Annual Report 2017 the E&O Group
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ANNUAL REPORT 2017 THE E&O GROUP The E&O Group (Eastern & Oriental Berhad) is a listed company on Bursa Malaysia that has established a reputation as the premier lifestyle property developer of exclusive addresses for the discerning. In Kuala Lumpur, E&O’s landmark properties include The Mews, St Mary Residences, Dua Residency, Idamansara and Seventy Damansara, all located in the most prime and prestigious neighbourhoods of the capital city. In Penang, the award-winning Seri Tanjung Pinang (STP) is the island’s fi rst masterplanned seafront development that is now a highly sought-after and thriving community to locals as well as expatriates from over 20 nationalities. Reclamation of the second phase of STP started in 2016 and is on-going. In Johor’s southern development corridor of Iskandar Malaysia, E&O has embarked on Avira, a 207-acre development within Bandar Medini Iskandar that has easy accessibility to the Second Link connection to Singapore. In its expansion overseas, E&O’s international foray into real estate investment and development is focused within prime locations in London, including Princes House along Kingsway, ESCA House in Bayswater, and a commercial property in Hammersmith. E&O’s leading position as a lifestyle developer is anchored by its niche in luxury hospitality derived from its namesake, the iconic Eastern & Oriental Hotel, a cherished heritage landmark in George Town established in 1885. The Group has further leveraged on its experience and expertise in hospitality management with the opening of E&O Residences serviced apartments in Kuala Lumpur. www.easternandoriental.com EXPECT NOTHING ORDINARY Enriched by our heritage, crafting legacies for the future Our inheritance of values such as grace, refi nement and appreciation of beauty, has emboldened us to seek fresh interpretations of the old to forge ahead and create anew PURPOSE E&O designs and builds properties that cater to the lifestyle aspirations of discerning individuals. VALUES At E&O, we do things differently, always for the better, with sincerity, integrity and passion. 10-YEAR GROUP FINANCIAL HIGHLIGHTS (RM’000) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 STATEMENTS OF COMPREHENSIVE INCOME Revenue 704,764 422,183 449,497 497,141 605,536 492,151 271,271 352,375 304,449 516,399 Profi t/(Loss) before tax 125,296 54,755 202,136 167,173 187,271 171,172 48,154 93,276 (38,124) 194,565 Income tax expense (34,380) (15,926) (45,470) (47,389) (50,505) (43,433) (11,948) (18,630) 6,067 (34,789) Profi t/(Loss) attributable to owners of the parent 86,604 37,191 152,088 113,239 129,556 123,296 32,880 70,765 (37,276) 128,854 STATEMENTS OF FINANCIAL POSITION Issued and Paid-up capital (unit) 1,262,319 1,259,784 1,252,095 1,135,622 1,135,622 1,133,463 842,592 761,644 591,995 419,061 Weighted Average Number of stock units 1,256,430 1,240,722 1,221,324 1,217,332 1,106,182 1,093,675 1,059,935 1,063,967 666,211 532,804 Shareholders’ Fund 1,698,831 1,638,405 1,599,974 1,474,912 1,389,868 1,289,523 1,058,237 1,043,259 814,371 729,686 Total Assets 3,896,977 3,758,725 3,070,500 2,473,998 2,477,871 2,178,319 2,113,796 2,180,724 1,975,142 2,186,920 Total Loans and Borrowings 1,532,349 1,518,339 1,164,189 728,159 772,014 604,825 743,138 831,064 891,758 827,440 RATIOS Net Earnings/(Loss) per stock unit (sen) 6.9 3.0 12.5 9.3 11.7 11.3 3.0 6.6 (5.6) 24.2 Net Dividend per stock unit (sen) ^ 2.00 ** 3.00 3.38 3.19 1.50 2.85 – 3.70 Net Assets per stock unit attributable to owners of the parent (RM)* 1.35 1.31 1.31 1.33 1.26 1.17 1.21 1.25 1.25 1.55 Net Gearing (times) 0.73 0.78 0.60 0.31 0.35 0.26 0.41 0.26 0.79 0.51 * Net assets per stock unit is computed based on the number of ordinary stock units in issue net of treasury stock units at: - 31.3.2017 of 1,257,197,597 - 31.3.2016 of 1,254,944,463 - 31.3.2015 of 1,222,654,764 - 31.3.2014 of 1,106,182,310 - 31.3.2013 of 1,106,182,310 - 31.3.2012 of 1,104,023,810 - 31.3.2011 of 813,202,612 - 31.3.2010 of 753,979,637 - 31.3.2009 of 584,065,285 - 31.3.2008 of 416,531,076 ** The Company distributed a total of 24,601,619 treasury stock units, being payment of the fi rst and fi nal dividend by way of distribution of treasury stock units at the ratio of one (1) treasury stock unit for every fi fty (50) ordinary stock units held in the Company. ^ Proposed fi rst and fi nal single-tier dividend of 3 sen per stock unit, to be approved by the stockholders at the forthcoming Annual General Meeting. Eastern & Oriental Hotel–Heritage Wing, Penang CONTENTS 8 Group Corporate Structure 11 Corporate Information 12 Directors’ Profi le 19 Management Profi le 23 Management’s Discussion & Analysis 47 Sustainability Statement 2017 69 Global Reporting Initiative (GRI) G4 Content Index 75 Directors’ Responsibility Statement 76 Corporate Governance Statement 90 Statement on Risk Management and Internal Control 94 Audit Committee Report 99 Other Compliance Information 108 Financial Statements 2017 258 Group’s Properties 263 Analysis of Stockholdings 268 Analysis of Warrant Holdings 271 Notice of Annual General Meeting 278 Statement Accompanying Notice of Annual General Meeting Form of Proxy Persada Mentari (30%) Ribuan Mergexcel Property E&O-PDC Sdn Bhd Imbang Development Holdings (100%) GROUP Permaijana (70%) Tanjung Pinang Rimelite Sdn Bhd Sdn Bhd Sdn Bhd (18%) Ribu (M) Development Sdn Bhd (100%) (50%) (60%) Junjung Angkasa KSM Property CORPORATE Sdn Bhd Sdn Bhd Sdn Bhd (100%) (72%) Development (100%) Sdn Bhd STRUCTURE (12.50%) Kayangan Kamunting Indasu Housing Monplus E&O Property E&O Customer (100%) AS AT 30 JUNE 2017 Budaya Management Bridgecrest Development Housing Services (Penang) Services Sdn Bhd (94.60%) Resources Sdn Bhd Sdn Bhd Development Sdn Bhd Sdn Bhd Patsawan E&O (75%) Sdn Bhd (100%) (100%) Sdn Bhd Properties (100%) (100%) Properties (100%) Sdn Bhd Sdn Bhd E&O (1%) KCB Trading Unicorn (51%) (100%) Management Sdn Bhd Housing Services E&O Property Development Regal (51%) Sdn Bhd (Singapore) Rhinever Sdn Bhd Alliance (100%) Pte Ltd Hammersmith KCB (Guernsey) (100%) Sdn Bhd Trans-Mutual Kamunting Housing Renown (100%) Development (UK) Limited Sdn Bhd Management Development (100%) Terra Heritage Limited (100%) (100%) (HK) Sdn Bhd Sdn Bhd (100%) Limited (100%) Damansara Ambangan Sdn Bhd (50%) Puri Seventy Emerald WCW (100%) Technologies (60%) Sdn Bhd Damansara Designs Hammersmith Sdn Bhd Teratak (100%) Sdn Bhd Sdn Bhd Properties (100%) (100%) (100%) Warisan (M) Limited Sdn Bhd Edisi (100%) Utama (100%) Sdn Bhd (40%) E&O Sales Eastern & Loxley Pelicrest KCB Holdings Tinggi Murni Samudra Pelangi (100%) & Marketing Oriental Holdings Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd Plc Management (100%) (100%) (100%) (100%) (100%) (100%) Limited (84.02%) E&O Property (100%) Development Berhad Dynamic Radiant Kiara Eastern & Galaxy Degree (15.98%) Sdn Bhd Oriental Prestige Sdn Bhd (100%) Express Sdn Bhd Sdn Bhd (100%) (100%) Matrix E&O Trading (100%) Promenade Sdn Bhd Nuri Merdu Sdn Bhd E&O Cruises (100%) Sdn Bhd (100%) Eastern & Sdn Bhd (50%) Oriental Hotel (100%) Lone Pine Sdn Berhad Hotel E&O-PIE E&O Developers (100%) E&O Express (Penang) Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd (100%) (100%) (100%) (100%) Twenty First Century Realty E&O Eminent Sdn Bhd Restaurants (100%) Pedestal Sdn Bhd Sdn Bhd E&O Hotel Management (M) (100%) (100%) Sdn Bhd (100%) KCB Geotechnics * Listed on Bursa Malaysia Securities Berhad Sdn Bhd Subsidiary Company (100%) Associated Company Eastern & Oriental Jointly Controlled Entity Oriental Light (Guernsey) Oriental Light (UK) Properties (Guernsey) Limited Limited Limited (100%) (100%) (100%) 8 | EASTERN & ORIENTAL BERHAD (555-K) ANNUAL REPORT 2017 | 9 Quayside Seafront Resort Condominiums, Seri Tanjung Pinang, Penang CORPORATE INFORMATION DIRECTORS Dato’ Azizan bin Abd Rahman – Chairman Dato’ Seri Tham Ka Hon – Executive Deputy Chairman Mr Kok Tuck Cheong – Managing Director Mdm Kok Meng Chow – Finance Director Tan Sri Dato’ Seri Mohd Bakke bin Salleh Encik Kamil Ahmad Merican Datuk Vijeyaratnam a/l V. Thamotharam Pillay Datuk Christopher Martin Boyd Ms Tan Kar Leng @ Chen Kar Leng Datuk Tee Eng Ho COMPANY SECRETARY REGISTRAR Ang Hong Mai (MAICSA REG No. 0864039) Metra Management Sdn Bhd 30.02, 30th Floor MAIN BANKERS Menara Multi-Purpose Affi n Bank Berhad Capital Square Alliance Bank Malaysia Berhad No. 8, Jalan Munshi Abdullah AmBank (M) Berhad 50100 Kuala Lumpur CIMB Bank Berhad T 03-2698 3232 Hong Leong Bank Berhad F 03-2694 8571 Malayan Banking Berhad OCBC Bank (Malaysia) Berhad REGISTERED OFFICE Public Bank Berhad Level 3A (Annexe) RHB Bank Berhad Menara Milenium Sumitomo Mitsui Banking Corporation 8 Jalan Damanlela Malaysia Berhad Damansara Heights Bank of Toyko-Mitsubishi UFJ (M) Berhad 50490 Kuala Lumpur T 03-2095 6868 AUDITORS F 03-2095 9898 Ernst & Young Level 23A, Menara Milenium STOCK EXCHANGE LISTING Jalan Damanlela Main Market of Bursa Malaysia Pusat Bandar Damansara Securities Berhad 50490 Kuala Lumpur T 03-7495 8000 WEBSITE F 03-2095 9076 www.easternandoriental.com ANNUAL REPORT 2017 | 11 DIRECTORS’ PROFILE DATO’ AZIZAN BIN ABD RAHMAN Independent Non-Executive Director / Chairman Dato’ Azizan bin Abd Rahman, a Malaysian, male, aged 67 was appointed as Independent Non-Executive Director/Chairman of Eastern & Oriental Berhad on 6 November 2003.