Sime Darby Property : Corporate Governance Report 2023

CORPORATE GOVERNANCE REPORT

STOCK CODE	:	5288
COMPANY NAME	: SIME DARBY PROPERTY BERHAD
FINANCIAL YEAR	:	December 31, 2023

OUTLINE:

SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B - DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PURSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

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SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's

leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1

The board should set the company's strategic aims, ensure that the necessary resources are

in place for the company to meet its objectives and review management performance. The board should set the company's values and standards and ensure that its obligations to its shareholders and other stakeholders are understood and met.

Application	:	Applied
Explanation on :	The Board of Directors ("the Board") of Sime Darby Property Berhad
application of		("Sime Darby Property" or "the Company") is responsible to ensure
the practice		sustainable long-term performance, creation of positive economic
		value and growth for the Group as well as maximise returns for
		shareholders.
		The Board is committed to anticipate and analyse governance trends
		to enhance board effectiveness and future-proof the organisation
		against unforeseeable vulnerabilities, such as labour-related
		challenges and escalating material prices as well as market
		challenges and headwinds, with measures to ensure sustainable
		growth and business continuity, while enhancing resilience and
		adaptability to numerous market opportunities.
		The Board's oversight role focuses on continuing to build a resilient
		organisation while also laying the foundations for the Group's future
		success. The Board has a responsibility to drive the long-term
		success of Sime Darby Property, by constructively challenging and
		supporting the development of the Sime Darby Property Group's
		("the Group") strategy, for the benefit of the broader group of
		stakeholders, consumers, society and shareholders, and at the
		same time, instil a culture of continuous improvement and
		developing talent to drive organisational transformation.
		The Board is guided by its Board Charter to ensure that it effectively
		discharges its duties and responsibilities under Clause 5.1. The
		Board Charter is available on the Group's website at
		www.simedarbyproperty.com/who-we-are/corporate-governance.
		The Board has put in place a robust Corporate Governance
		Framework where specific powers of the Board are delegated to the
		relevant Board Committees and the Group Managing Director
		("GMD").

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The Board is assisted by the following Board Committees during the financial year under review:

1. Audit Committee ("AC")
2. Nomination and Remuneration Committee ("NRC")
3. Risk Management Committee ("RMC")
4. Board Tender Committee ("BTC")
5. Board Sustainability Committee ("BSC")

The Terms of Reference ("TOR") of the AC, NRC, RMC, BTC and

BSC are available on the Group's website at www.simedarbyproperty.com/who-we-are/corporate-governance.

The Board has clearly demarcated the day-to-day operational functions of the Management and the overall responsibilities of the Board through the Board Charter, Board Committees' TOR, Group Policies and Limits of Authority, TORs and other governance documents.

As guided by the Board Charter, the Board assumes, among others, the following seven (7) principal responsibilities:

1. Promoting Good Corporate Governance Culture

The Board, together with Management, is committed to continuously promote a good corporate governance culture within the organisation. In discharging its duties and responsibilities, the Group's business activities are governed by

1. set of high-level Group policies, known as the Group Policies and Authorities ("GPA"), which is a key component of Sime Darby Property's corporate governance framework as they serve as a tool by which the Board formally delegates functions and powers to the Management. It clearly defines relevant matters and applicable limits, including those reserved for the
   Board's approval, and those which the Board may delegate to the Board Committees, GMD and Management.

Sime Darby Property's Purpose, Vision, Mission and Values ("PVMV") statement was launched in June 2022 with the main aim to drive the direction and behaviour expected from the Group's employees, outlined as follows:

• Purpose
• Vision
• Mission
• Values

• To be a Value Multiplier for people, businesses, economies and the planet.
• Advancing real estate as a force for collective progress, in harmony with the planet's resources.
• To develop, own and manage a thriving asset portfolio that creates value for all stakeholders.
• 'TEAM'

1. T - Together we do what's right o E - We lead with Excellence
   o A - We embrace new Approaches o M - We Make things happen

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1. Reviewing and Adopting a Strategic Plan for the Group
   The Board plays an active role in the development of the Group's strategy and monitoring its performance and implementation.
2. 1. Sime Darby Property has an annual business plan process in place whereby the Board meets with the Management to discuss on the recommended corporate and operational strategies together with the proposed financial targets, investments and budgeted capital expenditures of the Group.
   2. As part of the strategic planning process, for the financial year 2023 ("FY2023"), the Board Strategy Session was held from 21 to 23 October 2022 for the Board to deliberate and provide feedback on the proposed Annual Operating Plan ("AOP") for Financial Years ("FY") 2023 to 2025, together with the proposed financial targets, investments and budgeted capital expenditure of the Group. These engagements also strengthen the working and personal relationship between the Board and Management as well as drive collaborative efforts and, promote trust within the organisation.
      A Mid-Year Review exercise was conducted from 1 to 3 August 2023 to stock-take and review the Company's performance in the first half of FY2023, forecast and align with the FY2023 full-year financial results and corporate scorecard performance, discuss on key challenges and brainstorm solutions and support required, pulse-check on People-related priorities and kick-startpre-emptive planning for the FY2023 AOP.
   3. A Pre-Board Strategy Session was held on 9 October 2023 to discuss the current market and industry trends and issues as well as seed ideas in setting the basis for the FY2024 Corporate Direction. The session was useful in obtaining feedback from the Board on the proposed AOP for FY2024 to FY2026 and Financial Budget for FY2024. Sharing sessions from both local and international industry experts were also held as part of the Pre-Board Strategy Session.
   4. In November 2023, the Board approved the proposed AOP for FY2024 to FY2026 with some suggested improvements / refinements. These would be tracked and reported to the Board every quarter. Subsequently, a 2-day Annual Management Dialogue for the top 350 leaders (Assistant Managers and above) of the Group was held in February 2024 to review Sime Darby Property's full-year 2023 performance, discuss and align key strategic plans to achieve the Group's goals and take stock of the progress of its transformation journey, the gaps and actions plans. This platform enabled participants to learn and discuss the strategic plans presented by various operating units within the Group.

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The Management gained constructive input / guidance from the Board on the way forward with its AOP as well as the regulatory landscapes and challenges of the property and real estate industries in Malaysia.

The Board continues to provide its guidance, views and feedback to ensure that the strategies are well implemented, and the business of the Group is properly managed to safeguard the shareholders' interest in its journey towards becoming a real estate company by 2025, producing sustainable and impactful value to customers and stakeholders.

1. Overseeing Conduct of the Group's Business
   The Board monitors the conduct of the Group's business via the report by GMD presented at quarterly Board meetings. The Board, on a continuous basis, is well informed of the progress of the Group's strategic initiatives and critical operational issues as well as its performance based on the approved Key
   Performance Indicators ("KPIs").
   The Board, comprising members with diversified knowledge and skills, are accessible and acts as a sounding board to the GMD and the Management team to bounce ideas and obtain views.
2. Identifying Principal Risks and Ensuring the Implementation of Appropriate Internal Controls and Mitigation Measures
   A Risk Management Framework is in place to enable the Group to identify, assess and manage / mitigate risks. The Board, through the RMC, assists the Board to fulfil its responsibilities relating to risk governance and risk management to manage the overall risk exposure of the Group to the acceptable level. The
   Group Risk Management ("GRM") department is responsible to assist the Management, RMC and the Board in the coordination and implementation of the Risk Management Framework across the Group.
   The RMC reviews in detail the key risk profile of the Group on a quarterly basis. An update on the Group's key risks, which include an overview of its impact to the Group in the form of a heat map is presented to the Board at its quarterly meetings to give a snapshot of the key risks impacting the Group. The RMC advises the Board on measures taken by Management and advice given by RMC to manage these key risks.
   The Board, through the AC, reviews the systems of internal controls of the Group to ensure, as far as possible, the protection of its assets and shareholders' investments. The Group Corporate Assurance ("GCA") department is responsible to assist the AC and the Board in undertaking regular and systematic reviews of the Group's internal control systems so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively in the Company and the Group.

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The GCA has the authority to audit and review projects and systems at any time and report its findings directly to the AC. Any significant audit findings are reported and deliberated by the AC at its meetings, and subsequently reported to the Board.

The Governance Oversight Management Committee ("GOMC"), a management-level governance committee, continues to drive, manage and monitor the implementation of Governance, Risk and Compliance Framework within the Group. The GOMC will provide the necessary feedback and comments on key findings

1. / programs undertaken by GRM, Group Compliance Office ("GCO") and GCA prior to its presentation to the respective Board committee. The GOMC met four (4) times during the financial year under review.

2. Succession Planning
   The Board, through the NRC, is responsible to ensure that there is effective succession planning in place for Sime Darby Property. The NRC ensures that there is an appropriate dynamic of skills, experience and diversity on the Board, as well as a steady pool of talent for selection purposes.
   In addition to the succession plan for the Board, the NRC also reviews the succession planning for senior critical roles (including GMD) and talent pool demographics, with the view of enhancing the Group's Succession Planning Framework, including talent management and human capital development for key critical management positions. The framework focuses on, amongst others, the determination of the criticality of positions, identification and selection of talents based on pre-defined competency profiles and drawing up individual development plans to bridge any competency gap. The NRC had, in May and November 2023, reviewed the Company's succession planning for senior critical roles (including the GMD) and talent pool demographics with the assistance of an external consultant.
   During the financial year under review, the NRC ensured that appropriate assessment was conducted on key critical positions in the Group, which included the review and evaluation of the identified candidates for Senior Management promotion recommendation to the Board, to ensure the continuity of the Group's SHIFT25 transformation plan and the various initiatives under it. The NRC ensured that the said promotions and contract renewal were based on the criteria, merit, performance and key achievements during their tenure and with due regard for diversity in skills, experience, age and cultural background.

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During the financial year under review, the NRC reviewed the composition of the Board and Board Committees taking into consideration the mix of skills, competencies, industry experience, integrity, personal attributes and time commitment required of a Director to effectively fulfil his or her role as a Director and Chairman / Member of the respective Board Committees. This included succession planning to ensure a smooth transition in the Board's succession process. The NRC will continue to leverage on various sources, such as referrals from existing Directors and other leadership development and consulting organisations to identify potential candidates for nomination as Directors.

A new Non-IndependentNon-Executive Director, Nur Farahbi Shaari was appointed to the Board in September 2023 as well as her alternate director namely, Khalid Mohammed Noor.

1. Overseeing the Development and Implementation of a

Stakeholder Communications Policy for Sime Darby

Property

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Sime Darby Property believes in building investor confidence through good corporate governance practices and communication with the stakeholders. The Group carried out its Investor Relations ("IR") activities in accordance with its policy in order to create and enhance shareholders' value.

The Board is apprised of IR activities as well as analysts' recommendations and market consensus of the Group's performance against the KPIs on a quarterly basis. Reports on share price performance, shareholding structure and Total Shareholders' Returns against indices and peers were also reported to the Board on a quarterly basis.

The IR department provides proactive and effective IR engagement with various investors / stakeholders of the investment community, through targeted IR targeted activities throughout the year via multiple channels and methods to enhance share of voice.

1. Reviewing the Adequacy and Integrity of the Management Information and Internal Control Systems of Sime Darby Property Group
   The Board is ultimately responsible for the adequacy and integrity of the Group's management information and internal control systems. Details pertaining to the Company's internal control systems and its effectiveness are provided in the Statement on Risk Management and Internal Control on pages 250 to 259 of the Annual Report 2023.
   The Board is guided by its Charter, which outlines its duties and responsibilities under Clause 5.1, available on the Group's website.

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All Board members exercise their powers for a proper purpose and in good faith in the best interests of the Group. In directing or managing the Group's business and affairs they exercise reasonable care, skill and diligence by applying their knowledge, skill and experience.

The Board ensures that key transactions or critical decisions are deliberated and decided by the Board in a meeting. The Board also ensures that decisions and basis for those decisions, including any dissenting views are made known and properly minuted in the minutes of meetings.

The Directors are aware of their collective and individual responsibilities to all shareholders for the way the affairs of the Company are managed and operated. The Board is satisfied that it has fulfilled these duties and obligations during the financial year under review.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

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Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.2

A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

Application	:	Applied
Explanation on	:	The Board is chaired by Dato' Rizal Rickman Ramli, representing
application of the		Permodalan Nasional Berhad ("PNB"), person connected with a
practice		major shareholder of Sime Darby Property. He is currently the
		Chief Investment Officer, Private & Strategic Investments for
		PNB, who oversees all activities related to PNB's real estate
		portfolio including land banking, strategic development, domestic
		and international property investments, hospitality and affordable
		housing.
		Dato' Rizal Rickman Ramli was appointed as Chairman of Sime
		Darby Property on 7 May 2021. Prior to his appointment, he had
		served as a Director of the Company since 5 April 2018 and is
		familiar with the background and operations of the Group.
		Coupled with his experience in strategic planning, corporate
		strategy, investments, property and real estate industries, as well
		as experience in other public and public listed companies, he
		provides effective and seamless continuity in leading and
		addressing the legacy issues confronting the corporation,
		strengthening the financial position of the corporation and
		transforming the corporation towards becoming a real estate
		company.
		The roles of the Chairman of the Board are clearly specified in the
		Board Charter under Clause 5.2, available on the Group's
		website.
		The responsibilities of the Chairman, among others, are as
		follows:
		1) Setting the values and ethical standards of the Group,
		instilling good corporate governance practices, leadership
		and effectiveness of the Board.
		2) Ensures that procedures and processes are in place to
		facilitate effective conduct of the business of the Board.
		3) Presides over Board meetings, stimulates debates on issues
		and encourages positive contributions from each Board
		member.

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1. Ensures that Directors are properly briefed on issues arising at Board meetings and there is sufficient time allowed for discussion on complex or critical issues and where appropriate, arrange for informal meetings beforehand to enable thorough preparation so that ultimately, decisions can be made on a sound and well-informed basis.
2. Leads the Board in setting key policies and directions and ensures that the Board fulfils its obligations under the Board Charter.

Based on the findings of the Board Effectiveness Evaluation ("BEE") exercise conducted in December 2023, Dato' Rizal Rickman Ramli has demonstrated effective leadership qualities, characterised by meticulous preparation ahead of meetings and strategic direction of meetings in ensuring adequate focus and discussion of key matters, encouraging robust discussions, and assurance of clear outcomes. Furthermore, he has nurtured amicable relations among board members and shareholders, which facilitated alignment among stakeholders while ensuring the Company's interest was paramount.

During the financial year under review, the Non-Executive Directors ("NEDs") had, at least one discussion held without the presence of Executive Director / Management via various platforms.

The Chairman, being a PNB representative, had abstained from the deliberation and voting on resolutions / proposals deemed interested in (related party transactions) during the financial year under review.

Explanation for	:
departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure:

Timeframe:

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's

leadership and is collectively responsible for meeting the objectives and goals of the company.

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