KECK SENG (MALAYSIA) BERHAD 196801000565 (8157-D) 2020 A N N U A L R E P O R T KECK SENG (MALAYSIA) BERHAD 196801000565 (8157-D) A N N U A L R E P O R T (Incorporated in Malaysia) 2020 C O N T E N T S Page About Keck Seng Malaysia 2 Group Overview 3 Financial Highlights 4 Chairman's Statement 5 Management Discussion And Analysis 6 - 7 Corporate Information 8 Directors' Profile 9 - 18 Key Senior Management’s Profile 19 - 26 Corporate Governance Overview Statement 27 - 48 Audit Committee Report 49 - 54 Statement On Risk Management And Internal Control 55 - 57 Sustainability Statement 58 - 70 Directors' Report 71 - 75 Statement By Directors 76 Statutory Declaration 76 Independent Auditors' Report 77 - 82 Statements Of Comprehensive Income 83 - 84 Statements Of Financial Position 85 - 86 Consolidated Statement Of Changes In Equity 87 - 88 Company Statement Of Changes In Equity 89 Statements Of Cash Flows 90 - 91 Notes To The Financial Statements 92 - 165 Analysis Of Shareholdings 166 - 168 Particulars Of Group Properties 169 - 170 Notice Of Annual General Meeting 171 - 177 Proxy Form Enclosed 1 KECK SENG (MALAYSIA) BERHAD 196801000565 (8157-D) A N N U A L R E P O R T (Incorporated in Malaysia) 2020 ABOUT KECK SENG MALAYSIA Keck Seng (Malaysia) Berhad (“Keck Seng Malaysia”) traces its history back to 1943 when Mr Ho Yeow Koon co-founded a small trading business in Singapore which he subsequently expanded to Malaysia. He bought land in Masai, Johor, and ventured into rubber planting in 1959, followed by oil palm cultivation in 1965. The plantation was the beginning of Keck Seng Malaysia, which was publicly listed on 26 May 1977. Over the years, we have grown to a diversified group with business operations extending from plantations to hotels, golf resort, property development and investment. Our Vision • To build a diversified corporation • To provide sustainable long term growth and value to shareholders Our Values We value our people as our strength, and will retain and develop our human capital through our core values of: • integrity • commitment • diligence • cost efficiency • innovation Our Community We believe in contributing to and growing together with our communities, and will continue to engage in socially beneficial activities. 2 KECK SENG (MALAYSIA) BERHAD 196801000565 (8157-D) A N N U A L R E P O R T (Incorporated in Malaysia) 2020 GROUP OVERVIEW Keck Seng Malaysia has three core businesses: Plantations and Manufacturing We are an integrated player with oil palm plantations, mill, refinery and manufacturing operations based in Johor, Malaysia. Property Development and Investment We are a property developer focusing in Johor, Malaysia. Our projects include: Projects Location Bandar Baru Kangkar Pulai 27 km Pontian Road immediately after Kangkar Pulai Village. Tanjong Puteri Resort 35 km south-east of Johor Bahru. Adjacent to Pasir Gudang Industrial Estate. Taman Daya 13 km north-east of Johor Bahru (near Kampong Baru, Kangkar Tebrau). We are also involved in property investment. Our key investments include: Buildings Location Description Menara Keck Seng 203, Jalan Bukit Bintang, 55100 Kuala Lumpur. Office Regency Tower 8, Jalan Ceylon, 50200 Kuala Lumpur. Condominium Hotels and Resort We own hotels in North America and operate a golf resort in Malaysia. Hotels/Resort Location Description DoubleTree by Hilton Alana - 1956, Ala Moana, Boulevard, Honolulu, 18 storey hotel with 317 rooms Waikiki Beach Hawaii, 96815, USA. and an adjoining 7 storey office building SpringHill Suites 25, West 37th Street, New York, 19 storey hotel with 173 rooms New York NY, 10018, USA. Midtown Manhattan Delta Hotels by Marriott Toronto 655, Dixon Road, Toronto, Ontario Canada, 12 storey hotel with 433 rooms Airport and Conference Centre M9W 113. Tanjong Puteri Golf Resort 35 km south-east of Johor Bahru. 54 holes golf course, clubs Adjacent to Pasir Gudang and other recreational facilities Industrial Estate. 3 KECK SENG (MALAYSIA) BERHAD 196801000565 (8157-D) A N N U A L R E P O R T (Incorporated in Malaysia) 2020 FINANCIAL HIGHLIGHTS (RM’000) 2016 2017 2018 2019 2020 Revenue by business segments (Restated) (Restated) Plantations and Manufacturing 687,862 831,579 590,854 525,883 627,665 Property 116,622 108,417 115,065 184,184 176,152 Hotels and Resort 237,219 239,708 250,152 256,375 63,870 Dividend income 7,524 9,553 11,206 12,164 6,776 Total revenue 1,049,227 1,189,257 967,277 978,606 874,463 Profit/Loss) before tax 154,955 31,008 69,521 101,766 (85,230) Profit/(Loss) net of tax 128,101 23,042 39,169 91,641 (71,974) Profit/(Loss) net of tax attributable to owners of the parent 124,291 22,876 36,472 88,317 (64,561) Earnings/(Loss) per share (sen) 35 6 10 25 (18) Dividend per share (sen) 10 10 10 4 0 Equity attributable to owners of the parent 2,213,702 2,380,960 2,244,108 2,244,760 2,154,137 Total assets 2,860,983 2,920,093 2,775,528 2,795,928 2,655,231 Loans and borrowings 293,031 250,992 232,090 235,563 229,857 Share Price (RM) 2016 2017 2018 2019 2020 Highest daily close 5.67 5.18 4.92 4.98 4.69 Lowest daily close 4.69 4.55 3.92 4.07 3.41 Year-end closing 4.73 4.60 4.08 4.70 3.84 4 KECK SENG (MALAYSIA) BERHAD 196801000565 (8157-D) A N N U A L R E P O R T (Incorporated in Malaysia) 2020 CHAIRMAN’S STATEMENT Dear Shareholders, It had been more than a year since coronavirus (“COVID-19”) pandemic started. The number of COVID-19 cases worldwide had surpassed 149 million and continued to increase every day. The protracted pandemic made 2020 one of the most challenging and disruptive year for our businesses. Social and commercial activities had been significantly curtailed and triggered a deep global recession. Performance The hospitality sector had been one of the most heavily affected by the pandemic due to state-mandated closures, travel restrictions and fear of travel. The Group recorded lower revenue and a loss in 2020 due to temporary closure of our overseas hotels. Even after the hotels were allowed to reopen, travel restrictions greatly reduced the demand for hotel rooms. Outlook and Strategy This year has begun on a more positive note as vaccination programs are rolling out in various countries. Unfortunately, complications related to vaccine rollout and new variants of the virus could still threaten to undermine the ongoing economic recovery. Travel restrictions continue to be enforced in most countries and adversely affect the demand for travel and leisure activities. We expect the performance of our hotels to operate under stressful conditions until we see a return to pre-pandemic level of travel bookings. At the onset of the pandemic, when many countries went into lockdown last year, many governments came out with stimulus packages to support companies and employment with tax breaks, loans and wage subsidies. These relief programs have expired, scaled down or are expiring, adding another dimension of uncertainty to the bumpy recovery. It is therefore vital to monitor these risks and uncertainties closely, and persist with our measures to safeguard the interests of our employees and business operations. We will also carry on with our efforts to control expenses and conserve cash. Dividends In view of the economic uncertainties, the Board is taking a prudent stance to strengthen the balance sheet, and thus no dividend is recommended for the financial year 2020. Acknowledgement On behalf of the Board, I wish to express my sincere appreciation to the Management and staff of our Group for their diligence, dedication and loyalty. I wish to offer my gratitude in particular to the Management and staff locally and across the globe who have done their utmost under very trying circumstances. I would also like to express my sincere appreciation to all our shareholders, business partners and stakeholders for their support. Ho Kim Swee @ Ho Kian Guan Chairman 27 April 2021 5 KECK SENG (MALAYSIA) BERHAD 196801000565 (8157-D) A N N U A L R E P O R T (Incorporated in Malaysia) 2020 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL REVIEW In 2020, the COVID-19 pandemic triggered an unprecedented global crisis when many business activities were at one point halted due to movement restrictions to contain the outbreak of COVID-19. Our overseas hotels were closed for many months and recorded a significant revenue decrease in 2020. On the other hand, the Manufacturing division did better in 2020 due to higher selling prices of refined oil. Overall, the Group’s revenue in 2020 was 11% lower than 2019. Compared to a profit in 2019, the Group recorded a loss in 2020 due to operational losses incurred by our overseas hotels and an impairment loss recognised on a hotel. The Group’s balance sheet remained prudent with loans and borrowings almost unchanged from previous year. We believed our low amount of borrowings should enable Keck Seng to ride out the economic uncertainties due to the pandemic. OPERATIONS REVIEW Plantations and Manufacturing The Plantations division saw an increase in crop production for 2020 as we achieved an improvement in output per hectare due to favourable conditions. However, 2021 production is expected to be slightly lower after the 2020 peak. We also saw rising palm oil prices in 2020, which hit RM4,000 per tonne this year. As a result of the higher product prices, financial performance was better in 2020 for the Manufacturing division.