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Quarterly Report For The Financial Period Ended 31 March 2018

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Consolidated Statement Of Profit Or Loss And Other Comprehensive Income

For the first quarter and three months ended 31 March 2018
(The Figures have not been audited)

Consolidated Statement Of Financial Position

For the first quarter and three months ended 31 March 2018
(The figures have not been audited)

Review Of Group Performance

Current 3-month vs corresponding preceding 3-month review (March 2018 vs March 2017)


The Group recorded higher revenue of RM144.0 million for the quarter under review, as compared to RM113.5 million reported in the corresponding quarter of 2017. The increase was contributed by both Property and Construction divisions, which recorded a 33% increase in their revenue when compared against that achieved in the corresponding period in 2017, due to increased work progress and additional new property sales [see Note 17.1 (b) for details].

At the same time, the Group registered a loss before tax of about RM13.0 million, against a loss of RM6.8 million reported in March 2017. The loss was mainly attributed to our major associate, Dayang Enterprise Holdings Bhd. ("DEHB") and its subsidiary, Perdana Petroleum Berhad ("PPB") (in which the Group has a direct equity interest of about 9.9% following the dividend-in-specie comprising shares in PPB distributed by DEHB in the last quarter of 2017). Our Group’s share of the loss of DEHB and PPB amounted to RM12.9 million in the current quarter under review (31.3.2017: our Group’s share of DEHB and PPB’s loss amounted to RM12.5 million).

Current 3-month vs immediate preceding 3-month review (March 2018 vs December 2017)


When compared to the immediate preceding quarter (October to December 2017), the improvement in group revenue and performance was mainly due to increased work progress achieved from existing on-going projects.

Higher loss reported in the immediate preceding quarter (October to December 2017) of RM40.2 million was mainly attributable to the additional loss provision of RM107 million made for certain completed projects during that quarter.

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 3-month vs corresponding preceding 3-month review (March 2018 vs March 2017)


For the current quarter under review, Property segment achieved higher revenue of RM47.0 million, against the RM41.3 million achieved in the corresponding period in 2017. The increase in Property revenue was partly contributed by increased work progress achieved. The Group also managed to achieve new sales of about RM44.1 million during the current quarter, against that of RM52.1 million achieved in the corresponding period of 2017.

The drop in the Property profit was due to the changes in property mix sold as well some discounts/rebates given for certain completed development projects as part of the Group’s initiatives to clear off property stocks. Increased financing costs had also led to the drop in the overall profit for this Segment.

Current 3-month vs immediate preceding 3-month review (March 2018 vs December 2017)


Despite the improvement in the Property revenue to RM47 million from RM22.9 million achieved in the immediate preceding quarter, this Segment recorded a lower profit of RM143,000 (October to December 2017: RM720,000), mainly due to the changes in product mix sold and rising interest costs

Prospects

We expect the property market to remain 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 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. We expect to introduce more medium range and affordable property to local markets in the years to come.

In short, product planning and pricing as well as tightening of costs control (including appropriate right sizing and cost cutting) are amongst the key measures being implemented in order to sustain the performance in our Property segment in the near term.

b) Construction

Current 3-month vs corresponding preceding 3-month review (March 2018 vs March 2017)


Higher Construction revenue of RM91.0 million was reported, a 46.2% increase from that reported in March 2017, which was in tandem with the increased work progress achieved from the existing on-going projects.

However, the Segment registered a marginal loss of RM977,000 during the current quarter, against a profit of RM887,000 in March 2017, mainly due to increased financing costs.

Current 3-month vs immediate preceding 3-month review (March 2018 vs December 2017)


When compared to the immediate preceding quarter (October to December 2017), the improvement in Construction revenue and performance was mainly due to increased work progress from the existing projects during the quarter.

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. Appropriate right sizing and cost cutting are being carried out as part of the process to better manage costs. Besides, we also focus on enhancing the existing process and system as part of the initiatives to rehabilitate this segment.

With continuous efforts and resources invested to further improve our project deliverables, we remain cautiously optimistic to complete the current outstanding order book at decent margin and within scheduled timeline. At the same time, we are 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 3-month vs corresponding preceding 3-month review (March 2018 vs March 2017)


The drop in the revenue for Other segment was mainly due to lower trading and sales, about 58% lower than that reported in the corresponding period of 2017.

However, the segment showed slight improvement in its performance, mainly due to the tight control of fixed overheads incurred especially from low performing operations such as premix.

Current 3-month vs immediate preceding 3-month review (March 2018 vs December 2017)


When compared to the immediate preceding quarter, Other segment showed a decline in revenue during the current 3 months, mainly attributable to lower trading sales achieved as explained above.

However, the Segment performance had improved a result of tight control of fixed overheads (including right sizing exercise) particularly on low performing operations.

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.

At the same time, we are in the process of disposing of the non-performing premix operation to minimize further loss and realise some cash.

Review Of Performance Of Major Associate

Our associate, Dayang Enterprise Holdings Bhd. ("DEHB"), registered a lower loss after tax attributable to owners of about RM21.3 million, against RM42.6 million achieved in the corresponding period in 2017. The loss was mainly due to foreign exchange losses and lower charter rates achieved.