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Home / 2010 Annual Report: Chairman’s Statement

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Dear Shareholders,

On behalf of the Board of Directors of Tambun Indah Land Berhad (“Tambun Indah” or “the Group”), I am pleased to present to you the Annual Report 2010 and the audited financial statements for the financial year ended 31 December 2010 (“FY2010”).

FY2010 was an auspicious year for the Group as we were successfully listed on the Main Market on Bursa Malaysia Securities Berhad on 18 January 2011. This achievement was the culmination of many milestones accomplished throughout our corporate history spanning more than 15 years.

As the pioneer in bringing innovative property concepts in Mainland Penang, we are pleased that the listing not only marks the coming of age for Tambun Indah, but more importantly enables us to accelerate our business expansion in the coming years.

FINANCIAL PERFORMANCE

Malaysia recorded notable economic growth in 2010, with Gross Domestic Product (“GDP”) rising by 7.2% compared to the contraction of 1.7% in the previous year.

The Malaysian House Price Index noted that prices increased by 6% on an annual basis during the first three quarters of 2010, almost doubling the average increase of 3.4% during 2000 to 2009. The strong price increase was driven in part by higher demand, due to continued growth in household incomes, improving consumer sentiment and the accommodative financing environment.

Against this backdrop, I’m pleased to state that Tambun Indah continued to display a commendable financial track record.

For FY2010, the Group registered audited revenue of RM39.6 million. These results however only represent the Group’s revenue from 11 November 2010 to 31 December 2010 as the acquisition of subsidiary companies by Tambun Indah was only completed on 11 November 2010.

As the Group was formed on 11 November 2010, the financial performance proforma figures for FY2010 and FY2009, as reported in our Prospectus dated 29 December 2010 would be used for comparison purposes.

The Group’s revenues in FY2010 rose to RM128.1 million from RM100.9 million in FY2009, an encouraging improvement of 26.9% in view of sustained demand for our properties. Our Juru Heights and Pearl Garden projects were major contributors to the Group’s revenues, accounting for 45.1% and 35.1% respectively of FY2010 Group’s revenues.

Group’s gross profits amounted to RM39.4 million in FY2010, up 22.1% from RM32.3 million in the previous year.

The Group’s lean cost structure and low-interest business model, coupled with the increase in sales, resulted in rising profitability in the year under review.

The Group achieved pre-tax profits and profits after tax of RM36.2 million and RM27.9 million respectively in FY2010; demonstrating strong double-digit growth from RM30.0 million and RM23.8 million in pre-tax profits and profits after tax respectively in FY2009. Group’s net profits attributable to shareholders amounted to RM25.2 million in FY2010 from RM23.9 million previously, a slight increase due to higher minority interest component in the year under review.

Based on the Group’s enlarged share capital of 221 million shares of RM0.50 par each, earnings per share improved to 11.40 sen in FY2010, versus 10.80 sen in FY2009.

Overall, we are satisfied with the Group’s financial results in FY2010, and believe that it sets a strong foundation for the Group to continue on its growth path onward.

Tambun Indah has committed to a progressive dividend policy of paying 40 to 60% of the Group’s net profits to our shareholders as dividends. We believe that this dividend policy would go a long way in attracting long term investors, and create value for shareholders over the long term.

CORPORATE DEVELOPMENTS

• Acquisitions of Premcourt Development Sdn Bhd (“Premcourt”), Pridaman Sdn Bhd (“Pridaman”) and Ikhtiar Bitara Sdn Bhd (“Ikhtiar Bitara”)

On 16 February 2011, Tambun Indah proposed the acquisitions of three companies, namely Premcourt, Pridaman and Ikhtiar Bitara, for a total purchase consideration of RM11.6 million, to be financed by internally-generated funds.

Further to that, Tambun  Indah announced on 18 April  2011  that  upon  the   completion of  due  dilience on Premcourt and the valuation report on the land to be developed by Premcourt, Tambun Indah and the vendors of Premcourt have mutually agreed to renegotiate certain terms and conditions of the acquisition. Upon reaching an agreement on the revised terms and conditions, a new share purchase agreement will be entered into between Tambun  Indah and  the vendors of  Premcourt and a  further  announcement in connection  there with will be released in due course.

In the meantime, the proposed acquisitions of Pridaman and Ikhtiar Bitara will proceed without any variations. The  proposed acquisitions of the two  companies  would  increase the  Group’s  GDV by  RM69 million, and effectively raise the Group’s total GDV to RM1.6 billion to last till 2016. The development projects via the newly acquired companies are expected to contribute approximately RM14 million in pre-tax profits over the expected development period from FY2011 to FY2014.

• Agreement with Pembangunan Bandar Mutiara Sdn Bhd (‘PBM”), a wholly-owned subsidiary of Mutiara Goodyear Development Berhad

On 4 May 2011, Tambun Indah announced that its 60% subsidiary Palmington Sdn Bhd (‘Palmington”) had entered into an agreement with PBM to acquire and develop parcels of land in Mainland Penang for a purchase consideration of RM233.3 million. PBM owns the balance 40% of Palmington.

Palmington would acquire from PBM five parcels of land measuring 527 acres, which are situated close to Tambun lndah’s existing Pearl Garden township and would enable the Group to strengthen its presence in the Simpang Ampat locality. The proposed development is linked to the North South Express Highway via Jalan Bukit Tambun, and is 15 minutes’ drive from the proposed Second Penang Bridge.

Tambun Indah would finance its portion of the purchase consideration amounting to approximately RM139.9 million via internally-generated funds and bank borrowings.

FUTURE OUTLOOK

According to the Malaysian Economy report by the Ministry of Finance, performance of the residential subsector improved by  1.1%  in  the fourth quarter  of  2010 (compared  to  -6.5%  in Q3 2010), in tandem with increasing  construction activity,  particularly in the high-end residential segment. Housing starts registered impressive growth of 41.6% (compared to -8.7% in Q3 2010) following renewed interest from purchasers and developers. The improved performance of this sub-sector was also reflected in the increased take-up rate of 28.7% during the quarter (compared to 17.4% in Q3 2010) which was also the highest in the year.

The Penang property market is expected to chart commendable growth in the coming years, spurred by growing interest from foreign investors for Penang properties, growing Foreign Direct Investments (“FDI”), and, to some extent, property upgrading in line with the population’s increasing affluence.

Therefore, we at Tambun Indah would align our strategies to ride the growth wave in the current financial year.

To this end, we will continue our tried-and-tested approach of offering high-quality yet affordable properties in a timely manner. At the same time, we would maintain an optimal land bank for future projects.

We would also continue our marketing strategies to create higher awareness of our ongoing and upcoming projects to potential buyers.

Recognizing our core competencies and proven business model, the Board is confident of the Group’s bright prospects ahead.

CORPORATE GOVERNANCE

The Board is committed in carrying out best practices of corporate governance within the Group as a fundamental part of fulfilling our responsibilities to protect shareholder’s value and enhance the business prosperity of the Group.

The  measures to this effect are  detailed in  the  Corporate  Governance Disclosure in  this  Annual  Report .

APPRECIATION

On behalf of the Board, I would like to express my deepest appreciation to my fellow Directors, management and the staff in Tambun Indah Group for their commitment and diligence in being with us for the past 15 years. I  would also  like   to  take this  opportunity to thank our valued shareholders, business associates, regulatory authorities  and  customers for their continuous support to the Group. We look forward to your continued partnership going forward.

Thank you

Tsai Yung Chuan, Non-Independent Non-Executive Chairman