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Home / 2012 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 the Annual Report and the Audited Financial Statements for the financial year ended 31 December 2012 (“FY2012”).

Malaysia’s residential property market had an average year, dampened by a softening of the higher-end market as a result of cautious sentiment in the mortgage sector. Even Penang’s vibrant market, which had recorded strong double-digit growth in the number of transactions over the past couple of years, was not spared and encountered some turbulence.

As a developer of mid- to higher-end projects at affordable prices, Tambun Indah was able to steer clear of much of this headwind that affected the overall Penang residential market, and as a result, the Group was able to end FY2012 on a positive note.

FINANCIAL PERFORMANCE
Tambun Indah recorded a 54.7% increase in revenue to RM296.7 million against RM191.8 million in FY2011 on the back of new property launches and higher revenue recognition from ongoing projects.

In line with Tambun Indah’s robust topline revenue growth, our FY2012 profit before tax (PBT) increased 68.9% to RM 79.0 million compared to RM46.8 million previously, while net profit grew 74.6% to RM40.8 million against RM23.4 million in FY2011. The higher profit was largely attributed to our strong product mix which provided better value-formoney properties to the increasingly discerning purchasers in Penang.

Basic earnings per share surged 40.2% from 10.65 sen to 14.93 sen in FY2012.

Tambun Indah’s balance sheet remained healthy in FY2012, with shareholder’s equity rising 43.7% to RM223.2 million from RM155.3 million previously due to increase in retained profits, and in capital arising from the Rights Issue exercise undertaken during the year under review.

Cash and bank balances at the end of the financial year stood at RM96.0 million, contributed in part by the proceeds of RM44.2 million from the 2-for-5 Rights Issue. Whilst total borrowings increased 7.5% to RM83.8 million from RM77.9 million previously, corresponding to bank loans for the purchase of additional land bank for future development, the Group remained in a net cash position compared to FY2011’s net gearing of 0.25.

This puts Tambun Indah in an ideal position to fund further land acquisition and working capital needs when appropriate.

DIVIDENDS
Tambun Indah has a progressive dividend policy of paying 40% to 60% of net profit to shareholders.

The Board had declared an interim dividend of 2.0 sen per share on 27 November 2012, and this was paid on 26 February 2013. A final dividend of 3.3 sen per share in respect of FY2012 had been proposed for approval by shareholders at the forthcoming Annual General Meeting. Together, the total dividend payout for FY2012 will be 5.3 sen per share or approximately RM16.5 million, constituting 40.4% of the Group’s FY2012 net profit.

CORPORATE DEVELOPMENTS

On 20 February 2013, Tambun Indah announced that the memorandum of understanding signed on 21 April 2012 between the Group’s 60%-owned subsidiary Palmington Sdn Bhd and SIS Charter Sdn Bhd for the construction of, and the subsequent lease of an international school in Pearl City to SIS Charter has lapsed.

The Group is in the midst of talks with other educational groups who have indicated interest in setting up a school within our flagship development.

FUTURE OUTLOOK

Despite the moderated growth in the overall Malaysian property market, Penang is still considered as one of the more dynamic real estate markets in the country.

According to data from property valuator Henry Butcher Malaysia, the volume and value of property transactions has grown at a cumulative average growth rate (CAGR) of 8.4% and 13.2% respectively between 1999 to 2011. Volume and value CAGR grew at an even higher pace between 2009 and 2011, at 20.1% and 26.0% respectively.

With Penang’s booming economy, an established and a growing transportation network which includes the Penang Second Bridge, and a population of around 1.6 million people with the need for a roof over their heads and a place to call home, these translate into opportunities for property developers with the right products in the right locations.

Penang’s future prospects for this sector remain strong. According to the Real Estate and Housing Developers’ Association, the State’s property market is set to see sustainable growth of between 5% and 10% in 2013 on the back of rising demand.

The view that Penang’s property market will be sustainable in 2013 is also shared by property agents, a few of whom feel that Mainland Penang will be a key destination for buyers seeking reasonably priced low-density homes in strategic locations.

Given the above, Tambun Indah’s flagship Pearl City project is well positioned to tap into the positives in the market. Our flagship mixed development in Seberang Perai Selatan will be a well-integrated township complemented with public amenities, recreation facilities, healthcare and wellness centre, retail outlets, and more than 11,000 residential housing units upon completion in 2020.

Additionally, Pearl City is adjacent to existing transportation networks like the North South Expressway and future infrastructure developments like the Penang Second Bridge and a railway station supporting the double-track line running between Padang Besar and Ipoh.

With RM256.0 million worth of projects slated for launch in FY2013, ongoing work at all our existing developments, and about RM1.9 billion gross development value worth of properties in the pipeline, Tambun Indah is well positioned for growth given the positive outlook for the Penang property market.

CORPORATE GOVERNANCE

In the pursuit of building sustainability in the Group’s profitability, Tambun Indah is committed to upholding the best practices of corporate governance in our day-to-day operations so as to protect and enhance shareholders’ value. The measures the Group has undertaken to ensure this are detailed in the Corporate Governance Disclosure in this Annual Report.

APPRECIATION

On behalf of the Board, I would like to take this opportunity to extend our thanks and gratitude to the shareholders for their continued support and loyalty; as well as the management and staff for their commitment, dedication and contribution towards the success of the Group.

To my fellow directors, I thank you for your counsel and active participation during the year. I would like to thank my predecessor Mr Tsai Yung Chuan for the guidance he provided and his contribution to the Board in his previous capacity.

On behalf of the Board, I would like to record our appreciation to Dato’ Mohamad Nadzim Shaari for his contributions. We regret that he was unable to continue as a director on account of his other commitments. We welcome Ms. Tsai Chia Ling’s appointment to Board as an Alternate Director on 27 July 2012.

Our sincere thanks and gratitude also go out to our customers, bankers, business associates, all stakeholders, and the relevant authorities for their cooperation and continued support during the year.

Thank you.

Lai Fook HoyChairman