Chairman's Letter to Shareholders
sba chairman 2017

"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 for the financial year ended 31 March 2017"

 

STRATEGIC REVIEW
2016/17 went through a series of high impact events ranging from collapse of oil prices, volatility of emerging market currencies against the US Dollar, the results of the UK Referendum to leave European Union (“BREXIT”) and the US Presidential Election. Prior to BREXIT, the introduction of a higher stamp duty of up to 15% for purchases of property effective from 1 April 2016 have created much anxiety and uncertainty in the UK market where the Group has significant investments.

Holland Park Villas, in the borough of Kensington and Chelsea, and Burlington Gate, in Mayfair, London as well as our future Kilmuir House project, in Belgravia, London cater to a very select group of buyers namely the Ultra High Net Worth Individuals (“UHNWI”), in reference to individuals with net worth in excess of US$30 million. Between  2006-  2016, the total number of UHNWI  in UK rose 28% to 9470 and this is expected to increase by another 30% in the coming decade. (Source: Knight Frank’s Wealth Report 2017)

The UK is home to Europe’s dominant business and financial services cluster and the only English speaking major-sized economy in the region. This puts it in a uniquely advantageous position to attract UHNWI from across the globe who value mature financial markets, transparent regulatory systems and first-class educational institutions for their children. The Wealth Report Attitudes Survey also identified UK as the most popular destination for UHNWI to acquire a second home due to the lifestyle, personal security, education, and opportunities for capital appreciation that it offers.


holland park
Entrance lobby of Holland Park Villas, Campden Hill, London

The above factors, together with the weaker Pound Sterling, have translated into resilient sales number for Holland Park Villas with sales valued at £84 million recorded post the UK Referendum. Burlington Gate is 88% pre-sold and the remaining 5 larger and penthouse units will only be released for sale after completion.

2016 also saw us, together with an international consortium, completing the acquisition of 2 properties (Ludgate House and Sampson House) located in Bankside area in the London Borough of Southwark. The iconic Tate Modern is located metres away and is connected to the city and St. Paul’s by another landmark, the Millenium Bridge walkway. The project named Bankside Yards will create an exciting mixed-use development (private residential accommodation, offices and retail and leisure space) and transform an area just across the city and overlooking River Thames where current density is low relative to transport connectivity.

Building on our strong relationship with Grosvenor, the Group expanded this co-investment partnership firstly to Japan in 2014 and then to Spain and Hong Kong in 2016. We partnered with Grosvenor because of the value its international experience and local knowledge bring. They unlock opportunities in those markets which we would not have direct access. This strategy will enable the Group to diversify its investments and to venture into other key global cities.         
 

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CURRENT YEAR RESULTS AND PROSPECTS

In the absence of any completion of properties in London, the Group recorded a profit before tax of RM32 million for the financial year ended 31 March 2017. This was mainly derived from our Malaysia Properties in particular Sibujaya, Sarawak and Kayangan Heights, Shah Alam and contributions from our joint venture in Japan.
 
The two major and active developments in London namely Holland Park Villas and Burlington Gate are scheduled for completion before December 2017 and profits will be recognised in the coming financial year ending 31 March 2018. Around the same time, we are also expecting our Sungai Liang mini-hydro station to be commissioned and contribute to our Group’s profits here onwards. We believe that well-designed properties in prime locations of key global cities will appeal strongly to the UHNWI and other targeted markets. 


DIVIDEND
For the financial year 2017, the Board has recommended a final dividend of 3 sen per ordinary share totalling RM18 million, to be approved by shareholders at the forthcoming Annual General Meeting. The Company has also in October 2016 paid out preferential dividend of 2 sen per redeemable convertible preference share amounting to RM5 million.


CORPORATE  SOCIAL RESPONSIBILITY
The Group is proud of the philanthropic activities pledged by its major shareholder, Tan Sri Azman Hashim, by contributing resources and management in the design, construction and development of the various public buildings benefiting all Malaysians. These include, among others, the University Malaya School of Accountancy, the University Malaysia Sabah Art Center, the University Sains Malaysia, the Tunku Kurshiah College Sports Arenas and the Sibujaya Community Sports Centre. The Group also gives back to the society by jointly sponsoring the Amcorp Study Grant offering scholarships to talented young Malaysians to pursue the Association of Chartered Certified Accountants (“ACCA”) qualification in Malaysia on a full time basis. Further details of the Group’s Corporate Social Responsibility are set out on pages 46 to 49 of the Annual Report.


ACKNOWLEDGMENT
I would like to take this opportunity to extend our sincere appreciation to our shareholders, clients, business associates and bankers for their continuous support and confidence in the Group through the years. I would also like to thank my fellow Board members, the management team and our employees for their guidance and contribution the past year. I look forward to meeting you at the forthcoming Annual General Meeting.
 

SIGNATURE
Shalina Azman
Chairman
10 July 2017
                 

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