Spearheading. Growth ANNUAL REPORT 2016

Transcription

1 Spearheading Growth ANNUAL REPORT 2016

2 OUR VISION is to be a leading corporation in our core businesses by providing products and services of superior values and by sustaining consistent long-term growth in volume and profitability. We shall strive to achieve responsible commercial success by satisfying our customers needs, giving superior performance to our shareholders, providing rewarding careers to our people, cultivating mutually beneficial relationship with our business associates, caring for the society and the environment in which we operate and contributing towards the progress of our nation. FOR MORE INFO

3 COMMITMENT as we do what we say we will do INTEGRITY which is essential and cannot be compromised LOYALTY is crucial because we are one team sharing one vision 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: 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 COST EFFICIENCY is crucial as we need to remain competitive INNOVATIVENESS to provide us additional competitive edge SPEARHEADING GROWTH IOI Properties Group Berhad (IOIPG) is spearheading growth in the property sector by leveraging on its strength, resources and expertise; backed by a reputable track record. Our extensive business portfolio encompassing property development, property investment as well as leisure and hospitality has spurred further growth and progress as we continue to grow in size and stature. We believe that our three core businesses play important roles in creating a sustainable business model which in turn delivers valuable returns to our shareholders and effectively supports sustainable living in the society in which we operate in. As one of the leading integrated property players in the country with distinctive residential, commercial and investment properties across Malaysia, Singapore and the People s Republic of China, we will continue to uphold our brand promise of providing reliable and quality lifestyle developments as we drive forward in pursuit of our long-term growth and aspirations.

4 CONTENTS 4TH ANNUAL GENERAL MEETING IOI PROPERTIES GROUP BERHAD ( A) Venue : Putrajaya Ballroom I (Level 3), Putrajaya Marriott Hotel, IOI Resort City, Sepang Utara, Malaysia. Date : Wednesday, 26 October 2016 Time : 10:00 a.m. Our Vision Our Core Values Facts at a Glance Key Indicators CHAIRMAN S STATEMENT Chairman s Statement...06 Five-Year Financial Highlights...12 Group Financial Position...14 Group Performance Highlights...15 Segmental Performance...16 Group Quarterly Results...18 Financial Calendar...19 MANAGEMENT S DISCUSSION AND ANALYSIS Group Financial Review...20 Group Business Review Property Development...24 Group Business Review Property Investment...32 Group Business Review Leisure and Hospitality...38

5 SUSTAINABILITY AND CORPORATE RESPONSIBILITY FINANCIAL REPORTS Sustainability and Corporate Responsibility...42 Corporate Responsibility Social Contributions...48 Corporate Information...56 Board of Directors...58 Profile of Directors...60 Senior Management Team...68 Profile of Senior Management...69 Regional Presence...76 Location of Operations in Malaysia...77 Corporate Calendar...78 Audit and Risk Management Committee Report...84 Statement on Corporate Governance...90 Statement on Risk Management and Internal Control Statement of Directors Interests Shareholdings of Senior Management Team Other Information Directors Report Group s Material Properties Notice of Annual General Meeting Statement Accompanying Notice of Annual General Meeting Shareholders Information PROXY FORM

6 PROFIT BEFORE TAXATION NET ASSETS PER SHARE 2015 RM1.13 billion 2015 RM3.56 EARNINGS PER SHARE sen FACTS AT A GLANCE DIVIDEND PER SHARE sen SHARE PRICE at 14 September 2016 MARKET CAPITALISATION 30 June 2015 RM RM7.00 billion

7 KEY INDICATORS % JUL 15 AUG 15 SEP 15 OCT 15 NOV 15 DEC 15 JAN 16 FEB 16 MAC 16 APR 16 MAY 16 JUN 16 IOI PROPERTIES GROUP BERHAD FTSE BURSA MALAYSIA KLCI BURSA MALAYSIA PROPERTY

8 IOI PROPERTIES GROUP BERHAD CHAIRMAN S STATEMENT DEAR SHAREHOLDERS, On behalf of the Board of Directors and the management, it gives me great pleasure to present to you the Annual Report of IOI Properties Group Berhad ( IOIPG ) for the financial year ended 30 June 2016 ( FY2016 ). TAN SRI DATO LEE SHIN CHENG Executive Chairman GROUP PERFORMANCE Despite the challenging economic environment in FY2016, I am pleased to report that the Group recorded a strong set of financial results with our three main business segments i.e. property development, property investment and leisure & hospitality all registering improved results. The Group recorded revenue of RM3,025 million and profit before taxation ( PBT ) of RM1,525 million for FY2016, an increase of 59% and 35% respectively from the last financial year of RM1,906 million and RM1,130 million respectively. The increase in both revenue and PBT was mainly due to improved performance from our property development segment with significant contributions from the Group s overseas projects in Xiamen, People s Republic of China ( PRC ) and Singapore, as well as, our township in Bandar Puteri Bangi, Warisan Sepang and new launched project, Conezión in IOI Resort City. 06

9 ANNUAL REPORT 2016 Revenue from the Group s operating segments were RM2,614 million from property development, RM272 million from property investment, RM132 million from leisure & hospitality and RM7 million from other operations. In terms of revenue contribution from property development, it is mainly derived from our projects in the Klang Valley of 29% followed by Johor of 18%, Singapore of 18%, PRC of 31% and others (Penang and Negeri Sembilan) of 4%. For FY2016, the Group recorded sales of 2,368 units against FY2015 sales of 1,750 units. In terms of sales value, the Group recorded total sales of RM2,214 million of which 51% was from developments in Malaysia with PRC and Singapore operations contributing the remaining 30% and 19% respectively. As at 30 June 2016, the Group s financial position remained strong with total assets at RM22,810 million, an increase of 24% from the last financial year of RM18,439 million, cash in hand at RM2,087 million and a net gearing of 14%. The Group s net assets per share is RM3.60 for the financial year under review. A more detailed analysis of the Group s performance is available under the section Management s Discussion and Analysis in this Annual Report. As at 30 June 2016, the Group s financial position remained strong with total assets at RM22,810 million, an increase of 24% from the last financial year of RM18,439 million, cash in hand at RM2,087 million and a net gearing of 14%. Amigo Clubhouse at 16 Sierra 07

10 IOI PROPERTIES GROUP BERHAD CHAIRMAN S STATEMENT OPERATING ENVIRONMENT Generally, global economic growth in the second quarter of 2016 was moderate and uneven across all economies. The US economy recorded a moderate growth due to a slowdown in investments, despite increased household consumption and exports. The Eurozone experienced a slight moderate growth with continued support from steady domestic demand and accommodative monetary policy. Meanwhile, economic growth in China was sustained largely due to increased government spending on infrastructure investments and a recovery in the property market. Growth among some of the ASEAN economies remained steady spurred by higher infrastructure investments and improved consumption. Despite increasing uncertainties in the external environment, the Malaysian economy expanded by 4% during the second quarter of 2016, with support largely from domestic demand which is attributable to strong consumption and investment activities. Malaysia s residential property market continues to remain lackluster with slower growth in volume and value of transactions recorded. Amidst a challenging property market environment, most developers have adopted a push marketing strategy to help boost sales of projects to improve revenue. For the Group, we have introduced the deferred payment scheme stretched over 18 to 24 months for the downpayment. In addition, Transit Oriented Developments ( TOD ) will continue to be promoted along transportation routes in line with the various infrastructure projects such as the upcoming completion of the LRT extension line, first phase of the Sungai Buloh-Kajang MRT line coming into operations by the end of 2016 as well as, to capitalize on our existing landbank that are located close to the proposed Kuala Lumpur-Singapore High Speed Rail ( HSR ). In Singapore, in view of the continuing global economic uncertainty and the current cooling measures being in force particularly the additional buyer s stamp duty, sales in private residential market continue to be challenging. However price affordability and established locations will be key determinants for prospective home buyers and this is evident with the continued sales recorded by our Trilinq project during the financial year under review. The PRC s economy grew by 6.7% in the second quarter of 2016 due to a buoyant property market and government spending on infrastructure investments. The Group views the PRC as one of the key location that provides vast investment and development potential and will continue to monitor developments in the property sector there. IOI Palm City 08

11 ANNUAL REPORT 2016 BUSINESS DEVELOPMENTS Kompleks Kubica Square, situated within the commercial hub of Bandar Puteri Bangi was launched in September The retail lots with a multi-level car park are also within the neighbourhood where Tesco Hypermarket was recently opened in August 2016, which will serve to attract a steady stream of patrons and customers due to its strategic location along the Kuala Lumpur-Seremban Highway and directly accessible via the Bandar Seri Putra toll interchange. In October 2015, the Group unveiled the first phase of its new township in Warisan Sepang with the launch of Evira, a residential development in the 200-acre freehold township. Warisan Sepang is located close to the Kuala Lumpur International Airport ("KLIA") and Sepang F1 Circuit with easy accessibility via major highways and is about 1.5km from the Express Rail Link Salak Tinggi station, as well as, to the new Xiamen University. Over at our Bandar Puteri Puchong township, Le Pavillion Residences featuring serviced apartments with retail outlets at the ground level was also launched in October The development is strategically located close to the new LRT station which came into operations this year, providing easy access to amenities such as schools, financial institutions, healthcare and commercial hubs as well as, shopping malls. The Group achieved commendable take-up rates for its overseas projects in both Xiamen, PRC and Singapore. In November 2015, IOI Palm City s second phase of its upscale lakeview high-rise residences was launched to overwhelming response from property buyers. To date, the project has registered a take-up rate of 100%. Whilst, our Trilinq project in Singapore continued to register favourable take-up rate, recording sales of 120 units for FY2016. Following the acquisition of new subsidiaries (as detailed under the Corporate Developments section), the Group launched Conezión, the first integrated development in IOI Resort City in March The first phase of the launch was two residential blocks comprising 663 units with a GDV of approximately RM400 million. For FY2016, the Group s investment property portfolio increased from 4.6 million square feet ( sq ft ) to 5.6 million sq ft, with the addition of net lettable area ( NLA ) from IOI City Towers which obtained its certificate of completion of compliance in March The two 31-storey office towers is GBI-certified and offers the latest trends in sustainability, spaciousness and facilities with a versatile floor layout to accommodate a dynamic workplace and flexible work patterns. To further enhance the vibrancy of IOI Resort City, the Group s Le Méridien Putrajaya, a 353-room 5-star hotel was officially opened on 18 August 2016 and is a highly anticipated addition to the Group s investment properties. Le Méridien Putrajaya is within a 30-minute drive from the KLIA, 15 minutes away from Kuala Lumpur via the high-speed railway system and is in close proximity to the administration and residential districts of Putrajaya. With its culturally-refined design and atmosphere combined with stunning views of IOI Resort City, as well as, ample event space, Le Méridien Putrajaya is envisaged to cater to both business and leisure clientele. The opening of the IOI Puchong Jaya LRT station located next to IOI Mall in Puchong has increased accessibility to the mall, and in turn also provides an opportunity for the Group to consider redevelopment opportunities. One option could be to consider TOD, which would allow the Group to optimise the mix of retail, hospitality, commercial and residential spaces on its existing landbank to create an all seamlessly integrated development to provide day to day convenience while at the same time providing connectivity via the LRT line. Over in Singapore, the South Beach, a joint venture development between IOIPG and City Developments Limited ( CDL ) continues to progress to become a fully integrated mixed used development, with the completion of the retail component expected by end To date, more than 90% of South Beach s total retail space has been leased. The completion of the MRT link in July 2016, which provided the vital link to the Esplanade and City Hall MRT stations, will not only provide convenience to the development but also enhance the vibrancy and footfall to the retail area. In respect of South Beach Office Tower encompassing over 46,000 square metres of Grade A office space, it continues to be well tenanted with almost full occupancy, securing numerous renowned multinational corporations such as Sanofi-Aventis, Tableau Asia Pacific, Rabobank, Facebook and LEGO, to name a few. Following the soft launch of The South Beach hotel in September 2015, IOIPG and CDL announced on 29 June 2016 of its collaboration with Marriott International, Inc to manage the hotel, and has since been rebranded as JW Marriott Hotel Singapore South Beach. 09

12 IOI PROPERTIES GROUP BERHAD CHAIRMAN S STATEMENT Le Méridien Putrajaya at IOI Resort City IOIPG through its wholly-owned subsidiary Fortune Growers Sdn Bhd, acquired fourteen pieces of land located in Daerah Kuala Langat, Negeri Selangor measuring approximately acres (known as Poh Ann Estate) for a total cash consideration of RM140.6 million on 8 August The transaction is pending completion in accordance with the terms of the sale and purchase agreement, including the final land areas which will be determined by a licensed and independent land surveyor. The Group through its indirect 99.8% owned subsidiary, IOI (Xiamen) Properties Co Ltd had on 26 August 2016 successfully tendered for a 6.20 acre parcel of land in Xiamen for a tender sum of RMB2.3 billion (approximately RM1.4 billion). The parcel of land is intended for mixed development within the new Xiang an central business district in Xiamen which is proposed to be a new integrated eco-city. CORPORATE DEVELOPMENTS On 20 October 2015, IOIPG announced that the Company had on 19 October 2015 entered into conditional share sale and subscription agreements for the acquisition of the entire issued and paid-up ordinary share capital in Mayang Development Sdn Bhd ( MDSB ) and Nusa Properties Sdn Bhd ( Nusa ) for a total consideration of RM1.6 billion and subscription of 296,314,000 and 48,621,000 new redeemable non-cumulative preference shares-class B of RM0.01 each in MDSB and Nusa respectively for a total consideration of RM0.3 billion. The acquisitions of MDSB and Nusa were completed on 27 January 2016 and accordingly, MDSB and Nusa are now wholly-owned subsidiaries of IOIPG. Following the completion of the acquisitions, the Group s existing development land bank within IOI Resort City have been enlarged to more than 450 acres, thus paving the way for future development of IOI Resort City. IOI Resort City is anticipated to contribute positively to the Group taking into consideration the location of the land which is fronting the entrance to Putrajaya and next to the South Klang Valley expressway. 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 committed to developing in a sustainable way in tandem with environmental, economic and social considerations; which enhances value creation to our customers. Besides driving sustainable profit growth and returns for the shareholders, the Group also undertakes 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 in. This is done mainly through Yayasan Tan Sri Lee Shin Cheng ( Yayasan TSLSC ), a charitable foundation jointly funded by IOI Properties Group Berhad and IOI Corporation Berhad. 10

13 ANNUAL REPORT 2016 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 sustainability measures and CR initiatives are covered in the Sustainability and Corporate Responsibility section. DIVIDEND For FY2016, an interim dividend of 8.0 sen per ordinary share amounting to a total payout of approximately RM352.9 million was declared. This represents approximately 33% distribution of the Group s net profit attributable to shareholders. The dividend declared in FY2016 was an increase of 33% from the interim dividend of 6.0 sen per ordinary share declared in FY2015. PROSPECTS The overall property market is anticipated to remain challenging in the year ahead due to economic uncertainties and prevailing consumer sentiment. As one of the leading property developers, well known for successful development of comprehensive self-contained suburban townships in Malaysia, the Group will continue to leverage on its strength to launch products that will cater to the changing preferences of purchasers, as well as, focus on strong execution and management of projects and inventory, to continue to deliver excellent results to our shareholders. For the Group s newer townships in Bandar Puteri Bangi and Warisan Sepang the recent opening of Tesco Hypermarket and new Xiamen University within the respective townships will enhance the range of township amenities and continue to draw potential purchasers going forward. For our established townships in Bandar Puchong Jaya and Bandar Puteri Puchong, the commencement of the LRT line, will enhance the marketability of our existing land banks. The Group is opportune to have four LRT stations within and in the vicinity of these townships. With rapid urbanisation, properties located in the vicinity of LRT lines will be identified as excellent investment choices due to ease of connectivity and convenience. To meet this market demand, the Group may consider TODs on land banks that are located in the vicinity of LRT stations. With the re-alignment of the MRT 2 line from Bandar Malaysia to Putrajaya, a MRT station is proposed in our 16 Sierra township, which will enhance ease of connectivity to our existing and future residences. We are also optimistic that the connectivity of 16 Sierra township will be further enhanced with the proposed connection of the MRT 2 line with the proposed HSR at Putrajaya. The completion of IOI City Towers and the opening of Le Méridien Putrajaya in IOI Resort City will contribute to revenue growth from our property investment and leisure & hospitality segments. As the Group s retail, hospitality and office developments are strategically located within its matured townships and growth corridors, this will continue to enable the Group to enjoy healthy occupancies and rental yields. The Group remains optimistic on the prospects of its property development in the PRC and expects positive contribution from its remaining components in IOI Palm City (i.e. residential units, commercial units, boutique offices, hotel and shopping mall), as well as, the new land bank located within Xiang an central business district. ACKNOWLEDGEMENTS On behalf of the Board of Directors, I wish to extend my heartfelt appreciation to all our purchasers and business associates for your unwavering support to the continued success of the Group. In spite of a challenging economic environment in FY2016, the Group has continued to record a strong set of financial results and I wish to express my sincere appreciation on behalf of the Board of Directors, to the management and employees of the Group for their dedication, perseverance and contributions. I also wish to welcome Tan Sri Dato Sri Koh Kin Lip ( Tan Sri Dato Koh ) to the Board with his appointment as an Independent Non-Executive Director on 2 January I am confident that with Tan Sri Dato Koh coming on board, will bring an invaluable wealth of experience and advice to the progress of the Group. Finally, 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 the Group. TAN SRI DATO LEE SHIN CHENG Executive Chairman 11

14 IOI PROPERTIES GROUP BERHAD FIVE-YEAR FINANCIAL HIGHLIGHTS FINANCIAL YEAR ENDED 30 JUNE (RM'000) * (pro forma) 2012* (pro forma) RESULTS Revenue 3,024,940 1,906,491 1,454,445 1,323,259 1,052,220 Profit before interest and taxation 1,467,621 1,079,635 1,132, , ,983 Net interest income/(expense) 57,078 50,691 (12,494) 1,118 44,709 Profit before taxation 1,524,699 1,130,326 1,120, , ,692 Taxation (424,440) (229,729) (216,662) (191,156) (144,755) Profit for the financial year 1,100, , , , ,937 Attributable to: Owners of the parent 1,080, , , , ,771 Non-controlling interests 20,241 9,895 13,824 19,982 11,166 ASSETS Property, plant & equipment 1,122,322 1,120,101 1,047, ,431 N/A Land held for property development 4,591,032 2,894,104 3,011,711 2,282,478 N/A Investment properties 4,024,219 3,388,152 2,765,489 1,993,810 N/A Interests in joint ventures 4,820,518 4,155,262 3,855,746 3,575,449 N/A Other non-current assets 303, , , ,496 N/A Current assets 7,948,610 6,568,448 3,801,442 2,936,568 N/A Total assets 22,810,341 18,439,498 14,725,075 11,983,232 N/A EQUITY AND LIABILITIES Total shareholders equity 15,885,085 13,427,197 11,202,530 10,335,384 N/A Non-controlling interests 130, ,957 98,677 26,855 N/A Total equity 16,015,839 13,538,154 11,301,207 10,362,239 N/A Borrowings 4,262,032 2,799,010 2,057, ,420 N/A Other non-current liabilities 916, , , ,054 N/A Other current liabilities 1,615,856 1,679,896 1,065, ,519 N/A Total liabilities 6,794,502 4,901,344 3,423,868 1,620,993 N/A Total equity and liabilities 22,810,341 18,439,498 14,725,075 11,983,232 N/A FINANCIAL RATIOS Basic earnings per share N1 (sen) Diluted earnings per share (sen) Interest cover (times) Dividend per share (sen) N/A N/A Dividend payout ratio (%) N/A N/A Net assets per share (RM) N/A Gross gearing ratio (%) N/A Net gearing ratio (%) N/A Return on average shareholders equity (%) N/A Return on average capital employed (%) N/A * The Group's financial performance and financial positions are prepared on the assumption that the business combinations had taken place from the beginning of each financial year. This is to provide a meaningful comparison of the financial performance of the Group. N1 Basic earnings per share for FY2012, FY2013 and FY2014 were calculated by dividing net profit attributable to owners of the parent by the number of ordinary shares outstanding at the end of FY2014 i.e. 3,239,014,726 throughout each financial year. This is to provide a meaningful comparison of the financial performance of the Group. 12

15 ANNUAL REPORT 2016 REVENUE RM 000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 1,052,220 1,323,259 1,454,44 5 1,906,491 3,024,940 PROFIT BEFORE INTEREST AND TAXATION RM 000 1,500,000 1,200, , , , ,641 1,132,898 1,079,635 1,467, , , SHAREHOLDERS EQUITY RM ,000,000 15,000,000 10,335,384 11,202,530 13,427,197 15,885,085 NET ASSETS PER SHARE RM ,000, ,000,

16 IOI PROPERTIES GROUP BERHAD GROUP FINANCIAL POSITION AS AT 30 JUNE 2016 RM 000 7,948,610 Current assets 303,640 Other noncurrent assets 4,820,518 Interests in joint ventures Assets 1,122,322 Property, plant and equipment 4,591,032 Land held for property development 4,024,219 Investment properties 916,614 Other non-current liabilities 4,262,032 Borrowings 130,754 Non-controlling interests Equity and Liabilities 1,615,856 Other current liabilities 15,885,085 Total shareholders equity AS AT 30 JUNE 2015 RM 000 6,568,448 Current assets 1,120,101 Property, plant and equipment 422,438 Other non-current liabilities 1,679,896 Other current liabilities 313,431 Other noncurrent assets 4,155,262 Interests in joint ventures Assets 2,894,104 Land held for property development 3,388,152 Investment properties 2,799,010 Borrowings 110,957 Non-controlling interests Equity and Liabilities 13,427,197 Total shareholders equity 14

17 ANNUAL REPORT 2016 GROUP PERFORMANCE HIGHLIGHTS In RM 000 unless otherwise stated * 2012* (pro forma) (pro forma) FINANCIAL PERFORMANCE Revenue 3,024,940 1,906,491 1,454,445 1,323,259 1,052,220 Segment operating profit 1,073, , , , ,474 Fair value gain on investment properties 145, , , , ,067 Gain on bargain purchase 71, ,966 8,326 Share of results of associates (3,806) 1,716 3,494 6,989 8,228 Shares of results of joint ventures 181,278 72,073 60,644 82,457 33,214 Profit before interest and taxation 1,467,621 1,079,635 1,132, , ,983 Net interest income/(expense) 57,078 50,691 (12,494) 1,118 44,709 Profit before taxation 1,524,699 1,130,326 1,120, , ,692 Taxation (424,440) (229,729) (216,662) (191,156) (144,755) Profit for the financial year 1,100, , , , ,937 SEGMENT ANALYSIS Property Development Sales value 2,214,426 1,778,457 1,966,806 1,703, ,007 Sales (unit) 2,368 1,750 2,667 2,485 1,406 Revenue 2,613,666 1,592,174 1,274,255 1,116, ,147 Segment operating profit 909, , , , ,955 Property Investment Occupancy rate (%) Rental yield (%) Revenue 271, , , ,421 96,262 Segment operating profit 141,361 97,515 66,575 65,632 64,696 Leisure and Hospitality Occupancy rate (%) Revenue 131, ,778 58,317 87,205 73,292 Segment operating profit/(loss) 18,221 10,143 4,377 16,655 (13,430) Others Revenue 7,586 10,906 16,979 13,143 17,519 Segment operating profit 4,937 5,771 14,264 10,324 15,253 * The Group s financial performance and financial positions are prepared on the assumption that the business combinations had taken place from the beginning of each financial year. This is to provide a meaningful comparison of the financial performance of the Group. 15

18 IOI PROPERTIES GROUP BERHAD SEGMENTAL PERFORMANCE PROPERTY DEVELOPMENT PROPERTY INVESTMENT SALES VALUE RM 000 REVENUE RM 000 SALES UNIT SEGMENT OPERATING PROFIT RM 000 2,214,426 2, , ,361 REVENUE RM 000 2,613,666 SEGMENT OPERATING PROFIT RM , ,816 Leisure & Hospitality 7,586 Others 271,872 Property Investment Revenue 2016 (RM 000) 16 2,613,666 Property Development

19 ANNUAL REPORT 2016 LEISURE & HOSPITALITY OTHERS REVENUE RM 000 REVENUE RM 000 SEGMENT OPERATING PROFIT RM 000 SEGMENT OPERATING PROFIT RM ,816 18,221 18,221 Leisure & Hospitality 141,361 Property Investment 7,586 4,937 4,937 Others Segment Operating Profit 2016 (RM 000) 909,134 Property Development 17

20 IOI PROPERTIES GROUP BERHAD GROUP QUARTERLY RESULTS In RM'000 unless otherwise stated 30 Sep 2015 % 31 Dec 2015 % 31 Mar 2016 % 30 Jun 2016 % Revenue 595, , , , Operating profit 211, , , , Share of results of associates (947) 24.9 (1,161) 30.5 (978) 25.7 (720) 18.9 Share of results of joint ventures (13,360) (7.4) 99, (14,996) (8.2) 110, Profit before interest and taxation 197, , , , Interest income 10, , , , Profit before taxation 208, , , , Taxation (89,402) 21.1 (123,636) 29.1 (99,432) 23.4 (111,970) 26.4 Profit for the financial year 118, , , , Attributable to: Owners of the parent 115, , , , Non-controlling interest 3, , , , , , , , Earnings per share (sen) Basic Diluted SEGMENT REVENUE AND SEGMENT RESULTS Segment Revenue Property development 502, , , , Property investment 60, , , , Leisure and hospitality 30, , , , Others 1, , , , , , , , Segment Results Property development 163, , , , Property investment 29, , , , Leisure and hospitality 2,911 (5.0) (34,108) 58.9 (16,031) 27.7 (10,675) 18.4 Others 1, , , , , ,

21 ANNUAL REPORT 2016 FINANCIAL CALENDAR Annual General Meeting 26 October 2016 Notice of Annual General Meeting Payment of Dividend Payment 21 October September 2016 Announcement of Results Book Closure 22 September st Interim 4th Quarter 22 August 2016 Declaration 22 August rd Quarter 27 May 2016 Financial Year End 30 June nd Quarter 25 February st Quarter 16 November

22 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Financial Review Despite the challenging economic environment, the Group posted a record high of RM3,024.9 million revenue for the financial year ended 30 June 2016 ( FY2016 ), which was 59% higher than FY2015. The increase in revenue was mainly attributable to IOIPG s property development segment whereby it registered an increase of RM1,021.5 million revenue to RM2,613.7 million, which amounted to 86% of the Group s total revenue. Property investment, leisure and hospitality, and other segments contributed to the remaining 14%. The Group s Profit Before Interest and Tax ( PBIT ) surged to RM1,467.6 million from RM1,079.6 million, an increase of 36% when compared with preceding year. After excluding the fair value gain from investment properties of RM145.4 million and the one off gain of RM71.1 million arising from the bargain purchase for the acquisition of subsidiaries (similarly excluding the fair value gain on investment properties of RM316.6 million in preceding year) and the share of result of joint ventures and associates, the PBIT surged to RM1,073.7 million from RM689.3 million, an increase of 56% when compared to FY2015. The increase in PBIT of RM384.4 million was mainly derived from the property development segment whereby the Group s overseas development projects both in Xiamen, PRC and Singapore are progressing well, and together with the enhanced performance of our development projects in Klang Valley have contributed significantly to the increase. The remaining improved results came from the property investment, and leisure and hospitality segments with higher occupancy, higher rental rates and better control of operating expenses. 20 Double Volume Ceiling Height at Dumalis, 16 Sierra

23 ANNUAL REPORT 2016 Lake View at The Terresse 2, Bandar Puteri Bangi The Group s Profit Before Interest and Tax has surged to RM1,467.6 million from RM1,079.6 million, an increase of 36% when compared with preceding year. The Group generated Operating Cash Flow of RM111.1 million for FY2016 against RM334.3 million for the preceding year, whereby the decrease was mainly due to the increase in development expenditures in new townships in high growth areas, coupled with high cash flows commitment in the high rise condominium projects that are nearing completion. For FY2016, the Group invested a total of RM1,173.1 million, out of which RM740.3 million was for the acquisition of subsidiaries, RM242.2 million for overseas investment projects in Singapore, RM103.7 million for capital expenditures and investment property project, and RM86.9 million in common infrastructure for property development projects. The Group s Shareholders Equity as of 30 June 2016 stood at RM15,885.1 million, an increase of RM2,457.9 million or 18% over the preceding year, mainly due to increase of issuance of ordinary share capital of RM1,347.6 million, foreign currency gain on translation of foreign operations of RM248.7 million and total earnings of RM1,080.0 million offset by a total dividend payment of RM226.0 million in the current financial year. The Group s Interest Cover was 10.0 times (FY2015: 10.1 times). The Group actively manages its debt maturing profile, operating cash flows and the availability of funding to ensure all operating, investing and financing needs are met. The Group will continue to manage its capital funding requirement in a proactive manner, optimise gearing levels to provide value to shareholders. An interim single tier dividend of 8% or 8.0 sen per ordinary share amounting to a total payout of RM352.9 million was declared in respect FY2016. It equates to a dividend payout of 33% out of total earnings attributable to the owners of the parent, with a dividend yield of 3.3% (based on share price of RM2.44 per share as at dividend declaration date). 21

24 Property Development

25 IOI City Towers Inspiring and Influencing Lifestyles As a Lifestyle Influencer, IOI Properties Group Berhad ( IOIPG ) is focused on creating exciting lifestyle concepts of the highest standards. IOIPG offers a myriad of lifestyle experiences for its customers with its exclusive collection of integrated townships comprising lifestyle developments of residential enclaves, commercial hubs, purpose-built office buildings, hotels, shopping malls and golf courses.

26 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Business Review Property Development IOI Properties Group Berhad (IOIPG), in line with its vision to be an industry leader, continues to build business momentum in creating sustainable communities and thriving commercial hubs that influence lifestyle and redefine skylines. The Group with its substantial and geographically diverse land bank is on track to create value in its property development activities, achieving sustainable growth and operational excellence in its diverse spread of developments along high growth corridors within the Klang Valley such as Bandar Puteri Puchong, 16 Sierra, IOI Resort City, Bandar Puteri Bangi; and in well-established growth areas of the Northern and Southern Regions of Malaysia, notably Desaria in Penang and Bandar Putra Kulai in Johor. With its dynamic business strategies and global business outlook, IOIPG had expanded its business in the international property scene of Singapore and People s Republic of China; leveraging on its strength in resilience and proven track record spanning three decades. OPERATIONS REVIEW Property development continues to be the key driver in both revenue and segmental operating profit of the Group. The Group registered 64% growth in revenue to RM2,613.7 million; and 58% growth in segmental operating profit to RM909.1 million for the financial year ended 30 June The development projects in Malaysia contributed 51% to the Group s revenue; followed by 31% from its overseas development projects in Xiamen, PRC and 18% from its Singapore projects. Hanging Garden at Almyra Residence, Bandar Puteri Bangi 24 Klang Valley During FY2016, IOIPG delivered the final block of Skypod Residences in Puchong totalling 366 units of serviced apartments and 82 units of Skypod Square in Bandar Puchong Jaya, and two blocks of La Thea Residences in 16 Sierra totaling 526 units to its customers. In Bandar Puteri Puchong, IOIPG launched one tower of its highrise mixed development Le Pavillion comprising 322 units of serviced apartments, and 63 units of Le Pavillion Xchange complete with unique features which include the Floating Pavillion Function Hall, Lily Pad Pond, Tree House amongst others. In addition, the Group has launched 109 units of Dumalis 2, a two-storey landed residential property at 16 Sierra. The modern, stylish and spacious Dumalis 2 was well-received by customers seeking a place to call home in the South of Puchong. 16 Sierra is an award winning development, with its Sierra 6 winning the Best Landed Development category in the iproperty People s Choice Awards 2015; and 16 Sierra winning the Most Family Friendly award. In FY2016, 663 units of residential units of the Conezión development located at IOI Resort City was launched and received good response from property buyers. The Conezión, a mere 700 metres from IOI City Mall is an integrated mixed development that offers the ideal live-work-shop experience for those who appreciate a lifestyle balance of city buzz and nature s bliss. The Group welcomes yet another 5-star hotel in IOI Resort City; namely the Le Méridien Putrajaya Hotel. This new addition is yet another feather in its cap joining other international class multi-award winning facilities within IOI Resort City namely the IOI City Mall, Palm Garden Golf Club and the Putrajaya Marriott Hotel. The Group is expected to embark on the construction of the 2nd phase of IOI City Mall by the second quarter of the next financial year which sees an additional 1 million square feet of exciting retail offerings to this resort city.

27 ANNUAL REPORT 2016 Akira, 3 storey Semi-D at 16 Sierra In Bandar Puteri Bangi, following the success of its superlink houses (Terresse), serviced apartments (Almyra Residence) and shop offices (Kubica Square), IOIPG unveiled the second phase of its superlink units, Terresse 2 and its integrated commercial hub, Enigma Square. Bandar Puteri Bangi, a master-planned township comprising residential and commercial components anchored by its three Streets of Dreams namely California Street, Tropical Street and Art Street, is poised to become a lifestyle hub with the perfect balance of sustainable environmental well-being within an urban development. Over at Warisan Sepang, the Group emulated its successful formula of building cohesive townships in high growth areas, with the launch of its first phase of freehold 2-storey terrace houses (196 units), Evira. This self-sustainable township with a poeticthemed street scape has been warmly greeted by those who seek lifestyles steeped in the rich heritage of the arts amidst the beauty of nature, and yet be able to enjoy modern living within its commercial hub. The opening of nearby Xiamen University Malaysia Campus, the construction of the Elite Interchange coupled with the ERL station within close proximity have greatly enhanced the connectivity and accessibility to Warisan Sepang. Other Regions In Bandar IOI, Bahau, IOIPG delivered the first phase of 88 units of shop offices to its owners soon after Tesco commenced its operation in November Another 62 units of shop offices, light industry and residential units comprising semi-detached and terraced homes would all be delivered to purchasers before end of September A McDonald s drive through restaurant is expected to be opened in early Meanwhile in the northern region, the Group s Penang development of Cypress Villa comprising 48 units semi-detached and 3 units bungalow is nearing completion, and is expected to hand over keys to owners by the first quarter of the financial year In the southern region, IOIPG has a variety of projects in Kulai and Segamat such as Bandar Putra Kulai, Taman Kempas Utama, Taman Lagenda Putra and Bandar Putra Segamat. The Group has completed and delivered nine (9) phases of landed properties totalling 885 units, three (3) phases of factories totalling 81 units as well as 711 units of serviced apartment, The Platino. 25

28 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Business Review Property Development (Continued) International On the international front, the Group has completed its maiden property development project ie IOI Park Bay and successfully delivered 600 units of condominium, 32 units of town villa, 129 units of SOHO together with 456 car park bays to its owners in December 2015 with a total sales value of RMB1.6 billion. At the date of this report, an insignificant number of car park bays remained unsold. The Group launched Phase 2 of its mixed development project in IOI Palm City, Jimei, in the current financial year with additional 259 units. Together with the Phase 1 launched units of 224, the project recorded a remarkable achievement as 100% of units have been sold at the date of this report, generating a total sales value of approximately RMB1.4 billion. Meanwhile, the third phase of this development which comprises 30 units of condominium were launched in the last quarter of the current financial year. In Singapore, sales of The Trilinq comprising 755 units of condominium is gaining traction, generating a total sales value of approximately SGD148 million with 120 units sold for FY2016. As at 30 June 2016, the Group s ongoing property development projects (excluding investment-based development projects) and the status of their development are as follows: Project Year of Development's Commencement Original Development Land Size (Acres) Remaining Development Land Size (Acres) Estimated Gross Value billion Remaining Estimated Gross Value billion Ongoing Bandar Puchong Jaya, Selangor RM4.2 RM0.6 IOI Resort City, Putrajaya 1995 & RM19.5 RM18.7 Bandar Putra Kulai, Johor ,680 3,565 RM9.1 RM5.9 Bandar Putra Segamat, Johor RM0.9 RM0.3 Bandar Puteri Puchong, Selangor RM15.8 RM10.8 Taman Lagenda Putra, Kulai, Johor RM0.7 RM0.2 Taman Kempas Utama, Johor Bahru, Johor RM3.3 RM Sierra, Puchong South, Selangor RM6.8 RM4.5 South Beach, Beach Road, Singapore SGD1.0 SGD1.0 Desaria, Sungai Ara, Penang RM0.5 RM0.3 The Jalan Lempeng, Singapore SGD1.0 SGD0.6 IOI Palm City, Xiamen, PRC RMB6.7 RMB4.9 Bandar IOI, Bahau, Negeri Sembilan RM0.8 RM0.4 Bandar Puteri Bangi, Selangor RM3.7 RM2.8 Warisan Sepang RM3.9 RM3.7 i-synergy, Senai, Kulai, Johor RM2.0 RM2.0 26

29 ANNUAL REPORT 2016 Project Year of Development's Commencement Original Development Land Size (Acres) Remaining Development Land Size (Acres) Estimated Gross Value billion Remaining Estimated Gross Value billion Completed Sentosa Cove, Singapore SGD0.9 SGD0.6 Cape Sentosa Cove, Singapore SGD1.6 SGD1.6 Farrer Park, Singapore SGD0.4 SGD0.05 IOI Park Bay, Xiamen, PRC RMB1.8 The Platino, Johor Bahru, Johor RM0.5 RM0.2 The table below sets forth key information with respect to the performance of IOIPG s property development business excluding joint ventures: * 2012* Units of property sold 2,368 1,750 2,667 2,485 1,406 Total sales (RM'000) 2,214,426 1,778,457 1,966,806 1,703, ,007 Revenue (RM'000) 2,613,666 1,592,174 1,274,255 1,116, ,147 Operating profit (RM'000) 909, , , , ,955 * The Group s financial performance and financial positions are prepared on the assumption that the business combinations had taken place from the beginning of each financial period. This is to provide a meaningful comparison of the financial performance of the Group. The property sales mix by price range is as follows: Price Range (RM'000) % (RM'000) % Below RM250,000 21, ,175 1 Between RM250,000 and RM500, , , Between RM500,000 and RM750, , , Between RM750,000 and RM1,000, , , Between RM1,000,000 and RM1,500, , , Between RM1,500,000 and RM2,000, , , Above RM2,000, , , TOTAL 2,214, ,778,

30 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Business Review Property Development (Continued) OUTLOOK AND PROSPECTS Malaysia The property development environment for 2017 is expected to remain challenging industry-wide. However, demand for properties in strategic growth areas with good accessibility and connectivity is expected to remain resilient. The Group will continue to leverage on its vast and strategic land bank at different geographical location to develop properties that meet current market needs. Our projects in 16 Sierra, IOI Resort City, Bandar Puteri Bangi and Warisan Sepang are well located at growth corridors and highly accessible by highways and rail infrastructures. The newlycompleted LRT rail line and its four stations at Bandar Puchong Jaya and Bandar Puteri Puchong have enhanced connectivity for property owners and contributed to a positive spillover effect on the commercial hubs for the townships. The Group has also embarked on a few Transit Oriented Development ( TOD ) around the LRT stations. TOD, an integrated development within or near vicinity of rail station is the way forward for sustainable living that can be seen in major cities of the world. The current young population demographics of Malaysians backed by an expanding middle income group, low unemployment rate and commendable economic growth will continue to ensure demand for properties. IOIPG with its prudent financial management and proven township development track record, will continue to focus on exceeding its customer expectations and be the developer of choice, developing sustainable, quality, affordablypriced landed and high-rise residences as well as commercial units in our strategic, mature townships that are well-connected and equipped with amenities such as in Puchong, Puchong South, Bangi and Sepang. In the fourth quarter of 2016, the first and second phase of Terresse double storey link houses along with the first phase of Kubica Square shop offices in Bandar Puteri Bangi will be handed over to property buyers. The township will further benefit from a more vibrant environment and increased commercial activities with the opening of Tesco in the township in August Meanwhile, in Puchong, the last remaining block of Le Pavillion is expected to be launched in FY2017. Currently, in the Southern Region, IOIPG s property development activities are taking advantage of its vast land bank that is most suited for landed properties. The Johor market is expected to remain resilient despite some challenges arising from the highly competitive high-rise residential properties. Strategic marketing and advertising through a multitude of channels will be implemented to target potential customers. Apart from that, proactive customer engagement on social media will remain as one of the strategies to reach out to our customers, maintain our competitive edge and to enhance our brand visibility as well as to raise awareness on our brand identity. The Group is vigilant on the current property market, setting strategies and priorities for its development projects. Training and development of staff will continue to be prioritised in order to remain competitive in the market; and to be prepared to take on challenges to turn any prevailing market conditions into opportunities for business growth and sustainability. Singapore With the cooling measure in placed, the property market in Singapore continues to be challenging. Property projects in good location and with connectivity continues to attract buyers interest. In the financial year under review, the Group has launched additional units for sale for The Jalan Lempeng, registering improvements in take up rate as compared with the previous year. Sales recorded for FY2016 was 120 units worth SGD148 million as compared to FY2015 of 62 units worth SGD79 million. PRC The property market in the PRC is anticipated to be buoyant with the government s supportive measures earlier introduced. The same sentiment is shared with property developers in Xiamen, evident by its historically high tender prices recorded for its recent land tenders. In November 2015, IOI Palm City s second phase of its upscale lake-view high-rise residence was launched. The project continues to recieve overwhelming response from property purchasers, registering a take up rate of 100% up to the date of this report. The Group through its indirect 99.8% owned subsidiary, IOI (Xiamen) Properties Co Ltd had on 26 August 2016 successfully tendered for a 6.20 acre parcel of land within the new Xiang an Central Business District in Xiamen. The land is intended for mixed development. The Group views the PRC as one of the key location that provide vast investment and development potential and will continue to monitor developments in the property sector there. 28

31 ANNUAL REPORT 2016 South Beach, Singapore 29

32 Property Investment

33 IOI City Mall Delivering Sustainable Value through Strategic Investments IOI Properties Group Berhad ( IOIPG ) manages its impressive portfolio of investment properties comprising prime assets within its integrated developments including shopping malls and purpose-built offices. Its innovative investment strategies enhance value and deliver sustainable growth for the Group.

34 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Business Review Property Investment The Group s property investment business is a strategic part of IOI Properties Group Berhad ( IOIPG ). The property investment assets of the Group serve as an essential platform to generate better returns to shareholders and provide added value to customers of IOIPG. Together with the development segment they both provide a steady stream of revenue and profits to the Group. IOIPG s prime property investment interests comprising a range of property assets from shopping malls, commercial/ retail space and office space contribute positively towards the Group s revenue with stable and recurring rental income. The Group s existing property investment portfolio as at 30 June 2016 has approximately 5.6 million sq. ft. of lettable space of which about 2.6 million sq. ft. is retail space and another 2.5 million sq. ft. is office space, and the balance encompassing, amongst others, residential properties. IOIPG s major investment properties are: (a) (b) IOI City Mall in IOI Resort City, Putrajaya with 380 retail shop lots with a total net lettable area ( NLA ) of about 1.5 million sq. ft.; IOI Mall Puchong owns more than 353 retail shop lots with a total NLA of approximately 856,000 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 886,000 sq. ft.; (d) (e) (f) (g) IOI Mall Kulai in Johor with more than 258 retail shop lots with a total NLA of approximately 242,000 sq. ft.; One IOI Square and Two IOI Square located in IOI Resort City, Putrajaya with a total of two blocks of 12-storey purpose-built office towers with approximately 441,000 sq. ft. of total NLA; IOI City Tower 1 and IOI City Tower 2 situated in IOI Resort City, Putrajaya comprising two 31-storey office towers with approximately 1 million sq. ft. of NLA; IOI Boulevard in Puchong comprising 68 units of office and retail lots with a total NLA of approximately 229,000 sq. ft. Le Méridien Putrajaya For its property investment segment, the Group posted a total revenue of RM271.9 million with segmental operating profit of RM141.4 million, representing a marked improvement of RM79.3 million or 41% and RM43.9 million or 45% respectively when compared with FY2015. The key driver of its revenue was from the retail sector whereby it accounted for 82% of the Group s total revenue in its property investment segment. It recorded revenue and operating profit of RM224.3 million and RM120.0 million respectively. The improved performance was mainly due to higher occupancy and rental rates from both retail and office segments. 32

35 ANNUAL REPORT 2016 Puchong Financial Corporate Centre OPERATIONS REVIEW Despite the challenging FY2016, the Group s investment properties enjoyed gains in capital appreciation and a steady growth in returns resulting from overall improved occupancy and yields. These improved results have been achieved by a dedicated and professional team working on the portfolio of investment assets that are strategically located within IOI s matured townships and the region s development growth corridors. The market conditions in both the property development and investment segments have been challenging. However, the property investment segment continues to maintain a steady stream of rental revenue from the occupied shopping malls and offices. With greater competition, the management would need to develop more innovative marketing strategies to deal with the competition and oversupply (be it retail or office sectors) to ensure the occupancies in all the different sectors are not only maintained but improved; and rental/yield not only preserved but increased. Malaysia Retail In FY2016, IOI City Mall, the largest mall in southern Klang Valley with a 1.5 million sq. ft. of net lettable area, achieved an occupancy of 95%. As one of the state-of-the-art architectural landmarks in IOI Resort City, the mall has been the backbone of the township by providing excellent shopping experience to customers from not only around IOI Resort City but indeed to the entire southern region of Kuala Lumpur, Selangor and Negeri Sembilan. It is further complemented by a myriad of world class services available at the IOI Resort City including 5-star hotels and an award-winning golf club. IOI City Mall s comprehensive tenant mix 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; 33

36 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Business Review Property Investment (Continued) South Beach Tower, Singapore District 21, an indoor apocalypse theme park; and 300 specialty, fashion, and food and beverage ( F&B ) outlets, has made it a household name for the communities of South Klang Valley, Semenyih, Puchong, Bangi, Kajang and Putrajaya. With its excellent infrastructure and connectivity, its strategic location near the administrative centre of Putrajaya and complemented by 5-star Marriott Putrajaya and the newly completed Le Méridien Hotel of IOI Resort City, it has also become a popular regional mall offering a variety of entertainment, dining and shopping choices to locals and foreign tourists alike. IOI City Mall has also won the Malaysia Landscape Architecture Awards 2016 in the Professional Category: Landscape Design Award. IOI Mall Puchong has maintained its strong performance with occupancy remaining at approximately 95%. The management has continued with its high level performance in marketing, promotions and customer service to maintain its position as a popular mall in Puchong, meeting the entertainment, shopping and food & beverage needs of Puchong and its nearby communities. The mall s traffic is expected to benefit from the completion of Light Rail Transit ( LRT ) stations connecting Puchong to multiple high growth areas. 34

37 ANNUAL REPORT 2016 Offices Despite of the overall soft market sentiment and competitive office space market, the Group s property investment has managed to secure higher occupancy rates for its office space investment assets in FY2016. IOI Boulevard has achieved a 90% occupancy rate while PFCC has increased its overall occupancy. The office market in Puchong particularly PFCC has been able to attract Multinational Corporations ( MNCs ), benefiting from an enhanced network of connectivity and accessibility, as a result of the transportation convenience offered by the completed Light Rapid Transport ( LRT ) system as well as its location next to the Four Points by Sheraton Puchong. Regional Investment Properties South Beach, a joint venture development between IOIPG and City Developments Limited ( CDL ) continues to progress to become a fully integrated mixed used development, with the completion of the retail component expected by end To date, more than 90% of South Beach s total retail space has been leased. The completion of the MRT link in July 2016, which provided the vital link to the Esplanade and City Hall MRT stations, will not only provide convenience to the development but also enhance the vibrancy and footfall to the retail area. In respect of South Beach Office Tower encompassing over 46,000 square meters of Grade A office space, it continues to be well tenanted with almost full occupancy, securing numerous renowned multinational corporations such as Sanofi-Aventis, Tableau Asia Pacific, Rabobank, Facebook and LEGO, to name a few. Overall, the Group registered total fair value gain on investment properties of RM145.4 million. OUTLOOK & PROSPECTS Malaysia The impact of Good and Services Tax ( GST ) on the market is still being felt by consumers as they exercise caution in spending arising from a net reduction in their disposable incomes. Coupled with an overall weakened ringgit, the impact on the Malaysian consumer and retailers has been significant. The increase in retail space from numerous new malls continue to affect retail rentals as retailers have more choices to locate their outlets and a number of existing and new malls are experiencing challenging times with more voids being experienced. IOIPG is fortunate in that the malls (IOI City Mall, IOI Mall Puchong and IOI Mall Kulai) are still enjoying good occupancies despite the current challenging environment. This is because they are located in matured townships, growth corridors, within wellplanned integrated developments and connected by an excellent infrastructure. IOI Mall Puchong is expected to continue its strong performance following its enhanced connectivity and accessibility with the completion of the LRT system. Besides that, the growing population surrounding IOI Resort City has resulted in a generally good outcome in occupancy and customer traffic for IOI City Mall. IOIPG will continue to build investment properties within its township developments in high growth areas. Although the office market is expected to remain soft with the current challenging economic environment, IOIPG will continue to enhance its marketing strategies, positioning its investment properties appropriately to meet current market needs, ensuring effective and efficient management, and to promote our properties in the international market to multinational companies. Singapore The property investment market is anticipated to be challenging with new office space coming into the Singapore market in the years ahead. Nevertheless, the investment property component in South Beach is anticipated to perform well with synergistic benefits to be capitalised from the MRT link increasing footfall for the retail component, as well as, providing convenience and connectivity to our office tenants as the entire integrated mixed used development is completed by end

38 Leisure and Hospitality

39 Palm Garden Golf Club Leveraging on our strengths to build a distinctive brand Our leisure and hospitality portfolio comprising an impressive array of world class hotels, resorts and golf courses is well-known in the industry for their unique features and strong brand recognition. With the addition of new hotels and new ventures in the pipeline, we are on course towards strengthening and elevating our reputation in the leisure and hospitality industry.

40 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Business Review Leisure & Hospitality Le Méridien Putrajaya Lobby For over three decades, IOI Properties Group Berhad ( IOIPG ) has accomplished success and recognition not just in its property development and property investment portfolios, but is also highly recognised for its exclusively crafted hotels, resorts and golf courses under its leisure and hospitality portfolio. The Group strives to be one of the leading players in the leisure and hospitality circle with its signature collection of world class hotels and exciting ventures into the international leisure and hospitality scene. In its quest to influence lifestyles as it develops integrated townships, IOIPG creates a cache of lifestyle elements to complement not only the distinctive features of the architectural structures in the townships developed, but the growing and thriving communities within the development. 38 IOIPG creates integrated developments and townships that comprise a perfect blend of residential, commercial as well as leisure and hospitality elements; allowing each to complement the other as well as to leverage on the unique features and services each has to offer. These synergies are strategically embedded in the master-planned integrated developments of IOI Resort City and Bandar Puteri Puchong. To date, IOIPG has under its wings the following hotels, resorts and golf courses in the Klang Valley and Johor in the southern region: (a) Putrajaya Marriott Hotel, a five-star hotel located in IOI Resort City, houses 380 spacious guest rooms, 73 executive rooms and 35 exclusive suites. Set amidst the lush greenery of a resort environment, this opulently designed hotel and its restaurants have won numerous awards including Best Hotel Development ; (b) Four Points by Sheraton Puchong, a four-star business hotel strategically located in the heart of Puchong, features 249 stylish and contemporary guestrooms and suites; (c) Palm Garden Hotel, a four-star hotel located within IOI Resort City comes with 151 tastefully furnished rooms;

41 ANNUAL REPORT 2016 (d) Palm Garden Golf Club ( PGGC ), also located in IOI Resort City is a renowned award winning golf course winning the Par Golf People s Choice Awards 2016 for Best Overall Golf Experience, Best Greens and Best Corporate Tournament Venue in Malaysia, as well as being recognised as the 1st Big Hole Golf in Malaysia by Malaysia Book of Records in June 2016; (e) Palm Villa Golf and Country Resort, located in the township of Bandar Putra Kulai, Johor, is a 27-hole golf course which comes with a comprehensive range of club facilities; (f) At the date of this report, Le Méridien Putrajaya has joined the Group s signature collection of hotels with it officially welcoming its first guests during its opening on 18 August Under the Group s leisure and hospitality portfolio, revenue generation recorded for this financial year is mainly from the hotel guest room 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 major contributors from this segment are Putrajaya Marriott Hotel and Four Points by Sheraton Puchong. The Group registered a total revenue of RM131.8 million with segmental operating profit of RM18.2 million, an increase of RM21.0 million or 19% and RM8.1 million or 80% respectively when compared with FY2015. The hotel segment contributed 73% to the total revenue. It recorded a revenue and operating profit of RM96.0 million and RM10.9 million respectively. The improved performance was primarily due to better performance from all hotels with higher occupancy and average room rates coupled with better control of operation expenditures. Le Mei Chinese Restaurant at Le Méridien Putrajaya 39

42 IOI PROPERTIES GROUP BERHAD MANAGEMENT S DISCUSSION AND ANALYSIS Group Business Review Leisure & Hospitality (Continued) OPERATIONS REVIEW With the addition of Four Points by Sheraton Puchong to IOIPG s collection of hotels in December 2014, the hotel has gained commendable popularity amongst local and international leisure travelers as well as amongst businesses in both Puchong and its surrounding growth areas ie Subang, Bandar Sunway and Shah Alam. The hotel has recorded consistent occupancy rate at above 70% since its opening. Recognised as the first international chain hotel in the business district of Puchong, the hotel sits in an ideal location within walking distance to popular eateries, nearby amenities including hospitals, shopping malls, schools, Central Park. It is well connected too via the newly completed LRT, and highways including the LDP, KESAS and MEX. In its efforts to further enhance customer experiences, the Group has initiated the progressive refurbishment exercise for Putrajaya Marriott Hotel which aims to add a touch of modernity while maintaining the opulence of the original interior design of the guest rooms. Upgrading works is expected to be completed by next year. The PGGC remains strong and competitive in the golf circuit with its consistent and effective maintenance of the golf course and greens. This has persistently driven loyal and new customers to PGGC as the golf course of their choice. IOIPG welcomes 5-star Le Méridien Putrajaya into its signature hotel collection at IOI Resort City. This internationally acclaimed hotel by Starwood Hotels and Resorts Worldwide, Inc. comprises 353 contemporary guest rooms including 42 executive suites. Latitude 2 at Le Méridien Putrajaya OUTLOOK AND PROSPECTS Malaysia IOIPG always strives to counter all challenges it may face, ahead of time, particularly in the leisure and hospitality industry whereby this segment of business is generally more competitive especially in terms of room rates, golf-fees, F&B promotions to name a few. As such the refurbishment initiatives currently ongoing in Putrajaya Marriott Hotel is crucial in order to maintain its competitiveness in the industry in achieving higher occupancy rates and contributing towards long-term sustainable growth. Effective and efficient maintenance of the hotel guest rooms, facilities and golf courses, joint promotions and new attractions to enhance customer experiences with service excellence are the key contributing drivers of sustainable growth for the Group s leisure and hospitality segment. Cluster marketing to leverage on the attractions and facilities of other business components within the 40 Pool View of Four Points by Sheraton Puchong

43 ANNUAL REPORT 2016 Putrajaya Marriott Hotel Group will be aimed at increasing customer traffic and enhancing revenue through strategic cross marketing and knowledge sharing amongst all business entities within the Group. Meanwhile, the Le Méridien Putrajaya, which at the date of this report has opened its doors for business and is expected to further enhance the integrated township of IOI Resort City, complementing the myriad of available world class amenities and award-winning facilities. The hotel is interconnected to offices at IOI City Towers and IOI City Mall. This integrated concept of the mall and hotel will encourage tourist patronisation due to its location which is well-served by major arterial roads and highways. The Group foresees more patrons visiting Four Points by Sheraton Puchong although the hotel may face increased competition with the opening of new hotels within the vicinity. In spite of this, the hotel is expected to continue to perform well in view of its strategic location within the matured township of Bandar Puteri Puchong that has a financially robust business environment and a community that appreciates a higher standard of living. Despite anticipating a soft market sentiment globally in the coming financial year, the Group is confident that its leisure and hospitality portfolio will make it through rough shores with its forwardlooking mindset of applying creative business strategies, leveraging on the unique features of existing lifestyle components located within their developments in which they are located in; and available facilities and amenities in the neighbouring vicinities. The Group will continue its concerted efforts in aggressively marketing its rooms, convention and conference facilities and F&B experiences to corporate institutions, private and local sector as well as local and international tourists. The Group will capitalise on the high customer traffic of its shopping malls to increase brand visibility of its leisure and hospitality brands as well as tap on the highly populated surrounding commercial, industrial and residential areas. Singapore Albeit a steady supply of hotels coming on stream which will put pressure on occupancy rates, the Singapore hotel industry is poised to remain resilient. Capitalising from its position as a global and regional transit hub, with a well developed tourism infrastructure and efficient transport network. Following from the soft launch of the South Beach Hotel in September 2015, IOIPG and City Development Limited announced on 29 June 2016 of its collaboration with Marriott International, Inc to manage the hotel and has since been rebranded as JW Marriott Hotel Singapore South Beach. The collaboration is anticipated to enhance the global reach of potential clientele capitalising on the extensive network and strong branding of Marriott International. 41

44 IOI PROPERTIES GROUP BERHAD SUSTAINABILITY AND CORPORATE RESPONSIBILITY Running for a good cause Crafting a better future for our children of tomorrow by sustaining the significant wonders of today This may sound ambitious but in IOI Properties Group Berhad ( IOIPG ), we believe in the amazing ability of each individual in crafting a future of our dreams and aspirations, significantly creating a positive, long-lasting impact to the lives of many around us; and to those of future generations. 42

45 ANNUAL REPORT 2016 We believe that Building Value in Development and embracing sustainability will take us forward in being the market leader in the property industry; offering products and services with the aim to exceed expectations and with the commitment to positively and distinctively influence lifestyles of our customers and the community in which we operate. Building Value In Development With this in mind, IOIPG has been constantly embracing sustainability as it formulates and implements its business strategies based on the company vision of sustainable long-term growth through ensuring superior performance, developing our people, building relationships with our stakeholders, contributing to progress and caring for the society and the environment in which we operate. We believe sustainability encompasses both sustainable growth of the Group s businesses as well as the sustainability of the three pillars of economy, environment and society. We leverage on the expertise and assets of each business segment within the Group to enhance performance, to build mutually beneficial and meaningful stakeholder relationships where we are able to collaborate and positively contribute towards sustainability. Our employees are committed to strive towards a healthy work culture through green initiatives that has a positive impact on our sustainability journey which includes simple actions such as lights off during lunch, recycling printed papers, use of soft copies of drawings and reference materials vs printed copies amongst others. Apart from that, we continue to be active in our CR initiatives and encourage employee volunteerism. Our Policy and Principles IOIPG is committed towards adopting responsible practices to enhance value creation in the following: Incorporating design principles and adopting work practices that positively impacts energy and water conservation as well as the environment Cultivating conducive work environment to achieve its quality policy Promoting activities that contribute to safety and vibrancy of the community Continuously improve health and safety standards Contributing positively to biodiversity Contributing positively to social and economic development of its communities Embracing a sustainable work culture Microclimatic wave-like canopy at South Beach, Singapore 43

46 IOI PROPERTIES GROUP BERHAD SUSTAINABILITY AND CORPORATE RESPONSIBILITY (Continued) The Sustainability Strategy of the Group is steered by the Group Sustainability Steering Committee chaired by the Chief Executive Officer (CEO) with the IOIPG Head of Sustainability directly reporting to the CEO. Championing Sustainability Our People We continuously strive for continual improvement and enhancement of ongoing efforts in embedding sustainability in our business strategies and embracing sustainability in our corporate and work culture. IOIPG recognises the important role of leadership and ownership at all levels within the Group in ensuring the successful implementation of sustainability initiatives. Thus, the Sustainability Strategy of the Group is steered by the Group Sustainability Steering Committee chaired by the CEO with the IOIPG Head of Sustainability directly reporting to the CEO. The IOIPG Sustainability Committee comprising Senior Management across its core business segments, steers the Group s sustainability strategy into a competitive advantage for the Group s business, integrating both business and sustainability priorities in order for the Group to thrive. 44 Datin Joanne Wong and students at a school programme Our Products Renowned for its expertise in township development, IOIPG not only builds properties but develops integrated townships with comprehensive facilities and amenities aimed at providing conducive environment for sustainability, where communities grow and businesses thrive within residential and commercial enclaves with lush landscaped surroundings of open spaces and recreational retreats. The Group s property investment portfolio and its leisure and hospitality businesses encompassing impressive assets such as hotels of world renowned brands, award-winning golf courses, purpose-built office buildings and award-winning shopping malls amongst others are located within the Group s property developments ie IOI Resort City, Bandar Puteri Puchong, Bandar Puchong Jaya, Bandar Putra Kulai etc. The efficient management of these investment assets which include world-class Marriott Putrajaya Hotel, 5-star Le Méridien Putrajaya, award-winning Palm Garden Golf Club, Grade A GBI-certified IOI City Towers, the longest mall in Southern Klang Valley IOI City Mall amongst others, not only ensures profitable returns but creates value to the township in which it is located in. Apart from that, it benefits the communities in which it operates in, thus laying a strong foundation for continued economic growth and sustainable living for the community, contributing towards nation building. Major townships developed by IOIPG are located at growth corridors with high connectivity and accessibility via extensive highways effectively reducing travelling time on the road. Current and future developments in the Klang Valley will focus on Transit-oriented Development ( TOD ) and this is expected to positively encourage efforts by the respective communities to reduce carbon footprint by using alternative options of transportation. In Bandar Puteri Bangi, a 7.5km stretch of bicycle and jogging path will be provided to encourage a healthy lifestyle. Meanwhile in IOI Resort City, a pedestrian and bicycle lane is being progressively constructed to facilitate the use of non-fuel transportation; and to encourage healthy living amongst the urbanites in this world class destination for local and international communities.

47 ANNUAL REPORT 2016 Our Green Efforts The Group incorporates sustainable green features and technology into its architectural concepts and design principles, aimed at creating unique signature developments that harnesses natural light and air, reduces energy consumption and carbon footprint; and encourages sustainable lifestyles amongst the occupants of its developments. In line with its efforts in building sustainable living for the community, IOIPG has over the years adopted various practices in order to build sustainable townships and commercial enclaves. The following are sustainable features which have been incorporated within IOIPG developments thus far: Commercial High-Rise Buildings Obtaining the Green Building Index ( GBI ) or Green Mark Certification Building orientation to face north-south direction to reduce heat and sun glare Incorporating energy management modules in building automation system Application of low Volatile Organic Compound ( VOC ) paint Installation of photovoltaic cells at the rooftop where appropriate Installation of motion sensor lights at staircase areas Installation of water-saving toilet cisterns Installation of sensor taps in public toilets The IOI City Mall Run 2016 organised by IOI City Mall to advocate healthy living amongst the community Residential Buildings Implementation of cross ventilation designs where applicable Design or layout with strategicallyplaced windows to naturally ventilate all bathrooms without the use of exhaust fans Design or layout with open concept and high ceilings to enhance natural lighting and ventilation North-South building orientation to reduce heat and sun glare; thus reducing use of air-conditioning system contributing to reduction in energy consumption Adoption of vertical plantings to enhance aesthetics and reduce carbon footprints Installation of solar water heating systems Installation of rainwater harvesting systems for irrigation purpose Apart from these, various new ideas have been innovated to further complement IOIPG s efforts in creating sustainable living for the community and eventually the nation. Using recyclable metal formwork as well as steel roof truss in our developments which aims to reduce the number of trees being cut Implementing effective waste management system at construction sites to support reduction and recycling of waste Incorporating designs or layout of carparks, lift lobbies and washrooms to harness natural ventilation which directly saves on electricity consumption and reduces GHG emissions Alternative looping for lighting circuits at the carpark and staircase areas which allows the flexibility of reducing 50% use of lights during non-peak hours 45

48 IOI PROPERTIES GROUP BERHAD SUSTAINABILITY AND CORPORATE RESPONSIBILITY (Continued) Apart from incorporating green features in our design concepts; efforts aimed at reducing impact on the environment are practised in its planning and implementation of landscaping at development sites. During the refurbishing of Palm Garden Golf Club (PGGC), 85% of existing trees totalling 2,191 trees were transplanted. Besides, 80% of the planted materials for the PGGC refurbishment was sourced and propagated on site, eliminating the need for long-haul transportation of the materials and effectively contributing towards both fuel consumption GHG emissions. In Bandar Puteri Bangi, trees originally located at the development site are transplanted to create lush green open spaces and parks for the enjoyment of the residents and to facilitate social interaction amongst residents within and beyond the neighbourhood, a crucial part of sustainable living towards nation building. In the management of the Group s investment assets, the facilities and property management teams are focused on ensuring efficient management systems in place in order to strive towards lowering energy consumption and reducing the impact of our business operations on the environment. Energy conservation programs for more precise control on the reduction of energy wastage such as replacement of conventional lighting with Light Emitting Diode ( LED ) lighting, and more precise control on air conditioning and mechanical ventilation ( ACMV ) are in progress. Replacement of inefficient chillers with energy efficient units for hotels, malls and office buildings to improve performance and energy efficiency is expected to be progressively implemented. Our Community Human Capital Development IOIPG believes that education is an integral component in empowering and enlightening the young to become leaders of tomorrow. The Group s community outreach programmes which centres on education, human capital development and corporate philanthropic initiatives are mainly undertaken by its charity arm, the Yayasan Tan Sri Lee Shin Cheng ( Yayasan TSLSC ). To date, Yayasan TSLSC has contributed over RM36 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 Scholarships and career opportunities are awarded to academically outstanding students pursuing fulltime undergraduate studies related to the Group s business nature. Yayasan TSLSC deems it a great investment to support qualified Malaysian youths and to help build the nation s human capital through these scholarships. To date, Yayasan TSLSC has granted 247 students with more than RM5.6 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 basic education as a platform for a brighter future. The adopted students will receive financial assistance and school bags from Yayasan TSLSC until their completion of primary or secondary education. Since its inception, the SAP has benefited more than 1000 students from over 200 schools in Peninsular Malaysia and Sabah. To date, the total sponsorship amounts to more than RM3 million. 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, new halls, libraries, perimeter fences, IT and sports facilities in order to improve the learning environment. To date, six primary and secondary schools in Sabah have been adopted. From time to time, financial assistance is also extended to improve and 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 towards achieving academic excellence. Cash awards, plaques and certificates of achievement are given out annually to students from primary to upper secondary levels who excel academically, possess high leadership qualities and are active in their extra-curricular activities. More than RM535,000 worth of cash prizes have been given to over 1,400 young achievers since its inception. 46

49 ANNUAL REPORT 2016 The Young Achievers Award ( YAA ) by Yayasan TSLSC Collaboration Malaysian Collective Impact Initiatives In August 2015, IOI joined the Malaysian Collective Impact Initiatives ( MCII ) along with several other private companies, nonprofit organisations and government agencies to collectively drive positive change in the community at large. MCII was established with the objective of improving education in Malaysia and encouraging cross-sector collaboration, community engagement and youth upskilling which contribute towards successful employment after school. School retention and youth unemployment in Klang have been identified as the two main focus areas of MCII. Two schools in Klang SMK Pandamaran Jaya and SMK Tengku Idris Shah have been identified as the pilot sites for the project. IOI looks forward to playing a meaningful social transformative role in MCII as it moves to make collective impact where it matters. Charity Bargain Basement Bargain Basement is another charity initiative by Yayasan TSLSC. Armed with a Give to Inspire Others to Give motto, the charitable store started its operations on 1 June Its objective is to encourage the public to donate pre-loved or unused items for sale whereby net proceeds are channelled to different charities. Reaching Out 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 by Yayasan TSLSC. Some of these activities include bringing cheer to residents at old folks homes and organising outdoor teambuilding sessions for children from orphanages. IOIPG actively engages the customers via productive efforts undertaken by the Customer Relations Unit ( CRU ) aimed at building 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 service excellence, CRU engages with customers and the community within IOIPG developments through various initiatives such as the IOI Service Champions and Customer Surveys. Other community engagement efforts include the Reach Out community newsletter which is distributed free of charge to the communities within IOIPG developments, our community website which provides a virtual engagement and interaction platform for customers and the community, IOI Privilege Card and Go Green campaigns. In addition to organising community events, IOIPG also supports activities organised by the Residents Association ( RAs ) in its efforts to create sustainable communities in its townships. IOIPG s numerous CR efforts are highlighted in the Corporate Responsibility Calendar on pages 48 to 55. 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. IOIPG in its continued efforts to contribute towards sustainability for the benefit of future generations, will continue to play an important role in leading initiatives towards adopting responsible practices in everyday business, enhancing value creation to its customers and embedding sustainability in its corporate culture. We have started the journey on the road of Sustainability and it will be an exciting, vibrant journey of memorable sustainability experiences which adds value to business. 47

50 IOI PROPERTIES GROUP BERHAD CORPORATE RESPONSIBILITY Social Contributions (July 2015 June 2016) JULY 2015 IOI City Mall welcomed 25 children from Rumah Bakti Al-Kausar to its first Aidilfitri celebration themed The Symphony Raya Charity Event. The children were treated to adventurous fun rides at District 21 s indoor theme park and lunch at Nathan s Famous. 20 AUGUST 2015 IOI Properties Group Berhad ( IOIPG ) and IOI Corporation Berhad ( IOIC ) participated in the Bursa Bull Charge 2015 and contributed RM26,600 in support of Bursa Malaysia s aim in fostering a sustainable and inclusive marketplace AUGUST 2015 The 11 th Putra Charity Run 2015 in Bandar Putra, Kulai Jaya attracted 3,800 participants, and successfully raised RM70,000 for the Handicapped and Mentally Disabled Children Association of Johor Bahru AUGUST 2015 Putrajaya Marriott Hotel and Palm Garden Hotel brought festive cheer to 80 underprivileged children from Rumah Keluarga Kami and Rumah Tumpangan & Sekolah Anak-anak Yatim & Miskin Sungai Pinang to its Riang Ria Aidilfitri Charity Hi-tea. The children and caregivers enjoyed sumptuous food and received goodie bags as well as duit raya. 48

51 ANNUAL REPORT OCTOBER Yayasan Tan Sri Lee Shin Cheng ( Yayasan TSLSC ) awarded 18 deserving students with scholarships worth RM850,000 in recognition of their outstanding academic and extra-curricular achievements. The students received their scholarships from IOIC Chief Executive Officer Dato Lee Yeow Chor and the foundation s Executive Director Datin Joanne Wong at a presentation ceremony held at Palm Garden Golf Club. 8 NOVEMBER 2015 Four Points by Sheraton Puchong organised a charity drive themed The Children is our Future Hope. This charitable event successfully raised RM12,000 to support Check Out for Children, a joint initiative between Starwood Hotels & Resorts Worldwide, Inc and UNICEF. 30 children from Rita Home, an orphanage in Klang were invited to join in the fun. 8 NOVEMBER 2015 Yayasan TSLSC contributed RM50,000 to the building fund of SJK (C) Pei Cheng in Johor during the Tiger-Sin Chew Chinese Education Charity Concert

52 IOI PROPERTIES GROUP BERHAD CORPORATE RESPONSIBILITY Social Contributions (July 2015 June 2016) NOVEMBER 2015 Putrajaya Marriott Hotel and Palm Garden Hotel celebrated Deepavali with 80 children from Ephrata Home, Rumah Kasih and Pertubuhan Anak Yatim Darul Aminan. In addition to being served a delicious spread of Indian-inspired dinner buffet, the children also received goodie bags and cash tokens NOVEMBER 2015 IOIPG proudly organised the IOI Properties M6Riders MTB RapiDino Challenge 2015 with Kelab Berbasikal Mahkota 6 at Bandar Puteri Bangi. This event was to promote healthy living amongst residents DECEMBER 2015 A total of 129 children from the National Autism Society of Malaysia (NASOM), Rumah Anak-anak Yatim Al-Nasuhah and Shepherd s Home were treated to a Christmas charity dinner themed A Night of Fairies, Princes & Princesses by Putrajaya Marriott Hotel and Palm Garden Hotel. 50

53 ANNUAL REPORT DECEMBER 2015 IOI Mall Kulai organised a Christmas tea party for 45 children from Pertubuhan Kebajikan Shan De Johor Bahru and Pusat Jagaan Kanak-kanak Terencat Akal Saleng. The children also received school supplies which were collected by the mall through its Donation Gift Campaign DECEMBER 2015 IOI City Mall gave a special Christmas experience to 101 children from Rumah Syafiyyah, Rumah Yatim Sri Sai Selangor and House of Love by treating them to an exciting day at the mall. The children watched Legend of a Rabbit at the cinema, enjoyed delicious meals at selected F&B establishments and received goodie bags. 15 JANUARY 2016 IOI City Mall celebrated Chinese New Year with 21 senior citizens from The Klang & Coast Chik Sin Thong Old Folks Home Selangor and Persatuan Rumah Kebajikan Ebenezer. They tossed yee sang and were pampered with special hair grooming treatments as well as goodie bags to kick off the new year

54 IOI PROPERTIES GROUP BERHAD CORPORATE RESPONSIBILITY Social Contributions (July 2015 June 2016) JANUARY 2016 IOI Mall Puchong invited 40 underprivileged families to commemorate the launch of its Chinese New Year celebration which coincided with Old Master Q s 50 th Anniversary Exhibition. The families enjoyed dinner and received goodie bags with ang pow packets along with good wishes for the new year JANUARY 2016 The 2 nd edition of IOI Eco Fun Ride held at 16 Sierra township attracted 1,000 cyclists. This fun ride was aimed at fostering closer ties with the surrounding communities besides encouraging a healthy and green lifestyle. 15 FEBRUARY 2016 Putrajaya Marriott Hotel and Palm Garden Hotel held a festive luncheon for senior citizens from Rumah Caring, Kajang and The Little Sisters of the Poor, Cheras. Both hotels presented the guests with gifts and ang pow packets during the Mon-Key to Happiness event. 52

55 ANNUAL REPORT FEBRUARY 2016 Yayasan TSLSC awarded RM360,000 to 403 needy students from 29 primary and secondary schools in Peninsular Malaysia and Sabah under its Student Adoption Programme FEBRUARY 2016 To support social enterprises, Yayasan TSLSC pledged RM80,000 to purchase tote bags and socks from Persatuan Daybreak, a home cum social enterprise in Perak, where the disabled are provided vocational skills training to make handicrafts for sale. 19 MARCH 2016 March was designated as IOI s Earth Month whereby green activities and awareness campaigns were held throughout IOIPG to encourage all employees to adopt a sustainable lifestyle. It culminated with the observance of Earth Hour on 19 March MARCH 2016 IOI City Mall continued to advocate healthy living with the IOI City Mall Run 2016 by encouraging more people to participate in physical and sporting activities. 53

56 IOI PROPERTIES GROUP BERHAD CORPORATE RESPONSIBILITY Social Contributions (July 2015 June 2016) MARCH 2016 Employees of IOIC and IOIPG participated in The Edge Kuala Lumpur Rat Race 2016 and pledged RM32,000 in support of The Edge Education Foundation MAY students received the Young Achievers Awards (YAA) from Yayasan TSLSC plus cash prizes, plaques, and certificates worth RM38,900 in recognition of their excellent academic and extra-curricular achievements. 1 JUNE 2016 Putrajaya Marriott Hotel and Palm Garden Hotel came together to welcome the month of Ramadan by distributing the traditional Ramadan delicacy bubur lambuk at selected toll booths located near IOI Resort City. Three thousand packets of the delicacy were distributed to road users from 2:30 pm to 4:00 pm. 54

57 ANNUAL REPORT JUNE 2016 Putrajaya Marriott Hotel teamed up with Palm Garden Hotel to celebrate Hari Raya with 50 underprivileged boys from Pusat Kebajikan Anak-anak Yatim dan Tahfiz Al-Habbah (PERS) JUNE 2016 Yayasan TSLSC initiated Bargain Basement to encourage the public to donate pre-loved or pre-used items for sale at its outlet located at B3 of IOI City Mall. 100% of its net proceeds are channeled to various charities in its efforts to contribute to the community and the underprivileged JUNE 2016 IOI City Mall welcomed 30 children from Rumah Penyayang Ulin Nuha to celebrate A Mystical Ramadan at IOI City Mall. The children were treated to a complimentary Angry Birds movie session and followed by a shopping spree and buka puasa dinner. 55

58 IOI PROPERTIES GROUP BERHAD BOARD OF DIRECTORS TAN SRI DATO LEE SHIN CHENG PSM, DPMS, JP Executive Chairman TAN SRI DATO SRI KOH KIN LIP PSM, SSAP, JP Senior Independent Non-Executive Director LEE YEOW SENG Chief Executive Officer DATO LEE YEOW CHOR DSAP Non-Independent Non-Executive Director WEBSITES DATUK TAN KIM TAN CHONG MIN PMC, JP Independent Non-Executive Director DATUK LEE SAY TSHIN DMSM, SDK Independent Non-Executive Director DATUK DR TAN KIM HEUNG PMW Independent Non-Executive Director AUDIT AND RISK MANAGEMENT COMMITTEE DATUK TAN KIM TAN CHONG MIN* PMC, JP Chairman DATUK LEE SAY TSHIN* DMSM, SDK DATUK DR TAN KIM HEUNG* PMW NOMINATING AND REMUNERATION COMMITTEE TAN SRI DATO SRI KOH KIN LIP* PSM, SSAP, JP Chairman DATUK TAN KIM TAN CHONG MIN* PMC, JP DATUK DR TAN KIM HEUNG* PMW * Independent Non-Executive Directors 56

59 ANNUAL REPORT 2016 Corporate Information IOI Palm City in Xiamen, PRC EMPLOYEES SHARE OPTION SCHEME COMMITTEE TAN SRI DATO LEE SHIN CHENG PSM, DPMS, JP Chairman LEE YEOW SENG DATO LEE YEOW CHOR DSAP AUDITORS PricewaterhouseCoopers Chartered Accountants Level 10, 1 Sentral, Jalan Rakyat Kuala Lumpur Sentral P O Box Kuala Lumpur Tel Fax THE ADMINISTRATION AND POLLING AGENT Boardroom Corporate Services (KL) Sdn Bhd Lot 6.05, Level 6 KPMG Tower 8 First Avenue, Bandar Utama Petaling Jaya Selangor Darul Ehsan Tel Fax CHARTERED SECRETARY TAN SIN YEE (MAICSA ) REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Two IOI Square IOI Resort City Putrajaya Tel Fax REGISTRAR Tricor Investor & Issuing House Services Sdn Bhd Unit 32-01, Level 32, Tower A Vertical Business Suite Avenue 3, Bangsar South No. 8, Jalan Kerinchi Kuala Lumpur Tel Fax LEGAL FORM AND DOMICILE Public Limited Liability Company Incorporated and Domiciled in Malaysia STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad STOCK CODE

60 IOI PROPERTIES GROUP BERHAD BOARD OF DIRECTORS TAN SRI DATO LEE SHIN CHENG > Executive Chairman > LEE YEOW SENG Chief Executive Officer DATO LEE YEOW CHOR Non-Independent Non-Executive Director > 58

61 ANNUAL REPORT 2016 TAN SRI DATO SRI KOH KIN LIP Senior Independent Non-Executive Director > > DATUK TAN KIM TAN CHONG MIN Independent Non-Executive Director DATUK LEE SAY TSHIN Independent Non-Executive Director > > DATUK DR. TAN KIM HEUNG Independent Non-Executive Director 59

62 IOI PROPERTIES GROUP BERHAD LEADERSHIP PROFILE OF DIRECTORS TAN SRI DATO LEE SHIN CHENG Executive Chairman Tan Sri Dato Lee Shin Cheng was appointed to the Board on 1 June He is also the Executive Chairman and founder of IOI Group. Tan Sri Lee is an entrepreneur with considerable experience in the plantation and property development industries. He is pivotal to the operations of IOI Group, having founded the plantation and property businesses more than 25 years ago. Through his entrepreneurial leadership and stewardship, strategic vision, guidance, wisdom as well as his vast experience, IOI Group has grown in tandem to become one of the leading plantation and property groups in Malaysia. As our Executive Chairman, he oversees the day-to-day operations of the Group and also provides coherent leadership in leading the Board of IOI Properties Group Berhad including, effective communication with stakeholders as well as providing entrepreneurial leadership and stewardship in the charting of IOI Properties Group s future direction. In recognition of Tan Sri Lee s immense contribution to the property industry in Malaysia, he was bestowed the singular honour of FIABCI Malaysia Property Man of the Year 2001 Award. In February 2002, Tan Sri Lee was conferred the Honorary Doctorate Degree in Agriculture by Universiti Putra Malaysia in recognition of his contributions to the palm oil industry. In 2006, Tan Sri Lee was conferred the Fellowship of the Incorporated Society of Planters ( FISP ) by Malaysia s ISP. In October 2008, Tan Sri Lee was conferred Honorary Fellowship of the Malaysian Oil Scientists and Technologists Association ( MOSTA ) for his outstanding contributions to agriculture, in particular the oleochemical and specialty oils and fats. Tan Sri Lee was also awarded the prestigious Malaysian Palm Oil Association ( MPOA ) Recognition Award 2011 for his outstanding contributions and leadership in the plantation industry. In recognition of Tan Sri Lee s leadership efforts and qualities in Malaysian palm oil industry, he was awarded the Palm Oil Industry Leadership Award in September 2015 by Malaysian Palm Oil Council ( MPOC ). Tan Sri Lee was a Council Member of the East Coast Economic Region Development Council ( ECERDC ) for the Government from 2008 to Tan Sri Lee is also active in providing his advice and guidance to a large number of industry groupings, associations and social organisations. He serves as, among others, the Honorary President of the Associated Chinese Chambers of Commerce and Industry of Malaysia ( ACCCIM ). Tan Sri Lee is the father of Dato Lee Yeow Chor and Lee Yeow Seng. Tan Sri Lee is deemed in conflict of interest with IOI Properties Group by virtue of his interest in certain privately-owned companies which are involved in similar business of property investment and property development. Except for certain recurrent related party transactions of a revenue or trading nature which are necessary for day-to-day operations of IOI Properties Group and for which Tan Sri Lee is deemed to be interested which is disclosed under the notes to audited financial statements section of the Annual Report, there are no other business arrangements with the Company in which he has personal interest. He attended all the nine (9) Board Meetings held during the financial year ended 30 June

63 ANNUAL REPORT 2016 TAN SRI DATO LEE SHIN CHENG Executive Chairman Nationality Age 77 Date of Appointment: 1 June 2013 Gender: Male 61

64 IOI PROPERTIES GROUP BERHAD 62 LEE YEOW SENG Chief Executive Officer Nationality Age 38 Date of Appointment: 25 February 2013 Gender: Male

65 ANNUAL REPORT 2016 LEADERSHIP PROFILE OF DIRECTORS LEE YEOW SENG CHIEF EXECUTIVE OFFICER 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 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. He attended all the nine (9) Board Meetings held during the financial year ended 30 June Lee Yeow Seng is the youngest son of Tan Sri Dato Lee Shin Cheng and the brother of Dato Lee Yeow Chor. 63

66 IOI PROPERTIES GROUP BERHAD LEADERSHIP PROFILE OF DIRECTORS DATO LEE YEOW CHOR NON-INDEPENDENT NON-EXECUTIVE DIRECTOR 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 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 In March 2015, Dato Lee was appointed as a Director on the Board of Bank Negara, the Central Bank of Malaysia. 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 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 six (6) out of the nine (9) Board Meetings held during the financial year ended 30 June TAN SRI DATO SRI KOH KIN LIP SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR Tan Sri Dato Sri Koh Kin Lip ( Tan Sri Richard Koh ) was appointed to the Board on 2 January He received his early education in Sabah prior to his pursuit of higher education in Plymouth Polytechnic, United Kingdom (currently known as Plymouth University, United Kingdom). In 1977, he was awarded with a Higher National Diploma in Business Studies and a Council s Diploma in Management Studies. Tan Sri Richard Koh joined Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business which was then principally engaged in timber industry and was actively involved in the administrative and financial matters. In 1985, he assumed the role as Managing Director of his family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the flagship company of the family businesses. Rickoh Holdings Sdn Bhd and group of companies had since continued to grow via diversifying its business activities which are now comprising, amongst others, properties investments, property holdings, properties letting, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, information technology, property development, hotel business, insurance agency, trading in golf equipment and accessories, river sand mining, bricks manufacturing and quarry operations. Currently, Tan Sri Richard Koh is a Non-Independent Non-Executive Director of NPC Resources Berhad, Independent Non-Executive Director of Daya Materials Berhad and Cocoaland Holdings Berhad. He is also a member of the Management Committee of Red Sena Berhad. Tan Sri Richard Koh is the Chairman of Nominating and Remuneration Committee of the Company. He is the Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees in Daya Materials Berhad; member of Audit Committee, Nominating Committee and Remuneration Committee in Cocoaland Holdings Berhad; and member of the Audit Committee in NPC Resources Berhad. Apart from his business involvement, Tan Sri Richard Koh is also actively involved in corporate governance and advisory role in various industries where he sits on the boards of various private and public listed companies in a non-executive capacity. He attended all four (4) Board Meetings held after his appointment during the financial year ended 30 June

67 ANNUAL REPORT 2016 DATO LEE YEOW CHOR TAN SRI DATO SRI KOH KIN LIP Non-Independent Non-Executive Director Senior Independent Non-Executive Director Nationality Age Date of Appointment: Date of Appointment: Age Nationality February January Gender: Male Gender: Male 65

68 IOI PROPERTIES GROUP BERHAD DATUK TAN KIM TAN CHONG MIN Independent Non-Executive Director Nationality 66 Age 77 Date of Appointment: 1 June 2013 Gender: Male DATUK LEE SAY TSHIN Independent Non-Executive Director Nationality Age 63 Date of Appointment: 22 August 2013 Gender: Male DATUK DR. TAN KIM HEUNG Independent Non-Executive Director Date of Appointment: 1 June 2013 Gender: Male Age 54 Nationality

69 ANNUAL REPORT 2016 LEADERSHIP PROFILE OF DIRECTORS DATUK TAN KIM TAN CHONG MIN INDEPENDENT NON-EXECUTIVE DIRECTOR Datuk Tan Kim Tan Chong Min was appointed to the Board on 1 June 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 ). 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 and Yayasan Tan Sri Lee Shin Cheng. He attended all the nine (9) Board Meetings held during the financial year ended 30 June Notes: 1. Save as disclosed above, none of the Directors have: (a) any family relationship with any directors and/or major shareholders of the Company; and (b) any conflict of interest with the Company. 2. None of the Directors have any conviction for offences (other than traffic offences) within the past five (5) years. 3. None of the Directors have any public sanction or penalty imposed by the relevant regulatory bodies during the financial year ended 30 June DATUK LEE SAY TSHIN INDEPENDENT NON-EXECUTIVE DIRECTOR Datuk Lee Say Tshin was appointed to the Board on 22 August 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 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 In his capacity as Managing Director of Strategic Business Development, Datuk Lee Say Tshin was instrumental in developing 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 has been appointed as Advisor to the advisory board of the Secretariat for the Advancement of Malaysian Entrepreneurs ( SAME ) in the Prime Minister s Department since April He attended all the nine (9) Board Meetings held during the financial year ended 30 June DATUK DR. TAN KIM HEUNG INDEPENDENT NON-EXECUTIVE DIRECTOR Datuk Dr Tan Kim Heung was appointed to the Board on 1 June 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 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 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. He attended all the nine (9) Board Meetings held during the financial year ended 30 June

70 IOI PROPERTIES GROUP BERHAD SENIOR MANAGEMENT TEAM Executive Chairman Tan Sri Dato Lee Shin Cheng Chief Executive Officer Lee Yeow Seng CORPORATE Chief Financial Officer Betty Lau Sui Hing General Manager, Corporate Communication & Sustainability Kristine Ng Mee Yoke Chartered Secretary Tan Sin Yee PROPERTY DEVELOPMENT Chief Operating Officer Teh Chin Guan Senior General Managers Lee Yoke Har Simon Heng Kwang Hock Tan Keng Seng Lim Beng Yeang General Managers Lou Fu Leong Ho Kwok Wing Ir David Choo Kay Boon Chung Nyuk Kiong Albert Lee Wen Loong Deputy General Manager Lim Cheok Leng General Manager, The Trilinq, Singapore Lee Yean Pin (Li Yanping) Assistant General Manager, Xiamen, People s Republic of China Ooi Wooi Yaw PROPERTY INVESTMENT Chief Operating Officer Cheah Wing Choong Complex General Manager, IOI City Mall, Putrajaya Chris Chong Voon Fooi LEISURE & HOSPITALITY Senior General Manager, Hotels Simon Yong General Manager, Golf Club Brandon Chin Boon Chiun 68

71 ANNUAL REPORT 2016 PROFILE OF SENIOR MANAGEMENT The management team is headed by the Group Executive Chairman, Tan Sri Dato Lee Shin Cheng and the Group Chief Executive Officer, Lee Yeow Seng. They are assisted by the following senior management team:- 01 TEH CHIN GUAN 02 Chief Operating Officer, Property Development CHEAH WING CHOONG Chief Operating Officer, Property Investment Nationality : Malaysian Age / Gender : 50 / Male Date of Appointment : 28 August 2006 Nationality : Malaysian Age / Gender : 57 / Male Date of Appointment : 22 September 2014 Skills and Experience: Mr Teh holds a Bachelor of Engineering (Honours) degree from Universiti Teknologi Malaysia. He is currently a member of the Harvard Club of Malaysia. Before joining IOI Group, property division in year 2006, Mr Teh had held various senior positions in Berjaya Land Bhd and he brings with him many years of experience from the property and construction industry. He joined the organisation in August 2006 as an Assistant General Manager in the property division and was promoted to General Manager in July Mr Teh was subsequently promoted to Property Director on 2 July 2012 and was redesignated to his current position as Chief Operating Officer of IOI Properties Group in 2014 after the demerger of the property division. He has since played a major role in contributing towards taking the Group s property development to the next level, creating signature landmarks in the Group s major developments in the growth corridor of the Klang Valley namely PFCC and IOI Boulevard in Puchong; and redefining the IOI Resort City, Putrajaya skyline with impressive contemporary structures of IOI City Towers, IOI City Mall and the Le Méridien Hotel Putrajaya. Skills and Experience: Mr Cheah is a Chartered Surveyor with thirty-three (33) years of experience in the property industry which include property consultancy, property development, project management, asset management and valuation and property management of a wide spectrum of commercial, residential and institutional properties. Mr Cheah holds a Masters in Business Administration from Bath, England and a Bachelor of Science Degree (Honours) in Estate Management from the Heriot-Watt University, Edinburgh, Scotland. He is a registered Valuer with the Board of Valuers, Estate Agents and Appraisers, Malaysia and is also a registered Estate Agent. Mr Cheah is a fellow member of The Institute of Surveyors, Malaysia, and a member of Royal Institution of Chartered Surveyors, United Kingdom. He started his career with Rahim & Co. After eight (8) years, he joined Peat Marwick Consultants where he was responsible for project management before joining Tan & Tan Development Berhad as Head of the Real Estate and Property Division in 1992; and was later promoted to the Senior General Manager of the Assets Management Division under the merged listed entity of IGB Corporation Berhad. Prior to joining IOI Properties Group, Mr Cheah was the Chief Operating Officer (Property Investments) with Sunway Group since

72 IOI PROPERTIES GROUP BERHAD PROFILE OF SENIOR MANAGEMENT 03 BETTY LAU SUI HING 04 KRISTINE NG 05 MEE YOKE Chief Financial Officer General Manager, Corporate Communication & Sustainability TAN SIN YEE Chartered Secretary Nationality Skills and Experience: : Hong Kong national and Permanent Resident of Malaysia Age / Gender : 54 / Female Date of Appointment : 1 October 2010 She is a Fellow of the Association of Chartered Certified Accountants ( FCCA ), a member of the Malaysian Institute of Accountants ( MIA ) and a member of the Institute of Chartered Secretaries and Administrators ( ICSA ). She has honed her financial management skills with companies in various industries in Malaysia, Singapore, Britain, the United States and China. She brings with her more than twenty-five (25) years of experience and has held various senior finance positions in local companies and overseas ventures. Prior to joining IOI Group, property division in 2010, she was the Group Financial Controller of INTI lnternational University/Laureate Educational Group. Nationality : Malaysian Age / Gender : 49 / Female Date of Appointment Skills and Experience: : 25 May 2016 Ms Kristine Ng has more than twenty (20) years experience in the property industry, holding various senior and general management positions, with expertise in the areas of customer relationship management, communication, public relations, customer engagement, property & facility management; and training & development. She is responsible for the coordination of sustainability policies and strategies amongst the various divisions within IOI Properties Group; and oversees the Corporate Communication functions of the Group. Nationality : Malaysian Age / Gender : 30 / Female Date of Appointment Skills and Experience: : 1 August 2016 Ms Tan Sin Yee is an Associate member of the Malaysian Institute of Chartered Secretaries & Administrators ( MAICSA ). She has more than 8 years of working experience in corporate secretarial services. Prior to joining IOI Group in August 2014, she was a Senior Associate in a secretarial service provider firm where she responsible to attend corporate secretarial and advisory works of clients listed on the Main Market and ACE Market of Bursa Malaysia Securities Berhad as well as unlisted companies including Government Linked companies, multinational companies, local incorporated companies and etc. She is responsible for the full spectrum of financial management including financial reporting function, and to drive the improvement of financial operation process of IOI Properties Group. 70

73 ANNUAL REPORT LEE YOKE HAR Senior General Manager, Marketing and Business Development Nationality : Malaysian Age / Gender : 45 / Female Date of : 1 May 1996 Appointment 07 TAN KENG SENG Senior General Manager Nationality : Malaysian Age / Gender : 61 / Male Date of : 30 April 2011 Appointment 08 SIMON HENG KWANG HOCK Senior General Manager Nationality : Malaysian Age / Gender : 58 / Male Date of Appointment : 10 June 1996 Skills and Experience: Ms Lee Yoke Har graduated with a LLB (Honours) from King s College, London and is a Barrister-at-law (Middle Temple) and also holds a Diploma in Finance and Accounting. She joined IOI Group as a Legal Executive in 1996 and was subsequently transferred to the property division to take charge of implementing the International Organisation for Standardisation quality management systems. She has since held various positions in IOI Properties Group and was promoted to her current position in Skills and Experience: After completing his secondary school education at the Royal Military College, he went on to earn a Bachelor Degree in Civil Engineering from McGill University, Canada. He worked for six (6) years before enrolling in and completing a two-year Masters program at the Massachusetts Institute of Technology ( MIT ) of Cambridge, USA. Since then, he has worked in the banking, manufacturing and property development sectors. He joined IOI Group, property division in 2011 and is responsible for the Group s development projects at Ayer Keroh (Melaka) and Bahau (Negeri Sembilan). Skills and Experience: Mr Simon Heng graduated from University of Malaya in 1982 with a Bachelor of Engineering (Honours) degree. Since graduating in 1982, he has worked with several consultant engineering companies as well as the public service sector with Jabatan Pengairan dan Saliran Negeri Johor (formerly known as Jabatan Parit dan Tali Air Negeri Johor). He started his career in property development as an Assistant General Manager in 1992 and joined IOI Group in 1996 to take charge of the property division s Bandar Putra Kulai project. He was also in charge of the development of a golf course and oversaw the construction of IOI Mall shopping complex in Bandar Putra Kulai. He is responsible for moving IOI Properties Group into high end projects in Johor, especially in Iskandar Malaysia Medini and Danga Bay regions. 71

74 IOI PROPERTIES GROUP BERHAD PROFILE OF SENIOR MANAGEMENT 09 LIM BENG YEANG 10 LOU FU LEONG 11 HO KWOK WING Senior General Manager Johor General Manager Johor General Manager Nationality : Malaysian Age / Gender : 54 / Male Date of : 3 April 1995 Appointment Nationality : Malaysian Age / Gender : 56 / Male Date of Appointment : 13 March 1995 Nationality : Malaysian Age / Gender : 51 / Male Date of Appointment : 16 July 2012 Skills and Experience: Mr Lim Beng Yeang holds a Bachelor of Science (Honours) in Housing Building & Planning from Universiti Sains Malaysia. He was one of the pioneer staff who has been with IOI Group, property division since 1995, and was involved with the strategic planning and project management of IOI Group s flagship development of 5,700 acres in Bandar Putra Kulai, Johor. He has over twenty-seven (27) years of experience in property development business and is presently responsible for the Group s operations in Johor Bahru, Kulaijaya and Segamat (all in Johor) in areas such as township planning, building approvals and designs, contracts management, construction activities, sales administration and marketing. Prior to joining IOI Group, he was the Senior Construction Manager with Regal Crest (M) Sdn Bhd, a local construction company in Johor Bahru, and he has also worked in Indonesia during his tenure with MBf Property Services Sdn Bhd as a Senior Property Executive. He is responsible for the property business units of IOI Properties Group in Johor, namely Nice Skyline (Bandar Putra Segamat), Legend Advance (Taman Lagenda Putra, Kulaijaya) and Trilink Pyramid (The Platino, Johor Bahru). Skills and Experience: Mr Lou Fu Leong holds a Bachelor of Engineering (Honours) degree in Civil Engineering from the University of Strathclyde, Scotland. He was the Project Manager of a property development company for five (5) years prior to joining IOI Group, property division in 1995 as a Senior Project Manager. He played a key role in the start-up of our Bandar Putra Kulai project in Johor, transforming Swee Lam Estate into a selfcontained township that includes, amongst others, a shopping mall, golf course, club house, sport & recreation complex, schools, town park. In 2007, he headed the project team in the development of Taman Kempas Utama, which consists of residential, commercial, industrial and serviced apartments such as the D Summit serviced apartments. Currently, he is involved in the planning and implementation of the recently acquired projects such as the D Prominenz serviced apartments in Plentong, i-synergy Business Park in Senai and the SOHO/ SOVO project in Kempas Baru. Skills and Experience: Mr Ho Kwok Wing holds a Masters and a Bachelor Degree of Science in Civil Engineering from Oklahoma State University. Upon graduation he worked as a consulting structural engineer in California, USA from 1991 to He subsequently joined Bina Goodyear Berhad as a Project Engineer in He left as a Senior General Manager and joined IOI Group, property division in 2012 as a General Manager. He is responsible for the overall property development projects in IOI Resort City. 72

75 ANNUAL REPORT IR DAVID CHOO KAY BOON General Manager 13 CHUNG NYUK KIONG General Manager 14 ALBERT LEE WEN LOONG General Manager Nationality : Malaysian Age / Gender : 54 / Male Date of Appointment : 18 May 2012 Nationality : Malaysian Age / Gender : 53 / Male Date of Appointment : 18 August 2014 Nationality : Malaysian Age / Gender : 56 / Male Date of Appointment : 20 January 2005 Skills and Experience: He holds a Master of Science in Civil Engineering from the University of Texas at Austin, USA. He is also a registered Professional Engineer with the Board of Engineers, Malaysia and a Corporate Member of The Institution of Engineers, Malaysia. Prior to joining IOI Group, property division in 2012 as a General Manager, he had worked both locally and abroad (USA and United Arab Emirates) for property developers, main contractors and consulting engineers handling a wide spectrum of building projects comprising mixed development, commercial, residential, international airport and institution buildings. He is responsible for project planning, development and implementation of the Group s 16 Sierra and PJ Midtown projects. Skills and Experience: Mr Chung Nyuk Kiong holds a Master of Science in Construction Management from Heriot Watt University and Master of Business Administration from University of Newcastle. He is also a Member of Royal Institution of Chartered Surveyors and Project Management Professional ( PMP ). Prior to joining IOI Properties Group in 2014 as a General Manager, he had worked with public listed property developers and construction companies locally and abroad which entail mixed development, office, commercial and residential buildings. He is responsible for the overall property development projects in Puchong Jaya and Bandar Puteri Puchong. Skills and Experience: Mr Albert Lee graduated from Universiti Sains Malaysia in 1986 with a Bachelor of Science (Hons) Housing Building & Planning with over thirty (30) years of experience in property development and construction industries. He is currently responsible for the planning, implementation and maintenance of Bandar Puteri Klang, Bandar Putera 2 and Bandar Putera Klang townships development at Klang Selatan. Prior to joining IOI Group, property division, he was the General Manager of Soon Seng Group ( SSG ) Property Development and Construction Division. He was the Project Manager for the Property Division of MBf Properties Services Sdn Bhd ( MBf ) before joining SSG. He had carried out feasibility studies for potential land purchase, property investment and projects joint-ventures with land owners and land transactions for MBf Group. 73

76 IOI PROPERTIES GROUP BERHAD PROFILE OF SENIOR MANAGEMENT 15 LIM CHEOK LENG Deputy General Manager 16 LEE YEAN PIN 17 General Manager OOI WOOI YAW Assistant General Manager Nationality : Malaysian Age / Gender : 51 / Female Date of Appointment : 17 October 2012 Nationality : Singaporean Age / Gender : 43 / Female Date of : 1 March 2012 Appointment Nationality : Malaysian Age / Gender : 41 / Male Date of Appointment : 1 July 2010 Skills and Experience: Ms Lim Cheok Leng holds a Bachelor of Science (Honours) in Housing Building & Planning from Universiti Sains Malaysia. Upon graduation, she had joined IOI Group, property division as Project Assistant in the contract department for five (5) years before being promoted to Sales and Administration Manager to lead the Sales and Marketing department. She has over twenty-five (25) years of experience in property development business. In 2012 being promoted to Deputy General Manager, responsible for the Penang branch s operations in areas such as design, layout and building approvals, contracts management, construction activities, estate management, sales administration and marketing. Skills and Experience: Ms Lee Yean Pin holds a Master of Science (Real Estate Development) from Massachusetts Institute of Technology ( MIT ) of Cambridge, USA and a Bachelor of Science (Estate Management) from National University of Singapore. She has more than fifteen (15) years of experience in urban planning, real estate development and place management in Singapore and has held various appointments in Singapore s national land use planning and conservation authority before joining IOI Group, property division in March She is responsible for overall planning, execution and coordination of the property development projects under her charge. Skills and Experience: Mr Ooi Wooi Yaw holds a Bachelor of Environmental Design from University of Tasmania, Australia and a Diploma in Architecture from Institute Technology Pertama, Kuala Lumpur. He has more than fourteen (14) years of experience in the property and shopping mall development sector. He has held several management positions in various organisations such as Jaya Jusco Stores Bhd (as assistant project manager) and The Store Corporation Berhad (as design manager) prior to joining IOI Group, property division in 2010 as project manager. He was subsequently promoted to Assistant General Manager in He is responsible for the overall planning, execution, controlling and coordinating of the property development project in Xiamen, PRC. 74

77 ANNUAL REPORT CHRIS CHONG VOON FOOI Complex General Manager, IOI City Mall, Putrajaya 19 SIMON YONG Senior General Manager, Hotels 20 BRANDON CHIN BOON CHIUN General Manager, Golf Club Nationality : Malaysian Nationality : Malaysian Nationality : Malaysian Age / Gender : 37 / Male Age / Gender : 46 / Male Age / Gender : 60 / Male Date of Appointment : 11 July 2011 Date of Appointment : 3 October 2007 Date of Appointment : 1 December 2011 Skills and Experience: Mr Chris Chong Voon Fooi holds a Bachelors of Art (Honours) in International Business Administration from Northumbria University of Newcastle. He has more than seventeen (17) years of experience in shopping mall development and management. Prior to joining IOI Group, property division, he had worked for a leading shopping mall developer in Kuala Lumpur holding various roles in development, leasing, marketing, operations and procurement over the span of eleven (11) years. He joined IOI Group, property division in 2011 as Head of Marketing and Leasing for IOI City Mall and subsequently promoted to General Manager in 2014 where he is responsible for the overall operations of IOI City Mall and IOI City office towers. Notes: Save as disclosed above, none of the above senior management team have: (a) any directorship in public companies and listed issuers; (b) any family relationship with any directors and/ or major shareholders of the Company; (c) any conflict of interest with the Company; (d) any conviction for offences (other than traffic offences) within the past five (5) years; and (e) any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. Skills and Experience: Mr Simon Yong has a Diploma in Computer Studies, NCC London from the Informatics College. He has worked in six (6) 5-star as well as 4-star hotels around Malaysia, specialising in the rooms division starting with Shangri- La International, pre-opening for Nexus Resort, Karambunai and The Empire Hotel, Brunei, Rebak Marina Resort Langkawi and The ZON Hotels (Kuala Lumpur and Johor Bahru). He has a total of twentyeight (28) years of hotel operations experience and exposure. He joined Palm Garden Hotel as its General Manager in 2007 before taking up his current position at Putrajaya Marriott Hotel in With his extensive working experience and training in the hospitality industry, he brings hands-on leadership in sales and marketing, rooms division and finance divisions. He is responsible for the overall operations and profitability of Putrajaya Marriott Hotel and Spa and Palm Garden Hotel. Skills and Experience: Mr Brandon Chin holds a Malaysian Certificate of Education. He has over forty (40) years experience in various professions. In particular, he has served the Royal Malaysian Police, Special Branch division as an inspector for ten (10) years. In 1985, he left the forces to take up a new challenge in Electrolux Malaysia as Security Manager and later moved on to do Marketing & Sales for twelve (12) years in the company. He then went on to take up his new passion in golf as General Manager for two established golf clubs in Malaysia. Between 2005 to end 2011, he joined Perusahaan Otomobil Nasional Sdn Bhd ( PONSB ) as Security Manager heading the Investigations, Operations and Corporate Integrity division. He finally quit PONSB to return to his passion for golf and joined Palm Garden Golf Club as its General Manager in As General Manager of the first Premier Public Golf Club in Malaysia i.e. Palm Garden Golf Club, he is responsible for the overall management and daily operations of the club which is open to the public in general (Public Golf Course). He is also responsible for overseeing the initiatives of the Palm Garden Golf Club to reach out through various marketing & sales strategies in order to attract high end golfers and corporate entities to patronise the golf club facilities so as to maintain profitability and enhance the business positioning of the Palm Garden Golf Club. 75

78 IOI PROPERTIES GROUP BERHAD REGIONAL PRESENCE THE PEOPLE S REPUBLIC OF CHINA IOI Park Xiamen IOI Palm Xiamen MALAYSIA Penang Selangor Negeri Sembilan Malacca Johor SINGAPORE Cape Royale, Sentosa Cove Farrer Park Seascape, Sentosa Cove South Beach The Trilinq 76

79 ANNUAL REPORT 2016 LOCATION OF OPERATIONS IN MALAYSIA PENANG NEGERI SEMBILAN 1 Desaria, Sungai Ara 7 Bandar IOI, Bahau PENANG Penang International Airport 1 SELANGOR 2 Bandar Puchong Jaya & Bandar Puteri Puchong 3 16 Sierra, Puchong South 4 IOI Resort City, Putrajaya 5 Bandar Puteri Bangi 6 Warisan Sepang MALACCA 8 Ayer Keroh JOHOR 9 Bandar Putra Segamat 10 Taman Lagenda Putra 11 Bandar Putra Kulai 12 Taman Kempas Utama 13 The Platino SELANGOR KLIA 5 7 NEGERI SEMBILAN Main Airport 8 MALACCA 9 JOHOR North-South Expressway East Coast Expressway Senai International Airport

80 IOI PROPERTIES GROUP BERHAD CORPORATE CALENDAR South Beach Hotel, Singapore, welcomed its first group of guests to experience luxurious travel living within an aesthetically-pleasing abode designed by acclaimed French designer Philippe Starck. IOI Properties Group Berhad ( IOIPG ) launched Warisan Puteri, a 202-acre freehold township in Sepang. Over 60% of the 196 units of Evira (two-storey terrace homes) were sold during the opening weekend. 3 SEPT OCT OCT N O V IOIPG launched Le Pavillion, a freehold mixed development in Bandar Puteri Puchong. IOIPG won the Best Commercial Development (IOI City Mall), Best Landed Development (Sierra 16 Sierra) and two Highly Acclaimed awards (Developer of the Year and Township of the Year for 16 Sierra) at the iproperty.com People s Choice Awards. 78

81 ANNUAL REPORT Palm Garden Golf Club is the first in Asia to launch the Big Hole Golf to golfers in this region. Big Hole Golf plays with an 8-inch cup instead of the standard 4¼-inch cup, making it easier to hole out and speed up the game s duration. IOIPG moved up two spots to eighth place in The Edge Malaysia Top Property Developers Award N O V N O V N O V DEC IOI Palm City in Xiamen, the People s Republic of China successfully launched the second phase of its upscale lake-view high-rise residences. IOI City Mall is the first in Malaysia to introduce the Car Finder System that enables shoppers to locate their parked cars instantly and also helps to locate empty parking bays via its embedded Parking Guidance System. 79

82 IOI PROPERTIES GROUP BERHAD CORPORATE CALENDAR Bandar Puteri Bangi welcomed Tesco Malaysia, one of Malaysia s leading retail chains with a groundbreaking ceremony. IOIPG acquired 400 acres of strategic landbank located within IOI Resort City, bringing the total to 450 acres. This paved the way for future development and further expansion plans in the mega township. 1 0 DEC DEC JAN JAN The Malaysia Book of Records bestowed IOI City Mall with multiple accolades: Icescape Ice Rink (Biggest Ice Rink) and District 21 indoor theme park (First Indoor Pump Track, First Indoor Rope Course for Children, First Indoor High Rope Course, First Indoor Roller Glider, and First Indoor Maze). IOIPG launched the Bougain Villa luxurious bungalow at IOI Palm Villa Golf & Country Resort in Bandar Putra Kulai, Johor. 80

83 ANNUAL REPORT Bandar Puteri Puchong marked its 15 th anniversary with a community event for all residents. The vibrant township is one of today s most recognisable landmarks in Puchong. South Beach was awarded Platinum, the highest accolade for the Singapore Good Design Mark (SG Mark), for its sustainability features. 2 7 FEB MAR MAR MAR IOIPG won four awards at the StarProperty.my Awards The accolades are All-Star Award (Top Ranked Developers of the Year), The Family-Friendly Award (Best Family-Centric Development): Honours for 16 Sierra, The Starter Home Award (Best Affordable Home): Merit for Almyra Residence for Bandar Puteri Bangi, The Cornerstone Award (Best Landed Development): Merit for Sierra 16 Sierra. IOIPG launched Conezión, the first integrated development in IOI Resort City. 663 residential units were open for sale, with the retail and office portions to follow at a later date. 81

84 IOI PROPERTIES GROUP BERHAD CORPORATE CALENDAR Palm Garden Gofl Club was voted one of the top three golf clubs by ParGolf People s Choice Awards in these categories: Best Corporate Tournament Venue, Best Overall Golf Experience, and Best Greens. IOIPG was awarded BCI Asia Top 10 Developers Award MAR APR M AY JUN IOI City Mall was accorded the Merit nod for Landscape Design Award (Professional Category) at the Malaysia Landscape Architecture Awards Palm Garden Golf Club was recognised by the Malaysia Book of Records for the First Big Hole Golf in Malaysia. 82

85 ANNUAL REPORT Recent Achievement IOIPG and City Developments Limited ( CDL ) collaborated with Marriott International to unveil the JW Marriott Hotel Singapore South Beach. IOIPG won the Best Mid-Range Condo Development (Central Malaysia) for Skyz Residence at the South East Asia Property Awards (Malaysia) JUN AU G AU G Recent Milestone Le Méridien Putrajaya, a five-star hotel owned by IOIPG and managed by Starwood Hotels & Resorts Worldwide, Inc. was officially launched. 83

86 IOI PROPERTIES GROUP BERHAD AUDIT AND RISK MANAGEMENT COMMITTEE REPORT The Board of Directors of IOI Properties Group Berhad ( IOIPG or the Company ) 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 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 biography of each member of the Committee is set out in the Profile of Directors section:- Datuk Tan Kim Tan Chong Min Chairman Independent Non-Executive Director C 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 Reviewing any significant matters highlighted including financial reporting issues, significant judgements made by management, significant and unusual events or transactions, and how these matters are addressed SUMMARY OF WORK OF THE COMMITTEE 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. B Datuk Lee Say Tshin Member Independent Non-Executive Director Datuk Dr Tan Kim Heung Member Independent Non-Executive Director 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 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 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 summary of work and the main matters that the Committee considered during the financial year ended 30 June 2016 ( FYE 2016 ) 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 Committee has reviewed the unaudited quarterly financial results and audited financial statements of the Group before recommending them for Board s approval. 84

87 ANNUAL REPORT 2016 As part of the year-end reporting process the Committee reviewed external auditors' reports on audit and accounting matters, internal control recommendations and tax matters impacting the Group noted in the course of their audit. There were no significant and unusual events or transactions highlighted by the management as well as external auditors during the financial year. 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 representation 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, who is a member of The Institute of Internal Auditors Malaysia, reports functionally to the Committee, and the Committee reviewed and approved the annual Internal Audit plan and budget for activities to be undertaken during 2016/2017. 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. 33 audit assignments (including 5 special audit assignments) were completed during the financial year on various operating units of the Group covering property development, property investment, leisure and hospitality and other segments. Audit reports were issued to the Committee and Board quarterly 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. Certain significant issues and matters unsatisfactorily resolved had been highlighted to the Committee and it was also agreed on an increased focus on the speed of their resolution. 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 Committee relationship. The Committee has met one (1) time privately (without management presence) with the Head of Group Internal and Risk Management during FYE 2016 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 FYE 2016 was RM747,559 (2015: RM239,173). The substantial increase in the internal audit cost was mainly attributed to the significant increase in the number of total headcounts and low base of 2015 total internal audit cost following the establishment of a separate Group Internal Audit function in July

88 IOI PROPERTIES GROUP BERHAD AUDIT AND RISK MANAGEMENT COMMITTEE REPORT 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 Committee conducts 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. Bi-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. Risk management activities take place throughout the organisation to support the Committee in its corporate governance responsibilities, working with the business to proactively and effectively manage risk. This, together with the related control and the following assurance processes, is designed to identify, evaluate and manage risk and to ensure that the resultant residual risks meet the risk appetite of the Board:- 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 Control Certification and Assessment Disclosure. Operating unit s response to the Questionnaires on Control and Regulations. The Committee discussed with management how they would continue to deliver high-quality oversight and risk evaluation against the background of the current economic climate and softening of property market. Where areas for improvement have been identified and the necessary actions in respect of the relevant control procedures have been or are being taken. The details relating to risk management are reported separately under Statement on Risk Management and Internal Control on pages 108 to 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 ( PwC ). 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 risks and areas of audit focus identified by PwC 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. The Committee met with PwC at various stages during the audit process, including without management presence, to discuss their remit and any issues arising from the audit. During the FYE 2016, the Committee met privately three (3) times with PwC without management presence. The Committee concluded that the effectiveness of the external audit process remains strong. 6. Auditors re-appointment review The Committee considered the re-appointment of PwC. This review took into account the following factors:- 86

89 ANNUAL REPORT 2016 (i) Auditors effectiveness The Committee met with management, including without the auditors presence, 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 PwC remained effective. (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 (ii) Independence and objectivity The Committee considered the safeguards in place to protect the external auditors' independence. Below RM200,000 per engagement Above RM200,000 and up to RM400,000 per engagement CFO CEO The Committee reviews the work undertaken by the external auditor and each year assesses its independence, objectivity and performance. In doing so, it takes into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non-audit services. The Committee monitors the auditor s compliance with relevant regulatory, ethical and professional guidance on the rotation of partners, as well as assessing annually its qualifications, expertise, resources and the effectiveness of the audit process, including confirmation from the external auditor on its own internal quality procedures. The audit engagement partner is required to rotate every five (5) years and the current audit engagement partner has held the position for two (2) years. PwC also 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 concluded that it continues to be satisfied with the performance of PwC and that PwC continues to be objective and independent in relation to the audit. Hence, the Committee and the Board have recommended their re-appointment. Greater than RM400,000 per engagement, or if the value of non-audit fees to audit fees reaches a ratio of 1:2 as a result of a new engagement, regardless of value Committee 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 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. 87

90 IOI PROPERTIES GROUP BERHAD AUDIT AND RISK MANAGEMENT COMMITTEE REPORT 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. (i) Making IOIPG Group awares of the terms of the engagement and, in particular, the basis on which fees are charged and which services are covered by the quoted fees; The non-statutory audit fees incurred for services rendered to the Group by PwC Malaysia for FYE 2016 was RM1,019,000 (2015: RM674,000). Expenditure on audit and non-audit services is set out in note 8 to the audited financial statements for FYE The nature of the non-audit fees was mainly tax advisory fees, of which 43% of the total non-audit fees was approved in the financial year ended 30 June 2014 and carried forward in FYE 2016, while the remaining non-audit fees relating to one-off corporate exercises of IOIPG and yearly statutory tax compliance respectively were 22% each. After stripping the foregoing non-audit fees breakdown, the balance of non-audit fees was merely approximately constituting 16% of the total audit fees (on a group basis) payable to PwC Malaysia. In this respect, the Committee has carefully considered the non-audit services provided during the year by PwC and is satisfied that the provision of those non-audit services during the year by PwC did not compromise the auditors independence. The principle of professional competence and due care imposes an obligation on PwC to maintain professional knowledge and skill at the level required to ensure that IOIPG Group receives competent professional service. The Committee believes that the provision of nonaudit services in itself does not result in lower quality audits where necessary safeguards operate. The safeguards which currently exist as means of eliminating threats to PwC s independence or reducing such threats to an acceptable level include, among others:- (ii) Those who provide the non-audit services, which may impose a self-review threat, are not the members of the audit team; (iii) The services provided are one-off and transaction-based and is not be expected to recur; and (iv) The nature and scope of non-audit fees provided by PwC to IOIPG Group are specifically not prohibited by the By-Laws of MIA or promulgations of the International Federation of Accountants. The Committee believes that providing such non audit-services helps PwC build a deeper understanding of IOIPG Group, including its business model, strategy, risk, competitive position and industry. This furthers PwC s insight and can enhance professional scepticism, thereby increasing audit quality. (iv) Audit fees The Committee was satisfied that the level of audit fees (on a group basis) payable to PwC Malaysia in respect of the audit services provided (being RM914,000 for 2016) (2015: RM776,000) 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 (i.e. PwC Malaysia) is derived from the shareholders approval granted at the Company's Annual General Meeting in

91 ANNUAL REPORT 2016 Recommendation to re-appointment Following its consideration, the Committee recommended to the Board the re-appointment of PwC 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) (ii) Reviewed whistleblowing activities to monitor the actions taken by the Group in respect of whistleblowing reports received. 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. E Three (3) meetings were held subsequent to the financial year end to the date of Directors Report and were attended by the following members: Members Datuk Tan Kim Tan Chong Min Total Number of Meetings Number of Meetings Attended 3 3 Datuk Lee Say Tshin 3 2 Datuk Dr Tan Kim Heung 3 3 ANNUAL REVIEW AND PERFORMANCE EVALUATION The Committee reviewed and amended its Terms of Reference during the FYE 2016 in line with the latest changes in the Listing Requirements of Bursa Malaysia. Also, as required by its Terms of Reference, the Committee conducted an annual performance evaluation in an effort to continuously improve its processes. D (iii) Reviewed the internal audit report relating to existing related party transactions annually. ATTENDANCE Number of Meetings and Details of Attendance Eight (8) meetings were held during the FYE The attendance record of each member was as follows: Members Total Number of Meetings Number of Meetings Attended 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. Datuk Tan Kim Tan Chong Min 8 8 Datuk Lee Say Tshin 8 8 Datuk Dr Tan Kim Heung

92 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE INTRODUCTION This Statement sets out the principles features of IOIPG Group s corporate governance framework and main governance practices. At IOIPG Group, we continue to practice a governance framework that goes beyond an interest in governance for its own sake or the need to simply comply with regulatory requirements. In the same of spirit, we do not see governance is just a matter for the Board of Directors (the Board ). Good governance is also the responsibility of senior management. The Board recognises the paramount importance of good corporate governance to the success of IOIPG Group. It strives to ensure that a high standard of corporate governance is being practised throughout IOIPG Group in ensuring continuous and sustainable growth for the interests of all its stakeholders. IOIPG Group s corporate governance practices are guided by its Vision IOI whereby responsible and balanced commercial success is to be achieved by addressing the interests of all stakeholders. A set of core values guides our employees at all levels in the conduct and management of the business and affairs of IOIPG Group. We believe that good corporate governance results in quantifiable and sustainable long term success and value for shareholders as well as all other stakeholders, as reflected by our performance and track record over the years. During the financial year, IOIPG Group has received numerous accolades and awards in recognition of its efforts. IOIPG Group will continue its efforts in evaluating its governance practices in response to evolving best practices and the changing needs of IOIPG Group. The Board is pleased to present this Statement and explain how IOIPG Group has applied the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (the CG Code ). The diagram below describes the governance framework at IOIPG Group. It shows interaction between the stakeholders and the Board, demonstrates how the Board Committee structure facilitates the interaction between the Board and the Chief Executive Officer ( CEO ) and illustrates the flow of delegation from stakeholders. We have process in place to ensure the delegation flows through the Board and its committees to the CEO and management committees and into the organisation. At the same time, accountability flows back upwards from the Company to stakeholders. GOVERNANCE FRAMEWORK STAKEHOLDERS Engagement Audit and Risk Management Committee ( ARMC ) BOARD OF DIRECTORS Nominating and Remuneration Committee ( NRC ) Employees Share Options Scheme ( ESOS ) Committee Board Oversight, Engagement, Delegated Authority and Accountability Engagement CEO Group Sustainability Steering Committee Risk Management Committees of All Business Operating Units Leisure and Hospitality Division Management Committee Property Investment Division Management Committee Property Development Division Management Committee Engagement, Reporting and Accountability 90

93 ANNUAL REPORT 2016 IOIPG Group has complied with the principles and recommendations of the CG 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 CG Code: The CG 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 nonexecutive 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 there is a clear division of responsibilities to distinguish between the provision of leadership to the Board and the executive responsibility for running IOIPG Group s business. Despite our Chairman is an executive member of the Board, the Board has the majority presence of Independent Directors with distinguished records and credentials to ensure that there is independence of judgement and balance of power and authority on the Board. The Executive Chairman encourages free expression of opinions and healthy debates by all Directors, allowing sufficient time for discussion of issues and ensuring that all Directors are able to fully and actively contribute to the deliberations and the Board s decisions fairly reflect Board consensus. The NRC was satisfied that notwithstanding Tan Sri Dato 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 IOIPG. PRINCIPLE 1 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES 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 IOIPG Group. In discharging its functions and responsibilities, the Board is guided by the Board Charter and Investment/Development Contract/Capital Expenditure Policy which outline the duties and responsibilities of the Board, matters reserved for the Board as well as those which the Board may delegate to the Board Committees, CEO and management. 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; (f) Declaration of dividend and Directors fees; and (g) Annual and interim results. 91

94 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) 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. The Board plays a critical role in setting the appropriate tone at the top and is charged with leading and managing IOIPG Group in an effective, good governance and ethical manner. Each Director has a legal duty to act in the best interest of IOIPG Group. The Directors are, collectively and individually, aware of their responsibilities to the shareholders and stakeholders for the manner in which the affairs of the Company are managed. The Board sets IOIPG Group s values and standards and ensures that its obligations to its stakeholders are understood and met. All matters not specifically reserved to the Board and necessary for the day-to-day operations of IOIPG Group are delegated to management. Specifically, the responsibilities of management are, among others: Formulating, recommending and implementing the strategic objectives of the Company; Translation of the approved strategic plan into annual operating and financial plans of the business; Manage the Company s human, physical and financial resources to achieve the Company s objectives; Operate within the delegated authority limits set by the Board; Assumption of the day-to-day responsibility for the Company s conformance with relevant laws and regulations, its compliance framework and all other aspects of the day-to-day running of the company; Develop, implement and manage the Company s risk management and internal compliance and control systems and operate within the risk appetite set by the Board; Develop, implement and update policies and procedures; Keep pace with industry and economic trends in the Company s operating environment; and Provide the Board with accurate, timely and clear information to enable the Board to perform its responsibilities. Executive Directors are involved throughout the investment process and alignment with the Board s strategy is considered from the initial discussion of a transaction, right through to final approval. The CEO implements the policies, strategies and decisions adopted by the Board. All Board authorities conferred on the management is delegated through the CEO and this will be considered as CEO s authority and accountability as far as the Board is concerned. The CEO takes on primary responsibility to spearhead and manage the overall business activities of the various business divisions of IOIPG Group to ensure optimum utilisation of corporate resources and expertise by all the business divisions and at the same time achieves IOIPG Group s long-term objectives. The CEO is assisted by the Chief Operating Officers ( COOs ) and the head of each division in implementing and running IOIPG Group s day-to-day business. His intimate knowledge of the business and his handson management practices enabled IOIPG Group to have leadership positions in its chosen industries. 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. Recommendation 1.2 The Board should establish clear roles and responsibilities in discharging its fiduciary and leadership functions 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. The Board Committees namely, the ARMC, NRC and the ESOS Committee, all collectively referred to as the Committees are entrusted with specific responsibilities to oversee IOIPG 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 Board 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 presented to the Board for notation and endorsement. The Board establishes the vision and strategic objectives of IOIPG Group, directing policies, strategic action plans and stewardship of IOIPG Group s resources towards realising Vision IOI. 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 IOIPG Group. 92

95 ANNUAL REPORT 2016 The Board assumes, amongst others, the following significant responsibilities: (a) Reviewing and adopting strategic plans for IOIPG Group which include strategies on environmental, social and governance ( ESG ) underpinning sustainability; (b) Providing entrepreneurial leadership to management that promotes innovation and long term value creation; (c) Overseeing the conduct of IOIPG Group s businesses and the performance of management s implementation of IOIPG Group s strategic and objectives and its performance; (d) Ensuring that the Company has in place an appropriate risk management framework and setting the risk appetite within which the board expects management to operate; (e) Planning for the succession of Board and key senior management and having in place a process to provide for the diversity (including gender diversity); (f) Overseeing the development and implementation of an investor relations programme and shareholder communications policy; and (g) Reviewing the adequacy and integrity of IOIPG Group s accounting and corporate reporting systems as well as internal control and management information systems. When running Board meetings the Chairman maintains a collaborative atmosphere and ensures that all Directors contribute to debates. The Chairman and/or CEO arrange informal meetings and events throughout the year to help build constructive relationships between the Board members. Recommendation 1.3 The Board should formalise ethical standards through a code of conduct and ensure its compliance All Directors and employees are expected to safeguard the integrity and protect the reputation and performance of IOIPG Group by behaving ethically and professionally at all times. The Company s Code of Business Conduct and Ethics (the Code ) sets forth the standard of conduct and culture required for all officers, managers and employees of IOIPG Group. Adherence to the Code and to our other official policies are essential to maintaining and furthering our reputation for fair and ethical practices among our customers, shareholders, employees, communities and other stakeholders. Working with a strong sense of integrity is critical to maintaining trust and credibility. The Code 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 (including no bribes or kickbacks), communicating with the public, financial accounting and reporting accuracy and etc. In discharging its responsibilities, the Board is also guided by Code of Ethics for Directors issued by the Companies Commission of Malaysia. Directors are expected to conduct themselves with the highest ethical standards and corporate governance. The Directors are required to notify the Company of any potential conflicts of interest that may affect them in their roles as Directors of IOIPG Group under the Code. All potential conflicts of interest are recorded and reviewed by the ARMC and full Board. IOIPG Group communicates the Code of Ethics for Directors and the Code 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 the Code 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) to informant@ioigroup.com or complete an online whistleblowing form on the IOIPG Group website, (b) Fax to +(603) Whistleblowing Secretariat Group Internal Audit, Tel: +(603) (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 City, Putrajaya, Malaysia 93

96 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) Position Name address Chairman of ARMC Datuk Tan Kim Leong Head of Group Internal Audit and Risk Management Jimmy Yee Yoke Seng Executive Chairman Tan Sri Dato Lee Shin Cheng CEO Lee Yeow Seng COO (Property Development) Teh Chin Guan COO (Property Investment) Cheah Wing Choong Senior General Manager (Johor Properties) Simon Heng Kwang Hock Senior General Manager (Johor Properties) Lim Beng Yeang The Code of Ethics for Directors, the Code and Whistleblowing Policy can be viewed on our website. Recommendation 1.4 The Board should ensure that the Company s strategies promote sustainability The Board recognises the importance of sustainability matters and IOIPG Group has in May 2016 recruited the General Manager, Corporate Communication and Sustainability to assist the Board in managing ESG of IOIPG Group. 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 organisation seeks to enhance its probability of achieving business success and sustainability, IOIPG 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. IOIPG 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 Group is therefore committed to developing in a sustainable way in tandem with environmental, economic and social consideration. IOIPG 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. IOIPG Group also has a commitment to find innovative ways to enhance learning and encourage local school and business links. IOIPG 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. IOIPG Group is committed to expanding its community/charity program to enable increased engagement with, and support for, relevant and registered community or charitable organisations. Recommendation 1.5 The Board should have procedures to allow its members access to information and advice 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 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. 94

97 ANNUAL REPORT 2016 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, Ms Tan Sin Yee, having had more than 8 years experience in corporate secretarial practice. She is an Associate member of the Malaysian Institute of Chartered Secretaries & Administrators (MAICSA). The Company Secretary whose appointment and removal is subject to Board s approval, attend all Board and Board Committee meetings. 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 IOIPG 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. During the year, the Company Secretary had tabled the summary on the amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and analysis of corporate governance disclosure in annual report at the Board meeting for their notation. 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 IOIPG Group, the Company Secretary has oversight on overall corporate secretarial functions of IOIPG Group, both in Malaysia and the region where IOIPG Group operates. Recommendation 1.7 The Board should formalise, periodically review and make public its Board Charter The Board adopts the Boards 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. In light of impending launching of the revised CG Code 2016, the Board has agreed to undertake a meaningful review once the revised CG Code has been launched by the Securities Commission. Any updates to the principles and practices set out in this Charter will be made available on the Company's website. 95

98 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) 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 Tan Sri Dato Sri Koh Kin Lip Datuk Tan Kim Tan Choong Min Datuk Dr Tan Kim Heung Designation Chairman, Senior Independent Non-Executive Director Member, Independent Non-Executive Director Member, Independent Non-Executive Director 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 Annual General Meeting ( AGM ) prior to their endorsement by the Board; 4. Reviewed the independence of the Board s Independent Director; 5. Reviewed the terms of office and performance of the ARMC and its members to determine whether the ARMC and its members have carried out their duties in accordance with their terms of reference; Deliberated on the gender diversity of boardroom prior to the new appointment of Director; and 7. Deliberated the revised CG Code 2016 and Directors remuneration benchmarking based on top 10 market capitalisation companies on Bursa Malaysia as well as peers comparison. Recommendation 2.2 The Nominating Committee should develop, maintain and review the criteria to be used in the recruitment process and annual assessment of Directors The procedure for the appointment of new Directors is rigorous and transparent. Other than the appointment of Tan Sri Dato Sri Koh Kin Lip on 2 January 2016, no changes to the composition of the Board occurred during the year. 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. 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

99 ANNUAL REPORT 2016 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. The terms and conditions of appointment of Non-Executive Directors are available for inspection at the Company s registered office and at the AGM. Board Evaluation Criteria The Board evaluation comprises Performance Evaluation of the Board and various Board Committees, Director s Peer Evaluation and assessment of the independence of the Independent Directors. 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. 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 IOIPG Group. The criteria for assessing the independence of an Independent Director include the relationship between the Independent Director and IOIPG Group and his involvement in any significant transaction with IOIPG 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 Fourth AGM is Datuk Lee Say Tshin. Tan Sri Dato Sri Koh Kin Lip who is appointed as a Director on 2 January 2016, will also retire and subject to reelection at the Fourth AGM pursuant to Article 93 of the Articles. The profiles of the Directors who are due for re-election are set out on pages 67 and 64. The Directors who are due for retirement and re-appointment in accordance to Section 129 of the Companies Act, 1965 at the forthcoming Fourth AGM are Tan Sri Dato Lee Shin Cheng and Datuk Tan Kim Tan Chong Min. Their profiles are set out on pages 60 and 67. Diversity 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 fulfil required time commitments in the case of Non-Executive Directors. The Board recognises the challenges in achieving the right balance of diversity on the Board. This will be done over time, taking into 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. The Board through its NRC takes steps to ensure that woman candidate is sought and considered in its recruitment exercise. The Board believes that while it is important to promote gender diversity, it decided not to set specific targets just to fill the quota for gender diversity as the selection criteria of a Director will be based on an effective blend of competencies, skills, extensive experience and knowledge in areas identified by the Board. Nevertheless, the Board is endeavouring to have a woman board member in the near future. 97

100 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) Directors core areas of expertise The list below summarises the key skills and experiences of the Directors: Leadership and strategic management Business acumen Finance and banking Legal Accounting and financial management Real estate, construction and project management Stakeholders engagement Some Directors are represented in more than one (1) category. 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): Employees gender diversity disclosure Age Bracket Headcount of All Employees % of All Employees Headcount of Male Employees % of Male Employees Headcount of Female Employees % of Female Employees & above Grand Total 1, , % 40% Management position and Directors on the Board of IOIPG Category Total Headcount Headcount of Male Employees % of Male Employees Headcount of Female Employees % of Female Employees In Management position (Manager & above) Directors on the Board of the Company In Management position 65% 35% 98

101 ANNUAL REPORT 2016 Ethnicity In Management position (Manager and above) 8% Others 7% Indian 27% Bumiputera 58% Chinese For all employees (except those in Management position and Directors on the Board) 6% Others 11% Indian Recommendation 2.3 The Board should establish formal and transparent remuneration policies and procedures to attract and retain Directors Based on the remuneration framework, the remuneration packages for the Executive Directors comprise a fixed component in the form of a base salary and, where applicable, meeting allowance together with other benefits-in-kind and variable components (which includes year-end bonus) which is determined by IOIPG Group s overall financial performance in each financial year are designed to reward performance that supports our strategy and creates sustainable long term value for shareholders. Executive Directors are eligible to participate in IOIPG s Employees Share Option Scheme and on the same basis as other eligible employees. The Company provides Directors and Officers Liability Insurance and may provide an indemnity to the fullest extent permitted by the Companies Act, 1965 (the Act ). When reviewing the structure and level of Directors fees, which comprises base Director s fee and additional fees for service rendered on Board Committee, the NRC takes into the consideration of Directors respective roles and responsibilities in the Board and Committees and the NRC also compared against the peers practices. 20% Chinese Directors on the Board 63% Bumiputera 14% Bumiputera Each of the Directors receives a base fixed Director s fee and meeting allowance for each Board and general meetings that they attend. The level of remuneration of Non-Executive Directors reflects their experience and level of responsibility undertaken by them. Non-Executive Directors will receive a fixed fee, with additional fees if they are members of Board Committees, with the Chairman of the ARMC or NRC receiving a higher fee in respect of his service as chairman of the respective Committees. The fees for Directors are determined by the full Board with the approval from shareholders at the AGM. No Director is involved in deciding his own remuneration. 86% Chinese 99

102 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) 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 2016 are as follows: 1. Aggregate remuneration of Directors categorised into appropriate components: Company Subsidiaries Category Fees RM 000 Benefitsin-kind RM 000 Others^ RM 000 Company Total RM 000 Salaries & Bonus + RM 000 Benefitsin-kind RM 000 Others^ RM 000 Group Total RM 000 Executive Directors Tan Sri Dato Lee Shin Cheng , ,384 Lee Yeow Seng , ,572 Total , ,956 Non-Executive Directors Tan Sri Dato Sri Koh Kin Lip (appointed on 2 January 2016) Dato Lee Yeow Chor Datuk Tan Kim Leong Datuk Lee Say Tshin Datuk Dr Tan Kim Heung Tan Sri Ong Ka Ting (retired on 26 October 2015) Total Notes: ^ Comprises meeting allowances. + The salary and variable bonus are inclusive of employer s provident fund and social security welfare contributions 2. Number of Directors whose remuneration falls into the following bands: Number of Directors Range of Remuneration Executive Non-Executive RM1 to RM50,000 1 RM50,001 to RM100,000 1 RM100,001 to RM150,000 4 RM150,001 to RM200,000 RM200,001 to RM14,550,000 RM14,550,001 to RM14,600,000 1 RM14,600,001 to RM29,350,000 RM29,350,001 to RM29,400,000 1 For financial year ended 30 June 2016, Tan Sri Dato Lee Shin Cheng and Lee Yeow Seng were offered share options under the Company s Employees Share Option Scheme which is disclosed under the Directors Report section of the audited financial statements contained in the Annual Report. 100

103 ANNUAL REPORT 2016 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 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 IOIPG 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 IOIPG Group s business and direction. Taking into account the scope and nature of the operations of IOIPG 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 60 to 67 of the Annual Report, and the Notice of AGM for Directors proposed for re-election and re-appointment at the 2016 AGM. Currently, no alternate Directors have been appointed in respect of any of the Directors. The Board and NRC review the independence of Directors annually according to the criteria on independence set out in the below Main Market Listing Requirements and Practice Notes of Bursa Securities on independence. In addition to the annual review by the NRC and the Board of the Directors independence, each Independent Non-Executive Director also submits an annual declaration. A Director may be considered independent in character and judgement if he 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 Act; (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) (f) is not acting as a nominee or representative of any executive director or major shareholder of the Company; 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. Tan Sri Dato Sri Koh Kin Lip, Datuk Tan Kim Leong, Datuk Lee Say Tshin and Datuk Dr Tan Kim Heung are considered to be Independent Directors and the Company satisfies the requirement under Recommendation 3.5 of the CG Code. In accordance with the best practices in corporate governance, Tan Sri Dato Sri Koh Kin Lip 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) and richard.koh@ioigroup.com 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 101

104 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) Recommendation 3.3 The Board must justify and seek shareholders approval in the event it retains as an Independent Director, a person who has served in that capacity for more than nine years. Length of Non-Executive Directors Tenures (in year 2016) 0 2 Years 33% 2 4 Years 67% 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 5 years. The Board is mindful of the compliance of the Recommendations 3.2 and 3.3 of the CG 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 Regular Board and Committee meetings are scheduled throughout the year and the Directors ensure that they allocate sufficient time to discharge their duties effectively. Occasionally, Board meetings may be held at short notice, when Board-level decisions of a timecritical nature need to be made. The Chairman considers that all the Directors continue to devote sufficient time in discharging their duties. When considering the re-nomination of Directors for re-election or appointment, the NRC also takes into account the competing time commitments faced by Directors with multiple board representations. In addition to current review procedures of the attendance records, the appointment letter has put in place for Directors to consult the Chairman of the Board with regard to accepting any new appointments as Directors on listed companies and notifying 102 the Board on any changes in their external appointments. This would allow the Director to review his time commitments with the proposed new appointments. 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. Nine (9) Board meetings were held during the financial year ended 30 June The attendance record of each Director since the last financial year was as follows:- Total Number of Meetings Number of Meetings Attended Executive Directors Tan Sri Dato Lee Shin Cheng 9 9 Lee Yeow Seng 9 9 Non-Executive Directors Tan Sri Ong Ka Ting (retired on 26 October 2015) Tan Sri Dato Sri Koh Kin Lip (appointed on 2 January 2016) Total Number of Meetings Number of Meetings Attended Dato Lee Yeow Chor 9 6 Datuk Tan Kim Tan Chong Min 9 9 Datuk Lee Say Tshin 9 9 Datuk Dr Tan Kim Heung 9 9 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 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.

105 ANNUAL REPORT 2016 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. Further training is available for Directors, including presentations by the executive team on particular aspects of the business. All the Directors including Tan Sri Dato Sri Koh Kin Lip, being a new Director appointed on 2 January 2016, had completed the Mandatory Accreditation Programme (MAP) as specified by Bursa Securities. During the financial year, members of the Board who have attended various training programmes, forums, conferences and seminars are as follows: Tan Sri Dato Lee Shin Cheng First World Conference of Overseas Chinese Business The Fifth Kubuqi International Desert Forum July 2015 to 7 July July 2015 to 29 July 2015 HSBC Forum: RMB and China s Global Future 17 August 2015 Malaysia s Economic Update September 2015 The Maritime Silk Road China Malaysia Forum 28 September 2015 Malaysia China High Level Economic Forum 23 November 2015 Global Outstanding Chinese Forum April 2016 The Eighth Conference for Friendship of Overseas Chinese Association 1 June 2016 to 7 June 2016 Lee Yeow Seng The Fifth Kubuqi International Desert Forum July 2015 to 29 July 2015 Sustainability Engagement Series for Directors / Chief Executive Officers 31 March 2016 Tan Sri Dato Sri Koh Kin Lip Seminar on Transition from Private Entities Reporting Standard (PERS) to Malaysian Private Entities Reporting Standard (MPERS) Are you ready? 10 September 2015 and 11 September Budget and Tax Seminar 11 November 2015 FX & Economic Outlook Briefing 3 March 2016 Dato Lee Yeow Chor Palm International Nutra Cosmeceutical Conference 3 August 2015 Palm Oil Leadership Forum (PILA) 7 September 2015 Global Oils and Fats Forum, USA 14 October 2015 to 15 October 2015 Global Transformation Forum 21 October 2015 Palm Oil Economic Review and Outlook Seminar January 2016 IOI In-House Senior Management Training Programme 6 April 2016 to 7 April 2016 Invest Malaysia Conference 2016 by Bursa Malaysia Berhad 12 April

106 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) Dato Lee Yeow Chor (Cont d) Indonesia Malaysia Investment Forum 29 April 2016 Palm Oil Trade Seminar, Turkey 16 May 2016 to 17 May 2016 Sustainability Engagement Series for Directors / Chief Executive Officers 1 June 2016 Young Presidents Organisation (YPO) Forum 16 June 2016 to 18 June 2016 Datuk Tan Kim Tan Chong Min Datuk Lee Say Tshin Corporate Governance Breakfast Series with Directors The Board s Response in light of Rising Shareholder Engagements Roles and Responsibilities of Directors in relation to Financial Statements (Appendix 1 of Bursa Malaysia s Letter) 4 August August 2015 Effective Board Evaluation by Bursa Malaysia 10 September 2015 Trans-Pacific Partnership Agreement (TPPA) 1 December 2015 The New Auditor s Report Sharing the UK Experience by Audit Oversight Board Bursa Malaysia Corporate Governance Breakfast Series for Directors: Future of Auditor Reporting The Game Changer for Boardroom Corporate Governance Breakfast Series with Directors The Strategy, the Leadership, the Stakeholders and the Board How to build or burn trust in an organisation (A conversation with Andrew Fastow, former CFO of Enron) Corporate Governance Breakfast Series with Directors The Board s Response in Light of Rising Shareholder Engagements Secretariat for the Advancement of Malaysia Entrepreneurs (SAME) Advisory Board Meeting (#2) Capital Market Director Programme for Fund Management (Modules 1, 2B, 3 & 4) 13 January March May June August August October 2015 to 21 October 2015 Capital Market Director Programme for Doing Business in a Responsible Way 27 November 2015 Corporate Governance Breakfast Series with Directors: Improving Board Risk Oversight Effectiveness 26 February 2016 HSBC Global Trade Outlook 2016 Breakfast Session 9 March 2016 World Halal Conference 30 March 2016 to 31 March 2016 Malaysia-UK Investor Showcase at Marlborough House, Pall Mall, London 16 May 2016 HSBC Global Trade & Receivables Finance Keynote Luncheon with Federation of Malaysian Manufacturers (FMM) 3 June 2016 Datuk Dr Tan Kim Heung Risk Management & Internal Control: Workshop for Audit Committee Members Capital Market Director Programme: Risk Oversight and Compliance Action Plan for Board of Directors 7 September May

107 ANNUAL REPORT 2016 PRINCIPLE 5 UPHOLD INTEGRITY IN FINANCIAL REPORTING 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 IOIPG 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 IOIPG 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 IOIPG Group as at 30 June 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 IOIPG 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 Act to prepare financial statements for each financial year which give a true and fair view of IOIPG Group and of the Company s state of affairs, results and cash flows. The Directors are of the opinion that IOIPG 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. The Directors are satisfied that IOIPG Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of IOIPG 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 IOIPG 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. Recommendation 5.2 The Audit Committee should have policies and procedures to assess the suitability and independence of external auditors The Board maintains a transparent and professional relationship with IOIPG Group s external auditors. During the year, the ARMC considered the independence and objectivity of PricewaterhouseCoopers, Malaysia ( PwC ) based on the criteria quality of services, sufficiency of resources, communication and interaction, audit planning, independence, objectivity and professional scepticism. In determining the independence of PwC, the ARMC reviewed all aspects of their relationships with them including the processes, policies and safeguards adopted by IOIPG Group and PwC relating to audit independence, and agreed the audit strategy and the audit fee. A copy of the Policies and Procedures to assess the Suitability and Independence of External Auditors can be found in 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. During the financial year ended 30 June 2016, the ARMC met privately three (3) times with the external auditors (i.e. PwC) without the presence of the executive Board members and management. In addition, the external auditors are invited to attend the Company s AGM and are available to answer any questions from the shareholders. The non-statutory audit fees incurred for services rendered to IOIPG Group by PwC for the financial year ended 30 June 2016 was RM1,019,000 (2015: RM674,000). The Board has carefully considered the non-audit fees provided during the year by PwC and is satisfied that the provision of those non-audit services during the year by PwC does not compromise the auditors independence. 105

108 IOI PROPERTIES GROUP BERHAD STATEMENT ON CORPORATE GOVERNANCE (Continued) Additional disclosures on non-statutory audit fees and the detailed work carried out by the ARMC for the financial year are set out separately in ARMC Report. 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 The Board should establish a sound risk management framework and internal controls system. Recommendation 6.1 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 IOIPG 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. 106 PRINCIPLE 7 ENSURE TIMELY AND HIGH QUALITY DISCLOSURE Companies should establish corporate disclosure policies and procedures to ensure comprehensive, accurate and timely disclosure. 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 IOIPG 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 endeavour to reply to these queries in the shortest possible time. 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 initiative.

109 ANNUAL REPORT 2016 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 the full Board plans to attend the AGM, which provides an opportunity for all shareholders to question the Directors in person. 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 In line with the recent amendments to the Main Market Listing Requirements of Bursa Securities, the Company will implement poll voting for all the resolutions set out in the Notice of AGM via electronic means at the AGM to expedite verification and counting of votes. In addition, the Company will appoint one scrutineer to validate the votes cast at the AGM. Recommendation 8.3 The Board should promote effective communication and proactive engagements with shareholders 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 price-sensitive 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 IOIPG 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, both domestically and internationally; and Participating in teleconferences with investors and analysts. IOIPG Group has also established several websites with the main one being for shareholders and the public to access corporate information, financial statements, news and events related to IOIPG Group on a timely basis. Material facts and presentation materials given out at above functions are made available on IOIPG Group s website to provide equal opportunity of access for other shareholders and the investing public and to allow them to write in to IOIPG Group if they have questions. During the financial year, IOIPG Group had approximately 42 meetings with analysts and investors. IOIPG 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 stakeholders. 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 as clear and complete picture of IOIPG Group s 107

110 IOI PROPERTIES GROUP BERHAD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTRODUCTION 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. 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 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 quarterly and 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. RISK MANAGEMENT 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 Organisation for Standardisation. ISO provides a standard on the implementation of risk management). 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 By linking risks to capital, the Group establishes risk-adjustedreturn 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. ORGANISATION HIERARCHY BOARD (Executive Management) BUSINESS OBJECTIVES HIERARCHY VISION EXTERNAL RISKS FRAME OF REFERENCE Divisions & SBU (Senior Management & Mid-Management) Strategic Objectives & Goals ALIGNED Operation/Functions (Executives & Staff) Operational Goals & Targets INTERNAL RISKS 108

111 ANNUAL REPORT 2016 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 II) 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. 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 219 to 235. 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. 109

112 IOI PROPERTIES GROUP BERHAD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (Continued) 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. 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. 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. 110

113 ANNUAL REPORT 2016 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. The review includes the following: Regular internal audit reports and periodic discussions with the ARMC. Quarterly and 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 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, 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 minutes of the Directors meeting held on 14 September

114 IOI PROPERTIES GROUP BERHAD STATEMENT OF DIRECTORS INTERESTS In The Company And Its Related Corporations As At 30 August 2016 (Based on the Register of Directors Shareholdings) Name of Directors Direct % Indirect % The Company No. of ordinary shares of RM1.00 each Tan Sri Dato Lee Shin Cheng 39,567, ,629,483, Tan Sri Dato Sri Koh Kin Lip 875, ,589, Lee Yeow Seng 2,210, ,246,955, Dato Lee Yeow Chor 5,110, ,247,260, Datuk Tan Kim Tan Chong Min 10,500 * 67,704 5 * Datuk Lee Say Tshin 45,000 6 * Datuk Dr Tan Kim Heung 22,855, Ultimate Holding Company Progressive Holdings Sdn Bhd ( PHSB ) No. of ordinary shares of RM1.00 each Tan Sri Dato Lee Shin Cheng 18,000, ,000, Lee Yeow Seng 3,000, Dato Lee Yeow Chor 3,000, Ultimate Holding Company PHSB No. of redeemable non-cumulative preference shares of RM0.01 each Tan Sri Dato Lee Shin Cheng 396,970, 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 and its holding company, they are also deemed to be interested in the shares of all the subsidiaries of the Company and its holding company to the extent that the Company and its holding company have an interest. Notes: 1 Deemed interested by virtue of his interest in PHSB, which in turn holds 100% equity interest in Vertical Capacity Sdn Bhd ( VCSB ) 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 his 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 his interest under Summervest Sdn Bhd. 2 Deemed interested by virtue of his interest in Rickoh Corporation Sdn Bhd and Rickoh Holdings Sdn Bhd under Section 6A of the Act. 3 Deemed interested by virtue of his interest in PHSB, which in turn holds 100% equity interest in VCSB under Section 6A of the Act. 4 Deemed interested by virtue of his interest in PHSB, which in turn holds 100% equity interest in VCSB under Section 6A of the Act and also interest in share of his spouse, Datin Joanne Wong Su-Ching under Section 134(12)(c) of the Act. 5 Deemed interested by virtue of his interest in E. P. H. Holdings Sendirian Berhad and Tan Kang Hai Holdings Sdn Berhad under Section 6A of the Act as well as shares held by his son, Tan Enk Purn under Section 134(12)(c) of the Act. 6 Deemed interested by virtue of the interest in shares of his spouse, Datin Tan Sok Ing under Section 134(12)(c) of the Act. 7 Deemed interested by virtue of the interest in shares of his spouse, Puan Sri Datin Hoong May Kuan under Section 134(12)(c) of the Act. * Negligible 112

115 ANNUAL REPORT 2016 SHAREHOLDINGS OF SENIOR MANAGEMENT TEAM Based on the Record of Depositors as at 30 August 2016, the details of shareholdings of our senior management team are as follows: Name Direct % Indirect % 1. Teh Chin Guan 66 * 2. Cheah Wing Choong 3. Lee Yoke Har 364, Betty Lau Sui Hing 5. Kristine Ng Mee Yoke 14,000 * 6. Tan Sin Yee 7. Simon Heng Kwang Hock 129,500 * 8. Tan Keng Seng 11,000 * 9. Lim Beng Yeang 10. Lou Fu Leong 54,000 * 11. Ho Kwok Wing 12. Ir David Choo Kay Boon 13. Chung Nyuk Kiong 14. Albert Lee Wen Loong 15. Lim Cheok Leng 16. Lee Yean Pin (Li Yanping) 23,700 * 17. Chris Chong Voon Fooi 18. Simon Yong 19. Brandon Chin Boon Chiun 20. Ooi Wooi Yaw 52,500 * Note: * Negligible 113

116 IOI PROPERTIES GROUP BERHAD OTHER INFORMATION COMPOSITION OF SHAREHOLDERS as at 30 August % Foreigners 0.01% Government and other Government related agencies 65.88% Malaysian Substantial Shareholders 2. A conditional share sale agreement with Tan Sri Lee, Puan Sri Hoong and Dato Lee Yeow Chor ( DLYC ) for the acquisition of 6,000,000 ordinary shares of RM1.00 each in Nusa Properties Sdn. Bhd. ( Nusa ), representing the entire issued and paid-up ordinary share capital of Nusa for a consideration of RM million ( Nusa Acquisition ), wherein:- (i) RM31.98 million was satisfied via cash; and (ii) RM million was satisfied via the issuance of 130,246,041 new IOIPG Shares at an issue price of RM2.21 per Share % Malaysian Bodies Corporate and Individuals MATERIAL CONTRACTS The material contracts entered into by the Company and its subsidiaries involving Directors and major shareholders interests since the end of the previous financial year are as follows:- Acquisition of Mayang Development Sdn Bhd and Nusa Properties Sdn Bhd The Company had on 19 October 2015 entered into:- 1. A conditional share sale agreement with Tan Sri Dato Lee Shin Cheng ( Tan Sri Lee ), Puan Sri Datin Hoong May Kuan ( Puan Sri Hoong ) for the acquisition of 250,000 ordinary shares of RM1.00 each in Mayang Development Sdn. Bhd. ( MDSB ), representing the entire issued and paid-up ordinary share capital of MDSB for a total consideration of RM1, million ( MDSB Acquisition ), wherein:- (i) RM million was satisfied via cash; and (ii) RM1, million was satisfied via the issuance of 514,530,146 new ordinary shares of RM1.00 each in IOIPG ( IOIPG Shares or Shares ) at an issue price of RM2.21 per Share. As part of the MDSB Acquisition, the Company was simultaneously entered into a conditional subscription agreement with MDSB for the subscription of 296,314,000 new redeemable non-cumulative preference shares-class B of RM0.01 each in MDSB ( MDSB RPS-B ) at a cash subscription price of RM296,314,000 ( MDSB RPS-B Subscription ). The proceeds arising from the MDSB RPS-B Subscription were utilised by MDSB for the purpose of the full and final capital redemption of the MDSB-RPS A. As part of the Nusa Acquisition, the Company was simultaneously entered into a conditional subscription agreement with Nusa for the subscription of 48,621,000 new redeemable non-cumulative preference shares-class B of RM0.01 each in Nusa ( Nusa RPS-B ) at a cash subscription price of RM48,621,000 ( Nusa RPS-B Subscription ). The proceeds arising from the Nusa RPS-B Subscription were utilised by the Company for the purpose of the full and final capital redemption of the Nusa RPS-A. (The MDSB Acquisition and the Nusa Acquisition are collectively referred to as the Acquisitions ). The Acquisitions were completed on 27 January 2016 and accordingly, MDSB and Nusa are now wholly-owned subsidiaries of IOIPG. Tan Sri Lee is the Executive Chairman and major shareholder of IOIPG holding 0.90% direct and 59.58% indirect interest in IOIPG through IOIPG Shares held by Vertical Capacity Sdn Bhd ( VCSB ), Summervest Sdn Bhd, DLYC and Lee Yeow Seng ( LYS ). DLYC and LYS are persons connected to Tan Sri Lee by virtue of them being the sons of Tan Sri Lee. Tan Sri Lee, DLYC and LYS are major shareholders of Progressive Holdings Sdn Bhd which in turn holds 100% interest in VCSB. UTILISATION OF PROCEEDS The 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 The total gross proceeds raised from the Rights Issue were amounted to RM1,025,688,

117 ANNUAL REPORT 2016 The status of the utilisation of proceeds as at 30 August 2016 is as follows:- Details of utilisation Approved utilisation Actual utilisation Balance unutilised RM mil RM mil RM mil Timeframe for utilisation Capital expenditure Within 30 months* Investment opportunities Within 24 months Working capital Within 18 months Estimated expenses in relation to the Rights Issue Within 6 months 1, * As announced on 20 April 2016, the timeframe for the utilisation of the balance of the proceeds for the purpose of capital expenditure had been extended for another 12 months from August 2016 to August EMPLOYEES SHARE OPTION SCHEME ( ESOS ) An ESOS was established on 8 May 2015 for the benefit of the eligible employees and Executives Directors of IOIPG Group. On 23 May 2016, the Company offered a total of 33,800,000 share options at an option price of RM2.25 to the eligible persons of IOIPG Group in accordance with the By-Laws of the ESOS. As at 30 June 2016, a total of 33,500,000 share options had been accepted by the eligible persons. The total number of share options granted and accepted under the ESOS to the Executive Chairman and Chief Executive Officer ( CEO ) are set out in the table below:- Number of Share Options as at 30 June 2016 Description Total Executive Chairman and CEO Offered 33,800,000 10,500,000 Granted and Accepted 33,500,000 10,500,000 As at 30 June 2016, none of the ESOS had been exercised. The percentage of share options applicable to the Directors and senior management under the ESOS are as follows:- Directors and Senior Management During the Financial Year 2016* (%) Since Commencement of the ESOS up to 30 June 2016* (%) Aggregate maximum allocation Actual granted and accepted * Based on the total number of shares with voting rights of 4,411,215,200 as at 30 June 2016 (Issued and paid-up ordinary share capital is 4,423,626,700 ordinary shares including 12,411,500 treasury shares) The Company did not grant any options over the ordinary shares pursuant to the ESOS to the Non-Executive Directors. 115

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119 118 Directors Report FINANCIAL STATEMENTS 128 Statements of Profit or Loss 129 Statements of Comprehensive Income 130 Statements of Financial Position 132 Statements of Changes in Equity 135 Statements of Cash Flows 139 Notes to the Financial Statements 250 Statement by Directors 250 Statutory Declaration 251 Independent Auditors Report FINANCIAL REPORTS