GALLANT VENTURE LTD. GALLANT VENTURE LTD. COMMITTED TO GROWTH ANNUAL REPORT 2017 ANNUAL REPORT 2017 ANNUAL REPORT GALLANT VENTURE LTD. 3 HarbourFront Place #16-01 HarbourFront Tower Two Singapore 099254 Tel: (65) 6389 3535 Fax: (65) 6396 7758 www.gallantventure.com TABLE OF CONTENTS 01 OUR PROFILE 02 OUR CORE BUSINESSES • AUTOMOTIVE • PROPERTY DEVELOPMENT • INDUSTRIAL PARKS • UTILITIES • RESORT OPERATIONS 07 LETTER TO SHAREHOLDERS 09 BUSINESS REVIEW 13 FINANCIAL REVIEW 15 FINANCIAL HIGHLIGHTS 16 GROUP STRUCTURE 20 BOARD OF DIRECTORS 23 KEY EXECUTIVES 24 CORPORATE INFORMATION 25 FINANCIAL CONTENTS GALLANT VENTURE LTD Annual Report 2017 01 OUR PROFILE Gallant Venture Ltd is an Indonesia focused investment holding company headquartered in Singapore. We are an integrated automotive group with coverage across Indonesia and a master planner for industrial parks and resorts in Batam and Bintan. With vision and perseverance, we have successfully plots in Bintan. Progressive completion of the Lagoi developed Batam and Bintan into an investment and Bay project will bring our Bintan Resorts to new tourist destination offering integrated businesses and heights and significantly enhance the business services such as industrial parks, utilities, property prospects on the island. development and resort operations. Our businesses are well-positioned to leverage on the strategic With our acquired automotive arm – PT Indomobil alliance between the Singapore and Indonesia Sukses Internasional Tbk (“IMAS”), we have governments and close proximity to Singapore. deepened our roots into Indonesia and diversified our portfolio from a single location-focused business Continuously expanding our product offering, Lagoi to a country-focused investment holding company. Bay Development is our latest integrated project with resorts/hotels, commercial activities and residential GALLANT VENTURE LTD 02 Annual Report 2017 AUTOMOTIVE Gallant Venture’s Automotive IMAS is an Indonesia based integrated automotive business includes distribution of business with businesses in vehicle agencies, vehicle sales distribution, after-sales services, passenger vehicles, commercial financing, spare parts distributions, automotive vehicle, heavy duty equipment, parts/components manufacturing and other related vehicle and equipment financing, supporting services. supply of spare parts, vehicle IMAS manages well-known international brands servicing and vehicle rental and such as Nissan, Audi, Suzuki, Volkswagen and logistics services. Renault for passenger vehicle, Hino, Volvo and Renault Trucks for commercial vehicles, Volvo, Kalmar and Manitou for heavy duty equipment and has well-distributed sales and after-sales branch network to capture higher sales penetration across Indonesia. GALLANT VENTURE LTD Annual Report 2017 03 PROPERTY DEVELOPMENT Gallant Venture is the master Located in Northern Bintan, Lagoi Bay Development planner and infrastructure is our latest integrated resort project covering approximately 1,300 hectares of land. It will be provider in our properties situated home to resorts, residential sites, shopping malls, in Batam and Bintan. We master restaurants, entertainment and sea-sport facilities. planned land parcels for industrial, Some of the investors in Lagoi Bay include the commercial, residential and world’s leading resorts and hotels marques such resort projects and the Group’s as The Sanchaya, Four Point by Sheraton, Ibis style & Novotel by Accor Asia Pacific, Dialoog Hotels by land inventory in Bintan is Malka, Haven and Alila Resort. approximately 18,000 hectares. Over the next few years, it will add over 150 new businesses, approximately 10 new hotel properties, condominiums and housing compounds, contributing more than 5,000 room keys to Bintan Resorts’ current 1,900 key count. GALLANT VENTURE LTD 04 Annual Report 2017 INDUSTRIAL PARKS Gallant Venture owns and These parks encompass net lettable area of manages Batamindo Industrial 550,000sqm in Batamindo Industrial Park and 100,000sqm in Bintan Industrial Estate. Our Park in Batam and the Bintan industrial parks are designed with flexible layouts Industrial Estate in Bintan. and ease of set-up. Separate areas are broadly We offer the convenience designed for offices, productions, as well as of one-stop manufacturing loading and unloading of goods. To meet the environment with ready access needs of investors and tenants, whom may require specifications unique to their operations in the to Singapore’s financial, factories, the factories may be customised so to infrastructure and logistics achieve operational efficiency and effectiveness. network. Our activities include the development of the industrial Our Batamindo Industrial Park is parks, sales and lease of the first industrial park in the Asia-Pacific to be certified ISO 9001:2000 and ISO 14001, hallmarks prepared industrial land as well of manufacturing site that is efficient, cost effective as the provision of ready-built and environmentally friendly. factories and dormitory. GALLANT VENTURE LTD Annual Report 2017 05 UTILITIES Gallant Venture, a private utilities provider in Batam and Bintan, provides electricity, telecommunications, water and waste management services to its Industrial Parks’ and Resorts’ customers. 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. Our facilities include 18 dual-fired generators In order to cope with any potential increase in at Batamindo Industrial Park, 3 generators at electricity consumption and provide steady power Bintan Industrial Estate, and 4 generators at supply to its customers, we cater approximately Bintan Resorts. The installed capacities of the 30% of our installed capacity as standby reserve. Group’s generators are 125MW, 10MW, and In addition, we maintain a strategic fuel reserve 24MW respectively. so to ensure continuous and uninterrupted power generation even in the event of disruption in fuel supply. GALLANT VENTURE LTD 06 Annual Report 2017 RESORT OPERATIONS Gallant Venture provides overall Bintan Resorts continue to be a popular tropical support facilities and services to resort destination with both Singapore residents and International travellers, famed for its pristine resorts located in within Bintan beaches and gorgeous scenery. With the opening Resorts. We undertake the overall of new hotels, shopping malls and new attraction planning, development, operations in Lagoi Bay, we have witnessed strong growth in and marketing of Bintan Resorts tourist arrivals especially the China Market to Bintan and provide services to the hotels Resorts. With the new Bintan International Airport coming online, it will further enhance connections and resorts located within Bintan to overseas countries and drive tourism growth in Resorts that include ferry services Bintan Resorts. 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 operation of a 24-hour crisis centre. GALLANT VENTURE LTD Annual Report 2017 07 LETTER TO SHAREHOLDERS DEAR FELLOW SHAREHOLDERS, Our company has continued to evolve over the last year. and with minimal deterioration of quality, resulting in an NPL All of our core businesses have improved, although the net portfolio significantly smaller than most of our competitors. results were negatively affected by losses in some of our associate companies. Nevertheless we are positive on the Another bright prospect is our logistics joint venture with the direction of our company and look forward to sharing with Japanese company Seino. In two short years it has become you our updates. a major player in the trucking business in Indonesia, and is on track to be one of the dominant logistics companies in Automotive Indonesia. In November, Indomobil also dedicated its new Our automotive business continues to be the key driver office and showroom building at Jalan MT Haryono, with just of our results, once again generating around 90% of our under 200,000 square feet spread over 20 floors, including revenues. While the overall automotive sector in Indonesia offices, training centers, and showrooms. We welcome you has done well, our recovery was slowed by delays in new to have a look at this important building on your next visit model introduction in a very dynamic mass market automotive to Jakarta. sector, as well as the weak associate company results primarily related to losses in the Nissan/Datsun assembly Utilities business. Our utilities business is relatively unchanged year on year, with slightly higher billable production. We look forward to Our business has benefited from strong Hino truck sales that further demand growth next year from both Bintan Resorts has had a good recovery on the back of domestic economic and Bintan Industrial Estate. Bintan Resorts has increasing growth, registering sales growth of around 30% vs 2016. demand from additional hotel properties opening over the Our automotive leasing and financing businesses continue next few years as well as from higher overall occupancy levels to grow and produce positive results, but perhaps more at the existing properties on the back of significantly higher importantly, the portfolio growth has been highly selective visitor arrivals. Bintan Industrial