GROWTH AND VALUE CREATION BUILDING ON OUR FOUNDATION GALLANT VENTURE VENTURE GALLANT LTD ANNUAL REPORT 2013 ANNUAL Gallant Venture Ltd 991A Alexandra Road #02-06/07 Singapore 119969 Tel: (65) 6389 3535 Fax: (65) 6396 7758 www.gallantventure.com 2013 ANNUAL REPORT CONTENTS 01 OUR PROFILE 02 OUR PRESENCE 04 OUR CORE BUSINESSES • AUTOMOTIVE • PROPERTY DEVELOPMENT • INDUSTRIAL PARKS • UTILITIES • RESORT OPERATIONS 14 LETTER TO SHAREHOLDERS 17 BUSINESS REVIEW 20 FINANCIAL REVIEW 22 GROUP STRUCTURE 24 FINANCIAL HIGHLIGHTS 25 BOARD OF DIRECTORS 27 KEY EXECUTIVES 28 CORPORATE INFORMATION 29 STATEMENT OF CORPORATE GOVERNANCE 41 DIRECTORS’ REPORT 43 STATEMENT BY DIRECTORS 44 INDEPENDENT AUDITOR’S REPORT 45 STATEMENTS OF FINANCIAL POSITION 46 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 47 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 48 CONSOLIDATED STATEMENT OF CASH FLOWS 50 NOTES TO THE FINANCIAL STATEMENTS Designed and produced by 142 STATISTICS OF SHAREHOLDINGS (65) 6578 6522 144 NOTICE OF ANNUAL GENERAL MEETING PROXY FORM GALLANT VENTURE LTD ANNUAL REPORT 2013 1 OUR PROFILE Gallant Venture Ltd. is an investment holding company with a focus on regional growth opportunities, headquartered in Singapore. We are a commercial development and management group in the Riau Archipelago and an integrated master planner for industrial parks and resorts in Batam and Bintan. ince our establishment in the 1990s, we have been an important innovator in four key business segments – utilities, industrial parks, resort operations and S property development. Our businesses are well-positioned to leverage on the strategic proximity of Singapore and the strategic alliance between the Singapore and Indonesia governments. Our landmark development projects include the Batamindo Industrial Park, the Bintan Industrial Estate and Bintan Resorts, with more prime developments in the pipeline slated for completion in the near future. GALLANT VENTURE LTD 2 ANNUAL REPORT 2013 SINGAPORE BATAM JAKARTA GALLANT VENTURE LTD ANNUAL REPORT 2013 3 OUR PRESENCE GALLANT VENTURE LTD. is headquartered in Singapore which aims to maximise shareholders’ value. Its strategy is to build a diversified portfolio which primarily operates in the islands of Batam and Bintan, located just across the Singapore Straits. The proximity allows us to leverage the strategic alliance between the Singapore and Indonesia governments to co-develop the region by marrying Singapore’s capital and technology resources, with Indonesia’s natural and human resources. We are proud to have contributed in growing the Riau Archipelago from a series of sparsely populated island controlled by the regional government in Pekanbaru, to Indonesia’s newest province with a new capital being developed in Bintan and a blossoming economy and a current population of over 1.8 million. In 2013, the Company has ventured into automotive sector in Indonesia region to tap into the growing demand of vehicle sales which have doubled from approximately 600,000 units to approximately 1.2 million units in 2013. Gallant Venture acquired 71.49% of PT Indomobil Sukses Internasional Tbk (“IMAS”), one of the two largest integrated automotive business groups in Indonesia. IMAS has comprehensive expertise across automotive business included holding sole agent brand, vehicles assembly and distribution of vehicle sales including heavy equipment, after-sales services, vehicle assembly, and manufacturing of automotive parts/component with further interest in financial services. BINTAN GALLANT VENTURE LTD 4 ANNUAL REPORT 2013 GALLANT VENTURE LTD ANNUAL REPORT 2013 5 AUTOMOTIVE This is Gallant Venture’s new business segment from the acquisition of PT Indomobil Sukses Internasional Tbk (“IMAS”) in May 2013. MAS is one of the two largest integrated automotive business groups in Indonesia. Its primary business line covers brand holding sole agent, vehicle sales distribution, I after sales service, vehicle ownership financing, spare part distribution under the “IndoParts” brand, vehicle assembly, automotive parts/component manufacturing and other related supporting services. IMAS manages well-known international brands, such as Audi, Foton, Hino, Kalmar, Manitou, Nissan, Renault, Renault Trucks, Suzuki, Volkswagen, Volvo, Volvo Trucks, and Mack Trucks and has well-distributed sales and after-sales branch network to capture higher sales penetration across Indonesia. GALLANT VENTURE LTD 6 ANNUAL REPORT 2013 GALLANT VENTURE LTD ANNUAL REPORT 2013 7 PROPERTY DEVELOPMENT Gallant Venture acts as master planner and developer for its development projects, including industrial, commercial, residential and resort projects, on the Group’s land bank in Bintan of approximately 18,000 hectares. agoi Bay development is an approximately 1,300 hectare-sized plot of land located in northern Bintan which is earmarked for an integrated resort Ldevelopment, featuring resorts, residential sites, shopping malls, restaurants, entertainment and sea-sport facilities. Some of the investors of the Lagoi Bay development include world’s leadings resorts/hotels marques such as Alila Villas, The Sanchaya, Grand Lagoi Swiss-Belhotel and Treasure Bay. On completion, it will house over 150 new businesses, 10 new hotel properties, condominiums and housing compounds, adding over 3,000 keys to Bintan Resorts’ current 1,500 key count. GALLANT VENTURE LTD 8 ANNUAL REPORT 2013 GALLANT VENTURE LTD ANNUAL REPORT 2013 9 INDUSTRIAL PARKS Gallant Venture owns and manages the Batamindo Industrial Park in Batam and the Bintan Industrial Estate in Bintan. We offer the convenience of a one- stop manufacturing environment with ready access to Singapore’s infrastructure and logistics network. Our activities include the development of the industrial parks, sales or lease of land in the park as well as the provision of ready-built factories. hese parks encompass net lettable area of 540,000m2 in Batamindo Industrial Park and 100,000m2 in Bintan Industrial Estate. Our industrial parks are designed Twith flexible layouts and ease of set-up. Separate areas are broadly designed for offices, productions, as well as loading and unloading of goods. To meet the needs of investors and tenants who may require specifications unique to their operations in the factories, the factories may be customised by the amalgamation of existing factories, taking into consideration space and loading requirements. Our Batamindo Industrial Park is the first industrial park in the Asia-Pacific to be certified ISO 9001:2000 and ISO 14001, hallmarks of manufacturing site that is efficient, cost- effective and environmentally friendly. GALLANT VENTURE LTD 10 ANNUAL REPORT 2013 GALLANT VENTURE LTD ANNUAL REPORT 2013 11 UTILITIES Gallant Venture, a private provider of utilities in Batam and Bintan, provides electricity, telecommunications, water and waste management services to its industrial parks, Batamindo Industrial Park and Bintan Industrial Estate; and Bintan Resorts. The Group has invested approximately S$435 million in the construction and development of utilities infrastructure and resources including power generation and distribution facilities, portable water treatment facilities, sewage treatment plants and waste water treatment facilities and landfills. ur facilities include 19 dual-fuel fired generators at Batamindo Industrial Park, 6 generators at Bintan Industrial Estate, and 4 generators at Bintan O Resorts. The installed capacities of the Group’s generators are 130MW, 20MW and 24 MW respectively. In order to cope with any potential increase in electricity consumption and provide steady power supply to its customers, our standby capacity is able to generate up to 30% of installed capacity. In addition, we maintain a strategic reserve of fuel sufficient for 15 to 60 days of normal production. GALLANT VENTURE LTD 12 ANNUAL REPORT 2013 GALLANT VENTURE LTD ANNUAL REPORT 2013 13 RESORT OPERATIONS Gallant Venture provides overall support facilities and services to resorts located in Bintan Resorts. We have been managing and operating the 3,000 hectare Bintan Resorts for more than a decade. We undertake the overall planning, development, operations and marketing of Bintan Resorts and provide services to the hotels and resorts located within Bintan Resorts that include ferry services and ferry terminal operations, tour operations, property rental, workers’ accommodation, medical support and estate and township maintenance such as road maintenance and drainage as well as operate a 24-hour crisis center. intan Resorts continue to be a popular tropical resort destination with both Asia and International travelers, famed for its pristine beaches and gorgeous scenery. With the opening of new hotels and shopping malls in Lagoi Bay in Bnd 2 half of 2014, we expect an increase in tourist arrivals to Bintan Resorts. GALLANT VENTURE LTD 14 ANNUAL REPORT 2013 LETTER TO SHAREHOLDERS DEAR FELLOW SHAREHOLDERS, 2013 has been a transformational year for our company. Following your approval of the purchase of PT Indomobil Sukses Internasional Tbk (“IMAS”) at our EGM last year, and our subsequent successful 1-for-1 rights issue (which raised over S$675 million), we completed the acquisition of the controlling 52.35% stake in IMAS in May 2013. Under the rules of the Indonesian Stock Exchange, we were then required to make a takeover offer to purchase the remaining outstanding shares of IMAS. At the close of the Mandatory Takeover Offer in July 2013, we have increased our stake in IMAS to 71.49%. With this acquisition, IMAS became a substantial