This is my inaugural Annual Statement to Shareholders as the Chairman of Ireka Corporation Berhard (“Ireka Group” or the “Group”). I am privileged and delighted to present the Annual Report and Audited Accounts of the Group for the financial year ended 31 March 2015 (“FY2015”).
For FY2015, the Group’s revenue improved by 47.1% to RM426.2 million compared to RM289.7 million recorded in the previous year. This is mainly contributed by the increased volume of work completed by the Infrastructure Division’s construction activities during the year, in particular the Imperia Puteri Harbour, Iskandar Malaysia Project and Solstice @ Pan’Gaea, Cyberjaya Project. The operating profit achieved by the Group was RM12.9 million compared with an operating loss of RM1.9 million in FY 2014. However, after allowing for the share of losses of an associated company, Aseana Properties Limited (“Aseana Properties” or “Aseana”) of RM6.0 million, the loss for the year amounted to RM2.4 million compared to a loss of RM27.3 million recorded in the previous year.
The Board of Directors have recommended a first and final single-tier dividend in respect of the financial year ended 31 March 2015, of three sen per ordinary share for shareholders’ approval at the forthcoming Annual General Meeting. The dividend payout of RM5.1 million will be accounted for as an appropriation from retained earnings in the financial year ending 31 March 2016. This dividend payout is a token of appreciation to our loyal shareholders who have placed their confidence and trust in Ireka over the years, and we hope for your continued support in the ensuing years.
Despite the current lackluster economic outlook, the drastic drop of crude oil price and the weakening Malaysian Ringgit, the Country’s construction sector continues to record positive growth, spearheaded by mega projects and rail-lines development projects. On the construction front, we have a RM1.4 billion order book as at date of this report, which includes the MRT Civil and Structure Works, two residential and office tower projects at KL Eco City and The RuMa Hotel and Residences, of which approximately RM760.4 million remains outstanding. The Group will continue to seek opportunities to replenish its order book, albeit on a cautious basis to minimize the risks of an uncertain economy in the short to medium term. The Group’s construction activities is also expected to remain busy with a number of planned Group property projects being scheduled for launching in the coming financial year.
Malaysia experienced a softer property market in view of the current economic outlook coupled with rising inflation and lower purchasing power following the implementation of the Goods and Services Tax (“GST”). The property cooling measures introduced by the Government since 2013 coupled with tighter lending guidelines have also continued to weigh on the market. FY2015 saw the completion of Kasia Greens in Nilai, which is the first development under Ireka’s new zenZ brand. Kasia Greens consisting of 142 units of terraced houses located in Nilai, was successfully handed over to its buyers in early June 2015. The Group will soon launch Rimbun Kasia, its next phase of residential development in Bandar Baru Nilai and ASTA, the modern industrial park in Kajang later this year. Following these two projects, Ireka targets to launch its residential project in Kajang and Mont’ Kiara during the first half of 2016.
Ireka’s associate, Aseana Properties, had in May 2015 announced proposals regarding the future of the company to enable realization of the company’s assets in a controlled, orderly and timely manner, with the objective of achieving a balance between periodically returning cash to shareholders and maximizing the realization value of the company’s investment. Subsequently, during the Annual General Meeting and Extraordinary General Meeting held in June 2015, the shareholders had approved the proposals for the continuation of Aseana for the next three years to June 2018, adoption of a new divestment policy, and intention to make distributions of not less than US$20.0 million in 2015 based on current cash balances and expected receivables from realized assets.
The performance of i-Tech Network Solutions Sdn Bhd (‘i-Tech’) and iTech ELV Solutions Sdn Bhd (‘iTech ELV’), the Group’s Technologies businesses, have also been impacted by the weaker economy and a highly competitive market landscape. The weaker economy has resulted in clients postponing IT spending, particularly in the Oil and Gas industry. In Vietnam, i-Tech Network Solutions (Vietnam) Company Ltd continues to support the City International Hospital in Ho Chi Minh City. The Company also managed to secure a few networking and systems integration projects with a few of multi-national companies in Vietnam.
FY2015 saw the culmination of a productive and professional relationship between the Group and two long-serving members of the Board. The Board and I wish to record our sincere appreciation and profound gratitude to Tuan Haji Ir. Abdullah bin Yusof who retired as Chairman of the Board and Mr. Kwok Yoke How who retired as Independent Non-Executive Director on 31 March 2015, for their invaluable services rendered to the Board and the Group for the past 23 years. Simultaneously, I take this opportunity to welcome our new Board members, Dato’ Azmi bin Abdullah and Mr. Hoe Kah Soon as Independent Non-Executive Directors, and Mr. Tan Thiam Chai as Group Executive Director. Dato’ Azmi’s wealth of experience in the banking and finance industry will be of immense value to the Group. Mr. Hoe, who has broad international experience as a management consultant across many industries will also add a valuable perspective to our Board. Mr. Tan, who is also the CEO of Ireka Engineering & Construction Sdn Bhd, with his years of experience in the construction industry, will definitely bring an important perspective to the Board.
I would also like to congratulate and welcome our new Group Managing Director/Group CEO, Mr. Lai Voon Hon and Group Deputy Managing Director/Group Deputy CEO, Ms. Monica Lai. They have both taken on the tasks to provide leadership in executing the various projects and initiatives of the Group going forward. With these new appointments, Datuk Lai Foot Kong has taken on a new role as Group Executive Director/Group Advisor and will continue to bring his wealth of experience to the Group. In my and Datuk Lai Foot Kong’s years of serving as executive leaders of the Group, I offer our gratitude to all our employees for their hard work and commitment towards achieving our shared goals and objectives. I urge everyone to give their undivided support to our new Managing Director/CEO and Group Deputy Managing Director/Group Deputy CEO in their effort to bring Ireka to greater heights.
Last but not least, on behalf of the Board, I wish to convey my sincere thanks to all shareholders, customers, business partners, Government authorities and Aseana for their continued support in our business undertakings.
DATUK LAI SIEW WAH P.G.D.K.