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Integrated Annual Report 2021
Financial Report 2021

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Chairman’s Reflections

We live in critical times, with climate change fast becoming a real threat to how we live and do business. As an organisation that has always embraced sustainability, we believe that the time for climate action is now.


2020: RM2.1 billion

RM 1.6

2020: RM1,199 million

RM 1,448

2020: RM(154) million

RM 61

2020: RM1.00 sen

RM 1.00

The property development and construction sector met with many setbacks stemming from its dependence on physical labour at project sites and global supply chains.

Dear Stakeholders,
2021 continued to be a year of turmoil and turbulence for the entire world as not only did the COVID-19 pandemic persist, but the impact of climate change reverberated around the world, disrupting economies and livelihoods.

As nations continued to grapple with the prolonged health crisis and increasingly frequent weather disasters, I would like to proffer that we at MRCB have strived to manage the difficulties and challenges within our operating environment to the best of our abilities. The pandemic, which remains an unprecedented event in the modern era, has through foresight taught us an important lesson, and we reaffirm our commitment to ensuring we keep our eye on the broader value creation objective and continue adding to the important work of strengthening our sustainability foundation and developing our climate action plans.

  • A Challenging Year

    2021 has been more challenging than the previous year with the emergence of new COVID-19 variants amidst global efforts to battle the health crisis through immunisation efforts. As Malaysia, and many other parts of the world, imposed lockdowns throughout the year to contain the spread of the virus, global supply chains were greatly impacted, leading to shortages of important raw materials and increased prices. The ensuing border closures also meant labour shortages for Malaysia, especially for the construction and industrial sectors, which are heavily dependent on foreign labour. Both these issues significantly affected MRCB and were exacerbated by the lockdowns and construction site closures which prevented us from constructing anything for a little over two months.

    However, despite the operational challenges, we forged ahead with our sustainability agenda and strengthened climate actions to accelerate our transition towards a low-carbon future. This included leveraging innovation and technology to reduce our carbon footprint and to improve operational efficiency through optimised cost and manpower, as well as working to expand our future scope of business to include waste treatment. However, we acknowledge that our organisation will not succeed over the long-term without good corporate governance and social well-being. Hence, we go beyond the operational segment when embedding sustainability practices into our business. We inculcate good corporate governance and create value for our employees and the local communities we serve by fostering diversity, emphasising the occupational health, safety and well-being of our people, including mental wellness, and generating long-lasting positive social impacts.

  • Strengthening Climate Action

    With climate action now being the most discussed issue globally, MRCB is proud to attest to the efforts and commitment we have put in place to lead the industry in pushing forward the Environmental, Social, and Governance (ESG) agenda in 2021. As a member of the United Nations Global Compact (UNGC) CFO Taskforce for the Sustainable Development Goals, we endeavour to walk the talk in embedding ESG in our business management and operations. For a start, we believe in practising transparency and as such, we have been very actively engaging with key stakeholders to make disclosures of our ESG performance, which is also publicly available on our corporate website. We have also established a foothold in climate risk disclosure by engaging an external consultant to assess our assets against the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    As an ESG proponent, we truly believe that climate actions by businesses need to start now. The recent floods in Malaysia in December 2021 are just one of the few examples of the negative impacts of climate change. The event, which led to the loss of properties and even lives, disrupted various business operations and supply chains, further impacting the economy that was already reeling from the pandemic, and served as a wake-up call for all industries to take immediate action before it is too late. In 2020, we announced our commitment towards achieving Net Zero Carbon in our Scope 1 & Scope 2 emissions by 2040 and set internal reduction targets for our operations. While our Scope 1 & Scope 2 emissions are currently calculated in accordance with the World Business Council for Sustainable Development and World Resources Institute’s GHG Protocol, we now plan to adopt more stringent emission reduction target setting and from this year we have transitioned to science-based targets. In 2021, we began to lay the groundwork to extend our goal to our vendors and suppliers by reaching out to our top suppliers to communicate our plans and assess their readiness levels that could eventually allow us to track their carbon footprint as a means to strengthen our climate action plans. While we are still a long way from being able to measure and monitor carbon emissions produced by our vendors and suppliers, we hope we will eventually be able to disclose their greenhouse gas (GHG) emissions, which contribute to our Scope 3 emissions. We also canvassed our major suppliers on their human rights policies and other important sustainability related data points, to enable us to develop our sustainable procurement strategy, which will be a key thrust for us in 2022.

    As a sustainable developer, our contribution to climate change will not stop at reducing our own direct and indirect carbon emissions as we expand our scope of business into waste treatment. Nationwide, there are 141 landfills, with only 21 of them being sanitary landfills. These landfills, which have an average lifespan of 30 years and require large areas of land, contribute to environmental pollution and release methane gas which traps 72 times more heat than CO2. With the expected growth in household waste, there is an urgent need for alternative ways to treat waste, in an environmentally-friendly manner, and slowly eliminate landfills completely. To this end, we are pleased to report that our endeavour in developing a waste-to-energy project will soon come to fruition as we reach the final stage of negotiations at the Government level.

    I am also pleased to note that we remain a constituent of the FTSE4Good Index, which has been a challenge given our classification as being in a primary industry in the index, where our carbon emissions are a top focus area. It however also indicates that our efforts to manage this matter, in addition to our other sustainability initiatives continue to be recognised.

  • Leveraging Innovation and Technology to Reduce OUR Carbon Footprint

    To accelerate our transition towards a low-carbon future, our efforts are further supported by our very own modular construction technology, the MRCB Building System (MBS). This innovative proprietary technology, which allows the construction of a building to be undertaken offsite in a controlled environment, is widely used in developed countries, and certainly proven its benefits when it enabled us to build 35 classrooms for five schools in approximately three months for the Ministry of Education in Malaysia. This technology reduces our carbon footprint, operational costs and our dependency on foreign workers, which naturally also lowers the risk of accidents at the workplace as up to 90% of the work is carried out at ground level using the MBS technology. We also licensed the MBS technology to two major developers in Hong Kong and Singapore for high-rise developments they are undertaking in those countries. In recognition of our efforts towards sustainability through the deployment of our MBS technology, MRCB received the Sustainability Performance Award 2021 for SDG Ambition Benchmark 6 awarded by the United Nations Global Compact Malaysia & Brunei in December 2021.

    Our role as a TOD developer in Malaysia naturally incorporates sustainability and also helps cut carbon emissions, as their heavy integration with mass public transportation infrastructure encourage city dwellers to use public transport for commuting, taking motor vehicles off the roads. In 2021, we were given the opportunity to expand the benefits of TOD beyond Malaysia when we won the tender to develop a TOD in Auckland, New Zealand, which is set to benefit a population of about 170,000 people. Valued at NZ$452 million (RM1.25 billion), the development is set to begin in 2024.

    We also achieved an important milestone in 2021, when Stesen Sentral Kuala Lumpur (SSKL), which is located within our first TOD, KL Sentral, marked its 20th Anniversary. Launched in 2001, SSKL and the surrounding KL Sentral Central Business District (CBD) is one of MRCB’s most iconic developments and positioned us as the pioneer TOD developer in Malaysia. The development has helped catalyse the economic boom that we see in the KL Sentral CBD today and will continue connecting communities well into the future.

  • Generating Economic Value

    From the economic and business perspective, we are certainly aware of the important role we can play as a developer of properties and infrastructure in helping to advance the economies of entire communities. As such, we continue to market our capabilities in building important drivers of growth such as highways, rail infrastructure and TODs to build the nation and help the country realise its aspirations. Despite setbacks brought about by the Enhanced and Full Movement Control Orders that were reinstated between June and August 2021, we are progressing well in this context, as we will be completing the Mass Rapid Transit Line 2 Package V210, the Damansara-Shah Alam Elevated Expressway (DASH) and the Sungai Besi – Ulu Kelang Elevated Expressway (SUKE) construction projects in 2022.

    Another important achievement in 2021 was MRCB’s acquisition of George Kent (Malaysia) Berhad’s 50% equity interest in the LRT3 project joint venture company, Setia Utama LRT3 Sdn Bhd (SULSB) (formerly known as MRCB George Kent Sdn Bhd), thus taking our ownership to 100%, and allowing us to recognise 100% of the revenues and profits from the construction of this iconic RM11.4 billion infrastructure project. This acquisition will allow us to leverage on our existing resources and harness the economies of scale arising out of owning 100% of the project company, leading to a leaner structure that should improve the margins from the project. In 2021, the LRT3 project managed to achieve 67% physical construction progress and is on track for completion in 2024.

    Beyond this, our strategy going forward is to reduce our overall concentration risk, given that the bulk of our projects are in Malaysia. This is why we have penetrated the New Zealand market, as we continue to look for other opportunities in Australia, where we are already well-established.

  • Creating Value for our People and for Communities

    In our bid to build a sustainable future, we prioritise the development and the wellness of our people to ensure a strong workforce as one of our cornerstones. In the year under review, we continued to focus on the key areas for our employees to improve their health and well-being. This included providing professional and social support such as mental health counselling, which we started well before the pandemic hit and was extremely useful during lockdowns to help our people cope with additional mental stress.

    As a caring employer, we constantly engage with our employees to meet their needs and reach out to them during challenging times, such as during the floods in December 2021. In developing competent and empathic leaders, we also launched the People Transformation Programme to equip our employees with the mindset and behaviours to accelerate and sustain organisational transformation. This programme, which involved 348 employees in 2021, is set to continue into 2022, along with our other ongoing learning and development programmes. We also introduced new e-learning platforms, namely e-LATiH and an e-learning platform under the UN Global Compact (UNGC) Academy, to promote self-directed learning and encourage a learning culture.

    Fundamentally, supporting the local communities in which we operate is equally important in ensuring no one is left behind. In 2021, we contributed approximately RM2.9 million to the underprivileged in cash and in kind via Yayasan MRCB and through MRCB’s corporate social responsibility initiatives to various community development programmes, which included efforts to alleviate the negative impacts of the pandemic as well as the devastating floods.

  • Leading with Good Governance

    The corporate governance landscape continues to advance and evolve in Malaysia, as evidenced by the introduction of the latest edition of the Malaysian Code on Corporate Governance 2021 (MCCG 2021) in April 2021. MRCB is fully supportive of these efforts, and has successfully complied with 39 out of the 43 Practices prescribed in MCCG 2021, together with 3 out of the 5 optional Step-Up Practices that aim to raise the bar well beyond existing regulatory requirements.

    In light of the continuously changing operational landscape, particularly due to the pandemic and growing concerns on climate change, in 2021 MRCB restructured its Board line-up to better guide the Group through the challenges that lie ahead. As a result, we now have a nine-member strong team that possesses a diverse set of skills, experiences, and know-how that will stand MRCB in good stead. As a direct consequence of this, however, we will fall short in achieving the 30% women participation at the Board-level, with a representation of only 22%. Nevertheless, we are actively sourcing for new female directors, and plans are underway to close the remaining MCCG 2021 departures that will be reflected within our end-2022 MCCG results.

    We first implemented our ISO 37001:2016-certified Anti-Bribery Management System (ABMS) in 2019, and in 2021, we continued to educate our workforce by conducting 10 ABMS workshops for 1,124 employees. In cultivating a “speak-up” culture that encourages the fight against corruption, a whistleblowing webinar was also conducted and attended by 443 employees.

    In 2021, the Group was awarded the Industry Excellence Award for the Property Sector in the 2020 MSWG-ASEAN Corporate Governance Scorecard Assessment. The Scorecard covers 146 areas related to good corporate governance practices, 25 areas on bad practices that result in penalties, and 13 bonus areas that identify practices that go above and beyond good corporate governance. We also received a Gold Award at the 2021 Australasian Reporting Awards (ARA) in Melbourne, Australia for the third time. The Gold Award benchmarks and recognises the world’s best practices in transparent and accountable reporting. Both these independent awards recognised and validated our efforts over the years in upholding the highest standards of corporate governance, transparency and quality of disclosures.

  • Going Forward

    On behalf of the Board of Directors, I would like to extend our appreciation to our employees who have continued to demonstrate dedication and resilience within the most challenging of times. We also thank the authorities, relevant Ministries and regulators for their support. To our shareholders, customers and business partners, thank you for your loyalty and continued trust as we look ahead to a better year in 2022.

    To my fellow Board members, your support and insights have provided the Group and its Management with the fortitude to navigate the pandemic. I would like to take this opportunity to thank our former Board members, Puan Rohaya Mohammad Yusof, Encik Hasman Yusri Yusoff, and To’ Puan Janet Looi Lai Heng, who have provided wise counsel during these trying times. I wish them all the very best in all their future endeavours.

    I am also proud to welcome our new Board members, Tan Sri Mohamad Salim Fateh Din, Datuk Seri Amir Hamzah Azizan, Encik Mohamad Hafiz Kassim, Dato' Dr Junaidah Kamarruddin and Puan Lim Fen Nee. We are excited to welcome you on board, and look forward to your wisdom and guidance.

    We are also grateful to the Group Managing Director, Encik Imran Salim and his Management team for steadying the ship through difficult times and creating a strong platform to rebound as economic recovery gets underway in 2022.