Chairman's Letter to Shareholders
 



 
 

"Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of the Group and the Company the financial year ended 31 March 2018" 

 
 
CURRENT YEAR RESULTS 
The Group recorded profit after tax of RM145.2 million, RM124.8 million above the previous year primarily from the contributions from the two development projects in prime central London - Holland Park Villas and Burlington Gate. This was largely due to the recognition of profits for these two projects on the completion method. Both the projects achieved completion and handover of units in the 2nd half of calendar year 2017. The sales from these two high-end residential development projects have met our expectations with recognition of profit from sales of 45 units out of 72 units in Holland Park Villas and 36 units out of 42 units in Burlington Gate. The strong financial performance has improved the shareholders’ funds by 7.7% to RM1.0 billion as at 31 March 2018. Since the end of the financial year, we have also seen further uptake in the remaining units. 
 
STRATEGIC REVIEW 
The Group has since 2009 invested in prime central London and has progressed through various strategies across both commercial and residential from hold for capital appreciation to value enhancement to development of properties. Back in 2012, given the compression of yields across commercial and residential properties, we took the conscious decision to venture into high-end residential development which culminated in this year’s results. Although the property market has softened in general, we remain positive about its prospects and continue to be invested through our Bankside Yards and Kilmuir House projects. London remains on the radar of most international high net worth investors given its strong fundamentals and was retained as the world’s most powerful financial center for 2017 by World Economic Forum. London is ranked number two in the Knight Frank City Wealth Index 2018 and the top city with the highest average number of nationalities investing in 2016 and 2017. (Source: Knight Frank Wealth Report 2018)

During the financial year, Bankside Yards undertook a replanning exercise seeking to increase the development area by 295,000 square feet while for Kilmuir House, active discussions were held to revise and improve our product design and offering. Once these plans are finalised and approved, it will further enhance both project values and contribute positively to the Group’s earnings upon their completion. With yields already compressed and several developed countries looking to raise interest rates in time to come, future returns on properties will likely to be derived from active management. This could be undertaken through various replanning, improvements, development and leasing strategies which is one of the key advantages of property over other asset classes. What we and our partners are doing now at Bankside Yards and Kilmuir House reflects this active management approach.

The Group will continue its joint venture partnership with some of the most reputable property developers and managers for its overseas projects. This cost effective partnership model is one of the key success factors for the Group and we are devoted to earning the trust and respect of our business partners to sustain our business.

Amprop London Investments 
The Group added four new residential properties to its portfolio in Madrid, Spain - Santa Engracia, Modesto Lafuente, Hermosilla and Garcia de Paredes, bringing it to five projects spread across the prime districts of Salamanca and Chamberi in Madrid. The Spanish economy recorded a healthy 2017 Gross Domestic Product (“GDP”) growth rate of 3.1% (2016: 3.2%). The International Monetary Fund also indicated that Spain has made great progress in terms of its economic recovery, with growth forecast in 2018 of 2.5% to be higher than the Eurozone average of 2.1%. The country is also poised to tackle the remaining challenges, such as reducing structural unemployment, public debt and increasing productivity. Madrid itself saw property prices increasing particularly in the prime central districts and Knight Frank Research has forecasted a 5% increase in prime residential values over the 2018 calendar year. Considering the improving market outlook and pipeline of potential deals, both us and our joint venture partner, Grosvenor Europe agreed to inject a further €15 million each to bring the total committed equity fund for Spain to €100 million.

The Group also expanded its presence in East Asia and recently entered into an investment term sheet with an experienced property team formerly from the Asia division of an international developer. The target investment is a commercial property located in an area undergoing regeneration at the heart of Shanghai, the financial hub of China. The joint venture is looking at repositioning the property to take advantage of the strong demand of office space.

Over in East Malaysia, the Group received the Commendation Award for Commercial in the SHEDA Excellence Awards 2017 from the Sarawak Housing and Real Estate Developers’ Association for the development of Sapphire East. Sapphire East is the latest 3-storey shophouse development in Sibujaya, changing the retail perspective of the township and has been well received. The Sibujaya township has seen growth over the past few years coinciding with several new infrastructure being constructed for the benefit of its residents, the latest being a new sports center and mosque, to be approved by the local authorities.

SHEDA Excellence Awards 2017
The winning team, led by senior management, Mr. Lim Pooi Siang (3rd from right) and Encik Mohamed Fadzil Abdul Hamid 
(4th from right) receiving the Commendation Award for Commercial at the SHEDA Excellence Awards 2017. 

The Group will build on its various growth platforms with its joint venture partners while exploring new opportunities and focusing on quality assets that deliver healthy and sustainable returns. The Company has completed its rights issue of new class B redeemable convertible preference shares (‘RCPS B’) which was listed on the Main Market of Bursa Malaysia Securities Berhad on 26 April 2018, raising additional capital of RM356.6 million. This rights issue together with the current year profits has increased the Group’s shareholders’ funds to RM1.4 billion and placed the Group in a net cash position. This puts it in a stronger financial footing and will provide capacity for the Group to meet its existing commitments and expansion to other key global cities. The efforts undertaken now, while not immediate, aims to create longer term sustainable value for its stakeholders.

The Board has recommended a final dividend in respect of financial year 2018 of 4 sen per ordinary share totaling approximately RM23.7 million to be approved by shareholders at the forthcoming Annual General Meeting.


ACKNOWLEDGEMENT
I wish to conclude by expressing our gratitude and to acknowledge the immense contribution and guidance of three of our long serving Directors, Tun Chen Wing Sum, Tan Sri Lee Lam Thye and Encik Azmi Hashim who have resigned in April 2018. Further and on behalf of the Board, I wish to express our heartfelt gratitude and appreciation to our shareholders, clients, business partners and bankers for their continuous support and confidence in the Group. 

Shalina Azman
Chairman

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