Stay Together. Stay Integrated Report 2018 >> GROUP HIGHLIGHTS 2018 Earnings Per Share 14.8 sen Shareholders Fund Dividend Per Share RM14.14 8.55 sen billion Ongoing Projects 45 Effective Land Banks 9,516 acres Revenue Strong GDV in the Pipeline Unbilled Sales Total Sales RM3.59 RM149.70 RM12.32 Achieved billion billion billion RM5.12 Profit Before Tax Profit Attributable to Owners Total Strong, Dynamic & billion RM991.0 of the Company Diversified Employees million RM671.0 2,300 million People* * Approximate 1 STAY TOGETHER. STAY SETIA >> Inside this Report Our growth trajectory is anchored in sound fundamentals. Our diligence, integrity and Content persistent focus on sound business practices provide a solid foundation for our continued delivery of value in the long term. Introduction 6 Our Approach to Reporting With decades of experience setting the bar in 8 About This Integrated Report Malaysia’s property market, we know beyond a doubt that it is only together that we can thrive. Our Business Our success is a truly befitting reflection of our 10 Who We Are belief that together, we can weather all challenges 12 Our Presence and achieve even greater heights. 14 Corporate Structure 17 Corporate Information As we continue to expand, we are also now 18 Corporate Calendar celebrating the deeper meaning that our name 25 Accolades stands for. We remain loyal to our stakeholders and steadfast in our commitment to quality and Our Leadership growth – striving to ensure a better life for all. 26 Chairman’s Message 30 Board of Directors Therefore, in staying true to our nature and our 40 Key Management Profile name, we will continue to “STAY TOGETHER. STAY SETIA”. Our Value Creation Model 44 Value Creation 48 Building Trusted Relationships 49 Material Matters Performance Review 52 Management Discussion and Analysis 74 Group Financial Summary Our Commitment to Sustainability 76 Sustainability Statement 2 Our Governance 102 Corporate Governance Overview Statement 121 Additional Compliance Information 3 126 Statement on Risk Management and Internal Control Our Financial Statements 138 Corporate Information 139 Directors’ Report 146 Statements of Financial Position 149 Statements of Comprehensive Income 151 Consolidated Statement of Changes in Equity 1 Artist impression of KL Eco City 153 Statement of Changes in Equity 155 Statements of Cash Flows 2 Artist impression of Sapphire by the Gardens 159 Notes to the Financial Statements 3 Sanctuary of Western Heritage – Setia Eco Glades 295 Statement by Directors 4 Artist impression of the poolside at TRIO by Setia 295 Statutory Declaration 296 Independent Auditors’ Report Other Information 304 Analysis of Shareholdings 310 List of Material Properties Held by The Group 311 Notice of Annual General Meeting Watch our “Stay Together. 316 Group Directory Stay Setia” brand video Form of Proxy 4 >> Vision, Mission and Core Values Vision, Mission and Core Values Vision Mission TO BE THE BEST IN ALL WE DO • To provide superior customer service and satisfy customer needs through a culture of excellence • To enhance shareholder’s value • To be a caring and responsible employer • To be mindful of our social responsibilities A diverse Team Setia is our asset Our Values At S P Setia, we take pride in the work that we do. We have a clear purpose in mind with a transparent SCRIPT which serves as the core values that guide us every day. S C R I P T SETIA’s Customers Responsibilities Integrity Professionalism Team Setia Work Ethics • Respect • Serve with • Commitment • Honesty • Work • Teamwork • Support one passion to success • Reliability professionally • Embrace diversity S P Setia Corporate another • Responsive to • Learn & grow • Continuous Headquarters (Roof Garden) needs improvement INTRODUCTION S P Setia Berhad Group >> Our Approach to Reporting Introduction ICON NAVIGATION This report provides information that we believe The icons in this report are applied is of material interest to stakeholders who wish to throughout to improve usability. The icons make an informed assessment of S P Setia’s ability > show the integration between relevant to generate value in the short, medium and elements of the report and how we use long-term. our strategies and resources to create sustainable value for our stakeholders. We have sought to ensure that all information in this report relates to matters that have material bearing on value creation at S P Setia. Financial Capital Our business and activities (page 52) along with the impacts across our value chain (page 44) represent the main aspects through which we are able to mobilise value creation. Our true value Manufactured Capital is reflected in the manner in which we operate throughout the year (page 52) and by our response to the resulting risks and opportunities (page 48) and how we continue to meet stakeholder needs Human Capital (page 50). Making an informed assessment of our business and sustainability response requires an overview Social and Relationship Capital of material matters (page 76) in the Group. The material matters included in this report were identified through a structured process involving key internal stakeholders and incorporating Natural Capital S P Setia’s business model and operating context. We welcome feedback on this report. Please address any questions, comments or suggestions to corporate via email: [email protected] 6 INTEGRATED REPORT 2018 7 INTRODUCTION S P Setia Berhad Group >> About This Integrated Report About This Integrated Report This Integrated Report is our primary report to shareholders and other stakeholders. It is supplemented Standards and Guidelines by documents published as part of our annual results announcement on our website and the disclosures This report applies the Guiding Principles of the International Integrated Reporting <IR> Framework and aligned with the Global outlined below. Reporting Initiative (GRI) Standards: Core option. Reporting Boundary and Scope All financial statements have been prepared in accordance to the requirements of the Companies Act 2016 and the Malaysian The Integrated Report covers the primary activities of S P Setia, our business Financial Reporting Standards (MFRS). Our inaugural Integrated divisions, subsidiaries in the Malaysian and international operations as well as Report includes progress of entities where S P Setia holds a controlling stake unless otherwise stated. Prepared Our Capitals in accordance with the International Integrated Reporting <IR> Framework, our our sustainability approach, first Integrated Report provides a concise and material assessment of our strategic Our relevance as a business today and in the future, as well as our ability to create long-term value, are interrelated and path for achieving strong financial performance while also delivering environmental how far along the journey fundamentally dependent on the forms of capital available to us (our inputs), how we use them (our value-added activities), and and societal value in an increasingly dynamic business sector. The information we are and the value our presented in this report describes the manner in which this value is created for our our impact and the value we produce (our outputs and outcomes). sustainability initiatives have key stakeholders, including employees, regulators, suppliers and business partners, analysts as well as the communities in which we operate. added to our business. The report describes S P Setia’s approach to sustainability and provides insights into S P Setia is committed our strategies. The scope highlights the economic, environmental and social aspects to providing stakeholders of our developments and operations in Malaysia, Vietnam, Australia, Singapore, Financial Manufactured Human Social and Natural China and the United Kingdom. Capital Capital Capital Relationship Capital Capital with credible, transparent and timely information on Reporting period Shareholders’ equity Business structure Our people, Team Community Managing our and funding that and products Setia, are at the contribution our business sustainability impact on natural This is S P Setia’s inaugural Integrated Report, with subsequent reports to be are used to support including our heart of all that efforts, including resources through produced annually henceforth. This Integrated Report encapsulates material performance with particular business and development we do and we the developments our operations and information encompassing our strategy and business model, operating contexts, regard to risks, opportunities material risks, stakeholder interests, performance, prospects and governance from operational activities projects. continue to invest that we build and business activities. including expansion Manufactured capital in their growth in operate. and challenges. 1 January 2018 to 31 December 2018 unless otherwise stated. activities. also encompasses addition to nurturing Our transition to integrated reporting marks our continuous efforts to improve our operational a culture that information disclosures. processes as well as incubates innovative the framework and and sustainable OUR PRIMARY REPORTS TO STAKEHOLDERS mechanics of how development we do business and solutions for our Interim Reports Financial Results and Group Updates Corporate Governance Reports support the needs of customers. • Malaysian Companies Act 2016 • Malaysian Financial Reporting Standards (MFRS) • Main Market Listing Requirements our customers. of Bursa Malaysia Securities Berhad • Malaysian Code on Corporate Governance