UEM SUNRISE UEM SUNRISE Find joy and happiness with us as we provide you with a place to call home, grow, learn and take care of what is most important to you. #UEMSunrisewillhelpyou #FindYourHappy Annual Report 2019 UEM SUNRISE BERHAD 200801028815 (830144-W) CoverRATIONALE We believe that our customers’ needs go beyond just having a physical place and we continue to listen, understand and adapt to these needs. Our approach to property is thus one that creates an environment that enriches, invigorates and inspires — to provide a place that can cater to our customers as they grow, change and evolve in their own pursuit of happiness. Our spaces are constructed and curated with this in mind, the representation of a journey that is embedded in our brand values of Caring, Honest, Involved, Enthusiastic and Fun-loving. InsideTHIS REPORT ABOUT THIS REPORT page 02 STRONG GOVERNANCE TO ENSURE pages 72-115 Frameworks and Guidelines Followed 02 STRATEGIC PROGRESS Scope and Boundaries 02 Board of Directors’ Profile 72 Joint Secretaries 84 ABOUT UEM SUNRISE pages 03-09 Senior Management Team’s Profile 85 Vision, Mission & Values 03 Senior Leadership Team 87 2019 Highlights 04 Corporate Governance Overview Statement 88 Financial Calendar 2019 05 Investor Relations 100 Corporate Profile 06 Additional Compliance Information 101 Corporate Information 08 Audit Committee Report 103 Group Corporate Structure 09 Statement on Internal Control and Risk Management 108 Risk Management Report 112 WHAT THE LEADERSHIP SAYS pages 12-51 Directors’ Responsibility Statement 115 Chairman’s Letter to Shareholders 12 MD/CEO’s Letter to Shareholders 16 FINANCIAL STATEMENTS pages 116-271 Management Discussion & Analysis 20 Directors’ Report 117 Five-Year Financial Highlights 46 Statement by Directors 125 Five-Year Group Performance 47 Statutory Declaration Group Quarterly Performance 48 125 Summarised Group Balance Sheet 49 Independent Auditors’ Report 126 Five-Year Financial Review of the Group 50 Statement of Profit or Loss 132 Share Price & Volume Traded 51 Statements of Comprehensive Income 133 Statements of Financial Position 134 CREATING VALUE IN A RESPONSIBLE WAY pages 54-69 Statement of Changes in Equity 138 Our Value Creation Model 54 Statements of Cash Flows 140 Listening to Our Stakeholders 56 Notes to the Financial Statements 142 Our Materiality 58 Our Approach to Sustainability 60 OTHER INFORMATION pages 272-279 Analysis of Shareholdings 272 Material Properties of UEM Sunrise Berhad Group 275 Recurrent Related Party Transactions 276 02 ABOUT THIS REPORT About THIS REPORT REPORTING PRINCIPLES AND FRAMEWORK UEM Sunrise Berhad’s (UEM Sunrise) Annual Report is our primary communication tool informing stakeholders about our progress against our strategic plans and efforts to create value. This Report has been guided by the principles of the International Integrated Reporting Council (IIRC) framework, as we embark on our journey towards producing a full-fledged Integrated Annual Report in the future. UEM Sunrise has further ensured that the Report is aligned with the Malaysian Code on Corporate Governance (MCCG), the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad, the Companies Act 2016, the Malaysian Financial Reporting Standards and the International Financial Reporting Standards. SUSTAINABILITY FORWARD-LOOKING UEM Sunrise produces a separate Sustainability Report annually, which provides a comprehensive STATEMENTS representation of our approach in managing the economic, environmental and social aspects that affect our business and stakeholders. As we move towards Integrated Reporting, we have begun to embed Throughout the Report, we use elements of sustainability into the Report, as illustrated by descriptions of how we engage with our forward-looking statements stakeholders, as well as sharing our material sustainability matters. Further details can be seen in our that relate to the plans, goals, Creating Value in a Responsible Way section on page 54. strategies and future operations and performance of our SCOPE AND BOUNDARIES organisation. These statements are not guarantees of future This Report describes our financial and non-financial performance during the period from 1 January 2019 performance, as they involve risks to 31 December 2019. It covers all aspects of UEM Sunrise’s businesses, whether in Malaysia, particularly and assumptions in the context in the Central and Southern regions, or internationally, namely Australia and South Africa. Apart from of potential scenarios. While we reporting on performance, the Report considers challenges to the business, and opportunities and risks endeavour to progress with our that could impact our value creation abilities. strategies and plans, changes in macroeconomic and operating HOW WE CAN FURTHER IMPROVE landscapes may require us to adapt to follow suit. UEM Sunrise engages with stakeholders frequently and we value your feedback, comments and enquiries on this Report. Our Investor Relations team can be contacted at: [email protected] ANNUAL REPORT 2019 03 Vision, MISSION & VALUES VisionBuilding communities of the future with you MissionUEM Sunrise brings together the talented and the skilled, the imaginative and for you. and the courageous. We create sustainable environments loved by homeowners, acclaimed by investors and recognised by the industry. We believe in thinking big and acting quickly to unlock potential; to thrive in a changing world. ChiefHappiness Officers CARING HONEST INVOLVED ENTHUSIASTIC FUN-LOVING We care about others This interest we have in We need to be actively We remain optimistic As all our ideas, creativity as much as doing good inspiring others in their involved in wanting to and enthusiastic in the and decisions are work. We take pride in quest for happiness support our customers outcome and effect our undertaken to positively what we do and have must come from a place and stakeholders on their efforts are contributing to impact others, we the desire to do the best of honesty. It must be Find Your Happy journey the lives of all the people find this journey both we can consistently – genuine. It must also be regardless of whether it we touch in their Find Your fulfilling and enjoyable. conscientiously finding used positively to build is a masterplan we are Happy journey. ways to improve. and move things forward. developing, a residential We seek and generate Through honesty with tower we are building, With this enthusiasm, ways to find the fun, We find joy in the work an intent to build, a commercial centre we positivity and belief comes excitement and happy we do, in the people we create trust. are constructing, a space a confidence borne out of in everything we do as we do it with and in the we are creating or a child a principled approach far much as we can. environment we create This becomes the whose education we are removed from arrogance to do it in. foundation from which helping. and selfishness. our business is built on We care for people, places and prospers. It influences This involvement must be we create and our planet. and drives the way we driven by genuine interest do business. And the for it to be meaningful, business we are in is to fulfilling and powerful. inspire and help others Find When we are actively their Happy through the involved and genuinely environments we create, interested, we will always the products we offer, find ways to help inspire the services we provide and hopefulness in our initiatives we undertake customers’, stakeholders’ – one space at a time. and colleagues’ Find Your Happy journey. 04 ABOUT UEM SUNRISE 2019HIGHLIGHTS REVENUE PATANCI SALES RM2.9 bil RM224 mil RM1.1 bil (42% increase from FY2018) Introduced Launched RM1.2 bil worth of properties Launched 72.7-acre Kiara Bay masterplan development in Kuala Lumpur adjacent to the Kepong Metropolitan Park brand tagline and with a total GDV of RM15.0 bil CHIEF values Participated in Acknowledged Home for Highest Ranked Ownership Growth in Launched th Campaign Profit After Tax hUb 5 (HOC) 2019 which Over 3 Years mobile app in The Edge contributed to 43% Property Excellence at The Edge Billion UEM Sunrise’s of our sales Awards 2019 Ringgit Club 2019 Awards digital customer self-service channel Launched 11 Achieved BukuHubs Invested in selected 9,917 sales galleries, retail 75% training hours for RM8 mil spaces, schools and in annual Customer in CSR and employees affordable housing Satisfaction Survey community initiatives areas ANNUAL REPORT 2019 05 Corporate PROFILE UEM SUNRISE BERHAD (UEM SUNRISE OR THE COMPANY) IS A PUBLIC-LISTED COMPANY AND ONE OF MALAYSIA’S LEADING PROPERTY DEVELOPERS. IT IS THE FLAGSHIP COMPANY FOR TOWNSHIP AND PROPERTY DEVELOPMENT BUSINESSES OF UEM GROUP BERHAD (UEM GROUP) AND KHAZANAH NASIONAL BERHAD (KHAZANAH). UEM GROUP IS WHOLLY OWNED BY KHAZANAH, THE STRATEGIC INVESTMENT FUND OF THE GOVERNMENT OF MALAYSIA. The Company has core competencies in macro township development; The Company was also responsible for the development of the creative high-rise residential, commercial, retail and integrated developments; retail space in Solaris Dutamas, known as Publika. In 2019, the Company as well as property management and project & construction services. launched its newest integrated development, Kiara Bay, in Kuala Lumpur adjacent to the Kepong Metropolitan Park. Kiara Bay is a 72.7-acre In Malaysia, UEM Sunrise is the master developer of Iskandar Puteri, masterplan development that is set to transform one of Kuala Lumpur’s one of the five flagship zones of Iskandar Malaysia in Johor and is earliest townships into an eco-living destination. currently undertaking the development of the area into a regional city. Iskandar Puteri is envisioned to become the largest fully integrated urban Internationally, the Company has expanded to Melbourne, Australia, with development in Southeast Asia and will provide significant investment, its 88-storey Aurora Melbourne Centre on La Trobe Street and 42-storey financial and business opportunities for the economic growth and Conservatory located on Mackenzie Street. In Durban, South Africa, development of the region, once fully completed.