CAHYA MATA SARAWAK SUSTAINABILITY REPORT 2015

18 CAHYA MATA SARAWAK SUSTAINABILITY REPORT 2015 ECONOMIC We are also tasked with undertaking strong corporate governance measures; enhancing ties and building respect among the communities that we serve; as well as gaining strong support from our shareholders and bankers. Finally, we are to set our sights on private sector-driven profitability; leverage on a strong SCORE play; and develop an expertise that can help us expand globally in the future. Supporting Sarawak’s Sustainable Growth Our Cement Division’s cement operations are managed by CMS Cement Sdn Bhd which produces the CEM 1 standard of Portland cement and operates grinding plants in Kuching and Bintulu. As the sole manufacturer of cement in Sarawak, CMS Cement constantly focuses on improving its pan- State supply chain to ensure that it fulfils its long- term commitment to the growth of Sarawak. CMS Cement is tasked with overseeing the operations of bulk terminals in Sibu and Miri that are outfitted with packing and bulk distribution capabilities. All of the Group’s cement is transported from our plants in Kuching and Bintulu to these terminals via purpose-built all-weather barges equipped with fully enclosed pneumatic self-loading and unloading systems. These efforts ensure all Sarawak’s main centres of economic activity, namely Kuching, Sibu, Bintulu, Miri, and emerging markets such as Samalaju and their hinterlands, have a consistent and sufficient supply of bag and bulk cement to meet their needs. To meet the anticipated increase in cement demand in the State, the Cement Division has also developed a 1.00 million MT per annum grinding plant adjacent to the Mambong clinker plant. The new RM190.0 million plant began commercial cement production in December 2015 and will be fully operational by the first half of 2016. With this third plant, CMS Cement’s total production capacity will increase by almost 60% with an annual combined rated production capacity of 2.75 million MT per annum. This will enable the Group to meet growing cement demand in Sarawak, have significant reserve production capacity, as well as potentially extend its supply into nearby countries. CMS Cement’s staff and operations are avowedly customer-centric in terms of assuring both quality and supply reliability. Our Cement Division has invested: • More than RM56.0 million over the last six years on improving our pan-State distribution capabilities, which include our two bulk terminals; and • RM80.0 million on upgrading our clinker plant’s production capacity and improving operational efficiencies and production quality. OUR 9-POINT SCORECARD SOLID & SUSTAINABLE PROFITS SUPPORTIVE SHAREHOLDERS & BANKERS PRIVATE SECTOR-DRIVEN PROFITABILITY SCORE PLAY GROWING OF EXPORTABLE EXPERTISE CORPORATE GOVERNANCE EXPERIENCED MANAGEMENT TEAM GROWING COMMUNITY RESPECT STRONG BALANCE SHEET & FINANCIALLY PRUDENT We believe that these principles will guide CMS towards becoming the best proxy-listed investment for Sarawak’s accelerating economic growth and will ensure long-term sustainable economic growth for our four stakeholder groups. Sustainable Procurement At CMS, our procurement procedures are transparent, at arm’s length and conducted with a high level of professional conduct. Transactions must be conducted with standard commercial terms that are not more favourable to related parties than those generally available to the public. We are committed to leading with integrity and conducting business relationships with high ethical standards. We insist that directors, owners, employees and vendors (contractors, suppliers or consultants) abide by the terms of our Code of Ethics and Business Conduct (the Code) at all times. Compliance with the Code is also mandatory for vendors to maintain their registration. Fair Competition We expect our suppliers to compete honestly, fairly and ethically for all business opportunities. We expect their statements and representations to be true and accurate in all respects. Suppliers and consultants are forbidden from: • Manipulating the tendering process with other parties or entities; • Engaging in any anti-competitive conduct including tender rigging and entering into any arrangement with other parties that will compromise the genuine competition of those tendering; and • Submitting more than one tender through other parties: o With common shareholders, directors, management and/or operating premises; or o With shareholders or directors as their close family members. Our tendering processes have specific and robust processes, checks and balances built into them. These are based on many years of experience preventing the above issues from occurring. Periodically, these measures have resulted in tenders being recalled and suppliers and their managers being banned as vendors.