Climate Change Data

Environmental Metrics

ESG Focus Areas

• Quality
• Environmental Management System (ISO 14001)
• Quality Management System (ISO 9001)

Environmental Achievements

• Metex Steel Sdn Bhd received ISO 14001: 2015 Environmental Management System certification in the first half of 2017.

Social Achievements

• Implemented CRM solutions to better manage customer orders and understand buying patterns.
• Provided training for sales and marketing staff on CRM solutions.

Governance Achievements

• Successfully reduced gearing ratio to 1.00 times by paring down debts using funds from the listing exercise.
• Received ISO 9001: 2015 Quality Management System certification for Metex Steel Sdn Bhd in the first half of 2017.

Climate Goals & Targets

Environmental Challenges

• Slowdown in the property sector.
• Intense market competition with the emergence of new players.
• Government's decision to freeze hiring of new foreign workers, increase of levy, and rising cost of raw materials.

Mitigation Strategies

• Focus on increasing production capacity at existing plants and investing in new plants.
• Shifting strategy from distribution of “high volume and low margin” products to “low volume and high margin” offerings.
• Improving product quality and services to stay competitive.
• Seeking long-term contracts with flexible price positions with clients.
• Actively widening product portfolio and diversifying income stream through organic growth and/or mergers and acquisitions.

Supply Chain Management

Responsible Procurement

• Negotiating better pricing and rebates from suppliers.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ISO 9001, ISO 14001

Certifications: ISO 9001: 2015, ISO 14001: 2015

Third-party Assurance: SGS (Malaysia) Sdn Bhd and SGS United Kingdom Ltd

Environmental Metrics

ESG Focus Areas

• Renewable Energy
• Sustainability

Environmental Achievements

• Completed acquisition of 45% stake in Atlantic Blue, specializing in large-scale solar farming and provision of solar photovoltaic (contributing to renewable energy).

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Decline in revenue from building material and logistics services sector (11.77% decline in 2017, mainly due to drop in cement sales).
• Delays in MIPCP projects due to lengthy application process with Singapore authorities and decrease in Singapore demand for polymer pipes.
• Impairment on trade receivables (RM310.39 million, 68% of total current assets).

Mitigation Strategies

• Increased revenue from other building materials (plywood, tiles, blocks, panels) to offset decline in cement sales.
• Exploring alternative markets (Philippines, Sri Lanka) for MIPCP products and applied for product license and registration with SPAN Malaysia.
• Each business unit is responsible for trade receivable collection; overdue accounts are blocked from order delivery system; group credit control department monitors collection status.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Growth in renewable energy sector.

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• SDG 7 (Affordable and Clean Energy)

Investments in renewable energy contribute to achieving SDG 7.

Sustainable Products & Innovation

• Solar energy solutions

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Economic
• Environmental
• Social
• Governance

Environmental Achievements

• Installed solar panel systems on Metex Steel and Starken AAC factories with a combined capacity of 2.425MW, generating green electricity and reducing carbon footprint.
• Produced 381,056 m³ of Starken AAC Blocks, a sustainable and recyclable building material.
• Manufactured 15km of polymer concrete pipes, promoting trenchless technology for minimized environmental impact.
• Entered into an agreement with Tanjung Bin Power Sdn Bhd to collect and recycle coal ash.

Social Achievements

• Spent approximately RM315,000 on employee development and training initiatives, including the Business Leader Development Programme and Global Leadership Summit participation.
• Organized various employee engagement events such as Town Hall Meetings, Annual Dinner, Festive Season Celebrations, and the 100 Days Journey programme.
• Participated in community initiatives like collaborations with Heriot-Watt University Malaysia and Universiti Tunku Abdul Rahman, and a blood donation campaign.

Governance Achievements

• Established a Code of Conduct and Ethics based on principles of integrity and corporate social responsibility.
• Implemented a Whistle-blowing Policy to encourage reporting of misconduct.
• Established Board Committees (Audit, Nomination, Remuneration, and Risk Management) to oversee various aspects of the Group’s operations.

Climate Goals & Targets

Environmental Challenges

• Rising costs of labor and raw materials.
• Availability of skilled personnel.
• Changes in laws and regulations.
• Stiff competition in the building materials industry.
• Slow property take-up rate and deferral of mega projects.
• Credit risk from customers.
• Dependence on experienced management and key personnel.

Mitigation Strategies

• Introduced automation (robotic arm) to reduce production time, eliminate human error, and improve product quality.
• Implemented strict waste minimization schemes in AAC production.
• Expanded product portfolio and diversified income streams.
• Expanded customer mix and dealer groups.
• Upgraded trading division and introduced more cranes for faster handling.
• Continuous monitoring of customer payment trends and customer visits.
• Succession planning and training programs for employees.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Bursa Malaysia Main Market Listing Requirements, Bursa Malaysia Sustainability Reporting Guide and Toolkits

Sustainable Products & Innovation

• Modular units
• Starken AAC
• Polymer concrete pipes
• Solar photovoltaic solutions

Environmental Metrics

ESG Focus Areas

• Sustainable Green Building Materials
• Waste Management
• Energy Management
• Occupational Health and Safety
• Local Communities
• Employee Welfare
• Employee Training and Development

Environmental Achievements

• Increased supply of AAC Blocks to customers from 381,056 m³ in FYE 2018 to 525,305 m³ in FYE 2019.
• Produced 16 modular units throughout FYE 2019 (although less than 408 units in FYE 2018, expanded customer base to UK and Saudi Arabia).
• Increased supply of polymer concrete pipes to customers from 15km in 2018 to 20km in 2019 (105km total over the years).
• Collected 33,000 mt of recycled coal ash in FYE 2019.
• Solar panel systems installed on Metex Steel and Starken AAC factories generating 1MW and 1.425MW of electricity respectively.
• Steel wire mesh manufacturing with low wastage and 80% average recycle rate of metal scrap.

Social Achievements

• Spent approximately RM0.2 million for employees’ development and training initiatives in 2019.
• Various employee engagement activities (Town Hall Sessions, Spot Awards, Photoshoot Session, Self-Enrichment Session, #Learn. Share. Teach Session, etc.).
• Organized blood donation campaign.
• Collaboration with Borneo Evangelical Mission to provide job opportunities.
• Hosted factory tours for students from various universities and institutions.

Governance Achievements

• Established a Whistle-blowing Policy.
• Implemented a nine (9) years policy for its Independent Non-Executive Directors.
• Formal and transparent selection process for new Directors.
• Regularly reviewed Code of Conduct and Ethics.

Climate Goals & Targets

Environmental Challenges

• Lower revenue from modular building solutions, manufacturing of wire mesh, ready-mixed concrete, and distribution of building materials and logistics services.
• Sluggish property market.
• Stiff competition in ready-mixed concrete sector.
• Relocation of fire door manufacturing plant affecting production output.
• Raw materials pricing increase for fire doors.
• Intense price war in AAC block sector.
• Excess supply of block in local market.
• Cost over-run due to complexity of installation work for Pavilion Project.
• Covid-19 pandemic and MCO impacting business operations.

Mitigation Strategies

• De-gearing plan and disposal of non-core assets.
• Focus on higher margin building material products.
• Investment in brand building and promotional activities.
• Expansion of product portfolio.
• Cost-cutting measures after relocation of fire door plant.
• Order for new sizing machine to improve efficiency.
• Export market expansion for AAC blocks and wall panels.
• Collaboration with existing form work wall system for UHPC.
• Digital transformation program to increase productivity and reduce reliance on foreign labor.
• Cautious strategy focusing on consolidating existing business and turning around loss-making investments.

Supply Chain Management

Supplier Audits: Frequent supplier evaluation to ensure quality and cost-effective supplies.

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Starken AAC products (up to 20% recycled materials)
• Modular units
• Polymer concrete pipes
• Steel wire mesh

Environmental Metrics

Environmental Challenges

• Export sales for panel, block and polymer concrete pipe to Singapore suspended due to lockdown in Singapore as a result of Covid-19 pandemic.
• Reduction in selling price for block and reinforced concrete product as a result of excess capacity due to subdued property and infrastructure market.
• Gross losses sustained by G-Cast UHPC Sdn Bhd resultant from cost over-run due to the imposition of Conditional Movement Control Order (“CMCO”) and complexity of installation work attributable to site condition for the design and build project, Bukit Jalil Pavilion 2 Shopping Mall.
• Challenging business outlook during the CMCO period.
• Demand from construction material industry remained soft.
• Export sales for panel and block to Singapore has just resumed back lately as the Building and Construction Authority only allowed the construction work in Singapore to recommence in a controlled manner in phases after the Covid-19 circuit breaker period ended on 1 June 2020.

Mitigation Strategies

• Initiated some cost cutting measures via digitalisation and automation across plantwide and officewide to lower down its operation cost and to stay competitive in the market.
• Reviewed its loss-making businesses and devise measures to improvise their performances.
• Further pared down its bank borrowings by RM39.80 million, from RM508.68 million in the preceding quarter to RM468.88 million in the current quarter.
• Starken Drymix Solutions Sdn Bhd has managed to beef up its production utilisation rate to 57% as at end of October 2020 by running extended shift to cater for the increase in demand.
• Starken Drymix Solutions Sdn Bhd embarking on product portfolio expansion i.e. construction chemicals and grouts and continuous market development initiatives to broaden its coverage on various construction needs.
• Continue to penetrate and expand overseas market to fill up the excess capacity in Starken AAC 2.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: MFRS 134- Interim Financial Reporting