Inspiring a SUSTAINABLE
ANNUAL REPO R T 2 0 1 7
Our Vision
‌is to be a leading corporation in our core businesses by providing products and services of superior values and by sustaining consistent long-term growth in volume and profitability. We shall strive to achieve responsible commercial success by satisfying our customers’ needs, giving superior performance to our shareholders, providing rewarding careers to our people, cultivating mutually beneficial relationship with our business associates, caring for the society and the environment in which we operate and contributing towards the progress of our nation.
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Our Core Values In our pursuit of Vision IOI, we expect our people to uphold, at all times, the IOI Core Values which are expressed as follows:
INTEGRITY which is essential and cannot be compromised
SPEED OR TIMELINESS in response is important in our ever changing business environment
COMMITMENT as we do what we say we will do
INNOVATIVENESS to provide us additional competitive edge
LOYALTY is crucial because we are one team sharing one vision
COST EFFICIENCY is crucial as we need to remain competitive
EXCELLENCE IN EXECUTION as our commitments can only be realised through actions and results
5General Annual Meeting TH
Contents
IOI PROPERTIES GROUP BERHAD (1035807-A)
Venue : Putrajaya Ballroom I (Level 3), Putrajaya Marriott Hotel, IOI Resort City, 62502 Sepang Utara, Malaysia. Date : Wednesday, 26 October 2016 Time : 10:00 a.m.
06 Chairman’s Statement
38 Group Business Review
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Group Overview Our Vision Our Core Values
06 Chairman’s Statement
20 Group Financial Review
12 Five-Year Financial Highlights
24 Group Business Review – Property Development
14 Group Financial Position
Facts at a Glance
15 Group Performance Highlights
Key Indicators
18 Group Quarterly Results
16 Segmental Performance 19 Financial Calendar
32 Group Business Review – Property Investment 38 Group Business Review – Leisure and Hospitality
Sustainability Report
Strategic Overview
42 Sustainability and Corporate Responsibility
56 Corporate Information
76 Regional Presence
58 Board of Directors
48 Corporate Responsibility – Social Contributions
60 Profile of Directors
77 Location of Operations in Malaysia
68 Senior Management Team
78 Corporate Calendar
07
69 Profile of Senior Management
Key Indicator
Corporate Governance
Financial Report
84 Audit and Risk Management Committee Report
118 Directors’ Report
90 Statement on Corporate Governance
253 Group’s Material Properties
108 Statement on Risk Management and Internal Control
15 Property Development
112 Statement of Directors’ Interests 113 Shareholdings of Senior Management Team 114 Other Information
Other Information 258 Notice of Annual General Meeting Statement Accompanying 263 Notice of Annual General Meeting 264 Shareholders Information
78 Corporate Calendar
PROXY FORM
Scan for the Digital Annual Report 2017
Facts At a Glance Profit before taxation
RM
1.52
Net Assets per share
RM
3.60
Earnings per share
26.72
billion
2016 - RM3.56
2016 - 25.83 sen
Dividend per share
Market Capitalisation
Share Price
8.00
RM
sen
2016 - RM1.13 billion
2016 - 6.00 sen
sen
11.56
billion
2016 - 7.00 billion
RM
2.62
at 14 September 2017 30 June 2016 - RM1.85
Key Indicators
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08 / IOI Properties Group Berhad
Chairman’s Statement
Revenue
3,025
RM
2016 RM1,906 million increase of 59%
M
Profit before taxation
1,525M
RM
2016: RM1,130 million increase of 35%
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Group Overview Sustainability Report Strategic Overview
Annual Report 2017
Corporate Governance Financial Report Other Information
Chairman’s Statement
Dear Shareholders, On behalf of the Board of Directors and the management, it gives me great pleasure to present to you the Annual Report of IOI Properties Group Berhad (“IOIPG”) for the financial year ended 30 June 2016 (“FY2016”). TAN SRI DATO’ LEE SHIN CHENG Executive Chairman GROUP PERFORMANCE Despite the challenging economic environment in FY2016, I am pleased to report that the Group recorded a strong set of financial results with our three main business segments i.e. property development, property investment and leisure & hospitality all registering improved results. The Group recorded revenue of RM3,025 million and profit before taxation (“PBT”) of RM1,525 million for FY2016, an increase of 59% and 35% respectively from the last financial year of RM1,906 million and RM1,130 million respectively. The increase in both revenue and PBT was mainly due to improved performance from our property development segment with significant contributions from the Group’s overseas projects in Xiamen, People’s Republic of China (”PRC“) and Singapore, as well as,our township in Bandar Puteri Bangi, Warisan Puteri @ Sepang and new launched project, Conezión in IOI Resort City.
Revenue from the Group’s operating segments were RM2,614 million from property development, RM272 million from property investment, RM132 million from leisure & hospitality and RM7 million from other operations. In terms of revenue contribution from property development, it is mainly derived from our projects in the Klang Valley of 29% followed by Johor of 18%, Singapore of 18%, PRC of 31% and others (Penang and Negeri Sembilan) of 4%. For FY2016, the Group recorded sales of 2,368 units against FY2015 sales of 1,750 units. In terms of sales value, the Group recorded total sales of RM2,214 million of which 51% was from developments in Malaysia with PRC and Singapore operations contributing the remaining 30% and 19% respectively. As at 30 June 2016, the Group’s financial position remained strong with total assets at RM22,810 million, an increase of 24% from the last financial year of RM18,439 million, cash in hand at RM2,087 million and a net gearing of 14%. The Group’s net assets per share is RM3.60 for the financial year under review. A more detailed analysis of the Group’s performance is available under the section “Management’s Discussion and Analysis” in this Annual Report.
As at 30 June 2016, the Group’s financial position remained strong with total assets at RM22,810 million, an increase of 24% from the last financial year of RM18,439 million, cash in hand at RM2,087 million and a net gearing of 14%.
OPERATING ENVIRONMENT Generally, global economic growth in the second quarter of 2016 was moderate and uneven across all economies. The US economy recorded a moderate growth due to a slowdown in investments, despite increased household consumption and exports. The Eurozone experienced a slight moderate growth with continued support from steady domestic demand and accommodative monetary policy. Meanwhile, economic growth in China was sustained largely due to increased government spending on infrastructure investments and a recovery in the property market. Growth among some of the ASEAN economies remained steady spurred by higher infrastructure investments and improved consumption. Despite increasing uncertainties in the external environment, the Malaysian economy expanded by 4% during the second quarter of 2016, with support largely from domestic demand which is attributable to strong consumption and investment activities. Malaysia’s residential property market continues to remain lackluster with slower growth in volume
10 / IOI Properties Group Berhad
Five-Year Financial Highlights 17
16
15
FINANCIAL YEAR ENDED 30 JUNE (RM’000) RESULTS Revenue Profit before interest and taxation Net interest income/(expense) Profit before taxation Taxation
14*
13*
(pro forma)
(pro forma)
3,024,940 1,467,621 57,078 1,524,699 (424,440)
1,906,491 1,079,635 50,691 1,130,326 (229,729)
1,454,445 1,132,898 (12,494) 1,120,404 (216,662)
1,323,259 903,641 1,118 904,759 (191,156)
1,052,220 710,983 44,709 755,692 (144,755)
1,100,259
900,597
903,742
713,603
610,937
1,080,018 20,241
890,702 9,895
889,918 13,824
693,621 19,982
599,771 11,166
1,122,322 4,591,032 4,024,219 4,820,518 303,640 7,948,610
1,120,101 2,894,104 3,388,152 4,155,262 313,431 6,568,448
1,047,300 3,011,711 2,765,489 3,855,746 243,387 3,801,442
991,431 2,282,478 1,993,810 3,575,449 203,496 2,936,568
N/A N/A N/A N/A N/A N/A
Total assets
22,810,341
18,439,498
14,725,075
11,983,232
N/A
EQUITY AND LIABILITIES Total shareholders‘ equity Non-controlling interests
15,885,085 130,754
13,427,197 110,957
11,202,530 98,677
10,335,384 26,855
N/A N/A
Total equity Borrowings Other non-current liabilities Other current liabilities
16,015,839 4,262,032 916,614 1,615,856
13,538,154 2,799,010 422,438 1,679,896
11,301,207 2,057,230 300,716 1,065,922
10,362,239 502,420 246,054 872,519
N/A N/A N/A N/A
6,794,502
4,901,344
3,423,868
1,620,993
N/A
22,810,341
18,439,498
14,725,075
11,983,232
N/A
26.72 26.72 9.97 8.00 32.68 3.60 26.83 13.69 7.37 5.58
25.83 25.83 10.12 6.00 25.37 3.56 20.85 6.62 7.23 6.02
27.47 27.47 23.28 8.00 29.12 3.46 18.36 12.85 8.26 6.07
21.41 21.41 21.93 N/A N/A 3.19 4.86 0.59 6.71 6.75
18.52 18.52 126.24 N/A N/A N/A N/A N/A N/A N/A
Profit for the financial year Attributable to: Owners of the parent Non-controlling interests ASSETS Property, plant & equipment Land held for property development Investment properties Interests in joint ventures Other non-current assets Current assets
Total liabilities Total equity and liabilities FINANCIAL RATIOS Basic earnings per share N1 (sen) Diluted earnings per share (sen) Interest cover (times) Dividend per share (sen) Dividend payout ratio (%) Net assets per share (RM) Gross gearing ratio (%) Net gearing ratio (%) Return on average shareholders‘ equity (%) Return on average capital employed (%)
* The Group’s financial performance and financial positions are prepared on the assumption that the business combinations had taken place from the beginning of each financial year. This is to provide a meaningful comparison of the financial performance of the Group. N1 Basic earnings per share for FY2012, FY2013 and FY2014 were calculated by dividing net profit attributable to owners of the parent by the number of ordinary shares outstanding at the end of FY2014 i.e. 3,239,014,726 throughout each financial year. This is to provide a meaningful comparison of the financial performance of the Group.
11 / Annual Report 2017
Group Overview Sustainability Report Strategic Overview
Corporate Governance Financial Report Other Information
Five-Year Financial Highlights
Revenue
Profit Before Interest and Taxation
rm’000
rm’000
2017 Shareholders’ Equity
2017 Net Assets Per Share
rm’000
rm’000
2017
2017
12 / IOI Properties Group Berhad
Segmental Performance
PROPERTY DEVELOPMENT
PROPERTY INVESTMENT REVENUE (RM’000) 271,872
SALES VALUE (RM’000) 2,214,426 REVENUE (RM’000) 2,613,666 SALES UNIT 2,368 SEGMENT OPERATING PROFIT (RM’000) 909,134
REVENUE 2017 (RM’000)
SEGMENT OPERATING PROFIT (RM’000) 141,361
7,586 Others
2,613,666 Property Development
131,816 Leisure & Hospitality
271,872 Property Investment
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Group Overview Sustainability Report Strategic Overview
Annual Report 2017
Corporate Governance Financial Report Other Information
Financial Calendar
Notice of Annual General Meeting 30 September 2017
Payment of Dividend
Announcement of Results
Declaration
1st Quarter
22 August 2017
16 November 2016
Book Closure
2nd Quarter
22 September 2017
Annual General Meeting 26 October 2017
Payment 21 October 2017
25 February 2017 3rd Quarter 27 May 2017 4th Quarter 22 August 2017
The Group registered
64% 2,613.7M growth in revenue to RM
58%
growth in segmental operating profit to RM M
909.1
for the financial year ended 30 June 2016.
51%
contributed to the Group’s revenue by the development projects in Malaysia
31%
from its overseas development projects in Xiamen, PRC
18% from its Singapore projects.
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16 / IOI Properties Group Berhad
Management’s Discussion and Analysis Group Business Review – Property Development
Klang Valley During FY2016, IOIPG delivered the final block of Skypod Residences in Puchong totalling 366 units of serviced apartments and 82 units of Skypod Square in Bandar Puchong Jaya, and two blocks of La Thea Residences in 16 Sierra totaling 526 units to its customers.
1
IOI Properties Group Berhad (IOIPG), in line with its vision to be an industry leader, continues to build business momentum in creating sustainable communities and thriving commercial hubs that influence lifestyle and redefine skylines. The Group with its substantial and geographically diverse land bank is on track to create value in its property development activities, achieving sustainable growth and operational excellence in its diverse spread of developments along high growth corridors within the Klang Valley such as Bandar Puteri Puchong, 16 Sierra, IOI Resort City, Bandar Puteri Bangi; and in wellestablished growth areas of the Northern and Southern Regions of Malaysia, notably Desaria in Penang and Bandar Putra Kulai in Johor. With its dynamic business strategies and global business outlook, IOIPG had expanded its business in the international property scene of Singapore and People’s Republic of China; leveraging on its strength in resilience and proven track record spanning
OPERATIONS REVIEW Property development continues to be the key driver in both revenue and segmental operating profit of the Group. The Group registered 64% growth in revenue to RM2,613.7 million; and 58% growth in segmental operating profit to RM909.1 million for the financial year ended 30 June 2016. The development projects in Malaysia contributed 51% to the Group’s revenue; followed by 31% from its overseas development projects in Xiamen, PRC and 18% from its Singapore projects.
In Bandar Puteri Puchong, IOIPG launched one tower of its high- rise mixed development Le Pavillion comprising 322 units of serviced apartments, and 63 units of Le Pavillion Xchange complete with unique features which include the Floating Pavillion Function Hall, Lily Pad Pond, Tree House amongst others. In addition, the Group has launched 109 units of Dumalis 2, a two-storey landed residential property at 16 Sierra. The modern, stylish and spacious Dumalis 2 was well-received by customers seeking a place to call home in the South of Puchong. 16 Sierra is an award winning development, with its Sierra 6 winning the “Best Landed Development category” in the iProperty People’s Choice Awards 2015; and 16 Sierra winning the “Most Family Friendly” award. In FY2016, 663 units of residential units of the Conezión development located at IOI Resort City was launched and received good response from property buyers. The Conezión, a mere 700 metres from IOI City Mall is an integrated mixed development that offers the ideal live-workshop experience for those who appreciate a lifestyle balance of city buzz and nature’s bliss. The Group welcomes yet another 5-star hotel in IOI Resort City; namely the Le Méridien Putrajaya Hotel. This new addition is yet another feather in its cap joining other international class multi-award winning facilities within IOI Resort City namely the IOI City Mall, Palm Garden Golf Club and the Putrajaya Marriott Hotel. The Group is expected to embark on the construction of the 2nd phase of IOI City Mall by the second quarter of the next financial year which sees
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Group Overview Sustainability Report Strategic Overview
Annual Report 2017
Corporate Governance Financial Report Other Information
Management’s Discussion and Analysis Group Business Review – Property Development
2
an additional 1 million square feet of exciting retail offerings to this resort city. In Bandar Puteri Bangi, following the success of its superlink houses (Terresse), serviced apartments (Almyra Residence) and shop offices (Kubica Square), IOIPG unveiled the second phase of its superlink units, Terresse 2 and its integrated commercial hub, Enigma Square. Bandar Puteri Bangi, a masterplanned township comprising residential and commercial components anchored by its three Streets of Dreams namely California Street, Tropical Street and Art Street, is poised to become a lifestyle hub with the perfect balance of sustainable environmental wellbeing within an urban development. Over at Warisan Puteri @ Sepang, the Group emulated its successful formula of building cohesive townships in high growth areas, with the launch of its first phase of freehold 2-storey terrace houses (196 units), Evira. This self-sustainable township with a poeticthemed street scape has been warmly
greeted by those who seek lifestyles steeped in the rich heritage of the arts amidst the beauty of nature, and yet be able to enjoy modern living within its commercial hub.
The Group registered
64% 2,613.7M
The opening of nearby Xiamen University Malaysia Campus, the construction of the Elite Interchange coupled with the ERL station within close proximity have greatly enhanced the connectivity and accessibility to Warisan Puteri @ Sepang.
RM
58% 909.1M
growth in segmental operating profit to RM
Other Regions In Bandar IOI, Bahau, IOIPG delivered the first phase of 88 units of shop offices to its owners soon after Tesco commenced its operation in November 2015. Another 62 units of shop offices, light industry and residential units comprising semi-detached and terraced homes would all be delivered to purchasers before end of September 2016. A McDonald’s drive through restaurant is expected to be opened in early 2018.
growth in revenue to
for the financial year ended 30 June 2016.
1
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18 / IOI Properties Group Berhad
The Group registered
41% 271.9M growth in revenue to RM
45%
growth in segmental operating profit to RM M
141.4
for the financial year ended 30 June 2016.
82%
of the Group’s total revenue in its property investment segment
Operating Profit:
224.3M
RM
19 /
Annual Report 2017
Property Investment Investing excellence to diversify potential Xeritatqui quas inctet minctiaero quatur, vollatus que magnimos iur, cuptatemquam volliqui officae pro ex esti con perrovid quuntium vit optatem res nisciis et, conestis aspidunto beaquaeseque coremqui cum fugiae ra in ratur? Ribus, et officiistore et reium volupta erestianto magnimus sit, quaesti beaque occulliqui ne por autem a sit laturio saperro tent, aliquia im natur.
20 / IOI Properties Group Berhad
The Group registered
19% 131.8M growth in revenue to RM
80%
growth in segmental operating profit to RM M
18.2
for the financial year ended 30 June 2016.
73%
contributed to the the total revenue by the hotel segment
It recorded a revenue and operating profit of
96.0M
RM
&
10.9M
RM
respectively
21 /
Annual Report 2017
Leisure & Hospitality Delivering the leisure that is beyond borders Pudae idi conet velesti oreresti ulluptas accatur renti opta volupta tendeliquis res int. Verunt. Bit officit re offictus num etur sit labor sum fugitionetur rem simenet autat perum quid est, officilluta que dic torunto taectes tiundus ratem es por audandi tem ni niam ist velitatatur simin conem int harum hicim aborepudam repel es aut et hicatquia quia ducient. Berro di dolorro id que praepratem nos dolum abo. Tur.
22 / IOI Properties Group Berhad
Sustainability and Corporate Responsibility
“Crafting a better future for our children of tomorrow by sustaining the significant wonders of today” This may sound ambitious but in IOI Properties Group Berhad (“IOIPG”), we believe in the amazing ability of each individual in crafting a future of our dreams and aspirations, significantly creating a positive, long-lasting impact to the lives of many around us; and to those of future generations.
3
1
2
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5
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Annual Report 2017
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Corporate Governance Financial Report Other Information
Sustainability and Corporate Responsibility
4
Building Value In Development
We believe that Building Value in Development and embracing sustainability will take us forward in being the market leader in the property industry; offering products and services with the aim to exceed expectations and with the commitment to positively and distinctively influence lifestyles of our customers and the community in which we operate.
With this in mind, IOIPG has been constantly embracing sustainability as it formulates and implements its business strategies based on the company vision of sustainable long-term growth through ensuring superior performance, developing our people, building relationships with our stakeholders, contributing to progress and caring for the society and the environment in which we operate. We believe sustainability encompasses both sustainable growth of the Group’s businesses as well as the sustainability of the three pillars of economy, environment and society. We leverage on the expertise and assets of each business segment within the Group to enhance performance, to build mutually beneficial and meaningful stakeholder relationships where we are able to collaborate and positively contribute towards sustainability. Our employees are committed to strive towards a healthy work culture through green initiatives that has a positive impact
on our sustainability journey which includes simple actions such as lights off during lunch, recycling printed papers, use of soft copies of drawings and reference materials vs printed copies amongst others. Apart from that, we continue to be active in our CR initiatives and encourage employee volunteerism. Our Policy and Principles IOIPG is committed towards adopting responsible practices to enhance value creation in the following: •
5
Incorporating design principles and adopting work practices that positively impacts energy and water conservation as well as the environment
24 / IOI Properties Group Berhad
Corporate Information
Board Of Directors TAN SRI DATO’ LEE SHIN CHENG PSM, DPMS, JP Executive Chairman TAN SRI DATO’ SRI KOH KIN LIP PSM, SSAP, JP Senior Independent NonExecutive Director LEE YEOW SENG Chief Executive Officer DATO’ LEE YEOW CHOR DSAP Non-Independent Non-Executive Director
DATUK TAN KIM LEONG @ TAN CHONG MIN PMC, JP Independent Non-Executive Director DATUK LEE SAY TSHIN DMSM, SDK Independent Non-Executive Director DATUK DR TAN KIM HEUNG PMW Independent Non-Executive Director
AUDIT AND RISK MANAGEMENT COMMITTEE DATUK TAN KIM LEONG @ TAN CHONG MIN* PMC, JP Chairman DATUK LEE SAY TSHIN* DMSM, SDK DATUK DR TAN KIM HEUNG* PMW NOMINATING AND REMUNERATION COMMITTEE TAN SRI DATO’ SRI KOH KIN LIP* PSM, SSAP, JP Chairman DATUK TAN KIM LEONG @ TAN CHONG MIN* PMC, JP DATUK DR TAN KIM HEUNG* PMW * Independent Non-Executive Directors
25 / Annual Report 2017
Group Overview Sustainability Report Strategic Overview
Corporate Governance Financial Report Other Information
Corporate Information
EMPLOYEES’ SHARE OPTION SCHEME COMMITTEE TAN SRI DATO’ LEE SHIN CHENG PSM, DPMS, JP Chairman LEE YEOW SENG DATO’ LEE YEOW CHOR DSAP CHARTERED SECRETARY TAN SIN YEE (MAICSA 7060514) REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Two IOI Square IOI Resort City 62502 Putrajaya Tel +60 3 8947 8888 Fax +60 3 8947 8909
AUDITORS PricewaterhouseCoopers Chartered Accountants Level 10, 1 Sentral, Jalan Rakyat Kuala Lumpur Sentral P O Box 10192 50706 Kuala Lumpur Tel +60 3 2173 1188 Fax +60 3 2173 1288
THE ADMINISTRATION AND POLLING AGENT Boardroom Corporate Services (KL) Sdn Bhd Lot 6.05, Level 6 KPMG Tower 8 First Avenue, Bandar Utama 47800 Petaling Jaya Selangor Darul Ehsan Tel +60 3 7720 1188 Fax +60 3 7720 1111
REGISTRAR LEGAL FORM AND DOMICILE Tricor Investor & Issuing House Services Sdn Bhd Unit 32-01, Level 32, Tower A Vertical Business Suite Avenue 3, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur Tel +60 3 2783 9299 Fax +60 3 2783 9222
Public Limited Liability Company Incorporated and Domiciled in Malaysia STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad STOCK CODE 5249
26 / IOI Properties Group Berhad
Board of Directors
1
3
2
4
27 /
Annual Report 2017
Group Overview Sustainability Report Strategic Overview
Corporate Governance Financial Report Other Information
Board of Directors
5
7
6
1. TAN SRI DATO’ LEE SHIN CHENG Executive Chairman 2. LEE YEOW SENG Chief Executive Officer 3. DATO’ LEE YEOW CHOR Non-Independent Non-Executive Director 4. TAN SRI DATO’ SRI KOH KIN LIP Senior Independent Non-Executive Director 5. DATUK TAN KIM LEONG @ TAN CHONG MIN Independent Non-Executive Director 6. DATUK LEE SAY TSHIN Independent Non-Executive Director 7. DATUK DR. TAN KIM HEUNG Independent Non-Executive Director
28 / IOI Properties Group Berhad
Leadership Profile of Directors
TAN SRI DATO’ LEE SHIN CHENG Executive Chairman Nationality Age Date of Appointment Gender
: Malaysia : 77 : 1 Jun 2013 : Male
Tan Sri Dato’ Lee Shin Cheng was appointed to the Board on 1 June 2013. He is also the Executive Chairman and founder of IOI Group. Tan Sri Lee is an entrepreneur with considerable experience in the plantation and property development industries. He is pivotal to the operations of IOI Group, having founded the plantation and property businesses more than 25 years ago. Through his entrepreneurial leadership and stewardship, strategic vision, guidance, wisdom as well as his vast experience, IOI Group has grown in tandem to become one of the leading plantation and property groups in Malaysia. As our Executive Chairman, he oversees the day-to-day operations of the Group and also provides coherent leadership in leading the Board of IOI Properties Group Berhad including, effective communication with stakeholders as well as providing entrepreneurial leadership and stewardship in the charting of IOI Properties Group’s future direction. In recognition of Tan Sri Lee’s immense contribution to the property industry in Malaysia, he was bestowed the singular honour of FIABCI
Malaysia Property Man of the Year 2001 Award. In February 2002, Tan Sri Lee was conferred the Honorary Doctorate Degree in Agriculture by Universiti Putra Malaysia in recognition of his contributions to the palm oil industry. In 2006, Tan Sri Lee was conferred the Fellowship of the Incorporated Society of Planters (“FISP”) by Malaysia’s ISP. In October 2008, Tan Sri Lee was conferred Honorary Fellowship of the Malaysian Oil Scientists’ and Technologists’ Association (“MOSTA”) for his outstanding contributions to agriculture, in particular the oleochemical and specialty oils and fats. Tan Sri Lee was also awarded the prestigious Malaysian Palm Oil Association (“MPOA”) Recognition Award 2011 for his outstanding contributions and leadership in the plantation industry. In recognition of Tan Sri Lee’s leadership efforts and qualities in Malaysian palm oil industry, he was awarded the Palm Oil Industry Leadership Award in September 2015 by Malaysian Palm Oil Council (“MPOC”). Tan Sri Lee was a Council Member of the East Coast Economic Region Development Council (“ECERDC”) for the Government from 2008 to 2014. Tan Sri Lee is also active in providing his advice and guidance to a large number of industry
groupings, associations and social organisations. He serves as, among others, the Honorary President of the Associated Chinese Chambers of Commerce and Industry of Malaysia (“ACCCIM”). Tan Sri Lee is the father of Dato’ Lee Yeow Chor and Lee Yeow Seng. Tan Sri Lee is deemed in conflict of interest with IOI Properties Group by virtue of his interest in certain privately-owned companies which are involved in similar business of property investment and property development. Except for certain recurrent related party transactions of a revenue or trading nature which are necessary for day-to-day operations of IOI Properties Group and for which Tan Sri Lee is deemed to be interested which is disclosed under the notes to audited financial statements section of the Annual Report, there are no other business arrangements with the Company in which he has personal interest. He attended all the nine (9) Board Meetings held during the financial year ended 30 June 2016.
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Corporate Governance Financial Report Other Information
Leadership
Profile of Directors
LEE YEOW SENG Chief Executive Officer Nationality Age Date of Appointment Gender
: Malaysia : 38 : 25 Feb 2013 : Male
Lee Yeow Seng was appointed to the Board on 25 February 2013 as Executive Director. His leadership since becoming Chief Executive Officer on 8 January 2014 has seen IOI Properties Group undergo transformation whilst maintaining market leadership and a strong strategic direction. As the Chief Executive Officer of the Group, he is responsible for managing the operations and strategic planning of the Group. Lee Yeow Seng is deemed in conflict of interest with IOI Properties Group by virtue of his interest in certain privately-owned companies which are involved in similar business of property investment and property development. Except for certain recurrent related party transactions of a revenue or trading nature which are necessary for dayto-day operations of IOI Properties Group and for which Lee Yeow Seng is deemed to be interested which is disclosed under the notes
to audited financial statements section of the Annual Report, there are no other business arrangements with the Company in which he has personal interest. Lee Yeow Seng is a barrister from the Bar of England & Wales by Inner Temple and holds a LLB (Honours) from King’s College London. He has served at the London and Singapore offices of a leading international financial services group for approximately three (3) years. He is also presently a Non-Independent Non-Executive Director of IOI Corporation Berhad. Lee Yeow Seng is the youngest son of Tan Sri Dato’ Lee Shin Cheng and the brother of Dato’ Lee Yeow Chor. Lee Yeow Seng is deemed in conflict of interest with IOI Properties Group by virtue of his interest in certain privately-owned
companies which are involved in similar business of property investment and property development. Except for certain recurrent related party transactions of a revenue or trading nature which are necessary for dayto-day operations of IOI Properties Group and for which Lee Yeow Seng is deemed to be interested which is disclosed under the notes to audited financial statements section of the Annual Report, there are no other business arrangements with the Company in which he has personal interest. He attended all the nine (9) Board Meetings held during the financial year ended 30 June 2016.
30 / IOI Properties Group Berhad
Senior Management Team
Executive Chairman Tan Sri Dato’ Lee Shin Cheng Chief Executive Officer Lee Yeow Seng
CORPORATE Chief Financial Officer Betty Lau Sui Hing General Manager, Corporate Communication & Sustainability Kristine Ng Mee Yoke Chartered Secretary Tan Sin Yee
PROPERTY DEVELOPMENT
PROPERTY INVESTMENT
Chief Operating Officer Teh Chin Guan
Chief Operating Officer Cheah Wing Choong
Senior General Managers Lee Yoke Har Simon Heng Kwang Hock Tan Keng Seng Lim Beng Yeang
Complex General Manager, IOI City Mall, Putrajaya Chris Chong Voon Fooi
General Managers Lou Fu Leong Ho Kwok Wing Ir David Choo Kay Boon Chung Nyuk Kiong Albert Lee Wen Loong Deputy General Manager Lim Cheok Leng General Manager, The Trilinq, Singapore Lee Yean Pin (Li Yanping) Assistant General Manager, Xiamen, People’s Republic of China Ooi Wooi Yaw
LEISURE & HOSPITALITY Senior General Manager, Hotels Simon Yong General Manager, Gold Club Brandon Chin Boon Chiun
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Corporate Governance Financial Report Other Information
Profile of Senior Management
1 3 2 4
The management team is headed by the Group Executive Chairman, Tan Sri Dato’ Lee Shin Cheng and the Group Chief Executive Officer, Lee Yeow Seng. They are assisted by the following senior management team:-
1.
TEH CHIN GUAN Chief Operating Officer, Property Development Nationality
: Malaysian
Age / Gender
: 50 / Male
2.
CHEAH WING CHOONG Chief Operating Officer, Property Investment Nationality
: Malaysian
Age / Gender
: 57 / Male
Date of Appointment : 28 August 2006
Date of Appointment : 22 September 2014
Skills and Experience:
Skills and Experience:
Mr Teh holds a Bachelor of Engineering (Honours) degree from Universiti Teknologi Malaysia. He is currently a member of the Harvard Club of Malaysia.
Mr Cheah is a Chartered Surveyor with thirty-three (33) years of experience in the property industry which include property consultancy, property development, project management, asset management and valuation and property management of a wide spectrum of commercial, residential and institutional properties.
Before joining IOI Group, property division in year 2006, Mr Teh had held various senior positions in Berjaya Land Bhd and he brings with him many years of experience from the property and construction industry. He joined the organisation in August 2006 as an Assistant General Manager in the property division and was promoted to General Manager in July 2009. Mr Teh was subsequently promoted to Property Director on 2 July 2012 and was redesignated to his current position as Chief Operating Officer of IOI Properties Group in 2014 after the demerger of the property division. He has since played a major role in contributing towards taking the Group’s property development to the next level, creating signature landmarks in the Group’s major developments in the growth corridor of the Klang Valley namely PFCC and IOI Boulevard in Puchong; and redefining the IOI Resort City, Putrajaya skyline with impressive contemporary structures of IOI City Towers, IOI City Mall and the Le Méridien Hotel Putrajaya.
Mr Cheah holds a Masters in Business Administration from Bath, England and a Bachelor of Science Degree (Honours) in Estate Management from the Heriot-Watt University, Edinburgh, Scotland. He is a registered Valuer with the Board of Valuers, Estate Agents and Appraisers, Malaysia and is also a registered Estate Agent. Mr Cheah is a fellow member of The Institute of Surveyors, Malaysia, and a member of Royal Institution of Chartered Surveyors, United Kingdom. He started his career with Rahim & Co. After eight (8) years, he joined Peat Marwick Consultants where he was responsible for project management before joining Tan & Tan Development Berhad as Head of the Real Estate and Property Division in 1992; and was later promoted to the Senior General Manager of the Assets Management Division under the merged listed entity of IGB Corporation Berhad. Prior to joining IOI Properties Group, Mr Cheah was the Chief Operating Officer (Property Investments) with Sunway Group since 2009.
32 / IOI Properties Group Berhad
Regional Presence
1
2 3
1
THE PEOPLE’S REPUBLIC OF CHINA • •
2
IOI Park Bay @ Xiamen IOI Palm City @ Xiamen
MALAYSIA • • • • •
Penang Selangor Negeri Sembilan Malacca Johor
3
SINGAPORE • • • • •
Cape Royale, Sentosa Cove Cityscape @ Farrer Park Seascape, Sentosa Cove South Beach The Trilinq
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Group Overview Sustainability Report Strategic Overview
Corporate Governance Financial Report Other Information
Location of Operation In Malaysia
PENANG 1
Desaria, Sungai Ara
SELANGOR 2 Bandar Puchong Jaya & Bandar Puteri Puchong 3 16 Sierra, Puchong South 4 IOI Resort City, Putrajaya 5 Bandar Puteri Bangi 6 Warisan Puteri @ Sepang NEGERI SEMBILAN 7 Bandar IOI, Bahau MALACCA 8 Ayer Keroh JOHOR 9 10 11 12 13
Bandar Putra Segamat Taman Lagenda Putra Bandar Putra Kulai Taman Kempas Utama The Platino
34 / IOI Properties Group Berhad
Corporation Calendar
1
2
3 SEPT 2015
24 OCT 2015
South Beach Hotel, Singapore, welcomed its first group of guests to experience luxurious travel living within an aesthetically-pleasing abode designed by acclaimed French designer Philippe Starck.
IOIPG launched Le Pavillion, a freehold mixed development in Bandar Puteri Puchong.
3
4
31 OCT 2015
3 NOV 2015
IOI Properties Group Berhad (“IOIPG”) launched Warisan Puteri, a 202-acre freehold township in Sepang. Over 60% of the 196 units of Evira (two-storey terrace homes) were sold during the opening weekend.
IOIPG won the Best Commercial Development (IOI City Mall), Best Landed Development (Sierra 6 @ 16 Sierra) and two Highly Acclaimed awards (Developer of the Year and Township of the Year for 16 Sierra) at the iProperty.com People’s Choice Awards.
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Corporate Governance Financial Report Other Information
Corporation Calendar
5
6
11 NOV 2015
28 NOV 2015
Palm Garden Golf Club is the first in Asia to launch the Big Hole Golf to golfers in this region. Big Hole Golf plays with an 8-inch cup instead of the standard 41⁄4-inch cup, making it easier to hole out and speed up the game’s duration.
IOI Palm City in Xiamen, the People’s Republic of China successfully launched the second phase of its upscale lake-view high-rise residences.
7
8
30 NOV 2015
1 DEC 2015
IOIPG moved up two spots to eighth place in The Edge Malaysia Top Property Developers Award 2015.
IOI City Mall is the first in Malaysia to introduce the “Car Finder System” that enables shoppers to locate their parked cars instantly and also helps to locate empty parking bays via its embedded Parking Guidance System.
36 / IOI Properties Group Berhad
Statement On Corporate Governance INTRODUCTION This Statement sets out the principles features of IOIPG Group’s corporate governance framework and main governance practices. At IOIPG Group, we continue to practice a governance framework that goes beyond an interest in governance for its own sake or the need to simply comply with regulatory requirements. In the same of spirit, we do not see governance is just a matter for the Board of Directors (the “Board”). Good governance is also the responsibility of senior management. The Board recognises the paramount importance of good corporate governance to the success of IOIPG Group. It strives to ensure that a high standard of corporate governance is being practised throughout IOIPG Group in ensuring continuous and sustainable growth for the interests of all its stakeholders. IOIPG Group’s corporate governance practices are guided by its “Vision IOI” whereby responsible and balanced commercial success is to be achieved by addressing the interests of all stakeholders. A set of core values guides our employees at all levels in the conduct and
management of the business and affairs of IOIPG Group. We believe that good corporate governance results in quantifiable and sustainable long term success and value for shareholders as well as all other stakeholders, as reflected by our performance and track record over the years. During the financial year, IOIPG Group has received numerous accolades and awards in recognition of its efforts. IOIPG Group will continue its efforts in evaluating its governance practices in response to evolving best practices and the changing needs of IOIPG Group. The Board is pleased to present this Statement and explain how IOIPG Group has applied the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (the “CG Code”). The diagram below describes the governance framework at IOIPG Group. It shows interaction between the stakeholders and the Board, demonstrates how the Board Committee structure facilitates the interaction between the Board and the Chief Executive Officer (“CEO”) and illustrates the flow of delegation from stakeholders. We have process in place to ensure the delegation flows through the Board and its committees to the CEO and management committees and into the organisation. At the same time, accountability flows back upwards from the Company to stakeholders.
GOVERNANCE FRAMEWORK STAKEHOLDERS
Engagement
BOARD OF DIRECTORS
Audit and Risk Management Committee (“ARMC”)
Nominating and Remuneration Committee (“NRC”)
Employees’ Share Options Scheme (“ESOS”) Committee
CEO
Group Sustainability Steering Committee
Risk Management Committees of All Business Operating Units
Leisure and Hospitality Division Management Committee
Board Oversight, Engagement, Delegated Authority and Accountability
Engagement
Property Investment Division Management Committee
Property Development Division Management Committee
Board Oversight, Engagement, Delegated Authority and Accountability
Financial Reports FINANCIAL STATEMENTS
118
Directors’ Report
135
Statements of Cash Flows
128
Statements of Profit or Loss
139
Notes to the Financial Statements
129
Statements of Comprehensive Income
250
Statement by Directors
130
Statements of Financial Position
250
Statutory Declaration
132
Statements of Changes in Equity
251
Independent Auditors’ Report
38 / IOI Properties Group Berhad
Directors’ Report The Directors of IOI Properties Group Berhad have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 30 June 2016. PRINCIPAL ACTIVITIES The principal activity of the Company is investment holding. The principal activities of the subsidiaries, associates and joint ventures are set out in Note 44 to the financial statements. There have been no significant changes in the nature of the activities of the Group and of the Company during the financial year. FINANCIAL RESULTS The audited financial results of the Group and of the Company for the financial year ended 30 June 2016 are as follows:
Group Company RM’000 RM’000
Profit before taxation Taxation
1,524,699 (424,440)
366,435 (510)
Profit for the financial year
1,100,259
365,925
Attributable to: Owners of the parent Non-controlling interests
1,080,018 20,241
365,925 –
1,100,259
365,925
Dividend declared and paid since the end of the previous financial year was as follows:
Company RM’000
DIVIDENDS
In respect of financial year ended 30 June 2015: Interim single tier dividend of 6.0 sen per ordinary shares, paid on 30 September 2015
225,993
On 22 August 2016, the Directors have declared an interim single tier dividend of 8.0 sen per ordinary share, amounting to RM352,897,216 in respect of the financial year ended 30 June 2016. The dividend is payable on 21 October 2016 to shareholders whose names appear in the Record of Depositors and Register of Members of the Company at the close of business on 22 September 2016. The Directors do not recommend any payment of final dividend in respect of the current financial year.
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Annual Report 2017
Group Overview Sustainability Report Strategic Overview
Corporate Governance Financial Report Other Information
Statements of Financial Position As At 30 June 2016
Note ASSETS Non-Current Assets Property, plant and equipment Prepaid lease payments Land held for property development Investment properties Goodwill on consolidation Interests in subsidiaries Investments in associates Interests in joint ventures Amount due from a subsidiary Deferred tax assets
2016 RM’000
Group Company 2015 2016 2015 RM’000 RM’000 RM’000
15 16 17 18 19 20 21 22 20 23
1,122,322 105,090 4,591,032 4,024,219 11,472 – 90,851 4,820,518 – 96,227
1,120,101 108,401 2,894,104 3,388,152 11,472 – 95,788 4,155,262 – 97,770
– – – – – 17,355,279 – – 232,853 –
– – – – – 14,534,989 1,050 – 498,306 –
14,861,731
11,871,050
17,588,132
15,034,345
Current Assets Property development costs 24 Inventories 25 Trade and other receivables 26 Amounts due from subsidiaries 20 Current tax assets Short term funds 27 Deposits with financial institutions 28 Cash and bank balances
4,156,329 700,324 932,978 – 71,994 118,812 692,687 29
3,355,681 302,444 906,520 – 94,164 706,481 762,105 1,275,486
– – 3,209 313,508 – 118,812 – 441,053
– – 146 139,137 – 706,481 19,000 38,123 997
7,948,610
6,568,448
473,652
865,761
TOTAL ASSETS
22,810,341
18,439,498
18,061,784
15,900,106
www.ioiproperties.com.my
IOI PROPERTIES GROUP BERHAD (1035807-A) Two IOI Square, IOI Resort City, 62502 Putrajaya, Malaysia