REWARDING MEMORIES, RISING HIGH ANNUAL REPORT 2010 Cover Rationale This year has been filled with many rewarding memories and Sunway City Berhad is now aiming towards greater heights. After a year of great success, Sunway City Berhad has now elevated itself, rising high just like the hot air balloons and will continue to grow. 3 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Vision A premier property company focusing on quality real estate development and investing in properties with attractive yields that augment its township development to generate excellent returns that maximise shareholders’ value. Sunway City Berhad Group of Companies shall achieve the vision through the realisation of the following goals: • Exceeding customers’ needs with superior and innovative products and services. • Building and developing a culture and environment that promote excellence and dedication in its stakeholders. • Utilising technology to enhance the Group’s competitive advantage in the marketplace. Mission To create a conducive environment for living, working and leisure by transforming the existing landscape and/or landform into well-designed and visually stimulating structures that will greatly enhance its value. 4 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Financial Calendar 5 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Announcement Of Interim Dividend 31 sen Interim Dividend less 25% income tax for the Quarterly Results financial year ended 31 December 2010 27 MAY 2010 Announcement of the notice of entitlement and payment: Announcement of the unaudited consolidated results for 23 AUGUST 2010 the 1st quarter ended 31 March 2010 Date of entitlement: 20 AUGUST 2010 9 SEPTEMBER 2010 Announcement of the unaudited consolidated results for the 2nd quarter ended 30 June 2010 Date of payment: 7 OCTOBER 2010 24 NOVEMBER 2010 Announcement of the unaudited consolidated results for the 3rd quarter ended 30 September 2010 Annual Report and 22 FEBRUARY 2011 Announcement of the unaudited consolidated results for Annual General Meeting the 4th quarter ended 31 December 2010 6 JUNE 2011 Date of notice of 28th Annual General Meeting and date of Final Dividend issuance of Annual Report 2010 5 sen Final Dividend less 25% income tax for the financial 30 JUNE 2011 period ended 31 December 2009 Date of 28th Annual General Meeting Announcement of the notice of entitlement and payment: 31 MAY 2010 Date of entitlement: 24 AUGUST 2010 Date of payment: 22 SEPTEMBER 2010 6 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Table of contents Sunway City Performance Exemplary Key Business Corporate Review Leadership Segments 8 38 50 64 Corporate Profile 8 5-Year Financial Highlights 40 Profile of Board of Directors 52 Property Development 66 SunCity in the Limelight 12 Segmental Performance 41 Profile of Management Team 58 Property Investment & REIT 76 Group Corporate Structure 14 Chief Financial Officer’s Review 42 Hospitality 80 Corporate Information 16 Value Added Statement 48 Leisure 84 Corporate Philosophy 18 Share Performance 49 Healthcare 88 Chairman’s Statement 20 Calendar of Significant Events 26 Awards and Accolades 30 Our Hallmark of Green Awards 36 7 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Corporate With Shareholdings’ Responsibility Integrity Financials Information 92 116 154 364 Marketplace 96 Corporate Governance Statement 118 Directors’ Report 156 Directors’ Interests in Shares, Workplace 100 Terms of Reference of Executive Statement by Directors 166 Options over Ordinary Shares Environment 108 Committee of the Board 127 Statutory Declaration 167 and Warrants 364 Community 112 Terms of Reference of Independent Auditors’ Report 168 Analysis of Shareholdings 365 Nomination Committee 130 Income Statements 171 Analysis of Warrantholdings 368 Terms of Reference of Statements of Comprehensive Income 172 Remuneration Committee 131 Statements of Financial Position 173 Terms of Reference of Employees’ Statements of Changes in Equity 177 Annual General Meeting Share Option Scheme Committee 132 Statements of Cash Flows 180 Terms of Reference of Risk Notes to the Financial Statements 184 Notice of 28th Annual General Meeting 370 Management Committee 134 List of Properties 344 Proxy Form Audit Committee Report 135 Recurrent Related Party Transactions 363 Statement on Internal Control 140 Enterprise Risk Management 142 Additional Compliance Information 146 Investor Relations 150 8 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Corporate Profile Sunway corporateCorporate headquartersHeadquarters 9 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Sunway City Berhad SunCity was incorporated as a private limited company in of wasteland, the pristine, well-landscaped resort township Malaysia on 13 July 1982 as Sri Jasa Sdn Bhd and subsequently expresses the unique ‘Resort Living within the City’ concept. (“SunCity”) is a dynamic and changed its name to Sri Jasa Development Corporation Sdn Bhd integrated Malaysian property on 1 December 1986 and Bandar Sunway Sdn Bhd on 25 July It also reflects the Group’s commitment to make livability a top priority as the township is equipped with the finest in retail and conglomerate and consists of 1987. It was converted to a public limited company on 24 July 1995 and assumed its present name, Sunway City Berhad on 2 commercial; hospitality; leisure and entertainment; healthcare both Property Development and April 1996. SunCity’s successful listing on the Main Market of and education facilities. Bursa Malaysia (formerly known as Main Board of Kuala Lumpur Property Investment divisions. The internationally-acclaimed ‘Resort Living within the City’ will Stock Exchange) on 8 July 1996 is a testament to its solid soon be further complemented by the development of SunCity’s As a result, this has enabled business management and aspiration to evolve even further as next iconic attraction, the RM5.2 billion Sunway South Quay an integrated real estate conglomerate. the Group to enjoy the ‘Best of project which will be an international lakeside metropolis. Both Worlds’ – a high-growth Property Development division High-Growth Property Development Division and a stable base of income High-Yielding Property Investment Division As a property developer, the Group has vast experience in SunCity’s property investment division on the other hand holds from high-yielding investment developing innovative and quality residential and commercial a truly diversified portfolio of quality properties which includes properties. In its quest to create a ‘better life’ for communities properties. shopping malls, office buildings, education buildings, hotels, in Malaysia and overseas, SunCity constantly takes steps to theme parks and hospital, establishing itself as an international deliver products and services of unrivalled quality and value for class investment and commercial property player in the region. its customers. This has helped to solidify the Group’s status as a leading community master developer. With the vast majority of investment assets achieving good yields, the property investment division has step up on the value The Property Development division has delivered over 17,000 chain by injecting eight prime properties totalling RM3.7 billion properties with a gross development value (“GDV”) of RM20 in asset value into Sunway Real Estate Investment Trust (“REIT”), billion. As at 1 May 2011, the Group has an unlaunched landbank making it Malaysia’s largest listed REIT on the main market of 1,872 acres with a GDV of RM20 billion. of Bursa Malaysia. The eight properties are Sunway Pyramid, The crowning jewel for SunCity is the RM6.9 billion Sunway Sunway Carnival Mall, SunCity Ipoh Hypermarket, Sunway Resort Integrated Resort City development, popularly known as Bandar Hotel & Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya, Sunway, which spans an impressive 7-million-square feet Menara Sunway and Sunway Tower. development in the Klang Valley. Transformed from 800 acres 10 SUNWAY CITY BERHAD ANNUAL REPORT 2010 Corporate Profile Hospitality Division Healthcare Division A Recognised and Well-Known Brand The Hospitality division manages a collection of hotels and Sunway Medical Centre (“SunMed”) adds to the Group’s position resorts encompassing three brand names - Sunway Hotels & as a provider of quality healthcare services under the Healthcare The strength of the Sunway brand has been widely recognised by Resorts, Allson Hotels & Resorts and The Banjaran Hotsprings division. SunMed has been ISO 9001: 2008 certified since 2003 both local and overseas associations. For two consecutive years Retreat; representing over 3,400 guestrooms. Its international and in compliance with MS ISO 15189 and Malaysian Society for in 2008 and 2009, Sunway won the Malaysia’s Most Valuable portfolio of hospitality products and services ranges from a Quality in Health (MSQH) accredited private hospital. SunMed is Brand Award by Interbrand and the Association of Accredited luxury collection and spa retreat, 5-star hotels with world-class one of the foremost private medical care centres in the nation Advertising Agents Malaysia (4As) and the Brand Laureate convention, meeting and exhibition facilities, luxurious villas, with a total of 350 beds, more than 100 consultation suites, 12 Conglomerate Award by Asia Pacific Brands Foundation. Winning serviced townhouses and suites, 4 and 3-star hotels, to technical operation theatres and a multi-storey car park with 700 parking both the awards for two consecutive years affirms Sunway’s services, travel services, franchise management as well as hotel bays. SunMed offers a comprehensive