Management Discussion and Analysis (Cont d)

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1 Review of Financial Results (Cont d) Statements of profit or loss and other comprehensive income (Cont d) Cost and expenses Cost and expenses 30 June 2017 (RM 000) 30 June 2016 (RM 000) Cost of sales 155, ,390 Selling and distribution expenses 4,851 3,746 Administrative expenses 18,142 14,379 Other expenses 6,840 2,917 Total 184, ,432 Cost of sales The 5% increase in cost of sales was in tandem with the 6% increase in revenue with major contribution from property development activities. Selling and distribution expenses Additional expenses for marketing and promotional activities spent in preparation for projects for the next calendar year has contributed to the higher selling and distribution expenses. Administrative expenses Increase in administrative expenses by 26% was mainly due to increase in staff costs. In line with the Group direction for further expansion, additional senior management personnel with relevant expertise has been recruited, alongside with additional headcount. Other expenses The increase in other expenses was due to the Group s commitment for quality assurance and maintenance. Statements of financial position The Group maintained a strong balance sheet as at 30 June 2017, with the explanation for the following fluctuations : Shareholders equity Shareholders equity increased from RM314.1 million to RM341.2 million mainly on increase in net profit attributable to shareholders. Property, plant and equipment Property, plant and equipment increased from RM70.8 million to RM71.8 million due to addition of assets for the newly opened budget hotel in Jitra, Kedah. Property development costs Property development costs ( PDC ) decreased to RM112.4 million from RM129.3 million following reclassification to cost of sales. Annual Report

2 Review of Financial Results (Cont d) Statements of financial position (Cont d) Inventories The inventories have increased due to reclassification from PDC upon completion of construction towards end of FY2017. Subsequently, about 20% of these inventories were sold off. Trade and other receivables Trade and other receivables increased from RM102.6 million to RM141.9 million mainly due to increase in accrued billings for projects and deposits paid for proposed land acquisitions. Trade and other payables Trade and other payables increased from RM47.8 million to RM59.3 million due to PDC incurred towards the last quarter of FY2017. Loan and borrowings Loan and borrowings decreased from RM83.3 million to RM80.3 million due to repayment of term loans during FY2017. Cash and bank balances Cash and bank balances decreased from RM20.7 million to RM16.0 million due to deposits paid for proposed land acquisitions. Dividend OIB s Board of Directors had, on 7 August 2017 declared an interim single-tier dividend of 7 sen per ordinary share, totalling RM10.1 million in respect of FY2017 with payment made on 30 August Capital expenditure plan As part of business strategy to replenish and expand land bank, a wholly-owned subsidiary, OIB Properties (K) Sdn Bhd had on 23 May 2017, entered into four (4) separate conditional Sale and Purchase Agreements ( SPA ) for the proposed acquisitions of the following :- (a) (b) (c) (d) A parcel of leasehold land measuring approximately acres located in Mukim Ijok, District of Kuala Selangor, State of Selangor; 406 sub-divided freehold lands measuring in aggregate approximately acres located in Bandar Amanjaya, District of Kuala Muda, State of Kedah; Part of six (6) parcels of freehold lands measuring in aggregate approximately acres located in Mukim Sungai Petani and Bandar Amanjaya, all in District of Kuala Muda, State of Kedah; and 11 parcels of adjoining freehold lands measuring in aggregate approximately 5.03 acres located in Mukim 12, District of Barat Daya, State of Pulau Pinang. The Group anticipates achieving a Gross Development Value ( GDV ) of approximately RM1.0 billion from these lands based on current development projections incorporating a mix of apartments, two storey terrace houses and bungalows. The purchase of the lands is subject to fulfillment of the conditions as stipulated in the SPA including obtaining the approval from the shareholders at an extraordinary general meeting. 14 Oriental Interest Berhad ( M)

3 Review of Operations As at 30 June 2017, the Group s on-going projects were as follow : Project Types of Development Number of Units Estimated GDV (RM million) Central Projects Seroja Hills Condominium Residensi 14 2 & 3-storey bungalow Taman Belia Antarabangsa 2-storey bungalow Taman Seri Bestari 2-storey terrace Dahlia Impiana (Selangorku) Affordable apartment Apartment Bestari (Selangorku) Affordable apartment Northern Projects Taman Serai Wangi (PPA1M) 1-storey terrace 2-storey terrace Taman Sinar Intan 2-storey semi-detached Taman Sinar Intan (PPA1M) 2-storey terrace Taman Camar 2-storey terrace Taman Permaipura (PPA1M) 1-storey terrace 2-storey terrace Total 1, Central Projects Seroja Hills The project, which houses 256 condominium units split between two tower blocks, is the tallest residence in Bandar Baru Salak Tinggi, Sepang. The development features state of the art facilities inclusive of a swimming pool, gym, futsal court, multipurpose hall and library. Artist Impression of Seroja Hills Condominium Annual Report

4 Central Projects (Cont d) Residensi 14 Residensi 14 features bungalows with a splendid and luxurious design in an inspiring community nestled amongst nature that is just a stone s throw away from Bandar Baru Bangi. Artist Impression of Residensi 14 Bungalow Taman Belia Antarabangsa Taman Belia Antarabangsa gives buyers the chance to live amongst nature right by a forest reserve in Melaka without sacrificing accessibility to modern amenities and a vibrant township nearby. The development features beautifully landscaped areas surrounding a lake at the heart of a large multi-phase mixed development. Artist Impression of Taman Belia Antarabangsa Bungalow Taman Seri Bestari This project is located in Bandar Baru Salak Tinggi, Sepang and offers spacious living in a guarded community with a variety of recreational spaces including a fruit orchard and landscaped garden. Artist Impression of Taman Seri Bestari Double Storey Terrace 16 Oriental Interest Berhad ( M)

5 Central Projects (Cont d) Dahlia Impiana Dahlia Impiana is an affordable apartment located in Taman Dahlia, Bandar Baru Salak Tinggi, Sepang. Great for first home buyers, with 3 bedrooms and 2 bathrooms. The project is surrounded by greenery and a growing community environment. Artist Impression of Dahlia Impiana Apartment Bestari Apartment Bestari is an affordable Selangorku homes project, is located in Desa Bestari, Sepang. The project features minimalist living with 3 bedrooms and 2 bathrooms. The development is surrounded by greenery and a budding community-like environment. Artist Impression of Apartment Bestari Annual Report

6 Northern Projects Taman Serai Wangi An integrated township that strives for modern living in Padang Serai, Kedah consisting of commercial and residential components. Strategically located at the border of Penang and is accessible through Butterworth-Kulim Expressway and North-South Highway Bertam Toll Gate. The PPA1M project offers a mix of single storey terrace and double storey terrace to civil servants. Artist Impression of Taman Serai Wangi Double Storey Terrace (PPA1M) Artist Impression of Taman Serai Wangi Single Storey Terrace (PPA1M) Taman Sinar Intan Strategically located along the Western Bypass and accessible through Sungai Petani South Interchange of the North-South Highway and also the Sungai Petani town. The residential development features double storey semi-detached and PPA1M double storey terrace with unique contemporary designs. Artist Impression of Taman Sinar Intan Double Storey Terrace (PPA1M) Artist Impression of Taman Sinar Intan Double Storey Semi-Detached 18 Oriental Interest Berhad ( M)