY DIVISION 100% CMS Cement Sdn Bhd 30% HELP IBRACO CMS Sdn Bhd 100% CMS Cement Industries 95% CMS Capital Sdn Bhd Sdn Bhd CONSTRUCTION MATERIALS & 51% COPE Private Equity Sdn Bhd 100% CMS Concrete Products TRADING DIVISION Sdn Bhd 21.22% Kenanga Investment Bank 69% CMS Wires Sdn Bhd Berhad* 51% CMS Infra Trading Sdn Bhd 4.16% PROPERTY DEVELOPMENT DIVISION 51% CMS Resources Sdn Bhd 50% SACOFA Sdn Bhd 100% Projek Bandar Samariang Sdn Bhd 100% PPES Concrete Product 44.25% Malaysian Phosphate 100% CMS Property Development Sdn Bhd Sdn Bhd Additives (Sarawak) Sdn Bhd 100% CMS Quarries Sdn Bhd 2017 SUSTAINABILITY REPORT 100% CMS Hotels Sdn Bhd 25% OM Materials (Sarawak) Sdn Bhd 80% Betong Premix Sdn Bhd 51% CMS Land Sdn Bhd 25% OM Materials (Samalaju) 51% CMS Property Management 60% CMS Premix (Miri) Sdn Bhd Sdn Bhd Sdn Bhd 20% 20% KKB Engineering Bhd* 51% Samalaju Properties Sdn Bhd 60% CMS Premix Sdn Bhd 100% Samalaju Hotel 40% 40% Management Sdn Bhd 60% CMS Penkuari Sdn Bhd 100% Samalaju Management Services Sdn Bhd CONSTRUCTION & SERVICES / DORMANT / ROAD MAINTENANCE DIVISION INACTIVE COMPANIES SAMALAJU DEVELOPMENT DIVISION 100% CMS Works Sdn Bhd 100% Cahya Mata Sarawak 100% Samalaju Industries Sdn Bhd Management Services Sdn Bhd 100% CMS Roads Sdn Bhd 100% CMS I-Systems Bhd 100% CMS Pavement Tech Sdn Bhd 100% CMS I-Systems