This year’s cover visual represents the Boustead Group’s commitment to ensure that the principles RATIONALE of sustainability fully permeate our operations across the Group’s six Divisions. THE SUSTAINABILITY REPORT 2018 CONTENTS 03 ECONOMIC Products & Services 40 Providing Business Opportunities 46 01 OVERVIEW About Boustead Group 4 Financial Highlights 6 Message from the Board Sustainability Committee 8 Sustainability Highlights 14 ENVIRONMENT Awards 15 04 Protecting the Environment 52 OUR APPROACH TO 02 SUSTAINABILITY Overview 18 Sustainability Journey 20 Scope of Reporting 22 SOCIAL Group Sustainability Policy 24 05 Sustainable Development Goals 26 Health & Safety 60 Governance Structure 28 Stakeholder Engagement 32 Human Capital 64 Materiality 34 Reaching Out to Communities 68 Risk Management 36 Scan to view or download our Annual Report 2018 here 2 BOUSTEAD HOLDINGS BERHAD 01 Pharmaniaga delivering medicine to rural areas Sustainability Report 2018 3 01 OVERVIEW About Boustead Group 4 Financial Highlights 6 Message from the Board Sustainability Committee 8 Sustainability Highlights 14 Awards 15 4 BOUSTEAD HOLDINGS BERHAD ABOUT BOUSTEAD GROUP ESTABLISHED OVER 190 YEARS AGO, BOUSTEAD HOLDINGS BERHAD HAS EVOLVED AND REINVENTED ITSELF FROM A MODEST TRADING COMPANY TO NOW A WELL DIVERSIFIED HOME-GROWN CONGLOMERATE. BOUSTEAD IS INVOLVED IN SIX KEY SECTORS OF THE MALAYSIAN ECONOMY, NAMELY PLANTATION, PROPERTY, PHARMACEUTICAL, HEAVY INDUSTRIES, FINANCE & INVESTMENT AND TRADING & INDUSTRIAL. DRIVEN BY A STRONG TALENT POOL OF MORE THAN 17,000 EMPLOYEES, THE GROUP’S TOTAL ASSETS AMOUNT TO RM18.8 BILLION WHILE SHAREHOLDERS’ FUNDS STAND AT RM5.4 BILLION. Sustainability Report 2018 5 PLANTATION PROPerty PHARMACEUTICAL As one of the most experienced The Group’s Property Division is an The Pharmaceutical Division and established upstream oil palm established leader in the property provides an extensive range of plantation players in Malaysia, the sector, involved in key areas services and products catering Plantation Division is backed up by including property development, to the pharmaceutical and a strong track record in plantation property investment, property healthcare industries. Counting both management spanning decades. management, hotel operations Government and private entities The Division manages a substantial and project management. The as clients, the Division is growing land bank throughout Peninsular Division features a strong portfolio its regional presence with its core Malaysia, Sabah as well as Sarawak of assets including award-winning businesses spanning logistics and is a strong proponent for townships, a prominent chain of and distribution, manufacturing sustainable agronomic practices. hotels in addition to commercial and of generic pharmaceuticals residential developments. and medical devices, sales and marketing, distribution of medical products and hospital equipment as well as retail pharmacy. HEAVY INDUSTRIES FINANCE & INVESTMENT TRADING & INDUSTRIAL The Heavy Industries Division’s Led by financial services Apart from being the owner and diverse maritime and aerospace conglomerate, the AFFIN Bank, the operator of Malaysia’s only other interests encompass the defence, Finance & Investment Division’s home-grown retail petroleum enforcement and security as well strong portfolio of businesses offer network, the Trading & Industrial as commercial and energy sectors. a wide range of financial solutions Division is also involved in the The Division’s participation in these comprising consumer banking, manufacturing and distribution of sectors involves a wide range of investment banking, Islamic banking building materials and Industrialised products and services including along with finance and insurance. Building System (IBS). The Division shipbuilding of naval vessels, The Division is also invested in other also provides project management fabrication for the oil and gas key sectors of the economy including expertise for construction work. industry, aviation support services, education, travel and tourism. ship repair and maintenance, repair and overhaul services. 6 BOUSTEAD HOLDINGS BERHAD TOTAL ASSETS SHAREHOLDERS’ 2018 EQUITY RM18.8 billion RM5.4 billion REVENUE CAPEX & ACQUISITION RM10.2 billion RM1.0 billion FINANCIAL HIGHLIGHTS EBITDA NET ASSETS PER SHARE RM220 million 265 sen DIVIDEND YIELD LOSS BEFORE TAXATION 3.5% RM388 million Sustainability Report 2018 7 Maintaining the environment at Royale Chulan Cherating Resort 8 BOUSTEAD HOLDINGS BERHAD MESSAGE FROM THE BOARD ECONOMIC sustainability commITTEE ENVIRONMENT As a diversified conglomerate, Boustead Holdings Berhad is committed to excellence in sustainability by integrating sustainable practices into all aspects of our business activities. The Group is heartened to note that our efforts in balancing economic prosperity, environmental protection and social SOCIAL responsibility have had a positive impact. Sustainability Report 2018 9 SOCIAL Bousteadians, champions of sustainability Following through from our efforts in 2017, we further streamlined our material issues to focus on six key matters in relation to our Group’s business operations based on stakeholder priorities. We also determined our materiality assessment plan for future Sustainability Reports. With this new plan, we will review the materiality matrix and material issues based on the risk, opportunities and impact of the Group annually while a complete revision of the materiality matrix, if necessary will be undertaken every two years following comprehensive stakeholder engagement. Our inaugural standalone Sustainability Report will offer a holistic overview of the Group’s sustainability efforts for the year. 10 BOUSTEAD HOLDINGS BERHAD MESSAGE FROM THE BOARD SUSTAINABILITY COMMITTEE ECONOMIC The Group is committed to continuous We are passionate about strengthening the Almost investment in research and development local economy by prioritising surrounding (R&D) to ensure that our products and communities for employment as well as services are relevant and meet the needs business opportunities. of our customers. The Pharmaceutical Division offers In 2018 alone, the Pharmaceutical Division prospects for growth and skill enhancement 40 registered almost 40 new products of to local vendors and entrepreneurs through various dosage forms while developing several successful programmes including NEW PRODUCTS phytomedicine with scientifically proven its Bumiputera Vendor Development medicinal claims, set to shine a spotlight on Programme and RoyalePharma Alliance the appeal of local herbs as phytomedicine. Programme which positively impacted almost 300 vendors and entrepreneurs 2,984 The Heavy Industries Division’s R&D during the year. REGISTERED VENDORS initiatives during the year was focused on the implementation of advanced technology The Heavy Industries Division has to produce state-of-the-art products and 2,984 registered vendors in its business services. ecosystem. As a result of the Group’s long-term In addition, our Plantation Division agronomic R&D initiatives, our Segaria awarded 200 landowners with contract CONTRACTS FOR and Sungai Jernih mills have consistently work over the years. surpassed the national average oil extraction rate of their respective regions 200 since 2009, demonstrating our ability to LAND OWNERS produce more with less. Sustainability Report 2018 11 MESSAGE FROM THE BOARD SUSTAINABILITY COMMITTEE ENVIRONMENT As a diversified conglomerate, we are conscious of how much the environment is a part of the Group’s overall business ecosystem. Our goal has and will always be to continuously safeguard the environment while pursuing growth. In line with our commitment to environmentally friendly business practices that promote the preservation of the environment, our Plantation Division has in place several sustainability policies including, Best Environmental Management Practices, Good Agricultural Practices (GAP) and Good Milling Conserving a natural waterfall at Sg. Jernih Estate, Pahang Practices (GMP) which govern the Division’s daily operations. Our Property Division’s Mutiara and vehicles are maintained regularly Damansara township is home to a Green to minimise emissions and maximise Building Index Gold Rating and Multimedia energy efficiencies. Super Corridor Status office tower, the WE ARE COMMITTED Nucleus Tower. BHPetrol conducts Environmental Impact Assessment (EIA) studies for all new TO ENVIRONMENTALLY All our shipyards within the Heavy projects to determine environmental Industries Division have a stringent zero impact while continuous monitoring burning policy in place and are equipped is conducted on the quality of effluent FRIENDLY BUSINESS with controls to prevent oil and water discharge and its effect on the environment. spillage. In addition, waste and scrap PRACTICES are segregated to prevent rubbish or Environmentally friendly measures are waste from being disposed into the implemented across the Pharmaceutical sea while all equipment, machineries Division including recycling, energy saving, waste reduction, anti-pollution and water harvesting. 12 BOUSTEAD HOLDINGS BERHAD MESSAGE FROM THE BOARD SUSTAINABILITY COMMITTEE In 2018, the Trading & Industrial Division Across the Group, we are committed to collaborated with the Department of create and sustain an engaged work culture Occupational Safety and Health Malaysia that attracts, retains and motivates our (DOSH) on a weeklong programme to employees through fair and competitive SOCIAL highlight the