PUTRAJAYA: IOI Properties Group Bhd has decided to turn down a proposed gratuity payment of RM17.73 million to the late founder Tan Sri Lee Shin Cheng.
“The family has decided to decline the gratuity payment, so it was not tabled during the meeting. We feel that we don’t need it,” CEO Lee Yeow Seng told reporters on the sidelines of the company’s AGM.
According to the company’s AGM notice on Bursa Malaysia, there was a resolution to seek approval to pay a gratuity of RM17.73 million to the late Shin Cheng in recognition of his 44 years of service and contribution to IOI Properties Group.
At IOI Corp Bhd’s AGM on Oct 25, a similar resolution was carried, in which a gratuity of RM27.36 million was proposed to be paid to to Shin Cheng in recognition of his 38 years of service and contributions to IOI Corp Group.
The RM27.36 million, which is a one-off payment from IOI Corp, is computed at 1.5 months for every year of service in the group, based on his last drawn salary of RM480,000.
On a cumulative basis, that is a total payment of RM45.09 million that is proposed to be paid as gratuity.
This raised concerns from the Minority Shareholder’s Watch Group that if the gratuity was approved, it would go to Shin Cheng’s estate and the amount would accrue to the beneficiaries of his estate, who are not known.
Meanwhile, Yeow Seng said the company is targeting just over RM2 billion in sales and RM2 billion in new launches for FY2020 ending June 30.
The sales will be contributed from Malaysia and China, with a roughly even split between the two markets.
In terms of unsold properties, Yeow Seng said IOI Properties would continue to look to driving sales by appointing sales agents and coming up with incentives such as rent-to-own schemes.
“We managed to bring down the inventories as some of the stocks were sold during this period (Home Ownership Campaign). Buyers are looking to take advantage of the scheme and response is good,” he said.
Meanwhile, for the group’s investment properties, IOI City Mall will see an addition of about 1 million sq ft in net lettable area by 2021.
Looking ahead, Yeow Seng said the group would continue to focus on affordable housing, eyeing a revenue growth of over 5%, despite the potential profit margin erosion.
“Affordable housing is where the market is right now, so the profit margins will be lower but we will try to launch more products. The margin erosion from affordable housing would probably be about 2-3% compared to last year.
“We hope that the revenue increase will be able to make up for it. We are looking at more than 5% growth compared to last year, which will hopefully offset the lower profit margin,” he said.
For the financial year ended June 30, 2019, IOI Properties reported a 12.3% decline in net profit to RM661.29 million from RM753.64 million a year ago.
