LIFESTYLE Development Property Influencer Investment Property Hospitality Leisure &

ANNUAL REPORT 2017 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.

www.ioiproperties.com.my OUR CORE VALUES

In our pursuit of Vision IOI, we expect our people to uphold, at all times, the IOI Core Values which are expressed as follows:

INTEGRITY which is essential and cannot 01 be compromised

COMMITMENT as we do what we say we will do 02

LOYALTY is crucial because we are one team 03 sharing one vision

EXCELLENCE IN EXECUTION as our commitments can only be realised through actions and results 04

SPEED OR TIMELINESS in response is important in our ever 05 changing business environment

INNOVATIVENESS to provide us additional competitive edge 06

COST EFFICIENCY is crucial as we need to 07 remain competitive CONTENTS

Our Vision CREATING A Our Core Values SUSTAINABLE FUTURE Facts at a Glance 65 Sustainability Key Indicators

75 - Delivering Excellence BUSINESS REVIEW 87 - Caring for the Environment 6 Chairman’s Statement 97 - Creating Value for Our Employees 12 Five-Year Financial Highlights - Developing Sustainable 107 Communities 14 Group Financial Position 120 - Content Index th 15 Group Performance Highlights

Annual 16 Segmental Performance General Meeting 5 18 Group Quarterly Results IOI PROPERTIES GROUP BERHAD 19 Financial Calendar (1035807-A) Management Discussion 20 and Analysis

20 - Group Financial Review DATE - Group Business Review 27 October 2017, Friday 23 - Property Development - Group Business Review 31 - Property Investment TIME - Group Business Review 35 10:00 a.m. - Leisure and Hospitality

40 Corporate Information

42 Regional Presence VENUE Putrajaya Ballroom I (Level 3), 43 Location of Operations in Malaysia Putrajaya Marriott Hotel, IOI Resort City, 44 Corporate Calendar 62502 Sepang Utara, Malaysia. 54 Our Social Responsibility Calendar

WHO GOVERNS US

122 Board of Directors

124 Profile of Directors

134 Senior Management Team

135 Profile of Senior Management HOW WE ARE GOVERNED

143 Corporate Governance Report

- Corporate Governance 143 Overview Statement

174 - Audit Committee Report

- Statement on Risk Management 181 and Internal Control

184 Statement of Directors’ Interests

Shareholdings of 185 Senior Management Team

186 Other Information

FINANCIAL REPORTS

190 Directors’ Report

200 Financial Statements

332 Group’s Material Properties We’re a

SHAREHOLDERS’ INFORMATION LIFESTYLE 337 Shareholders’ Information Influencer

NOTICE We aspire to create a sustainable future.

340 Notice of Annual General Meeting Thus, every element of our developments is aligned to create lifestyle spaces for stay, work and play. We look into every detail, Statement Accompanying Notice of 345 from planning to design and putting the final touches – for a Annual General Meeting vibrant and lively environment of urban contemporary living with • Proxy Form accessibility to modern lifestyle amenities amidst sprawling greens and chic urban spaces. We inspire lifestyles that are full of zest within our living spaces crafted in architectural chic, coloured with the vibrant hues and textures of lush greens and foliage; crafting homes that warms the heart and work space that ignites passion to succeed.

It is this exacting ideal that drives the sustainability of our business in property development, property investment and leisure & hospitality spanned across Malaysia, Singapore and Xiamen in People’s Republic of China. IOI PROPERTIES GROUP BERHAD (1035807-A) FACTS AT A GLANCE

PROFIT EARNINGS BEFORE PER SHARE TAXATION RM1.44 18.42

billion 2017 sen 2017 RM1.52 billion (2016) 24.99 sen (2016)

GROSS NET DIVIDEND ASSETS PER SHARE PER SHARE 6.00

sen 2017 RM3.31 2017 8.00 sen (2016) 3.60 sen (2016)

SHARE MARKET PRICE CAPITALISATION RM12.11

RM2.20 2017 2017 as at 30 June billion 2.35 sen (2016) RM10.37 billion (2016) ANNUAL REPORT 2017 KEY INDICATORS

% 20

15

10

5

0

-5

-10

-15

-20 JUL 16AUG 16 SEPT 16OCT 16 NOV 16 DEC 16 JAN 17 FEB 17 MAR 17 APR 17 MAY 17 JUN 17

IOI PROPERTIES FTSE BURSA BURSA MALAYSIA GROUP BERHAD MALAYSIA INDEX PROPERTY IOI PROPERTIES GROUP BERHAD (1035807-A) CHAIRMAN’S STATEMENT

TAN SRI DATO’ LEE SHIN CHENG Executive Chairman

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 2017 (“FY2017”).

GROUP PERFORMANCE at 10%, and others (Penang, Melaka and Negeri Sembilan) at 3%. For our property investment For the financial year under review, the Group segment, increase in revenue was mainly from IOI recorded a revenue of RM4,185 million and profit City Mall due to higher rental income attributable to before taxation (“PBT”) of RM1,437 million compared increased occupancy rate. Meanwhile, the opening to the previous financial year of RM3,025 million and of Le Méridien Putrajaya hotel in August 2016 has RM1,525 million respectively. The increase in revenue contributed to an increase in revenue contribution to of approximately 38% was mainly attributable to the leisure & hospitality segment. increased contributions from the Group’s business segments of property development, property For the financial year under review, the Group investment and leisure & hospitality. achieved total sales of RM2,847 million (2,296 units), an increase of 29% from the previous financial Group revenue was mainly driven by our property year of RM2,214 million (2,368 units). The Group’s development segment with revenue contribution of overseas projects in Singapore and PRC accounted RM3,714 million, followed by RM302 million from for 46% and 15% respectively of total sales. Sales property investment, RM162 million from leisure & from our overseas projects are attributable to the hospitality and RM7 million from other operations. Trilinq project in Singapore and IOI Palm City project In terms of revenue contribution in the property in the PRC. Domestic sales from the Klang Valley development segment, it was largely from our which accounted for 29% of total sales were mainly projects in Singapore at 47%, Klang Valley at 27%, attributable to projects in IOI Resort City, 16 Sierra People’s Republic of China (“PRC”) at 13%, Johor and Warisan Puteri Sepang.

6 ANNUAL REPORT 2017

CHAIRMAN’S STATEMENT

REVENUE FROM THE South Beach, Singpore GROUP’S OPERATING SEGMENTS

PROPERTY DEVELOPMENT RM3,714 million

PROPERTY INVESTMENT RM302 million

LEISURE & HOSPITALITY RM162 million

As at 30 June 2017, the Group’s financial position remained strong with total assets at RM33,628 million, an increase of 47% from the previous financial year of RM22,810 million and cash in hand at RM2,376 million. Meanwhile, the Group’s net assets per share stood at RM3.31. Le Méridien Putrajaya A more detailed analysis of the Group’s performance is available under the section “Management’s Discussion and Analysis” in this Annual Report.

OPERATING ENVIRONMENT

In the second quarter of 2017, the global economy expanded by 3.1% attributable to improved economic conditions in advanced economies and robust economic growth in emerging and developing economies. Meanwhile, the US economy expanded by 2.1% due to strong domestic and external demand. The PRC’s economy expanded by 6.9% supported by growth of 8.2% in real estate investment as property sales and investment remained strong in lower-tier cities. 7 IOI PROPERTIES GROUP BERHAD (1035807-A)

CHAIRMAN’S STATEMENT

Malaysia’s economy posted a strong growth of 5.8% in the second The Trilinq, Singapore quarter of 2017 supported by improved external sector and domestic demand which expanded by 5.7%, attributable to robust private sector activities. Private sector spending grew by 7.1% due to increased disposable income driven by stable employment conditions and improved export earnings. In the first half of 2017, the residential property market remained challenging. Continued tight lending conditions have impacted sales volume and values of residential properties.

Singapore’s economy grew by more than 2% in the second quarter of 2017 driven by the manufacturing sector. Private home sales increased in the second quarter of 2017 driven by secondary sales market, in line with improved market sentiments following the relaxation of certain property cooling measures for example, the easing of the sellers’ stamp duty in the first quarter of 2017. Meanwhile, the primary sales market continued to perform with increase of 4.3%. Improvement in property sales and lower inventory of unsold units in the second quarter of 2017 may signal that the residential property market has bottomed out.

Property cooling measures have continued in many cities in the PRC in the first half of 2017, with banks imposing more stringent lending policy and increased interest rate on property mortgages, which have impacted transaction volumes and property prices in the first and second tier cities. Even though the impact of cooling measures may persist in the short term, value of properties is expected to continue to hold in first and second tier cities in the longer term. As the Group holds a long term view on the PRC which it considers as having vast development and investment potential, we will continue to monitor developments in the property market in the PRC. Palmyra Residence in Bandar Puteri Bangi comprising 588 units of serviced apartments with gross development value (“GDV”) of BUSINESS DEVELOPMENTS RM239 million was launched in November 2016. The development is complemented by a commercial hub of lifestyle commercial Avista in Warisan Puteri Sepang comprising 182 freehold units developments developed by the Group such as Kubica Square, of two-storey terrace houses was launched in September 2016. Enigma Square and Kompleks Kubica Square, as well as Tesco The development is the second residential phase at the 206-acre hypermarket, a 10-acre Oasis parkland and public amenities such Warisan Puteri Sepang township which is strategically located as the Bangi Komuter station. next to the fast growing Bandar Baru Salak Tinggi and well connected by major highways such as the Maju Expressway and Within IOI Resort City, the second phase of Conezion comprising Putrajaya-Cyberjaya Expressway. An upcoming interchange at 663 units of serviced apartments with a GDV of RM391 million was ELITE Highway is expected to further enhance connectivity in the launched in October 2016. Meanwhile, Par 3 comprising 207 units of township. Warisan Puteri Sepang is also close to the Kuala Lumpur condominiums and 18 units of condo villa with total GDV of RM267 International Airport, Express Rail Link (“ERL”) Salak Tinggi station, million was launched in May 2017. IOI Resort City is one of our KIP Mall, Xiamen University as well as an upcoming shopping major integrated mixed developments spanning close to 800 acres. destination, Horizon Village Outlets (formerly known as Kuala IOI Resort City is strategically located in the southern Klang Valley Lumpur International Outlet). and fronting the entrance to Putrajaya with good connectivity to major urban centres within a 30-minute radius via major highways. Developments within IOI Resort City is complemented by existing

8 ANNUAL REPORT 2017

CHAIRMAN’S STATEMENT

completed developments which include amongst others, IOI City Langham Place hotel. The land is connected to other districts in Mall, 5-star Le Méridien Putrajaya hotel and IOI City Towers’ the mainland of Xiamen via Shen Hai highway and Xiang An Avenue 31-storey Grade A Green Building Index (“GBI”) certified corporate and is in close proximity to the upcoming Yang Tang station (city office towers with approximately one million square feet of net subway line 3) and Peng Cuo Bei station (city subway line 4) when lettable area. completed in year 2020 and 2022.

IOI Palm City’s residences in Xiamen, PRC recorded a favourable The Group’s Trilinq project in Singapore obtained its temporary take-up rate with sales of RM368 million for FY2017. Its remaining occupation permit in April 2017 and continued to record a residential components of high rise residences and town villas are favourable take-up rate with sales of 307 units for FY2017. expected to be launched within the next financial year. Construction on IOI Palm City’s commercial components comprising a shopping For the South Beach in Singapore, an integrated development mall, hotel and boutique offices has commenced in the first quarter which is a joint venture with City Developments Limited, an official of 2017 and is expected to be completed in 2021. IOI Palm City opening of the 634-room JW Marriott Hotel Singapore South Beach is an integrated development consisting of residences, boutique was held on 24 March 2017. The hotel operations is expected to offices, a shopping mall and hotel with an estimated gross built-up pick up with the recent opening of its spa services in May 2017 and area of approximately 7.1 million square feet. its re-modelled ballroom in September 2017 and with more food & beverage outlets expected to be opened between the second For the Group’s newly acquired Xiang An land in Xiamen, PRC, half of 2017 and early 2018, as well as the Singapore Formula 1 construction work is expected to commence in the fourth quarter event in September 2017. South Beach Office Tower and retail of 2017. The land is intended for mixed development comprising spaces at South Beach Avenue are both fully leased. South Beach condominiums, town villas and commercial units within the new Avenue offers a wide spectrum of dining and service outlets and its Xiang An central business district in Xiamen which is proposed connection to the extensive MRT network is expected to enhance to be a new integrated eco-city. Key future developments in the vibrancy and footfall for the retail area. The launch of South Beach’s vicinity include schools, a hospital and a new international airport 190-unit residences will be dependent on market conditions. With which is expected to be completed in year 2020. The land is about the mixed used components in place, the entire South Beach 25km from the Xiamen Gaoqi International Airport and is connected development is anticipated to contribute positively to the future to the Xiang An undersea tunnel providing easy access to the island prospects of the joint venture partners. of Xiamen and other commercial hubs such as Wanda Plaza and

IOI Palm City, Xiamen, PRC

9 IOI PROPERTIES GROUP BERHAD (1035807-A)

CHAIRMAN’S STATEMENT

CORPORATE DEVELOPMENTS On 25 January 2017, the Company’s 99.9% owned subsidiary, Pine Properties Sdn Bhd entered into a shareholders’ agreement with The Company’s wholly-owned subsidiary, Wealthy Link Pte Ltd had MJR Investment Pte Ltd (“MJRI”) for a joint development of a high- on 11 November 2016 successfully tendered for a parcel of land rise luxury condominium known as the Gems on a 9.7 acre freehold in Central Boulevard in Singapore measuring approximately 1.09 land in IOI Resort City. MJRI is a member of Mitsubishi Estate hectares for a tender bid price of SGD2.57 billion. Subsequently Group which is a leading Japanese real estate developer with a on 12 June 2017, the Company announced the signing of a diverse spectrum in the real estate industry including residential, memorandum of agreement with Hongkong Land International office, retail and hotel businesses. Holdings Limited (“HKL”) for a joint development and management of the Central Boulevard development in Singapore. DIVIDEND

A proposed rights issue of up to 1,111,178,800 rights shares at an For FY2017, an interim dividend of 6 sen per ordinary share issue price of RM1.38 to be implemented on a renounceable basis amounting to a total payout of approximately RM330 million of one (1) rights share for every four (4) existing IOIPG shares was declared and subsequently paid on 8 September 2017. This held (“Rights Issue”) was announced on 18 November 2016. The represents approximately 36% distribution of the Group’s net profit Rights Issue was completed following the listing and quotation of attributable to shareholders. 1,101,629,075 rights shares on the Main Market of Bursa Malaysia Securities Berhad on 28 March 2017. A total gross proceeds of GROUP PROSPECTS approximately RM1.52 billion was raised for the purpose of repayment of borrowings obtained to fund the parcel of land in The Malaysian economy is expected to expand at a faster rate in Central Boulevard. 2017 with economic expansion driven by robust domestic demand and strengthening exports.

Although the property market is expected to remain challenging in the year ahead due to continued uncertainties in the external environment and prevailing market sentiments, demand for residential properties in strategic locations with good transportation infrastructure and close proximity to amenities and economic activities are expected to continue to draw prospective buyers.

Phase 1 of the MRT which commenced in December 2016 and the recent opening of Phase 2 in July 2017 are anticipated to support transit oriented developments (“TOD”) in prime and suburban areas located along these routes as they will provide better connectivity and convenience. With the construction of the MRT 2 (Sungai Buloh-Serdang-Putrajaya) line which is expected to commence service by 2022, a MRT station is proposed within our 16 Sierra township.

These mass public transportation systems are expected to enhance the visibility of 16 Sierra township but also our other established townships in Bandar Puchong Jaya and Bandar Puteri Puchong where there are four LRT stations located within its vicinity. It also augurs well on the marketability of our future projects in Puchong and 16 Sierra as they are located in close proximity to the existing LRT stations and the proposed MRT 2 line station respectively. In addition, the mass public transportation systems also provide ease of connectivity for existing residents in these townships in addition to allowing the Group to maximise its product portfolio with the option of considering TODs on our land banks located along or in IOI City Mall, IOI Resort City Putrajaya the vicinity of MRT and LRT lines.

10 ANNUAL REPORT 2017

CHAIRMAN’S STATEMENT

In IOI Resort City, we are positive on the prospects of the Gems as developments in the immediate surrounding area include Asia the Group will be collaborating with an established Japanese real Square I & II, Marina Bay Financial Centre, One Raffles Quay and estate developer. Construction is expected to commence during Marina Bay Sands Integrated Resort. Central Boulevard is directly the fourth quarter of 2017. The development will comprise eight linked to the surrounding developments at One Raffles Quay and blocks of residences with an estimated GDV of RM600 million, set Marina Bay Financial Centre, as well as, office clusters at Raffles in close proximity to our existing completed developments such Place and Shenton Way via an extensive network of pedestrian links as our hotels, shopping mall, office towers and golf course, with and also seamlessly connected to the Downtown and Raffles Place easy access to clubhouse, dining and entertainment facilities and MRT stations, offering easy access to the rail network. The land amenities. IOI Resort City is master planned to be the pulse of is also in close proximity to East Coast Parkway, Marina Coastal the Southern Klang Valley with its residential and commercial Expressway, Ayer Rajah Expressway, Central Expressway and components integrated with leisure and entertainment facilities, Nicoll Highway. The proposed development at Central Boulevard and its location fronting the entrance to Putrajaya with easy is envisaged to comprise two office towers with an estimated access to major urban centres such as Cyberjaya, Puchong and 1,260,000 square feet of leasable space and an estimated 30,000 Kuala Lumpur City Center via an established network of highways. square feet retail podium. The Group is optimistic on the proposed Residences surrounding the 18-hole championship Palm Garden joint venture and collaboration with HKL, a member of Jardine golf course are Puteri Palma Residences, Clio Residences and Matheson Group for the joint management and development of Conezion. IOI City Mall is the anchor of IOI Resort City with Central Boulevard into a landmark development in the central its attraction of visitors from neighbouring townships in Kajang, business district of Singapore. Bangi, Banting, Serdang and Puchong. IOI City Towers which is GBI certified offer approximately 1,000,000 square feet of As our retail, hospitality and office developments are situated in Grade A leasable space whilst our 5-star Le Méridien Putrajaya urban and strategically located areas, these investment properties and Putrajaya Marriott hotels offer quality accommodation for such as IOI City Mall, IOI Mall in Puchong and IOI Boulevard are business and leisure clienteles. With the addition of the Gems, it expected to continue to enjoy healthy occupancies and generate is anticipated that the increased residential population will not only good rental yields. support the components in IOI Resort City but also enhance the vibrancy and visibility of IOI Resort City as a preferred residential ACKNOWLEDGEMENTS and commercial destination. On behalf of the Board of Directors, I would like to take Xiamen is the second largest city and main commercial hub in the this opportunity to express my sincere appreciation to our Fujian province and has one of the busiest ports in the PRC. The stakeholders, including shareholders, bankers, customers and Xiamen North Railway Station is a key stop on the high-speed business associates for their continued support of the Group. coastal route of the China Rail Network, linking Xiamen to other I would also like to extend my appreciation to my fellow Board major cities within the Fujian province, as well as cities such as members, management team and employees for their dedication, Guangzhou and Shenzhen. Xiamen’s Gaoqi International Airport support and commitment to the success of the Group. is a main air hub in the eastern part of the PRC with flights to domestic and international destinations. Overall, Xiamen is ideally Meanwhile, I am pleased to welcome Ms. Lee Yoke Har to the located which makes it an attractive hub for economic activity. As Board with her appointment as an Executive Director effective from the Group holds a long term view on the PRC which it considers as 1 July 2017. I am confident that Ms. Lee Yoke Har’s appointment having development and investment potential, we remain optimistic will bring invaluable insights and contributions to the Group. on the prospects of our existing land bank in Xiamen. In closing, we look forward to another successful year ahead with The recently acquired Central Boulevard land, which is intended the continued support from all stakeholders. for Grade A office development is situated in a prime and strategic location within the Marina Bay financial and business district in Singapore. Marina Bay has been established as a major business and financial precinct to complement the existing central business TAN SRI DATO’ LEE SHIN CHENG district of Singapore and is home to many major local and Executive Chairman international companies as well as financial institutions. Notable

11 IOI PROPERTIES GROUP BERHAD (1035807-A) FIVE-YEAR FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 30 JUNE 2017 2016 2015 2014 2013* (RM’000) (pro forma)

RESULTS Revenue 4,185,361 3,024,940 1,906,491 1,454,445 1,323,259 Profit before interest and taxation 1,384,752 1,467,621 1,079,635 1,132,898 903,641 Net interest income/(expense) 51,873 57,078 50,691 (12,494) 1,118 Profit before taxation 1,436,625 1,524,699 1,130,326 1,120,404 904,759 Taxation (468,799) (424,440) (229,729) (216,662) (191,156) Profit for the financial year 967,826 1,100,259 900,597 903,742 713,603 Attributable to: Owners of the parent 920,870 1,080,018 890,702 889,918 693,621 Non-controlling interests 46,956 20,241 9,895 13,824 19,982

ASSETS Property, plant & equipment 1,137,912 1,122,322 1,120,101 1,047,300 991,431 Land held for property development 4,560,892 4,591,032 2,894,104 3,011,711 2,282,478 Investment properties 12,804,095 4,024,219 3,388,152 2,765,489 1,993,810 Interests in joint ventures 5,126,081 4,820,518 4,155,262 3,855,746 3,575,449 Other non-current assets 279,350 303,640 313,431 243,387 203,496 Current assets 9,719,412 7,948,610 6,568,448 3,801,442 2,936,568 Total assets 33,627,742 22,810,341 18,439,498 14,725,075 11,983,232

EQUITY AND LIABILITIES Total shareholders’ equity 18,227,961 15,885,085 13,427,197 11,202,530 10,335,384 Non-controlling interests 260,615 130,754 110,957 98,677 26,855 Total equity 18,488,576 16,015,839 13,538,154 11,301,207 10,362,239

Borrowings 12,494,506 4,262,032 2,799,010 2,057,230 502,420 Other non-current liabilities 1,065,346 916,614 422,438 300,716 246,054 Other current liabilities 1,579,314 1,615,856 1,679,896 1,065,922 872,519 Total liabilities 15,139,166 6,794,502 4,901,344 3,423,868 1,620,993 Total equity and liabilities 33,627,742 22,810,341 18,439,498 14,725,075 11,983,232

FINANCIAL RATIOS Basic earnings per share N1 (sen) 18.42 24.99 25.83 27.47 21.41 Diluted earnings per share N1 (sen) 18.42 24.99 25.83 27.47 21.41 Interest cover (times) 5.71 9.97 10.12 23.28 21.93 Dividend per share (sen) 6.00 8.00 6.00 8.00 N/A Dividend payout ratio (%) 35.88 32.68 25.37 29.12 N/A Net assets per share (RM) 3.31 3.60 3.56 3.46 3.19 Gross gearing ratio (%) 68.55 26.83 20.85 18.36 4.86 Net gearing ratio (%) 55.51 13.69 6.62 12.85 0.59 Return on average shareholders’ equity (%) 5.40 7.37 7.23 8.26 6.71 Return on average capital employed (%) 3.76 5.58 6.02 6.07 6.75

* 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 2013 and FY2014 were calculated by dividing net profit attributable to owners of the Company by the number of ordinary shares outstanding at the end of FY2014 i.e. 3,239,014,726 throughout each financial year. This is to provide a meaningful comparison of the financialperformance of the Group. Basic and diluted earnings per share for FY2016 had been adjusted, due to adjustment made for bonus elements of rights issue. 12 ANNUAL REPORT 2017

FIVE-YEAR FINANCIAL HIGHLIGHTS

Revenue RM’000 Profit Before Interest and Taxation RM’000

1,323,259 1,454,445 1,906,491 3,024,940 4,185,361 903,641 1,132,898 1,079,635 1,467,621 1,384,752

2017 2017

2016 2016

2015 2015 2014 2014

2013 2013

Shareholders’ Equity RM’000 Net Assets Per Share RM

10,335,384 11,202,530 13,427,197 15,885,085 18,227,961 3.19 3.46 3.56 3.60 3.31

2017 2017

2016 2016

2015 2015 2014 2014

2013 2013

13 IOI PROPERTIES GROUP BERHAD (1035807-A) GROUP FINANCIAL POSITION

As at 30 June 2017 RM’000

Assets Equity and Liabilities

Property plant Land held Non-controlling Current assets and equipment for property interest 1,137,912 260,615 Borrowings 9,719,412 development 12,494,506 4,560,892

Total shareholders’ equity 18,227,961

Other non-current Investment assets Other properties 279,350 non-current 12,804,095 Interests in Other liabilities joint ventures current 1,065,346 5,126,081 liabilities 1,579,314

As at 30 June 2016 RM’000

Assets Equity and Liabilities Property plant Non-controlling Land held Current assets and equipment interest for property 7,948,610 1,122,322 130,754 development Borrowings 4,591,032 4,262,032

Other non-current liabilities 916,614 Total shareholders’ equity 15,885,085

Other Investment non-current properties assets 4,024,219 303,640 Other Interests in current joint ventures liabilities 4,820,518 1,615,856

14 ANNUAL REPORT 2017 GROUP PERFORMANCE HIGHLIGHTS

In RM’000 unless otherwise stated 2017 2016 2015 2014 2013* (pro forma)

FINANCIAL PERFORMANCE Revenue 4,185,361 3,024,940 1,906,491 1,454,445 1,323,259 Segment operating profit 1,326,258 1,073,653 689,260 565,487 643,296 Fair value gain on investment properties 56,231 145,405 316,586 305,307 162,573 Gain on bargain purchase - 71,091 – 197,966 8,326 Share of results of associates 3,264 (3,806) 1,716 3,494 6,989 Shares of results of joint ventures (1,001) 181,278 72,073 60,644 82,457 Profit before interest and taxation 1,384,752 1,467,621 1,079,635 1,132,898 903,641 Net interest income/(expense) 51,873 57,078 50,691 (12,494) 1,118 Profit before taxation 1,436,625 1,524,699 1,130,326 1,120,404 904,759 Taxation (468,799) (424,440) (229,729) (216,662) (191,156) Profit for the financial year 967,826 1,100,259 900,597 903,742 713,603

SEGMENT ANALYSIS Property Development Sales value 2,846,826 2,214,426 1,778,457 1,966,806 1,703,979 Sales (unit) 2,296 2,368 1,750 2,667 2,485 Revenue 3,714,204 2,613,666 1,592,174 1,274,255 1,116,490 Segment operating profit 1,179,487 909,134 575,831 480,271 550,685

Property Investment Occupancy rate (%) 65 77 75 74 74 Rental yield (%) 87666 Revenue 302,119 271,872 192,633 104,894 106,421 Segment operating profit 126,482 141,361 97,515 66,575 65,632

Leisure and Hospitality Occupancy rate (%) 49-77 50-74 49-52 54-56 53-59 Revenue 161,796 131,816 110,778 58,317 87,205 Segment operating profit/(loss) 15,393 18,221 10,143 4,377 16,655

Others Revenue 7,242 7,586 10,906 16,979 13,143 Segment operating profit 4,896 4,937 5,771 14,264 10,324

* 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 IOI PROPERTIES GROUP BERHAD (1035807-A) SEGMENTAL PERFORMANCE

PROPERTY DEVELOPMENT PROPERTY INVESTMENT

SALES VALUE (RM’000) REVENUE (RM’000) 2,846,826 302,119

SALES (UNIT) SEGMENT OPERATING PROFIT (RM’000) 2,296 126,482

REVENUE (RM’000) 3,714,204

SEGMENT OPERATING PROFIT (RM’000) 1,179,487

Revenue 2017 Others (RM’000) 7,242

Leisure & Hospitality 161,796

Property Investment 302,119

Property Development 3,714,204

16 ANNUAL REPORT 2017

SEGMENTAL PERFORMANCE

LEISURE AND HOSPITALITY OTHERS

REVENUE (RM’000) REVENUE (RM’000) 161,796 7,242

SEGMENT OPERATING PROFIT (RM’000) SEGMENT OPERATING PROFIT (RM’000) 15,393 4,896

Segment Operating Profit 2017 Others (RM’000) 4,896

Leisure & Hospitality 15,393

Property Investment 126,482

Property Development 1,179,487

17 IOI PROPERTIES GROUP BERHAD (1035807-A) GROUP QUARTERLY RESULTS

In RM’000 unless otherwise stated 31 Sep 2016 % 31 Dec 2016 % 31 Mar 2017 % 30 Jun 2017 %

Revenue 899,515 21.5 1,194,725 28.5 895,824 21.4 1,195,297 28.6 Operating profit 270,356 19.6 393,595 28.5 183,300 13.2 535,238 38.7 Share of results of an associate 382 11.7 718 22.0 1,139 34.9 1,025 31.4 Share of results of joint ventures 3,747 (374.3) (5,709) 570.3 1,299 (129.8) (338) 33.8 Profit before interest and taxation 274,485 19.8 388,604 28.1 185,738 13.4 535,925 38.7 Interest income 14,975 28.9 7,621 14.7 15,591 30.0 13,686 26.4 Profit before taxation289,460 20.1 396,225 27.6 201,329 14.0 549,611 38.3 Taxation (89,539) 19.1 (107,780) 23.0 (87,235) 18.6 (184,245) 39.3 Profit for the financial year 199,921 20.7 288,445 29.8 114,094 11.8 365,366 37.7

Attributable to: Owners of the parent 189,568 20.6 273,530 29.7 121,136 13.1 336,636 36.6 Non-controlling interest 10,353 22.0 14,915 31.8 (7,042) (15.0) 28,730 61.2 199,921 20.7 288,445 29.8 114,094 11.8 365,366 37.7

Earnings per share (sen) Basic 4.30 6.20 2.72 5.79 Diluted 4.29 6.20 2.72 5.79

SEGMENT REVENUE AND SEGMENT RESULTS Segment Revenue Property development 793,572 21.4 1,068,251 28.8 777,182 20.9 1,075,199 28.9 Property investment 71,332 23.6 77,490 25.7 75,864 25.1 77,433 25.6 Leisure and hospitality 32,511 20.1 47,473 29.3 40,928 25.3 40,884 25.3 Others 2,100 29.0 1,511 20.9 1,850 25.5 1,781 24.6 899,515 21.5 1,194,725 28.5 895,824 21.4 1,195,297 28.6

SEGMENT RESULTS Property development 232,103 19.4 344,726 28.8 132,890 11.1 487,873 40.7 Property investment 53,796 23.6 54,076 23.8 59,589 26.2 60,017 26.4 Leisure and hospitality (13,303) 29.4 (10,939) 24.2 (8,032) 17.8 (12,940) 28.6 Others 1,889 38.6 741 15.1 1,291 26.4 975 19.9 274,485 19.8 388,604 28.1 185,738 13.4 535,925 38.7

18 ANNUAL REPORT 2017 FINANCIAL CALENDAR

FINANCIAL YEAR PAYMENT END OF DIVIDEND

30 JUNE 2017 DECLARATION 15 AUGUST 2017

BOOK CLOSURE 30 AUGUST 2017 INTERIM ANNOUNCEMENT OF PAYMENT RESULTS 8 SEPTEMBER 2017

1ST QUARTER 22 NOVEMBER 2016

ND 2 QUARTER GENERAL 21 FEBRUARY 2017 MEETINGS

RD NOTICE OF EXTRAORDINARY 3 QUARTER GENERAL MEETING 23 MAY 2017 26 JANUARY 2017

TH EXTRAORDINARY 4 QUARTER GENERAL MEETING 28 AUGUST 2017 13 FEBRUARY 2017

NOTICE OF ANNUAL GENERAL MEETING 29 SEPTEMBER 2017

ANNUAL GENERAL MEETING 27 OCTOBER 2017

19 IOI PROPERTIES GROUP BERHAD (1035807-A) MANAGEMENT DISCUSSION AND ANALYSIS GROUP FINANCIAL REVIEW Notwithstanding the challenges faced, the Group remained focus and continued on delivering sustainable long term shareholders value. The Group’s revenue surged to a record high of RM4.2 billion for the financial year ended 30 June 2017 (“FY2017”), which is 38% higher than the previous financial year. The increase in revenue was mainly attributable to the property development segment whereby it registered an increase of RM1.1 billion revenue to RM3.7 billion, which amounted to 89% of Group’s total revenue. Property Investment, Leisure and Hospitality, and other segment contributed to the remaining 11%.

Dumalis, 16 Sierra

The Group’s Profit Before Interest and Tax (“PBIT”), after excluding the fair value gain from investment >> properties of RM56.2 million and share of results of joint ventures and associate of RM2.3 million (similarly excluding the fair value gain of RM145.4 million, the one off gain of RM71.1 million arising from the bargain purchase on the acquisition of subsidiaries and share of results of joint ventures and associates of RM177.5 million, for which the share of results was mainly attributable to the fair value gain arisen from the office tower and retail components in an investment property in Singapore), has improved 23.5% to RM1.3 billion.

20 ANNUAL REPORT 2017

MANAGEMENT DISCUSSION AND ANALYSIS GROUP FINANCIAL REVIEW

La Thea Residences, 16 Sierra

The Group’s PBIT (after excluding the fair value gain The Group’s Shareholders’ Equity as of 30 June as mentioned) of RM1.3 billion is mainly derived 2017 stood at RM18.2 billion, an increase of RM2.3 THE GROUP from property development segment, whereby the billion or 15% over the previous financial year. The SHAREHOLDERS’ Group’s overseas development projects in Xiamen, said increase was mainly due to issuance of ordinary EQUITY PRC are progressing well, with the completion of share capital of RM1.5 billion, foreign currency gain Trilinq project in Singapore and together with the on translation of foreign operations of RM262.6 RM18.2 billion enhanced performance of our development projects million, and total earnings of RM920.9 million offset in Klang Valley, all have contributed significantly to by a total dividend payment of RM352.9 million for DIVIDEND the increase. the financial year. 6.0 sen For FY2017, the Group has invested total of RM8.8 The Group’s gross borrowing as of 30 June 2017 per ordinary share billion, out of which RM8.3 billion was for the stood at RM12.5 billion, an increase of RM8.2 billion acquisition of a prime Central Business District when compared with the previous financial year. The land measuring approximately 1.1 hectares located said increase was mainly due to additional financing within Marina Bay in the Republic of Singapore, for the acquisition of a prime Central Business District RM329.5 million on acquisition of development land land measuring approximately 1.1 hectares located and common infrastructure for property development within Marina Bay in the Republic of Singapore. projects, RM138.6 million for property investment projects in Singapore, and RM109.1 million for Capital Expenditures (“CAPEX”) comprised largely enhancement and expansion of hotel facilities.

21 IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP FINANCIAL REVIEW

Palms Cafe, Palm Garden Hotel

The Group’s Net Interest Cover was 5.71 times An interim single tier dividend of 6% or 6 sen per THE GROUP’S (FY2016: 9.97 times). The decrease was due mainly ordinary share amounting to total payout of RM330.4 DIVIDEND EQUATES to increase in Group’s borrowings for investment million was declared and paid in respect of financial TO A DIVIDEND activities that resulted in higher gross interest costs year ended 30 June 2017. It equates to a dividend PAYOUT OF 36% increased from RM147.2 million to RM242.4 million. payout of 36% out of total earnings attributable to OUT OF TOTAL EARNINGS The Group manages its capital structure and makes the owners of the parent, with a dividend yield of ATTRIBUTABLE TO adjustments to it, in the light of changes in economic 2.83% (based on share price of RM2.12 per share THE OWNERS OF conditions and optimises debt and equity mix to as at dividend declaration date of August 15, 2017). THE PARENT. provide value to shareholders. The Group actively The Group has yet to formalise its dividend policy. monitors its operating cash flows, debt maturing However, based on the Group’s dividend records for profile, and the availability of funding against its the two (2) financial years 2016 & 2017, the dividend overall debt position so as to ensure all operating, payout is at least 33% of the total Group’s earnings investing and financing requirements as well as the attributable to the owners of the parent. loan covenants imposed by the financial institutions are met.

22 BUSINESS REVIEW

Seri Puteri Hills Puteri Seri

CREATING LIVING SPACES FOR STAY, WORK & PLAY WORK & PLAY FOR STAY, LIVING SPACES CREATING our development strategies. inspires play takes centre-stage work and stay, Contemporary urban lifestyle where of lush greenscapes peace of mind in an environment living spaces which offers With that in mind, we aim to create development. conducive for personal and professional with the convenience of value-added amenities that are hubs, enclaves, commercial of residential The long-standing popularity of our integrated sustainable townships development value. recognition of our hotels, shopping malls and golf courses demonstrates the offices, PROPERTY DEVELOPMENT MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY DEVELOPMENT

IOI Properties Group Berhad (IOIPG) continues to maintain its repute as a leader in the industry, consistently delivering results through its creation of sustainable communities of vibrant residential enclaves and thriving commercial hubs that influence lifestyles.

With its substantial and geographically diverse land bank, the Group remains steadfast in its commitment to create value through all of its property development undertakings, whilst aiming for sustainable growth and operational excellence across its various developments along high growth corridors within the Klang Valley such as Bandar Puteri Puchong, 16 Sierra, IOI Resort City, Bandar Puteri Bangi, Warisan Puteri at Sepang; 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 forward-looking business strategies and global business outlook, IOIPG continues to expand its property businesses in Singapore and the People’s Republic of China; leveraging on its resilience and an excellent track record.

OPERATIONS REVIEW

Property development continues to be the key driver in both revenue and segmental operating profit of the Group. The property development segment registered an increase of RM1.1 billion in revenue or 42% growth to RM3.7 billion and RM270.4 million increases or 30% growth in segmental operating profit to RM1.2 billion for the financial year ended 30 June 2017. Seri Puteri Hills, Bandar Puteri Puchong The development projects in Singapore contributed 47% of Group’s revenue, followed by 40% from Malaysia and balance of 13% from its development projects in Xiamen, PRC.

Par 3, IOI Resort City

24 ANNUAL REPORT 2017

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY DEVELOPMENT

Klang Valley With the entry of the millennials into the job market and ultimately making its mark in the demographics of the urban population, During FY2016, the Group recorded an increase in transaction for the Group has positioned its current and future developments to properties within the price range of RM400,000 to RM650,000. capture the imagination of this young and highly lifestyle-conscious With its vast and strategic land banks within high growth corridors target market. across different geographical regions, the Group was able to develop properties that addressed the current needs of customers Therefore, the Group is embarking on an all-new, exciting lifestyle targeting affordable medium cost properties in its comprehensive development to further jazz up the already vibrant commercial hubs integrated townships that are well complemented with urban along Lebuh Puteri, the main spine of vitality that extends into the facilities and lifestyle amenities. These are well-connected too via a exclusive residential enclaves of Bandar Puteri Puchong. Enjoying comprehensive network of convenient infrastructure and are highly the best of both worlds, the “Rejuvenated, Innovative and Original” accessible via major highways. of RIO at IOI RIO City, located in Bandar Puteri Puchong is an 80-acre urban hub of contemporary living spaces; with secure (a) In Bandar Puchong Jaya, IOIPG completed a regeneration work spaces that inspires; retail and hotel components that offer and rejuvenation project at Capitol Square which includes a a whole new world of discovery with the allure of exclusivity; and retail and carpark complex. The new Ampang LRT extension all these are well-connected with landscaped walkways interlaced line serving the vicinity bodes well for this development. with green spaces. (b) IOIPG also saw the completion and handover of Seri Puteri Hills townvilla and condo in Bandar Puteri Puchong to Meanwhile, Warisan Puteri Sepang continues its significant purchasers. contribution towards the Group’s revenue with its leverage on the (c) Bandar Puchong Jaya welcomed new home owners of Park student and tech customer segments of the nearby academic hubs Ville condo completed and handed over by IOIPG. of Xiamen University and Cyberjaya Technology City as well as its (d) In our new township of Bandar Puteri Bangi complete with connectivity via highways and the ERL. the newly opened Tesco hypermarket, proud property owners of the township’s maiden batch of development received In IOI Resort City Putrajaya, the Group via its 99.9% owned their keys to the newly completed link houses Teresse 1 and subsidiary, Pine Properties Sdn Bhd has entered into a strategic Teresse 2; as well as Kubica shop offices. collaboration of a JV venture with Mitsubishi Jisho Residence (e) The Group also completed and handed over its newly Investments Pte Ltd, a wholly owned subsidiary of Mitsubishi Estate completed double-storey linkhouses of 196 units of Evira Co. Ltd on The Gems condominium development. The Gems is to and 182 units of Avista in its new township of Warisan Puteri be developed on a freehold land measuring approximately 9.6 acres Sepang. in IOI Resort City, Putrajaya. Consisting of eight blocks of high- end residential units with sizes ranging from 1,250 sq ft – 1,750 The Group is embarking on Transit Oriented Developments (“TOD”) sq ft, the development of The Gems is scheduled to commence in and Low Carbon City Development that provides convenience of FY2018 and is expected to be completed in the course of 4 years. connectivity to visitors and to the communities within its township developments. In the face of the current market challenges, the Group intensified its advertising and promotion campaigns with strong focus on its In Bandar Puteri Puchong, a thriving mature township is an digital marketing strategy; amongst which includes search engine excellent showcase of the Group’s highly accessible and well- optimisation and content marketing via social media and online connected developments. Interconnecting roads link this township platforms. In striving to drive efficiency and profits, the Group to its neighbouring developments; and its infrastructure is leverages on data analytics, anticipating customer behaviour of supported by public transportation via two LRT stations, Stesen targetted market segments for the construction of highly effective Taman Perindustrian Puchong and Stesen Bandar Puteri. The and focused campaigns to unlock potential sales. It is currently township is connected too to the LDP at three main points namely embarking on the utilisation of the Industrial Building System (IBS) at the township interchange itself, and at two other intersections which is a sustainable alternative that minimises construction time into Puchong Perdana and Puchong Utama respectively. It is this and cost; simultaneously reducing the use of timber and diverting a excellent network of infrastructure that appeals to international and substantial amount of timber waste from landfills. MSC status companies as well as multinational corporate firms that have set up their base in the various commercial hubs of Bandar Puteri Puchong namely Puchong Financial Corporate Centre PFCC, the Puteri 2 commercial centre and the boutique offices at The Cube amongst others. 25 IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY DEVELOPMENT

Other Regions

At Bandar IOI Bahau, the Group delivered 90 units of semi- detached, 151 units of terraced houses and 62 units of shop offices. Also handed over were one unit of detached, 32 units of semi-detached and 63 units of terraced light industry.

In this financial year, the Group will launch 50 units of Mampu Milik Type A and 60 units of Mampu Milik Type B, the price of which is fixed by the State Government at RM80,000, and RM250,000 per unit respectively.

Meanwhile in the Northern Region, the Group’s Penang development of Cypress Villa comprising 48 units of semi-detached and 3 units bungalow was completed and handed over to purchasers in FY2017. Another development of Stramax Residences comprising 107 units of terraced houses is nearing completion and the units are expected to be handed over to new house owners in the second Whimsical Garden at Seri Puteri Hills, Bandar Puteri Puchong half of FY2018.

The Group has also completed and delivered D’Summit Phase 1 in The key themes that shape demand for space are rising customer Taman Kempas Utama, Clover 3A04 comprising 130 units in Bandar expectations, the integration of work and leisure time and the Putra Kulai and 6 units of Eminence in Bandar Putra Kulai, Johor. transforming impact of technology. This is where the Group sees the need to intensify its focus on where its expertise can enhance Meanwhile, at Taman Lagenda Putra, Kulai; the Group handed over value, attracting a broader range of customers. A strong record double storey semi-D, JADEN, in FY2017. of take up rates for the year is solid evidence that the Group’s properties are delivering what the customers want. In a rapidly International changing world, sustainable properties are becoming increasingly sought after and continue to create value as they are both resilient On the international front, the development projects in Singapore and well positioned to respond to the highly dynamic nature of and Xiamen, People’s Republic of China (“PRC”) contributed evolving customer expectations. positively to the Group’s results. In Singapore, Trilinq obtained the Temporary Occupational Permit during the financial year and the In view of the current challenging market with intense competition development project generated a total sales value of approximately from other developments offering similar products, the Group SGD411 million with 307 units sold. acknowledges that there is a necessity to mitigate the risk of unsold inventory by designing attractive packages with low entry IOI Palm City in Xiamen, PRC, achieved robust sales of cost for instance the IOI Group Buy campaign, “Buy Now, Pay approximately RMB594 million for the current financial year. Later” campaign and implementing introducer fees whereby these Significant contribution was derived from the sales of super high- initiatives have been well-received by the customers. The Group will rise condominiums. continue with its strong advocacy for product quality and customer service excellence as a brand differentiator for the IOIPG brand to stand out among the crowd. We will also be embarking on a branding campaign that aims to reinforce brand affinity amongst existing customers and to realise potential by extending our reach to the younger customer segment.

Apart from the above, the Group mitigates the risk of cyclical fluctuation of building and material cost through continual sourcing of alternative sustainable building materials, increasing supplier base, direct purchase from local manufacturers and incorporating sustainable designs that consider reduction in construction costs. 26 ANNUAL REPORT 2017

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY DEVELOPMENT

As at 30 June 2017 the Group’s ongoing property development projects (excluding investment-based development) are as follows:-

Original Remaining Remaining Year of Development Development Estimated Estimated Development’s Land Size Land Size Gross Value Gross Value Projects Commencement (Acres) (Acres) ’billion ’billion Ongoing Bandar Puchong Jaya, Selangor 1990 930 8 RM4.2 RM0.6 IOI Resort City, Putrajaya 1995 & 2016 354 274 RM19.5 RM18.1 Bandar Putra Kulai, Johor 1995 5,680 3,556 RM9.1 RM5.8 Bandar Putra Segamat, Johor 1995 489 53 RM0.9 RM0.3 Bandar Puteri Puchong, Selangor 2000 930 153 RM15.8 RM11.5 Taman Lagenda Putra, Kulai, Johor 2006 225 29 RM0.7 RM0.2 Taman Kempas Utama, Johor Bahru, Johor 2007 294 48 RM3.3 RM0.9 16 Sierra, Puchong South, Selangor 2008 535 186 RM6.8 RM4.6 The Platino, Tebrau, Johor 2012 5 - RM0.5 RM0.04 Desaria, Sungai Ara, Penang 2013 32 15 RM0.5 RM0.3 IOI Palm City, Xiamen, PRC 2014 21 14 RMB6.7 RMB4.6 Bandar IOI, Bahau, Negeri Sembilan 2014 283 30 RM0.8 RM0.4 Bandar Puteri Bangi, Selangor 2014 345 221 RM3.7 RM2.6 Bandar Puteri Warisan, Sepang 2014 336 128 RM3.9 RM3.6 i-Synergy, Senai, Kulai, Johor 2015 500 482 RM2.0 RM1.8

Original Remaining Remaining Year of Development Development Estimated Estimated Development’s Land Size Land Size Gross Value Gross Value Oversea Projects Commencement (Acres) (Acres) ’billion ’billion Completed Seascape @ Sentosa Cove, Singapore 2008 4 - SGD0.8 SGD0.5 Cape Royale @ Sentosa Cove, Singapore 2010 5 - SGD1.4 SGD1.4 Cityscape @ Farrer Park, Singapore 2011 2 - SGD0.4 SGD0.02 South Beach, Beach Road, Singapore 2011 9 - SGD1.0 SGD1.0 IOI Park Bay, Xiamen, PRC 2012 8 - RMB1.8 - The Trilinq @ Jalan Lempeng, Singapore 2013 6 - SGD1.0 SGD0.2

The table below sets forth key information with respect to the performance of IOIPG’s property development business excluding joint ventures:-

2017 2016 2015 2014 2013* Units of property sold 2,296 2,368 1,750 2,667 2,485 Total sales (RM’000) 2,846,826 2,214,426 1,778,457 1,966,806 1,703,979 Revenue (RM’000) 3,714,204 2,613,666 1,592,174 1,274,255 1,116,490 Operating profit (RM’000) 1,179,487 909,134 575,831 480,271 550,685

* 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 comparision of the financial performance of the Group.

27 IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY DEVELOPMENT

The property sales mix by price range is as follows:-

2017 2016 PRICE RANGE (RM’000) % (RM’000) % Below RM250,000 28,783 1 21,631 1 Between RM250,000 and RM500,000 188,586 7 247,913 11 Between RM500,000 and RM750,000 591,303 21 437,530 20 Between RM750,000 and RM1,000,000 107,173 4 141,343 6 Between RM1,000,000 and RM1,500,000 153,165 5 140,941 6 Between RM1,500,000 and RM2,000,000 30,672 1 709,525 32 Above RM2,000,000 1,747,144 61 515,543 24 Total 2,846,826 100 2,214,426 100

OUTLOOK AND PROSPECTS As both work and leisure become increasingly connected, properties that are surrounded by lush greenery complete with facilities and Malaysia amenities that allow for peace of mind, healthy lifestyle and the The year 2017 has proven to be a challenging one for most presence of retail and leisure offerings within easy reach; are highly industries across the board. The property market has seen its fair sought after. 16 Sierra and Bandar Puteri Puchong developments share of hurdles, with home buyers facing affordability issues, are designed and developed on the concept of green living in banks tightening loan approvals, a high percentage of loan buildings planned with sustainability in mind; amidst abundant rejection rates due to high household debt, a post-effect of the GST greenery and surrounded by the elements of nature. In a resort and the depreciation of the ringgit alongside the strengthening of city development such as IOI Resort City, customers are able the US dollar. However, Malaysia’s strong GDP growth in 1H2017 to enjoy easy accessibility to convenience and to contemporary and improved oil prices helped to ease the downward trend and urban lifestyles comprising fun entertainment, a multitude of dining strengthened the disposable income of the average Malaysian choices, shopping, facilities and amenities, amongst many other household. lifestyle options desired by young professionals and families.

Looking at the young demographics and an expanding middle- Meanwhile, the Group’s business plans will include planning of income category, the Group is confident that there will be continual sustainable townships within the Klang Valley with developments demand for properties, particularly those designed for multi- that focuses on “TOD” and affordability to meet the urban lifestyle generational living amidst the rejuvenating and relaxing elements expectations of the young market segment. In Puchong Jaya, the of nature. Sky Condominium in Bandar Puchong Jaya, Seri Puteri Group will focus on rejuvenation projects, “TOD” and collaborate Hills TownVilla and Condo in Bandar Puteri Puchong; as well as with the Local Council on the new initiative of Low Carbon City Conezion and Par 3 in IOI Resort City showcase developments that developments. For its 16 Sierra development with the MRT2 are able to appeal to both the multi-generational market segment within its vicinity, the Group will continue to focus on “TOD” and and the young customer segment in terms of chic architectural provide a sustainable healthy lifestyle with green living features of design, practical layout as well as facilities and amenities that bicycle paths and walkways to complement the signature thematic define contemporary and trendy lifestyles. gardens of 16 Sierra. Mid-range and affordably-priced properties will take centre-stage in Bandar Puteri Bangi and Warisan Puteri at Aside from the practicality in layout and architectural aesthetics, a Sepang which are located in established growth corridors and are foremost concern on a property buyer’s mind is safety and security well-connected via highways. which the Group continually addresses in its planning and design of its properties. Its premium urban lifestyle living spaces are complemented by a multi-tier security system of perimeter fencing, card access and security screening at guarded entrance, CCTV surveillance, card-access to restricted residents-only areas, digital internal security features within each property unit.

28 ANNUAL REPORT 2017

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY DEVELOPMENT

Seri Puteri Hills Townvilla

In Johor, the property market has remained sluggish in the past Bank Negara Malaysia recently reported that the overall loan year and is expected to continue its flattish trend this year. With approval rate for the purchase of properties remained high and this an increasing supply of apartments with many projects due to be bodes well for the property industry providing assurance that the completed and handed over this year, challenges are expected in demand for properties in Malaysia remains positive going forward. the secondary and rental market. Commercial properties, shops and With the Group’s sizeable land bank in strategic locations both in industrial developments are expected to face similar challenging Malaysia and overseas, coupled with strong track record of delivery, situations. Nevertheless, the market is likely to recover within the IOIPG is well-positioned to adapt to market demand. next two years. The Group continues to look forward with cautious optimism whilst For the medium term to long term, the Group will continue to develop maintaining sensitivity and flexibility to respond to market changes. products that are able match the dynamic market demand in terms In the current business landscape, the Group strongly advocates of price, design, quality and lifestyle features whilst remaining hands-on management, applying knowledge of the business, being sensitive to market changes and focusing on delivering excellent sensitive to market changes and focused on delivering value to service; as well as creating value for customers. Going forward, home buyers. the Group will focus on affordability, with landed properties within gated and guarded communities and apartments priced below The Group’s results show that its space offerings continue to be RM600,000. attractive to home owners, entrepreneurs and investors alike. This reflects the continuing effective execution of the Group’s strategy, providing space that responds to changing lifestyles and exceeding the expectations of its customers. The Group also expects the property market to scale up to firmer ground, barring any surprises on the international and domestic front. 29 IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY DEVELOPMENT

PRC Pavillion Service Apartments, Bandar Puteri Puchong Property cooling measures may continue to impact the market in the short term but property values is expected to continue to hold in first and second tier cities in the longer term. The Group’s existing projects and future development land bank are situated in Xiamen, which is an attractive economic hub given that it has an established transportation network that connects to other major cities and destinations in the PRC and abroad. The Group remains optimistic on the prospects of its property developments in the PRC as the above mentioned will enhance the visibility of our projects and attract prospective buyers.

IOI Palm City’s remaining residential components of high rise residences and town villas are expected to be launched in the next financial year.

Meanwhile, construction on the newly acquired Xiang An land in Xiamen, PRC is expected to commence in the fourth quarter of 2017. The mixed development consists of condominiums, town villas and commercial units within the new Xiang An central business district in Xiamen which is proposed to be a new integrated eco-city. Future developments that will complement the project include schools, a hospital and a new international airport. The land is ideally located with easy connectivity to the Xiamen Gaoqi International airport, Singapore main island of Xiamen and other commercial hubs via an undersea tunnel and will be linked to upcoming subway lines. Market sentiments have improved in the second quarter of 2017 as evidenced by increase of sales and lower inventory of unsold units following the relaxation of certain property cooling measures, for example, the easing of the sellers’ stamp duty in the first quarter of 2017. The residential property market outlook is anticipated to be optimistic as increase in sales is expected to continue its momentum attributable to improving market sentiments and pent up demand from buyers. As such, the Group remains optimistic that property projects in established locations with amenities are anticipated to continue to draw prospective buyers.

During the financial year under review, the Group’s Trilinq project in Singapore obtained its temporary occupation permit in April 2017 and continued to record a favourable take-up rate with sales of 307 units at sales value of RM1,310 million for FY2017.

30 IOI City Towers

MANAGEMENT DISCUSSION AND ANALYSIS

PROPERTY INVESTMENT

CREATING SUSTAINABLE GROWTH THROUGH STRATEGIC INVESTMENTS Aspirations to achieve sustainable growth is what motivates the Group’s investment strategies. The Group is committed to deliver sustainable value creation and long-term return through its impressive portfolio of investment properties. The prime investment assets now thriving and growing under IOIPG is proof of its success in delivering innovative investment strategies that enhance value and deliver sustainable growth for the Group. IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY INVESTMENT

Our property investment arm is a strategic part of the Group through which we aim to create added value for our customers, generate better returns to our shareholders and provide a steady stream of revenue and profits to the Group in the long term.

We have achieved good returns and a stable Puchong Financial Corporate Centre and recurring income through our prime property investment interests which comprise a range of property assets of shopping malls, commercial/ retail space and office space. Value-added amenities complete our integrated township development and create contemporary urban lifestyles. As at 30 June 2017, our existing property investment portfolio has an approximate total of 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 as office space with the balance comprised of residential properties.

IOIPG’s major investment properties are:-

(a) 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; (b) 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 a total NLA of approximately 886,000 sq ft; OPERATIONS REVIEW (d) IOI Mall Kulai in Johor with more than 258 retail The Group posted total revenue of RM302.1million, shop lots with a total NLA of approximately representing an improvement of RM30.2 million or 242,000 sq ft; 11% when compared with the previous financial year. (e) One IOI Square and Two IOI Square located The key revenue driver was from the retail sector in IOI Resort City, Putrajaya with a total of two whereby it accounts for 82% of the Group’s total blocks of 12-storey purpose built office towers revenue in property investment segment. It recorded with approximately 441, 000 sq ft of total NLA; revenue and operating profit of RM248.6 million and (f) IOI City Tower 1 and IOI City Tower 2 situated RM97.5 million respectively. The improved revenue in IOI Resort City, Putrajaya comprising two performance was mainly due to higher occupancy 31-storey office towers with approximately and rental rates from both retail and office segments. 1 million sq ft of NLA; and (g) IOI Boulevard in Puchong comprising The overall market in FY2017 has been challenging 68 units of office and retail lots with a total NLA financially and economically for the property of approximately 229,000 sq ft. investment sector as well as all the segments in the industry - Office, Hotel and Retail. However, in view of the various properties’ strategic location in growth corridors, good connectivity, modern and appealing designs and backed by a strong management and marketing team, the Group’s investment properties were able to weather through 2016 fairly well. 32 ANNUAL REPORT 2017

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY INVESTMENT

Malaysia Retail Retail malls in the Klang Valley maintained strong occupancy despite market news of an increasingly competitive retail mall environment, largely due to an oversupply of retail space, along with a weakened consumer market arising from GST implementation and a weaker oil price as compared to the period when crude oil hovered at around USD100 per barrel. Capitalising on the strong infrastructure connectivity over a large regional catchment (for instance IOI City Mall) plus a matured township (for example IOI Mall Puchong), both the Group’s Klang Valley malls have fared well.

In the year under review, the Group’s flagshipIOI City Mall was awarded the coveted FIABCI-Malaysia Property Award 2016 for the Retail Category. IOI City Mall, IOI Resort City The winner of this award is selected based on the development’s overall concept, design and architecture, environmental impact, safety and right direction in order to cater to shopping preferences of the young population maintenance, and its benefits to the community, which makes up a high percentage of urban shoppers. The Group remains amongst others. IOI City Mall, as one of the state- perceptive to changing customer needs and experiences, and hence continually of-the-art architectural landmarks in IOI Resort City adapts accordingly to accommodate appropriate changes to enrich the customer and the largest regional mall in southern Klang Valley shopping experience. with a 1.5 million sq ft of net lettable area achieved an occupancy of 98%. Complemented by world Looking forward, the Group plans to embark on renovation and expansion of class hotel brands and an award-winning premier its pioneer mall namely IOI Mall Puchong for a fresh new mall experience and golf course, IOI City Mall not only caters to the contemporary lifestyle ambience for its customers. Thereafter, a rebranding of local market segment but enjoys patronage from the the mall will be in the pipeline to reflect its contemporary lifestyle brand that entire Southern Region of Kuala Lumpur, Selangor continues to serve its surrounding vibrant neighbourhoods in the Puchong vicinity. and Negeri Sembilan. Meanwhile, IOI Mall Puchong Meanwhile, expansion works of IOI City Mall has been planned with another has continued to maintain its high occupancy of over 1 million sq ft poised to wow its customers once it is completed. The additional 95% and its customer footfall has benefitted from the lettable area will leverage on the high growth corridor of the Southern Klang Valley new (“LRT”) stations connecting Puchong to multiple region and the increased footfall it will generate for the mall. high growth areas which commenced operations in the year under review. Offices Although the overall office market in Klang Valley remains to be in oversupply, While the Group’s malls located in the Klang Valley the Group’s effective marketing and pricing strategies coupled with a strong have almost 100% occupancy, it must ensure that the property management and leasing team was able to attract appropriate tenants malls maintain their appeal with fresh and fun ways to Puchong and Putrajaya where most of its offices are located, with some offices to attract existing and new customers. The shopping enjoying more than 90% occupancy. The enhanced network of connectivity and experience must be maintained at a high-level with a accessibility has benefitted these two growth areas. The Group will continue to popular and trendy tenant-mix that reflects dynamic actively engage various marketing channels to implement aggressive campaigns and changing customer profiles and expectations. and offer competitive rental rates that reach out to proposed, existing and new The Group will continue its high level performance tenants; and has received generally positive feedback. in the implementation of its marketing proposals aimed at filling the existing occupancy gaps. We PFCC with its high connectivity and accessibility as a result of its location within are improving our tenant mix with an increase in close proximity to the (“LRT”) system and the Group’s hotel, Four Points by F&B offerings to enhance the shopping experience Sheraton Puchong has been able to attract Multinational Corporations (“MNCs”), of its customers with new food attractions such as effectively increasing its overall occupancy. the recently completed Food Street in IOI Puchong Mall with a variety of choices from Swensen to Go With a well-planned integrated resort city development that has since become a Noodles and many more. The ground floor has signature landmark in the southern growth corridor of the Klang Valley, interest been repositioned as a lifestyle, fashion-oriented in office space withinIOI Resort City is scaling upwards. Apart from the Group’s shopping level with trendy and renown brands such new corporate office which will be located atIOI City Tower 2 in IOI Resort City, as Cotton On and Charles & Keith amongst others the office tower will welcome too its new tenant Hewlett-Packard with a take-up that appeal to the young demographics of today’s office area of approximately 80,000 sq ft spanning across 5 levels; while the entire shoppers. Transforming the tenant mix to provide a tower of Two IOI Square which is also located in IOI Resort City will be occupied modern trendy shopping experience is a move in the by a foreign-based enterprise. 33 IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – PROPERTY INVESTMENT

Despite the challenging market situation for office leasing, the Group to improve long-term value for the properties and its stakeholders will persevere to ensure that its portfolio of investment properties are in the right direction. Malls and their respective expansions will is well-occupied at the best competitive rates to generate a steady continue to serve their purpose so long as they are strategically stream of recurring revenue for the Group and to create value for located and well-connected to population growth corridors where its stakeholders. families can enjoy all the conveniences that come with a mall in the vicinity. The Group has identified some key risks that may be challenging for its Leisure & Hospitality business segment. These are market The Group will also further tap on the synergies that come from risks which include a highly competitive corporate office market, the increased integration of commercial developments within the oversupply of retail space, and a slowdown of consumer spending. existing IOI developments as the Hotels, Offices and Shopping The Group’s short to long-term strategies are designed to Malls cross-sell and leverage on each other’s businesses. mitigate these risks such as aggressive marketing focusing on targeted market segments and effective pricing strategies; and While the outlook for the office market remains challenging as ensuring operational excellence with high standards of property the take-up rates are relatively slow, the Group will maintain management and facility management of our property investment its competitiveness in attracting and retaining more tenants by assets. In order to mitigate the risks of oversupply retail space and ensuring its investment assets are well-managed, facilities well- slow consumer spending, the Group’s mitigation plan includes maintained and service levels exceed expectations. studying and understanding market trends and its competition and enhancing tenant mix to offer new unique shopping experiences Singapore for its customers. The Group will continue to collaborate with An increase in the supply of premium and Grade A office space in tenants to enhance value proposition of a retail property or mall the Central Business District (“CBD”) is expected by end of 2017. as a destination of choice; and creating a conducive environment However, market outlook may improve given that there have been to evoke a lifestyle ambience that positively influences consumer progressive commitments to upcoming developments as tenants behaviour. relocate to better value propositions in newer buildings. The Group operates within an established risk management South Beach Office Tower and retail spaces at South Beach Avenue framework whereby risk review covers principal risk. The respective are both fully leased and are expected to continue to perform Risk Management Committees and workgroups of each business well with its prime location and connectivity to an extensive MRT unit conduct quarterly reviews to monitor and update on the network, major roads and expressways linking to the CBD and emerging and principal risks, evaluate adequacy of internal control airport, and with South Beach Avenue offering a wide spectrum of systems and establish response and actionable programmes to dining and service outlets. manage the risks. The review also includes annual presentation to and discussion with the Audit Committee and the Board. The newly acquired land in Central Boulevard is proposed for a Grade A development of two office towers with an estimated Regional Investment Properties 1,260,000 sq ft of leaseable space and an estimated 30,000 sq ft of South Beach, a joint venture development between IOIPG and retail podium. Central Boulevard is located in a prime and strategic City Developments Limited (“CDL”) is a fully integrated mixed used location within the Marina Bay financial and business district. development comprising a luxury hotel managed by JW Marriott, 190 units of luxury residences, with total net lettable area of 510,000 PRC sq ft of Grade A office space and 30,000 sq ft of retail space. The Xiamen is a main commercial hub in the Fujian province. Xiamen’s completion of the MRT link in May 2016 provides the viral link to the ideal location with established transportation networks covering Esplanade and City Hall MRT stations and enhances the vibrancy land, sea and air, linking to other major cities within the PRC and footfall to the retail area. and beyond will serve to enhance the visibility of our investment properties. In respect of South Beach Office Tower, its 510,000 sq ft of Grade A office space for lease is currently occupied by renowned IOI Palm City’s commercial components comprising a shopping multinational corporations such as Sanofi-Aventis, Tableau Asia mall, hotel and boutique offices has commenced construction in Pacific, Facebook and LEGO, to name a few. the first quarter of 2017 and is expected to be completed in 2021. OUTLOOK & PROSPECTS Malaysia Despite the growing prominence of internet retailing and the challenges faced with an oversupply of malls, the Group believes that the average Malaysian consumer will continue to patronise large, well-managed malls. Hence, plans for proposed expansions

34 Le Méridien Putrajaya

MANAGEMENT DISCUSSION AND ANALYSIS

LEISURE AND HOSPITALITY

BUILDING RELATIONSHIPS THROUGH SERVICE EXCELLENCE Our leisure and hospitality portfolio comprising an impressive hotels of world class brands and award-winning premier golf courses is well-known in the industry for its customer-centric appeal and strong brand recognition. With the addition of new hotels in the local and international front, we are on course towards strengthening and elevating our reputation in the leisure and hospitality industry. IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – LEISURE & HOSPITALITY

Understanding customers and meeting their expectations is the motivation that drives the Group’s leisure and hospitality business. For over three decades, IOI Properties Group Berhad (“IOIPG”) has achieved success and recognition not just for its property development and property investment portfolios, but also for its exclusively designed hotels, resorts and golf courses under its leisure and hospitality portfolio.

IOIPG aims to be a leading player in the leisure and hospitality circle with its signature collection of world class hotels, new and exciting ventures into the international leisure and hospitality scene.

Appreciation of service and hospitality is a motivation for brand excellence in the Group’s leisure and hospitality business. The Group is committed to delivering the highest standards of service upon which positive experiences are created and long- term relationships are built. In its mission to influence lifestyles as it develops more integrated townships, the Group constantly offers its best ideas to create a cache of lifestyle elements that complements the distinctive features of the architectural structures in the townships developed, and appeals to the urban communities within each development.

The Group’s integrated developments and townships make up a perfect blend of residential, commercial as well as leisure and hospitality elements; allowing each to complement the other and leverage on the unique features and services that each has to offer. These synergies are strategically embedded in the master-planned integrated developments of IOI Resort City and Bandar Puteri Puchong. View from Le Méridien Putrajaya

36 ANNUAL REPORT 2017

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – LEISURE & HOSPITALITY

Palm Garden Golf Club

Apart from being an award-winning top property developer, IOIPG (d) Palm Garden Golf Club (“PGGC”), located in IOI Resort City is proud to be one of the few integrated property developers that is a renowed award winning golf course which has won the Par builds and manages its own investment properties such as hotels, Golf People’s Choice Awards 2017 and Superbrands Awards golf courses, shopping malls and office buildings. To date, the 2017. Group has under its wings the following hotels, resorts and golf (e) Palm Villa Golf and Country Resort, located in the township courses in Klang Valley, Johor and Singapore:- of Bandar Putra Kulai, Johor, is a 27-hole golf course which comes with a comprehensive range of club facilities. (a) Putrajaya Marriott Hotel, a five-star hotel located in (f) Le Méridien Putrajaya, a five-star world class brand located in IOI Resort City, houses 380 spacious guest rooms, 73 IOI Resort City. executive rooms and 35 exclusive suites. Set amidst lush (g) JW Marriott Hotel Singapore South Beach, a 634-room luxury greeneries of a resort environment, this opulently designed hotel located on Beach Road bordering Singapore Central hotel has received numerous awards; Business District. (b) Four Points by Sheraton Puchong, strategically located in the heart of Puchong, is a four-star business hotel that features The Group registered total revenue of RM161.8 million, an increase 249 stylish and contemporary guestrooms and suites; of RM30.0 million or 23% when compared with previous financial (c) Palm Garden Hotel, a four-star hotel located within IOI Resort year. The hospitality sub-segment accounts for 81% of the total City comes with 151 tastefully furnished rooms; revenue in leisure and hospitality segment. It recorded a revenue and operating profit of RM130.2 million and RM10.8 million respectively. The improved revenue performance was primarily contributed by Le Méridien, Putrajaya which commenced its business in August 2016. 37 IOI PROPERTIES GROUP BERHAD (1035807-A)

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – LEISURE & HOSPITALITY

Palm Garden Hotel

OPERATIONS OVERVIEW The Group will continue its aggressive marketing strategies targeting the right market segment in order to further increase The hotel sector remains competitive with many new hotel occupancy rate. This will include its medium to long-term strategy completions. The Group succeeded in maintaining market share aimed at enhancing customer experience through refurbishment for existing hotels, with Four Points by Sheraton Puchong doing of its hotels. The recently completed refurbishment of Putrajaya fairly well, reaching out to a large client base of corporate firms and Marriott Hotel added a touch of modernity while maintaining manufacturing enterprises within the Puchong vicinity. The new the signature opulence of its interior. Meanwhile, the ongoing 5-star hotel, Le Méridien Putrajaya which commenced operations renovation at Palm Garden Hotel at IOI Resort City has since in August 2016, was able to attract new markets and perform enhanced its interior particularly for its Palm Café, with its facelift reasonably well with occupancy rates up to 70%. With effective giving it a fresh contemporary ambience; and the upgraded rooms marketing strategies and high standards of customer service enhancing its customers’ hotel stay experience. The refurbishment excellence, Le Méridien was able to maintain its customer base exercise at both hotels has improved overall occupancy rate and and develop new markets encompassing the public and private received good customer feedback. sector as well as corporate firms.

For long-term growth prospects, the Group will build hotels when the need arises for such a leisure component to complement its integrated lifestyle township developments and to create value for its stakeholders.

38 ANNUAL REPORT 2017

MANAGEMENT DISCUSSION AND ANALYSIS GROUP BUSINESS REVIEW – LEISURE & HOSPITALITY

actionable programmes to manage the risks. The review also includes annual presentation to and discussion with the Audit Committee and the Board.

International

IOIPG welcomes JW Marriott Hotel Singapore South Beach to its South Beach integrated development located nearby the Central Business District and Marina Bay. This internationally-acclaimed hotel offers luxury stay experiences in immaculately appointed rooms with contemporary designer interiors and breathtaking views of Singapore. It officially opened its doors in March 2017 and it has been enjoying a good occupancy rate up to more than 70%.

OUTLOOK & PROSPECTS

Malaysia

Putrajaya Marriott Hotel While the Group is aware that the outlook for the hotel segment remains challenging in an increasingly competitive market with new hotels envisaged to be opened coupled with an expectedly slower The PGGC remains strong and competitive as a highly preferred market due to government spending being affected, it will continue premier golf course in the country with its consistent and effective to maintain and strengthen its hotel service levels to uphold its maintenance of the golf course and greens. The high standards of strong presence in the institutional sector but further expand into PGGC complements the IOI Resort City development as a city for new markets within the corporate and tourism sectors. stay, work and play. Loyal customers who continue to play at PGGC is evident of its commitment in maintaining the high standards For PGGC, as a non-membership premier golf club, it will of the golf course. Its popularity amongst discerning golfers has differentiate itself from the crowd; not to mention its unique won it multiple accolades in the year under review namely ParGolf signature high lipped bunkers and challenging greens with average People’s Choice Awards where it was voted Malaysia’s Top Three speed of 10.5’ on the stimp meter makes it one of the most Best Greens 2017 and Superbrands Awards 2017. challenging golf courses in the country as it puts the mind, skill and dexterity of any player to the test. As a leisure component within For long-term sustainable business growth, PGGC continues to the development of IOI Resort City that attracts both local and break into new market segments and to increase its customer international golfers, PGGC is expected to continue its popularity base to encompass foreign and local golfers as well as institutional streak amongst discerning players and place IOI Resort City on and corporate clients. the map as the choice destination for stay, work and play.

For cost efficient management of its supply chain, the leisure and Singapore hospitality business segment face the risk of price fluctuation of its The tourism sector improved in the first quarter of 2017 with higher imported goods resulting from economic factors that may impact international visitor arrivals and increased tourism receipts. The the local currency. Therefore, sourcing of alternative products hospitality sector is expected to remain resilient as Singapore is that are manufactured locally is able to provide more options a global and regional transit hub with a well-established tourism of equally high quality and cost efficient options is encouraged; infrastructure and efficient transportation network. simultaneously supporting the local economy as a sustainability initiative. An official opening of the 634-room JW Marriott Hotel Singapore South Beach was held on 24 March 2017. Hotel operations is To effectively manage and mitigate identified risks such as the expected to perform well with the recent opening of its spa services above, the Group operates within an established risk management in May 2017, the unveiling of its remodelled ballroom in September framework that reviews on the adequacy and effectiveness of 2017 and with more food and beverage outlets expected to be risk management whereby each business unit via its respective opened between the second half of 2017 and early 2018, as well Risk Management Committees and workgroups conduct quarterly as the Singapore Formula 1 event in September 2017. reviews and updates on the emerging and principal risks, evaluate adequacy of internal control systems and establish response and

39 IOI PROPERTIES GROUP BERHAD (1035807-A) CORPORATE INFORMATION

BOARD OF DIRECTORS

Tan Sri Dato’ Lee Yeow Seng Dato’ Lee Yeow Chor Datuk Lee Say Tshin Lee Shin Cheng Chief Executive Officer DSAP DMSM, SDK PSM, DPMS, JP Non-Independent Independent Non-Executive Executive Chairman Non-Executive Director Director

Tan Sri Dato’ Sri Lee Yoke Har Datuk Tan Kim Leong @ Datuk Dr Koh Kin Lip Executive Director Tan Chong Min Tan Kim Heung PSM, SSAP, JP PMC, JP PMW Senior Independent Independent Non-Executive Independent Non-Executive Non-Executive Director Director Director

40 ANNUAL REPORT 2017

CORPORATE INFORMATION

AUDIT COMMITTEE GOVERNANCE, NOMINATING REGISTERED OFFICE AND THE ADMINISTRATION AND Datuk Tan Kim Leong @ AND REMUNERATION PRINCIPAL PLACE OF POLLING AGENT Tan Chong Min* COMMITTEE BUSINESS Boardroom Corporate Services PMC, JP Tan Sri Dato’ Sri Two IOI Square (KL) Sdn Bhd Chairman Koh Kin Lip* IOI Resort Lot 6.05, Level 6, KPMG Tower PSM, SSAP, JP 62502 Putrajaya 8 First Avenue, Bandar Utama Datuk Lee Say Tshin* Chairman Tel +60 3 8947 8888 47800 Petaling Jaya DMSM, SDK Fax +60 3 8947 8909 Selangor Darul Ehsan Datuk Tan Kim Leong @ Tel +60 3 7720 1188 Datuk Dr Tan Kim Heung* Tan Chong Min* AUDITORS PMW Fax +60 3 7720 1111 PMC, JP PricewaterhouseCoopers LEGAL FORM AND DOMICILE RISK MANAGEMENT Datuk Dr Tan Kim Heung* Chartered Accountants COMMITTEE PMW Level 10, 1 Sentral Public Limited Liability Company Datuk Lee Say Tshin* Jalan Rakyat Incorporated and Domiciled in DMSM, SDK EMPLOYEES’ SHARE OPTION Kuala Lumpur Sentral Malaysia SCHEME COMMITTEE P O Box 10192 Chairman STOCK EXCHANGE LISTING Tan Sri Dato’ 50706 Kuala Lumpur Tan Sri Dato’ Sri Lee Shin Cheng Tel +60 3 2173 1188 Main Market of Bursa Malaysia Koh Kin Lip* PSM, DPMS, JP Fax +60 3 2173 1288 Securities Berhad PSM, SSAP, JP Chairman REGISTRAR STOCK CODE Datuk Dr Tan Kim Heung* Lee Yeow Seng Tricor Investor & Issuing House 5249 PMW Services Sdn Bhd Dato’ Lee Yeow Chor Unit 32-01, Level 32, Tower A DSAP Vertical Business Suite Avenue 3, Bangsar South COMPANY SECRETARY No. 8, Jalan Kerinchi Tan Sin Yee 59200 Kuala Lumpur (MAICSA 7060514) Tel +60 3 2783 9299 WEBSITES * Independent Non-Executive Fax +60 3 2783 9222 www.ioiproperties.com.my Directors www.myioi.com

41 IOI PROPERTIES GROUP BERHAD (1035807-A) REGIONAL PRESENCE

3

1

2

1 2 3

MALAYSIA SINGAPORE THE PEOPLE’S REPUBLIC OF • Penang • Cape Royale, Sentosa Cove CHINA • Selangor • Cityscape @ Farrer Park

• Negeri Sembilan • Seascape, Sentosa Cove • IOI Park Bay @ Xiamen • Malacca • South Beach • IOI Palm City @ Xiamen • Johor • The Trilinq • The Trilinq @ Xiamen

42 ANNUAL REPORT 2017 LOCATION OF OPERATIONS IN MALAYSIA

Main Airport North-South Expressway East Coast Expressway

PENANG 1 / Desaria, Sungai Ara SELANGOR 2 / Bandar Puchong Jaya & Bandar Puteri Puchong 3 / 16 Sierra, Puchong South 4 / IOI Resort City, Putrajaya 5 / Bandar Puteri Bangi 6 / Warisan Puteri Sepang 1 NEGERI SEMBILAN PENANG 7 / Bandar IOI, Bahau Penang International MALACCA Airport 8 / Ayer Keroh JOHOR 9 / Bandar IOI Segamat 10 / Taman Lagenda Putra 11 / Bandar Putra Kulai 12 / Taman Kempas Utama 13 / The Platino

2 3 SELANGOR 4 5 6 7

NEGERI KLIA SEMBILAN 8 9 JOHOR MALACCA 10 11 12 Senai International Airport 13

43 IOI PROPERTIES GROUP BERHAD (1035807-A) CORPORATE CALENDAR

08 AUGUST 2016

IOI (Xiamen) Properties Co Ltd signed an agreement with Mango International Studio as the latter will be opening it’s first flagship store in Xiamen IOI Mall and will be taking up a lease area approximately 5,176m2, with 10 theatre halls which includes a double screen theatre, IMAX huge screen hall and DMAX huge screen hall.

11 AUGUST 2016

IOIPG won the Best Mid-Range Condo Development (Central Malaysia) for Sky Condominium at the South East Asia Property Awards (Malaysia) 2016.

18 AUGUST 2016

Le Méridien Putrajaya, a five-star hotel owned byIOIPG officially opened its doors for business.

44 ANNUAL REPORT 2017

CORPORATE CALENDAR

25 AUGUST 2016

Tesco opened its door at the fast-developing township of Bandar Puteri Bangi. This popular hypermarket definitely adds another dimension of convenience to the township.

26 AUGUST 2016

IOI (Xiamen) Properties Co Ltd an indirect 99.9% owned subsidiary of IOIPG successfully tendered for a parcel of land in Xiamen, PRC, through a competitive bidding for approximately RM1.4bil.

18 SEPTEMBER 2016

IOIPG launched Avista, a 2 storey terrace home which is part of a well-planned 206 acre freehold land at Warisan Puteri Sepang.

45 IOI PROPERTIES GROUP BERHAD (1035807-A)

CORPORATE CALENDAR

02 OCTOBER 2016

The launch of the final blocks of Conezion Residence service apartments received overwhelming response.

20 OCTOBER 2016

IOIPG announced its RM20 million plans in the upgrading and expansion of Bandar Puteri Puchong Interchange.

11 NOVEMBER 2016

IOIPG won its bid for a prime Central Business District land located within Marina Bay in Singapore via Wealthy Link Pte Ltd, a wholly owned subsidiary of the Group.

46 ANNUAL REPORT 2017

CORPORATE CALENDAR

17 NOVEMBER 2016

Multi-award winning IOI City Mall, which houses the world’s first indoor apocalypse-themed action park, District 21; and Malaysia’s first Olympic sized ice-skating rink, Icescape; added another feather on its cap by clinching the prestigious FIABCI Malaysia Property Awards 2016 - Retail Category.

25 JANUARY 2017

Pine Properties Sdn Bhd (“PPSB”), a 99.9% owned subsidiary of IOIPG signed a shareholders’ agreement with MJR Investment Pte Ltd, a wholly owned subsidiary of Mitsubishi Estate Co., Ltd.

47 IOI PROPERTIES GROUP BERHAD (1035807-A)

CORPORATE CALENDAR

13 MARCH 2017

Group Executive Chairman Tan Sri Dato’ Lee Shin Cheng and Mr Lee Yeow Seng, CEO of IOIPG officially handed over a 7,000 sq ft multi-purpose hall at Bandar Puteri Puchong to Subang Jaya Municipal Council (“MPSJ”).

21 MARCH 2017

IOIPG bagged three awards in the annual StarProperty.my Awards 2017 namely “The All-Star Top Ranked Developers of the Year”; “The Starter Home Award (Best Affordable Home): Honours” for Palmyra Residence, Bandar Puteri Bangi; and “The Family-Friendly Award (The Best Family-Centric Development): Merit” for Seri Puteri Hills, Bandar Puteri Puchong.

48 ANNUAL REPORT 2017

CORPORATE CALENDAR

24 MARCH 2017

JW Marriott Hotel Singapore South Beach had a Grand Opening Party with over 800 invited guests turning up to mark the occasion.

29 MARCH 2017

PPSB, 99.9% owned subsidiary of IOIPG, announced its collaboration with Mitsubishi Jisho Residence Investment Pte Ltd, a wholly-owned subsidiary of Mistsubishi Estate Co Ltd to jointly develop The Gems at IOI Resort City.

31 MARCH 2017

PGGC was voted Malaysia’s top three ‘BEST GREENS’ in ParGolf People’s Choice Award for the second consecutive year.

49 IOI PROPERTIES GROUP BERHAD (1035807-A)

CORPORATE CALENDAR

15 APRIL 2017

IOIPG launched Celeste, double-storey terrace houses at Bandar Putra Kulai, Johor.

26 APRIL 2017

PGGC was awarded its first Superbrands award.

27 APRIL 2017

PGGC organised its 5th Anniversary Cup which attracted the participation of 109 golfers.

50 ANNUAL REPORT 2017

CORPORATE CALENDAR

12 MAY 2017

IOIPG was named BCI Asia Top Ten Developer for the seventh consecutive year.

12 JUNE 2017

IOIPG and Hongkong Land Pte Limited officially marked their collaboration to jointly develop and manage a prime Central Business District land located within Marina Bay in Singapore.

14 JUNE 2017

Max Fashion; one of the largest retail conglomerates with headquarters in Dubai and one of the largest value fashion brands across the Middle East and India; opened its first Southeast Asia store in IOI City Mall.

51 IOI PROPERTIES GROUP BERHAD (1035807-A)

CORPORATE CALENDAR

19 JUNE 2017

An opening ceremony of the new Mahsan-Rompin Bypass and upgraded Jalan Bandar IOI-Mahsan by IOIPG was officiated by YAB Menteri Besar of Negeri Sembilan, Datuk Seri Utama Haji Mohamad bin Haji Hasan and Group Executive Chairman, Tan Sri Dato’ Lee Shin Cheng.

01 JULY 2017

IOIPG appoints Lee Yoke Har to the Board as Executive Director.

03 AUGUST 2017

A graduation ceremony for Auxiliary Police of IOIPG was graced by Deputy OCPD IPD Sepang Supt Baharudin bin Haji Mat Taib.

52 ANNUAL REPORT 2017

CORPORATE CALENDAR

17 AUGUST 2017

IOIPG received the Highly Commended Awarded at the PropertyGuru Asia Property Awards (Malaysia) 2017 for Sierra 6 located within its 16 Sierra township development.

18 AUGUST 2017

Le Méridien Putrajaya celebrated its first anniversary with business associates.

53 IOI PROPERTIES GROUP BERHAD (1035807-A) OUR SOCIAL RESPONSIBILITY CALENDAR

16 JULY 2016

30 Kelab Keluarga IOI JULY donated essential 2016 items to Pertubuhan Kebajikan Cahaya Permata Hati in Semenyih.

Putrajaya Marriott Hotel and Palm Garden Hotel collaborated with Kumpulan Media Karangkraf and Gana Creations to celebrate Hari Raya with three charitable organisations.

13 AUGUST 2016

The IOI Putra Charity Run 2016 held at IOI Mall Kulai attracted more than 3,900 participants and a total of RM66,000 funds generated from the run was channelled to Kiwanis Down Syndrome and Amitabha Centre Kulai.

54 ANNUAL REPORT 2017

OUR SOCIAL RESPONSIBILITY CALENDAR

08 SEPTEMBER 2016

IOIPG participated in Bursa Bull Charge 2016 to support Bursa Malaysia’s aim in fostering a sustainable and inclusive marketplace.

21 SEPTEMBER 2016 26 SEPTEMBER Putrajaya Marriott Hotel 2016 supported the “Chicken Dance For Charity” event organised by The Marriott Millennials Business Council – Malaysia to help raise funds for Malaysian AIDS Foundation.

IOI Xiamen staff extended a helping hand to those affected by Typhoon Meranti hit at Xiamen.

55 IOI PROPERTIES GROUP BERHAD (1035807-A)

OUR SOCIAL RESPONSIBILITY CALENDAR

01 OCTOBER 2016

01 IOIPG supported MPSJ’s OCTOBER Rejuvenation Program to spruced up the backlane of Jalan Kenari 5 2016 in Bandar Puchong Jaya with murals decorating walls along the Bargain Basement walkway. supported a fundraising effort organised by the newly established SJKC Kheng Chee Puchong.

22 OCTOBER 2016

Yayasan TSLSC awarded RM424,000 worth of scholarships to 12 outstanding students pursuing higher education at local institutions of higher learning.

56 ANNUAL REPORT 2017

OUR SOCIAL RESPONSIBILITY CALENDAR

Putrajaya Marriott Hotel and Palm Garden 04 Hotel teamed up with Traxx FM and held a NOVEMBER charity dinner for 60 underprivileged children 2016 and ten single mothers in celebration of Deepavali.

06 NOVEMBER 2016

Bargain Basement supporting the charity bazaar organised by Living Hope.

57 IOI PROPERTIES GROUP BERHAD (1035807-A)

OUR SOCIAL RESPONSIBILITY CALENDAR

10 NOVEMBER 2016

IOIPG announced its sponsorship to teenagers from House of Joy and Rumah Shalom to participate in IOIPG Obstacle Run 2016.

More than 700 participants 04 gathered to conquer 10 DECEMBER challenging obstacles in 2016 IOIPG Obstacle Run 2016 held at Bandar Puteri Puchong. Four Points by Sheraton 13 Puchong organised its NOVEMBER second annual charity 2016 drive in partnership with UNICEF and successfully raised RM9,700.

58 ANNUAL REPORT 2017

OUR SOCIAL RESPONSIBILITY CALENDAR

06 DECEMBER 2016

Bargain Basement donated RM50,000 to five underprivileged homes.

19 DECEMBER 2016

A Christmas Charity Dinner was co-organised by Putrajaya Marriott Hotel and Palm Garden Hotel at Putrajaya Marriott Hotel’s Ballroom for 105 children from “Shelter” Home for children in Old Klang Road and Shepherd’s Home in Semenyih.

59 IOI PROPERTIES GROUP BERHAD (1035807-A)

OUR SOCIAL RESPONSIBILITY CALENDAR

12 JANUARY 2017

IOI City Mall celebrated Chinese New Year with 38 senior citizens from Persatuan Rumah Amal Murni Kajang and Persatuan Kebajikan Rumah Victory Malaysia. The senior citizens were treated to a prosperity dinner, a movie ang pows to usher the new year.

15 JANUARY 2017

A “Neighbourhood Gotong Royong” was organised by IOIPG at Taman Lagenda Putra. The event which was attended by residents, local authorities and IOIPG employees was aimed at encouraging volunteerism in doing their part to keep the neighbourhood surroundings clean and to build a sense of togetherness.

04 FEBRUARY 2017

IOI Mall Puchong invited underprivileged children from Kampung Broga Semenyih, Kampung Baru Semenyih, Kampung Cempaka and senior citizens from Kim Loo Ting Temple for a charitable event in conjunction with Chinese New Year.

60 ANNUAL REPORT 2017

OUR SOCIAL RESPONSIBILITY CALENDAR

04 FEBRUARY 2017

Putrajaya Marriott Hotel and Palm Garden Hotel held a Chinese New Year Corporate and Charity Luncheon 2017 for 150 invitees, including 60 senior citizens from Lovely Nursing Home, Petaling Jaya and Persatuan Amal Murni, Kajang as well as clients, business partners and associates of the hotels.

07 FEBRUARY 2017

Yayasan TSLSC collaborated with Chumbaka Sdn Bhd and Agensi Inovasi Malaysia to sponsor ten schools in Puchong for the IOI-Puchong STEM Programme, an after school programme which focuses on Science, Technology, Engineering and Mathematics (STEM).

22 FEBRUARY 2017

Yayasan TSLSC awarded RM230,600 to 341 needy students from 23 primary and 7 secondary schools via its Student Adoption Programme (SAP) 2017.

61 IOI PROPERTIES GROUP BERHAD (1035807-A)

OUR SOCIAL RESPONSIBILITY CALENDAR

IOI City Mall organised the 19 “IOI City Mall Run 2017” MARCH which attracted over 1,000 2017 participants including 100 disabled participants.

25 MARCH 2017

RM33,900 cash was awarded to 68 27 deserving students via the Young MAY Achievers Awards 2017 by Yayasan 2017 TSLSC.

In support of the worldwide movement earth hour, activities were organised throughout IOIPG business segments to encourage responsible use of Earth’s non- renewable resource for a sustainable future.

62 ANNUAL REPORT 2017

OUR SOCIAL RESPONSIBILITY CALENDAR

30 MAY 2017

Putrajaya Marriott Hotel and Palm Garden Hotel teamed up with Muzik-Muzik Raya 2017 to spice up the Majlis Meriakan Anak-Anak Yatim & Asnaf for 100 underprivileged children.

07 JUNE 2017

Teenagers from House of Joy visited Le Méridien Putrajaya and tried their hands at making signature Le Méridien eclairs. The familiarisation trip was part of the Group’s sustainability efforts in preparing the young for the future under the Young Urbanites - Discovery programme.

09 JUNE 2017

A field trip was conducted at Four Points by Sheraton Puchong for the teenagers from House of Joy and they had fun learning about housekeeping and pastry decoration. It was a sustainability initiative under the Young Urbanites - Discovery programme.

63 IOI PROPERTIES GROUP BERHAD (1035807-A)

OUR SOCIAL RESPONSIBILITY CALENDAR

19 IOI City Mall JUNE feted children 2017 from Muhammad Al-Fateh Home to a complimentary movie at Golden Screen Cinema and a Hari Raya shopping spree at LOL.

22 JULY 2017

IOIPG supported the 25 The Edge KL Rat Race IOIPG was one JULY 2017 which was in of the Platinum 2017 support of The Edge sponsor at the Education Foundation. “Frost The Trail My Mercy Run 2017”.

14 SEPTEMBER 2017

IOIPG sent two teams to The Bursa Bull Charge 2017 in support of Bursa Malaysia’s charity fundraising event.

64