Chairman's Statement
ar2016 sba
 

FINANCIAL PERFORMANCE AND DIVIDENDS
           

I am pleased to report that Amcorp Properties Berhad (“AMPROP” or “Group”) recorded an increased profit after tax of RM87 million for the financial year ended 31 March 2016, surpassing the previous financial year’s profit after tax of RM37 million.

This enhanced the Group’s earnings per share to 13 sen and net assets per share have risen to RM1.47 per share.  The Group’s shareholders’ funds stood at RM994 million as at 31 March 2016.  The Board has proposed a total dividend of 6 sen per share or 12% consisting of a final dividend of 3 sen and a special final dividend of 3 sen.


PROPERTIES
           

AMPROP’s focus on being a property company in key developed cities began in 2009 when we first invested in prime central London in both commercial properties and residential projects.  Over that time, we formed strong partnerships with established and highly regarded developers to undertake larger scale projects and to diversify our risk.  In 2015, we expanded our investments with our partners to Tokyo, Japan.  As at 31 March 2016, the Group’s prime central London investments makes up 32% of our balance sheet and growing to 61% if we include the latest investments and acquisitions.  The current year’s achievement was a result of the disposal of 60 apartments in 4B Merchant Square in Paddington, London which was acquired in March 2013 and refurbished to high specifications.  The Group has also sold the two remaining penthouses in Neo Bankside and together the proceeds were reinvested in our new projects. 

In 2013 and 2014, we moved away from the mid-priced segment and undertook two luxurious development projects with average selling prices above £3,600 per sq ft.  The Holland Park Villas, located within the vicinity of Campden Hill, Kensington, has an expected gross development value (“GDV”) circa £605 million (approximately RM3.2 billion) and has sold about half of its 72 units.  The remaining units will be progressively released for sale and are expected to be delivered by phases in 2017.  Burlington Gate is a redevelopment of the existing building into a luxury apartment block with world class amenities, together with art galleries on the ground floor in the cultural and lifestyle epicentre of London, Mayfair.  It has an expected GDV of £276 million (approximately RM1.4 billion) and has been very well received with 88% of the units taken up.  The development of the 42 apartment units is similarly expected to complete in 2017.  Both Holland Park Villas and Burlington Gate are anticipated to contribute strongly to the Group’s earnings over the next two financial years.  In accordance with accounting standards, the profits from both projects will be recognized on completion and delivery of units to the purchasers.

Our joint venture with Hotel Properties Ltd, Temasek Holdings (Private) Limited and Native Land to acquire and develop Sampson House and Ludgate House in Southbank, London (Bankside Quarters project) completed the acquisition of the properties in May 2016.  The joint venture is now securing an enhanced planning permission where Bankside Quarters would be redeveloped with GDV in excess of £1 billion (approximately RM5.4 billion). This investment is our largest residential development in prime central London so far and is anticipated to anchor the contribution to the Group from 2019 onwards.

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Kilmuir House at Belgravia, London


  The Group entered into another joint venture in March 2016 with a 50% interest that managed to secure a rare opportunity to acquire a site with redevelopment potential in Belgravia, an exclusive suburb. The site extends to 0.44 acres and has triple frontage to Eaton Terrace, Ebury Street and South Eaton Place with prestigious residential neighbourhoods of Eaton Square and Sloane Square within very close proximity. It is only 550 meters away from Sloane Square Underground Station and within 1.5 kilometers from the renowned Harrods Department Store. Sitting on the site currently is Kilmuir House, a 49 two-bedroom apartment block totaling 35,225 sq ft which will be refurbished and let out while a comprehensive plan is put together to redevelop the site. Directly opposite the property is Ebury Square, a very successful prime residential development completed in 2014 by Berkeley Group with sales value over £3,000 per sq. ft. Thus, this project has an exciting development potential which will contribute to us in the future. 
Following the recent decision at the Referendum on United Kingdom’s membership of the European Union, the Group will continue to monitor the market closely for its impact and the developments that arise from there.  The strength of United Kingdom’s economy which is the 5th largest in the world and London as an international financial center will continue to be drivers for the demand of its real estate.  The shortage of supply, liquidity, transparency of laws, security and ease of ownership are some of the factors that will continue to make London a prime destination for global real estate investors.  Our projects are well placed in terms of location and product to cater to these affluent investors, both from within and outside United Kingdom. 



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The Westminster Nanpeidai, Japan

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The Westminster Nanpeidai, Japan

  Our property investments in Tokyo currently makes up 8% of our total assets.  During the year, another property was added comprising  offices and retail units with a net rentable area of 39,000 sq ft in a building known as Concieria Tower’s West.  The building located in Nishi-shinjuku, often dubbed the “Skyscraper City of Tokyo” is anticipated to benefit from on-going redevelopments in the vicinity led by large Japanese developers that would rejuvenate the area.  Meanwhile, our investment in a 52 unit apartment block located within 1km from Shibuya station has undergone a thoughtful refurbishment and has been rebranded as the Westminster Nanpeidai.  Some units have been released for sale starting from March this year and have been well received by local as well as foreign investors.  



At the local front, we continue to work with the Housing Development Corporation to build a sustainable and thriving Sibujaya township by ensuring the right infrastructure is put in place for the benefit of the steadily increasing number of residents.  The Group remains optimistic on the East Malaysia property market and has launched 2 new projects with a combined GDV of RM62 million, namely Phase 5 Pearl Avenue consisting 72 residential units and 28 units of three-storey shophouses and the response has been encouraging.  Unlike our foreign investments, Sibujaya is the Group’s township development where we have nurtured it for the past 7 years by adding the right amenities and facilities, upgrading of roads, beautification and landscaping. Sibujaya is an important contributor to the Group’s local development activities and there was a notable increase in revenue by 18% compared to the previous financial year.  The remaining undeveloped land of over 630 acres will last the Group another 10-15 years. 

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Burlington Gate in Mayfair, London


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Burlington Gate in Mayfair, London           


RENEWABLE ENERGY AND CONTRACTING

With the completion of the 2MW upgrade at Sungai Perting mini-hydro plant, the Group now has a total installed capacity of 16.25MW across both its solar and hydro renewable energy plants generating a total clean energy of 41GWh.  This was an 11% increase from the previous financial year partly due to the upgrade as well as higher plant efficiency achieved and made up 10% of our total revenue.  This capacity will increase further once our 20MW hydro plant in Sungai Liang, Raub, Pahang is commissioned in the 3rd quarter of 2017. This joint venture with Tenaga Nasional Berhad is expected to generate further clean energy of up to 85GWh annually.  AMPROP will continue to expand its renewable energy business particularly in hydro and solar power to capitalize on our expertise and to achieve the necessary economies of scale.

Our contracting segment remains focus on its mechanical engineering works on Heating, Ventilation and Air-Conditioning.  Notable project wins during the year were the Ruma Hotel and KL Equatorial and has a remaining book order of RM88 million.  We are alsoseeking opportunities to expand this business regionally in order to tap into the growing economy and development of commercial projects.
                    

COMMUNITY

AMPROP continues to play its role as a responsible and caring corporation by participating in various charitable and welfare projects.  Notably, the group contributed not just funds but also worked together with EPIC Homes where its employees volunteered time and effort in rebuilding homes for those affected by the floods in Kelantan.  AMPROP strongly believes in the value of education and has together with Yayasan Azman Hashim (“Yayasan”) established the Amcorp Study Grant that provides financial assistance and scholarship to deserving students.  Fifteen students have benefited from this scholarship in the past four years and those who graduate have the opportunity to contribute back to the growth of the Group.  Further details of AMPROP’s contributions are set out in the Corporate Social Responsibility disclosures on pages 32 to 33 of the Annual Report.

Yayasan is partially funded by AMPROP and has donated substantial sum especially to universities and will continue to do so in the future for the benefit of existing and future Malaysians.  All the staff of AMPROP are partners in the donations made as their efforts have contributed towards the Group’s profits over the years and have now made the activities of Yayasan possible.
 
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Burlington Gate in Mayfair, London

OUTLOOK

The Group will continue to be a niche developer and leverage on its partnership with well-known and reputable overseas partners in undertaking projects in prime central areas of key developed cities.  Towards this, the Group has acquired the knowledge and insight in foreign property markets to quickly capitalize on opportunities that come our way.  We will continue to be agile and vigilant to adjust our investment or development strategy to suit the current market conditions.  As with our business model in prime central London, we hope to replicate and expand our portfolio to other favorable European cities to enhance earnings and shareholders’ value in years to come.  In the coming months, Management’s efforts will be focused on the completion, sales and handover of both Holland Park Villas and Burlington Gate which will contribute positively to our future results.   


ACKNOWLEDGEMENT
           

On behalf of the Board, I would like 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 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
8 July 2016
                      

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