CAHYA MATA SARAWAK ANNUAL REPORT 2016

www.cmsb .com.my Section 03 P E R F O RMAN C E 2 0 1 6 Cahya Mata Sarawak Berhad 14 In light of the above, the Board is proposing a first and final tax exempt (single-tier) dividend of 6.30 sen per share subject to shareholders’ approval at the forthcoming Annual General Meeting. This represents a payout ratio of 40.01% and amounts to a dividend payable of RM67.69 million for FY 2016 (FY2015: RM48.35 million). Today, your Company continues to maintain a healthy balance sheet and a comfortable level of gearing. Our relatively low gearing these last four years coupled with our robust cash and cash equivalent reserves, is a delibrate policy to position ourselves for future investment opportunities. Going forward, we are finalising the proposal to undertake a Sukuk Programme of up to RM2.00 billion in nominal value for a period of up to 20 years. This proposed Sukuk Programme will help fundCMS’ working capital, capital expenditure and other general funding requirements and/or general corporate purposes. By having substantial cash reserves, strong positive cash flows and access to long-term debt funding through the planned Sukuk in this challenging economic climate, CMS has the flexibility to more easily capitalise on attractive investment opportunities which may from time to time arise whether it is brownfield expansion on an existing business or a new investment. I am delighted to report that CMS continues to create value for our shareholders in other ways and make Sarawak proud through the accolades that we receive. On 19 December 2016, the Group was included as a constituent of the FTSE4Good Bursa Malaysia (F4GBM) Index. The F4GBM Index is a globally recognised index launched by the FTSE Group, owned by the London Stock Exchange. It measures and recognises companies across the world demonstrating strong Environmental, Social and Governance (ESG) practices. The F4GBM Index constituents are selected from the top 200 Malaysian stocks in the Bursa Malaysia Index, screened in accordance with the transparent ESG criteria. In total, there are 42 constituents in the F4GBM Index. This is a significant achievement for CMS and underscores our sustainability practices via an internationally-recognised index. To our investors and our community, it positions us as a progressive and ethical company and reduces our perceived non- financial risk profile by being a company with a more sustainably-based and thus safer, long-term business model. This achievement is a result of the worthy efforts put in by the entire Group including our Board, Senior Management team and employees. To maintain this recognition (which is reviewed annually), we now have the responsibility to constantly exceed our Sustainability KPI (SKPI) targets and to ensure comprehensive reporting in our annual Sustainability Report. UPHOLDING RESPONSIBLE PRACTICES Good governance translates into good business and your Board remains committed to upholding and implementing strong standards of corporate governance, as well as robust risk management and internal control measures throughout our organisation. As integral components of our business, these elements are helping ensure the sustainable, long-term growth of our businesses, strengthening investor confidence, safeguarding our corporate reputation and ensuring continued shareholder value creation. In continuously seeking to uphold the highest corporate governance standards, the Group subscribes to the principles, guidelines and recommendations set out in the Second Edition of the Corporate Governance Guide issued by Bursa Malaysia Berhad and the Malaysian Code of Corporate Governance (MCCG) 2012. In the area of risk management, we continued to undertake the necessary measures to strengthen our risk profile while reinforcing our bottom-up approach to embed a more robust risk management process and culture across all levels of the organisation. We strongly believe in undertaking the necessary due diligence for new investments while maintaining conservative and prudent evaluation criteria, particularly in this current economic climate. As such, all new investments must undergo a stringent risk mitigation process before being brought before the Board. As a conscientious corporate citizen, we are genuinely committed to balancing out our strong economic performance with responsible environmental and social considerations. This will help ensure we deliver a sustainable performance and good stakeholder value while ensuring CMS’ long-term success. For more information on our sustainability achievements, kindly refer to our second standalone Sustainability Report titled ‘Strengthening Our Sustainability Momentum’ that has been published in line with Bursa Malaysia’s sustainability requirements. STAYING THE COURSE Despite a turbulent 2016, CMS has got back on track and is determined to stay the course. While the year in review saw us losing some of the momentum we had built up for some six years straight, rest assured that the Group continues to be driven forward by a combination of demonstrable factors that are ensuring our long-term growth. These include CMS’ continuing focus on proven and sustainable core businesses that revolve around, firstly, infrastructure and related services businesses, and secondly, the energy-intensive industry sector. By setting our sights on investments back into our core businesses, we are ensuring that we create a sustainable growth pathway for the long-run. Chairman’s Statement