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Quarterly Report For The Financial Period Ended 31 December 2011

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Financial Statement (288 KB)

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the quarter and twelve months ended 31 December 2011

(The Figures have not been audited)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2011

(The figures have not been audited)

Review of Group performance

The Group recorded lower revenue of RM91 million for the current quarter, compared to that reported in the corresponding quarter in 2010 of RM192 million. The group profit before tax for the current quarter was RM6.3 million against RM32 million achieved in the same period in 2010. The decrease is mainly attributable to the property and construction divisions, which recorded lower revenue and profit in the quarter under review [see Note 17.1(a) and 17.1(b) for further details].

Group revenue for the financial year to date decreased by about 33% from RM613 million in 2010 to RM410 million in 2011. Group profit before tax for the financial year to date also declined from RM132 million in 2010 to RM57 million. This was mainly due to the lower performance reported from the property and construction divisions. Detailed review of the performance and current year prospects of each operating segment (as shown in Note 11) are discussed in Section 17.1.

The income from its investments in associates and joint ventures contributed significantly to the overall group profit before tax for 2011.

Review Of Performance Of Operating Segments And Current Year Prospects

  1. Property
    Current vs preceding quarter review For the current quarter under review, the Property segment registered a slight improvement in its revenue, resulting from improved sales towards the last quarter of 2011. The return arising from the increase in sales will only be progressively reflected in the results of this segment within the next two years.
    Yearly performance review The decrease in Property segment revenue, from RM162 million in 2010 to RM115 million in 2011, was due mainly to the effect of lower sales of property in 2010, resulting in lower revenue being recognised progressively from the sales in the year under review. Other factors include the delay in obtaining approvals from the relevant authorites and the studies of designs to cater for changing market. However, the Group managed to achieve higher sales for the year under review with value exceeding RM180 million (2010: RM140 million). These sales are expected to contribute positively to the group performance within the next two years.
    Prospects Despite improving market demand for properties in Sarawak over the last twelve months, the Board remains cautious going forward in view of uncertainties over increasing costs of materials and labour, interest rate fluctuations, competition from other developers and decreasing purchasing power of property buyers arising in part from stricter bank lending limit.

    Over the last two years, we have put in place finalised plans to enable us to aggressively launch new products at the right time and at competitive prices. We have invested in people development, put in place right systems and processes, planned for an increase in our land bank and introduced new property models to better suit customer preferences and demands, amongst other initiatives.

    We are preparing to make in-roads into the upcoming Bintulu property market, leveraging our land bank in the prime location of the old Bintulu Airport as well as setting up our office in Kota Kinabalu to pave the way for our expansion to Sabah.

    Our launching of new housing projects in Miri and Kuching since the third quarter of 2011 has been well received by the local market and we are confident that this trend will continue in the year ahead.
  2. Construction
    Current vs preceding quarter review The construction segment did not perform to expectation in 2011. This was mainly due to lower stage of completion achieved on the existing on-going projects resulting from weather issues and additional design modification works for certain contracts.
    Yearly performance review For the year under review, the Construction segment recorded lower revenue of RM260 million (2010: RM419 million). The profit of the Construction segment declined from RM42 million in 2010 to RM883,000 in 2011. This was due mainly to substantial completion of high-margin projects during 2010. Lack of major new construction contracts secured in the past twelve months, competition from other contractors and pressure of cost increase leading to lower margins were also contributing factors to the decline in the results of the Construction segment. In 2011, the Group secured one overseas project with a total value of about RM12 million, for which works are at the initial stage.
    Prospects We have submitted tenders for a number of sizeable construction projects with an estimated value of more than RM2 billion and are short-listed for some of them. We expect the segment to perform better in the year ahead.
  3. Other segment
    Performance review Our Other segment performed reasonably well in the year under review, registering a 13% growth in revenue, from RM31 million in 2010 to RM35 million in 2011. The increase was mainly derived from the rental of property completed during 2011, including our newly completed Permy Hypermall with net lettable area of about 153,000 sq. ft, which is over 90% tenanted with GIANT as our anchor tenant. This segment managed to generate modest profit of RM796,000 for the current year, a turnaround from the loss of RM 2 million reported in 2010.
    Prospects With the average occupancy rate of more than 75% achieved in 2011 from the committed rental contracts, we expect the performance trends to remain at the same level or higher in the year ahead.

In addition, our associate, Dayang Enterprise Holdings Berhad, performed very well in the year under review, registering a profit after tax of RM84 million, an increase of 24% over the RM68 million achieved in 2010. With its on-going contracts exceeding RM1.4 billion to last at least until 2016, we expect this investment to contribute positively to our group results in near future.

Our initial inroad into the oil and gas construction projects via alliance contract with Samsung and Petronas in 2010 is expected to continue to contribute positively in the year ahead, with about 30% completion achieved as at 31 December 2011.

Although the Directors remains positive of the future prospects of the Group, the year ahead poses a challenge amid the unsettled global economic climate. The Directors will continue to exercise due care to sustain and enhance the shareholders' values of the Company.

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