ioi pr op er ties gr oup berhad annu al repor t 2015

Transcription

ANNUAL REPORT 2015
Harnessing
Innovation
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.
IOI Properties Group Berhad (“IOIPG”) is at the
forefront of developing distinctive residential
and commercial properties that lead the way in
fulfilling evolving lifestyle and harmonious living.
By Harnessing Innovation to discover new ways
to do things better, we continuously innovate
products and streamline business solutions to
optimise strategic value for our shareholders.
Leveraging on management’s strengths, expertise
and resources, we are moving on the right trajectory
towards becoming a visionary property developer in
this region with leading residential, commercial and
investment properties across Malaysia, Singapore
and the People’s Republic of China (“PRC”).
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.
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
COMMITMENT
as we do what we say we
will do
LOYALTY
is crucial because we are one
team sharing one vision
EXCELLENCE IN
EXECUTION
as our commitments can only
be realised through actions and
results
SPEED OR TIMELINESS
in response is important in
our ever changing business
environment
INNOVATIVENESS
to provide us additional
competitive edge
COST EFFICIENCY
is crucial as we need to remain
competitive
WE PROFIT FROM
OUR PRINCIPLES
PROFIT BEFORE TAXATION
1.13 billion
RM
2014 – RM1.12 billion
NET ASSETS PER SHARE
EARNINGS PER SHARE
2014 – RM3.46
2014 – 27.47 sen*
3.56
25.83 sen
RM
GROSS DIVIDEND PER SHARE
6.00 sen
2014 – 8.00 sen
SHARE PRICE
1.85
RM
2014 – RM2.52
MARKET
CAPITALISATION
7.0 billion
RM
2014 – RM8.2 billion
* Basic earnings per share for FY2014 was calculated by dividing net profit attributable to owners of the Company by the number of ordinary
shares outstanding at the end of FY2014, i.e. 3,239,014,726. This is to provide a meaningful comparison.
KEY INDICATORS
IOI PROPERTIES GROUP BERHAD
FTSE BURSA MALAYSIA KLCI
BURSA MALAYSIA PROPERTY
%
10 ––
9 ––
8 ––
7 ––
6 ––
5 ––
4 ––
3 ––
2 ––
1 ––
0 ––
-1 ––
-2 ––
-3 ––
-4 ––
-5 ––
-6 ––
-7 ––
-8 ––
-9 ––
-10 ––
-11 ––
-12 ––
-13 ––
-14 ––
-15 ––
-16 ––
-17 ––
-18 ––
-19 ––
-20 ––
-21 ––
-22 ––
-23 ––
-24 ––
-25 ––
-26 ––
-27 ––
-28 ––
30
07
14 21
JUL
30 04
11
18
AUG
25
02 08
15 22
29
07 13
SEP
20
OCT
2014
27
03
10
17
NOV
24
01
08
15
22
DEC
29 05
12
19
JAN
26
04 09
19 23
FEB
02
09
16
23
30
06
MAR
13
20
APR
2015
27 05
11
18
25
MAY
01
08
15
22
JUN
29
3
rd
Annual
General
Meeting
IOI PROPERTIES GROUP BERHAD (1035807-A)
Venue: Putrajaya Ballroom I, Putrajaya Marriott Hotel,
IOI Resort City, 62502 Sepang Utara, Malaysia
Date : Monday, 26 October 2015
Time : 10:00 am
CONTENTS
012
Chairman’s Statement
016 Four-Year Financial Highlights
018
Group Financial Position
019
Group Performance
Highlights
020
Segmental Performance
022
Group Quarterly Results
023
Financial Calendar
024
Management’s Discussion
and Analysis
Our Vision
Our Core Values
Key Indicators
024
Group Business Review
– Overview
028
– Property Development
034
– Property Investment
038
– Leisure and Hospitality
The Trilinq, Singapore
043 040
Sustainability and
Corporate Responsibility
044
Corporate Responsibility
– Social Contributions
070
Audit and Risk Management
Committee Report
051
Corporate Information
074
052
Board of Directors
Statement on
Corporate Governance
054
Profile of Directors
060
Senior Management Team
062
Regional Presence
092
Statement of
Directors’ Interests
063
Location of Operations
in Malaysia
093
Shareholdings of
Senior Management Team
064
Corporate Calendar
094
Other Information
089
Statement on
Risk Management and
Internal Control
Puteri Hills, Bandar Puteri Puchong
095
Financial Reports
221 Group’s Material Properties
226
Notice of Annual
General Meeting
229
Statement Accompanying
Notice of Annual
General Meeting
231
Shareholders’ Information
Proxy Form
Palm Garden Golf Club
IOI City Towers
Sprawling across 320 acres,
IOI Resort City seamlessly blends
the beauty of Mother Nature with
the existing building scape.
It brings together inspired
residential enclaves with worldclass shopping, entertainment,
business, commerce, recreation
and accommodation.
All nestled amidst picturesque
greenscapes to create an idyllic
mega city.
Puteri Palma Condominiums
Palm Garden Hotel
Putrajaya Marriott Hotel
IOI Square Office Towers
Icescape Ice Rink
The award-winning IOI City Mall is the largest
lifestyle and entertainment shopping mall
in the south region of Klang Valley.
300 specialty, 1.4 million sq. ft.
fashion and F&B outlets
7,200
car park bays
RETAIL
IOI City Mall
District21 theme park
of net lettable area
012
ANNUAL REPORT 2015
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 2015 (“FY2015”).
IOI Palm City, the Group’s second property development project
in Xiamen, PRC, higher sales registered from our Klang Valley
developments, namely Bandar Puchong Jaya and from our latest
township, Bandar Puteri Bangi, as well as higher contribution from
our property investment division.
IOI Palm City in Xiamen, PRC.
GROUP PERFORMANCE
Against a backdrop of economic uncertainties and market
headwinds, I am pleased to report that the Group delivered a set
of resilient and healthy financial results. For FY2015, the Group
achieved RM1,906.5 million in revenue, an increase of 31%
from FY2014, which is the highest ever revenue recorded. On
a segmental basis, our Klang Valley projects contributed 39.7%
of total revenue, followed by Johor with 28.8%, with Penang
and Negeri Sembilan projects providing 5.7% and the balance
from our overseas developments in Singapore and Xiamen, the
People’s Republic of China (“PRC”) the remaining 25.8%. Profit
Before Taxation for the financial year under review was RM1,130.3
million, which was marginally higher than FY2014 of RM1,120.4
million. The increases were mainly attributed to the robust sales by
Total units sold for FY2015 was 1,750 units against 2,667 units
registered in the last financial year. In terms of sales value, the
Group registered a total of RM1,778.5 million of which 67% was
contributed by our developments in Malaysia, followed by PRC
and Singapore at 20% and 13% respectively. On a segmental
basis, revenue contribution from our property development,
property investment, leisure and hospitality and other operation
are RM1,562.3 million, RM192.6 million, RM110.8 million and
RM40.8 million respectively.
The Group’s financial position remains healthy with total assets
growing by RM3,714.4 million to RM18,439.5 million and total
cash in hand stands at RM1,909.6 million. Net assets per share
for FY2015 is at RM3.56 per share, which is not reflected in the
market price. The Company continues to manage its capital in a
proactive manner to enhance shareholder value whilst ensuring
group funding requirements are met with gearing levels effectively
managed. The Group’s net gearing ratio for FY2015 stands at a
healthy level of 7%.
A more detailed analysis of the Group’s performance is available
under the section “Management’s Discussion and Analysis” in this
Annual Report.
ANNUAL REPORT 2015
013
TAN SRI DATO’ LEE SHIN CHENG
Executive Chairman
OPERATING ENVIRONMENT
The year under review was marred with many challenges,
softening of commodity prices including crude oil, anticipation
of higher borrowing costs, competitive devaluation of currencies
and the slowing down of PRC’s economy. These uncertainties,
together with the cooling measures earlier introduced by the
relevant authorities to manage and stabilise the property markets
in all localities that the Group has operations in, have also amplified
the challenges faced by the industry.
On the local front, the demand for property was subdued during
the year under review due to uncertainties surrounding the impact
of the Goods and Services Tax (“GST”) on house prices causing
some purchasers to adopt a more cautious approach toward
their purchases. In addition, financial institutions were also more
stringent in their approval of housing loans with loan eligibility
being revised to be based on net income from gross income.
Sales of domestic properties at prime locations however remained
resilient despite a cautious property market backdrop. This may
be attributed to the continued growth in private consumption
by 6.4%, which also contributed to the growth of the Malaysian
economy by 4.9% in the second quarter of 2015.
In Singapore, sales in private residential market continue to
be challenging due to the cooling measures currently in place.
Despite tough market conditions, properties targeted for the
masses in established locations continued to be visible. This
is evident from our Trilinq @ Jalan Lempeng project which has
registered increased sales during the year under review.
In the PRC, efforts by the authorities to revive the flagging property
market which includes interest rate cuts and lower downpayment
requirement for home owners have augured well for our
developments in Xiamen. In May 2015, the Group successfully
launched its maiden residential project in IOI Palm City. To date,
more than 96% of the 224 units available have been taken up.
BUSINESS DEVELOPMENTS
In January 2015, the Group launched its latest township, Bandar
Puteri Bangi, a 370-acre freehold integrated township located next
to the Kuala Lumpur-Seremban Highway and directly accessible
via the Bandar Seri Putra interchange toll. Sales were encouraging
as the development recorded an average 70% take-up rate for
The Terresse (two-storey superlink house), Almyra Residence
(serviced apartment), and Kubica Square (three- and four-storey
shop office) components within a month after launching.
The Group increased its property investment portfolio from 3.1
million sq. ft. to 4.5 million sq. ft. in FY2015 following the opening
of IOI City Mall in November 2015. The mall with a nett lettable
area of 1.4 million sq. ft. is the largest shopping mall in South
Klang Valley.
To further enhance the vibrancy of Bandar Puteri Puchong, the
Group introduced a new four-star business hotel, Four Points
by Sheraton Puchong at Puchong Financial Corporate Centre
(“PFCC”) in December 2015. The hotel with 250 guest rooms is
managed by Starwood Hotels & Resorts Worldwide, Inc. Four
Points by Sheraton Puchong is poised to set a new standard
in hospitality for business and residence within the surrounding
vicinity.
014
ANNUAL REPORT 2015
CHAIRMAN’S STATEMENT (Cont’d)
In Singapore, the South Beach mixed used development, a
joint venture with City Developments Limited, has commenced
operation with completion of the 34-storey North Tower. Named
South Beach Tower – the office component of the South Beach
development, encompasses over 46,000 sq. m. of Grade A office
space. The tower was well received securing numerous renowned
multinational companies including Facebook and Rabobank.
To date around 96% of the lettable area have been tenanted.
3 September 2015 also saw the soft-opening of The South Beach,
a 654-room hotel located on the South Tower of the South Beach
development. Designed by renowned creative French designer
Philippe Starck, the hotel offers a unique design and hospitality
experience with a blend of the latest integrated technology.
Designed by Foster+Partners, the entire development will
comprise residential, office, retail and hotel and upon completion
will contribute to the already stunning city skyline of Singapore.
CORPORATE DEVELOPMENTS
On 10 November 2014, the Company announced a Proposed
Rights Issue of 539,835,787 Rights Shares at an issue price of
RM1.90 to be implemented on a renounceable basis of one (1)
Rights Share for every six (6) existing IOIPG Shares held (“Rights
Issue”). The Rights Issue was completed following the listing
and quotation of 539,835,787 new ordinary shares on the Main
Market of Bursa Malaysia Securities Berhad on 9 February 2015.
A total gross proceeds of RM1.03 billion was raised.
On 8 May 2015, the Company established an employees’ share
option scheme which is targeted to be offered to employees
and executive directors who are involved in the management
of the Group in recognition of their contributions to the Group’s
operations and continued growth.
South Beach Tower in Singapore currently enjoys more than 90% occupancy.
DIVIDEND
For FY2015, the company declared an interim dividend of 6.0 sen
per ordinary share amounting to a total payout of approximately
RM226 million. The dividend declared represents approximately
25% distribution of the Group’s net profit attributable to
shareholders.
PROSPECTS
SUSTAINABILITY AND CORPORATE RESPONSIBILITY
The Group recognises that the pursuit of property development
inevitably impacts the environment and takes proactive steps to
minimise the potentially harmful effects of such activities wherever
practicable. IOIPG is therefore committed to developing in a
sustainable way in tandem with environmental, economic and
social considerations.
Besides driving sustainable profit growth and returns for the
shareholders, the Group also undertakes many corporate
responsibility (“CR”) activities. The Group’s CR efforts are focused
on sharing our success with, and giving back to the communities
in which we operate. This is done mainly through Yayasan Tan Sri
Lee Shin Cheng (“Yayasan TSLSC”), a charitable foundation jointly
funded by the Group and IOI Corporation Berhad.
As the Group continues to expand its operations, it will strive to
further broaden and deepen its sustainability and CR endeavours.
Key highlights of the Group’s many sustainability measures and
CR initiatives are covered in the “Sustainability and Corporate
Responsibility” section.
Against the backdrop of tighter financial criteria by financial
institutions on loans approval, looming economic uncertainties
including volatility in the foreign exchange and lingering interest
rate hikes, the outlook for the property market will be less robust.
In these challenging times, we will focus on strong execution and
management of projects on hand and inventory control, as we
strive to continue to deliver good results to our shareholders.
As a township developer, we will continue to leverage on our
strength to launch products that are more in vogue with the
changing preferences of our purchasers. Following from the
launch of our Bandar Puteri Bangi township in January 2015, the
Group will be gearing up for the launch of another new township in
Greater Kuala Lumpur, namely Bandar Puteri Warisan in Sepang
by this financial year. Similar to Bandar Puteri Bangi, the township
will be on freehold land. The initial launch will be landed residential
property and we are positive that it will be well received taking into
consideration the vibrancy of the area being close to the currently
under construction Xiamen University, as well as, to the Express
Rail Link (“ERL”) that connects the Kuala Lumpur International
Airport (“KLIA”) with Kuala Lumpur.
For our more established townships in Puchong, which are currently
undergoing rapid transformation due to the construction of the
LRT line, we will continue to develop our existing landbank in the
vicinity. Properties located near LRT lines continue to be identified
as excellent investment choices given the increasingly congested
traffic situation in the Klang Valley. With rapid urbanisation, more
emphasis will be on sustainable development, which emphasises
space, resource efficiency and connectivity. As such, TransitOriented Development (“TOD”) will become more popular in the
future which provides an optimal mix of quality retail, hospitality,
commercial and residential spaces all seamlessly integrated
to provide day to day convenience for people to live, work and
spend time in, while at the same time providing connectivity, for
example via the LRT to other locations.
In addition to the LRT project in Puchong, following the realignment
of the MRT 2 line from Bandar Malaysia to Putrajaya there is a
proposal to build a station in our 16 Sierra township development,
this will definitely provide convenience to our existing and future
residence.
Besides Malaysia, we are also upbeat on the remaining component
of our second Xiamen venture, IOI Palm City, which will be an
integrated development consisting of shopping malls, boutique
office, hotel and residential components.
The Group will also be increasing its investment property portfolio
with the completion of the other components of IOI Resort City
which include a hotel and two office towers. The Le Méridien
Putrajaya will be a five-star 350-guest room hotel managed by
Starwood Hotels & Resorts Worldwide, Inc. The office towers,
named IOI City Towers will comprise two 31-storey towers offering
state-of-the-art international Grade A offices that incorporate the
latest trends in sustainability, spaciousness and facilities. The
ANNUAL REPORT 2015
015
office towers will also be Green Building Index (“GBI”) certified
with a highly functional and energy-efficient design to reduce
energy consumption. We are confident that once the entire IOI
Resort City is completed, it will change the skyline of Putrajaya
and will be the preferred meeting point for residents living around
the vicinity of south Klang Valley.
ACKNOWLEDGMENTS
On behalf of the Board of Directors, I wish to extend our sincere
appreciation to all our purchasers and business associates for
your unflinching support which have made it possible for the
Group to achieve all that we have thus far.
I would also wish to announce that YBhg. Tan Sri Ong Ka Ting,
who has served with distinction on the Board, will not be seeking
re-election as a Director at the upcoming Annual General Meeting.
The Board and management have benefited immensely from his
wise counsel and deep insights. On behalf of the Board, I would
like to take this opportunity to record our appreciation to Tan Sri
Ong for his invaluable service and contribution and wish him well
in all his endeavours.
The achievements of 2014 reflect the dedication of the senior
management team, and the hard work and dedication of each
member of the Group, which the Board gratefully acknowledges.
Lastly, I would also like to record my gratitude for the wisdom and
guidance offered by my fellow Directors and for the continued
support of the shareholders of our Company.
Executive Chairman
Since opening in November 2014, IOI City Mall in IOI Resort City, Putrajaya has
successfully raised IOIPG’s profile as a leading integrated property developer.
016
ANNUAL REPORT 2015
FOUR-YEAR
FINANCIAL HIGHLIGHTS
In RM’000
2015
2014
2013*
(pro forma)
2012*
(pro forma)
1,906,491
1,005,846
1,079,635
1,130,326
900,597
1,454,445
1,068,760
1,132,898
1,120,404
903,742
1,323,259
814,195
903,641
904,759
713,603
1,052,220
669,541
710,983
755,692
610,937
890,702
9,895
889,918
13,824
693,621
19,982
599,771
11,166
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
18,439,498
14,725,075
11,983,232
N/A
Total shareholders’ equity
Non-controlling interests
Borrowings
Other non-current liabilities
Other current liabilities
13,427,197
110,957
2,238,650
422,438
2,240,256
11,202,530
98,677
2,057,230
300,716
1,065,922
10,335,384
26,855
502,420
246,054
872,519
N/A
N/A
N/A
N/A
N/A
Total equity and liabilities
18,439,498
14,725,075
11,983,232
N/A
25.83
7.23
10.12
3.56
20.85
6.62
0.21
27.47
8.26
23.28
3.46
18.36
12.85
0.18
21.41
6.71
21.93
3.19
4.86
0.59
0.05
18.52
N/A
126.24
N/A
N/A
N/A
N/A
RESULTS
Revenue
Operating profit
Profit before interest and taxation
Profit before taxation
Profit for the financial year
Attributable to:
Owners of the parent
ASSETS
Property, plant and equipment
Land held for property development
Investment properties
Interests in joint ventures
Other non-current assets
Current assets
Total assets
EQUITY AND LIABILITIES
FINANCIAL RATIOS
Basic earnings per shareN1 (sen)
Return on average shareholders’ equity (%)
Interest cover (times)
Net assets per share (RM)
Gross gearing ratio (%)
Net gearing ratio (%)
Debt to equity ratio (times)
* The Group’s financial performance and financial position 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.
Basic earnings per share for FY2014 and FY2013 were calculated by dividing net profit attributable to owners of the Company by the number of ordinary shares outstanding
at the end of FY2014 i.e. 3,239,014,726 throughout each financial year.
N1
REVENUE
PROFIT BEFORE TAXATION
RM’000
2,000,000
1,906,491
RM’000
1,200,000
1,120,404
1,000,000
1,454,445
1,500,000
ANNUAL REPORT 2015
1,323,259
800,000
1,130,326
904,759
755,692
1,052,220
1,000,000
600,000
400,000
500,000
200,000
0
2012
0
2013
2014
2015
2012
BASIC EARNINGS PER SHARE
2014
2015
SHAREHOLDERS’ EQUITY
Sen
RM’000
30
27.47
25.83
25
15,000,000
13,427,197
12,000,000
21.41
20
2013
10,335,384
18.52
11,202,530
9,000,000
15
6,000,000
10
3,000,000
5
0
0
2012
2013
2014
2013
2015
RETURN ON AVERAGE
SHAREHOLDERS’ EQUITY
10
2014
NET ASSETS PER SHARE
RM
%
4.0
8.26
8
3.5
7.23
6.71
2015
3.46
3.56
2014
2015
3.19
3.0
2.5
6
2.0
4
1.5
1.0
2
0.5
0
2013
2014
2015
0.0
2013
017
018
ANNUAL REPORT 2015
GROUP FINANCIAL
POSITION
1,120,101
1,047,300
Property, plant
and equipment
Property, plant
and equipment
2,894,104
6,568,448
Current
assets
1,120,101
Assets
Property,
plant
and equipment
313,431
6,568,448
Other
non-current
Current
assets
3,388,152
Investment
properties
2,894,104
4,155,262
Assets
Interests in
joint ventures
Land held
for property
development
3,388,152
Investment
properties
313,431
Other
non-current
assets
Land held
for property
development
3,801,442
1,047,300
243,387
Other
non-current
3,801,442
assets
243,387
Other
non-current
assets
300,716
Borrowings
Borrowings
1,679,896
13,427,197
Other current
Total
liabilities
shareholders’
equity
300,716
98,677
Other
Non-controlling
non-current
interests
liabilities
2,799,010
2,057,230
Borrowings
Borrowings
Non-controlling
interests
Equity
and
Liabilities
13,427,197
Total
shareholders’
equity
RM’000
Other
non-current
liabilities
2,057,230
110,957
AT
30 JUNE 2014
1,679,896
Other current
liabilities
Equity
and
Liabilities
2,765,489
3,855,746
2,799,010
422,438
110,957
Other
Non-controlling
non-current
interests
liabilities
Assets
2,765,489
3,011,711
Investment
properties
Land held
for property
development
Interests in
joint ventures
Interests in
joint ventures AS
30 JUNE 2015
Other
non-current
liabilities
3,855,746
Land held
for property
development
Investment
properties
4,155,262
RM’000
Property,
plant
Assets
and equipment
Current
assets
Interests in
AT
joint AS
ventures
422,438
3,011,711
Current
assets
98,677
Non-controlling
interests
1,065,922
Other current
liabilities
Equity
and
Liabilities
Equity
and
Liabilities
1,065,922
11,202,530
Other current
Total
liabilities
shareholders’
equity
11,202,530
Total
shareholders’
equity
ANNUAL REPORT 2015
019
GROUP PERFORMANCE
HIGHLIGHTS
In RM’000 unless otherwise stated
2015
2014
2013*
(pro forma)
2012*
(pro forma)
1,906,491
1,130,326
900,597
890,702
12,314,864
14,947,901
7.23
25.83
10.12
1,454,445
1,120,404
903,742
889,918
10,768,957
12,228,444
8.26
27.47
23.28
1,323,259
904,759
713,603
693,621
10,335,384
11,003,146
6.71
21.41
21.93
1,052,220
755,692
610,937
599,771
N/A
N/A
N/A
18.52
126.24
Property Development
Sales value
Sales (unit)
Revenue
Segment operating profit
1,778,457
1,750
1,562,258
559,368
1,966,806
2,667
1,243,476
462,630
1,703,979
2,485
1,091,193
542,908
851,007
1,406
836,820
430,055
Property Investment
Occupancy rate (%)
Rental yield (%)
Revenue
75
6
192,633
97,515
74
6
104,894
66,575
74
6
106,421
65,632
68
6
96,262
64,696
Leisure and Hospitality
Occupancy rate (%)
Revenue
49 – 52
110,778
10,143
54 – 56
58,317
4,377
53 – 59
87,205
16,655
52 – 63
73,292
(13,430)
Others
Revenue
40,822
22,234
47,758
31,905
38,440
26,428
45,846
36,153
FINANCIAL PERFORMANCE
Revenue
Net profit attributable to owners of the Company
Average shareholders’ equity
Average capital employed
Return on average shareholders’ equity (%)
Basic earnings per share (sen)
Interest cover (number of times)
SEGMENT ANALYSIS
year. This is to provide a meaningful comparison of the financial performance of the Group.
020
ANNUAL REPORT 2015
SEGMENTAL
PERFORMANCE
PROPERTY
DEVELOPMENT
PROPERTY
INVESTMENT
SALES VALUE RM’000
REVENUE RM’000
SALES UNIT
SEGMENT OPERATING PROFIT RM’000
1,778,457
192,633
1,750
97,515
REVENUE RM’000
1,562,258
REVENUE RM’000
559,368
192,633
104,894
106,421
96,262
SALES VALUE RM’000
1,778,457
1,966,806
1,703,979
2015
2014
*2013
*2012
RM Million
2015
2014
*2013
*2012
RM Million
2015
2014
*2013
*2012
RM Million
97,515
66,575
65,632
64,696
851,007
40,822
SALES UNIT
Others
1,750
2015
2014
*2013
*2012
2,667
2,485
1,406
Leisure &
Hospitality
192,633
REVENUE RM’000
2015
2014
*2013
*2012
RM Million
110,778
1,562,258
1,243,476
1,091,193
836,820
Property
Investment
1,562,258
Revenue
2015
Property
Development
(RM’000)
2015
2014
*2013
*2012
RM Million
559,368
462,630
542,908
430,055
* The Group’s financial performance and financial position 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.
LEISURE &
HOSPITALITY
OTHERS
REVENUE RM’000
REVENUE RM’000
110,778
40,822
10,143
22,234
REVENUE RM’000
REVENUE RM’000
110,778
2015
2014
*2013
*2012
RM Million
58,317
87,205
73,292
Property
Development
10,143
4,377
16,655
(13,430)
22,234
22,234
Others
Others
10,143
10,143
Leisure &
Hospitality
Leisure &
Hospitality
97,515
97,515
Property
Investment
40,822
47,758
38,440
45,846
2015
2014
*2013
*2012
RM Million
2015
2014
*2013
*2012
RM Million
1,562,258
ANNUAL REPORT 2015
Property
Investment
Segment
Operating
Profit 2015
(RM’000)
2015
2014
*2013
*2012
RM Million
559,368
Property
Segment
Development
Operating
Profit 2015
22,234
31,905
26,428
36,153
559,368
Property
Development
(RM’000)
* The Group’s financial performance and financial position 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.
021
022
ANNUAL REPORT 2015
GROUP QUARTERLY
RESULTS
In RM’000 unless
otherwise stated
30 September
2014
%
31 December
2014
%
31 March
2015
%
30 June
2015
%
Revenue
375,519
19.7
448,258
23.5
468,387
24.6
614,327
32.2
Operating profit
Share of results of associates
Share of results of joint ventures
150,993
(594)
6,952
15.0
(34.6)
9.6
348,928
1,199
(5,330)
34.7
69.9
(7.4)
146,908
434
(8,386)
14.6
25.3
(11.6)
359,017
35.7
677
39.4
78,837 109.4
Profit before interest and taxation
Interest income
Interest expense
157,351
8,974
(19,200)
14.6
17.7
–
344,797
10,334
(21,186)
31.9
20.4
–
138,956
15,177
8,862
12.9
29.9
–
438,531
16,206
31,524
40.6
32.0
–
Taxation
147,125
(44,892)
13.0
19.5
333,945
(51,176)
29.6
22.3
162,995
(51,485)
14.4
22.4
486,261
(82,176)
43.0
35.8
102,233
11.3
282,769
31.4
111,510
12.4
404,085
44.9
Attributable to:
101,001
1,232
11.3
12.4
280,348
2,421
31.5
24.5
107,760
3,750
12.1
37.9
401,593
2,492
45.1
25.2
102,233
11.3
282,769
31.4
111,510
12.4
404,085
44.9
Earnings per share (sen)
Basic
Diluted
3.12
3.12
8.65
8.65
3.04
3.04
10.64
10.64
SEGMENT REVENUE &
SEGMENT RESULTS
Segment Revenue
Property development
Property investment
Leisure and hospitality
Others
Segment Results
Property investment
Others
311,329
28,549
20,907
14,734
19.9
14.8
18.9
36.1
372,145
41,935
28,188
5,990
23.8
21.8
25.4
14.7
370,151
57,265
31,779
9,192
23.7
29.7
28.7
22.5
508,633
64,884
29,904
10,906
32.6
33.7
27.0
26.7
375,519
19.7
448,258
23.5
468,387
24.6
614,327
32.2
131,250
17,126
45
8,930
20.8
4.1
0.4
37.3
135,146
202,018
3,971
3,662
21.4
48.8
39.2
15.3
103,364
25,815
5,361
4,416
16.4
6.2
52.9
18.4
261,681
169,142
766
6,942
41.4
40.9
7.5
29.0
157,351
14.6
344,797
31.9
138,956
12.9
438,531
40.6
FINANCIAL
CALENDAR
FINANCIAL YEAR END
30 JUNE 2015
ANNOUNCEMENT OF RESULTS
1st Quarter
21 November 2014
2nd Quarter
13 February 2015
3rd Quarter
14 May 2015
4th Quarter
27 August 2015
PAYMENT OF DIVIDEND
1st Interim
Declaration
27 August 2015
Book Closure
18 September 2015
Payment
30 September 2015
Notice of Annual General Meeting
Annual General Meeting
Amigo Clubhouse at 16 Sierra, Puchong South.
2 October 2015
26 October 2015
ANNUAL REPORT 2015
023
024
ANNUAL REPORT 2015
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
Group Business Review – Overview
IOI Properties Group Berhad (“IOIPG”) is an established community developer well-known for its selfcontained suburban townships and a reputable track record spanning more than two decades in the
property industry.
IOI Palm City in Xiamen, PRC which comprises a shopping mall, boutique offices, a five-star hotel and luxury residences is expected to be completed in 2018.
Since forging its own path as a separate listed entity in January
2014, IOIPG has chalked up numerous accolades and milestones
in its journey towards achieving its vision. Its visionary track record
has further spurred the Group to launch vibrant townships and
innovative developments.
In addition to being consistently ranked highly among the largest
property players in Malaysia, IOIPG is also one of the few integrated
property companies that builds as well as manages investment
properties such as shopping malls, hotels, office buildings and golf
courses. It is renowned for its prowess in property development
and success in building thriving self-contained townships, notably
turning once-backwater Puchong into the commercial success it
is today. However, unknown to many, IOIPG’s success today is
leveraged on a solid footing encompassing several core business
components – property development, property investment, and
leisure and hospitality.
To complement its township developments, IOIPG builds
shopping malls, retail complexes, purpose-built office buildings
and golf courses, which bring value-add to its customers. IOIPG
has a superior track record in managing these prime assets which
it develops and owns, complementing its philosophy in offering
self-contained townships that aptly meets the community’s
lifestyle and business needs. This differentiating factor sets IOIPG
apart from its industry peers. Its strategic approach to develop
an investment portfolio to retain ownership and control of the
buildings transformed IOIPG into an integrated property player.
Through strategic partnerships, IOIPG has ventured into
five property development projects in Singapore comprising
high-end residential and integrated mixed developments. Over in
the People’s Republic of China (“PRC”), it has embarked on two
mixed property development projects in Xiamen.
ANNUAL REPORT 2015
025
With these established property assets across Malaysia,
Singapore and PRC, IOIPG will be able to enjoy a steady stream
of revenue, rental income and yield in the coming years. Coupled
with the upcoming property development launches, completion of
key projects such as IOI City Towers, South Beach and IOI Palm
City, exciting times are ahead for IOIPG. Undoubtedly, IOIPG’s
business portfolio is extensive and will continue to grow in size
and value as the Group expands its horizons beyond borders.
GROUP OPERATIONS OVERVIEW
Amidst the backdrop of a challenging economic outlook, the
Group remains resilient and continues to lay the foundations to
deliver long term value to its stakeholders.
In the year under review, the Group has made significant headway
with the following achievements:
•
Completion and opening of IOI City Mall in November 2014.
•
Completion and opening of Four Points by Sheraton Puchong
in December 2014.
•
Launch of new township in Bandar Puteri Bangi in January
2015.
•
Launch of PJ Midtown, a mixed use development,
joint venture between IOI Properties Berhad and Sime Darby
Brunsfield Sdn Bhd, in January 2015.
Completion and opening of office tower for South Beach
project in Singapore, a joint venture with City Developments
Limited (“CDL”), with more than 90% of office space leased.
GROUP FINANCIAL PERFORMANCE OVERVIEW
•
•
Launch of IOI Palm City’s residential phase in the last quarter
of FY2015.
Despite the challenging property market, the Group has achieved
record high revenue of RM1,906.5 million for the financial year
ended 30 June 2015 which was 31.1% higher than FY2014.
The increase in revenue was mainly attributable to IOIPG’s
property development segment which registered an increase of
RM318.8 million to RM1,562.3 million, which amounted to 81.9%
of the Group’s total revenue.
During the financial year, IOIPG’s joint venture project in Malaysia
and Singapore recorded a total revenue of RM183.2 million
(FY2014: RM437.6 million) which was not included in the Group’s
consolidated revenue.
Property investment, leisure and hospitality, and others’ segments
contributed to the remaining 18.1% of the Group’s revenue.
Residents of The Terresse, two-storey superlink homes in Bandar Puteri Bangi,
enjoy an enhanced sense of serene living amidst a guarded community with
modern multi-tier security system.
Profit after tax (“PAT”) for the Group stood at RM900.6 million for
FY2015. It was mainly derived from the property development and
property investment segments whereby the segmental operating
profit has increased by 20.9% and 46.5% respectively when
compared to the previous corresponding year after excluding
the one-off gain from acquisition of subsidiaries and the fair value
gain. Notably, the significant increase in the Group’s PAT was due
mainly to the successful launch of its new township in Bandar
Puteri Bangi, enhanced performance of development projects in
Klang Valley and Johor as well as the completion and opening of
IOI City Mall in November 2014. Also contributing to the profit was
the fair value gain on investment properties of RM316.6 million.
Le Pavillion in Bandar Puteri Puchong.
PROPERTY
DEVELOPMENT
Improved
performance
in 2015
+14 %
than 2013
nched two phases
Park Bay project
97%
sold out
with total
sales value
RMB1,278 million
Innovating new
developments that satisfy
evolving lifestyles.
With its prestigious collection of quality homes, hotels, shopping
malls, golf courses and offices in thriving townships, IOI Properties
Group Berhad (“IOIPG”) is primed to be the preferred lifestyle
developer – influencing the way hundreds of thousands of people live,
work and play through its commitment to conscientiously innovate
and create highly liveable masterpieces.
Par 3 Town Villa at IOI Resort City, Putrajaya.
Spring Garden at 16 Sierra, Puchong South.
028
ANNUAL REPORT 2015
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
Group Business Review – Property Development
With a strong repute as a developer of self-contained suburban townships IOI Properties Group
Berhad (“IOIPG”) has spent the last two decades diligently developing residential and commercial
properties both locally and abroad. In line with its vision to become a leading corporation in its core
businesses, the Group aims to continue leveraging on its strength and proven track record to leave
its esteemed mark at high growth corridors within Malaysia and in surrounding nations.
As an esteemed property developer in Malaysia, Singapore and
the People’s Republic of China (“PRC”), IOIPG is reputable for
its successful development of comprehensive self-contained
suburban townships along the high growth corridors in Klang
Valley, Penang and Johor in Malaysia.
From the Group’s landbank, the following main development
corridors and respective acreage have been identified:
LANDBANK
ACRES
OPERATIONS REVIEW
Property development continues to be the main driver of both
revenue and segmental operating profits for the Group, having
recorded RM1,562.3 million and RM631.4 million in FY2015
respectively.
The Group’s development projects in Klang Valley contributed
39.7% of its revenue while projects in Johor contributed 28.8%,
followed by 25.8% from its overseas development projects in
Singapore and Xiamen, PRC with the remaining 5.7% from
Penang and Negeri Sembilan.
Southern Region Corridor in Johor
6,391
Ayer Keroh, Malacca
1,338
Klang Valley
Bandar IOI, Bahau in Negeri Sembilan
1,080
During FY2015, IOIPG delivered to its house owners one of
the two blocks of Skypod Residences (serviced apartment) in
Puchong and 122 units of three-storey semi-detached houses in
16 Sierra.
Klang Valley, covering development areas in
Bandar Puchong Jaya; Bandar Puteri Puchong;
Bandar Puteri Bangi; Bandar Puteri Warisan,
Sepang; IOI Resort City and 16 Sierra
Northern Region Corridor in Penang
890
39
In Bandar Puchong Jaya, the Skyz Residence (resort
condominium) launched two of its five blocks to cater to
property buyers who prefer high-rise living lifestyle. Over at
16 Sierra, IOIPG introduced several landed properties, namely
Sierra 6 comprising two- and three-storey link houses and Sierra
12’s 336 units of N’Dira townhouses. These property launches
were warmly greeted by genuine property buyers seeking
comfortable abodes within a gated community.
IOIPG emulated its successful formula of building cohesive
townships with the launch of Bandar Puteri Bangi in Bangi,
Selangor. The first phase of properties launched included The
Terresse (two-storey superlink houses), Almyra Residence
(serviced apartment) and Kubica Square (three- and four-storey
shop offices). In less than a month, the township achieved 70%
sales for all three projects. The good response led IOIPG to
launch second phase of sales for similar products; The Terresse 2
and Enigma Square.
Rising majestically in Bandar Puchong Jaya, the Skyz Residence won the Highly
Commended: Residential Landscape Architecture (Malaysia) accolade by Asia
Pacific Property Awards.
Other Regions
In southern Johor, IOIPG’s townships of Bandar Putra Kulai,
Taman Lagenda Putra and Taman Kempas Utama situated within
Iskandar Malaysia as well as Bandar Putra Segamat continued
with their respective ongoing projects and completed several
landed residential and commercial properties. These included
Grandville (bungalows), GolfVue 2 (semi-detached houses),
Delanna and Arianna (two-storey houses), Kristal 2 (single
storey houses), The Empire and Quattro (three-storey shops).
Construction works were also underway for serviced apartments,
namely D’Summit Residences, The Platino and D’Putra Suites.
IOIPG also commenced the development of i-Synergy, a 500-acre
business park catering to light and medium industries.
ANNUAL REPORT 2015
029
Bandar IOI in Bahau, Negeri Sembilan started construction early
2014, and has since successfully launched its commercial (shop
offices), light industry (semi-detached and terrace) and residential
(semi-detached and terrace houses) properties. Two major
international brands, Tesco and McDonald’s, will commence
operations in the township by October 2015 and November 2016.
In northern Penang, IOIPG launched the Stramax Residences
(107 units of three-storey terrace houses) in Desaria, Sungai Ara
in April 2015. Another prestigious project, Cypress Villa (48 units
of three-storey semi-detached houses and three bungalows) was
built on elevated land and is scheduled for completion by end
of 2015.
As at 30 June 2015, the Group’s ongoing property development projects (excluding investment-based development projects) and the
status of their development are as follows:
YEAR OF
DEVELOPMENT’S
COMMENCEMENT
ORIGINAL
DEVELOPMENT
LAND SIZE
(ACRES)
Bandar Puchong Jaya, Selangor
1990
930
Approaching
completion
RM4.2 billion
IOI Resort City, Putrajaya
1995
50
Ongoing
RM0.8 billion
Bandar Putra Kulai, Johor
1995
5,680
Ongoing
RM9.1 billion
Bandar Putra Segamat, Johor
1995
489
Ongoing
RM0.9 billion
PROJECT
STATUS
ESTIMATED
GROSS VALUE
Bandar Puteri Puchong, Selangor
2000
930
Ongoing
RM15.8 billion
Taman Lagenda Putra, Kulai, Johor
2006
225
Ongoing
RM0.6 billion
Taman Kempas Utama, Johor Bahru, Johor
2007
294
Ongoing
RM3.1 billion
16 Sierra, Puchong South, Selangor
2008
535
Ongoing
RM6.8 billion
Seascape @ Sentosa Cove, Singapore
2008
4
Completed
SGD1.1 billion
Cape Royale @ Sentosa Cove, Singapore
2010
5
Completed
SGD1.5 billion
Cityscape @ Farrer Park, Singapore
2011
2
Completed
SGD0.4 billion
South Beach, Beach Road, Singapore
2011
9
Ongoing
SGD1.0 billion
The Platino, Johor Bahru, Johor
2012
5
Ongoing
RM0.5 billion
IOI Park Bay, Xiamen, PRC
2012
8
Ongoing
RMB1.8 billion
The Trilinq @ Jalan Lempeng, Singapore
2013
6
Ongoing
SGD1.0 billion
Desaria, Sungai Ara, Penang
2013
32
Ongoing
RM0.5 billion
IOI Palm City, Xiamen, PRC
2014
21
Ongoing
RMB4.9 billion
Bandar IOI, Bahau, Negeri Sembilan
2014
335
Ongoing
RM0.9 billion
Bandar Puteri Bangi, Selangor
2014
345
Ongoing
RM4.8 billion
Bandar Puteri Warisan, Sepang
2014
336
Ongoing
RM1.3 billion
i-Synergy, Senai, Kulai, Johor
2015
500
Ongoing
RM2.0 billion
030
ANNUAL REPORT 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS (Cont’d)
Group Business Review – Property Development
The table below sets forth key information with respect to the performance of IOIPG’s property development business excluding
joint ventures:
Units of property sold
Total sales (RM’000)
Revenue (RM’000)
Segment operating profit (RM’000)
2015
2014
2013*
2012*
1,750
1,778,457
1,562,258
559,368
2,667
1,966,806
1,243,476
462,630
2,485
1,703,979
1,091,193
542,908
1,406
851,007
836,820
430,055
period. This is to provide a meaningful comparison of the financial performance of the Group.
The Group sold a total of 1,750 units of properties with total sales value of RM1,778.5 million in FY2015, a decrease of 917 units worth
RM188.3 million as compared to FY2014. In terms of revenue, it is recorded at RM1,562.3 million in FY2015 which is RM318.8 million
higher than FY2014 of RM1,243.5 million.
Property sales by location are summarised as follows:
PROJECT
Bandar Puteri, Bangi, Selangor
The Trilinq @ Jalan Lempeng, Singapore
Bandar Puchong Jaya, Selangor
16 Sierra, Puchong South, Selangor
IOI Palm City, Xiamen, PRC
Bandar Putra Kulai, Johor
IOI Park Bay, Xiamen, PRC
Desaria, Sungai Ara, Penang
Bandar Puteri Puchong, Selangor
Taman Kempas Utama, Johor
Bandar Putra Segamat, Johor
Bandar IOI, Bahau, Negeri Sembilan
Others
Total
SALES VALUE (RM’000)
2015
2014
UNITS
2015
2014
245,512
239,040
235,531
230,596
226,720
148,228
115,081
100,017
77,819
51,132
41,166
24,913
42,702
–
26,805
82,006
249,662
–
310,139
660,625
13,450
104,926
363,899
14,778
66,879
73,637
317
62
265
214
171
262
10
66
29
114
145
36
59
–
8
110
317
–
674
618
7
58
640
55
57
123
1,778,457
1,966,806
1,750
2,667
During FY2015, the Group provided quality high-rise properties and landed homes to the middle income group in local market. The sales
mix recorded for unit price below RM750,000 excluding properties sale in Xiamen, PRC and Singapore was 33% of the Group’s total
sales value.
The property sales mix by price range is as follows:
PRICE RANGE
Below RM250,000
Between RM250,000 and RM500,000
Between RM500,000 and RM750,000
Between RM750,000 and RM1,000,000
Between RM1,000,000 and RM1,500,000
Between RM1,500,000 and RM2,000,000
Above RM2,000,000
Total
2015
(RM’000)
%
2014
(RM’000)
%
22,175
181,500
193,051
301,314
350,562
223,520
506,335
1
10
11
17
20
13
28
33,513
356,824
272,026
206,673
824,238
48,138
225,394
2
18
14
11
42
2
11
1,778,457
100
1,966,806
100
ANNUAL REPORT 2015
031
Despite the challenging property market environment in FY2015,
the Group exhibited marked improvement in its performance by
posting a revenue of RM1,562.3 million which was 25.6% higher
than FY2014. Such a significantly strong performance was enabled
by the achievement of higher sales and sustained progress of
ongoing projects undertaken by the Group in Malaysia, Singapore
and PRC.
On the international front, particularly in Xiamen, PRC during
FY2015, the Group successfully launched the first phase of its
residential properties with 96% sold at the date of this report,
generating total sales value of approximately RMB520.4 million.
OUTLOOK & PROSPECTS
Malaysia
With the recent implementation of Goods and Services Tax
(“GST”) beginning 1 April 2015, the domestic property market
sentiments remained relatively subdued as the industry continues
to experience slower overall take-up rate at new property
launches, especially for the high-end property segment. This is
partly attributed to the tightening measures on property sector
as announced in Malaysia Budget 2014 and other fiscal policies
such as lower loan-to-value (“LTV”) ratio and stricter financing
facilities. However, as these regulatory measures are meant
to curb speculation and not restrict genuine demand, these
measures are not expected to affect the sustainable growth of
the property sector on a long-term basis. The generally weak
sentiments were also influenced by a steep decline in commodity
prices and a relatively bearish equities market.
In Klang Valley, the prospect for the Group’s development in
growth areas such as Puchong, Puchong South and Bangi are
expected to remain resilient. The upcoming township, Bandar
Puteri Warisan, Sepang comprising freehold two-storey link
houses is due to be launched in FY2016, catering to growing
demand for landed properties. In Johor, sentiment is soft on
the condominium market thus impacting demand for high-rise
residences. As such, IOIPG will focus on developing landed
properties on its vast landbank in Kulai.
The Whimsical Garden of Puteri Hills Luxury Town Villa in Bandar Puteri Puchong
provides an alluring calm to the senses.
IOIPG is adopting strategies to target genuine buyers with quality
affordably-priced landed and high-rise residences as well as
commercial shop offices in strategic locations. These segment
markets are expected to be resilient in the current economic
situation.
Strategic location is key to a sound property purchase. IOIPG
will continue to optimise development of mature townships with
Transit-oriented Development (“TOD”), specifically at Bandar
Puchong Jaya and Bandar Puteri Puchong. Residents stand
to benefit upon the completion of the Light Rail Transit (“LRT”)
commuter lines and stations which provide added convenience
and accessibility to these townships.
In the meantime, IOIPG will seek to actively promote and advertise
through various channels that appropriately target potential
customers and at the same time, raise its brand profile and
awareness of key developments.
Singapore
The property market in Singapore continues to remain under
pressure. However, property projects in strategic locations
targeted at the mass market have seen good demand.
The Cityscape @ Farrer Park, comprising a total of 250 units
of condominium, has achieved 94% of sales. The project was
completed in October 2014.
Meanwhile, The Trilinq @ Jalan Lempeng which consists of
755 units of condominium has seen an increase in take-up rate
during the second half of FY2015.
PRC
In PRC, the demand and prices of residential properties are
expected to remain stable in high growth cities such as Xiamen.
The supportive policy measures such as policy rate cut had
improved buying sentiment which increased the number of sales
transactions in the property market.
Bandar IOI, the first concept township development in Bahau, Negeri Sembilan,
is master-planned to be a thriving hub of activity with modern residences and
commercial shops.
IOIPG has successfully launched the first phase of its residential
properties in IOI Palm City with 96% sold at the date of
this report.
IOI City Mall at IOI Resort City, Putrajaya.
PROPERTY
INVESTMENT
Higher FV
gain on
estment properties
305.31million
age occupancy
Y2014
74
%
Leveraging on strategic
investment assets to
enhance profitability.
Beyond developing, IOI Properties Group Berhad (“IOIPG”) invests
in and agilely manages its stable of principal investment properties
comprising shopping malls, retail complexes and purpose-built office
buildings in Malaysia, Singapore and the People’s Republic of China
(“PRC”). Innovative business strategies enable these integrated
developments to deliver greater value – leading to higher capital
appreciation and sustainable yields for the Group.
An artist’s impression of IOI City Towers
at IOI Resort City, Putrajaya.
Puchong Financial Corporate Centre
in Bandar Puteri Puchong.
034
ANNUAL REPORT 2015
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
Group Business Review – Property Investment
Property investment plays a strategic role in complementing the property development division of
IOI Properties Group Berhad (“IOIPG”). In the Group’s townships, the property investment interests are
the primary bedrock to bring greater value to its homeowners.
IOIPG’s prime property investment assets in Malaysia, which
complement its existing township developments, supplement
the group’s revenue with stable and recurring rental income. The
Group’s existing property investment portfolio as at 30 June 2015
has approximately a total 4.6 million sq. ft. of lettable space, of
which approximately 2.5 million sq. ft. is retail space, 1.6 million
sq. ft. is office space, and the balance encompassing, amongst
others, residential properties.
Some of IOIPG’s major investment properties are:
a) IOI City Mall in IOI Resort City, Putrajaya has 380 retail shop
lots with a total net lettable area (“NLA”) of 1.4 million sq. ft.;
b) IOI Mall Puchong has more than 353 retail shop lots with a
total NLA of approximately 859,000 sq. ft.;
c) Four blocks of 12-storey to 21-storey purpose-built office
buildings in Puchong Financial Corporate Centre (“PFCC”)
with total NLA of approximately 874,000 sq. ft.;
d) IOI Mall Kulai in Johor has more than 258 retail shop lots with
a total NLA of approximately 242,000 sq. ft.;
e) One IOI Square and Two IOI Square located in IOI Resort
City, Putrajaya comprise two blocks of 12-storey purposebuilt office towers with approximately 441,000 sq. ft. of NLA;
and
f)
IOI Boulevard in Puchong has 68 units of office and retail lots
with a total NLA of approximately 229,000 sq. ft.
IOIPG has realised optimal gains in capital appreciation over the
medium-term from its investments in purpose-built office and
commercial/retail space. At the same time, this segment presents
the Group with an avenue to benefit from sustained income
streams.
OPERATIONS REVIEW
The Group’s investment properties experienced a steady growth
over FY2015 enjoying overall improved occupancy. One of the key
reasons is attributed to the strategic location of these properties
within IOIPG’s developments which are situated within the growth
corridors. Its ownership control over these investment assets
allows IOIPG to have control over the tenant mix.
Synergies between the property investment and property
development components are apparent as IOIPG master-
planned shopping malls, retail complexes and purpose-built
office buildings alongside its township developments. As these
townships continue to mature and thrive, IOIPG’s investment
portfolio will see a marked enhancement from the development of
more upmarket properties and higher rental yields.
Property development is susceptible to economic fundamentals
due to its cyclical nature which may potentially impact the
company’s bottom line, while stable recurring income derived from
its property investment assets helps to strengthen the balance
sheet. In short, rental yield generates cash flow needed to cushion
the challenging effect resulting from a slow property sales market.
MALAYSIA
Retail
The most significant milestone for FY2015 was the successful
completion and subsequent opening of IOI City Mall at IOI Resort
City in November 2014, making it the largest mall in southern
Klang Valley with 1.4 million sq. ft. of NLA. Commencing with
80% occupancy, this modern architectural landmark has set a
new standard in retail mall design and elevated patrons’ shopping
experience in terms of the mall’s size, finishing and ambience.
With anchor tenants such as Parkson departmental store
occupying 220,000 sq. ft.; HomePro Malaysia; Index Living Mall;
Tesco; Golden Screen Cinemas (“GSC”); Wangsa Bowl; Icescape
Ice Rink, an Olympic-sized ice-skating rink; District21, an indoor
theme park; and 300 specialty, fashion, and food and beverage
(“F&B”) outlets, IOI City Mall has fast become a popular household
name as a regional mall offering a comprehensive selection of
shopping and entertainment facilities. The mall, which is within
IOI Resort City, enjoys excellent infrastructure and connectivity via
six major highways.
As for IOI Mall Puchong, it sustained its strong performance with
occupancy remaining at approximately 100%. The management
continues to be proactive in sourcing new tenants, improving
marketing and promotions as well as customer service to
consolidate its positioning as a family mall in Puchong. Traffic
flow and footfall are expected to improve in view of the expected
completion of Light Rail Transit (“LRT”) stations in 2016.
The retail sector is the main contributor; accounting for 79% of
the total revenue of the property investment division for FY2015.
It recorded a revenue and operating profit of RM152.1 million and
RM74.8 million respectively.
ANNUAL REPORT 2015
035
has also affected the economy with the price of goods and
services increasing due to costlier imports. The retail market is
also experiencing an increasing supply of shopping malls. This
has resulted in retailers having more locations to choose from,
thus affecting rentals.
IOI City Mall currently enjoys more than 90% tenant occupancy, thus providing
IOIPG with a steady yield for the coming years.
Offices
Despite the overall challenging office market, the offices at
PFCC and IOI Boulevard generally enjoyed higher occupancies
compared to FY2014. IOI Boulevard’s occupancy exceeded 80%
whilst PFCC saw increasing interest and rentals from multinational
corporations (“MNCs”). The imminent completion of the LRT by
2016 has contributed to the improvement in occupancies of
offices in Puchong.
REGIONAL INVESTMENT PROPERTIES
IOIPG’s collection of retail and office spaces has been
commended repeatedly for their superior value and quality, thus
spurring the Group to expand its investment portfolio to also
include the regional market in Singapore and Xiamen, PRC.
The South Beach, IOIPG’s flagship project in Singapore, is set
to inject vibrancy into the domestic property sector with an
office tower, a 654-room hotel, premium retail space and luxury
residential units. Upon completion, South Beach will be one of the
regional preferred hubs for businesses. The office tower currently
enjoys more than 90% occupancy.
Over in Xiamen, PRC, IOIPG’s mega mixed development,
IOI Palm City, is gathering strong interest from Chinese property
investors. The 44-acre project encompasses a grand shopping
mall, boutique offices, a luxury hotel, high-rise residences
and villas.
Notwithstanding the challenging economic environment, the
performance of IOIPG’s investment properties in Puchong are
expected to be steady as they are located in matured townships
and enjoy the benefits of an improving infrastructure system.
The LRT is expected to bring in more vibrancy and convenience
to IOIPG’s investment properties as they are all within close
proximity to the LRT stations. Continued aggressive and targeted
marketing is expected to ensure that the investment properties
remain competitive resulting in higher occupancies.
Set within an integrated development, IOI City Mall will be
complemented by two Grade A corporate office towers with a
NLA of one million sq. ft. and the 350-room five-star hotel by
Starwood Hotels & Resorts Worldwide, Inc. by early 2016. The
completion of both IOI City Towers and Le Méridien Putrajaya is
expected to enhance the performance of IOI City Mall.
SINGAPORE
The overall property investment market continues to remain
cautious with the Government maintaining a tight control on the
property market. Despite this scenario, the office towers of South
Beach project, a joint venture with City Developments Limited
(“CDL”), have achieved more than 90% occupancy with notable
MNCs as tenants.
PRC
The commercial property market in China has been cautious
as China’s economic growth is experiencing deceleration.
Nonetheless, IOIPG’s developments in Xiamen have been
encouraging with the strong take-up rate for its maiden launch of
IOI Palm City. The commercial developments in IOI Palm City are
expected to complement the growing population around Jimei
district.
These two notable developments will be proud additions to
IOIPG’s investment portfolio, generating healthy income revenue
for the Group in coming years.
Overall, the Group registered higher fair value gain on investment
properties of RM316.6 million compared to RM305.3 million in
FY2014.
OUTLOOK & PROSPECTS
MALAYSIA
The economic environment is expected to be challenging in view
of the depressed crude oil and palm oil prices. The introduction
of Goods and Services Tax (“GST”) in April 2015 has significantly
affected consumer demand which in turn affected retailers’
performances in shopping complexes. The weakening of ringgit
The grand shopping mall in IOI Palm City in Xiamen, PRC counts among the
approximate 1.5 million sq. ft. of retail and office space in NLA, boosting IOIPG’s
income and rental yield upon its completion in 2018.
Four Points by Sheraton Puchong in Bandar Puteri Puchong.
LEISURE &
HOSPITALITY
55%
average room
occupancy
Upcoming hotels
Four-star
Four Points by
Sheraton Puchong
and five-star
Le Meridien
Putrajaya
Strengthening leisure and
hospitality portfolio to
drive business.
Having successfully established its leisure and hospitality expertise,
IOI Properties Group Berhad (“IOIPG”) consolidated its reputation with
two new renowned hospitality brands in its portfolio. The Group is
poised to venture further into new shores and explore fresh avenues
in serving up greater value to our patrons.
Zest at Putrajaya Marriott Hotel, Putrajaya.
Palm Garden Golf Club at IOI Resort City, Putrajaya.
038
ANNUAL REPORT 2015
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
Group Business Review – Leisure & Hospitality
IOI Properties Group Berhad’s (“IOIPG”) hotels, resorts and golf courses in Klang Valley and Johor are
well-known in the leisure and hospitality circle for their unique features and strong brand recognition.
Tapping global opportunities available in the leisure and hospitality industry, the Group has launched
new hotels to take its leisure and hospitality portfolio to a whole new level.
IOIPG’s core business of property development is supported by
its cachet of complementary lifestyle elements. It builds hotels as
part of its property development projects which are then operated
under its leisure and hospitality portfolio. The Group’s hotels,
resorts and golf courses in Klang Valley and Johor are as follows:
a) Putrajaya Marriott Hotel, a five-star hotel with 380 guest
rooms, has 73 executive rooms and 35 exclusive suites. The
hotel in IOI Resort City, Putrajaya was awarded the Best Hotel
Development award in 2004, whilst the hotel’s restaurants
have received several awards in 2007, 2008, 2009 and 2013;
b) Four Points by Sheraton Puchong, a four-star business
hotel with 250 guest rooms located at Puchong Financial
Corporate Centre (“PFCC”), Puchong;
c) Palm Garden Hotel, a four-star hotel with 151 guest rooms
located in IOI Resort City, Putrajaya;
d) Palm Garden Golf Club (“PGGC”), which received the ParGolf
Awards 2012 for Best New Golf Course in Malaysia, and the
Best Golf Development Malaysia 2013-2014 award from Asia
Pacific Property Awards, is also located in IOI Resort City,
Putrajaya; and
e) Palm Villa Golf & Country Resort, a 27-hole golf course
located in the township of Bandar Putra Kulai, Johor.
The 350-room Le Méridien Putrajaya in IOI Resort City, Putrajaya is slated to open
in February 2016.
Revenue generated from the Group’s leisure and hospitality
activities are from hotel guests and function room rentals, golf
course-related fees, food and beverage (“F&B”), merchandise
sales and other related income from hotel and golf course
operations. The revenue from Putrajaya Marriott Hotel and Palm
Garden Hotel as well as the two golf courses in Putrajaya and
Johor serves as the major contributor to the leisure and hospitality
division for FY2015.
Unlike the property development and property investment divisions,
IOIPG’s leisure and hospitality business follows a seasonal pattern
which is largely dependent on festive periods, school holidays and
public holidays. As such, the need to sustain a continuous growth
and expansion of the Group’s stake in the industry is crucial in order
for IOIPG to chart its course to become one of the nation’s leading
players in the leisure and hospitality industry.
The revenue for IOIPG’s leisure and hospitality business is heavily
dependent on the inflow of guests, which the Group perceives
to be the most important operational performance indicator. Due
to the competitive nature of the leisure and hospitality industry
in Malaysia, pricing of room rates, golf course-related fees and
other activities have a significant and direct impact on the inflow
of guests patronising the Group’s hotels and golf clubs.
OPERATIONS REVIEW
Additionally, the consistent and effective maintenance of the golf
courses and hotel rooms, coupled with and the introduction of new
attractions and promotional offers are also seen as contributory
factors towards sustaining the continuous growth of the number
of guests frequenting the hotels and golf clubs.
Other than the completion of the 1.4 million sq. ft. IOI City
Mall, IOIPG is proud to welcome another significant milestone
in FY2015 – the completion and subsequent opening of the
250-room Four Points by Sheraton Puchong at PFCC in December
2014. The introduction of Four Points by Sheraton Puchong has
set a new standard in hospitality for businesses as well as residents
in the surrounding vicinity. Since its opening, the business-class
hotel has proved to be very popular among the small and medium
enterprises (“SMEs”) and business communities in Puchong,
Subang Jaya and Shah Alam. Its occupancy has been increasing
at a steady rate.
ANNUAL REPORT 2015
039
Together with Putrajaya Marriott Hotel, Palm Garden Hotel and
Four Points by Sheraton Puchong, this collection of hotels served
as the main contributor 73.3% to the leisure and hospitality
division for FY2015. It recorded a revenue and operating profit of
RM81.2 million and RM2.9 million respectively.
Both Putrajaya Marriott Hotel and Palm Garden Hotel are
expected to undergo renovation to further improve their
competitiveness in attracting patrons. Aggressive marketing
continues to be carried out to maintain and increase market share
in Putrajaya and southern Klang Valley.
The Le Méridien Putrajaya by Starwood Hotels & Resorts
Worldwide, Inc. is under construction and is due to complete by
early 2016, further adding revenue to this division.
Despite the slow tourism sector, corporate institutions and
MICE (meetings, incentives, conferences and exhibitions)
businesses continue to be tapped as well as capitalising on the
complementary amenities of the newly-completed IOI City Mall
and existing PGGC.
The PGGC remains a premium and challenging course in the
golf circuit. Continual maintenance of the landscape, course and
greens to exceedingly high standards has continued to attract a
steady stream of satisfied loyal and new golfers.
OUTLOOK & PROSPECTS
On the whole, the Malaysian tourism sector has been bleak over
FY2015 due to a slowdown in tourist arrivals with the Ministry
of Tourism and Culture Malaysia noting a recent drop of 30% in
tourists coming into the country. Furthermore, there will be a surge
in supply as an increasing number of hotel rooms are expected
to come into the market. This will continue to affect overall
room rates.
Meanwhile, Four Points by Sheraton Puchong is well-positioned
in Puchong as an international business-class hotel with good
occupancy. Similarly, the management is expected to continue
its marketing efforts to target the commercial, industrial and
residential areas in the matured neighbourhoods of Puchong,
Subang Jaya and Shah Alam.
A vast skyline of the Puchong landscape from the cocktail reception of Four Points by Sheraton Puchong, the latest addition to IOIPG’s leisure and hospitality portfolio.
040
ANNUAL REPORT 2015
SUSTAINABILITY AND
CORPORATE RESPONSIBILITY
In tandem with Malaysia’s move towards achieving the fully developed nation status in 2020, an
intense adoption of sustainable and social responsibility practices is foreseen. Playing its part as a
discerning and responsible property developer, IOI Properties Group Berhad (“IOIPG”) continuously
reinforces its sustainability and corporate responsibility (“CR”) initiatives to complement the
government’s call for responsible practices towards nation building. It is IOIPG’s way of giving back
to the environment, society, and eventually, the nation, while it continues to embark on its journey
as a leading property developer.
CHAMPIONING SUSTAINABILITY
•
facilitating environmentally-responsible product design;
Sustainable Policy and Principles
•
preserving biodiversity by planting tens of thousands of trees
of different local species;
IOIPG is committed towards adopting responsible practices
in its everyday business and conscientiously instilled effective
sustainable measures in its projects to enhance value creation for
its customers. It achieves this by:
•
contributing to the social and economic development of the
communities in which IOIPG develops and operates;
•
continuing its research and development efforts in green
buildings; and
•
practising sustainable work culture.
•
incorporating design principles and adopting work practices
that place considerable importance on energy conservation
and the environment;
•
promoting activities that contribute to the safety and vibrancy
of its communities;
•
cultivating a pro-active and conducive working environment
to achieve its quality policy;
•
supporting
carbon
management
through
efficient
management of resources (i.e. energy and water consumption)
using technological innovations and by recycling;
•
continuously improving its health and safety standards;
Shoppers can enjoy a breath of fresh air at the scenic
IOI City Mall’s outdoors with shaded walkways and foliage.
In line with its sustainability policy, IOIPG goes to great lengths
to adopt design features which harness natural light, encourage
cross and natural ventilation, reduce dependency on mechanical
systems which consume energy, and incorporate energy
management systems into its building automation systems to help
reduce overall energy consumption. It also consciously maximises
landscaping on available spaces in its residential and commercial
developments to reduce “island heat effect” and carbon footprint.
ANNUAL REPORT 2015
041
Other than incorporating environmentally-neutral design
principles and fittings in IOIPG’s buildings, the same
considerations are given to projects which are mainly
non-building based. For example, in the course of refurbishing
Palm Garden Golf Club (“PGGC”), rigorous considerations were
given to minimise impact to the existing environment. More than
85% of the trees (or 2,191 trees) at the old site were transplanted
to the new site and the trees achieved a remarkable survival rate
of more than 95%.
Apart from that, more than 80% of the planting material
requirements for the course were sourced, propagated and/or
transplanted at site. The onsite propagation helped to reduce
fuel consumption and air pollution which would otherwise have
resulted from the need to buy and transport these materials over
long distances.
IOI City Mall’s thermal energy storage system reduces electricity consumption while
extensive use of glass façade allows natural sunlight into the mall.
The following sustainability principles and
incorporated in IOIPG’s property developments:
features
are
Residential Buildings
•
Cross ventilation designs where applicable.
•
Natural ventilation for all bathrooms without the use of
exhaust fans through strategically-placed windows.
•
Open concept with high ceilings to enhance natural lighting
and ventilation.
•
Orientation of buildings towards North-South direction to
reduce heat and sun glare.
•
Vertical plantings to enhance beauty aesthetics and reduce
carbon footprint.
•
Solar water heating systems.
•
Rainwater harvesting systems for irrigation purposes.
•
Installation of water-saving cisterns.
•
Low Volatile Organic Compound (“VOC”) paint.
Commercial High-rise Buildings
•
Green Building Index (“GBI”) or Green Mark Certification.
•
Orientation of buildings towards North-South direction to
reduce heat and sun glare.
•
Energy management modules in its building automation
system.
•
Motion-sensored lights for staircases.
•
Photovoltaic cells at the rooftop where appropriate.
•
Installation of water-saving cisterns.
•
Low VOC paint.
•
Sensor taps for public toilets.
The Par 3 luxury homes in IOI Resort City built air wells between building blocks to
create natural ventilation while shading device in its façade and sky gardens
on alternate floors cool the building.
042
ANNUAL REPORT 2015
SUSTAINABILITY AND CORPORATE RESPONSIBILITY (Cont’d)
SERVING COMMUNITY
Human Capital Development
IOIPG believes that education is an integral component in
empowering and enlightening the young to become leaders of
tomorrow. Its community outreach programmes which centre
on education, human capital development and corporate
philanthropic initiatives are mainly undertaken by its charity arm,
Yayasan Tan Sri Lee Shin Cheng (“Yayasan TSLSC”). To date,
Yayasan TSLSC has contributed over RM33 million to various
schools, hospitals, welfare homes and charitable bodies, and
has given scholarships and grants to hundreds of schools
and students.
(a) Scholarship Awards
The ecoOasis Parkland in Bandar Puteri Bangi celebrates nature
within a pristine recreational space on natural terrain.
Sustainable Work Culture
IOIPG’s sustainability initiatives are not merely limited to tangible
outcomes such as its signature building features. Its commitment
to sustainability encapsulates almost all of its work practices,
and is now ingrained as part of its work culture. From a simple
commitment such as recycling all papers utilised during work
processes to ensuring all drawings presented at meetings are in
soft copies and having only one set of printed drawings to be
shared at workplace by all, IOIPG’s pledge to sustainability is firm
and unyielding.
IOIPG promotes activities that contribute to the vibrancy of its communities.
Scholarships and career opportunities are awarded to
academically outstanding students pursuing full-time
undergraduate studies. Yayasan TSLSC deems it a great
investment to support qualified Malaysian youths and to help
build the nation’s human capital through the scholarships.
To date, Yayasan TSLSC has granted 230 students with
more than RM4.5 million worth of scholarships.
(b) Student Adoption Programme
The Student Adoption Programme (“SAP”) was launched in
2008 by the then Deputy Minister of Education YB Dr Wee
Ka Siong to provide underprivileged children with equal
access to good basic education as a platform for a brighter
future. The adopted students will receive financial assistance
and school bags from Yayasan TSLSC until they complete
primary or secondary education. Since its inception, the
SAP has benefited more than 800 students from over
200 schools in Peninsular Malaysia and Sabah. To date, the
total sponsorship amounts to more than RM3 million.
ANNUAL REPORT 2015
043
(c) School Adoption Programme
The School Adoption Programme was launched in 2007 to
create a conducive learning environment for students from
deprived schools in rural areas. Financial assistance is given
to these adopted schools to upgrade their facilities such as
building new classrooms, halls, libraries, perimeter fences,
and IT and sports facilities in order to improve the learning
environment. To date, six adopted primary and secondary
schools in Sabah have been adopted under this scheme.
From time to time, financial assistance is also extended to
upgrade their school buildings.
(d) Young Achievers’ Awards
The Young Achievers’ Awards (“YAA”) was introduced by
Yayasan TSLSC in 1999 to invigorate and motivate young
students to strive for excellence in their studies. Cash
awards, plaques and certificates of achievement are given
out annually to reward bright students from primary to
upper secondary levels who excel academically,
possess high leadership qualities and are active in their
extra-curricular activities. More than RM497,000 worth of
cash prizes have been given to over 1,000 young achievers
since its inception.
Community Outreach
Besides human capital development programmes, IOIPG also
encourages and provides ample opportunities for employees
to volunteer their time and actively participate in various
CR activities organised under Yayasan TSLSC. Some of these
activities include bringing cheer to residents at old folks’ homes
and organising outdoor teambuilding sessions for children from
orphanages.
Charity visits to shelter homes brought joy to the residents.
IOIPG actively engages the customers via productive efforts
undertaken by the Customer Relations Unit (“CRU”) which
build sustainable relationships between the developer and the
community. Besides taking care of the customers’ needs and
ensuring they receive the “IOI Branded Customer Experience”
through enhanced customer service quality, some of its initiatives
for improving customer satisfaction are the IOI Customer
Service Champions and Customer Surveys while its community
engagement efforts include the Reach Out community newsletter,
community website (www.myioi.com), IOI Privilege Card and
“Go Green” campaign.
In addition to organising community events, IOIPG also supports
activities that are organised by the Residents’ Associations (“RAs”)
to create sustainable communities in its townships.
IOIPG’s numerous CR efforts are highlighted in the “Corporate
Responsibility” section.
CONCLUSION
IOIPG integrates sustainability and social well-being into every
aspect of its operations and work culture. Its sustainability and
CR initiatives reflect its commitment to uphold its Vision IOI and
Core Values. As IOIPG moves towards greater expansion, it
continues to strive to broaden and deepen its sustainability and
CR efforts.
Yayasan TSLSC reaches out to the community by supporting relief programmes for
those affected by natural disasters.
044
ANNUAL REPORT 2015
CORPORATE
RESPONSIBILITY
Social Contributions
2014
19
JULY
For the eighth consecutive year, IOI Mall Kulai
hosted its annual “Pertandingan Memasak Bubur
Lambuk antara Surau dan Masjid” to raise funds for
underprivileged children.
11
AUGUST
In collaboration with Traxx FM, a local radio station, Palm
Garden Hotel treated 65 children from Rumah Nur Hikmah
Kajang and Shepherds Home Dengkil to its “Hari Raya
Aidilfitri Charity and Open House”, where they enjoyed
traditional raya dishes, and received goodie bags and
duit raya.
12
AUGUST
Putrajaya Marriott Hotel welcomed 100 children from
Persatuan Kebajikan Teratak Nur Insan Kuala Lumpur
& Selangor, Rumah Kesayangan Petaling Jaya,
Agathians Shelter Petaling Jaya and Rumah Hope to
its “Fiesta Raya 2014” charity event. The children were
treated to a high-tea buffet and received duit raya.
ANNUAL REPORT 2015
23
AUGUST
In conjunction with the 57th Merdeka celebration, IOI
Properties Group Berhad (“IOIPG”) organised the
IOI-MPSJ Merdeka Fun Ride 2014 at IOI Sales Galleria
at The Cube, Bandar Puteri Puchong. The event
aimed to foster community spirit among residents
from IOIPG townships in Puchong.
23
SEPTEMBER
IOIPG participated in The Edge Kuala Lumpur
Rat Race 2014 by pledging RM32,000 in support of
The Edge Education Foundation (“TEEF”). Two teams
represented IOIPG in the charity race.
04
OCTOBER
IOI Mall Kulai celebrated World Animal Day 2014 by
organising “Adopt and Love them. Don’t Abandon”
event which saw pet lovers enjoying exciting games
and activities as well as health screening services.
045
046
ANNUAL REPORT 2015
CORPORATE RESPONSIBILITY (Cont’d)
2014
30
OCTOBER
Palm Garden Hotel celebrated Deepavali with
32 residents of Pusat Jagaan Ribuan Kasih in
Kajang. They were treated to a sumptuous buffet
dinner and enjoyed playing games with the hotel
associates.
22
NOVEMBER
Yayasan Tan Sri Lee Shin Cheng
(“Yayasan TSLSC”) awarded RM831,500
to 18 scholarship recipients in recognition
of their excellent academic and extracurricular achievements.
05
DECEMBER
IOI Mall Puchong collaborated with non-profit organisation
“Community at Heart” in the annual fundraising event called
“The Heavenly Gift”. Shoppers chose the charity programmes
and less privileged individuals that they wished to support and
sponsor accordingly.
ANNUAL REPORT 2015
13
DECEMBER
Yayasan TSLSC brought Christmas joy
to more than 30 children from Rumah
Keluarga Kami, Kajang. The meaningful visit
included KFC lunch treat, fun activities and a
handover of RM8,000 cash contribution and
household provisions.
15
DECEMBER
Putrajaya Marriott Hotel, Palm Garden Hotel and
IOI City Mall collaborated in organising a “Magical
Christmas Day” event for 72 underprivileged children
from Rumah Hope and Rumah Anak-Anak Yatim
Nasuhah. The children enjoyed themselves with
fun games, adventures at the indoor theme park
District21, ice-skating at Icescape Ice Rink and
a sumptuous lunch.
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048
ANNUAL REPORT 2015
2015
23
JANUARY
Yayasan TSLSC sponsored the three-day
“Intervarsity Talent Achievers Challenge” which saw
80 varsity students participating in presentations and
quiz challenges to emerge as overall top achievers.
24
JANUARY
A total of 160 volunteers from
IOI Group packed 70,000 meals in
less than two hours at the “IOI-Stop
Hunger Now’s Meal Packaging
Event” held at IOI City Mall. The
packed nutritious meals were
distributed to flood victims at the
East Coast states by Malaysian Red
Crescent Society (“MRCS”) and
Kelantan Foundation for the Disabled
(“YOKUK Foundation”).
28
JANUARY
Yayasan TSLSC sponsored 330 students
from 169 primary and secondary schools
nationwide under its annual Student
Adoption Programme with contributions
amounting to RM404,276.
ANNUAL REPORT 2015
03
MARCH
Putrajaya Marriott Hotel and Palm Garden Hotel
held a Chinese New Year luncheon for 65 residents
and caregivers of Lovely Nursing Centre in Petaling
Jaya, Selangor. Hotel associates also raised funds
for the residents and both hotels pledged to repair
the home.
28
MARCH
In conjunction with Earth Hour 2015, Putrajaya Marriott
Hotel and Palm Garden Hotel commemorated the green
initiative by switching off non-essential lights from 8:30 pm
to 9:30 pm. Both hotels also organised activities to raise
awareness on environmental conservation.
14
APRIL
Putrajaya Marriott Hotel and Palm Garden Hotel
adopted a baby tapir in a collaborative animal
conservation effort with the national zoo to create
awareness on the endangered animal.
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050
ANNUAL REPORT 2015
2015
13
JUNE
Seventy residents from Rumah Amal
Limpahan Kasih and Rumah Juara
from Puchong were taken on a fun
outing to IOI City Mall courtesy of
Yayasan TSLSC, where they enjoyed
various indoor games at District21
and watched “Jurassic World” in the
cinema.
20
JUNE
A total of 75 students received the Young
Achievers’ Awards from Yayasan TSLSC
plus cash prizes, plaques and certificates
worth RM33,400 in recognition of their
excellent results in public examinations
and active participation in extra-curricular
activities.
ANNUAL REPORT 2015
051
CORPORATE
INFORMATION
BOARD OF DIRECTORS
PSM, DPMS, JP
Executive Chairman
AUDIT AND RISK MANAGEMENT
COMMITTEE
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
DATUK TAN KIM LEONG @
TAN CHONG MIN*
Two IOI Square
IOI Resort
62502 Putrajaya
Tel +60 3 8947 8888
Fax+60 3 8947 8909
PMC, JP
LEE YEOW SENG
Chief Executive Officer
Chairman
DATO’ LEE YEOW CHOR
DMSM, SDK
DSAP
Non-Independent Non-Executive Director
TAN SRI ONG KA TING
PMN, SPMP, DPMS, DPMP
Senior Independent
Non-Executive Director
TAN CHONG MIN
DATUK LEE SAY TSHIN*
DATUK DR TAN KIM HEUNG*
PMW
NOMINATING AND REMUNERATION
COMMITTEE
TAN SRI ONG KA TING*
PMN, SPMP, DPMS, DPMP
Chairman
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
PMC, JP
Independent Non-Executive Director
DATUK LEE SAY TSHIN
TAN CHONG MIN*
PMC, JP
DMSM, SDK
DATUK DR TAN KIM HEUNG*
PMW
DATUK DR TAN KIM HEUNG
PMW
* Independent Non-Executive Director
EMPLOYEES’ SHARE OPTION
SCHEME COMMITTEE
REGISTRAR
Tricor Investor 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
LEGAL FORM AND DOMICILE
PSM, DPMS, JP
Chairman
LEE YEOW SENG
DSAP
CHARTERED SECRETARY
TAN CHOONG KHIANG
(MAICSA 7018448)
Public Limited Liability Company
Incorporated and Domiciled in Malaysia
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia
Securities Berhad
STOCK CODE
5249
WEBSITES
www.ioiproperties.com.my
www.myioi.com
052
ANNUAL REPORT 2015
1 TAN SRI DATO’ LEE SHIN CHENG
Executive Chairman
2 LEE YEOW SENG
3 DATO’ LEE YEOW CHOR
1
2
3
BOARD of
DIRECTORS
4 TAN SRI ONG KA TING
Senior Independent Non-Executive Director
5 DATUK TAN KIM LEONG @ TAN CHONG MIN
6 DATUK LEE SAY TSHIN
7 DATUK DR TAN KIM HEUNG
4
5
7
6
ANNUAL REPORT 2015
053
054
PROFILE of
DIRECTORS
Executive Chairman
Malaysian, Age 76
LEE YEOW SENG
Malaysian, Age 37
ANNUAL REPORT 2015
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
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 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.
ANNUAL REPORT 2015
055
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 (“PILA”)
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 eight (8) Board Meetings held during the
financial year ended 30 June 2015.
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 day-to-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.
056
ANNUAL REPORT 2015
PROFILE of DIRECTORS (Cont’d)
Malaysian, Age 49
TAN SRI ONG KA TING
Senior Independent Non-Executive Director
Malaysian, Age 59
DATO’ LEE YEOW CHOR was appointed to the Board as
Executive Director on 25 February 2013 and was subsequently
re-designated as Non-Independent Non-Executive Director on
18 December 2013.
Dato’ Lee is a barrister from Gray’s Inn, London and holds a
LLB (Honours) from King’s College London and a Postgraduate
Diploma in Finance and Accounting from London School of
Economics. Prior to joining IOI Group as a General Manager in
1994, he served in the Attorney General’s Chambers and the
Malaysian Judiciary Service for approximately four (4) years. His
last posting was as a Magistrate.
Dato’ Lee is presently on the Board of IOI Corporation Berhad
as its Chief Executive Officer and also a Non-Executive Director
on the Board of Bumitama Agri Limited. He is also a Trustee of
Yayasan Tan Sri Lee Shin Cheng, the charitable arm of IOI Group.
Dato’ Lee has been the Chairman of the Malaysian Palm Oil
Council (“MPOC”) since 2009 and also serves as a Council
Member in the Malaysian Palm Oil Association (“MPOA”) since
2002. In March 2015, Dato’ Lee was appointed as a Director on
the Board of Bank Negara, the Central Bank of Malaysia.
TAN SRI ONG KA TING was appointed to the Board on
1 June 2013. He sits as the Chairman of the Nominating and
Remuneration Committee and was a member of the Audit and
Risk Management Committee until 25 August 2014.
Tan Sri Ong holds a Bachelor of Science (Honours) degree and
a Diploma in Education respectively from University of Malaya.
He was conferred the Honorary Doctor of Laws Degree by
Campbell University in December 2008. He was conferred Guest
Professor of Xiamen University since September 2008.
Tan Sri Ong has held various senior appointments in the
Malaysian Government Administration from November 1986
until his retirement in March 2008 including the positions of
Parliamentary Secretary and Deputy Minister for the Ministry of
Home Affairs and Minister for the Ministry of Housing and Local
Government.
Tan Sri Ong is the Independent Non-Executive Chairman of
Taliworks Corporation Berhad (“Taliworks”). He is also the
Chairman of both Nomination and Remuneration Committees of
Taliworks.
ANNUAL REPORT 2015
057
He was a Director of the Malaysian Green Technology Corporation
from 2011 to 2013 and served on the National Council of the Real
Estate and Housing Developers’ Association (“REHDA”) Malaysia
as its Secretary-General from 2002 to 2006.
Dato’ Lee is the eldest son of Tan Sri Dato’ Lee Shin Cheng and
brother of Lee Yeow Seng.
Dato’ 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 Dato’ Lee is deemed to be interested which
is disclosed under 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 seven (7) out of the eight (8) Board Meetings held
during the financial year ended 30 June 2015.
Tan Sri Ong has been a Trustee of Yayasan Tan Sri Lee Shin
Cheng until 28 August 2015. He was also appointed Deputy
Chairman and Trustee of Kuok Foundation from 1 January 2009
to 1 April 2010.
Tan Sri Ong has been the Chairman of Malaysia-China Business
Council since 23 July 2011. He has also been appointed as
“Malaysian Prime Minister’s Special Envoy to the People’s
Republic of China” with ministerial status.
Tan Sri Ong was the President of Malaysian Chinese Association
(“MCA”) from 2003 to 2008, Chairman of Tunku Abdul Rahman
College Council from June 2004 to September 2011 and Member
of Parliament for Pontian, Tanjong Piai and Kulai constituencies in
Johor since October 1990 to May 2013.
058
ANNUAL REPORT 2015
PROFILE of DIRECTORS (Cont’d)
DATUK TAN KIM LEONG
@ TAN CHONG MIN
Malaysian, Age 76
DATUK LEE SAY TSHIN
Malaysian, Age 62
DATUK DR TAN KIM HEUNG
Malaysian, Age 53
DATUK TAN KIM LEONG @ TAN CHONG MIN was
appointed to the Board on 1 June 2013. He sits as the Chairman
of the Audit and Risk Management Committee and is a member
of the Nominating and Remuneration Committee.
Datuk Tan is a Fellow member of the Institute of Chartered
Accountants, Australia and the Malaysian Institute of Chartered
Secretaries and Administrators (“MAICSA”). He holds professional
memberships in the Malaysian Institute of Accountants (“MIA”)
and the Malaysian Institute of Certified Public Accountants
(“MICPA”).
DATUK LEE SAY TSHIN was appointed to the Board on
22 August 2013. He is a member of the Audit and
Risk Management Committee.
Datuk Lee Say Tshin graduated with a Bachelor of Economics
(Honours) from University of Malaya in 1975. Thereafter, he
joined HSBC Bank (M) Berhad as an Executive and went on to
become an accomplished banker with approximately 38 years
of experience in the banking industry. His last position held in
HSBC Bank (M) Berhad was as the Managing Director of Strategic
Business Development prior to his retirement on 30 June 2013.
ANNUAL REPORT 2015
059
He is the Chairman of Gul Technologies Singapore Ltd and
Amoy Canning Corporation (Malaya) Berhad. He is a director of
KL Industrial Services Berhad, Malaysia-China Business Council
(“MCBC”) and Goldis Berhad. He is also a Trustee of Ng Teck
Fong Foundation.
new businesses with the Malaysian Government at both federal
and state levels, particularly in promoting HSBC Islamic banking
products. He has been assisting government agencies, major
Government Linked Companies and Malaysian large corporations
in promoting the growth of infrastructure, oil and gas, oil palm and
real estate business.
Datuk Lee Say Tshin is an Independent Director of Pacific Mutual
Fund Board.
He attended seven (7) out of the eight (8) Board Meetings held
during the financial year ended 30 June 2015.
In his capacity as Managing Director of Strategic Business
Development, Datuk Lee Say Tshin was instrumental in developing
DATUK DR TAN KIM HEUNG was appointed to the Board
on 1 June 2013. He is a member of the Audit and Risk
Management Committee and Nominating and Remuneration
Committee.
Datuk Dr Tan graduated with a Bachelor of Medicine and Surgery
(“MBBS”) (London) (Honours) from The Middlesex and University
College Hospital Medical School, London in 1986 and received
his Member of the Royal College of Physicians (“MRCP”) (United
Kingdom) in 1989. In 1995, he was awarded a Doctorate of
Medicine/Cardiology (“MD”) from the University of London.
He became a Fellow of the American College of Cardiology
(“FACC”) in 1997, Member of the Academy of Medicine Malaysia
(“AM”) in 1999, and was awarded Fellowship of the Royal College
of Physicians (“FRCP”) (London) in 2001.
Datuk Dr Tan is a Consultant Cardiologist at HealthScan
Malaysia™. He is also a Consultant Cardiologist at Sunway
Medical Centre, Petaling Jaya, Malaysia. He was previously
Professor of Medicine and Head of Cardiology at the University
Malaya Medical Centre (“UMMC”) in Kuala Lumpur, Malaysia.
He held this position for seven (7) years since 1997, having
previously served as a Cardiologist at Guy’s Hospital, London,
United Kingdom.
Datuk Dr Tan is a recipient of numerous outstanding academic
awards and prizes with vast experience in various interventional
cardiac procedures. He is author or co-author of more than 100
published papers/articles/abstracts in peer reviewed journals
and has contributed chapters to several books. He is frequently
invited to lecture and to participate as an expert faculty in
international and national conferences/seminars/courses. He is
also a fellow or member of numerous professional organisations
and advisory boards.
Notes:
1. Save as disclosed above, none of the Directors have:
(a) any family relationship with any directors and/or substantial shareholders of the Company; and
(b) any conflict of interest with the Company.
2. None of the Directors have any conviction for offences within the past ten (10) years.
060
ANNUAL REPORT 2015
SENIOR
MANAGEMENT TEAM
Executive Chairman
LEE YEOW SENG
CORPORATE
PROPERTY DEVELOPMENT
PROPERTY INVESTMENTS
Chief Financial Officer
BETTY LAU SUI HING
Chief Operating Officer
TEH CHIN GUAN
Chief Operating Officer
CHEAH WING CHOONG
Chartered Secretary
TAN CHOONG KHIANG
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
General Manager,
LEE YEAN PIN (LI YANPING)
Assistant General Manager,
Xiamen, People’s Republic of China
OOI WOOI YAW
General Manager,
IOI Mall, Puchong
NAZREN FOO KHOON MIN
(STEVEN FOO)
LEISURE & HOSPITALITY
Senior General Manager, Hotels
SIMON YONG @ SIMON COSMAS
General Manager, Golf Club
BRANDON CHIN BOON CHIUN
ANNUAL REPORT 2015
061
Sierra 6 at 16 Sierra, Puchong South.
Le Pavillion in Bandar Puteri Puchong.
062
ANNUAL REPORT 2015
REGIONAL
PRESENCE
ASIA
MALAYSIA
SINGAPORE
THE PEOPLE’S REPUBLIC
OF CHINA
1
Penang
1
Cape Royale @ Sentosa Cove
1
IOI Park Bay @ Xiamen
2
Selangor
2
Cityscape @ Farrer Park
2
IOI Palm City @ Xiamen
3
Negeri Sembilan
3
Seascape @ Sentosa Cove
4
Malacca
4
South Beach @ Beach Road
5
Johor
5
The Trilinq @ Jalan Lempeng
ANNUAL REPORT 2015
LOCATION OF OPERATIONS
IN MALAYSIA
PENANG
1
Desaria, Sungai Ara
SELANGOR
PENANG
2
Bandar Puchong Jaya &
Bandar Puteri Puchong
3
16 Sierra, Puchong South
4
5
Bandar Puteri Bangi
6
1
NEGERI SEMBILAN
Penang
International
Airport
7
Bandar IOI, Bahau
MALACCA
8
Ayer Keroh
JOHOR
9
SELANGOR
10 Taman Lagenda Putra
11 Bandar Putra Kulai
2
3
4
12 Taman Kempas Utama
5
7
6
KLIA
NEGERI
SEMBILAN
8
MALACCA
13 The Platino
9
JOHOR
10
Main Airport
North-South Expressway
East Coast Expressway
Bandar Putra Segamat
11
Senai
International
Airport
12
13
063
064
ANNUAL REPORT 2015
CORPORATE
CALENDAR
2014
16
AUGUST
The 16 Sierra township in Puchong
South welcomed “Sierra 6”, a collection
of spacious 27’ x 73’ lot size units with
3,526 sq. ft. built-up area of superlink
houses with private gardens.
26
AUGUST
IOI Properties Group Berhad (“IOIPG”)
bagged four awards at the inaugural
Southeast Asia Property Awards (Malaysia)
2014. These include the Best Commercial
Development (Malaysia) for IOI City Mall;
and three Highly Commended awards for
La Thea Residences @ 16 Sierra, Puteri
Hills @ Bandar Puteri Puchong and D’Zone
Condominium @ Teluk Kumbar, Penang.
01
OCTOBER
Appointment of three senior management of IOIPG –
Mr Teh Chin Guan as the Chief Operating Officer (“COO”)
(Property Development), Mr Cheah Wing Choong as the
COO (Property Investment) and Ms Betty Lau as the Chief
Financial Officer.
ANNUAL REPORT 2015
13
OCTOBER
IOIPG was ranked top 10 at The Edge Malaysia
Top Property Developers Awards, making a winning
comeback to the list.
10
NOVEMBER
IOIPG announced a Proposed Rights Issue of 539,835,787
Rights Shares at an issue price of RM1.90 to be
implemented on a renounceable basis of one Rights Share
for every six existing IOIPG Shares held (“Rights Issue”).
The Rights Issue was completed following the listing
and quotation of 539,835,787 new ordinary shares on
the Main Market of Bursa Malaysia Securities Berhad on
9 February 2015.
20
NOVEMBER
IOI City Mall, the largest brand new lifestyle and
entertainment mall in the south of Klang Valley, was
officiated by IOI Group Executive Chairman Tan Sri
Dato’ Lee Shin Cheng, IOIPG Chief Executive Officer
(“CEO”) Mr Lee Yeow Seng and IOI Corporation
Berhad (“IOIC”) CEO Dato’ Lee Yeow Chor.
065
066
ANNUAL REPORT 2015
CORPORATE CALENDAR (Cont’d)
2014
02
DECEMBER
South Beach, the largest mixed-development in
Singapore, topped out its 45-storey South Tower. The
1.65 million sq. ft. project is jointly developed by IOIPG
and City Developments Limited (“CDL”).
15
DECEMBER
The four-star premier business hotel, Four Points by
Sheraton Puchong, owned by IOIPG and managed by
Starwood Hotels & Resorts Worldwide, Inc. was officially
launched.
ANNUAL REPORT 2015
2015
10
JANUARY
The launch of Bandar Puteri Bangi, a 370-acre of
freehold integrated mixed development, recorded
more than 70% take-up rate for The Terresse
(two-storey superlink houses), Almyra Residence
(serviced apartment), and Kubica Square (three- and
four-storey shop offices).
17
JANUARY
IOI City Mall witnessed the official opening of HomePro
Malaysia. The anchor tenant is a one-stop home product
centre for mall patrons.
12
FEBRUARY
IOI City Mall welcomed another anchor tenant,
Golden Screen Cinemas (“GSC”), with its 13-screen
fully digital halls complete with three 3D halls and two
GSC Maxx halls for a total capacity of 2,145 seats.
067
068
ANNUAL REPORT 2015
CORPORATE CALENDAR (Cont’d)
2015
12
MARCH
IOIPG’s second mega project in Xiamen, the
People’s Republic of China (“PRC”) – IOI Palm City
– opened its sales office to scores of Chinese property
buyers who are keen to invest in the integrated
development. IOI Palm City comprises high-rise
residences, villas, a shopping mall, boutique offices
and a five-star hotel.
08
MAY
IOIPG established an employees’ share option scheme
(“ESOS”). The IOIPG ESOS is targeted at employees and
executive directors who are involved in the management
of the Group in recognition of their accumulated
contributions to the operations and continued growth of
the Group.
15
MAY
Skyz Residence won the Highly Commended:
Residential Landscape Architecture (Malaysia) award
at the Asia Pacific Property Awards 2015-2016.
ANNUAL REPORT 2015
24
MAY
IOI Palm City in Xiamen, PRC successfully launched
the first phase of sales to overwhelming response from
local property buyers. Within three hours, the project
notched record sales of RMB350 million.
30
MAY
Palm Garden Hotel supported the Royal FLORIA
Putrajaya 2015 as one of the annual international
flower and garden festival’s Smart Partners. Besides
providing accommodation to more than 120 local and
international floral designers and landscape architects,
the hotel hosted the official Welcome Dinner and set
up IOI Heliconia Café at the festival.
12
JUNE
IOIPG won the British Construction Industry (“BCI”)
Asia Top 10 Developers Award 2015 for the fifth
consecutive year at the BCI Asia Awards 2015.
069
070
ANNUAL REPORT 2015
AUDIT AND RISK MANAGEMENT
COMMITTEE REPORT
The Board of Directors of IOI Properties Group Berhad (“IOIPG”) is
pleased to present the report on the Audit and Risk Management
Committee (the “Committee”) of the Board for the financial year
ended 30 June 2015.
The Committee was established on 29 May 2013 in line with the
Main Market Listing Requirements (“Listing Requirements”) of
Bursa Malaysia Securities Berhad (“Bursa Malaysia”).
A MEMBERS
The Committee consists of three (3) following members, who
each satisfy the “independence” requirements contained in
the Listing Requirements of Bursa Malaysia. The profile of
each member of the Committee is set out in the Profile of
Directors section:Datuk Tan Kim Leong @ Tan Chong Min
Chairman
Datuk Lee Say Tshin
Member
Datuk Dr Tan Kim Heung
Member
B SUMMARY KEY SCOPE OF RESPONSIBILITIES
The Committee operates under a written Committee’s Terms
of Reference containing provisions that address requirements
imposed by Bursa Malaysia. That Terms of Reference
is posted on the Corporate Governance section of the
Company’s website at www.ioiproperties.com.my.
The Terms of Reference prescribes the Committee’s
oversight of financial compliance matters in addition to a
number of other responsibilities that the Committee performs.
Those key responsibilities include, among others:•
Overseeing the financial reporting process and integrity
of the Group’s financial statements.
•
Evaluating the independence of external auditors.
•
Evaluating the performance and process of the
Company’s internal audit function and external auditors.
•
Overseeing the Group’s system of disclosure controls
and system of internal controls that management and
the Board have established.
•
Assessing the Company’s practices, processes and
effectiveness of risk management.
•
Reviewing conflict of interest situations and related party
transactions of the Group.
C ACTIVITIES
The Committee report provides an overview of the work
that the Committee carried out during the period, including
the significant issues considered in relation to the financial
statements and how the Committee assessed the
effectiveness of the external auditors.
The Committee has a responsibility to oversee the Group’s
internal control and risk management systems. The
Committee continues to monitor and review the effectiveness
of the Group’s internal control and risk management
systems with the support of Group Internal Audit and Risk
Management function.
The Committee has an annual work plan, developed from its
Terms of Reference, with standing items that the Committee
considers at each meeting, in addition to any matters that
arise during the year. The main matters that the Committee
considered during the year are described below:1. Financial statements and reporting
The Committee monitored the financial reporting
processes for the Group, which included reviewing
reports from, and discussing these with, management
and the external auditors, PricewaterhouseCoopers.
The Board and the Committee have reviewed the
unaudited quarterly financial results and audited financial
statements. As part of the year-end reporting process the
Committee reviewed external auditors’ reports on internal
controls, tax matters impacting the Group, accounting
and reporting matters as well as recommendations in
respect of control weaknesses noted in the course of
their audit.
2. Going concern assessment
The Committee and the Board reviewed the going
concern basis for preparing the Group’s consolidated
financial statements, including the assumptions
underlying the going concern statement and the period
of assessment. The Committee’s assessment was based
on reports by management and took note of the principal
risks and uncertainties, the existing financial position, the
Group’s financial resources, and the expectations for
future performance and capital expenditure.
3. Internal audit
The Internal Audit provides independent and objective
assurance and advisory services designed to add value
and improve the operations of the Group. Its scope
encompasses, but is not limited to, the examination
and evaluation of the adequacy and effectiveness of
the Group’s governance, risk management and internal
control processes in relation to the Group’s defined goals
and objectives. The Committee approved the internal
audit function’s charter, which sets out its role, scope,
accountability and authority.
The Head of Group Internal Audit and Risk Management
reports functionally to the Committee, and the Committee
reviewed and approved the annual Internal Audit plan
and budget for activities to be undertaken during
2015/2016. The Committee also reviewed the adequacy
of the scope, functions, competency and resources of
the internal audit function during the year.
The Internal Audit Department performs routine audit
on and reviews all operating units within the Group,
with emphasis on principal risk areas. Internal Audit
adopts a risk-based approach towards planning
and conduct of audits, which is partly guided by an
Enterprise Risk Management (“ERM”) framework.
Impact on the “Vision IOI” is taken into consideration
in determining the risk level as a holistic approach in
contributing to the achievement of the Group’s objectives
and in enhancing shareholders’ value.
25 audit assignments were completed during the
financial year on various operating units of the Group
covering property development, property investment,
hotels and other segments. Audit reports were issued
to the Committee and Board incorporating findings,
recommendations to improve on the weaknesses noted
in the course of the audits and management’s comments
on the findings. An established system has been put
in place to ensure that all remedial actions have been
taken on the agreed audit issues and recommendations
highlighted in the audit reports. Significant issues and
matters unsatisfactorily resolved would be highlighted to
the Committee.
The Committee reviewed the audit reports presented
by Internal Audit Department on findings and
recommendations and management’s responses
thereto and ensure that material findings are adequately
addressed by management.
The tasks, responsibilities, and goals of the Committee
and internal auditing are closely intertwined in many
ways. Certainly, as the magnitude of the “corporate
accountability” issue increases, so does the significance
of the internal auditing and audit committee relationship.
The Committee has a private session (without
management presence) with Head of Group Internal and
Risk Management in assuring that the mechanisms for
corporate accountability are in place and functioning.
The total costs incurred for the internal audit function
of the Group for the financial year ended 30 June 2015
was RM239,173 (2014: RM510,000). The substantial
decrease in the internal audit cost was mainly attributed
to the changes in the number of total headcounts
following the establishment of a separate Group Internal
Audit function.
ANNUAL REPORT 2015
071
4. Risk review
The Board and management drive a proactive risk
management culture and ensure that the Group’s
employees have a good understanding and application
of risk management principles towards cultivating a
sustainable risk management culture through education.
Regular risk awareness sessions are conducted at the
operational level to promote the understanding of risk
management principles and practices across different
functions within the Group. In addition, a risk-based
approach is embedded into existing key processes as
well as new key projects, and is compatible with the
Group’s internal control systems.
The Board conducts periodic reviews on the adequacy
and integrity of the Group’s ERM framework and policies,
particularly in relation to the mechanisms for principal
risk identification, assessment, response and control,
communication and monitoring.
An annual review of the effectiveness of risk management
and internal control processes was carried out by the
Committee. The Committee focused its review on the
Company’s risk mitigation and controls and the strategic
and organisation-wide risks facing the Group. Review
and assess the risk management activities and risk
review reports of the Group, are as follows:•
Bi-annual risk review reports compiled by the
respective operating units’ Risk Management
Committees, and annual presentation to and
discussion with the Committee.
•
Operating units’ CEO/CFO’s Internal
Certification and Assessment Disclosure.
•
Operating unit’s response to the Questionnaires on
Control and Regulations.
Control
The details relating to risk management are reported
separately under “Statement on Risk Management and
Internal Control” on pages 089 to 091.
5. Assessing the effectiveness of external audit
process
The Committee places great importance on ensuring that
there are high standards of quality and effectiveness in the
external audit carried out by PricewaterhouseCoopers.
Audit quality is reviewed by the Committee throughout
the year and includes reviewing and approving the
annual audit plan to ensure that it is consistent with the
scope of the audit engagement. In reviewing the audit
plan, the Committee discussed the significant risk areas
identified by PricewaterhouseCoopers most likely to give
rise to a material financial reporting error or those that
are perceived to be of higher risk and requiring additional
audit emphasis. The Committee also considered the
audit scope and materiality threshold.
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ANNUAL REPORT 2015
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (Cont’d)
The Committee met with PricewaterhouseCoopers
at various stages during the audit process, including
without management present, to discuss their remit
and any issues arising from the audit. The Committee
concluded that the effectiveness of the external audit
process remains strong.
6. Auditors’ re-appointment review
The Committee considered the reappointment of
PricewaterhouseCoopers. This review took into account
the following factors:(i) Auditors effectiveness
The Committee met with management, including
without the auditors present, to hear their views on
the effectiveness of the external auditors. The criteria
for assessing the effectiveness of the audit included
the robustness of the audit, the quality of the audit
delivery and the quality of the people and service.
The Committee concluded that the performance of
PricewaterhouseCoopers remained effective.
(ii) Independence and objectivity
The Committee considered the safeguards in place
to protect the external auditors’ independence.
PricewaterhouseCoopers follows the provisions
of the By-Laws on Professional Independence
of the Malaysian Institute of Accountants (“MIA”)
and its own ethical guidelines, and reported to the
Committee that it had considered its independence in
relation to the audit and confirmed to the Committee
that it complies with professional requirements
and that its objectivity is not compromised. The
Committee took this into account when considering
the auditors’ independence and concluded that
PricewaterhouseCoopers remained independent
and objective in relation to the audit.
(iii) Non-audit work carried out by the external
auditors
To help protect auditors objectivity and independence,
the provision of any non-audit services provided by
the external auditors requires prior approval, as set
out in the table below:Approval thresholds for
non-audit work
Approver
Below RM200,000 per engagement
CFO
Above RM200,000 and up to
RM400,000 per engagement
CEO
Greater than RM400,000 per Committee
engagement, or if the value of nonaudit fees to audit fees reaches
a ratio of 1:2 as a result of a new
engagement, regardless of value
Certain types of non-audit service are of sufficiently
low risk as not to require the prior approval of
the Committee, such as “audit-related services”
including the review of interim financial information.
The prohibited services are those that have the
potential to conflict directly with the auditors’ role,
such as the preparation of the Company’s financial
statements.
The significant non-audit work undertaken by
PricewaterhouseCoopers during the period included
tax compliance and advisory services. The total of
audit fees paid to PricewaterhouseCoopers during
the period is set out in Note 8 to the consolidated
financial statements.
The policy on audit and non-audit services of IOIPG
is guided by the following principles:(a) the auditors may provide audit and non-audit
related services that, while outside the scope of
the statutory audit, are consistent with the role
of auditors;
(b) the external auditors should not provide services
that are perceived to be materially in conflict
with the role of auditors;
(c) the external auditors may be permitted to provide
non-audit services that are not perceived to be
materially in conflict with the role of auditors;
and
(d) exceptions may be made to the policy where
the variation is in the interest of IOIPG and
arrangements are put in place to preserve the
integrity of the external audit process. The Board
must specifically approve any such exception.
Before appointing the external auditors to
undertake a non-audit service, consideration
has been given to whether this would create a
threat to the external auditors’ independence or
objectivity. The nature and scope of non-audit fees
provided by PricewaterhouseCoopers to IOIPG are
specifically not prohibited by the By-Laws of MIA
or promulgations of the International Federation of
Accountants.
By excluding the yearly routine tax compliance and
tax retainer fees, the remaining portion of non-audit
fees for tax advisory relative to the total audit fees
was about 36%. The Committee was satisfied that
neither the extent of the non-audit services provided
nor the size of the fees charged had any impact on
its independence as statutory auditors.
Having considered the foregoing, the Committee
was satisfied that the quantum of the total non-audit
fees relative to the total statutory audit fees (being
83.8% of the audit fees) together with the other
measures taken by the Company and the auditors
meant that the auditors’ independence from the
Group was not compromised.
(iv) Audit fees
The Committee was satisfied that the level of audit
fees payable to PricewaterhouseCoopers in respect
of the audit services provided (being RM902,000
for 2015) [2014: RM564,000 – fees paid to former
external auditor] was appropriate and that an
effective audit could be conducted for such a fee.
The existing authority for the Directors (including the
Committee) to determine the current remuneration
of the external auditors is derived from the
shareholders’ approval granted at the Company’s
Annual General Meeting in 2014.
Recommendation to reappoint
Following
its
consideration,
the
Committee
recommended to the Board the reappointment of
PricewaterhouseCoopers as external auditors. The
Board has accepted this recommendation and a
resolution for its reappointment for a further year will be
put to the shareholders at the Annual General Meeting.
7. Other matters considered by the Committee
The Committee also:(i) reviewed whistleblowing activities to monitor
the actions taken by the Group in respect of
whistleblowing reports received.
(ii) reviewed the Group’s compliance with the relevant
provisions set out under the Malaysian Code on
Corporate Governance 2012 for the purpose of
preparing the “Statement on Corporate Governance”
and “Statement on Risk Management and Internal
Control” pursuant to the Listing Requirements of
Bursa Malaysia.
(iii) reviewed the internal audit report relating to existing
related party transactions annually.
D ATTENDANCE
Number of Meetings and Details of Attendance
Six (6) meetings were held during the financial year ended
30 June 2015. The attendance record of each member was
as follows:
Total
Number of
Meetings
Number
of
Meetings
Attended
Datuk Tan Kim Leong @
Tan Chong Min
6
6
Datuk Lee Say Tshin
6
6
(Appointed on 25 August 2014)
4
4
Tan Sri Ong Ka Ting
(Resigned on 25 August 2014)
2
2
Members
ANNUAL REPORT 2015
073
Three (3) meetings were held subsequent to the financial year
end to the date of Directors’ Report and were attended by
the following members:
Total
Number of
Meetings
Number
of
Meetings
Attended
Tan Chong Min
3
3
Datuk Lee Say Tshin
3
3
3
3
Members
E ANNUAL REVIEW AND PERFORMANCE EVALUATION
The Committee reviewed its Terms of Reference during the
financial year ended 30 June 2014. Based on that review,
no changes to the Terms of Reference were necessary.
Also, as required by its Terms of Reference, the Committee
conducted an annual performance evaluation in an effort to
continuously improve its processes.
The Committee’s responsibility is to monitor and review
the processes performed by management and external
auditors. It is not the Committee’s duty or responsibility to
conduct auditing or accounting reviews or procedures. The
Committee members are not employees of the Company.
Therefore, the Committee has relied, without independent
verification, on management’s representation that the
financial statements have been prepared with integrity and
objectivity and in conformity with approved accounting
principles generally accepted in Malaysia and on the
representations of external auditors included in its reports
on the Company’s financial statements and internal control
over financial reporting.
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ANNUAL REPORT 2015
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 the Group. It strives to
ensure that a high standard of corporate governance is being
practised throughout the Group in ensuring continuous and
sustainable growth for the interests of all its stakeholders.
The 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 the 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, the Group has received numerous accolades and awards in
recognition of its efforts.
The Group will continue its efforts in evaluating its governance
practices in response to evolving best practices and the changing
needs of the Group. The Board is pleased to present this
Statement and explain how the Group has applied the principles
and recommendations set out in the Malaysian Code on Corporate
Governance 2012 (the “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 & Risk Management
Committee (“ARMC”)
Nominating and
Remuneration Committee
(“NRC”)
Employees’ Share
Options Scheme (“ESOS”)
Committee
Board Oversight,
Engagement,
Delegated Authority
and Accountability
Engagement
CEO
Risk Management
Committees of
All Business
Operating Units
Leisure and
Hospitality Division
Property
Investment Division
Property
Development Division
Management
Committee
Management
Committee
Management
Committee
Engagement,
Reporting and
Accountability
ANNUAL REPORT 2015
075
The Group has complied with the principles and recommendations of the Code save for the following recommendation and will further
review its corporate governance practices to bring the same in line with the recommendations under the Code:
The Code Recommendation
Compliance
Explanation
Recommendation 3.4
The positions of Chairman and
CEO should be held by different
individuals, and the Chairman
must be a non-executive
independent member of the
Board
The departure from the
Recommendation
3.4
is
only limited to non-executive
Chairman and the reasons for
such departure is listed.
The Executive Chairman is Tan Sri Dato’ Lee Shin Cheng and
the role of CEO is fulfilled by Lee Yeow Seng. Their roles are
separate and a clear division of responsibilities to distinguish
between the running of the Board and the executive
responsibility for running the business.
Despite our Chairman is an executive member of the Board,
the Board has the presence of Independent Directors with
distinguished records and credentials to ensure that there is
independence of judgement.
The NRC was satisfied that notwithstanding Tan Sri Lee’s
executive chairmanship, he has continued to discharge his
duties effectively and has shown tremendous commitment
and had played an integral role in the stewardship of
IOI Properties Group Berhad.
PR I N C I P L E 1 : E S TA B L I S H C L E A R R OLES AND
RE S P O N S I B I L I T I E S
The responsibilities of the Board, which should be set out in a
Board Charter, include management oversight, setting strategic
direction premised on sustainability and promoting ethical conduct
in business dealings.
Recommendation 1.1
The Board should establish clear functions reserved for the Board
and those delegated to management
The Board takes full responsibility for the oversight and overall
performance of the Company and of the Group. The Board has a
well-defined framework on the various categories of matters that
require the Board’s approval, endorsement or notations, as the
case may be.
The Board reserves full decision-making powers, amongst others,
on the following matters (save to the extent that the Board resolves
that determination and/or approval of any such matter shall be
delegated to the committees of the Board or management):a) Conflict of interest issues relating to a substantial shareholder
or a Director;
b) Material acquisitions and disposals of undertakings and
properties not in the ordinary course of business;
c) Material investments in capital projects;
d) Annual budgets (including major capital commitments);
e) Material corporate or financial exercise/restructuring; and
f) Declaration of dividend and Directors’ fees.
The Board is free to alter the matters reserved for its decision,
subject to the limitations imposed by the Articles of Association
and the law.
To ensure the effective discharge of Board’s function and
responsibilities, the Board delegates some of the Board authorities
and discretion to the CEO as well as the properly constituted
Board Committees.
The Executive Chairman leads the Board and is responsible for
the effective performance of the Board. As Executive Chairman,
he also oversees the day-to-day operations to ensure the smooth
and effective running of the Group.
The CEO implements the policies, strategies and decisions
adopted by the Board. All Board authorities conferred on the
management is delegated through the CEO, Chief Operating
Officers (“COOs”) and this will be considered as their authority
and accountability as far as the Board is concerned.
The CEO takes on primary responsibility for managing the Group’s
day-to-day business and resources. His intimate knowledge of
the business and his “hands-on” management practices enabled
the Group to have leadership positions in its chosen industries.
COOs and the head of each division are responsible for supporting
the CEO and assisting the CEO in implementing and running the
Group’s day-to-day business.
The Independent Non-Executive Directors are actively involved
in various Board Committees and contribute significantly to
areas such as performance monitoring and enhancement of
corporate governance and controls. They provide a broader
view, independent assessment and opinions on management
proposals sponsored by the CEO and COOs.
076
ANNUAL REPORT 2015
STATEMENT ON CORPORATE GOVERNANCE (Cont’d)
Recommendation 1.2
Recommendation 1.3
The Board should establish clear roles and responsibilities in
discharging its fiduciary and leadership functions
The Board should formalise ethical standards through a code of
conduct and ensure its compliance
The duties and responsibilities of the Board are clearly spelt out in
the Board Charter. To facilitate the discharge of this responsibility
and oversight role, the Board is assisted by a number of Board
Committees to which the Board has delegated certain key
matters.
All Directors and employees are expected to behave ethically and
professionally at all times and thereby protect and promote the
reputation and performance of the Company.
The Board Committees namely, the ARMC, NRC and the
ESOS Committee, all collectively referred to hereafter as the
“Committees” are entrusted with specific responsibilities to
oversee the Group’s affairs, in accordance with their respective
clear written terms of reference. All terms of reference of
the Committees are approved by the Board and reviewed
periodically to ensure their continued relevance. At each meeting,
the Chairmen of the Committees report to the Board on the key
issues deliberated and outcome of the Committees meetings.
Minutes of the Committees meetings will also be presented to
the Board for notation and endorsement.
The Board establishes the vision and strategic objectives of the
Group, directing policies, strategic action plans and stewardship
of the Group’s resources towards realising “Vision IOI”.
The Board assumes, amongst others, the following significant
responsibilities:a) reviewing and adopting strategic plans for the Group,
including monitoring the implementation of the strategic plan
by management;
b) overseeing the conduct of the Group’s businesses and
the performance of management to determine whether its
businesses are being properly managed;
c) identifying principal business risks faced by the Group and
ensuring the implementation of appropriate internal controls
and mitigating measures to address such risks;
d) ensuring all candidates appointed to the Board are of
sufficient calibre, including having in place a process to
provide for the orderly succession of the members of the
Board and diversity (including gender diversity);
e) overseeing the development and implementation of an investor
relations programme and shareholder communications
policy; and
f)
reviewing the adequacy and integrity of the Group’s internal
control and management information systems.
The Company’s Code of Business Conduct and Ethics sets forth
the standard of conduct required for all officers, managers and
employees of the Group. It covers all aspect of the Group’s business
operations, such as fairness, work environment and employment,
environment, safety, health and security, company assets and
information, dealing with conflict of interest, communicating with
the public, financial accounting and reporting accuracy and etc.
In discharging its responsibilities, the Board is guided by Code of
Ethics for Directors. Directors are expected to conduct themselves
with the highest ethical standards and corporate governance.
The Group communicates the Code of Ethics for Directors
and Code of Business Conduct and Ethics to all Directors and
employees upon their appointment/employment.
In addition, IOIPG Group encourages its employees to raise
genuine concerns about possible improprieties in matters
of financial reporting, compliance, suspected violations of
IOI Group’s Code of Business Conduct and Ethics and to disclose
any improper conduct or other malpractices within IOIPG Group
(i.e. whistleblowing) in an appropriate way.
The Whistleblowing Policy is to provide an avenue for all employees
of IOIPG Group and all agents, vendors, contractors, suppliers,
consultants and customers of IOIPG Group and members of
public to raise concerns about any improper conduct within
IOIPG Group without fear of retaliation and to offer protection
for such persons (including the employees of IOIPG Group) who
report such allegations.
Any employee or member of the public who has knowledge or is
aware that any improper conduct has been, is being, or is likely
to be committed within IOIPG Group is encouraged to make
disclosure by filling a prescribed Whistleblower Report Form and
submit it through any of the following reporting channels:
a) Email to informant@ioigroup.com or complete an online
whistleblowing form on the IOIPG Group website,
http://whistleblowing.ioiproperties.com.my
b) Fax to +(603) 8948 8233. Whistleblowing Secretariat – Group
Internal Audit, Tel: +(603) 8947 8888 (General line)
c) In person to the respective Head of Business/Operating Unit,
or its Head of Human Resource
d) In writing to one or more of the following persons as
appropriate at: IOI Properties Group Berhad, Level 10,
Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia
ANNUAL REPORT 2015
Position
Name
Email address
Chairman of ARMC
Datuk Tan Kim Leong
kltan@ioigroup.com
Head of Group Internal Audit & Risk Management
Jimmy Yee Yoke Seng
jimmy.yee@ioigroup.com
Executive Chairman
Tan Sri Dato’ Lee Shin Cheng
sclee@ioigroup.com
CEO
Lee Yeow Seng
ysl@ioigroup.com
Chief Operating Officer (Property Development)
Teh Chin Guan
cgteh@ioigroup.com
Chief Operating Officer (Property Investments)
Cheah Wing Choong
wccheah@ioigroup.com
Senior General Manager (Johor Properties)
Simon Heng Kwang Hock
simon.heng@ioigroup.com
Senior General Manager (Johor Properties)
Lim Beng Yeang
limby@ioigroup.com
077
The Code of Ethics, Code of Business Conduct and Ethics and Whistleblowing Policy can be viewed on our website.
Recommendation 1.4
Recommendation 1.5
The Board should ensure that the Company’s strategies promote
sustainability
The Board should have procedures to allow its members access
to information and advice
The Group recognises that the pursuit of property development
inevitably impacts the environment and takes steps to minimise the
potentially harmful effects of such activities wherever practicable.
IOIPG is therefore committed to developing in a sustainable way in
tandem with environmental, economic and social consideration.
All Board members are supplied with information in a timely
manner. Board reports are circulated prior to the Board meetings
to enable the Directors to obtain further information and
explanation, where necessary, before the meetings.
The motivation for IOIPG Group to engage in environmentally
responsible practices is reflected in the benefits of sustainable
commercial and residential property practices. As an organization
seeks to enhance its probability of achieving business success
and sustainability, the Group has moved through several phases,
during which it progressively broadens the scope of its approach:
first quality management, then business excellence, and finally
business sustainability. Our commitment to sustainability
continues to accelerate our business strategy.
The Group has a longstanding track record of thinking through
how our developments can integrate with the local community
and bring direct benefits as the planning process unfolds. The
Group also has a commitment to find innovative ways to enhance
learning and encourage local school and business links.
The Group promotes a high level of health and safety through the
following initiatives, which include among others:•
health and safety meeting;
•
provision of required safety equipment to employees and
guests visiting potentially hazardous sites such as those
under construction; and
•
participation in building emergency and evacuation
procedures and assistance in developing related protocols.
The Group is committed to expanding its community/charity
program to enable increased engagement with, and support for,
relevant and registered community or charitable organisations.
The Board reports include, amongst others, periodical financial
and corporate information, significant operational, financial and
corporate issues, performance of the various business units and
management proposals that require Board’s approval.
Detailed periodic briefings on industry outlook, company
performance and forward previews (forecasts) are also conducted
for the Directors to ensure that the Board is well informed of the
latest market and industry trends and developments.
From time to time and where necessary, the Directors, whether
as a group or individually, with the consent of the Chairman, are
entitled to take independent professional advice at the expense of
the Company, in furtherance of their duties and in the event that
circumstances warrant the same.
Recommendation 1.6
The Board should ensure it is supported by a suitably qualified
and competent Company Secretary
The Company Secretary, Mr Vincent Tan Choong Khiang,
assumed his role in 2013, having had 19 years’ experience in
corporate secretarial practice. He is a fellow member of the
Malaysian Institute of Chartered Secretaries and Administrators
(“MAICSA”). He is also a Council Member of MAICSA and
Chairman of the Editorial Board, Chairman of the Annual General
Meeting (“AGM”) Guide Task Force and Deputy Chairman of the
Conference Organising Committee 2015/2016.
078
ANNUAL REPORT 2015
The Board has direct access to the advice and services of a
Company Secretary who is responsible to the Board for ensuring
that all governance matters and Board procedures are followed
and that applicable laws and regulations are complied with. These
include obligations on Directors relating to disclosure of interests
and disclosure of any conflicts of interest in transactions with the
Group. The Company Secretary is also charged with highlighting
all compliance and governance issues which they feel ought to be
brought to the Board’s attention.
The Company Secretary also facilitates the communication of key
decisions and policies between the Board, Board Committees and
senior management. In ensuring the uniformity of Board conduct
and effective boardroom practices throughout the Group, the
Company Secretary has oversight on overall corporate secretarial
functions of the Group, both in Malaysia and the region where the
Group operates.
Recommendation 1.7
The Board should formalise, periodically review and make public
its Board Charter
The Board adopts the Board Charter to outline the manner in
which its constitutional powers and responsibilities of the Board
will be exercised and discharged, having regard to principles
of good corporate governance, international best practice and
applicable laws.
The Board Charter is established to provide guidance and clarity
for the Board’s roles and responsibilities as well as the powers
between the Board and the management, the different committees
established by the Board, between the Executive Chairman,
CEO and Independent Non-Executive Directors.
The Board Charter can be viewed on our website. The Board
Charter comprises, among others, the following areas:
•
Roles of the Board and Board Committees
•
Role of Individual Directors
•
Role of Senior Independent Non-Executive Director
•
Role of Chairman and CEO
•
Board Composition and Balance
•
Board Evaluation
•
Meetings
•
Remuneration Policies
•
Access to Information and Independent Advice
•
Financial Reporting
•
Stakeholders Communication
•
Company Secretary
•
Conflict of Interest
•
Code of Business Conduct and Ethics
The Board will review the Board Charter every two (2) years
and make any necessary amendments to ensure they remain
consistent with the Board’s objectives, current law and practices.
Any updates to the principles and practices set out in this Charter
will be made available on the Company’s website.
PRINCIPLE 2: STRENGTHEN COMPOSITION
The Board should have transparent policies and procedures that
will assist in the selection of Board members. The Board should
comprise members who bring value to Board deliberations.
Recommendation 2.1
The Board should establish a Nominating Committee which
should comprise exclusively of Non-Executive Directors, a majority
of whom must be independent
The NRC of the Board comprises exclusively three (3) Independent
Non-Executive Directors as follows:NRC Members
Designation
Tan Sri Ong Ka Ting
Chairman,
Senior Independent
Tan Choong Min
Member, Independent
Member, Independent
The NRC is responsible to review and recommend the appropriate
remuneration policies applicable to Directors and CEO, the
appointment and evaluation of the performance of the Directors
and Board Committees. The full term of reference of NRC is
available on our website.
The main activities of the NRC were as follows:
1. Reviewed the Executive Directors’ remunerations and
Directors’ Fees;
2. Performance evaluation of the Board, various Board
Committees and key officer(s) of the Company;
3. Evaluation of Directors seeking re-election and re-appointment
at the forthcoming AGM prior to their endorsement by the
Board; and
4. Deliberated on the gender diversity of boardroom prior to the
new appointment of Director.
ANNUAL REPORT 2015
079
Recommendation 2.2
Board Evaluation Criteria
The Nominating Committee should develop, maintain and review
the criteria to be used in the recruitment process and annual
assessment of Directors
The Board evaluation comprises Performance Evaluation of the
Board and various Board Committees, Director’s Peer Evaluation
and Independent Directors’ Self-Assessment.
Selection of candidates to be considered for appointment
as Directors is facilitated through recommendations from
the Directors, management or external parties including the
Company’s contacts in related industries, and finance, legal
and accounting professions. The NRC, where necessary, meets
with the shortlisted candidates to assess their suitability before
formally considering and recommending them for appointment to
the Board.
The assessment of the Board is based on four (4) main areas
relating to Board structure, Board operations, Board and
Chairman’s roles and responsibilities and Board Committees’ role
and responsibilities.
In reviewing and recommending to the Board any new
Director appointments, the NRC considers: (a) the candidate’s
independence, in the case of the appointment of an Independent
Non-Executive Director; (b) the composition requirements for
the Board and Committees (if the candidate is proposed to be
appointed to any of the Committees); (c) the candidate’s age, track
record, skills, knowledge, expertise, experience, professionalism,
integrity, capabilities and such other relevant factors as may be
determined by the NRC which would contribute to the Board’s
collective skills; and (d) any competing time commitments if the
candidate has multiple board representations.
The Board through the NRC also annually reviews its required
mix of skills and experience and other qualities, including core
competencies which the Directors should bring to the Board. The
Board has also implemented a process to be carried out by the
NRC annually for continuous assessment and feedback to the
Board on the effectiveness of the Board as a whole, the Board
Committees and the contribution of each individual Director.
When deliberating on the performance of a particular Director
who is also a member of the NRC, that member abstains from
the discussions in order to avoid any conflict of interests. The
NRC will reassess the qualifications of a Director, including the
Director’s past contributions to the Board and the Director’s
attendance and contributions at Board and Committee
meetings, prior to recommending a Director for re-election or
re-appointment to another term. The results of the individual
evaluation of the Directors are also used by the NRC, in its
consultation with the Chairman of the Board, to review, where
appropriate, the composition of the Board and Committees, and
to support its proposals, if any, for appointment of new members
and its recommendations for the re-appointment and re-election
of retiring Directors. Comments from the Directors, if any,
concerning the Board as a whole and the general performance
of the Directors, are also presented to the Board.
The performance of COOs and Chief Financial Officer and other
key executives are reviewed yearly by the CEO.
For Director’s Peer Evaluation, the assessment criteria include
abilities and competencies, calibre and personality, technical
knowledge, objectivity and the level of participation at Board
and Committee meetings including his contribution to Board
processes and the business strategies and performance of the
Group.
The criteria for assessing the independence of an Independent
Director include the relationship between the Independent Director
and the Group and his involvement in any significant transaction
with the Group.
During the year under review, the Board conducted an internally
facilitated Board assessment. Directors provide anonymous
feedback on their peers’ performance and individual performance
contributions to the Board. The review supported the Board’s
decision to endorse all retiring Directors standing for re-election.
Re-election and Re-appointment of Directors
In accordance with the Company’s Articles of Association
(“Articles”), all Directors who are appointed by the Board are
subject to re-election by shareholders at the first opportunity
after their appointment. The Articles also provide that at least
one-third (1/3) of the remaining Directors be subject to re-election
by rotation at each AGM provided always that all Directors shall
retire from office at least once every three (3) years but shall be
eligible for re-election.
Pursuant to Section 129 of the Companies Act, 1965, Directors
who are over the age of seventy (70) years shall retire at every
AGM and may offer themselves for re-appointment to hold office
until the next AGM.
The Director retires by rotation due for re-election pursuant to
Article 87 of the Articles at the forthcoming Third AGM is Datuk
Dr Tan Kim Heung. The profile of the Director who is due for
re-election is set out on page 059.
The Directors who are due for retirement and re-appointment in
accordance to Section 129 of the Companies Act, 1965 at the
forthcoming Third AGM are Tan Sri Dato’ Lee Shin Cheng and
Datuk Tan Kim Leong @ Tan Chong Min. Their profiles are set out
on pages 055 and 059.
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ANNUAL REPORT 2015
Diversity
account the present size of the Board, the valuable knowledge
and experience of the present Board members and the evolving
challenges to the Company over time. Nevertheless, the Board is
endeavouring to have a women board member in the near future.
The Board recognises the value of appointing individual Directors
who bring a variety of diverse opinions, perspectives, skills,
experiences, backgrounds and orientations to its discussions and
its decision-making processes. All appointments to the Board
will be made on merit while taking into account suitability for the
role, board balance and composition, the required mix of skills,
background and experience (including consideration of diversity).
Other relevant matters will also be taken into account, such as
independence and the ability to fulfill required time commitments
in the case of Non-Executive Directors.
We are committed to diversity and have had an equal employment
opportunity policy that goes beyond gender in terms of promoting
diversity in our business, in place for some time.The Board has
not set specific gender diversity targets at this time. We have
a relatively even spread of employees across all age brackets
which is reflective of our culture of teamwork and respect. Below
is a summary of the gender mix of our team (excluding foreign
workers):
The Board recognises the challenges in achieving the right balance
of diversity on the Board. This will be done over time, taking into
Employees diversity gender disclosure
Headcount of
All Employees
% of All
Employees
Headcount
of Male
Employees
% of Male
Employees
Headcount
of Female
Employees
% of Female
Employees
20 – 29
610
33.52
356
32.33
254
35.33
30 – 39
644
35.39
348
31.61
296
41.17
40 – 49
383
21.04
257
23.34
126
17.52
50 – 59
166
9.12
126
11.45
40
5.56
60 – 69
16
0.88
13
1.18
3
0.42
1
0.05
1
0.09
–
–
1,820
100.00
1,101
100.00
719
100.00
Age Bracket
70 & above
Grand Total
60%
40%
Management position and Directors on the Board of IOIPG
Category
In management position
(Manager & above)
Directors on the Board of
the Company
In management position
65%
35%
Total
Headcount
Headcount of
Male Employees
% of Male
Employees
Headcount of
Female
Employees
% of Female
Employees
193
126
65.28
67
34.72
7
7
100.00
–
–
Recommendation 2.3
The Board should establish formal and transparent remuneration
policies and procedures to attract and retain Directors
The NRC reviews and submits recommendation to the Board
on remuneration packages of Directors in accordance with the
Company’s policy guidelines which sets a proportionately high
variable pay component to the remuneration package so as to
strongly link remuneration to performance, experience and the
level of responsibilities.
All Directors are paid annual fees and meeting allowance for
each Board meeting that they attend. The level of remuneration
of Non-Executive Directors reflects their experience and level of
081
ANNUAL REPORT 2015
responsibility undertaken by them. Hence, the members of the
ARMC and the Chairman of NRC receive additional fees taking
into consideration the nature of their responsibilities. The fees
for Directors are determined by the full Board with the approval
from shareholders at the AGM. The components of the Executive
Director’s remuneration are structured to link rewards to corporate
and individual performance.
No Director is involved in deciding his own remuneration.
The details of the remuneration of Directors of the Company
comprising remuneration received/receivable from the Company
and subsidiary companies during the financial year ended
30 June 2015 are as follows:
1. Aggregate remuneration of Directors categorised into appropriate components:
Fees
RM’000
Salaries
RM’000
Bonus &
Incentives
RM’000
Benefitsin-kind
RM’000
EPF
RM’000
Others
RM’000
Total
RM’000
Executive Directors
190
5,400
27,662
32
3,967
20
37,271
Non-Executive Directors
580
–
–
40
–
46
666
2. Number of Directors whose remuneration falls into the
following bands:
Number of Directors
Range of Remuneration
NonExecutive Executive
RM50,000 to RM100,000
–
–
RM100,001 to RM150,000
–
5
RM150,001 to RM12,250,000
–
–
RM12,250,001 to RM12,300,000
1
–
RM12,300,001 to RM25,000,000
–
–
RM25,000,001 to RM25,050,000
1
–
For financial year ended 30 June 2015, none of the Directors
was offered share options under the Company’s ESOS.
The Board is mindful of the disclosure of details of the
remuneration of each Director. The Company complies with
the disclosure requirements under the Main Market Listing
Requirements of Bursa Securities i.e. disclosure of Directors’
Remuneration by applicable bands of RM50,000. The Board
is of the view that the transparency and accountability
aspects of Corporate Governance as applicable to Directors’
Remuneration are appropriately served by the above band
disclosure.
PRINCIPLE 3: REINFORCE INDEPENDENCE
The Board should have policies and procedures to ensure
effectiveness of Independent Directors.
Recommendation 3.1
The Board should undertake an assessment of its Independent
Directors annually
Recommendation 3.5
The Board must comprise a majority of independent directors
where the Chairman of the Board is not an independent director
082
ANNUAL REPORT 2015
Presently, the Board comprises seven (7) members, of whom
two (2) are Executive Directors, four (4) are Independent
Non-Executive Directors and one (1) is Non-Independent
Non-Executive Director. The Board composition complies with
the Main Market Listing Requirements of Bursa Securities that
requires a minimum of two (2) Directors or one-third (1/3) of the
Board, whichever is the higher, to be Independent Directors.
Although a relatively mid-sized Board, it provides an effective
blend of entrepreneurship, business and professional expertise in
business and risk management, financial (including audit, tax and
accounting), legal and technical areas of the industries the Group
is involved in. The members of the Board with their combined
business, management and professional experience, knowledge
and expertise, provide the core competencies to allow for diverse
and objective perspectives on the Group’s business and direction.
Taking into account the scope and nature of the operations of the
Group, the Board is satisfied that the current composition and
size of the Board provide for sufficient diversity and yet allow for
effective decision making.
A brief profile of each Director is presented on pages 054 to
059 of the Annual Report, and the Notice of AGM for Directors
proposed for re-election and re-appointment at the 2015 AGM.
Currently, no alternate Directors have been appointed in respect
of any of the Directors.
The Board with the assistance of the NRC reviews the
independence of Directors annually according to the criteria on
independence set out in the Main Market Listing Requirements
and Practice Notes of Bursa Securities on independence.
A Director may be considered independent in character and
judgement if he/she is independent of management and free from
any business or other relationship which could interfere with the
exercise of independent judgement or the ability to act in the best
interests of the Company.
Without limiting the generality of the foregoing, an independent
director is one who:
(a) is not an executive director of the Company or any related
corporation of the Company;
(b) has not been within the last two (2) years and is not an officer
(except as a non-executive director) of the Company. For this
purpose, “officer” has the meaning given in Section 4 of the
Companies Act, 1965;
(c) is not a major shareholder the Company;
(d) is not a family member of any executive director, officer or
major shareholder of the Company;
(e) is not acting as a nominee or representative of any executive
director or major shareholder of the Company;
(f) has not been engaged as an adviser by the Company under
such circumstances as prescribed by Bursa Securities or is
not presently a partner, director (except as an independent
director) or major shareholder, as the case may be, of a firm
or corporation which provides professional advisory services
to the Company under such circumstances as prescribed by
Bursa Securities; or
(g) has not engaged in any transaction with the Company under
such circumstances as prescribed by Bursa Securities or is
not presently a partner, director or major shareholder, as the
case may be, of a firm or corporation (other than subsidiaries
of the Company) which has engaged in any transaction with
the Company under such circumstances as prescribed by
Bursa Securities.
In addition to the annual review by the NRC of the Directors’
independence, each Independent Non-Executive Director also
submits an annual declaration.
In accordance with the best practices in corporate governance,
Tan Sri Ong Ka Ting continues to play his role as the
Senior Independent Non-Executive Director of the Board to
whom concerns of shareholders and stakeholders may be
conveyed. The Senior Independent Non-Executive Director
may be contacted at Tel: +(603) 8947 8900 and email:
ktong@ioigroup.com. Upon the retirement of Tan Sri Ong Ka Ting
after the conclusion of the 3rd AGM, Datuk Tan Kim Leong @
Tan Chong Min shall be the contact person until further notice.
Recommendation 3.2
The tenure of an Independent Director should not exceed
a cumulative term of nine (9) years. Upon completion of the
nine (9) years, an Independent Director may continue to serve
on the Board subject to the Director’s re-designation as a
Non-Independent Director
Recommendation 3.3
The Board must justify and seek shareholders’ approval in the
event if retains as an Independent Director, a person who has
served in that capacity for more than nine (9) years.
The Board has adopted a letter of appointment that contains the
terms on which Non-Executive Directors will be appointed. The
letter of appointment clearly defines role of Directors, including
among others, the expectations in terms of independence
participation, time commitment and continuous improvement.
Currently, the office tenure of other existing Independent
Non-Executive Directors is still less than five (5) years. The Board
is mindful of the compliance of the Recommendations 3.2 and
3.3 of the Code. The Board also believes that each of them has
retained independence of character and judgement and has not
formed associations with management that might compromise
their ability to exercise independent judgement or act in the best
interests of IOIPG Group.
PRINCIPLE 4: FOSTER COMMITMENT
Directors should devote sufficient time to carry out their
responsibilities, regularly updates their knowledge and enhance
their skills.
Recommendation 4.1
The Board should set out expectations on time commitment for
its members and protocols for accepting new directorships
The Board is satisfied with the level of time commitment by each
of the Directors toward fulfilling their roles on the Board and Board
Committees.
The Board has at least five (5) regularly scheduled meetings
annually, with additional meetings for particular matters convened
as and when necessary. Board meetings bring an independent
judgement to bear on issues of strategies, risks, performance,
resources and standards of conduct.
Eight (8) Board meetings were held during the financial year ended
30 June 2015. The attendance record of each Director since the
last financial year was as follows:
ANNUAL REPORT 2015
083
Total
Number of
Meetings
Number of
Meetings
Attended
Executive Directors
8
8
Lee Yeow Seng
8
8
Non-Executive Directors
Tan Sri Ong Ka Ting
8
8
Dato’ Lee Yeow Chor
8
7
Tan Chong Min
8
8
Datuk Lee Say Tshin
8
7
8
8
The Directors are required to disclose and update their
directorships and shareholdings in other companies as and
when necessary. The Directors are also expected to comply with
Paragraph 15.06 of the Main Market Listing Requirements of
Bursa Securities on the maximum number of five (5) directorships
they can hold in public listed companies to ensure that all
Directors are able to commit sufficient time for the Company.
To facilitate the Directors’ time planning, an annual meeting
calendar is prepared and circulated to them before the beginning
of every financial year. It provides the schedules dates for meetings
of the Board and Board Committees as well as the AGM.
Recommendation 4.2
The Board should ensure its members have access to appropriate
continuing education programmes
Training needs as deemed appropriate by individual Board
members are provided. Board members keep abreast with
general economic, industry and technical developments by their
attendances at appropriate conferences, seminars and briefings.
All the Directors had completed the Mandatory Accreditation
Programme (“MAP”) as specified by Bursa Securities.
084
ANNUAL REPORT 2015
During the financial year, members of the Board who have attended various training programmes, forums, conferences and seminars are
as follows:
Lee Yeow Seng
Tan Sri Ong Ka Ting
HSBC Forum in Malaysia: China Globalising; RMB Rising
12 August 2014
18th China International Fair for Investment & Trade
8 September 2014
Malaysia Current Economic Development & Financial Position
by Prime Minister
20 January 2015
Special Session on National Blue Ocean Strategy (“NBOS”)
27 January 2015
Reach & Remind Friends of the Industry Seminar 2015
and Dialogue with the Minister of Plantation Industries and
Commodities Malaysia
12 February 2015
BOAO Forum for Asia: Energy, Resources and Sustainable
Development Conference
11 June 2015
“One Belt and One Road” Malaysia-China Economic Conference
and Business Matching
29 June 2015
12 August 2014
Family Business Network (“FBN”) Family Retreat
30 October 2014 to
1 November 2014
Overview of Environmental, Social & Governance (“ESG”) Index
and Industry Classification Benchmark
20 August 2014
18th China International Fair for Investment and Trade (“CIFIT”)
2014
8 September 2014
APEC China 2014 CEO Summit
8 to 10 November 2014
Continuous Listing Obligations of Directors (Roles and
Responsibilities of Directors under the Listing Requirements)
27 November 2014
China (Fujian) – Malaysia Economic and Trade Promotion Forum
10 December 2014
Zhejiang-Malaysia Investment and Trade Symposium 2014
21 April 2015
4th International Palm Oil Sustainability Conference (“IPOS”)
19 August 2014 to
20 August 2014
Innovating Malaysia Conference
28 August 2014 to
29 August 2014
Palm Oil Trade Seminar, Shanghai
15 September 2014 to
16 September 2014
Palm Oil Trade Seminar, Kuala Lumpur
28 October 2014 to
29 October 2014
FBN Family Retreat
30 October 2014 to
1 November 2014
Strength Based Leadership Workshop for Managers
26 January 2015 to
27 January 2015
Palm & Lauric Oil Price Outlook Conference
3 March 2015 to
4 March 2015
Palm Oil Trade Show at Seoul, Korea
27 April 2015 to
28 April 2015
Tan Chong Min
Datuk Lee Say Tshin
PRINCIPLES
REPORTING
5:
UPHOLD
ANNUAL REPORT 2015
Audit Committee Workshop Series 3: Oversight of Financial
Reports and Compliance
7 August 2014
Audit Committee Workshop Series 4: Enhancing Audit Quality:
Role of Audit Committee
7 August 2014
Roles and Responsibilities of Directors in relation to Financial
Statements (Appendix 1 of Bursa Malaysia’s Letter)
28 August 2014
Risk Management & Internal Control – Workshops for Audit
Committee Members
13 October 2014
12 August 2014
Risk Management & Internal Control – Workshops for Audit
Committee Members
13 October 2014
HSBC Asian Outlook 2015 Conference
19 January 2015
Kuala Lumpur Investment Update 2015
22 January 2015
HSBC Forum in Hong Kong : RMB, Reform and China’s
Global Future
26 March 2015
Secretariat for the Advancement of Malaysia Entrepreneurs
(“SAME”) Advisory Board Meeting
14 April 2015
Governance, Director Duties and Regulatory Updates Seminar
2015
25 February 2015
INTEGRITY
IN
FINANCIAL
The Board should ensure financial statements are a reliable source
of information.
Recommendation 5.1
The Audit Committee should ensure financial statements comply
with applicable financial reporting standards
In presenting the annual financial statements and quarterly
financial results announcements to shareholders, the Board
aims to present a balanced and comprehensible assessment of
the Group’s financial position and prospects and ensures that
the financial results are released to Bursa Securities within the
stipulated time frame and that the financial statements comply
with regulatory reporting requirements. In this regard, the Board is
assisted by the ARMC in overseeing and governing the Group’s
financial reporting processes and the quality of its financial
reporting.
The financial statements are prepared on a going concern basis
and give a true and fair view of the financial position of the Group
as at 30 June 2015.
085
In addition to the Chairman’s Statement, the Annual Report of
the Company contains the following additional non-mandatory
information to enhance shareholders’ understanding of the
business operations of the Group:
•
Management’s discussion and analysis; and
•
Financial trends and highlights, key performance indicators
and other background industry notes deemed necessary.
Directors’ Responsibility for Preparing the Annual Audited
Financial Statements
The Directors are required by the Companies Act, 1965 (the
“Act”) to prepare financial statements for each financial year
which give a true and fair view of the Group and of the Company’s
state of affairs, results and cash flows. The Directors are of the
opinion that the Group uses appropriate accounting policies that
are consistently applied and supported by reasonable as well
as prudent judgements and estimates, and that the financial
statements have been prepared in accordance with Financial
Reporting Standards and the provisions of the Act and the Main
Market Listing Requirements of Bursa Securities.
086
ANNUAL REPORT 2015
The Directors are satisfied that the Group and the Company keep
accounting records which disclose with reasonable accuracy the
financial position of the Group and of the Company and which
enable proper financial statements to be prepared. They have also
taken the necessary steps to ensure that appropriate systems are
in place to safeguard the assets of the Group, and to detect and
prevent fraud as well as other irregularities. The systems, by their
nature can only provide reasonable and not absolute assurance
against material misstatements, loss and fraud.
The Company requires that the engagement partner involved in
the external audit should not remain in a key audit role beyond five
(5) years and cannot be re-engaged to play a significant role in the
audit of the Company for at least another two (2) successive years.
This is consistent with current By-Laws (on Professional Ethics,
Conduct and Practice) of the Malaysian Institute of Accountants.
PRINCIPLE 6: RECOGNISE AND MANAGE RISKS
Recommendation 5.2
The Board should establish a sound risk management framework
and internal controls system.
The Audit Committee should have policies and procedures to
assess the suitability and independence of external auditors
Recommendation 6.1
The policy and procedure to assess the suitability and
independence of external auditors can be viewed on our website.
The ARMC meets periodically to carry out its functions and duties
pursuant to its terms of reference. Other Board members also
attend meetings upon the invitation of the ARMC. At least twice a
year, the ARMC meets with the external auditors without executive
Board members present.
The Board maintains a transparent and professional relationship
with the Group’s external auditors. The criteria for the external
auditors assessment include quality of services, sufficiency
of resources, communication and interaction, audit planning,
independence, objectivity and professional skepticism. In
determining the independence of PricewaterhouseCoopers,
the ARMC reviewed all aspects of their relationships with them
including the processes, policies and safeguards adopted
by the Group and PricewaterhouseCoopers relating to audit
independence.
The non-statutory audit fees incurred for services rendered to the
Group by PricewaterhouseCoopers Malaysia and member firms
of PricewaterhouseCoopers International Limited for the financial
year ended 30 June 2015 was RM756,000 [2014: RM108,000 –
fees paid to BDO (former external auditors)]. Additional disclosures
on non-statutory audit fees can be found in ARMC Report.
The Board has considered the non-audit services provided during
the year by the auditors and are satisfied that the provision of
those non-audit services during the year by the auditors are
compatible with the auditors’ independence requirements.
The Board should establish a sound framework to manage risks
The Board has established a framework to formulate and review
risk management policies and risk strategies. Information on the
Group’s internal control is presented in the Statement on Risk
Management and Internal Control.
Recommendation 6.2
The Board should establish an internal audit function which
reports directly to the Audit Committee
Group’s internal audit function is carried out by the Internal
Audit (“IA”) Department, which reports directly to the ARMC on
its activities based on the approved annual Internal Audit Plan.
The function comprises a dedicated in-house team of qualified
professionals based in Putrajaya. The internal audit function is
independent of management and has full access of all IOIPG
Group’s entities, records and personnel.
The appointment, resignation and dismissal of the Head of IA is
reviewed and approved by the ARMC. The ARMC also provides
input on the annual performance appraisal of the Head of IA. The
Head of IA has unfettered access to the ARMC, the Board and
management. The Head of IA and a number of internal auditors
of the IA Department are members of The Institute of Internal
Auditors Malaysia.
PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY
DISCLOSURE
Companies should establish corporate disclosure policies and
procedures to ensure comprehensive, accurate and timely
disclosure.
ANNUAL REPORT 2015
087
There is also a section focusing on corporate governance and
outlined in that section are the Company’s Board Charter, Code
of Ethics for Directors, Code of Business Conduct and Ethics,
Statement on Corporate Governance, Statement on Risk
Management and Internal Control, Whistleblowing Policy and
various corporate governance initiatives.
Recommendation 7.1
The Board should ensure the Company has appropriate corporate
disclosure policies and procedures
The Board reviews and approves all quarterly and other important
announcements. The Company announces its quarterly and fullyear results within the mandatory period. The financial statements
and, where necessary, other presentation materials presented at
the Company’s general meetings, including material and pricesensitive information, are disseminated and publicly released via
BURSA LINK on a timely basis to ensure effective dissemination
of information relating to the Group.
To ensure that communications to the public regarding IOIPG
Group are timely, factual, accurate and complete, we have put
in place a Media Disclosure Policy which outlines the central
principles and practices in communicating with the media.
This Media Disclosure Policy is applicable to all Directors, those
authorised to speak on IOIPG Group’s behalf as well as all the
employees of IOIPG Group. It covers Media Guidelines comprising
media protocols to engage with the media in a responsible,
productive, and positive manner whilst keeping the integrity of
IOIPG Group in mind.
Recommendation 7.2
The Board should encourage the Company to leverage on
information technology for effective dissemination of information
The Company’s website is the key communication channel for
the Company to reach its shareholders and general public. The
Investor Relations section enhances the investor relations function
by including all announcements made by the Company, financial
results, annual reports, corporate presentation, financial calendar
as well as enquiries. The shareholders and general public may
direct their enquiries on the Company via “Enquiries” and the
Company’s Investor Relations team will endeavor to reply to these
queries in the shortest possible time.
PRINCIPLE 8: STRENGTHEN RELATIONSHIP BETWEEN
COMPANY AND SHAREHOLDERS
The Board should facilitate the exercise of ownership rights by
shareholders.
Recommendation 8.1
The Board should take reasonable steps to encourage shareholder
participation at general meetings
All shareholders of the Company receive the Annual Report of the
Company and the notice of AGM, which notice is also advertised
in the press and released via BURSA LINK. The chairmen of the
ARMC, NRC and the external auditors were present at the last
AGM, and will endeavour to be present at the 2015 AGM to assist
the Directors in addressing queries raised by the shareholders.
Historically, the Company’s AGMs have been well attended. It
has always been the practice for the Chairman to provide ample
time for the Q&A sessions in the AGMs and for suggestions and
comments by shareholders to be noted by management for
consideration.
Recommendation 8.2
The Board should encourage poll voting
The Company provides for separate resolutions at general
meetings on each substantial issue. Pursuant to the Articles of
the Company, all resolutions put to the vote at a general meeting
of the Company shall be decided on a show of hands unless
before or upon the declaration of the result, a poll is demanded
as follows:
(i) by the Chairman of the meeting; or
(ii) by at least two (2) members present in person or by proxy or
by attorney or in the case of a corporation by a representative;
or
088
ANNUAL REPORT 2015
(iii) by a member or members present in person or by proxy or
by attorney or in the case of a corporation by a representative
and representing not less than one-tenth (1/10) of the total
voting rights of all the members having the right to vote at the
meeting; or
(iv) by a member or members present in person or by proxy or
by attorney or in the case of a corporation by a representative
holding shares in the Company conferring a right to vote at
the meeting being shares on which an aggregate sum has
been paid-up equal to not less than one-tenth (1/10) of
the total sum paid-up on all the shares conferring that right
(excluding treasury shares).
At the commencement of every general meeting, the Chairman
informs shareholders of their right to demand a poll vote in
accordance with the Articles.
Pursuant to Paragraph 10.08(7A), Chapter 10 of the Main
Market Listing Requirements of Bursa Securities, the Chairman
of the meeting will be exercising his rights under Article 69 of
the Company’s Articles for resolution approving related party
transaction(s) at the general meetings and at any adjournment
thereof to be put to the vote by way of poll.
Recommendation 8.3
The Board should promote effective communication and proactive
engagements with shareholders
The Company strives to maintain an open and transparent
channel of communication with its stakeholders, institutional
investors and the investing public at large with the objective of
providing a clear and complete picture of the Group’s performance
and financial position as possible. The Company believes that
a constructive and effective investor relationship is an essential
factor in enhancing value for its shareholders. However, whilst the
Company endeavours to provide as much information as possible
to its shareholders and stakeholders, it is mindful of the legal and
regulatory framework governing the release of material and pricesensitive information.
The AGM is the principal forum for dialogue with shareholders,
who are given the opportunity to enquire and seek clarification
on the operations and financial performance of the Group. In
addition, the Company uses the following key investor relation
activities in its interaction with investors:
•
Meeting with analysts and institutional fund managers;
•
Participating in roadshows and investors conferences; and
•
Participating in teleconferences with investors and analysts.
The Group has also established several websites with the main
one being www.ioiproperties.com.my for shareholders and the
public to access corporate information, financial statements, news
and events related to the Group on a timely basis. Material facts
and presentation materials given out at above functions are made
available on the Group’s website to provide equal opportunity of
access for other shareholders and the investing public and to
allow them to write in to the Group if they have questions.
During the financial year, the Group had approximately 39 meetings
with analysts and investors. The Group enjoys a relatively high
level of coverage and exposure to the investment community.
Besides the above, management believes that the Company’s
Annual Report is a vital and convenient source of essential
information for existing and potential investors and other
stakeholders. Accordingly, the Company strives to provide a high
level of reporting and transparency that goes beyond mandatory
requirements in order to provide value for users.
ANNUAL REPORT 2015
089
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
INTRODUCTION
RISK MANAGEMENT
This Statement is in line with Paragraph 15.26(b) of the Main
Market Listing Requirements of Bursa Malaysia Securities
Berhad on the Group’s compliance with the Principles and Best
Practices relating to internal control as stipulated in the Malaysian
Code on Corporate Governance 2012 and guided by the
Statement on Risk Management & Internal Control: Guidelines for
Directors of Listed Issuers.
The Group adopts an Enterprise Risk Management (“ERM”)
framework which is consistent with the Committee of Sponsoring
Organisations of the Treadway Commission’s (“COSO”) ERM
framework, the Statement on Risk Management & Internal
Control: Guidelines for Directors of Listed Issuers, Bursa
Malaysia’s Corporate Governance Guide, and is in line with ISO
31000, Risk Management – Principles and Guidelines (which is a
standard relating to risk management codified by the International
Organization for Standardization. ISO 31000 provides a standard
on the implementation of risk management).
ACKNOWLEDGEMENT OF RESPONSIBILITIES
The Board of Directors (the “Board”) affirms its overall responsibility
for the Group’s system of internal control, including the assurance
of its adequacy and integrity, and its alignment with business
objectives. However, it should be noted that control systems are
designed to manage rather than to totally eliminate associated
risks; and as such, can only provide reasonable but not absolute
assurance against material loss or failure.
The Group’s ERM framework essentially links the Group’s
objectives and goals (that are aligned to its Vision) to principal
risks; and the principal risks to controls and opportunities that
are translated to actions and programmes. The framework also
outlines the Group’s approach to its risk management policies:
i)
Embrace risks that offer opportunities for superior
returns
The Board has established a process for identifying, evaluating,
monitoring and managing the significant risks faced by the Group
in its achievement of objectives and strategies. This process is
also applicable to the property development activities undertaken
by the Group through joint ventures, to the extent that the Group
reviews and manages significant risks in order to achieve the
Group’s business objectives, performs bi-annual risk review and
monitors key control activities in relation to the principal risks. This
process has been in place for the year under review and up to the
date of approval of this Statement.
ORGANISATION
HIERARCHY
BOARD
(Executive
Management)
By linking risks to capital, the Group establishes
risk-adjusted-return
thresholds
and
targets
that
commensurate with varying risk levels assumed by its
businesses. Superior risk management and other corporate
governance practices are also promoted as contributing
factors to lowering long-term cost of funds and boosting
economic returns through an optimal balance between
control costs and benefits.
BUSINESS
OBJECTIVES
HIERARCHY
FRAME OF
REFERENCE
VISION
EXTERNAL
RISKS
IG
AL
Operational
Goals & Targets
D
Operation/Functions
(Executives & Staff)
Strategic
Objectives & Goals
NE
Divisions & SBU
(Senior Management
& Mid-Management)
INTERNAL
RISKS
090
ANNUAL REPORT 2015
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (Cont’d)
ii) Risk Management as a collective responsibility
By engaging every level of the organisation as risk owners of
their immediate sphere of risks (as shown in the illustration),
the Group aims to approach risk management holistically.
This is managed through an oversight structure involving the
Board, Audit and Risk Management Committee (“ARMC”),
Internal Audit, Executive Management and business units’
Risk Management Committees.
iii) Risk forbearance shall not exceed capabilities and
capacity to manage
Any business risk to be assumed shall be within the Group’s
core competencies to manage. Hence, the continuous effort
in building risk management capabilities and capacity are
key components of the Group’s ERM effort. The Group’s
overall risk appetite is based on assessments of the Group’s
risk management capabilities and capacity.
iv) To apply as both a control and strategic tool
As a control tool, the Group ensures that the intensity and
types of controls commensurate with assessed risk rankings.
The Group also applies risk management as a strategic tool
in scoping opportunities, investment and resource allocation,
strategy formulation and performance measurement.
The Board conducts periodic reviews on the adequacy and integrity
of the Group’s ERM framework and policies, particularly in relation
to the mechanisms for principal risks identification, assessment,
response and control, communication and monitoring.
The Group’s activities expose it to a variety of risks, including
operating and financial risks. The Group’s overall risk
management objective is to ensure that the Group creates value
for its shareholders whilst minimising potential adverse effects
on its performance and positions. The Group operates within
an established risk management framework and clearly defined
policies and guidelines that are approved by the Board.
Under the Group’s ERM framework, the Group has relevant
policies and guidelines on risk reporting and disclosure which
cover the following principal risks:
I)
OPERATING RISK
• The Group’s policy is to assume operating risks that
are within its core businesses and competencies to
manage. Operating risk management ranges from
managing strategic operating risks to managing diverse
day-to-day operational risks.
• The management of the Group’s day-to-day operational
risks (such as those relating to health and safety,
quality, marketing and statutory compliance) is mainly
decentralised at the business unit level and guided by
approved standard operating procedures. Operational
risks that cut across the organisation (such as those relating
to procurement, integrated systems and reputation) are
coordinated centrally.
II) FINANCIAL RISK
• The Group is exposed to various financial risks relating
to credit, liquidity, interest rates, and foreign currency
exchange rates. The Group’s risk management objectives
and policies coupled with the required quantitative and
qualitative disclosures relating to its financial risks are set
out in Note 39 to the financial statements on pages 190 to
204.
CONTROL ENVIRONMENT
• The Group’s corporate culture is embedded in its core values of
integrity, commitment, loyalty, excellence in execution, speed
or timeliness, innovativeness and cost efficiency – to achieve
the Group’s vision and support the business objectives, risk
management and internal control system.
• The Code of Business Conduct and Ethics reinforces
the Group’s core value on integrity by providing guidance on
moral and ethical behaviour that is expected from all employees
in following the laws, policies, standards and procedures.
• Board committees such as the ARMC and Nominating and
Remuneration Committee are established by the Board, and
they are governed by clearly defined terms of reference and
authority for areas within their scope.
• The Group has an organisational structure that is aligned with
its business and operational requirements, with clearly defined
lines of responsibility and authority levels.
CONTROL ACTIVITIES
• Policies and procedures have been established for key business
processes and support functions. The Group has in place a
system to ensure that there are adequate risk management,
financial and operational policies, procedures and rules relating
to the delegation and segregation of duties.
• Annual business plans and operating budgets are prepared by
business and operating units, and are approved by the Board.
Actual performance and significant variances against budget
are monitored on an ongoing basis.
INFORMATION AND COMMUNICATION PROCESSES
• Management and the Board receive timely, relevant and reliable
management and financial reports which are reviewed on a
regular basis.
• The Group has in place a Management Information System
that captures, compiles, analyses and reports relevant data,
which enables management to make business decisions in an
accurate and timely manner.
• A whistleblowing policy is established to provide appropriate
communication and feedback channels which facilitate
whistleblowing, in a transparent and confidential manner. It
outlines the Group’s commitment to encourage its employees
and stakeholders to raise genuine concerns about possible
improprieties in matters of financial reporting, compliance,
suspected violations of the Group’s Code of Business
Conduct and Ethics, and to disclose any improper conduct or
other malpractices within the Group (i.e. whistleblowing) in an
appropriate way.
MONITORING
• The Group’s policies and procedures are reviewed and
revised periodically to meet changing business and operational
needs and regulatory requirements.
• Board meetings are held at least once in a quarter with a
formal agenda on matters for discussion. In addition, regular
management and operation meetings are conducted by senior
management which comprises the Chief Executive Officer
(“CEO”) and divisional heads.
• The Group’s Internal Audit function reports to the ARMC and
is guided by an Internal Audit Charter that is approved by the
Board. The Internal Audit function monitors compliance with
the Group’s policies and procedures and applicable laws
and regulations, and provides independent assurance on the
adequacy and effectiveness of risk management and internal
control system by conducting regular audits and continuous
assessment. Significant audit findings and recommendations
for improvement are highlighted to senior management and the
ARMC, with periodic follow-up reviews of the implementation
of corrective action plans.
RISK REVIEW FOR THE FINANCIAL YEAR
A review on the adequacy and effectiveness of the risk
management and internal control system has been undertaken
for the financial year under review. Each business unit, cutting
across all geographic areas, via its respective Risk Management
Committees and workgroups comprising personnel at various
levels carried out the following areas of work:
• Conducted reviews and updates of risk profiles including
emerging risks and re-rated principal risks.
• Evaluated the adequacy of key processes, systems, and
internal controls in relation to the rated principal risks, and
established strategic responses, actionable programmes
and tasks to manage the aforementioned and/or eliminate
performance gaps.
• Ensured internal audit programmes covered identified principal
risks. Audit findings throughout the financial period served as
key feedback to validate effectiveness of risk management
activities and embedded internal controls.
• Reviewed implementation progress of actionable programmes,
and evaluated post-implementation effectiveness.
ANNUAL REPORT 2015
091
The review includes the following:
• Regular internal audit reports and periodic discussions with the
ARMC.
• Bi-annual risk reviews compiled by the respective units’ Risk
Management Committees, and annual presentation to and
discussion with the ARMC, the Board, internal auditors, and
external auditors.
• Operating units’ CEO/Chief Financial Officer (“CFO”)’s Internal
Control Certification and Assessment disclosure.
• Operating units’ response to the Questionnaires on Control
and Regulations.
REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORS
As required by Paragraph 15.23 of the Bursa Malaysia Securities
Berhad Main Market Listing Requirements, the external auditors
have reviewed this Statement on Risk Management and
Internal Control. Their limited assurance review was performed
in accordance with Recommended Practice Guide (“RPG”)
5 (Revised) issued by the Malaysian Institute of Accountants.
RPG 5 (Revised) does not require the external auditors to
form an opinion on the adequacy and effectiveness of the risk
management and internal control systems of the Group.
Based on the procedures performed, nothing had come to
their attention that caused them to believe that the Statement
on Risk Management and Internal Control set out above was
not prepared, in all material respects, in accordance with the
disclosures required by paragraphs 41 and 42 of the Statement
on Risk Management & Internal Control: Guidelines for Directors
of Listed Issuers, nor was factually inaccurate.
CONCLUSION
The Board is satisfied with the adequacy and effectiveness of
the Group’s risk management and internal control system. The
Board has received assurance from the CEO and CFO that the
Group’s risk management and internal control system, in all
material aspects, is operating adequately and effectively. For the
financial year under review, there were no material control failures
or adverse compliance events that have directly resulted in any
material loss to the Group.
This Statement on Risk Management and Internal Control is made
in accordance with the resolution of the Board dated 1 September
2015.
092
ANNUAL REPORT 2015
STATEMENT
OF
DIRECTORS’
INTERESTS
In the Company and its related corporations as at 28 August 2015
(Based on the Register of Directors’ Shareholdings)
Name of Directors
Direct
%
Indirect
%
39,567,866
1.05
1,939,829,7051
51.50
–
–
–
–
Lee Yeow Seng
2,210,366
0.06
1,880,341,7242
49.92
5,110,000
0.14
1,880,646,8243
49.93
10,500
*
67,7044
*
–
–
–
–
22,855,900
0.61
–
–
The Company
No. of ordinary shares of RM1.00 each
Tan Sri Ong Ka Ting
Datuk Tan Kim Leong @ Tan Chong Min
Datuk Lee Say Tshin
By virtue of Tan Sri Dato’ Lee Shin Cheng, Lee Yeow Seng and Dato’ Lee Yeow Chor’s interests in the ordinary shares of the Company,
they are also deemed to be interested in the shares of all the subsidiaries of the Company to the extent that the Company has an interest.
Notes:
Deemed interested by virtue of his interest in Progressive Holdings Sdn Bhd, which in turn holds 100% equity interest in Vertical
Capacity Sdn Bhd and shares held by his sons, Dato’ Lee Yeow Chor and Lee Yeow Seng under Section 6A of the Companies
Act, 1965 (the “Act”) and also interest in shares of daughters, Lee Yoke Ling, Lee Yoke Har, Lee Yoke Hean and Lee Yoke Hui under
Section 134(12)(c) of the Act as well as shares held by Summervest Sdn Bhd.
Capacity Sdn Bhd.
Capacity Sdn Bhd and also interest in share of his spouse, Datin Joanne Wong Su-Ching under Section 134(12)(c) of the Act.
4
Deemed interested by virtue of his interest in E. P. H. Holdings Sendirian Berhad and Tan Kang Hai Holdings Sdn Berhad as well as
shares held by his son, Tan Enk Purn.
*
Negligible
1
2
3
ANNUAL REPORT 2015
093
SHAREHOLDINGS OF
SENIOR MANAGEMENT TEAM
Based on the Record of Depositors as at 28 August 2015, the details of shareholdings of our senior management team are as follows:
Name
Direct
%
Indirect
%
1. Teh Chin Guan
48,066
*
–
–
–
–
–
–
364,815
0.01
–
–
4. Betty Lau Sui Hing
–
–
–
–
5. Tan Choong Khiang
–
–
–
–
129,500
*
–
–
7,000
*
–
–
–
–
–
–
54,000
*
–
–
10. Ho Kwok Wing
–
–
–
–
11. Ir David Choo Kay Boon
–
–
–
–
12. Chung Nyuk Kiong
–
–
–
–
13. Albert Lee Wen Loong
–
–
–
–
23,700
*
–
–
15. Chris Chong Voon Fooi
–
–
–
–
16. Nazren Foo Khoon Min (Steven Foo)
–
–
–
–
17. Simon Yong @ Simon Cosmas
–
–
–
–
18. Brandon Chin Boon Chiun
–
–
–
–
52,500
*
–
–
2. Cheah Wing Choong
3. Lee Yoke Har
6. Simon Heng Kwang Hock
7. Tan Keng Seng
8. Lim Beng Yeang
9. Lou Fu Leong
14. Lee Yean Pin (Li Yanping)
19. Ooi Wooi Yaw
Note:
* Negligible
094
ANNUAL REPORT 2015
OTHER
INFORMATION
COMPOSITION OF SHAREHOLDERS
as at 28 August 2015
Foreigners
16.62%
Government and other
Government related agencies
Malaysian Substantial
Shareholders
0.06%
60.11%
Malaysian Bodies
Corporate and Individuals
23.21%
MATERIAL CONTRACTS
There were no material contracts entered into by the Company and its subsidiaries which involved Directors’ and major shareholders’
interests either still subsisting at the end of the financial year ended 30 June 2015 or entered into since the end of the previous financial
year.
PENALTIES
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant
regulatory bodies during the financial year ended 30 June 2015, which have material impact on the operations or financial position of the
Group.
UTILISATION OF PROCEEDS
The proposed renounceable rights issue of 539,835,787 new ordinary shares of RM1.00 each in IOIPG (“IOIPG Shares”) (“Rights Shares”)
at an issue price of RM1.90 per Rights Share on the basis of one (1) Rights Share for every six (6) existing IOIPG Shares (“Rights Issue”)
was completed following the listing and quotation of 539,835,787 IOIPG Shares on the Main Market of Bursa Malaysia Securities Berhad
on 9 February 2015.The total gross proceeds raised from the Rights Issue were amounted to RM1,025,688,000. The status of the
utilisation of proceeds as at 28 August 2015 is as follows:Details of utilisation
Capital expenditure
Investment opportunities
Working capital
Estimated expenses in relation
to the Rights Issue
Approved utilisation
RM’mil
Actual utilisation Balance unutilised
RM’mil
RM’mil
500.0
200.0
324.8
0.9
292.5
–
324.8
0.9
207.5
200.0
–
–
1,025.7
618.2
407.5
Timeframe for utilisation
Within 18 months
Within 24 months
Within 18 months
Within 6 months
FINANCIAL
REPORTS
096
Directors’ Report
FINANCIAL STATEMENTS
104
Statements of Profit or Loss
105
Statements of Comprehensive Income
106
Statements of Financial Position
108
Statements of Changes in Equity
111
Statements of Cash Flows
114
Notes to the Financial Statements
217
Supplementary Information on Realised
and Unrealised Profits or Losses
218
Statement by Directors
218
Statutory Declaration
219
Independent Auditors’ Report
096
ANNUAL REPORT 2015
DIRECTORS’ REPORT
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 2015.
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 2015 are as follows:
In RM’000
Group
Company
1,130,326
(229,729)
471,784
(1,167)
900,597
470,617
Attributable to:
890,702
9,895
470,617
–
900,597
470,617
Taxation
DIVIDEND
The Directors have declared first interim single tier dividend of 6.0 sen per ordinary share, amounting to RM225,993,000 in respect of the
financial year ended 30 June 2015. The dividend is payable on 30 September 2015 to shareholders whose names appear in the Record
of Depositors and Register of Members of the Company at the close of business on 18 September 2015.
The Directors do not recommend any payment of final dividend in respect of the current financial year.
ISSUE OF SHARES AND DEBENTURES
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM3,239,014,726 to RM3,778,850,513
by way of the issuance of 539,835,787 new ordinary shares of RM1.00 each pursuant to the renounceable rights issue at an issue price
of RM1.90 per ordinary share for cash as disclosed in Note 31 to the financial statements.
All the above newly issued ordinary shares rank pari passu in all respects with the existing shares of the Company.
There were also no issue of debentures by the Company during the financial year.
ANNUAL REPORT 2015
097
TREASURY SHARES
The shareholders of the Company, by an ordinary resolution passed at an Annual General Meeting held on 27 October 2014, approved
the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”).
The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the Share Buy
Back can be applied in the best interests of the Company and its shareholders.
During the financial year, the Company repurchased 11,956,400 ordinary shares of RM1.00 each of its issued shares from the open
market. The average price paid for the ordinary shares repurchased was RM1.97 per ordinary share. The repurchased transactions were
financed by internally generated funds. The ordinary shares repurchased are held as treasury shares and treated in accordance with the
requirement of Section 67A of the Companies Act, 1965.
The Company has the right to cancel, resell and/or distribute these shares as dividends at a later date. As treasury shares, the right
attached to voting, dividends and participation in other distribution is suspended. None of the treasury shares repurchased had been sold
as at 30 June 2015.
At the end of the financial year, the number of ordinary shares in issue after deducting treasury shares is 3,766,894,113 ordinary shares
of RM1.00 each.
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)
An ESOS was established on 8 May 2015 for the benefit of the eligible executives and Executive Directors of the Group.
The salient features of the ESOS are as follows:
(a)
Maximum number of shares available under the ESOS
The maximum number of new ordinary shares in the Company (“IOIPG Shares”) which may be issued and allotted under the ESOS
shall not exceed 10% of the issued and paid-up ordinary share capital of the Company (excluding treasury shares) at any point of
time throughout the duration of the ESOS.
(b)
Eligibility
Any employee (including Executive Director) of the Company and its subsidiaries (“IOIPG Group”) which are incorporated and
existing in Malaysia and are not dormant shall be able to participate in the ESOS, if, as at the date of offer (“Date of Offer”):
(i)
the employee has attained at least 18 years of age;
(ii)
the employee falls under the grade of M1 and above;
(iii)
is an Executive Director of the Company who has been involved in the management of the IOIPG Group for a period of at least
three (3) years of continuous service prior to and up to the Date of Offer;
(iv)
the employee is confirmed in writing as a full time employee and/or has been in the employment of the IOIPG Group for
a period of at least three (3) years of continuous service prior to and up to the Date of Offer, including service during the
probation period; and
(v)
fulfills any other criteria and/or falls within such category as may be determined by the ESOS Committee from time to time.
[The eligible Directors and eligible employees (collectively, “Eligible Person(s)”]
The eligibility under ESOS does not confer upon an Eligible Person any rights over or in connection with the options or the new
IOIPG Shares.
098
ANNUAL REPORT 2015
DIRECTORS’ REPORT (Cont’d)
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) (Continued)
(c)
Basis of allotment and maximum entitlement
Subject to any adjustments which may be made under the By-Laws, the maximum number of new IOIPG Shares that may be
offered and allotted to an Eligible Person shall be determined at the sole and absolute discretion of the ESOS Committee after
taking into consideration among others, the Eligible Person’s position, performance, length of service and seniority in IOIPG Group
respectively, or such other matters that the ESOS Committee may in its discretion deem fit subject to the following conditions:
(i)
the Eligible Person(s) do not participate in the deliberation or discussion in respect of their own allocation; and
(ii)
the number of new IOIPG Shares allocated to any Eligible Person who, either singly or collectively through persons connected
with such Eligible Person, holds 20% or more of the issued and paid-up share capital (excluding treasury shares) of the
Company, does not exceed 10% of the total number of new IOIPG Shares to be issued under the ESOS;
provided always that it is in accordance with any prevailing guidelines issued by Bursa Securities, the Listing Requirements or any
other requirements of the relevant authorities and as amended from time to time.
(d)
Duration of the ESOS
The ESOS came into force on 8 May 2015 and shall be for a duration of five (5) years.
The ESOS Committee shall have the sole discretion in determining whether the options will be granted in one (1) single grant or
based on staggered granting over the duration of the ESOS.
All options granted to a grantee under the ESOS are only exercisable within the option period and all options to the extent that have
not been exercised upon the expiry of the option period shall automatically lapse and become null and void and have no further
effect.
(e)
Exercise Price
The exercise price shall be based on the higher of the following:
(f)
(i)
the five (5)-day weighted average market price of IOIPG Shares, as quoted on Bursa Malaysia Securities Berhad (“Bursa
Securities”), immediately preceding the Date of Offer of the option, with a discount of not more than 10%; or
(ii)
the par value of IOIPG Shares of RM1.00 each.
Ranking of the new IOIPG Shares
The new IOIPG Shares to be allotted and issued upon any exercise of options shall upon allotment and issue, rank pari passu in
all respects with the then existing issued and paid-up IOIPG Shares, save and except that the holders of the new IOIPG Shares
so allotted and issued shall not be entitled to any dividends, rights, allotments and/or any other forms of distributions that may be
declared, made or paid to the shareholders of IOIPG, the entitlement date of which is prior to the date of allotment of such new
IOIPG Shares and will be subject to all the provisions of the Articles of Association of the Company relating to transfer, transmission
or otherwise.
(g)
Retention period
The new IOIPG Shares to be allotted and issued pursuant to the exercise of the options under the ESOS will not be subject to any
retention period or restriction on transfers.
ANNUAL REPORT 2015
099
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) (Continued)
(h)
Termination of the ESOS
The ESOS may be terminated by the ESOS Committee at any time before the date of expiry provided that the Company makes an
announcement immediately to Bursa Securities. The announcement shall include:
(i)
the effective date of termination;
(ii)
the number of options exercised or IOIPG Shares vested, if applicable; and
(iii)
the reasons and justification for termination.
Approval or consent of the shareholders of the Company by way of a resolution in a general meeting and written consent of grantees
who have yet to exercise their options and/or vest the unvested IOIPG Shares (if applicable) are not required to effect a termination
of the ESOS.
RESERVES AND PROVISION
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the notes to the
DIRECTORS
The Directors who have held office since the date of the last report are as follows:
Tan Sri Ong Ka Ting
Lee Yeow Seng
Datuk Lee Say Tshin
Tan Sri Ong Ka Ting who retires in accordance with Article 87 of the Company’s Articles of Association at the forthcoming Annual General
Meeting (“AGM”), has expressed his intention of not seeking re-election as Director at the AGM.
In accordance with Article 87 of the Company’s Articles of Association, Datuk Dr Tan Kim Heung retires by rotation at the AGM and being
eligible, offer himself for re-election.
Tan Sri Dato’ Lee Shin Cheng and Datuk Tan Kim Leong @ Tan Chong Min who have attained the age of seventy, retire in accordance with
Section 129(2) of the Companies Act, 1965 in Malaysia at the AGM. The Directors recommend that they be re-appointed in accordance
with Section 129(6) of the said Act and to hold office until the conclusion of the next AGM of the Company.
100
ANNUAL REPORT 2015
DIRECTORS’ INTERESTS
The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares of the Company and of its
related corporations during the financial year ended 30 June 2015 as recorded in the Register of Directors’ Shareholdings kept by the
Company under Section 134 of the Companies Act, 1965 in Malaysia are as follows:
As at 1 July 2014
Allotted*
Acquired/
Transferred^
Disposed
As at
30 June 2015
Direct Interests
Lee Yeow Seng
33,904,100
1,794,600
4,180,000
63,000
11,000,000
5,663,766
315,766
730,000
10,500
1,855,900
1,589,819,382
1,539,207,157
1,539,255,657
4,032
275,899,223
267,323,467
267,338,567
672
–
100,000
200,000
–
10,000,000^
–
–
–
(63,000)
–
39,567,866
2,210,366
5,110,000
10,500
22,855,900
–
–
–
–
1,939,829,705
1,880,341,724
1,880,646,824
67,704
Indirect Interests
Lee Yeow Seng
74,111,100 73,811,100
74,052,600
63,000
Notes:
*
Allotment of shares pursuant to rights issue.
^
Approved transfer of shares from immediate family member.
By virtue of Tan Sri Dato’ Lee Shin Cheng, Mr Lee Yeow Seng and Dato’ Lee Yeow Chor’s interests in the ordinary shares of the Company,
they are also deemed to be interested in the shares of all the subsidiaries of the Company to the extent that the Company has an interest.
The other Directors, Tan Sri Ong Ka Ting and Datuk Lee Say Tshin holding office at the end of the financial year did not have any interest
in the ordinary shares of the Company or its related corporations during the financial year.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the Directors of the Company has received or become entitled to receive any benefit
(other than the benefits as disclosed in Note 37 to the financial statements) by reason of a contract made by the Company or a related
corporation with the Director, or with a firm of which the Director is a member, or with a company in which the Director has a substantial
financial interest except for any benefits which may be deemed to have arisen by virtue of the significant related party transactions as
disclosed in Note 37 to the financial statements.
During and at the end of the financial year, no arrangement subsisted to which the Company is a party, with the object or objects of
enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any
other body corporate.
ANNUAL REPORT 2015
101
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
Before the statements of profit or loss, statements of comprehensive income and statements of financial position of the Group and of the
Company were made out, the Directors took reasonable steps:
(a)
to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful
debts, and had satisfied themselves that all known bad debts had been written off and that adequate provision had been made for
doubtful debts; and
(b)
to ensure that any current assets, other than debts, which were unlikely to realise their book values in the ordinary course of
business of the Group and of the Company have been written down to an amount which they might be expected so to realise.
As at the date of this report, the Directors are not aware of any circumstances:
(a)
which would render the amounts written off for bad debts or the amount of the provision for doubtful debts in the financial statements
of the Group and of the Company inadequate to any substantial extent;
(b)
which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading;
and
(c)
which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate.
As at the date of this report, there does not exist:
(a)
any charge on the assets of the Group or of the Company that has arisen since the end of the financial year which secures the
liabilities of any other person; and
(b)
any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent or other liability has become enforceable, or is likely to become enforceable within the period of twelve (12) months after the
end of the financial year, which in the opinion of the Directors, will or may substantially affect the ability of the Group or of the Company to
meet their obligations as and when they fall due.
OTHER STATUTORY INFORMATION
As at the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial
statements of the Group and of the Company that would render any amount stated in the financial statements misleading.
In the opinion of the Directors:
(a)
the results of the operations of the Group and of the Company for the financial year were not substantially affected by any item,
transaction or event of a material and unusual nature.
(b)
no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the
date of this report which is likely to affect substantially the results of operations of the Group and of the Company for the financial
year in which this report is made.
102
ANNUAL REPORT 2015
DIFFERENT FINANCIAL YEAR END OF SUBSIDIARIES
Due to local requirements, two (2) indirect subsidiaries of the Company, IOI (Xiamen) Properties Co. Ltd. and Xiamen Double Prosperous
Real Estate Development Co. Ltd. are adopting 31 December financial year end, which do not coincide with that of the Company. The
Directors of the Company have been granted approvals under Section 168(3) of the Companies Act, 1965 in Malaysia by the Companies
Commission of Malaysia for the aforementioned subsidiaries to have different financial year end from that of the Company for the financial
year ended 30 June 2015.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
Significant events during the financial year are disclosed in Note 41 to the financial statements.
SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD
There are no significant events subsequent to the end of the reporting period.
AUDIT AND RISK MANAGEMENT COMMITTEE
The Directors who serve as members of the Audit and Risk Management Committee are as follows:
Datuk Lee Say Tshin
NOMINATING AND REMUNERATION COMMITTEE
The Directors who serve as members of the Nominating and Remuneration Committee are as follows:
Tan Sri Ong Ka Ting
ESOS COMMITTEE
The Directors who serve as members of the ESOS Committee are as follows:
Lee Yeow Seng
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of Board in accordance with a resolution of the Directors:
Director
Lee Yeow Seng
Director
Putrajaya
1 September 2015
ANNUAL REPORT 2015
103
104
ANNUAL REPORT 2015
STATEMENTS OF PROFIT OR LOSS
For The Financial Year Ended 30 June 2015
In RM’000
Group
Company
2015
2014
2015
2014
7
8
1,906,491
(926,142)
1,454,445
(660,869)
460,130
–
20,734
–
Gross profit
Other operating income
Marketing and selling expenses
Administration expenses
Other operating expenses
980,349
356,379
(84,858)
(162,141)
(83,883)
793,576
533,422
(67,781)
(115,298)
(75,159)
460,130
2,592
(24)
(4,748)
(588)
20,734
42
(2)
(5,219)
(218)
Operating profit
9
Interest income
10
Interest expense
11
1,005,846
50,691
–
1,716
72,073
1,068,760
36,174
(48,668)
3,494
60,644
457,362
22,081
(7,659)
–
–
15,337
9,170
(5,693)
–
–
Taxation
12
1,130,326
(229,729)
1,120,404
(216,662)
471,784
(1,167)
18,814
(702)
900,597
903,742
470,617
18,112
Profit attributable to:
890,702
9,895
889,918
13,824
470,617
–
18,112
–
900,597
903,742
470,617
18,112
25.83
25.83
31.88
31.88
Revenue
Cost of sales
Earnings per ordinary share attributable
to owners of the parent
Basic earnings per share (sen)
Diluted earnings per share (sen)
Note
13
13
The notes on pages 114 to 217 form an integral part of the financial statements.
ANNUAL REPORT 2015
105
STATEMENTS OF
COMPREHENSIVE INCOME
In RM’000
Group
Company
2015
2014
2015
2014
900,597
903,742
470,617
18,112
597,455
34,543
–
–
Other comprehensive income for the financial year,
net of tax
597,455
34,543
–
–
Total comprehensive income for the financial year
1,498,052
938,285
470,617
18,112
Total comprehensive income attributable to:
1,482,225
15,827
924,328
13,957
470,617
–
18,112
–
1,498,052
938,285
470,617
18,112
Other comprehensive income that may be reclassified
subsequently to profit or loss, net of tax
Exchange differences on translation of foreign operations
106
ANNUAL REPORT 2015
STATEMENTS OF FINANCIAL POSITION
As At 30 June 2015
In RM’000
Group
Note
Company
2015
2014
2015
2014
1,120,101
108,401
2,894,104
3,388,152
11,472
–
95,788
4,155,262
–
97,770
1,047,300
94,502
3,011,711
2,765,489
11,472
–
64,517
3,855,746
–
72,896
–
–
–
–
–
14,534,989
1,050
–
498,306
–
–
–
–
–
–
14,165,961
1,050
–
590,695
171
11,871,050
10,923,633
15,034,345
14,757,877
Current Assets
Property development costs
24
Inventories
25
Trade and other receivables
26
Amounts due from subsidiaries
20
Current tax assets
Other investments
27
Short term funds
28
Deposits with financial institutions
29
Cash and bank balances
30
3,355,681
302,444
906,520
–
94,164
–
706,481
762,105
441,053
2,116,687
191,519
492,044
–
42,311
340,629
225,079
261,957
131,216
–
–
146
139,137
–
–
706,481
19,000
997
–
–
2,258
13
–
–
–
–
52
6,568,448
3,801,442
865,761
2,323
18,439,498
14,725,075
15,900,106
14,760,200
ASSETS
Non-Current Assets
Prepaid lease payments
Investment properties
Goodwill on consolidation
Interests in subsidiaries
Investments in associates
Amount due from a subsidiary
Deferred tax assets
TOTAL ASSETS
15
16
17
18
19
20
21
22
20
23
In RM’000
Group
Note
ANNUAL REPORT 2015
107
Company
2015
2014
2015
2014
Equity Attributable to Owners of The Parent
Share capital
31
Reserves
32
Retained earnings
Reorganisation debit balance
3,778,851
12,599,541
5,488,957
(8,440,152)
3,239,015
11,546,667
4,857,000
(8,440,152)
3,778,851
11,773,492
301,205
–
3,239,015
11,383,821
18,029
–
13,427,197
110,957
11,202,530
98,677
15,853,548
–
14,640,865
–
Total equity
13,538,154
11,301,207
15,853,548
14,640,865
2,238,650
104,896
–
317,542
1,307,230
95,305
–
205,411
–
–
–
–
–
–
98,180
–
2,661,088
1,607,946
–
98,180
Current Liabilities
Borrowings
33
Trade and other payables
35
Amounts due to subsidiaries
20
Current tax liabilities
560,360
1,661,939
–
17,957
750,000
1,040,865
–
25,057
–
2,852
42,976
730
–
742
19,726
687
2,240,256
1,815,922
46,558
21,155
Total liabilities
4,901,344
3,423,868
46,558
119,335
TOTAL EQUITY AND LIABILITIES
18,439,498
14,725,075
15,900,106
14,760,200
EQUITY AND LIABILITIES
LIABILITIES
Non-Current Liabilities
Borrowings
Amounts due to non-controlling interests
Amount due to a subsidiary
Deferred tax liabilities
33
34
20
23
108
ANNUAL REPORT 2015
STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Total
Foreign
Re- attributable
currency organisation to owners
Non
Share
Share
Treasury translation
debit
Retained
of the controlling
In RM’000
capital
premium
share
reserve
balance
earnings
parent
interests
Total
equity
Group
As at 1 July 2014
–
162,846
(8,440,152)
Exchange differences on translation
of foreign operations, net of tax
–
–
–
–
–
890,702
890,702
9,895
900,597
–
–
–
591,523
–
–
591,523
5,932
597,455
Total comprehensive income
–
–
–
591,523
–
890,702
1,482,225
15,827
1,498,052
539,836
–
485,852
(900)
–
–
–
–
–
–
–
–
1,025,688
(900)
–
–
1,025,688
(900)
–
–
–
–
–
–
–
–
–
–
376
(259,121)
376
(259,121)
(547)
–
(171)
(259,121)
–
–
–
–
–
–
–
(3,000)
(3,000)
–
–
(23,601)
–
–
–
(23,601)
–
(23,601)
3,778,851 11,868,773
(23,601)
754,369
(8,440,152)
Transactions with owners
Issuance of ordinary shares
Share issuance costs
Changes in equity interests
in subsidiaries
Dividend paid (Note 14)
Dividends paid to non-controlling
interests
Repurchase of treasury shares
(Note 32.1)
As at 30 June 2015
3,239,015 11,383,821
4,857,000 11,202,530
5,488,957 13,427,197
98,677 11,301,207
110,957 13,538,154
ANNUAL REPORT 2015
109
Total
Foreign
Re- attributable
currency organisation to owners
Non
Share
Share
Treasury translation
debit
Retained
of the controlling
In RM’000
capital
premium
share
reserve
balance
earnings
parent
interests
Total
equity
Group
As at 1 July 2013
406,393
881,345
41,090
128,436
–
4,120,615
5,577,879
100,020
5,677,899
Exchange differences on translation of
foreign operations, net of tax
–
–
–
–
–
889,918
889,918
13,824
903,742
–
–
–
34,410
–
–
34,410
133
34,543
–
–
–
34,410
–
889,918
924,328
13,957
938,285
3,239,015 11,383,821
–
–
–
– 14,622,836
Issuance of redeemable preference
shares to non-controlling interests
Acquisitions of subsidiaries
(Note 20.1(A))
Changes in equity interests
in subsidiaries
Dividends paid to non-controlling
interests
As at 30 June 2014
– 14,622,836
–
–
–
–
–
–
–
53,848
53,848
(406,393)
(881,345)
(41,090)
–
(8,440,152)
–
(9,768,980)
–
(9,768,980)
–
–
–
–
–
–
–
–
–
–
(138,537)
(14,996)
(138,537)
(14,996)
(64,745)
–
(203,282)
(14,996)
–
–
–
–
–
–
–
(4,403)
(4,403)
3,239,015 11,383,821
–
162,846
(8,440,152)
4,857,000 11,202,530
98,677 11,301,207
110
ANNUAL REPORT 2015
STATEMENTS OF CHANGES IN EQUITY (Cont’d)
Share
Share
Treasury
In RM’000
capital
premium
share
Retained
earnings/
(Accumulated
losses)
Total
equity
Company
As at 1 July 2014
3,239,015
11,383,821
–
18,029
14,640,865
–
–
–
470,617
470,617
–
–
–
470,617
470,617
485,852
–
–
(900)
–
–
(259,121)
–
(23,601)
–
1,025,688
(900)
(259,121)
(23,601)
Shares issuance costs
Repurchase of treasury shares (Note 32.1)
As at 30 June 2015
As at 1 July 2013*
539,836
–
–
–
3,778,851
11,868,773
(23,601)
229,525
15,853,548
–
–
–
(83)
(83)
–
–
–
18,112
18,112
–
–
–
18,112
18,112
3,239,015
11,383,821
–
–
14,622,836
As at 30 June 2014
3,239,015
11,383,821
–
18,029
14,640,865
* 2 ordinary shares of RM1.00 each were issued on the date of incorporation.
ANNUAL REPORT 2015
111
STATEMENTS OF CASH FLOWS
In RM’000
Group
Note
Company
2015
2014
2015
2014
1,130,326
1,120,404
471,784
18,814
4,546
130
14,198
757
48,668
58
(13)
(305,307)
(21)
–
–
–
–
–
–
–
–
7,659
–
(460,130)
–
–
–
–
31
–
–
–
–
–
5,693
–
(20,734)
–
–
–
–
–
–
(197,966)
–
(245)
(1,399)
(1,042)
(36,174)
(60,644)
(3,494)
–
–
–
–
–
(22,081)
–
–
–
–
–
–
–
(9,170)
–
–
(23)
Cash Flows From Operating Activities
Adjustments for:
Amortisation of prepaid lease payment
16
2,696
Bad debts written off
230
Depreciation of property, plant and equipment
15
27,444
Impairment losses on receivables
26
88
Interest expense
11
–
Property, plant and equipment written off
15
26
Dividend income
Fair value gain on investment properties
18
(316,586)
Fair value gain on other investments
–
Inventories written off 265
Loss on disposal of land from compulsory acquisition
1,493
Unrealised loss on foreign currency transactions
–
Bad debts recovered
(4)
Gain on:
– bargain purchase for the acquisition of subsidiaries
–
– disposal of investment properties
(508)
– disposal of property, plant and equipment
(1,114)
– disposal of land from compulsory acquisitions
–
Impairment losses on receivables written back
26
(927)
Interest income
10
(50,691)
(72,073)
(1,716)
Unrealised gain on foreign currency transactions
–
Operating profit/(loss) before working capital changes
Increase in property development costs
Decrease in inventories
(Decrease)/Increase in trade and other receivables
Increase in amounts due from former related companies
Increase in amount due from former holding company
Increase in trade and other payables
718,949
(492,986)
100,050
(366,459)
–
–
590,399
582,456
(174,161)
63,070
(12,430)
(25,895)
–
639,821
(2,737)
–
–
2,112
–
–
2,110
(5,420)
–
–
(2,258)
–
(77)
736
Cash generated from/(used in) operations
Tax paid
Tax refunded
549,953
(218,503)
2,812
1,072,861
(224,166)
2,807
1,485
(953)
–
(7,019)
(186)
–
Net cash from/(used in) operating activities
334,262
851,502
532
(7,205)
112
ANNUAL REPORT 2015
STATEMENTS OF CASH FLOWS (Cont’d)
In RM’000
Group
Company
Note
2015
2014
2015
2014
Dividends received
Interest received
Proceeds from:
– compulsory land acquisition
– disposal of other investments
– disposal of property, plant and equipment
– disposal of investment properties
Additional investments in subsidiaries
Redemption of preference shares
Repayments from a joint venture
Additions to:
– property, plant and equipment
– land held for property development
– investment properties
– other investments
Deposit paid for purchase of land
Acquisitions of subsidiaries,
net of cash and cash equivalents
20.1
Advances to subsidiaries
Repayment from subsidiaries
Investment in a joint venture
Advances to joint ventures
Investment in an associate 21
101,515
44,724
9,430
20,495
324,130
22,081
20,734
9,170
5,256
401,237
12,530
2,094
–
–
46,765
8,320
184,299
437
–
–
–
16,701
–
–
–
–
(302,030)
122,017
–
–
–
–
–
(2,500)
–
–
(179,857)
(472,377)
(268,811)
–
(2,774)
(89,349)
(831,326)
(397,358)
(523,847)
(8,500)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(72,935)
(29,555)
62,436
–
–
(2,436)
(35,752)
(1,050)
–
(145,870)
46,089
–
–
–
–
(111,584)
–
–
–
(1,050)
(412,188)
(1,587,500)
66,417
(85,230)
Cash Flows From Investing Activities
Net cash (used in)/from investing activities
In RM’000
Group
ANNUAL REPORT 2015
113
Company
Note
2015
2014
2015
2014
Advances from non-controlling interests
(Repayments to)/Advances from subsidiaries
Additional investments in subsidiaries
Proceeds from issuance of shares to
non-controlling interests
Interest paid
Dividend paid
14
Dividend paid to non-controlling interests
Drawdown of borrowings
Repayment of borrowings
Repurchase of treasury shares
32.1
Proceeds from issuance of right issues Repayments to a former related company
–
–
(171)
5,274
–
(2,682)
–
(74,930)
–
–
98,180
–
–
(90,274)
(259,121)
(3,000)
973,526
(278,532)
(23,601)
1,024,788
–
870
(30,355)
(14,996)
(4,403)
1,543,350
–
–
–
(520,959)
–
(7,659)
(259,121)
–
278,532
(278,532)
(23,601)
1,024,788
–
–
(5,693)
–
–
–
–
–
–
–
Net Cash From Financing Activities
1,343,615
976,099
659,477
92,487
1,265,689
240,101
726,426
52
618,252
25,698
376,738
1,413
52
–
–
–
1,909,639
618,252
726,478
52
Cash Flows From Financing Activities
Net Increase in Cash and
Cash Equivalents
Cash and Cash Equivalents at
Beginning Of Financial Year
Effect of Exchange Rate Changes
Cash and Cash Equivalents
At End of Financial Year
36
114
ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
1.
CORPORATE INFORMATION
The Company was incorporated in Malaysia on 25 February 2013 as a private limited liability company and domiciled in Malaysia.
On 4 June 2013, the Company converted its legal form from a private limited liability company to a public limited liability company.
On 15 January 2014, the ordinary shares of the Company were quoted and listed on the Main Market of Bursa Malaysia Securities
Berhad (“Bursa Malaysia”).
The registered office and principal place of business of the Company is located at Two IOI Square, IOI Resort, 62502 Putrajaya.
The financial statements were authorised for issue in accordance with a resolution by Board of Directors on 1 September 2015.
2.
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.
3.
BASIS OF PREPARATION OF FINANCIAL STATEMENTS
3.1 Basis of Preparation
The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting
Standards (“FRSs”) and the provisions of the Companies Act, 1965 in Malaysia. However, Note 46 to the financial statements
has been prepared in accordance with Guidance on Special Matter No. 1 Determination of Realised and Unrealised Profits or
Losses in the Context of Disclosure Pursuant to Bursa Malaysia’s Listing Requirements, as issued by the Malaysian Institute
of Accountants (“MIA Guidance”) and the Directive of Bursa Malaysia.
3.2 Basis of accounting
The financial statements of the Group and of the Company have been prepared under the historical cost convention except
as otherwise stated in the financial statements.
The preparation of financial statements in conformity with FRSs requires the Directors to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and contingent
liabilities. In addition, the Directors are also required to exercise their judgement in the process of applying the accounting
policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 5 to the financial statements.
Although these estimates and assumptions are based on the Directors’ best knowledge of events and actions, actual results
could differ from those estimates.
3.3 Presentation currency
The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency and all
financial information presented in RM are rounded to the nearest thousand (RM’000), except where otherwise stated.
4.
ANNUAL REPORT 2015
115
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs
4.1 New FRSs adopted during the current financial year
The Group and the Company adopted the following Standards of the FRS Framework that were issued by the Malaysian
Accounting Standards Board (“MASB”) during the current financial year.
Title
Effective Date
Amendments to FRS 10 Consolidated Financial Statements: Investment Entities
1 January 2014
Amendments to FRS 12 Disclosure of Interests in Other Entities: Investment Entities
1 January 2014
Amendments to FRS 127 Separate Financial Statements (2011): Investment Entities 1 January 2014
Amendments to FRS 132 Offsetting Financial Assets and Financial Liabilities 1 January 2014
Amendments to FRS 136 Recoverable Amount Disclosures for Non-Financial Assets
1 January 2014
Amendments to FRS 139 Novation of Derivatives and Continuation of Hedge- Accounting
1 January 2014
IC Interpretation 12 Levies
1 January 2014
Amendments to FRS 119 Defined Benefit Plans: Employee Contributions
1 July 2014
Amendments to FRSs Annual Improvements to FRSs 2010-2012 Cycle
1 July 2014
Amendments to FRSs Annual Improvements to FRSs 2011-2013 Cycle
1 July 2014
There is no material effect upon the adoption of the above amendments and IC Interpretations during the current financial year.
4.2 New FRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2016
The following are standards of the FRS Framework that have been issued by the MASB but have not yet been adopted by
the Group and the Company.
Title
Effective Date
FRS 14 Regulatory Deferral Accounts 1 January 2016
Amendments to FRS 10 and FRS 128 Sale or Contribution of Assets between an Investors
and its Associate or Joint Ventures
1 January 2016
Amendments to FRS 10, FRS 12 and FRS 127 Investment Entities
1 January 2016
Amendments to FRS 11 Accounting for Acquisitions of Interests in Joint Operations 1 January 2016
Amendments to FRS 116 and FRS 138 Clarification of Acceptable Methods of Depreciation
and Amortisation 1 January 2016
Amendments to FRS 127 Equity Method in Separate Financial Statements
1 January 2016
Amendments to FRSs Annual Improvements to FRSs 2012 – 2014 Cycle
1 January 2016
Amendments to FRS 101 Disclosure Initiative
1 January 2016
FRS 9 Financial Instruments
1 January 2018
The Group is in the process of assessing the impact of implementing these accounting standards and amendments as the
effects would only be observable in future financial years.
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NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
4.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (Continued)
4.3 New Malaysian Financial Reporting Standards (“MFRSs”) that have been issued, but have yet to be adopted
during the current financial year
Based on the MASB announcement on 2 September 2014, the effective date for the adoption of MFRS Framework by
transitioning entities (i.e. entities affected by MFRS 141 Agriculture and/or IC Interpretation 15 Agreements for Construction of
Real Estate) was deferred from annual periods beginning on or after 1 January 2015 to annual periods beginning on or after
1 January 2017.
Accordingly, as a transitioning entity as defined by the MASB, the Group has elected to continue to apply the FRS Framework
up till its financial year ending 30 June 2017 and will adopt the MFRS Framework that were issued by the MASB before or
during the financial year ending 30 June 2018. In adopting the new framework, the Group will be applying MFRS 1 First-time
adoption of MFRS.
5.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
5.1 Changes in estimates
Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The Directors are of the opinion that there are no material
changes in estimates at the end of the reporting period other than that as disclosed in Note 18 to the financial statements.
5.2 Critical judgements made in applying accounting policies
There are no significant judgements made by management in the process of applying the Group’s accounting policies that
have a significant effect on the amounts recognised in the financial statements.
5.3 Key sources of estimation uncertainty
The following are key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year.
5.3.1Property development
The Group recognises property development revenue and expenses in profit or loss by using the “percentage of
completion” method. The percentage of completion is determined by the proportion of property development costs
incurred for work performed up to the reporting period over the estimated total property development costs.
Significant judgements are required in determining the percentage of completion, the extent of the property development
costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the
development projects. In making the judgements, the Group evaluates based on past experience and by relying on the
work of specialists.
5.3.2Income taxes
The Group is subject to income taxes of different jurisdictions. Significant judgement is required in determining the
estimated taxable income, capital allowances and deductibility of certain expenses based on the interpretation of the
tax laws and legislations during the estimation of the provision for income taxes. The Group recognised liabilities for tax
based on estimates of assessment of the tax liability due. Where the final tax outcome is different from the amounts
that were initially recorded, such differences would impact the income tax and deferred income tax provisions, where
applicable, in the period in which such determination is made.
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SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
5.3 Key sources of estimation uncertainty (Continued)
5.3.3Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses and unabsorbed capital
allowances to the extent that it is probable that taxable profit would be available against which the unutilised tax losses
and unabsorbed capital allowances can be utilised. Significant management judgement is required to determine the
amount of deferred tax assets that could be recognised, based upon the likely timing and level of future taxable profits.
5.3.4Depreciation of property, plant and equipment
The cost of property, plant and equipment is depreciated on a straight-line basis over the assets’ useful lives. The
estimated useful lives applied by the Group as disclosed in Note 6.3 to the financial statements reflect the Directors’
estimate of the period that the Group expects to derive future economic benefits from the use of the Group’s property,
plant and equipment. These common life expectancies are applied in the business segment of the Group. Changes in
the expected level of usage and other commercial factors could impact the economic useful lives or principal annual
rates of depreciation and the residual values of these assets and therefore, depreciation charges could be revised.
5.3.5Fair value measurement
The fair value measurement of the financial and non-financial assets and liabilities of the Group utilises market observable
inputs and data. Inputs used in determining fair value measurements are categorised into different levels based on how
observable the inputs used in the valuation technique utilised are:
(i)
Level 1: Quoted prices in active markets for identical items (unadjusted);
(ii)
Level 2: Observable direct or indirect inputs other than Level 1 inputs; and
(iii)
Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used in the fair value
measurement of the item. Transfers of items between levels are recognised in the period they occur.
The Group measures investment property at fair value as disclosed in Note 6.7 to the financial statements. The Group
engages professional valuers to perform valuations on investment properties as disclosed separately in Note 18 to the
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6.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements by the
Group’s entities, unless otherwise stated.
6.1 Basis of consolidation
6.1.1Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries.
Subsidiaries are all entities (including structured entities) over which the Group has control. Control is achieved when the
Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:
(a)
Power over the investee;
(b)
Exposure or rights, to variable returns from its involvement with the investee; and
(c)
The ability to use its power over the investee to affect its returns.
If the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
(a)
The contractual arrangement with the other investee;
(b)
Rights arising from other contractual agreements; and
(c)
The voting rights of the Group and potential voting rights.
Intragroup balances, transactions, income and expenses are eliminated on consolidation. Unrealised gains arising from
transactions with associates and joint ventures are eliminated against the investment to the extent of the interest of the
Group in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that
there is no impairment.
The financial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using
consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency
with the policies adopted by the other entities in the Group.
Non-controlling interests represent equity in subsidiaries that are not attributable, directly or indirectly, to owners of the
parent, and is presented separately in the consolidated statement of profit or loss and other comprehensive income
and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the
Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent
and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Subsidiaries are consolidated from the date on which control is transferred
to the Group up to the effective date on which control ceases, as appropriate. Assets, liabilities, income and expenses
of a subsidiary acquired or disposed of during the financial year are included in the statement of profit or loss and other
comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.
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SIGNIFICANT ACCOUNTING POLICIES (Continued)
6.1 Basis of consolidation (Continued)
6.1.1Subsidiaries (Continued)
Disposal of subsidiaries
If the Group loses control of a subsidiary as a result of a transaction, event or other circumstances, the Group would
derecognise all assets, liabilities and non-controlling interests at their carrying amount and to recognise the fair value of
the consideration received. The profit or loss on disposal is calculated as the difference between:
(i)
The aggregate of the fair value of the consideration received and the fair value of any retained interest; and
(ii)
The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interests.
Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e.
reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if
the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former subsidiary at
the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS
139 Financial Instruments: Recognition and Measurement or, where applicable, the cost on initial recognition of an
investment in associate or joint venture.
Changes in ownership interests in subsidiaries without change of control
Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as
equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are
adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which
the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity
and attributed to owners of the parent.
Investment in subsidiaries in separate financial statements
An investment in subsidiary, which is eliminated on consolidation, is stated in the separate financial statements of the
Company at cost.
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6.
6.1.2Business combinations
Business combinations, including those under common control, are accounted for by applying the acquisition method
of accounting.
Under the acquisition method of accounting, any excess of:
(i)
the sum of the consideration transferred, the amount of non-controlling interest in the acquiree (if any), and the fair
value of the Group’s previously held equity interest in the acquiree (if any),
over
(ii)
the net fair value of the acquiree’s identifiable assets and liabilities,
is recorded as goodwill. The accounting policy for goodwill is set out in Note 6.11 to the financial statements. In
instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit
or loss, after reassessment, on the acquisition date.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Any contingent
consideration payable is recognised at fair value at the acquisition date. Measurement period adjustments to contingent
consideration are dealt with as follows:
(i)
If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within
equity; and
(ii)
Subsequent changes to contingent consideration classified as an asset or liability that is a financial instrument
within the scope of FRS 139 are recognised either in profit or loss or in statements of comprehensive income in
accordance with FRS 139. All other subsequent changes are recognised in profit or loss.
The Group recognises any non-controlling interests in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable
net assets. Subsequent to initial recognition, the carrying amount of non-controlling interests is the amount of those
interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.
In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair
value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.
Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured at their
fair values at the acquisition date, except that:
(i)
Deferred tax assets or liabilities and liabilities or assets related to employees benefit arrangements are recognised
and measured in accordance with FRS 112 Income Taxes and FRS 119 Employee Benefits respectively;
(ii)
Liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement
by the Group of an acquiree’s share-based payment transactions are measured in accordance with FRS 2 Sharebased Payment at the acquisition date; and
(iii)
Assets (or disposal groups) that are classified as held for sale in accordance with FRS 5 Non-current Assets
Held for Sale and Discontinued Operations are measured at fair value less costs to sell in accordance with that
Standard.
Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services
are received.
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6.1.3Associates
Associates are entities in which the Group has significant influence and that is neither subsidiaries nor interest in joint
ventures. Significant influence is the power to participate in the financial and operating policy decisions of the investees
but is neither control nor joint control over those policies.
In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses,
if any.
Investments in associates are accounted for in the consolidated financial statements using the equity method of
accounting based on the financial statements of the associates concerned, from the date significant influence
commences until the date the Group ceases to have significant influence over the associates. The financial statements
of the associates are prepared for the same reporting period as that of the Group, using consistent accounting policies.
Where necessary, accounting policies of associates are changed to ensure consistency with the policies adopted by the
Group. The investment in associates in the consolidated statement of financial position are initially recognised at cost
and adjusted thereafter for the post acquisition changes in the Group’s share of net assets of the investments.
The interest in associates is the carrying amount of the investments in associates under the equity method together with
any long-term interests that, in substance, form part of the Group’s net interest in the associates.
The excess of the cost of investment over the Group’s share of the net fair value of net assets of the associates’
identifiable assets, liabilities and contingent liabilities at the date of acquisition represents goodwill. Goodwill relating to
the associate is included in the carrying amount of the investment and is not amortised. The excess of the Group’s share
of the fair value of the net assets of the associates’ identifiable assets, liabilities and contingent liabilities over the cost of
investment at the date of acquisition is recognised in consolidated profit or loss.
The Group’s share of results of the associates during the financial year is recognised in the consolidated profit or loss,
and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive
income, after adjustments to align the accounting policies with those of the Group, from the date that significant
influence commences until the date that significant influence ceases. Adjustments to the carrying amount may also be
necessary for changes in the Group’s proportionate interest in the associate arising from changes in the associate’s
equity that have not been recognised in the associate’s profit or loss or other comprehensive income. The Group’s share
of those changes is recognised directly in equity of the Group. Distributions received from the associates reduce the
carrying amount of the investments.
When the Group’s share of losses exceeds its interest in the associate, the carrying amount of that interest is reduced
to nil and the Group does not recognise further losses unless it has incurred legal or constructive obligations or made
payments on its behalf.
When the Group ceases to have significant influence over an associate, any retained interest in the former associate
at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying
amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest
disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised
in the profit or loss.
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6.
6.1.3Associates (Continued)
When the interest of the Group in an associate decreases but does not result in a loss of significant influence, any
retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss.
Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the
profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets
or liabilities.
6.1.4Joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control. The parties are bound by
a contractual arrangement which gives two or more parties joint control of the arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control.
A joint arrangement is either a joint operation or a joint venture.
(i)
Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the assets, and obligations for the liabilities, relating to the arrangement. These parties are known as joint
operators.
The Group and the Company recognise in relation to its interest in a joint operation:
(a)
its assets, including its share of any assets held jointly;
(b)
its liabilities, including its share of any liabilities incurred jointly;
(c)
its revenue from the sale of its share of the output arising from the joint operation;
(d)
its share of the revenue from the sale of the output by the joint operation; and
(e)
its expenses, including its share of any expenses incurred jointly.
When the Group transacts with a joint operation (such as a sale or contribution of assets), the Group is considered
to be conducting the transaction with the other parties to the joint operation, as such the gains and losses
resulting from the transactions are recognised only to the extent of interests of other parties in the joint operation.
When the Group transacts with a joint operation (such as a purchase of assets), the Group does not recognise its
share of the gains and losses until it resells those assets to a third party.
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6.1.4Joint arrangements (Continued)
(ii)
Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the arrangement. These parties are known as joint venturers.
In the separate financial statements of the Company, an investment in a joint venture is stated at cost.
Any premium paid for an investment in a joint venture above the fair value of the share of the identifiable assets,
liabilities and contingent liabilities acquired of the Group is capitalised and included in the carrying amount of the
investment in joint venture. Where there is an objective evidence that the investment in a joint venture has been
impaired, the carrying amount of the investment is tested for impairment in accordance with FRS 136 Impairment
of Assets as a single asset, by comparing its recoverable amount with its carrying amount.
The Group recognises its interest in a joint venture as an investment and accounts for that investment using the
equity method in accordance with FRS 128 Investments in Associates and Joint Ventures based on the financial
statements of the joint venture.
The financial statements of the joint venture are prepared for the same reporting period as that of the Group,
using consistent accounting policies. Where necessary, accounting policies of joint venture are changed to ensure
consistency with the policies adopted by the Group.
The Group determines the type of joint arrangement in which it is involved, based on the rights and obligations
of the parties to the arrangement. In assessing the classification of interests in joint arrangements, the Group
considers:
(i) The structure of the joint arrangement;
(ii) The legal form of joint arrangements structured through a separate vehicle;
(iii) The contractual terms of the joint arrangement agreement; and
(iv) Any other facts and circumstances.
When there are changes in the facts and circumstances change, the Group reassesses whether the type of joint
arrangement in which it is involved has changed.
6.1.5Transactions eliminated on consolidation
Intragroup transactions and balances and the resulting unrealised gains are eliminated on consolidation. Unrealised
losses resulting from intragroup transactions are also eliminated.
Unrealised profits arising on transactions between the Group and its associates and joint ventures, which are included
in the carrying amount of the related assets and liabilities are eliminated partially to the extent of the Group’s interests in
the associates and joint ventures. Unrealised losses on such transactions are also eliminated partially.
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6.
6.2 Foreign currency
6.2.1Functional and presentation currency
The separate financial statements of each entity of the Group are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented
in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.
6.2.2Foreign currency translation and balances
Transactions in foreign currencies are converted into the relevant functional currency at rates of exchange ruling at the
transaction dates. Monetary assets and liabilities in foreign currencies at the end of each reporting period are translated
into the relevant functional currency at rates of exchange ruling at that date. All exchange differences arising from the
settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities
are included in profit or loss in the period in which they arise. Non-monetary items initially denominated in foreign
currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition, and
non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values
were determined for presentation currency purposes.
6.2.3Foreign operations
Financial statements of foreign operations are translated at the end of the reporting period exchange rates with respect
to their assets and liabilities, and at exchange rates at the dates of the transactions with respect to the statement of
profit or loss and statement of comprehensive income. All resulting translation differences are recognised as a separate
component of equity.
In the consolidated financial statements, exchange differences arising from the translation of net investment in foreign
operations are taken to equity. When a foreign operation is partially disposed off or sold, exchange differences that were
recorded in equity are recognised in profit or loss as part of the gain or loss on disposal.
Exchange differences arising on a monetary item that forms part of the net investment of the Company in a foreign
operation shall be recognised in profit or loss in the separate financial statements of the Company or the foreign
operation, as appropriate. In the consolidated financial statements, such exchange differences shall be recognised
initially as a separate component of equity and recognised in profit or loss upon disposal of the net investment. When
a foreign operation is partially disposed off or sold, exchange differences that were recorded in equity are recognised in
profit or loss as part of the gain or loss on disposal.
Goodwill and fair value adjustments to the assets and liabilities arising from the acquisition of a foreign operation are
treated as assets and liabilities of the acquired entity and translated at the exchange rate ruling at the end of each
reporting period.
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6.3 Property, plant and equipment and depreciation
All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable
to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other
costs directly attributable to bringing the assets to working condition for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
the cost is incurred and it is probable that future economic benefits associated with the cost would flow to the Group and the
cost of the asset could be measured reliably. The carrying amount of parts that are replaced is derecognised. The cost of the
day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item and
which have different useful lives, is depreciated separately.
After initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses.
Freehold land has an unlimited useful life and therefore is not depreciated.
Construction-in-progress is also not depreciated until such time when the asset is available for use.
Other property, plant and equipment are depreciated on the straight-line method so as to write off the cost of the assets over
their estimated useful lives. The principal annual depreciation rates are as follows:
Golf course development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
2%
2% – 10%
4% – 20%
10% – 20%
5% – 33%
Plantation development expenditure is capitalised under property, plant and equipment. New planting expenditure, which
represents the total cost incurred from land clearing to the point of harvesting, is capitalised and is not amortised. Replanting
expenditure, which represents cost incurred in replanting old planted areas, is charged to profit or loss in the financial year it
is incurred.
At the end of each reporting period, the carrying amount of an item of property, plant and equipment is assessed for impairment
when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write-down is made
if the carrying amount exceeds the recoverable amount (see Note 6.12 to the financial statements on impairment of nonfinancial assets).
The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the
amount, method and period of depreciation are consistent with previous estimates and expected pattern of consumption of
the future economic benefits embodied in the items of property, plant and equipment. The estimates of the residual values,
useful lives and the related depreciation charges for the property, plant and equipment are determined based on commercial
and production factors. The Group anticipates that the residual values of its property, plant and equipment will be insignificant.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic
benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying
amount is recognised in profit or loss.
When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and
reclassified as investment property. Any gain arising on remeasurement, net of deferred tax is recognised directly in equity. Any
loss is recognised immediately in profit or loss.
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6.
6.4 Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset is capitalised as part of the cost of the asset until when substantially all the activities necessary to prepare the asset
for its intended use or sale are complete, after which such expense is charged to profit or loss. A qualifying asset is an asset
that necessarily takes a substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing costs
is suspended during the extended periods in which active development is interrupted.
The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the borrowing during the
period less any investment income on the temporary investment of the borrowing.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
6.5 Leases
6.5.1Finance lease
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to
ownership. Assets acquired under finance leases are recognised initially at amounts equal to the fair value of the leased
assets or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Any
initial direct costs incurred by the Group are added to the amount recognised as an asset. The assets are capitalised as
property, plant and equipment and the corresponding obligations, net of finance charges, are included in borrowings.
The property, plant and equipment capitalised are depreciated on the same basis as owned assets as disclosed in Note
6.3 to the financial statements.
The minimum lease payments are allocated between finance charges and the reduction of the outstanding liability. The
finance charges are recognised in profit or loss over the period of the lease term so as to produce a constant periodic
rate of interest on the remaining finance lease obligations.
6.5.2Operating lease
•
The Group as lessee
Leases of assets under which all the risks and rewards incidental to ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are charged to profit or loss on a straightline basis over the period of the lease.
•
The Group as lessor
When assets are leased out under an operating lease, the asset is included in the statement of financial position
based on the nature of the asset. Lease income is recognised over the term of the lease on a straight-line basis.
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6.5 Leases (Continued)
6.5.3Lease of land and building
Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets.
The land and buildings elements of a lease are considered separately for the purpose of lease classification. All leases
that do not transfer substantially all the risks and the rewards are classified as operating leases other than the following:
•
property held under operating leases that would otherwise meet the definition of an investment property is
classified as an investment property on a property-by-property basis and, if classified as investment property, is
accounted for as if it is held under a finance lease; and
•
land held for own use under an operating lease, the fair value of which cannot be measured separately from the
fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance
lease, unless the building is also clearly held under an operating lease.
The minimum lease payments including lump-sum upfront payments made to acquire the interest in the land and
building are allocated between land and building elements in proportion to the relative fair values of the leasehold
interests in the land element and the buildings element at the inception of the lease.
The lump-sum upfront lease payments made represent prepaid lease payments and are amortised over the lease term
on a straight-line basis, except for leasehold land that is classified as an investment property or an asset held under
property development.
For leases of land and buildings in which the amount that would initially be recognised for the land element is immaterial,
the land and buildings are treated as a single unit for the purpose of lease classification and is accordingly classified as
a finance or operating lease. In such a case, the economic life of the building is regarded as the economic life of the
entire leased asset.
6.6 Property development activities
6.6.1Land held for property development
Land held for property development consists of land where no significant development activities have been carried
out or where development activities are not expected to be completed within the normal operating cycle. Such land is
classified as non-current assets and is stated at cost less accumulated impairment losses, if any.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties,
commissions, conversion fees and other relevant levies.
Land held for property development is reclassified as property development costs at the point when development
activities have commenced and where it can be demonstrated that the development activities can be completed within
the normal operating cycle.
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6.
6.6 Property development activities (Continued)
6.6.2Property development costs
Property development costs comprise costs associated with the acquisition of land and all costs that are directly
attributable to the development activities or that can be allocated on a reasonable basis to such activities. They comprise
the cost of land under development, construction costs and other related development costs common to the whole
project including professional fees, stamp duties, commissions, conversion fees, and other relevant levies.
Property development costs not recognised as an expense are recognised as an asset and are measured at the lower
of cost and net realisable value.
The excess of revenue recognised in profit or loss exceeds progress billings to purchasers, the balance is classified as
accrued billings under trade and other receivables. When progress billings to purchasers exceed revenue recognised in
profit or loss, the balance is classified as progress billings under trade and other payables.
6.7 Investment properties
Investment properties are properties, which are held either to earn rental yields or for capital appreciation or for both and
are not substantially occupied by the Group. Investment properties also include properties that are being constructed or
developed for future use as investment properties. Investment properties are initially measured at cost, which includes related
transaction costs. After initial recognition, investment properties are stated at fair value. Fair value is arrived at by reference to
active market prices for similar properties and is performed by registered independent valuers having appropriate recognised
professional qualifications and recent experience in the location and category of the properties being valued.
Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the financial
year in which they arise.
If the Group determines that the fair value of an investment property under construction is not reliably determinable but
expect the fair value of the property to be reliably determinable when construction is complete, the Group shall measure
that investment property under construction at cost until either its fair value becomes reliably determinable or construction
is completed (whichever is earlier). Once the Group is able to measure reliably the fair value of an investment property under
construction that has previously been measured at cost, the Group shall measure that property at its fair value.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits
associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the
replaced part is derecognised.
A property interest under an operating lease is classified and accounted for as an investment property on a property-byproperty basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an
operating lease classified as an investment property is carried at fair value.
Investment properties are derecognised when either they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. The gain or loss arising from
the retirement or disposal of an investment property is determined as the difference between the net disposal proceeds, if any,
and the carrying amount of the asset and is recognised in profit or loss in the period of the retirement or disposal.
When the use of a property changes from investment property to owner-occupied, the property is remeasured to fair value and
reclassified as property, plant and equipment. Any gain or loss arising on remeasurement is recognised directly in profit or loss.
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6.8 Construction contracts
Contract cost comprises cost related directly to the specific contract and those that are attributable to the contract activity in
general and can be allocated to the contract and such other costs that are specifically chargeable to the customer under the
terms of the contract. Contract cost includes direct materials, expenses, labour and an appropriate proportion of construction
overheads.
The aggregate costs incurred and profit or loss recognised on each contract is compared against the progress billings up
to the financial year end. Where the total costs incurred on construction contracts plus recognised profits (less recognised
losses) exceed progress billings, the balance is classified as amounts due from contracts customers. Where progress billings
exceed costs incurred plus recognised profits (less recognised losses), the balance is classified as amounts due to contracts
customers.
6.9 Inventories
Inventories of completed development properties are stated at the lower of cost and net realisable value. Cost is determined
on a specific identification basis and includes land, all direct building costs and other related development costs. Net realisable
value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling
expenses.
Other inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis.
Cost comprises the original cost of purchase plus the cost of bringing the inventories to their intended location and condition.
The cost of produce and finished goods includes the cost of raw materials, direct labour and a proportion of production
overheads.
6.10 Cash and cash equivalents
Cash and cash equivalents include cash and bank balances, deposits and other short term highly liquid investments and short
term funds with maturities of three (3) months or less, which are readily convertible to cash and are subject to insignificant risk
of changes in value.
6.11 Goodwill
Goodwill arises from business combination and represents the excess of the sum of the consideration transferred, the amount
of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest in the entity,
over the net fair value of the acquiree’s identifiable assets and liabilities, as described in Note 6.1.2.
After initial recognition, goodwill is carried net of accumulated impairment losses, if any. Goodwill is not amortised but instead
tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may
be impaired. Objective events that would trigger a more frequent impairment review include adverse industry or economic
trends, significant restructuring actions, significantly lowered profitability, or a sustained decline in the acquiree’s market
capitalisation.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill arising on acquisition of an associate, as described in Note 6.1.3, is included in the carrying amount of the investment
and is not amortised.
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6.12 Impairment of non-financial assets
The carrying amount of assets, other than inventories, deferred tax assets, assets arising from construction contracts,
investment properties measured at fair value, property development costs and financial assets (excluding investments in
subsidiaries, associates and joint ventures) are reviewed at the end of each reporting period to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable
amount is determined for the Cash-generating Unit (“CGU”) to which the asset belongs. Goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to
benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to
those units or groups of units.
Goodwill acquired in a business combination shall be tested for impairment as part of the impairment testing of the CGU to
which it relates. The CGU to which goodwill is allocated shall represent the lowest level within the Group at which the goodwill
is monitored for internal management purposes and not larger than an operating segment determined in accordance with
FRS 8 Operating Segments.
Recoverable amount is the higher of net selling price and value-in-use, which is measured by reference to discounted future
cash flows. In estimating the value-in-use, the estimated future cash inflows and outflows to be derived from continuing use of
the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates
have not been adjusted.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The impairment
loss is charged to profit or loss unless it reverses a previous revaluation in which case it will be charged to equity.
Impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for an asset other than goodwill is
reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the
last impairment loss was recognised.
The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount
does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment
loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in
profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.
6.13 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity
instrument of another enterprise.
A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or
another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with
another enterprise under conditions that are potentially favourable to the Group.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise,
or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under conditions that are
potentially unfavourable to the Group.
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6.13 Financial instruments (Continued)
Financial instruments are classified as assets, liabilities or equity in accordance with the substance of the contractual
arrangement. At initial recognition, a financial instrument is recognised at fair value plus, in the case of a financial instrument not
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the financial
instrument. Interest, dividends and losses and gains relating to a financial instrument or a component that is a financial liability
shall be recognised as income or expense in profit or loss. Distributions to holders of an equity instrument are debited directly
to equity, net of any related tax effect. Financial instruments are offset when the Group has a legally enforceable right to offset
and intends to settle on a net basis or to realise the asset and settle the liability simultaneously.
An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic
characteristics and risks of the embedded derivative is not closely related to the economic characteristics and risks of the host
contract, a separate instrument with the same terms as the embedded derivative meets the definition of a derivative, and the
hybrid instrument is not measured at fair value through profit or loss.
6.13.1 Financial assets
A financial asset is classified into the following four (4) categories after initial recognition for the purpose of subsequent
measurement:
(i)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise financial assets that are held for trading (i.e.
financial assets acquired principally for the purpose of resale in the near term), derivatives (both, freestanding
and embedded) and financial assets that were specifically designated into this classification upon initial
recognition.
Subsequent to initial recognition, financial assets classified as fair value through profit or loss are measured
at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as fair
value through profit or loss are recognised in profit or loss. Net gains or losses on financial assets classified
as fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income.
Such income is recognised separately in profit or loss as components of other income or other operating
losses.
However, derivatives that are linked to and must be settled by delivery of unquoted equity instruments that
do not have a quoted market price in an active market are recognised at cost.
Financial assets classified as financial assets at fair value through profit or loss including short term investment
and short term funds.
(ii)
Held-to-maturity investments
Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed or
determinable payments and fixed maturity that the Group has the positive intention and ability to hold to
maturity.
Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at amortised
cost using the effective interest method. Gains or losses on financial assets classified as held-to-maturity
are recognised in profit or loss when the financial assets are derecognised or impaired, and through the
amortisation process.
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6.13.1 Financial assets (Continued)
(iii)
Loans and receivables
Financial assets classified as loans and receivables comprise non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
Subsequent to initial recognition, financial assets classified as loans and receivables are measured at
amortised cost using the effective interest method. Gains or losses on financial assets classified as loans
and receivables are recognised in profit or loss when the financial assets are derecognised or impaired, and
through the amortisation process.
(iv)
Available-for-sale financial assets
Financial assets classified as available-for-sale comprise non-derivative financial assets that are designated
as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial
assets at fair value through profit or loss.
Subsequent to initial recognition, financial assets classified as available-for-sale are measured at fair value.
Any gains or losses arising from changes in the fair value of financial assets classified as available-for-sale
are recognised directly in other comprehensive income, except for impairment losses and foreign exchange
gains and losses, until the financial asset is derecognised, at which time the cumulative gains or losses
previously recognised in other comprehensive income are recognised in profit or loss. However, interest
calculated using the effective interest method is recognised in profit or loss whilst dividends on availablefor-sale equity instruments are recognised in profit or loss when the Group’s right to receive payment is
established.
A financial asset is derecognised when the contractual right to receive cash flows from the financial asset
has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount
and the sum of consideration received (including any new asset obtained less any new liability assumed)
and any cumulative gain or loss that had been recognised directly in other comprehensive income shall be
recognised in profit or loss.
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require
delivery of the asset within the time frame established generally by regulation or marketplace convention. A
regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using
trade date accounting.
6.13.2 Financial liabilities
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual
arrangement. A financial liability is classified into the following two (2) categories after initial recognition for the purpose
of subsequent measurement:
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6.13.2 Financial liabilities (Continued)
(i)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss comprise financial liabilities that are held for trading,
derivatives (both, freestanding and embedded) and financial liabilities that were specifically designated into
this classification upon initial recognition.
Subsequent to initial recognition, financial liabilities classified as fair value through profit or loss are measured
at fair value. Any gains or losses arising from changes in the fair value of financial liabilities classified as fair
value through profit or loss are recognised in profit or loss. Net gains or losses on financial liabilities classified
as fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income.
Such income is recognised separately in profit or loss as components of other income or other operating
losses.
(ii)
Other financial liabilities
Financial liabilities classified as other financial liabilities comprise non-derivative financial liabilities that are
neither held for trading nor initially designated as fair value through profit or loss.
Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective
interest method. Gains or losses on other financial liabilities are recognised in profit or loss when the financial
liabilities are derecognised and through the amortisation process.
A financial liability is derecognised when, and only when, it is extinguished, i.e. when the obligation specified in
the contract is discharged or cancelled or expires. An exchange between an existing borrower and lender of debt
instruments with substantially different terms are accounted for as an extinguishment of the original financial liability
and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial
liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial
liability.
Any difference between the carrying amount of a financial liability extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
All financial liabilities of the Group are measured at amortised cost except for financial liabilities at fair value through
profit or loss, which are held for trading (including derivatives) or designated at fair value through profit or loss upon
initial recognition.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original
or modified terms of a debt instrument.
The Group designates corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance
contracts as defined in FRS 4 Insurance Contracts. The Group recognises these insurance contracts as recognised
insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
At the end of each reporting period, the Group shall assess whether its recognised insurance liabilities are adequate,
using current estimates of future cash flows under its insurance contracts. If this assessment shows that the carrying
amount of the insurance liabilities is inadequate, the entire deficiency shall be recognised in profit or loss.
Recognised insurance liabilities are only removed from the statement of financial position when, and only when, it is
extinguished via a discharge, cancellation or expiration.
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6.13.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company
after deducting all of its liabilities. Ordinary shares are classified as equity instruments.
Ordinary shares are classified as equity which are recorded at the nominal value and proceeds in excess of the
nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium
are classified as equity.
Interim dividends to shareholders are recognised in equity in the period in which they are declared. Final dividends
are recognised upon approval of shareholders in a general meeting.
The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity
transaction costs comprise only those incremental external costs directly attributable to the equity transaction, which
would otherwise have been avoided.
The Group measures a liability to distribute non-cash assets as a dividend to the owners of the Company at fair
value of the assets to be distributed. The carrying amount of the dividend is remeasured at the end of each reporting
period and at the settlement date, with any changes recognised directly in equity as adjustments to the amount of
the distribution. On settlement of the transaction, the Group recognises the difference, if any, between the carrying
amounts of the assets distributed and the carrying amount of the liability in profit or loss.
When issued shares of the Company are repurchased, the consideration paid, including any attributable transaction
costs, is presented as a change in equity. Repurchased shares that have not been cancelled are classified as
treasury shares and presented as a deduction from equity. No gain or loss is recognised in profit or loss on the sale,
reissuance or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between
the sales consideration and the carrying amount of the treasury shares is shown as a movement in equity.
6.13.4 Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into
and subsequently remeasured at their fair value. Any gains or losses arising from changes in the fair value of these
contracts are recognised in profit or loss.
However, derivatives that are linked to and must be settled by delivery of unquoted equity instruments that do not
have a quoted market price in an active market are recognised at cost.
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6.14 Impairment of financial assets
The Group assesses whether there is any objective evidence that a financial asset is impaired at the end of each reporting
period.
(i)
Held-to-maturity investments and loans and receivables
The Group collectively considers factors such as the probability of bankruptcy or significant financial difficulties of the
receivable, and default or significant delay in payments by the receivables, to determine whether there is objective
evidence that an impairment loss on held-to-maturity investments and loans and receivables has occurred. Other
objective evidence of impairment include historical collection rates determined on an individual basis and observable
changes in national or local economic conditions that are directly correlated with the historical default rates of receivables.
If any such objective evidence exists, the amount of impairment loss is measured as the difference between the financial
asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original
effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of held-to-maturity investments is directly reduced by the impairment loss whilst the carrying
amount of loans and receivables are reduced through the use of an allowance account.
If in a subsequent period, the amount of the impairment loss decreases and it objectively relates to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the
carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of impairment
reversed is recognised in profit or loss.
(ii)
Available-for-sale financial assets
The Group collectively considers factors such as significant or prolonged decline in fair value below cost, significant
financial difficulties of the issuer or obligor, and the disappearance of an active trading market as objective evidence that
available-for-sale financial assets are impaired.
If any such objective evidence exists, an amount comprising the difference between the financial asset’s cost (net of any
principal payment and amortisation) and current fair value, less any impairment loss previously recognised in profit or
loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods.
Instead, any increase in the fair value subsequent to the impairment loss is recognised in other comprehensive income.
Impairment losses on available-for-sale debt investments are subsequently reversed in profit or loss if the increase in
the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment
loss in profit or loss.
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6.15 Provisions
Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event and when it is
probable that an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, the amount of a provision would be discounted to its present value at a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Provisions are reviewed at the end of each reporting period and adjusted to reflect current best estimate. If it is no longer
probable that an outflow of resources embodying economic benefits would be required to settle the obligation, the provision
would be reversed.
Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation
under the contract shall be recognised and measured as a provision.
6.16 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence would be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not
recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability
also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably.
The Group does not recognise a contingent liability but discloses its existence in the financial statements.
A contingent asset is a possible asset that arises from past events whose existence would be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise
contingent assets but discloses its existence where the inflows of economic benefits are probable, but not virtually certain.
In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured
initially at their fair value at the acquisition date.
6.17 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. Under the capital approach, government grants relating
to investment properties are initially included in liabilities as deferred government grants, and are credited to investment
properties when the costs for which the benefit of the grant is intended to compensate are incurred.
6.18 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, net of discounts and rebates. Revenue is
recognised when it is probable that the economic benefits associated with the transaction would flow to the Group and the
amount of the revenue can be measured reliably.
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6.18 Revenue recognition (Continued)
6.18.1 Property development
Revenue from property development is recognised based on the “percentage of completion” method in respect
of all units that have been sold. The percentage of completion is determined based on the proportion of property
development costs incurred for work performed up to the reporting period over the estimated total property
development costs.
When the financial outcome of a development activity cannot be reliably estimated, the property development revenue
shall be recognised only to the extent of property development costs incurred that is probable to be recoverable and
property development costs on the development units sold are recognised as an expense in the period in which they
are incurred.
Any expected loss on a development project, including costs to be incurred over the defects liability period, is
recognised as an expense in profit or loss immediately.
6.18.2 Construction contracts
Revenue from work done on construction contracts is recognised based on the “percentage of completion” method.
The percentage of completion is determined based on the proportion of contract costs incurred for work performed
up to the reporting period over the estimated total contract costs.
When the financial outcome of a construction contract cannot be estimated reliably, contract revenue shall be
recognised only to the extent of contract costs incurred that is probable to be recoverable and contract costs are
recognised as an expense in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the foreseeable loss is recognised as
an expense immediately.
6.18.3 Dividend income
Dividend income is recognised when shareholder’s right to receive payment is established.
6.18.4 Rental income
Rental income from operating leases is recognised on a straight-line basis over the lease term. When the Group
provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a straight-line basis, as
a reduction of rental income.
6.18.5 Interest income
Interest income is recognised in profit or loss as it accrues.
6.18.6 Club membership license fees
Club membership license fees, which are not refundable, are recognised as income when received.
6.18.7 Management fees
Management fees are recognised when services are rendered.
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6.18 Revenue recognition (Continued)
6.18.8 Hotel revenue
Revenue is recognised upon delivery of products and customer acceptance, if any, or performance of services, net
of sales taxes and discounts.
6.18.9 Sales of plantation produce
Revenue from the sale of plantation produce is recognised upon delivery of products and customer acceptance.
6.18.10 Sales of goods, services and rights of enjoyment
Revenue from sale of goods is recognised based on invoice value of goods sold and revenue from services is
recognised net of discounts as and when services are performed.
Entrance fees collected for rights of enjoyment of facilities are recognised when tickets are sold.
6.19 Employee benefits
6.19.1 Short-term employee benefits
Wages, salaries, other monetary and non-monetary benefits are measured on an undiscounted basic and are accrued
in the period in which the associated services are rendered by employees of the Group.
Short-term accumulating compensated absences such as paid annual leave are recognised as an expense when
employees render services that increase their entitlement to future compensated absences. Short-term nonaccumulating compensated absences such as sick leave are recognised when absences occur and they lapse if the
current period’s entitlement is not used in full and do not entitle employees to a cash payment for unused entitlement
on leaving the Group.
Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such
payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation.
6.19.2 Defined contribution plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a
fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employee benefits relating to employee service in the current and prior periods.
The Company and its subsidiaries incorporated in Malaysia make contributions to a statutory provident fund and its
foreign subsidiaries make contributions to their respective countries’ statutory pension schemes. Contributions to
defined contribution plans are recognised as an expense in the period in which the employees render their services.
Once the contributions have been paid, the Group has no further payment obligations.
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6.19 Employee benefits (Continued)
6.19.3 Defined benefit plans
The Group operates various defined benefit plans for eligible employees of the Group. The amount recognised as a
liability in respect of the defined benefit plan is the present value of the defined benefit obligations at the end of the
reporting period less fair value of plan assets.
The Group determines the present value of the defined benefit obligations and the fair value of the plan assets with
sufficient regularity such that the amounts recognised in the financial statements do not differ materially from the
amounts that would be determined at the end of the reporting period.
The present value of the defined benefit obligations and the related current service cost and past service cost are
determined using the projected unit credit method by an actuary. The rate used to discount the obligations is based
on market yields at the reporting period for high quality corporate bonds or government bonds.
Remeasurement of the net defined obligation which comprise actuarial gains and losses, the effect of the asset ceiling,
and the return on plan assets are recognised directly within equity in the period in which they occur. Remeasurements
are not reclassified to profit or loss in subsequent periods.
In measuring its defined benefit liability, the Group recognises past service cost as an expense on a straight-line
basis over the average period until the benefits become vested. To the extent that the benefits are already vested
immediately following the introduction of, or changes to, the defined benefit plan, the Group recognises past service
cost immediately in profit or loss.
Net interest is recognised in profit or loss, and is calculated by applying the discount rate used to measure the
defined benefit obligation at the beginning of the annual period to the balance of the net defined benefit obligation,
considering the effects of contributions and benefit payment during the reporting period. Gains or losses arising from
changes to scheme benefits or scheme curtailment are recognised immediately in profit or loss.
If the Group has an unconditional right to a refund during the life of the plan, it would recognise an asset measured
as the amount of the surplus at the reporting date that it has a right to receive a refund which would be the fair value
of the plan assets less the present value of the defined benefits obligation, less any associated costs, such as taxes.
If the amount of a refund is determined as the full amount or a proportion of the surplus, rather than a fixed amount,
the Group would make no adjustment for the time value of money, even if the refund is realisable only at a future date.
If there is no minimum funding requirement for contributions relating to future service, the economic benefit available
as a reduction in future contributions is the present value of future service cost to the entity for each period over the
shorter of the expected life of the plan and the expected life of the entity. The Group would assume that there would
be no change to the benefits provided by a plan in the future until the plan is amended and a stable workforce unless
it is demonstrably committed at the reporting dates to make a reduction in the number of employees covered by the
plan.
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6.19 Employee benefits (Continued)
6.19.4 Equity compensation benefits
The Group operates equity-settled share-based compensation plans under which the entity receives services from
employees as consideration for equity instruments (options) of the Group, allowing certain employees of the Group
to acquire ordinary shares of the Company at pre-determined prices. The fair value of the employee services received
in exchange for the grant of the options is recognised as an expense. The expense relating to share options is
recognised within staff costs in profit or loss over the vesting periods of the grants with a corresponding increase in
equity.
The total amount to be recognised as expense is determined by reference to the fair value of the share options
at the date of the grant and the number of share options to be vested by the vesting date. The fair value of the
share options is computed using a binomial options pricing model, excluding the impact of any non-market vesting
conditions. Non-market vesting conditions are included in assumptions about the number of options and grants that
are expected to vest.
At the end of each reporting period, the Group revises its estimates of the number of options that are expected to
become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in profit or
loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised
in capital reserve until the option is exercised, upon which it will be transferred to share premium, or until the option
expires, upon which it will be transferred directly to retained earnings.
The proceeds received net of any directly attributable transaction costs are credited to equity when the options are
exercised.
If the modification occurs during the vesting period, the incremental fair value granted is included in the measurement
of the amount recognised for services received over the period from the modification date until the date when the
modified equity instruments vest, in addition to the amount based on the grant date fair value of the original equity
instruments, which is recognised over the remainder of the original vesting period. If the modification occurs after
vesting date, the incremental fair value granted is recognised immediately.
If the Group modifies the terms and conditions of the equity instruments granted in a manner that reduces the total
fair value of the share-based payment arrangement, or is not otherwise beneficial to the employees, the Group
continues to account for the revised services received as consideration for the equity instruments granted as if that
modification had not occurred.
6.20 Income taxes
Income taxes include all domestic and foreign taxes on taxable profit. Income taxes also include other taxes, such as
withholding taxes, which are payable by foreign subsidiaries, associates, or joint ventures on distributions to the Group and
the Company, and real property gains taxes payable on disposal of properties, if any.
Taxation in profit or loss comprises current and deferred tax.
6.
ANNUAL REPORT 2015
141
6.20 Income taxes (Continued)
6.20.1 Current tax
Current tax expenses are determined according to the tax laws of each jurisdiction in which the Group operates
and include all taxes based upon the taxable profits (including withholding taxes payable by foreign subsidiaries on
distribution of retained earnings to companies in the Group), and real property gains taxes payable on disposal of
properties.
6.20.2 Deferred tax
Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying
amount of an asset or liability in the statement of financial position and its tax base.
Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial
recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction,
affects neither accounting profit nor taxable profit.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The
carrying amount of a deferred tax asset is reviewed at the end of each reporting period. If it is no longer probable
that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised,
the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient
taxable profits will be available, such reductions will be reversed to the extent of the taxable profits.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred income taxes relate to the same taxation authority on either:
(i)
the same taxable entity; or
(ii)
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred
tax liabilities or assets are expected to be settled or recovered.
Deferred tax would be recognised as income or expense and included in profit or loss for the period unless the tax
relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the
deferred tax will be charged or credited directly to equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on the announcement of tax rates and tax laws by the Government in the
annual budgets which have the substantive effect of actual enactment by the end of the reporting period.
6.21 Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing
profit or loss for the financial year attributable to owners of the parent by the weighted average number of ordinary shares
outstanding during the financial year. Diluted EPS for the financial year is determined by adjusting profit or loss attributable
to owners of the parent and weighted average number of ordinary shares outstanding for the effects of all potentially dilutive
ordinary shares.
142
ANNUAL REPORT 2015
6.
6.22 Operating segments
Operating segments are defined as components of the Group that:
(i)
engage in business activities from which it could earn revenues and incur expenses (including revenue and expenses
relating to transactions with other components of the Group);
(ii)
whose operating results are regularly reviewed by the Group’s chief operating decision maker (i.e. the Group’s Chief
Executive Officer) in making decisions about resources to be allocated to the segment and assessing its performance;
and
(iii)
for which discrete financial information is available.
An operating segment may engage in business activities for which it has yet to earn revenue.
The Group reports information separately about each operating segment that meets any of the following quantitative thresholds:
(i)
The reported revenue, including both sales to external customers and intersegment sales or transfers, is ten percent
(10%) or more of the combined revenue, internal and external, of all operating segments.
(ii)
The absolute amount of reported profit or loss is ten percent (10%) or more, in absolute terms of the greater of:
(iii)
(a)
the combined reported profit of all operating segments that did not report a loss; and
(b)
the combined reported loss of all operating segments that reported a loss.
The assets are ten percent (10%) or more of the combined assets of all operating segments.
Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately
disclosed, if the management believes that information about the segment would be useful to users of the financial statements.
Total external revenue reported by operating segments shall constitute at least seventy five percent (75%) of the Group’s
revenue. Operating segments identified as reportable segments in the current financial year in accordance with the quantitative
thresholds would result in a restatement of prior year’s segment data for comparative purposes.
6.23 Fair value measurements
The fair value of an asset or a liability, (except for lease transactions) is determined as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair
value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal
market or in the absence of a principal market, in the most advantageous market.
6.
ANNUAL REPORT 2015
143
6.23 Fair value measurements (Continued)
The Group measures the fair value of an asset or a liability by taking into account the characteristics of the asset or liability if
market participants would take these characteristics into account when pricing the asset or liability. The Group has considered
the following characteristics when determining fair value:
(a)
The condition and location of the asset; and
(b)
Restrictions, if any, on the sale or use of the assets.
The fair value measurement for a non-financial asset takes into account the ability of the market participant to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use
the asset in its highest and best use.
The fair value of a financial or non-financial liability or an entity’s own equity instrument assumes that:
7.
(a)
A liability would remain outstanding and the market participant transferee would be required to fulfil the obligation. The
liability would not be settled with the counterparty or otherwise extinguished on the measurement date; and
(b)
An entity’s own equity instrument would remain outstanding and the market participant transferee would take on
the rights and responsibilities associated with the instrument. The instrument would not be cancelled or otherwise
extinguished on the measurement date.
REVENUE
Group
In RM’000
Company
2015
2014
2015
2014
Sales of development properties
Rental from investment properties
Revenue from leisure and hospitality
Rendering of services
Dividend income from:
– subsidiaries in Malaysia
– other investments in Malaysia
Others
1,562,258
192,633
110,778
10,906
1,243,476
104,894
58,317
16,966
–
–
–
–
–
–
–
–
–
–
29,916
–
13
30,779
460,130
–
–
20,734
–
–
1,906,491
1,454,445
460,130
20,734
144
ANNUAL REPORT 2015
8.
OPERATING PROFIT
Group
In RM’000
Company
2015
2014
2015
2014
748
–
75
–
154
–
–
–
49
230
2,696
27,444
–
265
681
130
4,546
14,198
6,386
–
–
–
–
–
–
–
55
–
–
–
–
–
9
2,641
26
798,397
11
662
58
598,660
–
–
–
–
–
–
–
–
666
314
626
–
88
887
277
8,746
–
757
–
–
316
31
–
–
–
16
19
–
–
1,455
1,294
–
829
–
172
–
–
–
–
–
Operating profit has been arrived at after charging:
Auditors’ remuneration – statutory audit
– PricewaterhouseCoopers Malaysia
– Member firms of PricewaterhouseCoopers
International Limited
– Firms other than member firm of
PricewaterhouseCoopers International Limited
Bad debts written off
Amortisation of prepaid lease payments (Note 16)
Depreciation of property, plant and equipment (Note 15)
Fair value loss on investment properties
Inventories written off
Loss on disposal of
– land from compulsory land acquisition
Property, plant and equipment written off (Note 15)
Property development costs*
Rental of premises paid to
– a related company
– external parties
Realised loss on foreign currency transactions
Unrealised loss on foreign currency transactions
Impairment losses on receivables (Note 26)
Management fees to
– a subsidiary
– former related companies
– associate *
Included in property development costs of the Group is cost of inventories recognised as an expense during the financial year
amounted to RM67,115,000 (2014: RM63,042,000).
8.
ANNUAL REPORT 2015
145
OPERATING PROFIT (Continued)
Group
In RM’000
Company
2015
2014
2015
2014
4
–
–
–
–
–
13
–
–
460,130
–
20,734
316,586
–
1,930
311,693
21
1,685
–
–
957
–
–
–
508
1,148
1,123
–
2,061
256
–
–
–
–
–
–
–
927
197,966
1,042
–
–
–
–
192,633
12,662
7,668
–
104,894
9,941
680
–
–
–
1,635
–
–
–
–
42
and crediting:
Bad debts recovered
Dividend income from
– other investments in Malaysia
– subsidiaries in Malaysia
Fair value gain on
– investment properties (included in other operating income)
– other investments
– short term funds
Gain on disposal of
– land from compulsory acquisition
Gain on bargain purchase for the acquisitions of subsidiaries
(Note 20.1)
Impairment losses on receivables written back (Note 26)
Rental income from
– others
Realised gain on foreign currency transactions
Unrealised gain on foreign currency transactions
Cost of inventories of the Group recognised as an expense during the financial year amounted to RM77,714,000 (2014: RM75,539,000)
9.
STAFF COSTS
The staff costs of the Group and of the Company are as follow:
Group
In RM’000
Company
2015
2014
2015
2014
Wages, salaries and others
Contributions to Employee’s Provident Fund
145,722
15,286
119,815
12,976
836
–
722
–
161,008
132,791
836
722
Included in staff costs are remuneration of the key management personnel of the Group and of the Company as disclosed in
Note 37 to the financial statements.
146
ANNUAL REPORT 2015
10. INTEREST INCOME
Group
In RM’000
Company
2015
2014
2015
2014
Interest income from:
Short term deposits
Subsidiaries
Joint ventures
Housing development accounts
Other investments
Others
23,195
–
5,967
2,781
15,360
3,388
5,484
–
15,679
2,651
9,106
3,254
13,405
8,676
–
–
–
–
68
9,102
–
–
–
–
50,691
36,174
22,081
9,170
11. INTEREST EXPENSE
Group
In RM’000
Company
2015
2014
2015
2014
Interest expense:
Borrowings
Former related company
Subsidiaries
–
–
–
31,932
16,736
–
519
–
7,140
–
4,682
1,011
–
48,668
7,659
5,693
2015
2014
2015
2014
164,308
43
69,007
154,658
512
53,412
1,079
–
–
873
–
(171)
233,358
208,582
1,079
702
(2,146)
(67)
(1,416)
6,255
14
1,811
(83)
–
171
–
–
–
(3,629)
8,080
88
–
229,729
216,662
1,167
702
12. TAXATION
Group
In RM’000
Current year tax expense based on profit for the financial year:
Malaysian income taxation
Foreign taxation
Deferred taxation (Note 23)
(Over)/Under provision in prior years:
Malaysian income taxation
Foreign taxation
Deferred taxation (Note 23)
Company
ANNUAL REPORT 2015
147
12. TAXATION (Continued)
A numerical reconciliation between the average effective tax rate and the applicable tax rate of the Group and of the Company are
as follows:
Group
Company
%
2015
2014
2015
2014
Applicable tax rate
25.00
25.00
25.00
25.00
–
0.82
(25.59)
–
5.97
(27.24)
Tax effects in respect of:
Depreciation of non-qualifying property,
plant and equipment
Non allowable expenses
Non taxable income
Different tax rates arising from gain from
real property investments
Different tax rates in foreign jurisdiction
Unused tax losses and unabsorbed capital allowances
not recognised in loss making subsidiaries
Utilisation of previously unutilised tax losses and
unabsorbed capital allowances
Share of post tax results of associates
Share of post tax results of joint ventures
Revision of tax rate
0.12
2.02
(0.73)
0.05
1.00
(4.51)
(6.94)
2.80
(3.97)
2.41
–
–
–
–
0.03
0.08
–
–
(0.09)
(0.04)
(1.59)
0.06
(0.01)
(0.08)
(1.35)
–
–
–
–
–
–
–
–
–
(Over)/Under provision in prior years
20.64
(0.32)
18.62
0.72
0.23
0.02
3.73
–
20.32
19.34
0.25
3.73
The amount of tax savings arising from the utilisation of unutilised tax losses and unabsorbed capital allowances brought forward of
the Group amounted to RM4,169,000 (2014: RM456,000).
Subject to agreement with the tax authorities, certain subsidiaries of the Group have unutilised tax losses and unabsorbed capital
allowance of approximately RM5,924,000 (2014: RM9,249,000), for which the related tax effects have not been recognised in
the financial statements. These losses are available to be carried forward for set off against future chargeable income when these
subsidiaries derive future assessable income of a nature and amount sufficient for the tax losses to be utilised.
Malaysian income tax is calculated at the statutory tax rate of 25% (2014: 25%) of the estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Deferred tax is calculated on
temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements.
148
ANNUAL REPORT 2015
13. EARNINGS PER SHARE
(a)
Basic
The basic earnings per ordinary share for the financial year is calculated based on the profit for the financial year attributable to
owners of the parent divided by the weighted average number of ordinary shares in issue during the financial year, after taking
into consideration of treasury shares held by the Company.
Group
2015
2014
890,702
889,918
3,448,043
2,791,036
In RM’000
Profit attributable to owners of the parent
In ’000
Weighted average number of ordinary shares in issue after deducting the treasury shares The weighted average number of ordinary shares in issue for the financial year ended 30 June 2014 was calculated based
on the weighted average of 2,163,867,000 ordinary shares issued by the Company to the owners of the legal subsidiary (i.e.
IOIPB) for the reverse acquisition for five (5) months up to 3 December 2014 and 3,239,014,726 ordinary shares in issue of
the Company after 5 December 2014 for seven (7) months.
(b)
Group
In Sen
2015
2014
Basic earnings per ordinary share for:
– Profit for the financial year
25.83
31.88
Diluted
Diluted earnings per ordinary share equals basic earnings per ordinary share.
ANNUAL REPORT 2015
149
14. DIVIDEND
Group
Dividends paid by the Group and the Company are as follows:
Group
In RM’000
First interim single tier dividend in respect of
financial year ended 30 June 2014 of 8.0 sen
per ordinary share, paid on 29 October 2014
First interim dividend in respect of financial year ended
30 June 2014 of 2.5 sen per ordinary share,
less tax of 25%, paid on 31 October 2013
Company
2015
2014
2015
2014
259,121
–
259,121
–
–
14,996
–
–
259,121
14,996
259,121
–
Company
Subsequent to the financial year, on 27 August 2015, the Directors declared an interim single tier dividend of 6.0 sen per ordinary
share, amounting to RM225,993,000 in respect of the financial year ended 30 June 2015. The dividend is payable on 30 September
2015, to shareholders whose names appear in the Record of Depositors and Register of Members of the Company at the close of
business on 18 September 2015.
150
ANNUAL REPORT 2015
15. PROPERTY, PLANT AND EQUIPMENT
Group
2015
Transfer
Transfer
to land
from
At Transfer to
held for
property
Foreign
beginning investment
property development currency
of financial Reclassi- properties development
costs
Written translation
In RM’000
year Additions
fications
(Note 18) (Note 17) (Note 24)
off Disposals differences
At end of
financial
year
At Cost
Freehold land
Leasehold land
Plant and machinery
Motor vehicles
Construction-in-progress
134,776
–
78,308
382,030
65,404
15,959
38,539
418,137
548
888
–
–
–
–
–
–
889
–
–
–
40,097 386,013 (18,502) (61,413) 35,782
–
–
–
3,502
–
–
–
18,103 (1,847)
–
–
82,570 (385,054)
–
–
1,133,153 181,491
– (18,502) (61,413) –
1,488
–
6,605
–
–
–
–
– (2,784)
–
–
–
(407)
– (13,342)
(5)
(35)
(40) (6,395)
(118)
(268)
–
–
–
–
–
1,344
–
178
95
599
8,093
(163) (23,231)
2,2161,221,644
Current
Foreign
At beginning
year
currency
of financialdepreciation translation
In RM’000
year
charge Written off Disposals differences
133,428
1,488
78,790
722,832
101,146
13,204
54,504
116,252
At end of
financial
year
Accumulated depreciation
Leasehold land
Plant and machinery
Motor vehicles
–
6,263
3,085
46,433
10,159
19,913
9
1,670
8,208
8,481
2,198
6,878
–
–
–
(3)
(39)
(95)
–
(84)
(5,693)
(35)
(5,753)
(250)
–
–
100
–
64
34
9
7,849
5,700
54,876
6,629
26,480
85,853
27,444
(137)
(11,815)
198
101,543
ANNUAL REPORT 2015
151
15. PROPERTY, PLANT AND EQUIPMENT (Continued)
Group
2014
At Acquisition
beginning
of
of financial subsidiaries
In RM’000
year
Additions (Note 20.1)
Transfer
from
Foreign
investment
currency
properties
Written translation
(Note 18)
off
Disposals differences
At end of
financial
year
At Cost
Freehold land
Golf course development
expenditure
Plant and machinery
Motor vehicles
30,726
932
103,118
–
–
–
–
134,776
13,528
16,008
53,449
14,535
21,960
37,216
2,026
130
3,309
1,378
5,293
76,281
62,754
365,907
8,875
1,950
11,678
303,752
–
–
–
–
–
888
–
–
(229)
–
(255)
–
–
–
–
(1,902)
(141)
–
–
(15)
–
(2)
4
–
78,308
382,030
65,404
15,959
38,539
418,137
187,422
89,349
858,034
888
(484)
(2,043)
(13)
1,133,153
In RM’000
At
beginning
of financial
year
Current
year
depreciation
charge
Written off
Disposals
At end of
financial
year
Accumulated depreciation
Plant and machinery
Motor vehicles
2,254
2,853
41,861
10,149
16,815
4,009
232
4,784
1,761
3,412
–
–
(212)
–
(214)
–
–
–
(1,751)
(100)
6,263
3,085
46,433
10,159
19,913
73,932
14,198
(426)
(1,851)
85,853
152
ANNUAL REPORT 2015
15. PROPERTY, PLANT AND EQUIPMENT (Continued)
In RM’000
Group
2015
2014
133,428
1,479
70,941
717,132
46,270
6,575
28,024
116,252
134,776
–
72,045
378,945
18,971
5,800
18,626
418,137
1,120,101
1,047,300
Carrying amount
Freehold land
Leasehold land
Plant and machinery
Motor vehicles
Included in additions to property, plant and equipment of the Group are interest expenses amounting to RM1,634,000 (2014: Nil).
Included in freehold land are plantation development expenditure amounting to RM1,284,000 (2014: RM846,000).
16. PREPAID LEASE PAYMENTS
In RM’000
Group
2015
2014
94,502
(2,696)
16,595
99,353
(4,546)
(305)
108,401
94,502
At cost
At beginning of financial year
Amortisation
Foreign currency translation differences
At end of financial year
ANNUAL REPORT 2015
153
17. LAND HELD FOR PROPERTY DEVELOPMENT
Group
2015
Freehold
In RM’000
land
Long term
leasehold
land
Development
costs
Total
At cost
Additions
Reclassifications
Disposals
Transfer from/(to) property, plant and equipment (Note 15)
Transfer to property development costs (Note 24)
2,191,138
2,303
(3,674)
(6,590)
61,622
(230,227)
–
398,568
–
–
–
–
(135,949)
54,558
422,005
526,454
3,674
(159)
(209)
(393,729)
4,319
3,011,711
528,757
–
(6,749)
61,413
(759,905)
58,877
2,014,572
317,177
562,355
2,894,104
Additions
Acquisitions of subsidiaries (Note 20.1)
Disposals
Transfer from deposits
Transfer to property development costs (Note 24)
Transfer from investment properties (Note 18)
1,102,913
885,417
211,888
(6,815)
30,816
(36,755)
3,674
–
408,599
–
–
–
–
(9,178)
–
(853)
307,539
229,411
19,426
(106)
–
(134,240)
–
(25)
1,819,051
1,114,828
231,314
(6,921)
30,816
(180,173)
3,674
(878)
2,191,138
398,568
422,005
3,011,711
2014
At cost
Included in land held for property development of the Group are plantation land of RM381,539,000 (2014: RM382,323,000), which
are intended to be used for property development. Currently, the subsidiaries are harvesting oil palm crops from the said land.
Included in additions to land held for property development of the Group are interest expenses charged by bank and non-controlling
interest during the financial year amounting to RM56,155,000 and RM225,000 respectively (2014: charged by a former related
company and non-controlling interests amounting to RM6,137,000 and RM1,165,000 respectively).
Certain titles of freehold land amounting to RM354,420,000 (2014: RM376,365,000), whereby the Group is the beneficiary owner,
are registered under the name of the former holding company. The Group is in the midst of perfecting the land titles.
154
ANNUAL REPORT 2015
18. INVESTMENT PROPERTIES
Group
Transfer
At
Transfer
to land
beginning from/(to)
held for Acquisitions
Foreign
of
Re- property,
Transfer
property
of
Fair currency
financial classifica- plant and
to development subsidiaries
value translation
In RM’000
year
tions equipment inventories
(Note 17) (Note 20.1) adjustments Additions Disposals differences
At end of
financial
year
2015
Freehold land and buildings
Leasehold land
2,397,254
368,235
1,290
(1,290)
18,502
–
(37,382)
–
–
–
–
–
354,760 271,915
(38,174)
4,621
(1,586)
–
– 3,004,753
50,007 383,399
2,765,489
–
18,502
(37,382)
–
–
316,586
276,536
(1,586)
50,007 3,388,152
Freehold land and buildings
Leasehold land
1,185,270
291,837
–
–
(888)
–
–
–
(3,674)
–
590,926
–
233,429
71,878
392,191
5,167
–
–
– 2,397,254
(647) 368,235
1,477,107
–
(888)
–
(3,674)
590,926
305,307
397,358
–
(647) 2,765,489
2014
Included in investment properties of the Group were interest expense charged by bank during the financial year amounting to
RM7,725,000.
The fair values of the above investment properties were estimated based on valuations by independent registered valuers, which
were based on:
(i)
market evidence of transaction prices for similar properties for certain properties in which the values are adjusted for differences
in key attributes such as property size and quality of interior fittings under the comparison method (market approach).
The most significant input into this valuation method is price per square foot (“PSF”).
(ii)
receipts of contractual rentals, expected future market rentals, current market yields, void periods and maintenance
requirements and approximate capitalisation rates under the investment method (income approach).
(iii)
estimated gross development values using investment method or comparison method, less estimated costs to complete
under the residual method (income approach with estimated costs to complete).
ANNUAL REPORT 2015
155
18. INVESTMENT PROPERTIES (Continued)
The Group uses assumptions that are mainly based on market conditions existing at the end of each reporting period. The valuation
updates by independent registered valuers are endorsed by the Board of Directors on an annual basis.
Fair value is determined through various valuation techniques using Level 3 inputs (defined as unobservable inputs for asset or
liability) in the fair value hierarchy of FRS 13 Fair Value Measurement. Changes in fair value are recognised in the statement of
comprehensive income during the reporting period in which they are reviewed.
The Level 3 inputs or unobservable inputs include:
Term yield – the expected rental that the investment properties are expected to achieve and are derived from the
current passing rental, including revision upon renewal of tenancies during the financial year;
Reversion yield
– the expected rental that the investment properties are expected to achieve upon expiry of term rental;
Allowance for void
– refers to allowance provided for vacancy periods;
Price per square foot – estimated price per square foot (“psf”) for which a property should exchange on the date of valuation
between a willing buyer and a willing seller.
There are inter-relationships between unobservable inputs. For investment property under construction, increases in construction
costs that enhance the property’s features may result in an increase in future rental or sale values. An increase in the future rental
income may be linked with higher costs. If the remaining lease term increases, the yield may decrease.
In the previous financial year, due to the adoption of FRS 13 Fair Value Measurement which requires the valuation premises of
a non-financial asset to reflect its highest and best use, the basis of valuation of an existing investment property was changed
from investment approach to comparison approach which resulted in an increase of fair value of RM30,400,000. The highest and
best use of this investment property is for purpose of redevelopment into retail or residential building, and the property is currently
being used as a wet market pending further planning of future development of the property by the Group. For all other investment
properties, their current use equates to the highest and best use.
The fair value measurements using Level 3 inputs as at 30 June 2015 are as follows:
Significant unobservable inputs
Term
Reversion Allowance
Valuation technique
Fair value
yield
yield
for void
RM’000
%
%
%
Malls
Office towers
Retail
Income approach
Market approach
Income approach
Market approach
Market approach
1,754,342
255,940
909,100
171,799
296,971
Total
3,388,152
6.5 – 7.0
–
6.0 – 6.5
–
–
7.0 – 7.5
–
6.5
–
–
Price
per sq foot
(“psf”)
RM/psf
5.0
–
–
1,638
5.0
–
– 370 – 1,700
–
14 – 150
Changes to the reversion yield and price per square foot by 10 basis point and 10% respectively, as applicable, will result in a net
change in fair value of approximately RM116,048,000.
156
ANNUAL REPORT 2015
18. INVESTMENT PROPERTIES (Continued)
The fair value measurements using Level 3 inputs as at 30 June 2014 are as follows:
Significant unobservable inputs
Term
Reversion Allowance
Valuation technique
Fair value
yield
yield
for void
RM’000
%
%
%
Malls
Office towers
Retail
Income approach 1,327,190
Market approach
253,472
Income approach
719,985
Market approach
202,942
Market approach
261,900
Total 2,765,489
6.8 – 7.0
–
6.0 – 6.5
–
–
7.3 – 7.5
–
6.5
–
–
Price
per sq foot
(“psf”)
RM/psf
5.0
–
–
2,135
5.0
–
– 518 –1,550
–
11 – 140
Changes to the reversion yield and price per square foot by 10 basis point and 10% respectively, as applicable, will result in a net
change in fair value of approximately RM107,362,000.
19. GOODWILL ON CONSOLIDATION
In RM’000
Group
2015
2014
Add: Arising from acquisitions of subsidiaries (Note 20.1)
11,472
–
3,802
7,670
11,472
11,472
For the purpose of impairment testing, goodwill is allocated to the Group’s Cash-generating Units (“CGUs”) identified according to
the operating segments as follows:
Group
In RM’000
2015
2014
3,802
7,670
3,802
7,670
11,472
11,472
ANNUAL REPORT 2015
157
19. GOODWILL ON CONSOLIDATION (Continued)
Goodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount of the CGUs
based on value-in-use. Value-in-use is determined by discounting the future cash flows to be generated from the continuing use of
the CGUs based on the following assumptions:
(i)
Cash flows are projected based on the management’s most recent three (3) years business plan.
(ii)
Discount rates used for cash flows discounting purpose is the Group’s weighted average cost of capital. The average discount
rate applied for cash flow projections is 8.2% (2014: 10.0%).
(iii)
Growth rates of property and other segments are determined based on the industry trends and past performances of the
segments.
(iv)
Profit margins are projected based on the industry trends, historical profit margin achieved or predetermined profit margin for
property projects.
The management is not aware of any reasonably possible change in the above key assumptions that would cause the carrying
amounts of the CGUs to materially exceed their recoverable amounts.
20. SUBSIDIARIES
20.1 Interests in subsidiaries
In RM’000
Company
2015
2014
Unquoted shares in Malaysia
Unquoted shares outside Malaysia
11,889,240
1,540,812
11,767,530
1,479,932
Equity loans (Note 20.2)
13,430,052
1,104,937
13,247,462
918,499
14,534,989
14,165,961
At cost
Unquoted shares include redeemable preference shares (“RPS”) issued by subsidiaries (some of which are also issued to noncontrolling interests), which are redeemable at the option of issuer and entitle the Company to receive dividend out of profits
of the issuer at a rate to be determined by the issuer.
Details of the subsidiaries are set out in Note 44 to the financial statements.
158
ANNUAL REPORT 2015
20. SUBSIDIARIES (Continued)
20.1 Interests in subsidiaries (Continued)
During the financial year, the Company acquired, disposed or subscription of shares in its subsidiaries as follows:
Acquisition of shares/incorporation of new subsidiary
(i)
Acquired 1 ordinary share of HKD1.00 each, representing 100% of the issued and paid-up capital of Dynamism
Investments Limited for cash consideration of HKD1.00;
(ii)
Acquired 1 ordinary share of HKD1.00 each, representing 100% of the issued and paid-up capital of Vital Initiative
Limited for cash consideration of HKD1.00;
(iii)
Incorporation of a wholly-owned subsidiary known as Strategy Assets (L) Limited with 100 ordinary shares of USD1.00
each for cash consideration of USD100;
(iv)
Acquired 2 ordinary shares of RM1.00 each, representing 100% of the issued and paid-up capital of Emerald Property
Services Sdn. Bhd. for cash consideration of RM2.00;
(v)
Incorporation of a wholly-owned subsidiary known as Xiamen Palm City Management Services Co. Ltd. with total
registered capital of RMB510,000; and
(vi)
Acquired 65,000 ordinary shares of RM0.50 each in IOIPB at an average price of RM2.63 per IOIPB share for cash
consideration of RM171,000.
The above acquisitions and or incorporation of new subsidiaries had no material impact on the Group’s financial statements.
Subscriptions of shares
Company
Type of shares
No. of shares
’000
Amount
RM’000
Resort Villa Development Sdn. Bhd.
RPS of RM0.50 each at share premium
of RM99.50 each
1,800
180,000
IOIP Capital Management Sdn. Bhd.
of RM0.99 each
13,500
13,500
IOI City Mall Sdn. Bhd.
of RM0.90 each
491,308
491,308
IOI Properties Empire Sdn. Bhd.
of RM0.90 each
2,879
2,879
IOI Consolidated (Singapore) Pte. Ltd.
RPS at an issue price of SGD1.00 each
17,422
47,373
IOI Properties Capital (L) Berhad
RPS at an issue price of USD1.00 each
3,617
13,506
The above subscription were settled by cash, except for the subscription of shares amounting to (i) RM2,577,000 in
IOI Consolidated (Singapore) Pte. Ltd. which were settled by offsetting with amounts due to the Company and (ii)
RM444,130,000 in IOI City Mall Sdn. Bhd. which were settled via an exchange of shares as described in Note 20.1 (a) to the
financial statements.The above subscription of shares had no material impact on the Group’s financial statements.
ANNUAL REPORT 2015
159
Redemption of shares
Company
Type of shares
No. of shares
’000
Amount
RM’000
Bukit Kelang Development Sdn. Bhd.
RPS of RM0.01 each at share premium of
RM0.99 each
11,950
11,950
Resort Villa Golf Course Berhad
RM99.50 each
1,072
107,245
Property Skyline Sdn. Bhd.
RM0.99 each
2,822
2,822
The above redemption of shares were settled by cash. The above redemption of shares had no material impact on the Group’s
Disposal of shares
During the financial year, the Company:
(a)
Disposed of its wholly-owned subsidiary, IOI City Holdings Sdn. Bhd. to IOI City Mall Sdn. Bhd. for a total consideration
of RM444,129,933. The total consideration was settled by issuance of an equivalent value of new redeemable
non-cumulative preference shares (“RPS”) of RM0.10 each with a premium of RM0.90 per RPS each in IOI City Mall
Sdn. Bhd. to the Company credited as fully paid-up. The above common-control trasaction had no impact on the
Company’s financial statements.
(b)
Disposed of 1,000 ordinary shares of RM0.50 each in IOIPB to IOI City Holdings Sdn. Bhd. for total consideration of
RM500. There is no material impact on the Group’s financial statements.
160
ANNUAL REPORT 2015
2014
(A)
Prior to the listing of the ordinary shares of the Company on the Main Market of Bursa Malaysia, the Company was
incorporated by its former holding company, IOI Corporation Berhad (“IOIC”), as a holding company merely to effect
the reorganisation of the existing IOI Properties Berhad (“IOIPB”) (including its direct and indirect subsidiaries, the joint
ventures and associates (“IOIPB group”)) group without any changes to the economic substance of the existing IOIPB
group. The reorganisation includes acquisition of 810,948,936 ordinary shares of RM0.50 each, representing 99.8%
of the issued and paid-up share capital of IOIPB from IOIC, for a total consideration of RM9,768,980,000 which was
satisfied via the issuance of 2,163,866,849 new ordinary shares of the Company at an issue price of approximately
RM4.51 per ordinary share on 3 December 2013. Hence, the business combination for IOIPB has been accounted
as reverse acquisition accounting by analogy in accordance with FRS 3 Business Combination and the Company is
regarded as the accounting acquiree while IOIPB is the accounting acquirer.
The consolidated financial statements of the Group represent the continuation of the financial statements of IOIPB that
reflect:
(i)
The results from the beginning of the accounting period to the date of the combination are those of the IOIPB
group;
(ii)
The assets and liabilities of IOIPB group being recognised and measured in the financial statements at their
pre-combination carrying amounts without restatement to fair values;
(iii)
The retained earnings and other equity balances of IOIPB group immediately before the combination are those of
the IOIPB group; and
(iv)
The equity structure, however, reflects that of the Company, including the equity instruments issued to effect
the acquisition with the difference between the issued equity of the Company and the issued equity of IOIPB
amounting to RM8,440,152,000 being recorded under the equity component as “reorganisation debit” as shown
below:
RM’000
Issued equity of the Company for the acquisitions
Issued equity of IOIPB
9,768,980
(1,328,828)
Debit arising from reverse acquisition 8,440,152
ANNUAL REPORT 2015
161
2014
(i)
On 5 December 2013, the Company acquired the equity interests of the following Other Property Companies from IOIC:
Company Name
Equity interest
IOI Consolidated (Singapore) Pte. Ltd. (“IOI Conso”)
Resort Villa Development Sdn. Bhd. (“RVD”)
Resort Villa Golf Course Berhad (“RVGCB”)
IOI City Mall Sdn. Bhd. (“IOI City Mall”)
Palmex Industries Sdn. Bhd. (“Palmex”)
Bukit Kelang Development Sdn. Bhd (“BKD”)
Resort Villa Golf Course Development Sdn. Bhd. (“RVGCD”)
Eng Hup Industries Sdn. Bhd. (“EHI”)
PMX Bina Sdn. Bhd. (“PMX”)
IOI City Holdings Sdn. Bhd. (“IOICH”)
Nice Skyline Sdn. Bhd. (“NSSB”)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
60%
Total
*
^
Purchase
consideration
RM’000
1,449,270
342,208
274,130
220,255
90,013
84,852
48,007
5,548
2,739
*
64,289^
2,581,311
Representing RM2.
The Group regards NSSB as its subsidiary by virtue of IOIPB’s direct equity interest of 40% in NSSB.
The total purchase considerations of RM2,581,311,000 were satisfied via the issuance of 571,770,369 new ordinary
shares of the Company at an issue price of approximately RM4.51 per ordinary share.
162
ANNUAL REPORT 2015
2014
(i)
On 5 December 2013, the Company acquired the equity interests of the following Other Property Companies from IOIC
(Continued):
(1)
The fair values of the identifiable assets and liabilities as at the date of acquisition were as follows:
(2)
Investment properties Interest in a joint venture
Property development costs
Inventories
Trade and other receivables
Taxation
858,034
231,314
590,926
1,535,218
69,433
3,280
86,746
62,436
(575,341)
(978)
(60,667)
Total identifiable net assets
Less: Previously held interest Goodwill arising from acquisition Gain on bargain purchase from the acquisition of subsidiaries 2,800,401
(28,794)
7,670
(197,966)
Total cost of acquisition
2,581,311
The effects of the acquisition of Other Property Companies on cash flows were as follows:
Total cost of acquisition
Less: Non-cash consideration
(3)
RM’000
RM’000
2,581,311
(2,581,311)
Consideration settled in cash Cash and cash equivalents of subsidiaries acquired –
62,436
Net cash inflow of the Group on acquisition
62,436
Other Property Companies had contributed profit of RM49,309,000 during the previous financial year from the
acquisition date. Had the business combination taken place at the beginning of the previous financial year, the
Group’s profit for the previous financial year would have been RM958,261,000.
ANNUAL REPORT 2015
163
2014
(ii)
On 5 December 2013, the Company acquired 10% equity interest each in PVB and PSSB for an aggregate consideration
of RM196,345,000, which was satisfied via the issuance of 43,491,177 new ordinary shares of the Company at an issue
price of approximately RM4.51 per ordinary share. The Company regards PSSB and PVB as its subsidiaries by virtue
of IOIPB’s direct equity interest of 90% in both companies. In relation to this, the Group’s interest in these subsidiaries
accreted from 89.9% to 99.9%. The Group recorded a debit of RM123,535,000 in the retained earnings, being the
differences between the carrying amounts of non-controlling interests and purchase consideration.
In the previous financial year, the Company:
(B)
Acquired 2 ordinary shares of RM1.00 each, representing 100% of the issued and paid-up capital of IOI Properties
Empire Sdn. Bhd. for cash consideration of RM2.00. The acquisition had no material impact on the Group’s financial
statements.
(C)
Acquired 2 ordinary shares of RM1.00 each, representing 100% of the issued and paid-up capital of IOIP Capital
Management Sdn. Bhd. (“IOIPCM”) for cash consideration of RM2.00. The acquisition had no material impact on the
Group’s financial statements.
(D)
Subscribed 100 ordinary shares of USD1.00 each, representing 100% of the issued and paid-up capital of IOI Properties
Capital (L) Berhad for cash consideration of USD100. The acquisition had no material impact on the Group’s financial
statements.
(E)
Subscribed for 499,998 ordinary shares of RM1.00 each and 371,950,000 RPS of RM0.01 each plus premium of
RM0.99 each in IOICH. The total consideration for the subscription of RM372,449,998 was settled by offsetting the
amount due from IOICH to the Company.
(F)
Subscribed for 499,998 ordinary shares of RM1.00 each and 110,750,000 RPS of RM0.10 each plus premium of
RM0.90 each in IOI City Mall. The total consideration for the subscription of RM111,249,998 was settled by offsetting
the amount due from IOI City Mall to the Company.
(G)
Subscribed for 11,961,500 RPS in IOI Conso. The consideration for the subscription of SGD11,961,500 or equivalents
RM30,662,109 was settled by offsetting the amount due from IOI Conso to the Company.
(H)
Subscribed for an additional 2,500,000 ordinary shares of RM1.00 each in IOIPCM for cash consideration of
RM2,500,000.
(I)
Subscribed for 51,369,000 RPS of RM0.01 each plus premium of RM0.99 each in BKD. The consideration for the
subscription of RM51,369,000 was settled by offsetting the amount due from BKD to the Company.
(J)
Subscribed for 74,040,000 RPS of RM0.01 each plus premium of RM0.99 each in NSSB. The consideration for the
subscription of RM74,040,000 was settled by offsetting the amount due from NSSB to the Company.
(K)
Subscribed for 622,450 RPS of RM0.50 each plus premium of RM99.50 each in RVGCB. The consideration for the
subscription of RM62,245,000 was settled by offsetting the amount due from RVGCB to the Company.
(L)
Subscribed for 11,358,000 RPS of RM0.01 each plus premium of RM0.99 each in PSSB, representing 10% of the RPS
of PSSB. The consideration for the subscription of RM11,358,000 was settled by offsetting the amount due from PSSB
to the Company.
(M) Redeemed of 15,000 RPS of RM0.50 each plus premium of RM99.50 each in RVGCD. The total redemption amount of
RM1,500,000 was settled by offsetting the amount due to RVGCD.
(N)
Redeemed of 135,480 RPS of RM0.50 each plus premium of RM99.50 each in RVD. The total redemption amount of
RM13,548,000 was settled by offsetting the amount due to RVD.
164
ANNUAL REPORT 2015
20.2 Equity loans
Equity loans represent advances to foreign subsidiaries, which are used to invest in development properties in the People’s
Republic of China (“PRC”), joint venture’s projects in Singapore and development projects in Malaysia of RM1,023,960,000,
RM7,131,000 and RM73,846,000 respectively (2014: RM915,922,000, RM2,577,000 and Nil respectively). These amounts
are unsecured, interest free and settlements are neither planned nor likely to occur in the foreseeable future, and in substance
form part of the Company’s net investment in subsidiaries.
20.3 Amounts due from/(to) subsidiaries
The non-current amount due from a subsidiary represents outstanding amounts arising from advances and payments made
on behalf of a subsidiary. These amounts are unsecured, bear interest at rates ranging from 1.16% to 2.07% (2014: 1.20%
to 1.22%) per annum and payable upon demand in cash and cash equivalents. The current amount due from a subsidiary
represents payments made on behalf of a subsidiary, which is unsecured, bears interest at 3.10% to 3.25% (2014: 4.95% to
5.02%) per annum and is payable upon demand in cash and cash equivalents.
The amounts due to subsidiaries represent advances and payments made on behalf by subsidiaries, bear interest at 4.99%
to 5.48% (2014: 2.90%) per annum and payable upon demand in cash and cash equivalents.
20.4 Material non-controlling interests
As at 30 June 2015, the total non-controlling interests are RM110,957,000 (2014: RM98,677,000), of which RM60,494,000
(2014: RM53,776,000) are attributable to Clementi Development Pte. Ltd. (“Clementi”). The other non-controlling interests are
not significant.
Set out below are the summarised financial information for Clementi that has non-controlling interests that are material to the
Group. The below financial information is based on amounts before inter-company eliminations.
In RM’000
Proportion of ordinary shares held by non-controlling interests (%)
Summarised statements of comprehensive income:
Revenue Profit/Total comprehensive income for the financial year Profit/Total comprehensive income attributable to non-controlling interests
Clementi Development Pte. Ltd.
2015
2014
12%
12%
85,550
12,975
1,557
46,278
8,825
1,059
ANNUAL REPORT 2015
165
20.4 Material non-controlling interests (Continued)
In RM’000
Summarised statements of financial position:
Current assets Current liabilities Non-current assets Non-current liabilities Clementi Development Pte. Ltd.
2015
2014
1,416,971
(197,148)
672
(718,294)
1,262,340
(169,422)
704
(645,491)
502,201
448,131
Summarised cash flows:
Cash flows from/(used in) operating activities
Cash flows used in investing activities
Cash flows from/(used in) financing activities
3,013
(2)
12,537
(17,669)
–
(18,968)
Net increase/(decrease) in cash and cash equivalents during the financial year
Cash and cash equivalents at beginning of the financial year
Foreign exchange differences on opening balances
15,548
33,878
3,737
(36,637)
69,346
1,169
Cash and cash equivalents at end of the financial year
53,163
33,878
Net assets 166
ANNUAL REPORT 2015
21. ASSOCIATES
21.1 Investments in associates
Group
In RM’000
Company
2015
2014
2015
2014
Unquoted shares, at cost
Bargain purchase recognised in prior years
77,721
9,754
48,166
9,754
1,050
–
1,050
–
Share of post-acquisition results and reserves
87,475
8,313
57,920
6,597
1,050
–
1,050
–
95,788
64,517
1,050
1,050
Unquoted shares include redeemable preference shares (“RPS”) issued by associates, which are redeemable at the option of
issuer and entitle the Company to receive dividend out of profits of the issuer at a rate to be determined by the issuer.
All the associates of the Group are accounted for using the equity method in the consolidated financial statements. Details of
the associates are set out in Note 44 to the financial statements.
The Group does not have any associate which is individually material to the Group for both financial years ended 30 June
2015 and 30 June 2014.
Group
During the financial year, the Group acquired additional 7.8% of the issued and paid-up ordinary shares and 9.2% of the issued
and paid-up cumulative redeemable preference shares in Continental Estate Sdn. Bhd. (“CESB”) for a total consideration of
RM29,555,000. CESB becomes a 32.0% associate of the Group subsequent to the said acquisition.
Company
In the previous financial year, the Company subscribed for 1,050,000 ordinary shares of RM1.00 each, representing 35%
of the issued and paid-up share capital of IOI Corporate Services Sdn. Bhd. for a total cash consideration of RM1,050,000.
ANNUAL REPORT 2015
167
21. ASSOCIATES (Continued)
21.2 Summary of financial information of associates
In RM’000
Group
2015
2014
255,412
8,962
261,974
21,566
16,584
6,042
17,638
6,285
–
28,899
Assets and liabilities
Total assets
Total liabilities
Results
Revenue
Profit/Total comprehensive income for the financial year
Other information
Dividend received
21.3 The reconciliation of net assets of the associates to the carrying amount of the investment in associates is as
follows:
In RM’000
Group
2015
2014
Share of net assets of the Group
Bargain purchase
86,034
9,754
54,763
9,754
Carrying amount in the statement of financial position
95,788
64,517
1,716
3,494
Share of profit or loss of the Group
168
ANNUAL REPORT 2015
22. JOINT VENTURES
22.1 Interests in joint ventures
In RM’000
Group
2015
2014
Unquoted shares, at cost
Share of post-acquisition results and reserves
2,913,003
158,509
2,835,045
(17,297)
Amounts due from joint ventures
3,071,512
1,083,750
2,817,748
1,037,998
4,155,262
3,855,746
Unquoted shares include redeemable preference shares (“RPS”) issued by joint ventures, which are redeemable at the option
of issuer and entitle the Company to receive dividend out of points of the issuer at a rate to be determined by the issuer.
The above joint arrangements of the Group are regarded as joint ventures pursuant to the contractual rights and obligations
of the joint venture agreements that provide the Group with the rights to the net assets of the joint ventures. The joint ventures
are accounted for using the equity method in the consolidated financial statements. Details of the joint ventures are set out
in Note 44 to the financial statements.
In the previous financial year, the Company acquired 100% equity interests in IOI Conso as disclosed in Note 20.1 to the
financial statements. IOI Conso holds 49.9% equity interests in a joint venture, Scottsdale Properties Pte. Ltd.
ANNUAL REPORT 2015
169
22. JOINT VENTURES
22.2 Financial information of joint ventures
Set out below is the summarised financial information for joint ventures that are material to the Group, which are accounted
for using the equity method.
(i)
Summarised statements of financial position:
Scottsdale
Properties
Pte. Ltd.
Pinnacle
(Sentosa)
Pte. Ltd.
Mergui
Development
Pte. Ltd.
Non-current:
Non-current assets
6,372,432
4,361
356
Current:
Cash and cash equivalents
Other current assets
14,955
2,212,439
1,142
4,104,800
91,553
218,185
Total current assets
2,227,394
4,105,942
309,738
Total assets
8,599,826
4,110,303
310,094
1,134,750
1,567,187
–
66,217
–
4,306
Total non-current liabilities
1,200,967
1,567,187
4,306
Current:
Financial liabilities
(excluding trade and other payables and provisions)
Other liabilities
(including trade and other payables and provisions)
4,401,636
–
–
540,394
41,700
177,845
Total current liabilities
4,942,030
41,700
177,845
Total liabilities
6,142,997
1,608,887
182,151
Net assets 2,456,829
2,501,416
127,943
In RM’000
2015
Non-current:
Other liabilities
(including trade and other payables and provisions) 170
ANNUAL REPORT 2015
22. JOINT VENTURES (Continued)
22.2 Financial information of joint ventures (Continued)
for using the equity method (Continued).
(i)
Summarised statements of financial position (Continued):
Scottsdale
Properties
Pte. Ltd.
Pinnacle
(Sentosa)
Pte. Ltd.
Mergui
Development
Pte. Ltd.
Non-current:
Non-current assets
4,708,791
3
7
Current:
Cash and cash equivalents
Other current assets
6,745
1,850,668
229
3,764,924
71,805
436,625
Total current assets
1,857,413
3,765,153
508,430
Total assets
6,566,204
3,765,156
508,437
4,285,547
1,437,194
56,879
57,525
–
71,907
4,343,072
1,437,194
128,786
In RM’000
2014
Non-current:
Other liabilities
(including trade and other payables and provisions) Total non-current liabilities
Current:
Other liabilities
(including trade and other payables and provisions)
–
10,714
52,416
173,886
51,932
8,350
Total current liabilities
173,886
62,646
60,766
Total liabilities
4,516,958
1,499,840
189,552
Net assets 2,049,246
2,265,316
318,885
ANNUAL REPORT 2015
171
for using the equity method (Continued):
(ii)
Summarised statements of comprehensive income:
Scottsdale
Properties
Pte. Ltd.
Pinnacle
(Sentosa)
Pte. Ltd.
Mergui
Development
Pte. Ltd.
Revenue
28,071
30,757
85,124
Depreciation and amortisation
Interest income
Interest expenses
(575)
17
(13,174)
(4)
9
(28,653)
(1)
115
–
Profit/(Loss) before taxation
Taxation
148,998
(37,500)
(15,063)
4,152
46,946
(7,856)
Profit/(Loss)/Total comprehensive income for the financial year
111,498
(10,911)
39,090
–
–
149,856
Scottsdale
Properties
Pte. Ltd.
Pinnacle
(Sentosa)
Pte. Ltd.
Mergui
Development
Pte. Ltd.
–
4,289
389,238
–
10
–
–
1
(26,233)
(1)
20
–
(Loss)/Profit before taxation
Taxation
(19,156)
(60)
(37,202)
–
171,827
(29,219)
(Loss)/Profit/Total comprehensive income for the financial year
(19,216)
(37,202)
142,608
–
–
–
In RM’000
2015
Dividends received/receivable
In RM’000
2014
Revenue
Interest income
Interest expenses
Dividends received/receivable
172
ANNUAL REPORT 2015
(iii)
Reconciliation of the summarised information presented to the carrying amounts of interest in joint ventures is set out
below:
Scottsdale
Properties
Pte. Ltd.
Pinnacle
(Sentosa)
Pte. Ltd.
Mergui
Development
Pte. Ltd.
As at 1 July 2014
Less: Gross dividend distributed during the financial year
Profit/(Loss) for the financial year
Movement in share capital
2,049,246
–
111,498
102,182
193,903
2,265,316
–
(10,911)
41,491
205,520
318,885
(249,760)
39,090
–
19,728
As at 30 June 2015
2,456,829
2,501,416
127,943
Unquoted shares, at cost Share of post-acquisition results and reserves
1,069,075
143,000
1,820,364
(194,444)
1,435
75,331
Total investments in joint ventures
1,212,075
566,240
1,625,920
–
76,766
–
Total interests in joint ventures
1,778,315
1,625,920
76,766
In RM’000
2015
Net assets:
ANNUAL REPORT 2015
173
(iii)
Reconciliation of the summarised information presented to the carrying amounts of interest in joint ventures is set out
below (Continued):
Scottsdale
Properties
Pte. Ltd.
Pinnacle
(Sentosa)
Pte. Ltd.
Mergui
Development
Pte. Ltd.
As at 1 July 2013
(Loss)/Profit for the financial year
Movement in share capital
1,990,641
(19,216)
32,730
45,091
(411,246)
(37,202)
2,756,776
(43,012)
170,775
142,608
–
5,502
As at 30 June 2014
2,049,246
2,265,316
318,885
Unquoted shares, at cost Share of post-acquisition results and reserves
1,018,086
(9,394)
1,793,395
(320,940)
1,435
189,896
Total investments in joint ventures
1,008,692
519,272
1,472,455
6,964
191,331
34,150
1,527,964
1,479,419
225,481
In RM’000
2014
Net assets:
Set out below are the summarised information of all individually immaterial joint ventures on an aggregate basis.
In RM’000
2015
2014
Carrying amounts of interests in joint ventures
156,751
517,510
145,271
477,612
674,261
622,883
74
5,212
Share of joint ventures’ profits/total comprehensive income
22.3 Amounts due from joint ventures
The amounts due from joint ventures represent outstanding amounts arising from the Group’s subsidiaries’ proportionate
share in the advances and working capital to the joint ventures for the acquisition of land and its development projects in
Singapore. In the current financial year, an amount of SGD28,742,000 (equivalent to RM80,530,000) (2014: SGD695,337,000
(equivalent to RM1,808,236,000)) was capitalised as redeemable preference shares. The amounts due from joint ventures are
unsecured, non-interest bearing except for an amount of RM517,510,000 (2014: 477,612,000), which bears interest at rates
of 1.20% (2014: 1.20%) per annum and is not repayable within the next twelve (12) months.
174
ANNUAL REPORT 2015
23. DEFERRED TAXATION
Group
In RM’000
Company
2015
2014
2015
2014
132,515
16,731
(171)
–
Recognised in profit or loss (Note 12)
– Current financial year
– Prior years
69,007
(1,416)
53,412
1,811
–
171
(171)
–
Addition through acquisitions of subsidiaries (Note 20.1)
67,591
–
19,666
55,223
60,667
(106)
171
–
–
(171)
–
–
219,772
132,515
–
(171)
Presented after appropriate offsetting as follows:
Deferred tax assets
317,542
(97,770)
205,411
(72,896)
–
–
–
(171)
219,772
132,515
–
(171)
The movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
Group
In RM’000
Company
2015
2014
2015
2014
205,411
38,436
–
–
7,970
15,200
–
–
(5,610)
27,495
–
–
15,906
48,457
–
–
93,865
75,823
–
–
112,131
166,975
–
–
317,542
205,411
–
–
Recognised in profit or loss
Temporary differences on capital allowances
Temporary differences on amortisation of fair value
adjustments on business combinations
Temporary differences on fair value adjustments on
investment properties
Temporary differences on profit from sales of
development properties
ANNUAL REPORT 2015
175
23. DEFERRED TAXATION (Continued)
The movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows (Continued):
Group
In RM’000
Company
2015
2014
2015
2014
72,896
21,705
171
–
Recognised in profit or loss
Temporary differences on unutilised tax losses
Temporary differences on unabsorbed capital allowances
Other deductible temporary differences
(848)
6,363
19,359
(334)
(101)
51,626
–
–
(171)
–
–
171
24,874
51,191
(171)
171
97,770
72,896
–
171
Deferred tax assets
The components of deferred tax liabilities and assets at the end of the reporting period comprise the tax effects of:
Group
In RM’000
Company
2015
2014
2015
2014
26,513
18,543
–
–
46,719
52,329
–
–
Temporary differences on accelerated capital allowances
Temporary differences on amortisation of fair value
adjustments on business combinations
Temporary differences on fair value adjustments on
investment properties
Temporary differences on profit from sales of
development properties
74,622
58,716
–
–
169,688
75,823
–
–
317,542
205,411
–
–
Unutilised tax losses
Unabsorbed capital allowances
Other deductible temporary differences
872
6,864
90,034
1,720
501
70,675
–
–
–
–
–
171
97,770
72,896
–
171
Deferred tax assets
176
ANNUAL REPORT 2015
23. DEFERRED TAXATION (Continued)
The following deferred tax assets have not been recognised:
Group
In RM’000
2015
2014
Unutilised tax losses
Unabsorbed capital allowances
5,924
–
6,571
2,678
5,924
9,249
Deferred tax assets of certain subsidiaries have not been recognised in respect of these items as it is not probable that taxable profit
of the subsidiaries will be available against which the deductible temporary differences can be utilised.
24. PROPERTY DEVELOPMENT COSTS
Group
2015
Long term
Freehold
leasehold Development
In RM’000
land
land
costs
Accumulated
cost charged
to profit
or loss
Total
At cost
Costs incurred
Transfer to property, plant and equipment
(Note 15)
Transfer from land held for
property development (Note 17)
Transfer to inventories
Recognised as expense in profit or
loss as part of cost of sales
Completed projects
1,460,633
3,034
250,595
–
5,387,569
1,289,622
(4,982,110)
–
2,116,687
1,292,656
–
(1,488)
(6,605)
–
(8,093)
230,227
(8,093)
94,820
135,949
(2,948)
29,734
393,729
(162,817)
42,592
–
–
(42,014)
759,905
(173,858)
125,132
–
(297,950)
–
(10,248)
–
(4,328,812)
(756,748)
4,637,010
(756,748)
–
1,482,671
401,594
2,615,278
(1,143,862)
3,355,681
ANNUAL REPORT 2015
177
24. PROPERTY DEVELOPMENT COSTS (Continued)
Group
2014
Long term
Freehold
leasehold Development
In RM’000
land
land
costs
Accumulated
cost charged
to profit
or loss
Total
At cost
Costs incurred
Acquisitions of subsidiaries (Note 20.1)
Transfer from land held for
property development (Note 17)
Transfer to inventories
Recognised as expense in profit or loss
as part of cost of sales
1,378,553
3,034
21,351
245,653
–
–
4,388,493
723,607
263,599
(4,213,772)
–
(215,517)
1,798,927
726,641
69,433
36,755
(2,438)
23,378
9,178
(3,771)
(465)
134,240
(125,285)
2,915
–
–
(341)
180,173
(131,494)
25,487
–
–
–
(552,480)
(552,480)
1,460,633
250,595
5,387,569
(4,982,110)
2,116,687
Included in costs incurred in property development of the Group are interest expenses charged by bank and non-controlling interest
during the financial year amounting to RM41,474,000 and RM1,448,000 respectively (2014: Nil).
25. INVENTORIES
In RM’000
Group
2015
2014
Completed development properties
Raw materials and consumables
Others
299,038
684
2,722
185,965
2,373
2,780
302,444
191,118
–
401
302,444
191,519
At cost
At net realisable value
Completed development properties
178
ANNUAL REPORT 2015
26. TRADE AND OTHER RECEIVABLES
Group
In RM’000
Company
2015
2014
2015
2014
Trade receivables (Note 26.1)
Other receivables, deposits and prepayments (Note 26.2)
Accrued billings
Amounts due from contract customers (Note 26.3)
399,240
219,961
287,066
253
147,202
61,472
282,488
882
–
146
–
–
–
2,258
–
–
906,520
492,044
146
2,258
26.1 Trade receivables
In RM’000
Group
2015
2014
Trade receivables
Less: Accumulated impairment losses
401,910
(2,670)
150,846
(3,644)
399,240
147,202
(a)
Included in trade receivables of the Group are amounts due from affiliates of RM1,731,000 (2014: RM2,280,000) for
property project management services, provision of landscaping services and related costs provided by a subsidiary,
which is unsecured, non-interest bearing and payable within the credit period in cash and cash equivalents.
(b)
The normal trade credit terms granted by the Group range from 7 to 90 days (2014: 7 to 90 days) from date of invoice
and progress billing. They are recognised at their original invoiced amounts, which represent their fair values on initial
recognition.
(c)
The reconciliation of movements in the accumulated impairment losses of trade receivables is as follows:
Group
In RM’000
2015
2014
Acquisitions of subsidiaries
Charge for the financial year
Written back
Written off
3,644
–
88
(927)
(135)
4,699
196
757
(1,042)
(966)
2,670
3,644
ANNUAL REPORT 2015
179
26. TRADE AND OTHER RECEIVABLES (Continued)
26.2 Other receivables, deposits and prepayments
Group
In RM’000
Company
2015
2014
2015
2014
Other receivables
Less: Accumulated impairment losses
166,640
(1,439)
26,733
(1,439)
141
–
2,253
–
Deposits
Prepayments
165,201
31,063
23,697
25,294
32,767
3,411
141
5
–
2,253
5
–
219,961
61,472
146
2,258
Included in other receivables of the Group were an amount of RM100,160,000 (2014: Nil) in relation to a government grant for
the infrastructure costs of a project undertaken by the Group and RM50,432,000 (2014: Nil) pertaining to dividend receivable
from a joint venture. Included in deposits of the Group were an amount of RM11,274,000 (2014: RM8,500,000) paid for new
land acquisitions.
(i)
The reconciliation of movements in the accumulated impairment losses of other receivables is as follows:
Group
In RM’000
2015
2014
Written off
1,439
–
1,551
(112)
1,439
1,439
26.3 Amounts due from contract customers
In RM’000
Group
2015
2014
Aggregate costs incurred to date
Recognised profit
27,837
6,964
26,841
6,738
Progress billings
34,801
(34,548)
33,579
(32,697)
253
882
Amounts due from contract customers
180
ANNUAL REPORT 2015
27. OTHER INVESTMENTS
Group
In RM’000
– Unquoted investment outside Malaysia
2015
2014
–
340,629
The unquoted investments in the previous financial year were operated by a reputable licensed bank in PRC which had been fully
realised during the financial year.
28. SHORT TERM FUNDS
Group
In RM’000
Investments in fixed income trust funds in Malaysia
at fair value through profit or loss
Company
2015
2014
2015
2014
706,481
225,079
706,481
–
Investments in fixed income trust funds in Malaysia represent investment in highly liquid money market funds, which are readily
convertible to known amounts of cash and subject to an insignificant risk of changes in value.
29. DEPOSITS WITH FINANCIAL INSTITUTIONS
Group
In RM’000
Deposits with licensed banks
Company
2015
2014
2015
2014
762,105
261,957
19,000
–
Included in the Group’s deposits with financial institutions are amounts of SGD5,595,000 (2014: SGD6,520,000), equivalents to
approximately RM15,675,000 (2014: RM16,752,000) held under Housing Developers (Project Account) (Amendment) Rules 1997
in Singapore, which is not available for general use by the Group.
ANNUAL REPORT 2015
181
30. CASH AND BANK BALANCES
Included in the Group’s cash and bank balances are amounts of:
(i)
RM166,846,000 (2014: RM94,561,000) held under the Housing Development Account pursuant to Section 7A of the Housing
Development (Control and Licensing) Act, 1966 in Malaysia, as amended by the Housing Developers (Housing Development
Account) (Amendment) Regulation, 2002 in Malaysia, which is not available for general use by the Group.
(ii)
SGD162,000 (2014: SGD1,291,000), equivalent to approximately RM454,000 (2014: RM3,318,000) held under Housing
Developers (Project Account) (Amendment) Rules 1997 in Singapore, which is not available for general use by the Group.
(iii)
RMB141,087,000 (2014: Nil), equivalent to approximately RM85,772,000 (2014: Nil) held under Housing Developers (Project
Account) Rules, Fujian Province, Administration of Pre-sale of Commodity Premises Regulations (Revised) in the People’s
Republic of China which is not available for general use by the Group.
31. SHARE CAPITAL
Group
2015
Par value
per share
RM
Number
of shares
’000
RM’000
Authorised:
As at 1 July/30 June 1.00
50,000,000
50,000,000
Issued and fully paid-up:
As at 1 July
Issuance during the financial year
1.00
1.00
3,239,015
539,836
3,239,015
539,836
As at 30 June
3,778,851
3,778,851
Ordinary shares
182
ANNUAL REPORT 2015
31. SHARE CAPITAL (Continued)
Group
2014
Par value
per share
RM
Number
of shares
’000
RM’000
0.50
1,000,000
500,000
0.50
1.00
(1,000,000)
50,000,000
(500,000)
50,000,000
1.00
50,000,000
50,000,000
0.50
812,786
406,393
0.50
1.00
1.00
(812,786)
#
3,239,015
(406,393)
*
3,239,015
1.00
3,239,015
3,239,015
Ordinary shares
Authorised:
As at 1 July
Adjustment on reverse acquisition accounting by analogy on 3 December 2013
– elimination of IOIPB’s authorised share capital
– restated to the Company’s authorised ordinary share capital
As at 30 June
As at 1 July
Adjustment on reverse acquisition accounting by analogy on 3 December 2013
– elimination of IOIPB’s issued and fully paid-up ordinary share capital
– restated to the Company’s issued and fully paid-up ordinary share capital
As at 30 June
Company
2015
Number
of shares
’000
RM’000
2014
Number
of shares
’000
RM’000
Ordinary shares of RM1.00 each:
Authorised:
As at 1 July/30 June
50,000,000
50,000,000
50,000,000
50,000,000
As at 1 July
3,239,015
539,836
3,239,015
539,836
#
3,239,015
*
3,239,015
As at 30 June
3,778,851
3,778,851
3,239,015
3,239,015
*
#
Representing RM2.00
Representing 2 ordinary shares
183
ANNUAL REPORT 2015
31. SHARE CAPITAL (Continued)
Of the total 3,778,850,513 (2014: 3,239,014,726) issued and fully paid-up ordinary shares of RM1.00 each, 11,956,400 shares
(2014: Nil) are held as treasury shares as disclosed in Note 32.1 to the financial statements. Accordingly, the number of ordinary
shares in issued and fully paid-up after deducting treasury shares as at the end of the financial year is 3,766,894,113 (2014:
3,239,014,726) ordinary shares of RM1.00 each.
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM3,239,014,726 to
RM3,778,850,513 by way of the issuance of 539,835,787 new ordinary shares of RM1.00 each pursuant to the renounceable
rights issue at an issue price of RM1.90 per ordinary share for total cash proceed of RM1,024,788,000.
The issuance of paid-up ordinary shares in the previous financial year comprised the following:
Date of allotment
Number of shares
’000
3 December 2013
2,163,867
Issued pursuant to the completion of acquisition of IOIPB as disclosed
in Note 20.1 to the financial statements.
5 December 2013
1,075,148
Issued pursuant to the completion of acquisition of Other Property
Companies, land and debt settlement.
3,239,015
32. RESERVES
Group
In RM’000
Company
2015
2014
2015
2014
Share premium
Treasury shares (Note 32.1)
Foreign currency translation reserve (Note 32.2)
11,868,773
(23,601)
754,369
11,383,821
–
162,846
11,868,773
(23,601)
–
11,383,821
–
–
12,599,541
11,546,667
11,845,172
11,383,821
184
ANNUAL REPORT 2015
32. RESERVES (Continued)
32.1 Treasury shares
The shareholders of the Company, by an ordinary resolution passed at an Annual General Meeting held on 27 October 2014,
approved the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy
Back”).
The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the
Share Buy Back can be applied in the best interests of the Company and its shareholders.
During the financial year, the Company repurchased its issued ordinary shares of RM1.00 each from the open market as
follows:
No. of
shares
Cost
’000
RM’000
Purchase price*
Highest
Lowest
RM
RM
Average
RM
2015
Purchased during the financial year
May 2015
June 2015
*
–
–
–
–
–
9,611
2,345
19,186
4,415
2.11
2.09
1.96
1.85
2.00
1.88
11,956
23,601
2.11
1.85
1.97
Purchase price includes stamp duties, brokerage, clearing fee and government service tax.
The transactions under Share Buy Back were financed by internally generated funds. The repurchased ordinary shares of
the Company were held as treasury shares in accordance with the provision of Section 67A of the Companies Act, 1965 in
Malaysia.
32.2 Foreign currency translation reserve
The foreign currency translation reserve is used to record foreign currency exchange differences arising from the translation of
the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation
currency. It is also used to record the exchange differences arising from monetary items, which form part of the Group’s net
investment in foreign operations, whereby the monetary item is denominated in either the functional currency of the reporting
entity or the foreign operation.
ANNUAL REPORT 2015
185
33. BORROWINGS
In RM’000
Group
2015
2014
Unsecured
Term loans (Note 33.1)
Less: Portion due within 12 months included under short term borrowings
2,799,010
(560,360)
2,057,230
(750,000)
2,238,650
1,307,230
560,360
750,000
2,799,010
2,057,230
Non-current liabilities
Current liabilities
Unsecured
Term loans – portion due within 12 months (Note 33.1)
Total borrowings
33.1 Term Loans
Term loans of the Group include:
Unsecured
(a)
Bridge loan of RM750,000,000, which bore interest at 0.90% plus cost of fund per annum was fully refinanced by the
issuance of the unrated Islamic Medium Term Notes (“Sukuk Murabahah”) during the financial year.
(b)
Term loan of RM300,000,000 with fixed interest at 4.75% per annum and is repayable at the end of 3rd year from the
drawn down date in May 2014.
(c)
Synthetic foreign currency loan of USD150,000,000, equivalent to RM493,350,000 was drawn down in RM. The
currency used for settlement of both principal and interest is also in RM, which is based on the rate of currency
exchange fixed at the date of inception. The said loan bears fixed interest at 4.70% per annum and is repayable in five
(5) years with three (3) annual principal repayments of RM164,450,000 each commencing from December 2016.
(d)
Sukuk Murabahah of RM750,000,000 with fixed profit rate at 4.98% per annum and is repayable in five (5) years
with three (3) annual principal repayments of RM190,000,000, RM190,000,000 and RM370,000,000 respectively
commencing from September 2017.
(e)
Commodity Murabahah Term Financing-I of RM700,000,000 with fixed profit rate at 5.10% per annum and is repayable
in four-and-half (4.5) years with four (4) semi-annual repayments of RM175,000,000 each commencing thirty-six (36)
months from the first drawn date in October 2014.
(f)
Term loan of SGD200,000,000 with interest at 0.75% plus Swap Offer Rate per annum and is repayable in thirty-six (36)
months from the drawn down date in May 2013.
(g)
Synthetic term loan of USD400,000,000 with interest at 1.18% plus London Interbank Offer Rate per annum and is
repayable in five (5) years with three (3) equal annual principal repayments commencing three (3) years from the drawn
down date. This term loan is for the general corporate funding requirement and or capital expenditure. As at the
reporting date, the Group has yet to drawdown this term loan.
(h)
Term loan of SGD250,000,000 with interest at 0.75% plus six (6) months Swap Offer Rate in arrears per annum. The
loan is repayable in three (3) years with bullet repayment commencing from the drawn down date. As at the reporting
date, the Group has yet to drawdown this term loan.
186
ANNUAL REPORT 2015
33. BORROWINGS (Continued)
33.1 Term Loans (Continued)
The term loans are repayable upon maturity over the following years:
Group
In RM’000
Less than 1 year
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
More than 5 years
2015
2014
560,360
463,499
703,499
703,499
368,153
–
750,000
513,880
464,450
164,450
164,450
–
2,799,010
2,057,230
34. AMOUNTS DUE TO NON-CONTROLLING INTERESTS
The amounts due to non-controlling interests represent outstanding amounts mainly arising from the non-controlling interests’
proportionate advances and working capital for the acquisition of land and its development projects in Singapore which are
unsecured and bear interest at rates ranging from 1.16% to 3.15% (2014: 1.20% to 5.02%) per annum, and are not repayable
within the next twelve (12) months after the reporting date.
35. TRADE AND OTHER PAYABLES
Group
In RM’000
Trade payables (Note 35.1)
Other payables and accruals (Note 35.2)
Progress billings
Company
2015
2014
2015
2014
490,643
684,000
487,296
279,831
382,027
379,007
–
2,852
–
–
742
–
1,661,939
1,040,865
2,852
742
35.1 Trade Payables
Included in trade payables of the Group are retention monies of RM198,692,000 (2014: RM150,364,000).
Credit terms of trade payables vary from 14 to 60 days (2014: 14 to 60 days) from the date of invoice and progress claim. The
retention monies are repayable upon expiry of the defect liability period of 6 to 24 months (2014: 6 to 24 months).
ANNUAL REPORT 2015
187
35. TRADE AND OTHER PAYABLES (Continued)
35.2 Other payables and accruals
Group
In RM’000
Company
2015
2014
2015
2014
Other payables
Customer deposits and other deposits
Accruals
70,387
64,407
549,206
46,408
51,760
283,859
1,807
–
1,045
–
–
742
684,000
382,027
2,852
742
36. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at end of financial year comprise:
Group
In RM’000
Short term funds (Note 28)
Deposits with financial institutions (Note 29)
Cash and bank balances (Note 30)
Company
2015
2014
2015
2014
706,481
762,105
441,053
225,079
261,957
131,216
706,481
19,000
997
–
–
52
1,909,639
618,252
726,478
52
The Group has undrawn banking facilities of RM2,259,997,000 (2014: RM33,443,000) at end of the financial year.
37. SIGNIFICANT RELATED PARTY DISCLOSURES
37.1 Identities of related parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or
exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and
the party are subject to common control or common significant influence. Related parties may be individuals or other entities.
Related parties of the Group include:
(i)
Direct and indirect subsidiaries as disclosed in Note 44 to the financial statements;
(ii)
Progressive Holdings Sdn. Bhd. (“PHSB”), the holding company of Vertical Capacity Sdn. Bhd., which is the major
corporate shareholder of the Company. Tan Sri Dato’ Lee Shin Cheng, a Director of the Company and his immediate
family members, are shareholders of PHSB, and together, they own 51.16% of the shares in the Company;
(iii)
Associates and joint ventures as disclosed in Note 44 to the financial statements;
(iv)
Key management personnel which is the Directors of the Company whom having authority and responsibility for
planning, directing and controlling the activities of the Group directly or indirectly; and
(v)
Affiliates, companies in which the Directors who are also the substantial shareholders of the Company have substantial
shareholdings interest.
188
ANNUAL REPORT 2015
37. SIGNIFICANT RELATED PARTY DISCLOSURES (Continued)
37.2 Significant related party transactions
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had undertaken the
following transactions with related parties during the financial year:
Group
In RM’000
2015
2014
Affiliates
Property project management services
Rendering of building maintenance services
Sale of plant and landscaping services
Rental income
Disposals of property, plant and equipment
Golf services
Hotel services
Rental expenses
7,351
1,061
616
66
–
34
13
(362)
7,575
636
814
29
2
–
–
(375)
542
4
2
–
311
–
–
319
29,916
1,986
233
8
3
–
(1,455)
(69)
–
–
–
30,779
1,610
2,150
–
94
185
(812)
–
2
(22,997)
(284)
5,967
1,205
149,856
15,679
5,164
–
2,533
38
–
19
7
(1,294)
(666)
1,646
102
9,417
–
–
–
–
Former holding company
Hotel services
Golf services
Rental income
Former related companies
Sales of palm products
Rental income
Rendering of management services
Hotel services
Disposals of property, plant and equipment
Management fees paid
Rental expenses
Golf services
Interest expenses
Acquisition of property, plant and equipment
Joint ventures
Interest income
Management fees
Dividend income
Associates
Rental income
Hotel services
Dividend income
Golf services
Management fees paid
Rental expenses
ANNUAL REPORT 2015
189
37. SIGNIFICANT RELATED PARTY DISCLOSURES (Continued)
37.2 Significant related party transactions (Continued)
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had undertaken the
following transactions with related parties during the financial year (Continued):
Company
In RM’000
Subsidiaries
Interest income
Interest expense
Management fees
2015
2014
8,677
(7,140)
(172)
9,102
(5,693)
(184)
The related party transactions described above were carried out on terms and conditions negotiated and agreed between
the parties.
Information regarding outstanding balances arising from related party transactions as at 30 June 2015 are disclosed in Note
20.2, 20.3, 22.1 and 26.1 to the financial statements.
37.3 Key management personnel compensation
The remuneration of key management personnel during the financial year is as follows:
Group
In RM’000
Company
2015
2014
2015
2014
Fees
Remuneration
Estimated monetary value of benefits-in-kind
770
37,095
72
685
35,110
64
770
66
–
685
37
–
Total short term employee benefits
37,937
35,859
836
722
190
ANNUAL REPORT 2015
38. CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that entities of the Group are able to continue as going
concerns while maximising the return to shareholders through the optimisation of the debt and equity mix.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. Capital of the
Group comprises equity, borrowings and other long term liabilities. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives,
policies or processes during the financial years ended 30 June 2015 and 30 June 2014.
The Group monitors capital using a gearing ratio, which is net debt divided by equity attributable to owners of the parent. The Group’s
net debt includes borrowings less cash and cash equivalents. The Group is subject to certain externally imposed requirements in
the form of loan covenants. The Group monitors gearing ratios and compliance with loan covenants based on the terms of the
respective loan agreements, such as debts to equity ratio less than one (1) time and interest coverage ratio at least two-and-half
(2.5) times. The Group has complied with loan covenants during the financial year.
In RM’000
Borrowings (Note 33)
Less: Cash and cash equivalents (Note 36)
Net debt
Equity
Gearing ratio
Group
2015
2014
2,799,010
(1,909,639)
2,057,230
(618,252)
889,371
1,438,978
13,427,197
11,202,530
0.07
0.13
39. FINANCIAL INSTRUMENTS
Financial risk management objectives and policies
The Group’s activities expose it to a variety of financial risks, including foreign currency risk, interest rate risk, price fluctuation risk,
credit risk, liquidity and cash flow risk. The Group’s overall financial risk management objective is to ensure that the Group creates
value for its shareholders whilst minimising potential adverse effects on its financial performance and position.
The Group operates within an established Enterprise Risk Management framework with clearly defined policies and guidelines which
are administered via Divisional Risk Management Committees. Divisional Risk Management Committees report regularly to the Audit
Committee which oversees the management of risk in the Group on behalf of the Board of Directors.
ANNUAL REPORT 2015
191
39. FINANCIAL INSTRUMENTS (Continued)
39.1 Foreign currency risk
The Group operates internationally and is exposed to various currencies, mainly Singapore Dollar (“SGD”), US Dollar (“USD”)
and Renminbi (“RMB”). Foreign currency denominated assets and liabilities together with expected cash flows from committed
purchases and sales give rise to foreign currency exposures.
The Group’s foreign currency risk management objective is to minimise foreign currency exposure that gives rise to economic
impact, both at transaction and reporting period translation levels.
39.1.1 Risk management approach
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country, in which the
property or investment is located or by borrowing in currencies that match the future revenue stream to be generated
from its investments.
Foreign currency exposures in transactional currencies other than functional currencies of the operating entities are
kept to an acceptable level.
39.1.2 Foreign currency risk exposure
The Group and the Company are not exposed to any significant foreign currency risk as the financial assets and
liabilities are mainly denominated in the functional currencies of the respective entities within the Group.
39.2 Interest rate risk
The Group’s interest rate risk arises from its interest-bearing financial instruments that could impact fair value and future cash
flows due to fluctuation in market interest rates.
The Group’s objective on interest rate risk management is to achieve a balance in repricing risks and the optimisation of its
cost of funds whilst ensuring sufficient liquidity to meet funding needs.
The Group actively reviews its debt portfolio, taking into account the nature and requirements of its businesses as
well as the current business and economic environment. This strategy allows it to achieve an optimum cost of capital
whilst locking in long-term funding rates for long-term investments.
Funds held for liquidity purposes and temporary surpluses are placed in short term interest-bearing financial
instruments.
192
ANNUAL REPORT 2015
39.2 Interest rate risk (Continued)
39.2.2 Interest rate risk exposure
The Group’s interest bearing assets are primarily cash held in Housing Development Accounts and short term fund.
The Group considers the risk of significant changes to interest rates on those deposits and short term funds to be
unlikely.
The following tables set out the carrying amounts, the weighted average effective interest rates and repricing periods
as at the end of the reporting period of the Group’s and Company’s financial instruments that are exposed to interest
rate risk:
Repricing brackets
Total
Weighted
average
effective
Less than
1 – 2
2 – 3
3 – 4 More than interest rate
In RM’000
Note
1 year
years
years
years
4 years
Total
%
Group
2015
Interest-bearing
financial liabilities
Floating rate instruments
Borrowings
Amounts due to
33
560,360
–
–
–
–
560,360
1.25
34
–
104,896
–
–
–
104,896
1.63
560,360
104,896
–
–
–
665,256
33
750,000
513,880
–
–
–
1,263,880
2.92
34
–
95,305
–
–
–
95,305
1.51
750,000
609,185
–
–
–
1,359,185
Total interest-bearing liabilities
2014
Interest-bearing
financial liabilities
Floating rate instruments
Borrowings
Amounts due to
Total interest-bearing liabilities
ANNUAL REPORT 2015
193
39.2.2 Interest rate risk exposure (Continued)
The following tables set out the carrying amounts, the weighted average effective interest rates and repricing periods
as at the end of the reporting period of the Group’s and Company’s financial instruments that are exposed to interest
rate risk (Continued):
Repricing brackets
Total
Weighted
average
effective
Less than
1 – 2
2 – 3
3 – 4 More than interest rate
In RM’000
Note
1 year
years
years
years
4 years
Total
%
Company
2015
Interest bearing financial assets
Floating rate instrument
Amount due from a subsidiary
20.3
Total interest-bearing asset –
–
–
498,306
–
498,306
–
–
–
498,306
–
498,306
1.51
Interest-bearing financial liability
20.3
–
–
–
42,976
–
42,976
Total interest-bearing liability
–
–
–
42,976
–
42,976
–
–
–
455,330
–
455,330
13
–
–
–
590,695
590,708
13
–
–
–
590,695
590,708
98,180
–
–
–
–
98,180
Total interest-bearing liability
98,180
–
–
–
–
98,180
(98,167)
–
–
–
590,695
492,528
5.36
2014
Interest-bearing financial asset
20.3
Total interest-bearing asset
1.20
Interest-bearing financial liability
20.3
4.95
194
ANNUAL REPORT 2015
39.2.3 Sensitivity analysis
Sensitivity analysis on interest rate is applied on floating rate financial instruments only, as the carrying amount of fixed
rate financial instruments are measured at amortised cost.
A 50 basis points movement in interest rates would have increased or decreased the profit or loss of the Group and
of the Company by approximately RM3,326,000 (2014: RM6,796,000) and RM2,277,000 (2014: RM2,463,000).
39.3 Credit risk
The Group’s credit risk exposure is mainly related to external counter-party credit risk on monetary financial assets and trade
credits. Credit risk is managed at the business unit level, but macro Group-wide policies on the granting of credit and credit
control are issued and monitored centrally, such as those relating to credit risk concentration, adequacy of formal credit rating
and evaluation of counter parties, credit impairment and unit level credit control performance.
Credit risk from monetary financial assets is generally low as the counter-parties involved are strongly rated financial institutions.
The Group does not extend any loans or financial guarantees to third parties except for its own subsidiaries and joint ventures.
The Group’s objective on credit risk management is to avoid significant exposure to any individual customer or counter party
and to minimise concentration of credit risk.
Credit risk or financial loss from the failure of customers or counter parties to discharge their financial and contractual
obligations from trade credits is managed through the application of credit approvals, credit limits, insurance
programmes and monitoring procedures on an on-going basis. If necessary, the Group may obtain collateral from
counter parties as a mean of mitigating losses in the event of default.
The Group’s credit risk varies with the different classes of counter-parties as outlined below:
(i)
Property
Generally, property units sold are progressively invoiced and settled by end-buyers’ financiers posing minimal
credit risk. Property investment entails the hospitality sub-segment for which sales are generally cash settled;
and the rental property sub-segment which poses a certain degree of collection risk in correlation with the
macroeconomic environment.
ANNUAL REPORT 2015
195
39.3 Credit risk (Continued)
39.3.1 Risk management approach (Continued)
(i)
Property (Continued)
Policies and procedures
(a)
Tail-end progress billings on property units sold that serve as retention sum are closely monitored and
claimed upon expiry of retention period;
(b)
Credit granted for corporate clients in the hospitality sub-segment are duly assessed and selectively
approved with established limits;
(c)
All tenants of its investment properties are subjected to deposits requirement averaging three (3) months
rental; and
(d)
Credit exposure is monitored on limits and aging, managed and reviewed periodically. Debtors with
emerging credit problems are identified early and remedial actions are taken promptly to minimise further
exposure and to restore past due status.
Collateral and credit enhancement
In general, a combination of:
(ii)
(a)
Title retention and conveyance on clearance for property development;
(b)
Cash deposits/advance for hospitality sub-segment; and
(c)
Deposits for rental sub-segment.
Financial institutions and exchanges
The Group places its working capital and surplus funds in current account, money market, and time-deposits
with banks; and in security papers and investment trusts managed by licensed institutions. Beyond the minimal
deposit guarantee offered by certain sovereign nation’s deposit insurance schemes, the Group is exposed to a
degree of counter-parties’ credit risk in times of severe economic or financial crisis.
Policies and procedures
(a)
Funds are placed only with licensed financial institutions with credit rating of “A- and above”; and
(b)
Funds placements are centrally monitored, and where applicable are spread out based on location need.
Collateral and credit enhancement
In general, a combination of:
(a)
National deposit insurance; and
(b)
Fidelity guarantee.
In general, all business units in the Group have a comprehensive policy that governs the need for formal credit
rating system and evaluation on counter parties prior to any contractual arrangement that would result in credit
risk exposure. Besides exposure amount, credit risk is also measured and monitored by way of credit quality
segregation, past due aging analysis, and limits breach alerts. Reviews on credit impairment needs are made
quarterly based on objective evidence of loss events.
196
ANNUAL REPORT 2015
39.3.2 Credit risk exposures and concentration
Exposure to credit risk – property development
The Group does not have any significant credit risk from its property development activities as sale of development
units are made to large number of property purchasers with end-financing facilities from reputable end-financiers,
and the ownership and rights to the properties revert to the Group in the event of default.
Exposure to credit risk – property investment
Credit risk arising from the Group’s property investment sub-segment is limited as all tenants of its investment
properties are subjected to deposits requirement averaging three (3) months rental.
Exposure to credit risk – monetary financial assets
Credit risk from monetary financial assets (short term funds, deposits with financial institutions and cash and bank
balances) is generally low as the counter-parties involved are reputable financial institutions.
At the end of the reporting period, the maximum exposure of the Group and of the Company to credit risk is
represented by the carrying amount of each class of financial assets recognised on the statement of financial position.
Credit risk concentration profile
Concentrations of credit risk with respect of trade and other receivables are limited due to the Group’s large number
of customers, who are dispersed over a broad spectrum of industries and businesses.
The credit risk concentration of the Group is mainly in the “receivables” class, except for deposits and prepayments,
and this is further analysed below to reveal the credit risk concentration by geographic location and business segment.
Property Development
Property Investment
Others
Total
RM’000
%
RM’000
%
RM’000
%
RM’000
%
Malaysia
Asia (excluding Malaysia)
204,930
234,166
47
53
113,833
–
100
–
11,512
–
100
–
330,275
234,166
59
41
439,096
100
113,833
100
11,512
100
564,441
100
Malaysia
Asia (excluding Malaysia)
139,997
7,393
95
5
12,375
–
100
–
12,731
–
100
–
165,103
7,393
96
4
147,390
100
12,375
100
12,731
100
172,496
100
Group
2015
2014
ANNUAL REPORT 2015
197
39.3.2 Credit risk exposures and concentration (Continued)
The Company does not have any significant exposure to any individual customer or counterparty nor does it have any
major concentration of credit risk except for amounts due from subsidiaries. The credit risks with respect of amounts
due from subsidiaries are assessed to be low.
Financial assets that are neither past due nor impaired
The credit quality of trade and other receivables that are neither past due nor impaired are substantially amounts
due from property purchasers with good collection track record with the Group. All short term funds, deposits with
financial institutions, cash and bank balances are placed with or entered into with reputable financial institutions.
Financial assets that are past due but not impaired
As at 30 June 2015, trade and other receivables of the Group of RM55,663,000 (2014: RM26,247,000) were past
due but not impaired. Receivables of the Group that are past due but not impaired are mainly related to the progress
billings to be settled by end-buyers’ financiers. It is the Group’s policy to monitor the financial standing of these
receivables on an ongoing basis to ensure that the Group is exposed to minimal credit risk.
The ageing analysis of these receivables is as follows:
In RM’000
Up to 3 months
More than 3 months
Group
2015
2014
39,616
16,047
24,252
1,995
55,663
26,247
39.4 Liquidity and cash flow risk
Liquidity and cash flow risk arise when financial resources are insufficient to meet financial obligations as and when they fall
due, or have to be met at excessive cost. The Group’s liquidity risk also includes non-financial instruments.
The Group’s liquidity risk management objective is to ensure that all foreseeable funding commitments can be met as and
when due in a cost-effective manner.
The Group leverages on IOI Properties Group Berhad (“IOIPG”) as the public listed parent company whereby treasury related
activities are centralised and where the optimal weighted average costs of funds is managed. The Company, as a parent
company plays a central liquidity management role where the Group’s longer term funding requirements are managed based
on business and liquidity needs, whilst the day-to-day operational liquidity needs are decentralised at the business unit level.
The Group practises an arm’s-length market based policy with regard to funding costs.
198
ANNUAL REPORT 2015
39.4 Liquidity and cash flow risk (Continued)
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to
ensure all operating, investing and financing needs are met. To mitigate liquidity risk, management measures and
forecasts its cash commitments, monitors and maintains a level of cash and cash equivalents deemed adequate to
finance the Group’s operations and investment activities. In addition, the Group strives to maintain available banking
facilities at a reasonable level against its overall debt position.
The Group manages its liquidity risk with a combination of the following methods:
(i)
Maintain a balanced contractual maturity profile of financial assets to meet financial liabilities (particularly on
near and immediate term maturity);
(ii)
Maintain a diversified range of funding sources with adequate back-up facilities;
(iii)
Maintain debt financing and servicing plan; and
(iv)
Maintain medium to long-term cash flow planning incorporating funding positions and requirements of all its
subsidiaries.
As a Group policy, all business units conform to the following processes in ensuring its liquidity profiles are balanced
and that all its obligations can be met when due:
(i)
Perform annual cash flow budgeting and medium term cash flow planning, in which the timing of operational
cash flows and its resulting surplus or deficit are reasonably determined. The aggregation of these allows for an
overview of the Group’s forecast cash-flow and liquidity position, which in turn facilitates further consolidated
cash flow planning;
(ii)
Manage contingent liquidity commitment and exposures;
(iii)
Monitor liquidity ratios against internal thresholds;
(iv)
Manage working capital for efficient use of funds and optimise cash conversion cycle; and
(v)
Manage concentration and maturity profile of both financial and non-financial liabilities.
ANNUAL REPORT 2015
199
39.4.2 Liquidity risk exposure
The following table details the maturity profile of the Group’s and the Company’s financial liabilities at the end of the
reporting period based on contractual undiscounted repayment obligations.
In RM’000
On
demand
Less than
1 year
1 –2
years
2 – 3
years
3 – 4
years
More than
4 years
Total
Group
2015
Trade and other payables*
Amounts due to
Borrowings
–
1,174,643
–
–
–
–
1,174,643
–
–
–
676,759
104,896
573,005
–
784,198
–
755,552
–
388,427
104,896
3,177,941
–
1,851,402
677,901
784,198
755,552
388,427
4,457,480
2014
Trade and other payables*
Amounts due to
Borrowings
–
661,858
–
–
–
–
661,858
–
–
–
765,232
95,305
557,229
–
499,955
–
177,976
–
172,179
95,305
2,172,571
–
1,427,090
652,534
499,955
177,976
172,179
2,929,734
Note:
*
Includes retention monies of RM198,692,000 (2014: RM150,364,000) which the repayable within the normal
operating cycle i.e. upon expiry of the defect liability period of 6 to 24 months (2014: 6 to 24 months).
200
ANNUAL REPORT 2015
39.4.2 Liquidity risk exposure (Continued)
The following table details the maturity profile of the Group’s and the Company’s financial liabilities at the end of the
reporting period based on contractual undiscounted repayment obligations (Continued):
In RM’000
On
demand
Less than
1 year
1 –2
years
2 – 3
years
3 – 4
years
More than
4 years
Total
–
–
42,976
2,852
–
–
–
–
–
–
–
–
42,976
2,852
–
45,828
–
–
–
–
45,828
–
–
19,726
742
–
–
98,180
–
–
–
–
–
117,906
742
–
20,468
–
98,180
–
–
118,648
Company
2015
2014
(i)
The Group and the Company have ample liquidity to meet its “on-demand” financial liabilities and obligations
maturing in the next twelve (12) months;
(ii)
Financial liabilities contractual maturity periods exceeding twelve (12) months are within comfortable levels, and
should be well covered by its annual free cash flow to be generated from its operations; and
(iii)
Liquidity risk concentration is evident in maturity bucket financial year 2016 onwards, where the Group and the
Company’s borrowing commitments are due.
39.5 Fair values
(a)
Methods and assumptions used to estimate fair value
The fair values of financial assets and financial liabilities are determined as follows:
(i)
Financial instruments that are not carried at fair value and whose carrying amounts are a reasonable
approximation of fair value
The carrying amounts of financial assets and liabilities, such as trade and other receivables, trade and other
payables and certain borrowings, are reasonable approximation of their respective fair values, either due to their
short term nature or that they are floating rate instruments that are re-priced to market interest rates on or near
the end of the reporting period.
(ii)
Fixed rate borrowings
The fair value of these financial instruments are estimated by discounting expected future cash flows at market
incremental lending rate for similar types of borrowing at the end of each reporting period.
ANNUAL REPORT 2015
201
39.5 Fair values (Continued)
(b)
Fair value hierarchy
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the end of the reporting period.
Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The following tables set out the financial instruments carried at fair value and those not carried at fair value for which
fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position:
Fair value of financial instruments
carried at fair value
not carried at fair value
Total fair Carrying
In RM’000
Level 1 Level 2 Level 3
Total Level 1 Level 2 Level 3
Total
value amount
Group
2015
Financial asset
Financial asset at fair value
through profit or loss
– Short term funds
706,481
–
–
706,481
–
–
–
–
706,481
706,481
Other financial liabilities carried
at amortised costs
– Borrowings
– Amounts due to
–
–
–
–
– 2,210,624
– 2,210,624 2,210,624 2,238,650
–
–
–
–
–
–
–
–
–
–
– 2,315,520
104,896
104,896
104,896
104,896
– 2,315,520 2,315,520 2,343,546
202
ANNUAL REPORT 2015
39.5 Fair values (Continued)
(b)
Fair value hierarchy (Continued)
carried at fair value
not carried at fair value
Total fair Carrying
In RM’000
Level 1 Level 2 Level 3
Total Level 1 Level 2 Level 3
Total
value amount
Group
2014
Financial asset
Financial asset at fair value
through profit or loss
– Short term funds
225,079
–
–
225,079
–
–
–
–
225,079
225,079
Other financial liabilities carried at
amortised costs
– Borrowings
– Amounts due to
–
–
–
–
– 1,307,230
– 1,307,230 1,307,230 1,307,230
–
–
–
–
–
–
–
–
–
–
– 1,402,535
– 1,402,535 1,402,535 1,402,535
–
–
–
–
–
498,306
–
498,306
498,306
498,306
–
–
–
–
–
590,695
–
590,695
590,695
590,695
–
–
–
–
–
98,180
–
98,180
98,180
98,180
95,305
95,305
95,305
95,305
Company
2015
Financial asset
– Amount due from a subsidiary
2014
Financial asset
– Amount due from a subsidiary
Other financial liabilities
– Amount due to a subsidiary
ANNUAL REPORT 2015
203
39.6 Classification of financial instruments
The financial assets and liabilities are classified into the following categories after initial recognition for the purpose of
subsequent measurement:
Loans and
In RM’000
receivables
Fair value
through
profit or loss
Total
564,441
–
–
762,105
441,053
–
–
706,481
–
–
564,441
–
706,481
762,105
441,053
1,767,599
706,481
2,474,080
Trade and other receivables, net of deposits and prepayments
Other investments
Short term funds
172,496
340,629
–
261,957
131,216
–
–
225,079
–
–
172,496
340,629
225,079
261,957
131,216
906,298
225,079
1,131,377
Short term funds
Deposits with financial institutions Cash and bank balances
141
637,443
–
19,000
997
–
–
706,481
–
–
141
637,443
706,481
19,000
997
657,581
706,481
1,364,062
2,253
590,708
52
–
–
–
2,253
590,708
52
593,013
–
593,013
Financial assets
Group
2015
Other investments
Short term funds
2014
Company
2015
2014
204
ANNUAL REPORT 2015
39.6 Classification of financial instruments (Continued)
In RM’000
Other
financial
liabilities at
amortised costs
Group
2015
Borrowings
2,799,010
1,174,643
104,896
4,078,549
2014
Borrowings
2,057,230
661,858
95,305
2,814,393
Company
2015
2,852
42,976
45,828
2014
742
117,906
118,648
ANNUAL REPORT 2015
205
40. COMMITMENTS
40.1 Capital commitments
In RM’000
Authorised capital expenditure not provided for in the financial statements
– Contracted
Additions of land held for property development
Additions of property, plant and equipment
Additions of investment properties
– Not contracted
Additions of property, plant and equipment
Additions of investment properties
Group
2015
2014
121,359
243,163
386,532
40,000
174,295
306,774
493,956
667,879
84,330
39,000
40.2 Operating lease commitments
40.2.1 The Group as lessee
The Group entered into a non-cancellable operating lease agreement for lease of office space and or office equipments
for a lease period of between one (1) to five (5) years.
The future aggregate minimum lease payments under non-cancellable operating lease contracted for as at end of the
reporting period but not recognised as liabilities are as follows:
In RM’000
Group
2015
2014
Not later than one (1) year
Later than one (1) year and not later than five (5) years
478
428
310
99
906
409
206
ANNUAL REPORT 2015
40. COMMITMENTS (Continued)
40.2 Operating lease commitments (Continued)
40.2.2 The Group as lessor
The Group entered into non-cancellable operating lease agreements on its investment properties and unsold
properties. These leases have remaining non-cancellable lease terms of between two (2) to nine (9) years.
The future minimum lease payments receivable under non-cancellable operating leases contracted for as at end of
reporting period but not recognised as receivables are as follows:
In RM’000
Group
2015
2014
Not later than one (1) year
Later than one (1) year and not later than five (5) years
Later than five (5) years
175,845
197,993
17,755
153,073
127,236
20,188
391,593
300,497
41. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
(a)
Issuance of an unrated sukuk issuance programme of up to nominal value of RM1,500,000 under the Shariah
principal of Murabahah (“Sukuk Programme”).
On 30 September 2014, IOIP Capital Management Sdn. Bhd. (“IOIPCM”) successfully made its first issuance of unrated
Islamic Medium Term Notes of RM750,000,000 pursuant to the Sukuk Programme. The details are disclosed in Note 33 to
the financial statements.
(b)
Renounceable right issue of IOIPG shares
On 9 February 2015, the Company completed the renounceable right issue exercise (”Right Issue”) following the issuance of
539,835,787 new ordinary shares of RM1.00 each in IOIPG (“IOIPG Shares”) (“Right Share”) at an issue price of RM1.90 per
Right Share on the Main Market of Bursa Malaysia. The total gross proceeds raised from the Right Issue were amounted to
RM1,025,688,000.
(c)
Proposed acquisition by the Company or its nominee(s) of 37.17% Stake in Taipei Financial Center Corporation
for a total cash consideration of NT$25,140,000,000 (RM2,740,000,000) (“Proposed Acquisition”).
Following the expiry of the three (3) months period for the seller and purchaser to obtain the foreign investment approval from
the Investment Commission (“FIA”) of Taiwan, the share sale agreements for the Proposed Acquisition by the Company or
its nominee(s) of 37.17% stake in Taipei Financial Center Corporation has terminated on 6 March 2015. The Company had
received the refund of deposits from the seller.
(d)
Establishment of an employees’ share option scheme (“ESOS”) of up to ten percent (10%) of the issued and paidup share capital of IOIPG (“ESOS Scheme”)
An ESOS was effected on 8 May 2015 for the benefit of the eligible executive and Executive Directors of the Group. As at the
date of this report, there was no ESOS granted to any Executives or Executive Directors.
ANNUAL REPORT 2015
207
42. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD
There was no significant event subsequent to the end of the reporting period.
43. SEGMENTAL INFORMATION
The Group has four (4) reportable operating segments that are organised and managed separately according to the nature of
products and services, specific expertise and technological requirements, which require different business and marketing strategies.
The reportable segments are summarised as follows:
Development of residential, commercial and industrial properties
Property investment
Investments in shopping mall, office complex and other properties
Management and operation of hotels, resorts and golf course
Other operations
Cultivation of plantation produce, project and building services management, landscape services and
other operations which are not sizeable to be reported separately
The Group’s chief operating decision maker monitors the operating results of its business units separately for the purpose of
making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating
profit or loss which, in certain aspects as explained in the table below, is measured differently from operating profit or loss in the
consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and
are not allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
Segment assets exclude tax assets, deferred tax assets and assets used primarily for corporate purposes such as goodwill on
consolidation, short term funds and deposits with financial institutions.
Segment liabilities exclude tax liabilities, deferred tax liabilities, loans and borrowings that are managed under centralised treasury
function.
Details are provided in the reconciliations from segment assets and liabilities to the Group position.
208
ANNUAL REPORT 2015
43. SEGMENTAL INFORMATION
In RM’000
Property
Property
development investment
Leisure &
Other
hospitality operations Elimination
Total
2015
Revenue
External
Inter-segment
1,562,258
178,504
192,633
1,860
110,778
1,094
40,822
832,738
–
(1,014,196)
1,906,491
–
Total revenue
1,740,762
194,493
111,872
873,560
(1,014,196)
1,906,491
559,368
–
–
72,073
97,515
316,586
–
–
10,143
–
–
–
22,234
–
1,716
–
–
–
–
–
689,260
316,586
1,716
72,073
Segment results
631,441
414,101
10,143
23,950
–
1,079,635
Result
In RM’000
Property
development
Property
investment
Leisure &
hospitality
Other
operations
Total
7,416,048
–
4,155,262
3,925,648
–
–
776,683
–
–
398,077
95,788
–
12,516,456
95,788
4,155,262
11,571,310
3,925,648
776,683
493,865
16,767,506
1,266,000
331,454
165,852
3,529
1,766,835
21,248
3,386
347,220
6,271
87,964
20,156
1,595
327
458,027
30,140
685
260
21
278
1,244
2015
Assets
Operating assets
Interests in associates
Segment assets
Liabilities
Segment liabilities
Other information
Capital expenditure
Non-cash items other than depreciation
and amortisation
ANNUAL REPORT 2015
209
43. SEGMENTAL INFORMATION (Continued)
In RM’000
Property
Property
development investment
Leisure &
Other
hospitality operations Elimination
Total
2014
Revenue
External
Inter-segment
1,243,476
132,926
104,894
1,894
58,317
375
47,758
515,724
–
(650,919)
1,454,445
–
Total revenue
1,376,402
106,788
58,692
563,482
(650,919)
1,454,445
Gain on bargain purchase for the
acquisitions of subsidiaries
462,630
66,575
4,377
31,905
–
565,487
81,174
–
93,993
305,307
22,684
–
115
–
–
–
197,966
305,307
543,804
1,990
60,644
465,875
–
–
27,061
–
–
32,020
1,504
–
–
–
–
1,068,760
3,494
60,644
Segment results
606,438
465,875
27,061
33,524
–
1,132,898
Result
In RM’000
Property
development
Property
investment
Leisure &
hospitality
Other
operations
Total
6,162,924
–
3,855,746
2,796,807
–
–
840,402
–
–
390,964
64,517
–
10,191,097
64,517
3,855,746
10,018,670
2,796,807
840,402
455,481
14,111,360
873,980
174,851
84,748
2,591
1,136,170
4,921
2,696
400,933
6,138
80,794
9,628
947
282
487,595
18,744
9,870
6,860
12
8
16,750
2014
Assets
Operating assets
Interests in associates
Segment assets
Liabilities
Segment liabilities
Other information
Capital expenditure
Non-cash items other than depreciation
and amortisation 210
ANNUAL REPORT 2015
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities to the Group’s corresponding amounts are as
follows:
In RM’000
Group
2015
2014
Segment results
Interest income
Interest expense
1,079,635
50,691
–
1,132,898
36,174
(48,668)
Taxation
1,130,326
(229,729)
1,120,404
(216,662)
900,597
903,742
Segment assets
Unallocated corporate assets
16,767,506
1,671,992
14,111,360
613,715
Total assets
18,439,498
14,725,075
Segment liabilities
Unallocated corporate liabilities
1,766,835
3,134,509
1,136,170
2,287,698
Total liabilities
4,901,344
3,423,868
Profit or loss
Assets
Liabilities
Geographical segments
The Group’s major businesses operate in the following principal geographical areas:
Malaysia
Development of residential, commercial and industrial properties
Investments in shopping mall, office building and other properties
Cultivation of plantation produce
Management and operation of golf course, project management, landscape services and other operations
Singapore
Development of residential and commercial properties
PRC
Development of residential properties
Investments in shopping mall, hotel, office building and other properties
211
ANNUAL REPORT 2015
Geographical segments (Continued)
In RM’000
Malaysia
Singapore
PRC
Total
1,504,120
7,081,973
454,506
85,550
3,999,763
–
316,821
680,072
3,521
1,906,491
11,761,808
458,027
1,123,340
6,387,011
477,193
46,278
3,711,805
–
284,827
740,449
10,402
1,454,445
10,839,265
487,595
2015
Revenue from external customers by location of customers
Non-current assets^
Capital expenditure by location of assets
2014
Revenue from external customers by location of customers
Non-current assets^
Capital expenditure by location of assets ^
Excluding financial instruments, deferred tax assets and goodwill on consolidation
There is no single external customer from which the revenue generated exceeded 10% of the Group’s revenue.
44. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The subsidiaries, associates and joint ventures incorporated in Malaysia except otherwise stated, are as follows:
Effective Group Interest
Name of Company
2015
2014
Principal Activities
%
%
Bukit Kelang Development Sdn. Bhd.
100.0
100.0
Property development and cultivation of
plantation produce
Eng Hup Industries Sdn. Bhd.
100.0
100.0
Property development and property
investment
–
100.0
Investment holding and property investment
IOI City Mall Sdn. Bhd.
100.0
100.0
Property investment, property development
and property management
IOI Consolidated (Singapore) Pte. Ltd. *
(Incorporated in Singapore)
100.0
100.0
Investment holding
IOI Properties Berhad
99.8
99.8
Property development, property investment
and investment holding
IOI Properties Capital (L) Berhad
(Incorporated in Labuan)
100.0
100.0
Provision of treasury management services
IOI Properties Empire Sdn. Bhd.
100.0
100.0
investment
IOIP Capital Management Sdn. Bhd.
100.0
100.0
Provision of treasury management services
Direct Subsidiaries
IOI City Holdings Sdn. Bhd.
212
ANNUAL REPORT 2015
44. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES (Continued)
The subsidiaries, associates and joint ventures incorporated in Malaysia except otherwise stated, are as follows (Continued):
Name of Company
2015
2014
%
%
Nice Skyline Sdn. Bhd.
99.9
99.9
Property development and
investment holding
Palmex Industries Sdn. Bhd.
100.0
100.0
investment holding
PMX Bina Sdn. Bhd.
100.0
100.0
General contractor
Resort Villa Development Sdn. Bhd.
100.0
100.0
Property investment and hotel and
hospitality services
Resort Villa Golf Course Berhad
100.0
100.0
Development and management of
a golf club
Resort Villa Golf Course Development Sdn. Bhd.
100.0
100.0
Hotel and hospitality services
Emerald Property Services Sdn. Bhd.
100.0
–
Provision of management services
Dynamism Investments Limited *
(Incorporated in Hong Kong)
100.0
–
Investment holding
Vital Initiative Limited *
100.0
–
Investment holding
Strategy Assets (L) Limited
(Incorporated in Labuan)
100.0
–
Investment holding
Cahaya Kota Development Sdn. Bhd.
99.8
99.8
Commercial Wings Sdn. Bhd.
99.8
99.8
Property investment
Dynamic Management Sdn. Bhd.
99.8
99.8
Property development, investment holding
and provision of management services
Flora Development Sdn. Bhd.
99.8
99.8
investment
Flora Horizon Sdn. Bhd.
99.8
99.8
plantation produce
Future Link Properties Pte. Ltd. *
99.8
99.8
Hartawan Development Sdn. Bhd.
99.8
99.8
plantation produce
IOI Harbour Front Sdn. Bhd.
99.8
99.8
investment
IOI Landscape Services Sdn. Bhd.
99.8
99.8
Landscape services, sale of ornamental
plants and turfing grass
IOI Land Singapore Pte. Ltd. *
99.8
99.8
Investment holding
Direct Subsidiaries (Continued)
Subsidiaries of IOI Properties Berhad
ANNUAL REPORT 2015
213
Name of Company
2015
2014
%
%
IOI Lavender Sdn. Bhd.
99.8
99.8
investment
IOI Medini Sdn. Bhd.
99.8
99.8
investment
IOI Medini Management Sdn. Bhd.
99.8
99.8
IOI Mulberry Sdn. Bhd.
99.8
99.8
investment
IOI PFCC Hotel Sdn. Bhd.
99.8
99.8
Property development, hotel and
hospitality services
IOI Prima Property Sdn. Bhd.
99.8
99.8
investment
IOI Properties (Singapore) Pte. Ltd. *
99.8
99.8
Property investment and investment holding
Jutawan Development Sdn. Bhd.
79.8
79.8
investment
Knowledge Vision Sdn. Bhd.
99.8
99.8
investment
Kumpulan Mayang Sdn. Bhd.
99.8
99.8
Multi Wealth (Singapore) Pte. Ltd. *
99.8
99.8
Investment holding
Palmy Max Limited *
99.8
99.8
Investment holding
Paska Development Sdn. Bhd.
99.8
99.8
investment
Pilihan Teraju Sdn. Bhd.
99.8
99.8
investment
Pine Properties Sdn. Bhd.
99.8
99.8
investment
Property Skyline Sdn. Bhd.
99.8
99.8
Speed Modulation Sdn. Bhd.
99.8
99.8
Property investment
IOI City Hotel Sdn. Bhd.
100.0
100.0
Property investment, property development,
hotel and hospitality services
IOI City Park Sdn. Bhd.
100.0
100.0
Car park operator and provision of car park
management services
IOI City Tower One Sdn. Bhd.
100.0
100.0
IOI City Tower Two Sdn. Bhd.
100.0
100.0
Subsidiaries of IOI Properties Berhad (Continued)
Subsidiaries of IOI City Holdings Sdn. Bhd.
214
ANNUAL REPORT 2015
Name of Company
2015
2014
%
%
IOI Building Services Sdn. Bhd.
99.8
99.8
Building maintenance services
Lush Development Sdn. Bhd.
99.8
99.8
Riang Takzim Sdn. Bhd.
99.8
99.8
Investment holding
Tanda Bestari Development Sdn. Bhd.
99.8
99.8
Legend Advance Sdn. Bhd.
69.8
69.8
investment
Paksi Teguh Sdn. Bhd.
99.8
99.8
General contractors
Pilihan Megah Sdn. Bhd.
99.8
99.8
Property development, property investment,
investment holding and provision of
management services
100.0
–
Investment holding and property investment
87.8
87.8
Nice Frontier Sdn. Bhd.
99.8
99.8
and cultivation of plantation produce
Property Village Berhad
99.8
99.8
Property development, golf club and
recreational services and investment
holding
Trilink Pyramid Sdn. Bhd.
99.8
99.8
Wealthy Growth Sdn. Bhd.
99.8
99.8
99.8
99.8
General contractors
IOI (Xiamen) Properties Co. Ltd. #
(Incorporated in the People’s Republic of China)
99.8
99.8
and hotel and hospitality services
Prime Joy Investments Limited *
99.8
99.8
Investment holding
Subsidiaries of Cahaya Kota Development Sdn. Bhd.
Subsidiaries of Dynamic Management Sdn. Bhd.
Subsidiary of IOI City Mall Sdn. Bhd.
IOI City Holdings Sdn. Bhd.
Subsidiary of Multi Wealth (Singapore) Pte. Ltd.
Clementi Development Pte. Ltd.*
Subsidiaries of Property Skyline Sdn. Bhd.
Subsidiary of Property Village Berhad
Baycrest Sdn. Bhd.
Subsidiaries of Palmy Max Limited
ANNUAL REPORT 2015
215
Name of Company
2015
2014
%
%
99.8
99.8
99.8
–
99.9
99.9
General contractors
35.0
35.0
31.9
24.2
plantation produce
49.9
49.9
Investment holding
49.9
49.9
49.9
49.9
64.9
64.9
59.9
59.9
Subsidiary of Prime Joy Investments Limited
Xiamen Double Prosperous Real Estate Development
Co. Ltd. #
property management services
Subsidiary of IOI (Xiamen) Properties Co. Ltd.
Xiamen Palm City Management Services Co. Ltd. #
Subsidiary of Nice Skyline Sdn. Bhd.
Jurung Teguh Sdn. Bhd.
Direct Associate
IOI Corporate Services Sdn. Bhd. #
Associate of IOI Properties Berhad
Continental Estates Sdn. Bhd. #
Joint Venture of IOI Consolidated (Singapore) Pte. Ltd.
Scottsdale Properties Pte. Ltd. #
Joint Venture of IOI Land Singapore Pte. Ltd.
Seaview (Sentosa) Pte. Ltd. #
Joint Venture of IOI Properties Berhad
PJ Midtown Development Sdn. Bhd.
Joint Venture of IOI Properties (Singapore) Pte. Ltd.
Pinnacle (Sentosa) Pte. Ltd. #
Joint Venture of Multi Wealth (Singapore) Pte. Ltd.
Mergui Development Pte. Ltd. #
#
*
Audited by a firm other than member firm of PricewaterhouseCoopers International Limited and PricewaterhouseCoopers,
Malaysia
Audited by member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity
from PricewaterhouseCoopers, Malaysia
216
ANNUAL REPORT 2015
45. AUTHORISATION FOR ISSUE
The financial statements of the Group and of the Company for the financial year ended 30 June 2015 were authorised for issue by
the Board of Directors on 1 September 2015.
ANNUAL REPORT 2015
217
46. SUPPLEMENTARY INFORMATION ON REALISED AND UNREALISED PROFITS OR LOSSES
The retained earnings as at the end of the reporting period are analysed as follows:
Group
In RM’000
Company
2015
2014
2015
2014
4,314,975
1,243,995
3,775,249
1,075,697
300,248
957
18,029
–
Total share of retained earnings/(accumulated losses)
from associates
Realised
Unrealised
5,558,970
4,850,946
301,205
18,029
8,626
(313)
6,792
(195)
–
–
–
–
Total share of (accumulated losses)/retained earnings
from joint ventures
Realised
Unrealised
8,313
6,597
–
–
(63,454)
(14,872)
37,862
(38,405)
–
–
–
–
(78,326)
(543)
–
–
5,488,957
4,857,000
301,205
18,029
Total retained earnings of the Company and its subsidiaries
Realised
Unrealised
218
ANNUAL REPORT 2015
STATEMENT BY DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 104 to 216 have been drawn up in accordance with Financial
Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position
of the Group and of the Company as at 30 June 2015 and of their financial performance and cash flows of the Group and of the Company
for the financial year then ended.
In the opinion of the Directors, the information set out in Note 46 to the financial statements on page 217 has been compiled in accordance
with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures
Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented
based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board in accordance with a resolution of the Directors.
Director
Lee Yeow Seng
Director
Putrajaya
1 September 2015
STATUTORY DECLARATION
I, Lau Sui Hing Betty, being the officer primarily responsible for the financial management of IOI Properties Group Berhad, do solemnly
and sincerely declare that the financial statements set out on pages 104 to 217 are, to the best of my knowledge and belief, correct and
I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations
Act, 1960.
Subscribed and solemnly declared
by the abovenamed
at Puchong, Selangor Darul Ehsan
this 1 September 2015
Before me
Ng Say Jin
Commissioner for Oaths
No. B195
)
)
)
)
ANNUAL REPORT 2015
219
INDEPENDENT AUDITORS’ REPORT
To The Members Of IOI Properties Group Berhad
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of IOI Properties Group Berhad on pages 104 to 216, which comprise the statements of financial
position as at 30 June 2015 of the Group and of the Company, the statements of profit or loss, statements of comprehensive income,
statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary
of significant accounting policies and other explanatory notes, as set out on Notes 1 to 45.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance
with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for
such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 30 June
2015 and of their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards and the
requirements of the Companies Act, 1965 in Malaysia.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries
of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b)
We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors,
which are indicated in Note 44 to the financial statements.
(c)
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements
are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we
have received satisfactory information and explanations required by us for those purposes.
(d)
The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made
under Section 174(3) of the Act.
220
ANNUAL REPORT 2015
INDEPENDENT AUDITORS’ REPORT (Cont’d)
To The Members Of IOI Properties Group Berhad
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 46 on page 217 is disclosed to meet the requirement of Bursa Malaysia Securities
Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information
in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of
Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA
Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material
respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS
(No. AF: 1146)
Chartered Accountants
Kuala Lumpur
1 September 2015
SHIRLEY GOH
(No. 1778/08/16 (J))
Chartered Accountant
ANNUAL REPORT 2015
221
GROUP’S MATERIAL PROPERTIES
DEVELOPMENT PROPERTIES
Location
Remaining
Land Area
(Acres)
Tenure (Approximately)
Year of
Usage Acquisition
Carrying Amount
as at
30 June 2015
RM’000
MALAYSIA
Klang Valley
Bandar Puchong Jaya, Puchong
Various parcels of land in
Puchong Jaya
Petaling
Selangor Darul Ehsan
Freehold
Bandar Puteri, Puchong
Various parcels of land in Puchong
Petaling
Dengkil, Sepang
On-going condominium
and mix development
1989 and
1990
161,460
Freehold
167 On-going mix development
1990
196,515
Freehold
and future development
land
1990 and
1994
154,436
Leasehold
expiring
2091
land
2001 and
2002
448,194
Mukim of Dengkil
Dengkil, Sepang
Freehold
2012
257,327
Bandar Puteri Bangi
Beranang
Mukim of Ulu Langat
Freehold
2013
631,660
Freehold
1,080 On-going mix development
land
1990
131,798
Freehold
3,616 On-going mix development
land
1988 and
2012
232,593
16 Sierra, Puchong South
Dengkil, Sepang
13
Negeri Sembilan Darul Khusus
Bandar IOI, Bahau
Mukim of Rompin, Jempol
Negeri Sembilan Darul Khusus
Johor Darul Takzim
Bandar Putra Kulai
Senai Kulai, Johor Bahru
Johor Darul Takzim
222
ANNUAL REPORT 2015
GROUP’S MATERIAL PROPERTIES (Cont’d)
Location
Remaining
Land Area
(Acres)
Tenure (Approximately)
Year of
Usage Acquisition
Carrying Amount
as at
30 June 2015
RM’000
MALAYSIA (Continued)
Johor Darul Takzim (Continued)
i-Synergy
Various parcels of land
in Senai, Kulai
Johor Bahru
Johor Darul Takzim
Freehold
Taman Kempas Utama
Various parcels of land in Tebrau
Johor Bahru
Johor Darul Takzim
507
On-going commercial
development
2015
164,884
Freehold
2006
359,976
The Platino
Mukim of Tebrau
Johor Bahru
Johor Darul Takzim
Freehold
2009
124,202
Plentong
Johor Darul Takzim
Freehold
2011
147,681
Nusa Jaya
Johor Darul Takzim
Leasehold
expiring
2137
7
Future development land
2013
159,633
Mukim of Pulai
Johor Darul Takzim
Freehold
16
2013
192,538
Mukim Sungai Segamat
Mukim Pagoh, District of Segamat
Johor Darul Takzim
Freehold
1,254
2014
218,807
A parcel of Land
Kulai Jaya
Johor Darul Takzim
Freehold
467
2014
140,351
Leasehold
expiring
2111
6
On-going condominium
development
2012
1,354,829
IOI Park Bay
Xinglin Bay, Zone 11-11
Jimei District
Xiamen, Fujian Province
Leasehold
expiring
2050 &
2080
2010
179,222
IOI Palm City
Jimei Main Road
Jimei New Town
Zone 11-12, Jimei District
Leasehold
expiring
2082
2012
448,907
OVERSEAS
Singapore
The Trilinq
Jalan Lempeng
Singapore
The People’s Republic of China
ANNUAL REPORT 2015
223
INVESTMENT PROPERTIES
Location
Tenure
Net Lettable
Area
(’000 sq. ft.)
(Approximately)
Usage
Age of
Building
(Year)
Carrying Amount
as at
30 June 2015
RM’000
RETAIL
IOI City Mall
Lebuh IRC
IOI Resort City
62502 Putrajaya
Freehold
1,442
4-storey shopping mall
#
1,489,850^
IOI Mall
Bandar Puchong Jaya
Puchong
Freehold
618
18
374,000
IOI Mall (new wing)
Bandar Puchong Jaya
Puchong
Freehold
241
6
192,000
Puchong Financial Corporate
Centre (“PFCC”)
Tower 1 and 2
Bandar Puteri
Puchong
Freehold
377
2 blocks of 12-storey and
20-storey purpose-built
office building
6
153,000
PFCC
Tower 4 and 5
Bandar Puteri
Puchong
Freehold
497
2 blocks of 18-storey and
21-storey purpose-built
office building
1
230,000
IOI City Tower 1 and Tower 2
Lebuh IRC
IOI Resort City
Putrajaya
Freehold
*
2 blocks of 31-storey
purpose-built office building
*
317,000
One IOI Square and
Two IOI Square
IOI Resort
Putrajaya
Freehold
441
2 blocks of 12-storey
purpose-built office building
12
209,100
PURPOSE-BUILT
OFFICE BUILDING
224
ANNUAL REPORT 2015
GROUP’S MATERIAL PROPERTIES (Cont’d)
Location
Tenure
Net Lettable
Area
(’000 sq. ft.)
(Approximately)
Usage
Age of
Building
(Year)
Carrying Amount
as at
30 June 2015
RM’000
OTHERS
Bungalow (Beverly Row)
IOI Resort
62505, Putrajaya
IOI Palm City Development
Xinglin Bay Road and
Jimei Main Road
Jimei New Town Zone 11-12
Jimei District, Xiamen
Fujian Province
Freehold
268
37 units of
residential bungalow
10 – 18
130,000
40 to 50
years
leasehold
*
Integrated mixed
development including
shopping mall and
purpose-built
office building
–
306,399
The revaluation of the above properties was last carried out in the financial year ended 30 June 2015.
* The investment properties are currently under construction.
# The building has obtained the certificate of completion in November 2014.
^ Included purpose-built carpark which classified as property, plant and equipment with carrying amount of RM369,850,000.
ANNUAL REPORT 2015
225
LEISURE AND HOSPITALITY PROPERTIES
Location
Tenure
Built-up
Land Area
Area
(Acres) (’000 sq. ft.)
Usage
Age of
Building
(Year)
Carrying Amount
as at
30 June 2015
RM’000
MALAYSIA
Palm Garden Hotel
IOI Resort
Putrajaya
Freehold
3
140
151-room hotel
22
44,540
Putrajaya Marriott Hotel
IOI Resort
Putrajaya
Freehold
16 (part of)
1,521
488-room hotel
12
145,357
IOI Palm Garden Golf Club
IOI Resort
Putrajaya
Freehold
146
171
18-hole golf
course and club
house
3
207,342
Four Points by Sheraton Puchong
Bandar Puteri
Puchong
Freehold
8 (part of)
242
250-room hotel
^
113,235
Le Méridien Putrajaya
IOI Resort
Putrajaya
Freehold
37 (part of)
*
350-room hotel
*
113,487
40 years
leasehold
7 (part of)
*
280-room hotel
**
111,538
OVERSEAS
IOI Palm City Hotel
Jimei District
^ The hotel has obtained the certificate of completion in December 2014.
* The hotels are currently under construction.
** Development order obtained during the financial year, the construction works will be commencing from the next financial year..
226
ANNUAL REPORT 2015
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Third Annual General Meeting (“AGM”) of the Company will
be held at Putrajaya Ballroom I (Level 3), Putrajaya Marriott Hotel, IOI Resort City, 62502 Sepang Utara,
Malaysia on Monday, 26 October 2015 at 10:00 am for the following purposes:
AGENDA
1
To receive the Audited Financial Statements for the financial year ended 30 June 2015 and the Reports
of the Directors and Auditors thereon.
2
To re-elect Datuk Dr Tan Kim Heung, a Director retiring by rotation pursuant to Article 87 of the
Company’s Articles of Association.
Please refer to Note A
Resolution 1
(Please refer to Note B)
3
To consider and if thought fit, to pass the following as Ordinary Resolutions in accordance with Section
129 of the Companies Act, 1965:
(i) “THAT Tan Sri Dato’ Lee Shin Cheng, a Director retiring pursuant to Section 129(2) of the Companies
Act, 1965 be and is hereby re-appointed a Director of the Company to hold office until the next
Annual General Meeting.”
Resolution 2
(ii) “THAT Datuk Tan Kim Leong @ Tan Chong Min, a Director retiring pursuant to Section 129(2) of the
Companies Act, 1965 be and is hereby re-appointed a Director of the Company to hold office until
the next Annual General Meeting.”
Resolution 3
(Please refer to Note B)
4
To consider and if thought fit, to pass the following as an Ordinary Resolution:
“THAT the payment of Directors’ fees of RM793,868 for the financial year ending 30 June 2016
payable quarterly in arrears after each month of completed service of the Directors during the financial
year, to be divided among the Directors in such manner as the Directors may determine, be and is
hereby approved.”
Resolution 4
(Please refer to Note C)
5
To re-appoint Messrs PricewaterhouseCoopers, the retiring auditors for the financial year ending
30 June 2016 and to authorise the Directors to fix their remuneration.
Resolution 5
(Please refer to Note D)
6
As special business, to consider and if thought fit, to pass the following Ordinary Resolutions:
6.1 Authority to Directors to allot and issue shares pursuant to Section 132D of the
Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby
authorised with full powers to allot and issue shares in the Company from time to time and upon
such terms and conditions and for such purposes as they may deem fit subject always to the
approval of the relevant authorities being obtained for such issue and provided that the aggregate
number of shares to be issued pursuant to this resolution does not exceed ten percent (10%) of
the issued share capital for the time being of the Company and that such authority shall continue in
force until the conclusion of the next Annual General Meeting of the Company and that the Directors
be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the
listing of and quotation for the additional shares so issued.”
Resolution 6
ANNUAL REPORT 2015
227
6.2 Proposed Renewal of Existing Share Buy-Back Authority
“THAT subject to compliance with applicable laws, regulations and the approval of all relevant
authorities, approval be and is hereby given to the Company to utilise up to the aggregate of the
Company’s latest audited retained earnings and share premium account, to purchase, from time to
time during the validity of the approval and authority under this resolution, such number of ordinary
shares of nominal value RM1.00 each in the Company as may be determined by the Directors of
the Company from time to time through Bursa Malaysia Securities Berhad (“Bursa Securities”)
upon such terms and conditions as the Directors may deem fit and expedient in the interest of
the Company provided that the aggregate number of shares to be purchased and/or held by the
Company pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up
ordinary share capital of the Company at the time of purchase (“Proposed Purchase”);
THAT at the discretion of the Directors of the Company, the shares of the Company to be purchased
are to be cancelled and/or retained as treasury shares and distributed as dividends or resold on
Bursa Securities;
THAT the Directors of the Company be and are hereby empowered generally to do all acts
and things to give effect to the Proposed Purchase with full powers to assent to any condition,
modification, revaluation, variation and/or amendment (if any) as may be imposed by the relevant
authorities and/or do all such acts and things as the Directors may deem fit and expedient in the
best interest of the Company;
AND THAT such authority shall commence immediately upon passing of this resolution until:
(i) the conclusion of the next Annual General Meeting of the Company at which time the authority
shall lapse unless by ordinary resolution passed at a general meeting, the authority is renewed
either unconditionally or subject to conditions;
(ii) the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
(iii) revoked or varied by ordinary resolution of the shareholders of the Company in a general
meeting,
whichever is the earlier but not so as to prejudice the completion of purchase(s) by the Company
before the aforesaid expiry date and, in any event, in accordance with the provisions of the Main
Market Listing Requirements of Bursa Securities or any other relevant authorities.”
7
To transact any other business of which due notice shall have been given in accordance with the
Companies Act, 1965 and the Company’s Articles of Association.
By Order of the Board,
Tan Choong Khiang
Secretary (MAICSA 7018448)
Putrajaya
2 October 2015
Resolution 7
228
ANNUAL REPORT 2015
NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
Notes
1
A member may appoint any person to be his proxy and there shall be no restriction as to the qualification of the proxy. The provision
of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2
An instrument appointing a proxy must be in writing under the hand of the appointor or of his attorney duly authorised in writing or,
if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised.
3
Subject to Note 4 below, a member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting.
If a member appoints two (2) proxies to attend at the same meeting, the instrument of proxy must specify the proportion of his
shareholdings to be represented by each proxy and only one (1) of those proxies is entitled to vote on show of hands.
4
Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple
beneficial owners in one (1) securities account, there is no limit to the number of proxies which the exempt authorised nominee may
appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under
the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of Section
25A(1) of the SICDA.
5
An instrument appointing a proxy may specify the manner in which the proxy is to vote in respect of a particular resolution and, where
an instrument of proxy so provides, the proxy is not entitled to vote on the resolution except as specified in the instrument.
6
An instrument appointing a proxy must be deposited at the office of the Share Registrar, Tricor Investor Services Sdn Bhd at
Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur,
Malaysia not less than 48 hours before the time for holding the meeting or any adjournment thereof.
7
Only members whose names appear in the Record of Depositors as at 20 October 2015 shall be eligible to attend the AGM or
appoint proxy to attend and vote on his behalf.
8
Note A – To receive Audited Financial Statements for the financial year ended 30 June 2015
This Agenda item is meant for discussion only as under the provision of Section 169(1) of the Companies Act, 1965, the audited
financial statements do not require a formal approval of the shareholders. Hence, this resolution will not put forward for voting.
The 2015 Annual Report (which includes the Financial Report, the Directors’ Report and the Independent Auditors’ Report) will be
presented to the meeting. Shareholders can access a copy of the 2015 Annual Report at IOI Properties Group Berhad (“IOIPG”)’s
website, www.ioiproperties.com.my.
The Chairman will give shareholders an opportunity to ask questions about, and make comments on, the financial statements and
reports and IOIPG’s performance.
Shareholders will also be given an opportunity to ask the representative(s) of IOIPG’s auditors, Messrs PricewaterhouseCoopers,
questions relevant to audit matters, including the Auditors’ Report.
9
Note B – To re-elect Directors/To re-appoint Directors
i.
Retirement of Director
The Company received and noted correspondence from Tan Sri Ong Ka Ting notifying of his intention not to seek re-election
at the 3rd AGM. Hence, Tan Sri Ong will be retiring as Director of the Company with effect from 26 October 2015 upon the
conclusion of the 3rd AGM.
ii. Re-election of Director
Datuk Dr Tan Kim Heung is standing for re-election as Director of the Company and being eligible, has offered himself for
re-election at the 3rd AGM.
The Company’s Articles of Association states that at each AGM of the Company, one-third (1/3) of the Directors or if their number
is not three (3) or a multiple of three (3), then the number nearest one-third (1/3) must retire from office, provided always that all
Directors shall retire from office once at least in each three (3) years, but shall eligible for re-election.
iii. Re-appointment of Directors
The re-appointment of Tan Sri Dato’ Lee Shin Cheng and Datuk Tan Kim Leong @ Tan Chong Min who have attained the age
of 70 years, as Directors of the Company to hold office until the conclusion of the next AGM, shall take effect if the Ordinary
Resolutions 2 and 3 are passed by a majority of not less than three-fourths (3/4) of such members as being entitled to vote in
person or by proxy at this AGM of which not less than 21 days’ notice has been given.
ANNUAL REPORT 2015
229
Each of the Directors standing for re-election/re-appointment has undergone a performance evaluation and has demonstrated that
he remains committed to the role and continues to be an effective and valuable member of the Board. The Board has also conducted
assessment on the independence of the Independent Directors who are seeking for re-election/re-appointment and is satisfied that
the Independent Directors have complied with the independence criteria applied by the Company and continue to bring independent
and objective judgement to the Board deliberation.
The Board comprises seven (7) Directors, consisting of an Executive Chairman, an Executive Director and five (5) Non-Executive
Directors, whose experience and expertise are derived from a range of industries and sectors providing an invaluable perspective on
the Group’s business. Profile details for each Director, including their career history, competencies and experience can be found on
pages 054 to 059 of the 2015 Annual Report.
10 Note C – To approve Directors’ Fees
The Board has reviewed the Directors’ fees after taking into account fee levels and trends for similar positions in the market and time
commitment required from the Directors. The payment of Directors’ fees for the financial year ending 30 June 2016 shall be payable
quarterly in arrears after each month of completed service of the Directors during the financial year.
11 Note D – To re-appoint auditors
The Audit and Risk Management Committee and the Board have considered the re-appointment of Messrs PricewaterhouseCoopers
as Auditors of the Company and collectively agreed that Messrs PricewaterhouseCoopers has met the relevant criteria prescribed by
Paragraph 15.21 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
Messrs PricewaterhouseCoopers were appointed as auditors at the 2014 AGM and have indicated their willingness to stand for
re-appointment as auditors of the Company until the conclusion of the AGM in 2016.
12 Explanatory Notes on Special Businesses
i
Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965
Ordinary Resolution 6 is to seek a renewal of the general mandate which was approved at the 2nd AGM of the Company held on
27 October 2014 and which will lapse at the conclusion of the forthcoming AGM to be held on 26 October 2015.
The general mandate, if approved, will provide flexibility to the Company for any possible fund raising activities, including but not
limited to placing of shares for the purpose of funding future investment project(s) and acquisition(s) and for strategic reasons.
In order to eliminate any delay and costs in convening a general meeting to specifically approve such issuance of shares, it is
considered appropriate that the Directors be empowered, as proposed under the Ordinary Resolution 6, to allot and issue shares
in the Company up to an amount not exceeding in total ten percent (10%) of the issued share capital of the Company for the time
being. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.
The Company did not issue any new shares pursuant to Section 132D of the Companies Act, 1965 under the general mandate
which was approved at the 2nd AGM of the Company.
The Directors currently have no intention of issuing new shares, or of granting rights to subscribe for or to convert any security
into shares, except in connection with the Company’s employees’ share option scheme.
ii
Proposed Renewal of Existing Share Buy-Back Authority
Ordinary Resolution 7 is to seek a renewal of the authority granted at the 2nd AGM of the Company held on 27 October 2014
and which will lapse at the conclusion of the forthcoming AGM to be held on 26 October 2015. The resolution authorises the
Company to make market purchases of its own ordinary shares as permitted by the Companies Act 1965.
The Board seeks authority to purchase up to 10% of the Company’s issued ordinary shares (excluding any treasury shares),
should market conditions and price justify such action.
The Directors only intend to use this authority to make such purchases if to do so could be expected to lead to an increase in net
assets value per share for the remaining shareholders and would be in the best interests of shareholders generally, having due
regard to appropriate gearing levels, alternative investment opportunities and the overall financial position of the Company. The
Company bought back 11,956,400 ordinary shares of RM1.00 each during the financial year ended 30 June 2015.
Any purchases of ordinary shares would be by means of market purchases through the Bursa Malaysia Securities Berhad. Any
shares purchased under this authority may either be cancelled or held as treasury shares by the Company. Treasury shares may
subsequently be cancelled or sold for cash.
Please refer to explanatory information in the Share Buy-Back Statement dated 2 October 2015.
230
ANNUAL REPORT 2015
STATEMENT ACCOMPANYING
NOTICE OF ANNUAL GENERAL MEETING
Pursuant to Paragraph 8.27 (2) of the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad
(i) Details of individuals who are standing for election as Directors (excluding Directors standing for re-election)
No individual is seeking election as a Director at the forthcoming Third Annual General Meeting of the Company.
(ii) Directors standing for re-election/re-appointment
(a) Datuk Dr Tan Kim Heung will be retiring by rotation and standing for re-election pursuant to Article 87 of the Articles of Association
of the Company.
(b) The Directors seeking for re-appointment under Section 129 of the Companies Act, 1965 are as follows:
•
•
The profiles of the above-named Directors are set out in the section entitled “Profile of Directors” on pages 054 to 059 of the
Annual Report.
Their shareholdings in the Company and its related corporations are set out in the section entitled “Statement of Directors’ Interests”
on page 092 of the Annual Report.
ANNUAL REPORT 2015
231
SHAREHOLDERS’ INFORMATION
Type of shares
:Ordinary shares of RM1.00 each
Voting rights :One vote per shareholder on a show of hands
One vote per ordinary share on a poll
Number of shareholders
:27,063
ANALYSIS OF SHAREHOLDINGS
(adjusted capital after netting treasury shares)
Size of holdings
1 – 99
100 – 1,000
No. of holders
Total holdings
%
1,187
36,693
0.00
7,359
4,181,638
0.11
14,280
52,856,994
1.40
3,598
91,018,446
2.42
100,001 – 188,327,104
635
1,741,953,232
46.25
188,327,105 and above
4
1,876,495,110
49.82
27,063
3,766,542,113
100.00
No. of shares held
%
1,001 – 10,000
10,001 – 100,000
Total
LIST OF TOP 30 SHAREHOLDERS
(without aggregating securities from different securities accounts belonging to the same person)
Name
1.
Vertical Capacity Sdn Bhd
601,582,424
15.97
2.
530,743,300
14.09
3.
422,912,600
11.23
4.
Citigroup Nominees (Tempatan) Sdn Bhd
Employees Provident Fund Board
321,256,786
8.53
5.
178,682,800
4.74
6.
Cartaban Nominees (Asing) Sdn Bhd
Exempt Authorised Nominee for Bank J. Safra Sarasin Ltd, Singapore Branch
(BSCSG)
106,362,800
2.82
7.
AmanahRaya Trustees Berhad
Skim Amanah Saham Bumiputera
101,815,618
2.70
8.
HSBC Nominees (Asing) Sdn Bhd
Exempt Authorised Nominee for Morgan Stanley & Co. LLC
96,073,500
2.55
9.
AnnHow Holdings Sdn Bhd
81,727,300
2.17
10.
Amsec Nominees (Tempatan) Sdn Bhd
Pledged Securities Account – AmIslamic Bank Berhad for
70,123,600
1.86
11.
Summervest Sdn Bhd
50,829,300
1.35
12.
Amanah Saham Malaysia
50,458,333
1.34
232
ANNUAL REPORT 2015
SHAREHOLDERS’ INFORMATION (Cont’d)
LIST OF TOP 30 SHAREHOLDERS (Continued)
(without aggregating securities from different securities accounts belonging to the same person)
Name
No. of shares held
%
13.
Amanah Saham Wawasan 2020
47,774,533
1.27
14.
HLB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Vertical Capacity Sdn Bhd
41,725,000
1.11
15.
Exempt Authorised Nominee for State Street Bank & Trust Company
(West CLT OD67)
40,019,070
1.06
16.
39,567,866
1.05
17.
BBH and Co Boston for Vanguard Emerging Markets Stock Index Fund
37,325,994
0.99
18.
HSBC Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Vertical Capacity Sdn Bhd
34,572,000
0.92
19.
Lai Ming Chun @ Lai Poh Lin
29,665,400
0.79
20.
Amanah Saham 1Malaysia
29,419,242
0.78
21.
Cartaban Nominees (Tempatan) Sdn Bhd
Exempt Authorised Nominee for EastSpring Investments Berhad
27,254,238
0.72
22.
Citigroup Nominees (Asing) Sdn Bhd
Exempt Authorised Nominee for UBS AG Singapore (Foreign)
25,051,400
0.67
23.
HLB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Datuk Dr. Tan Kim Heung
22,855,900
0.61
24.
GIC Private Limited for Government of Singapore (C)
21,757,868
0.58
25.
Rickoh Holdings Sdn Bhd
21,384,998
0.57
26.
Exempt Authorised Nominee for JPMorgan Chase Bank, National Association
(U.S.A.)
19,915,057
0.53
27.
Kumpulan Wang Persaraan (Diperbadankan)
18,691,600
0.50
28.
Malaysia Nominees (Tempatan) Sendirian Berhad
Great Eastern Life Assurance (Malaysia) Berhad
18,554,156
0.49
29.
CIMSEC Nominees (Tempatan) Sdn Bhd
CIMB for Lai Ming Chun @ Lai Poh Lin
15,212,800
0.40
30.
Chan Cha Lin
13,401,200
0.36
3,116,716,683
82.75
Total
ANNUAL REPORT 2015
233
SUBSTANTIAL SHAREHOLDERS
(Based on the Register of Substantial Shareholders)
Name of shareholders
No. of ordinary shares held
Direct
%
Indirect
%
39,567,866
1.05
*1,938,491,390
51.47
–
–
**1,978,059,256
52.52
5,110,000
0.14
***1,880,341,724
49.92
Lee Yeow Seng
2,210,366
0.06
***1,880,341,724
49.92
1,880,341,724
49.92
–
–
–
–
1,880,341,724
49.92
336,787,586
8.94
–
–
Puan Sri Datin Hoong May Kuan
Progressive Holdings Sdn Bhd
Employees Provident Fund Board
#
Notes:
*
Deemed interested by virtue of his interest in Progressive Holdings Sdn Bhd (“PH”), which in turn holds 100% equity interest in Vertical
Capacity Sdn Bhd (“VC”), and shares held by his sons, Dato’ Lee Yeow Chor and Lee Yeow Seng and shares held by Summervest
Sdn Bhd.
** Deemed interested by virtue of her interest and the interests of her spouse, Tan Sri Dato’ Lee Shin Cheng and her sons, Dato’ Lee
Yeow Chor and Lee Yeow Seng in PH, which in turn holds 100% equity interest in VC and shares held by Tan Sri Dato’ Lee Shin Cheng,
Dato’ Lee Yeow Chor, Lee Yeow Seng and Summervest Sdn Bhd
*** Deemed interested by virtue of his interest in PH, which in turn holds 100% equity interest in VC.
#
Deemed interested by virtue of its interest in VC, the wholly-owned subsidiary.
NOTES
IOI PROPERTIES GROUP BERHAD (Company No. 1035807-A)
(Incorporated in Malaysia)
PROXY FORM
(Please use block letters)
I/We ________________________________________________________________________________________________________________
NRIC/Co. No. _________________________________________________________________ Mobile Phone No. _______________________
of __________________________________________________________________________________________________________________
being a member(s) of IOI Properties Group Berhad, hereby appoint ____________________________________________________
____________________________________________________________________________________________________________________
NRIC/Co. No. ________________________________________________________________________________________________________
of __________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________
and/or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Third Annual General
Meeting (“AGM”) of the Company to be held at Putrajaya Ballroom I (Level 3), Putrajaya Marriott Hotel, IOI Resort City,
62502 Sepang Utara, Malaysia on Monday, 26 October 2015 at 10.00 a.m. or any adjournment thereof.
The proportion of my/our holding to be represented by my/our proxy/proxies are as follows:
First proxy “A”
:
Second proxy “B” :
%
%
100%
No. of Shares Held :
CDS A/C No.
:
In case of a vote taken by a show of hands, *First Proxy “A”/*Second Proxy “B” shall vote on my/our behalf.
My/our proxy/proxies shall vote as follows:
(Please indicate with an “✗” or “✓” in the space provided as to how you wish your votes to be cast. If you do not do so, the proxy/proxies
will vote, or abstain from voting on the resolutions as he/they may think fit).
No. Ordinary Resolutions
1.
To re-elect Datuk Dr Tan Kim Heung as a Director
2.
To re-appoint Tan Sri Dato’ Lee Shin Cheng pursuant to Section 129 of the Companies
Act, 1965
3.
To re-appoint Datuk Tan Kim Leong @ Tan Chong Min pursuant to Section 129 of the
Companies Act, 1965
4.
To approve Directors’ Fees for the financial year ending 30 June 2016
5.
To re-appoint Messrs PricewaterhouseCoopers as Auditors and to authorise the
Directors to fix their remuneration
6.
To authorise the Directors to allot and issue shares pursuant to Section 132D of the
Companies Act, 1965
7.
To approve the proposed renewal of existing share buy-back authority
Dated this _______ day of ____________________ 2015
______________________________________
Signature of Shareholder/Common Seal
* Delete if inapplicable.
Notes:
1 A member may appoint any person to be his proxy and there shall be no restriction as to the
qualification of the proxy. The provision of Section 149(1)(b) of the Companies Act, 1965 shall
not apply to the Company.
2 An instrument appointing a proxy must be in writing under the hand of the appointor or of
his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or
under the hand of an officer or attorney duly authorised.
3 Subject to Note 4 below, a member shall not be entitled to appoint more than two (2) proxies
to attend and vote at the same meeting. If a member appoints two (2) proxies to attend at
the same meeting, the instrument of proxy must specify the proportion of his shareholdings to
be represented by each proxy and only one (1) of those proxies is entitled to vote on show of
hands.
First Proxy “A” Second Proxy “B”
For
Against
For
Against
4
5
6
7
Where a member of the Company is an exempt authorised nominee which holds ordinary
shares in the Company for multiple beneficial owners in one (1) securities account, there is no
limit to the number of proxies which the exempt authorised nominee may appoint in respect
of each omnibus account it holds. An exempt authorised nominee refers to an authorised
nominee defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”)
which is exempted from compliance with the provisions of Section 25A(1) of the SICDA.
An instrument appointing a proxy may specify the manner in which the proxy is to vote in
respect of a particular resolution and, where an instrument of proxy so provides, the proxy is
not entitled to vote on the resolution except as specified in the instrument.
An instrument appointing a proxy must be deposited at the office of the Share Registrar, Tricor
Investor Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3,
Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia, not less than 48 hours
before the time for holding the meeting or any adjournment thereof.
Only members whose names appear in the Record of Depositors as at 20 October 2015 shall
be eligible to attend the AGM or appoint proxy to attend and vote on his behalf.
1st fold here
STAMP
Share Registrar
TRICOR INVESTOR SERVICES SDN BHD
Unit 32-01, Level 32, Tower A
Vertical Business Suite
Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur
2nd fold here
IOI PROPERTIES GROUP BERHAD (1035807-A)
Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia
www.ioiproperties.com.my

ioi pr op er ties gr oup berhad annu al repor t 2015

Transcription

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