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Quarterly Report For The Financial Period Ended 30 September 2018

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Consolidated Statement Of Profit Or Loss And Other Comprehensive Income

For the second quarter and six months ended 30 September 2018
(The Figures have not been audited)

Consolidated Statement Of Financial Position

For the second quarter and six months ended 30 September 2018
(The figures have not been audited)

Review Of Group Performance

Current 9-month vs corresponding preceding 9-month review (September 2018 vs September 2017)


The Group recorded higher revenue of RM438.9 million for the period under review, as compared to RM261.0 million reported in the corresponding period of 2017. The increase was contributed by both Property and Construction divisions, which recorded a 78% increase in their revenue when compared against that achieved in the corresponding period of 2017, due to increased work progress and additional new property sales [see Note 17.1 (b) for details].

At the same time, the Group performance showed an improvement, from a loss before tax of RM118.1 million reported in September 2017 to a profit of about RM31.1 million. The Property and Construction divisions reported a combined profit of RM27.7 million during the 9-month period, against a loss of RM76.2 million registered in the corresponding period of 2017. At the same time, the Group’s share of the results in Dayang Enterprise Holdings Bhd. (“DEHB”) and its subsidiary, Perdana Petroleum Berhad (“PPB”), had also improved, from a loss of RM25.0 million in September 2017 to a profit of RM12.0 million in the current period under review.

Current 3-month vs immediate preceding 3-month review (September 2018 vs June 2018)


When compared to the immediate preceding quarter (April to June 2018), the increase in both group revenue and profit before tax were mainly due to higher work progress achieved at site as well as higher new property sales secured during this 3-month period.

At the same time, the net share of profits from the associate, DEHB, had also improved from RM10.5 million in the immediate preceding 3-month period to RM13.7 million in the current 3-month period.

Detailed review of the performance and prospects of each operating segment (as shown in Note 11) are discussed in Section 17.1 below.

Review of performance of operating segments and current year prospects

a) Property

Current 9-month vs corresponding preceding 9-month review (September 2018 vs September 2017)


Property segment recorded an increase in its revenue and profit during the current period under view. The increase was partly contributed by increased work progress achieved. Higher new sales of about RM100.6 million (January to September 2017: RM92.9 million) also had led to the increase in the property revenue and profit during the 9-month period.

Current 3-month vs immediate preceding 3-month review (September 2018 vs June 2018)


When compared to the immediate preceding quarter (April to June 2018), the increase in Property revenue and profit was partly due to higher work progress achieved during the 3-month period. At the same time, additional new sales of RM32.7 million were secured during this period, against that of RM23.8 million achieved in the immediate preceding 3-month period.

Prospects

We expect the property market to remain very challenging due to factors such as rising costs of doing business, increased competition and property stocks, weak buying sentiment, strict bank lending policy etc. In the near term, we will continue to focus on our existing three main flagship/integrated developments in Miri, Bintulu and Kuching and put in various initiatives to sell off the existing property stocks.

At the same time, we have also adopted a more cautious approach towards product launches and product types, to be more selective and sensitive to buyers’ demand and market conditions. This will enable us to tailor better product development to suit the market. More medium range and affordable property will be introduced to local markets in the years to come.

b) Construction

Current 9-month vs corresponding preceding 9-month review (September 2018 vs September 2017)


When compared to the previous 9 months ended 30 September 2017, Construction revenue and performance had substantially improved, which was in tandem with the increased work progress achieved from existing on-going projects.

The loss of RM79.4 million reported in last September 2017 was mainly due to additional loss provision of RM107 million for certain completed projects, made based on conservative management estimation on likely contract sum to be agreed with the clients (including possible likely prolongation and acceleration claims) as well as additional overheads to incur until the end of contract maintenance period.

Current 3-month vs immediate preceding 3-month review (September 2018 vs June 2018)


When compared to the immediate preceding quarter (April to June 2018), the increase in Construction revenue and profit was mainly due to increased work progress achieved from the existing on-going projects.

Prospects

We continue to implement measures to improve efficiency and control costs. At the same time, we also enhance project monitoring to ensure projects are on schedule, improve risk management system and embark on tightening of internal controls for this segment.

With continuous efforts and resources invested to further improve our project deliverables, we will focus to complete the current outstanding order book at decent margin and within scheduled timeline. At the same time, we are cautious and selective in project tendering and focus particularly on those projects where we have proven records and experiences, supported with current project management resources.

c) Other Segment

Current 9-month vs corresponding preceding 9-month review (September 2018 vs September 2017)


The drop in the revenue for Other segment was mainly due to lower trading sales, about 41% lower than that reported in the corresponding period of 2017. At the same time, Other segment registered lower loss of RM537,000, compared to RM1.1 million in September 2017, mainly attributable to some cost saving in utility consumption as well as scaling down of the premix operation.

Current 3-month vs immediate preceding 3-month review (September 2018 vs June 2018)


When compared to the immediate preceding quarter, Other segment showed an increase in revenue and performance during the current 3 months, mainly attributable to higher trading and quarry sale during the quarter.

The loss of RM1.2 million reported in the immediate preceding quarter was mainly due to the reclassification of overhead costs to this segment.

Prospects

The property investment and trading operations will continue to contribute positively to the Group results. In addition to retail property, we will be embarking on other types of commercial properties, for example hotel in Bintulu Paragon, for recurring income.

We will continue to improve the quarry operations and achieve economies of scale to manage fixed overheads costs.

Review Of Performance Of Major Associate

Our associate, Dayang Enterprise Holdings Bhd. (“DEHB”), reported an unaudited profit after tax attributable to owners of about RM66.5 million, against a loss of RM89.7 million registered in the corresponding period of 2017. The improvement in the DEHB performance was mainly due to higher maintenance work orders performed during the period under review.