Chairman's Statement |
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I am pleased to report that for the financial year (‘FY’) ended 31 March 2012 the Group made a record profit after tax of RM103.7 million. This was achieved on the back of our success in our recent investments in London commercial properties and from higher contribution from our associate companies. This achievement represents a continuing record of profitability for the Group for the 4th consecutive year since its transformation into a focused property, engineering and infrastructure Group.
The Group’s shareholders’ fund at 31 March 2012 amounted to RM661.2 million and this translates into a net asset value per share of RM1.15. The Group’s gearing ratio has been reduced from 32% in FY 2011 to 20% in FY 2012 and the Group’s cash and cash equivalents increased from RM28.9 million to RM152.0 million.
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The Group’s strategy to venture into the London property market has proven to be timely and rewarding. During the financial year the Group disposed the freehold office buildings located at 40/50 Eastbourne Terrace, Paddington, London which was acquired less than 2 years earlier, for a net profit of RM70.0 million, giving a return on equity in excess of 116%.
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 Baker Street
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Following its first large and successful foray into the London commercial property market, the Group continued to focus on prime central London areas by acquiring 2 properties to add to its property portfolio. The first one is a residential block which was converted from a commercial block in fashionable Baker Street and the second, an existing and tenanted 5-storey 10 units apartment block in Lexham Gardens, Kensington.
Encouraged by the recent invaluable experience and knowledge of the London property market, the Group aims to capitalise on its success by expanding its technical capability and the breadth of targeted property investment opportunities in London.
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In line with this aim, at the end of the FY 2012, the Group entered into a joint venture investment with 2 other prominent UK based companies, Native Land Limited and Grosvenor Limited to participate in the development of Pavilion D, a block of 53 upmarket and trendy suites in the multiple-award winning NEO Bankside project, located on the banks of river Thames and next to the Tate Modern museum, with an investment valuation of GBP62.5 million.
Native Land Limited is an award winning property developer that specialises in the London residential and mixed-use markets while Grosvenor Limited is a household UK property developer and investor for more than three centuries. NEO Bankside had recently won the Development of the Year in the RESI Awards 2012, Best Large Development in the Evening Standard New Homes Awards 2012 and overall winner of the London Evening Standard Awards 2012 and in the prestigious International Property Awards 2011, NEO Bankside was awarded the Best International Development - Multiple Units.
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NEO Bankside
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NEO Bankside's International Awards
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Subsequent to the financial year and in June 2012, the Group disposed its Lexham Gardens apartment block with a net gain of approximately RM6.6 million. This investment was also held for less than 2 years and provided a return on equity in excess of 33%. In addition, the Group has also started to market its Baker Street apartment units in Hong Kong, Singapore and London and has so far seen encouraging sales. The sale of these Baker Street units will contribute significantly to the Group’s future profitability.
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Continuing its focus on prime central London areas, in July 2012, the Group re-invested its profits and capital via a joint venture with HPL (Mayfair) Pte. Ltd., a wholly owned subsidiary of Hotel Properties Limited which is listed on the Singapore Stock Exchange and a UK company to acquire a building block in the highly prestigious and exclusive Mayfair, London area with a total expected capital outlay of GBP23.8 million. The project plan involves the redevelopment and conversion of the existing commercial building into high-end residential apartments in this famous London location.
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Old Burlington Street
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As part of the Group’s effort to reduce its non or low yield income producing assets, the Group disposed its land in Sepang, Selangor for a cash consideration of RM122.3 million. Part of the proceeds was utilised for the acquisition of retail and office lots, business suites and car park bays within a mixed commercial development known as Amcorp Trade Centre (‘ATC’) located in Petaling Jaya, Selangor with a net lettable area of more than 177,000 sq ft for RM84.9 million. The balance was utilised to reduce borrowings to further improve the Group’s debt ratio. ATC generates a sustainable net rental yield in excess of 7% per annum and steps are in place to further enhance this current rental yield.
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Kenanga Woods
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Apart from the active involvement in London, the Group also launched its Pearl Avenue housing project in Sibujaya, Sarawak with a gross development value (‘GDV’) of RM50.3 million comprising 170 units of 1½-storey and doublestorey terrace houses. The Group’s current and fully sold Seri Mutiara housing project in Salak South, Selangor with a GDV of RM48.4 million is expected to be completed in the 4th quarter of FY 2013 and the on-going and all-bungalow housing project at Kayangan Heights, Shah Alam, is also progressing well with the completion of 27 units Kenanga Woods bungalows and the in-progress 15 units Begonia Crescent bungalows with a GDV of RM100.4 million. The progress made has enhanced the overall landscape and breadth of the area. The Group’s total unbilled sales for property development currently stand at RM36.3 million.
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Perting Mini-Hydro
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The Group’s 4MW hydropower plant operational since December 2009, located at Sg. Perting, Pahang continues to perform efficiently with a higher electricity output. Our mini-hydro plant is known as an outstanding model of a mini hydro plant in Malaysia. Hydro power is one of the renewable energy sources falling under the feed-in-tariff mechanism. Under the Renewable Energy Act, the Group is eligible to sell its renewable energy for a duration of 21 years, ending in year 2031. In July 2012 the Group signed a new power purchasing agreement incorporating a tariff rate that is higher than the existing rate by 44% for every MW generated. This tariff increase will enhance the project’s current profitable operation.
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Group is eligible to sell its renewable energy for a duration of 21 years, ending in year 2031. In July 2012 the Group signed a new power purchasing agreement incorporating a tariff rate that is higher than the existing rate by 44% for every MW generated. This tariff increase will enhance the project’s current profitable operation.
The Group is currently carrying out feasibility studies as part of its effort to increase the capacity of its existing hydropower plant, in addition to working on a second hydropower plant as an expansion plan.
The Group has also initiated plans to tap on other renewable energy resources such as solar power using solar photovoltaic systems and is currently in the midst of finalising the action plans. The Group aims to expand its renewable energy business and has identified a potential investment of more than RM140 million over the next two years for it to participate in the industry’s need to diversify out of traditional energy resources through the Government’s Economic Transformation Programme.
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The Engineering Division continues to expand its transmission projects in Peninsular Malaysia and during the financial year secured projects from Tenaga Nasional Berhad (‘TNB’) with a total contract value of RM67.9 million and of which two projects with a contract value of RM11.9 million, were completed in FY 2012. Maintaining the continuous growth of transmission works, in May 2012 AMBC Transmission was awarded with another transmission project from TNB with contract value of RM24.6 million.
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Blue Star M&E Engineering continued to focus on its mechanical engineering works on Heating, Ventilation and Air-Conditioning (‘HVAC’) for shopping malls, office buildings, hospitals and hotels. For FY 2012 the company had a total contract worth of RM133.6 million and recently, it secured two new contracts worth RM62.5 million for the St Regis, Kuala Lumpur and Shah Alam Hospital taking the total HVAC contract value to date to RM196.1 million.
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St Regis KL
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A special dividend of 3 sen per ordinary share, less tax of 25% was paid on 12 October 2011 in respect of the financial year ended 31 March 2012. The Board is proposing a final dividend of 3 sen per ordinary share, less tax of 25% for approval of the shareholders at the forthcoming Annual General Meeting. If approved by shareholders, the total dividend payout for the financial year ended 31 March 2012 will be 6 sen per ordinary share.
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The Group will continue to focus on its property, engineering and infrastructure division with selected investments in central London properties and the continuous development of its existing land banks. The Engineering division is gathering strength and continues to search out for growth opportunities locally and regionally. With the Group’s recent active involvement in renewable energy, the infrastructure division’s long term growth prospect is expected to be enhanced. Barring any unforeseen circumstances, the Group can look forward to another profitable year ahead and create value for shareholders.
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On behalf of the Board, I would like to extend our appreciation and gratitude to our shareholders, customers, suppliers, bankers, business associates and various government authorities for the support and continued trust in us throughout the years.
Last but not least, I would like to extend my sincere gratitude to my fellow Board members for their contribution and guidance and appreciation to our dedicated management team and committed staff for their hard work and continuous effort over the years.
AZMI HASHIM
Executive Chairman
3 August 2012
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