CAHYA MATA SARAWAK SUSTAINABILITY REPORT 2015

17 CAHYA MATA SARAWAK SUSTAINABILITY REPORT 2015 ECONOMIC The Economic dimension of sustainability refers to the capacity of the CMS Group to generate steady, improving growth in relation to our economic indicators. We view this as an important dimension as a strong, stable and sustainable financial and economic system supports, not just the Company, but various other critical activities. These include, amongst others, our ability to continually drive shareholder value, to ensure the well-being of our staff, to ensure a continued focus on improving our product quality and to ‘Do Good’ while expanding our Corporate Responsibility activities. These and other economic activities are essential to our make-up as a responsible corporate entity, as such we are absolutely committed to and focussed on delivering long-term sustainable economic growth. Our Sustainable Business Model Today, CMS is being driven forward by a combination of factors that are ensuring the Group’s long-term sustainable growth. Our business model is based on the Group’s focus on proven core businesses within Sarawak that revolve around, firstly, infrastructure and related services businesses, and secondly, energy- intensive industry investments. Sarawak, under the Eleventh Malaysia Plan (11MP) is projecting economic growth of between 6%-7% per annum from 2016 to 2020. In line with this, Sarawak’s nominal GDP is expected to increase from RM122.5 billion in 2015 to RM171.3 billion in 2020. During the same period, nominal GDP per capita is also expected to increase from RM46,489.00 to RM61,406.00. Via the Sarawak Corridor of Renewable Energy (SCORE), Sarawak anticipates it will achieve the following growth milestones by 2030 – a five-fold rise in the State’s GDP and the creation of 1.6 million additional jobs. With RM334.0 billion expected to be injected into Sarawak’s economy by 2030 (approximately 20% from the government and 80% from the private sector), things bode well for the State. Today, CMS’ core Business Divisions, namely our Cement, Constructions Material & Trading, and Construction & Road Maintenance Divisions continue to generate the bulk of the Group’s revenue and earnings. Their roles revolve around the infrastructure facilitator space within Sarawak and they are expected to continue to grow in tandem with the State’s own economic growth. As we ramp up the pace of development in relation to our Kuching land banks and the Samalaju permanent township, our role in township and property development too is set to strengthen. These developments are led by our Property Development Division and Samalaju Development Division respectively. The long-term sustainable growth potential for both our property development arms is underpinned by their large land banks. Via SCORE and the State’s rising economy, there is expected to be an increase in both economic expansion and urbanisation rates. These are expected to serve as catalysts for the Group’s land bank developments with demand for townships and housing projected to rise steadily. This coupled with both our property development divisions’ own continuous efforts to bolster their respective portfolios positions them as ‘hidden gems waiting to be unlocked’. CMS’ strategic investments too can be viewed as the catalysts that would accelerate our next phase of transformational growth. Our 25% stake in the joint venture ferrosilicon and manganese alloys smelter project with Australian-listed OM Holdings Ltd, our 40% stake in an integrated phosphate products complex with Malaysian Phosphate Ventures Sdn Bhd and Arif Enigma Sdn Bhd, plus our 50% stake in Sacofa Sdn Bhd, a Sarawak-based telecommunications infrastructure and services company, are all poised to drive up shareholder value in the long-term. These investments are all projected to start contributing towards CMS’ financial results from the period 2016 to 2020. We believe that this phase will take CMS to ‘the next level’. Meanwhile, CMS’ transformational growth will come from the Group’s current core businesses which have been fully outfitted to participate in the infrastructure project and related services requirements that are ensuing as the State develops. Our transformational growth will also come from the Group’s energy-intensive investments in SCORE and our investment in the telecommunications infrastructure segment. All of our growth components are supplemented by CMS’ strong balance sheet, competent workforce and experienced management. We remain confident that as we stick to our planned strategies while adapting to market conditions, we will continue to deliver significant sustainable and transformational profits growth. Our aspiration in all this is to become a Top 30 Company in Malaysia with RM10.0 billion in market capitalisation. Our 9-Point Scorecard To further assist us in achieving economic and transformational growth, we are also guided by our 9-Point Scorecard. This is a set of principles that drives us to stimulate sustainable financial growth thereby ensuring a continuous robust performance. Our 9-Point Scorecard principles require us to sustain solid and sustainable profits; uphold prudent financial policies to ensure a strong balance sheet; as well as ensure an experienced and professional management team in steering CMS forward. Our aspiration is to become a Top 30 Company in Malaysia with RM10.0 billion in market capitalisation.