Operations Review

Excerpts from Annual Report 2010

MALAYSIA PROPERTY INDUSTRY IN 2010

Better overall economy

The improved consumer sentiments since the last quarter of 2009 has benefited the residential property market for the year in review, reflected in 2010 figures showing a rebound in demand at 7.1%, a marked increase from a contraction of 2.3% in 2009. In addition to the swell of consumer demand and consumption in 2010 is the 11% increase in the sales of construction-related materials in 2010, indicating strong investment activity, a positive sign to overall domestic economic growth.

PERFORMANCE OVERVIEW

High sales performance

The Group's strong revenues of RM316.9 million and PBT of RM74.3 million for FY2010 were attributable to the Group's improved overall sales performance from both the township and niche divisions.

TOWNSHIP DIVISION

Thriving population at the townships

For the year under review, the Group's three township developments had stepped up their launches in line with the country's steady economic performance. All in, a total of 591 units of residential and shop-offices were launched during the year, making significant contribution to the Group's profits. The Township Division's revenues were RM208.0 million, a 41% increase from RM148.0 million in FY2009. Post-tax profits of RM28.1 million was however lower than FY2009's RM49.6 million as higher profit margin was achieved from strategic land sales in FY2009.

Bandar Seri Alam being a fully integrated township spanning 3,762 acres (15 square kilometres) has been recognised as the “Eastern Gateway” of Iskandar Malaysia. Adding to this honour is the recognition from the Iskandar Regional Development Authority acknowledging Bandar Seri Alam as the “Educational Hub” for the Eastern Corridor of the Iskandar Malaysia. This was the result of the establishment of several institutions of higher learning in Seri Alam, ie University Kuala Lumpur; University Teknologi Mara; Masterskill University College of Health Sciences; Mara Junior Science College; Malaysia Arts School, Japanese International School; and the proposed HELP University and Raffles International College. In addition to these institutions Seri Alam also has six national type schools.

The Group's other township development in Iskandar Malaysia, Taman Seri Austin, posted a stronger performance for FY2010 compared to FY2009 arising from strong sales demand. Of the total gross land area of 500 acres in Taman Seri Austin, a balance of 208 acres is left for future development. The projected GDV from the undeveloped lands is estimated at RM1.0 billion.

Bandar Seri Putra, the Group's 899-acre township development in the Klang Valley has a total remaining estimated GDV of RM0.7 billion from its balance of 229 acres land to be developed.

NICHE DIVISION

Upmarket launches in succession

This division is represented by two current high-end developments in the Klang Valley, Suasana Bangsar and Suasana Bukit Ceylon in 2010; and will be joined by another boutique water-front development in Puteri Harbour, Nusajaya in 2011.

Suasana Bangsar, which was launched in July 2008, was the main contributor for the niche division for FY2010 as it reached full completion of the project, comprising 190 units of condominiums and posting a total project GDV of RM198 million.

Suasana Bukit Ceylon, a 310-unit service apartments located within the serene enclave of Bukit Ceylon was previewed in November 2010. Its estimated GDV stands at approximately RM314.8 million. Suasana Bukit Ceylon is expected to be the main contributor for the Niche Division in FY2011.

Completing the line-up of upmarket products in our Niche Division is the 50:50 joint-venture collaboration with UEM Land Berhad for the development of a block of exclusive waterfront luxury boutique apartments located adjacent to the proposed Traders Hotel and Indoor Theme Park at the waterfront of the Puteri Harbour Marina. This development is targeted to be launched in the second half of 2011.

OUTLOOK AND PROSPECT

Steady outlook with growth in sight

For the township division, Bandar Seri Alam is constantly evolving with more amenities added. Plans are afoot to set up a new banking hub and a modern commercial centre to cater to the needs of a fast-evolving population. Equally exciting is the outlook for Seri Austin with continuation of the upward trend of sales from 2010 well into 2011. In the Klang Valley, Bandar Seri Putra will continue with the new launches while planning is underway for its hill-top premium bungalows.

For the forthcoming FY2011, the Group expects the performance of its township division to remain steady while Suasana Bukit Ceylon and Puteri Harbour projects are expected to be the main contributors to the performance of the niche division.

The Group's new niche developments in the pipeline include the Matex project with mixed commercial, hotel and serviced residences development in Jalan Wong Ah Fook in the Johor Bahru city centre; the 4.35 acre 50:50 joint venture project with Bolton Bhd at the junction of Jalan Yap Kwan Seng and Jalan Mayang in the vicinity of KLCC; and the proposed development of a 600-acre land near Pulai Jaya, a 51:49 joint venture project with Tradewinds Johor Sdn Bhd.

To read the entire statement, please refer to UMLand's 2010 Annual Report here