 |
|||||||||||||||||||||||||||||||
INVESTOR RELATIONS
In the last financial year ended 31 March 2011 (FY2011), the Ireka Group recorded a revenue of RM443.95 million, a 13% increase compared to the RM393.07 million revenue recorded in the previous financial year (FY2010). The higher revenue was due to a higher volume of construction works completed during the period under review.
2010 saw the world economy continued its steady recovery following the September 2008 financial crisis. However, uncertainties persist with the debt crisis in several European countries and in the United States, coupled with its slow economic recovery. The recent credit rating downgrade of the US by Standard & Poor's affected world stock markets with many, if not all, major indices plunging, affecting investor confidence. Nevertheless, Asia is still seen as the shining hope for global economic recovery in the coming years, with strong macro and micro-economic fundamentals and increasing domestic consumption capacity. The Group remains committed to its vision, focusing on improving its performance and reliability, as well as striving for excellence in quality and creativity in delivering our products and services. These traits will form the basic building blocks of our business strategy going forward and will be consistently applied across our three core business divisions. INFRASTRUCTURE DIVISION During the financial year, Ireka Engineering & Construction Sdn Bhd ("IECSB") had successfully completed the structural works for the basement and podium of the office and hotel towers at KL Sentral; the 1 Mont' Kiara integrated office and retail development as well as Phase 1 of the high-end condominium project, SENI Mont' Kiara. Phase 2 of SENI Mont' Kiara is due for completion in the third quarter of this year. In February 2011, Ireka Group's Vietnambased construction arm, Ireka Engineering And Construction Vietnam Company Limited, secured a RM27.58 million contract for the structural works package of a general hospital at the International Hi-Tech Healthcare Park in Binh Tan District, Ho Chi Minh City, Vietnam. This marks the Group's maiden foray into Vietnam. The Group also secured two other contracts to construct two office towers (in November 2010) and a hotel block (in May 2011) at KL Sentral, with contract values of RM232.75 million and RM109.75 million respectively. This brings a total of RM370.08 million worth of construction projects secured during the financial year. In addition to the current construction works for the Harbour Mall and the Four Points by Sheraton hotel at Sandakan Harbour Square, as well as the Kulai- Second Link Expressway Interchange, the Group's order book stood at about RM1.22 billion, of which approximately RM414.00 million remained outstanding (as at end July 2011). In the coming year, the main priority for the Group is to replenish its order book. Based on the Group's track record and experience, the targeted projects will include commercial and Government buildings, infrastructure works as well as high-end residential buildings. Alongside that, the Group is constantly looking at ways to increase operational efficiency by improving on its current systems and processes. In Ireka, a Quality Control and Training ("QCT") Unit is one of the key initiatives in ensuring that the level of quality is continuously raised and to instill the culture of getting it 'Right The First Time' across the Group. REAL ESTATE DIVISION Towards the end of 2010, the residential segment stabilised with slight increases in prices of between 5% to 10%. The office segment maintained stable yields of between 6% and 8% with occupancy rates of approximately 80%. Throughout the year, Ireka Development Management Sdn. Bhd. ("IDM"), as the development manager of Aseana, has worked closely with the board of Aseana to ensure that its property portfolio was managed effectively and its balance sheet remained strong. In December 2010, Aseana announced the sale of the 20-storey office tower and 5-storey retail mall at 1 Mont' Kiara for RM333.00 million to ARA Asia Dragon Fund (an affiliate of Hong Kong's Cheung Kong Group). This disposal is a testament to IDM's ability to exit investments at the right time and for the right price. In January 2011, Aseana also announced the withdrawal from the acquisition of a plot of commercial development land in Mont' Kiara, due to uncertainty in the timing of approvals from the relevant authorities. Following the exit of Aseana from this project, Ireka Group now retains the right to complete the acquisition of this prime land from the land owner should the approvals from the relevant authorities are obtained in the near future. Detailed planning is underway for a joint development project between Ireka Group and Aseana (30:70) on a prime site in Kuala Lumpur City Centre ("KLCC") which is targeted for sales launch in early 2012. Strategically located on Jalan Kia Peng, this development will consist of a boutique hotel and serviced residences, with commanding views of the worldfamous Petronas Twin Towers. In Vietnam, the Vietnamese Dong underwent its third devaluation of 9.3% in February 2011 against the US Dollar. Since then, the devaluation of the Vietnamese Dong has been contained but the Vietnam economy is also facing inflationary pressures and high interest rates which have further dampened the investment climate. Within the real estate sector, the office segment in Vietnam is softening, observed in indicators such as the declining of occupancy and rental rates. In the residential segment, the low and midmarket and high-end villas sectors in prime location are still performing well but there is a perceived oversupply in the high-end apartment sector. In the third quarter of 2011, there are some signs that the apartment residential market may rebound, following reasonable results recorded at launches by established international developers in Ho Chi Minh City. Despite Vietnam's challenging economic environment, IDM has achieved commendable results for Aseana's developments in Vietnam. At the end of 2010, the pilling works for the City International Hospital ("CIH") at the International Hi-Tech Healthcare Park development in Binh Tan District, Ho Chi Minh City was completed, with the main structure works now progressing. In December 2010, another milestone was achieved, when Aseana signed a Hospital Management Agreement with Gleneagles Management Services Pte Ltd (a wholly-owned subsidiary of Parkway Holdings Limited) as the operator of CIH. Parkway Holdings Limited is a Singaporebased leading healthcare group and also Asia's largest healthcare service provider, managing hospitals in Singapore, Malaysia, India and Middle East. In April 2011, Aseana has signed a conditional agreement to develop a residential project (known as Phuoc Long B project) in District 9 of Ho Chi Minh City with Nam Long Investment Corporation on a 55:45 basis. The development will comprise 37 units of luxury villas and two high-rise apartment towers. IDM is currently working towards launching the project towards end of 2011. In the coming year, IDM will continue to focus on managing and delivering projects under Aseana's property portfolio. The final phases of Sandakan Harbour Square and SENI Mont' Kiara are slated for completion and several projects in Malaysia and Vietnam are also expected to commence by end of 2011. In addition to IDM's efforts for Aseana, Ireka will be seeking to build its own development land bank, with a focus on growth corridors in Malaysia. With that, the Group hopes to continue to leverage on its strength of creating innovative products across wider segments of the property market in the coming years. TECHNOLOGIES DIVISION However, i-Tech succeeded in its strategy to improve margins and efficiency. The company was conscious of rising operating costs and related expenses, higher cost of doing business and increasing labour cost for employing experienced technical staff. Thus, i-Tech had successfully managed to control these by streamlining some of its internal processes. With the Government's initiative towards national IT developments as laid out in the 10MP (e.g. high-speed broadband, 4th generation wireless services, cloud computing, etc.), i-Tech is confident that this will provide many opportunities for the ICT industry in general, and the company specifically. The other key opportunity lies in the Government's Economic Transformation Program (ETP) announced towards the end of last year, where Malaysia is seeking to be a world-class hub for data centers in this region. In its annual ICT industry forecasts, premier global provider of market intelligence, International Data Corporation (IDC), noted that IT spending in Malaysia will grow from US$5.9 billion in 2010 to US$6.5 billion this year and this growth is driven by some of the national governmental initiatives mentioned above. Frost & Sullivan, a global market research company, echoed this view, and pointed to wireless broadband and cloud computing as two specific growth areas in the local IT sector. As reported in last year's Annual Report, i-Tech planned to offer co-location services. Since then, the team had conscientiously focused on the design, planning and construction of a 'green' data center, located in Mont' Kiara. In July 2011, Phase 1 of the facility is completed and there will be extensive promotions with its business partner, IBM, to brand and offer a full suite of ICT services to its clientele. Investing in a data center is an important initiative and a major step forward for the Technologies division, further complementing the Infrastructure and Real Estate divisions for the Group. This strategy certainly supports Ireka Group's holistic and strategic approach in accelerating key technologies in the areas of advanced analytics, social collaboration and smarter commerce operations. The growth in hardware and software spending in recent years has attracted numerous new entrants and competitors into the market. As a result, margins are getting noticeably thinner and the reseller space is narrowing. i-Tech's investment in the data center and this diversification strategy will provide the company with a new growth platform, to stay ahead of its competitors for the longer term. In the years to come, the co-location services will further boost i-Tech's revenues and profits and allows the company to better address its customers' needs and demands. Moving forward, i-Tech will increase its efforts towards improving all aspects of its business processes, procedures and systems to place the Ireka Group on a technologically-advanced platform, as the world move towards business digitalisation. Lai Siew Wah |
|||||||||||||||||||||||||||||||
 |
|||||||||||||||||||||||||||||||
 |
|||||||||||||||||||||||||||||||
Despite the increase in revenue, the Group recorded a pre-tax loss of RM11.09 million, mainly due to share of losses in its associated company, Aseana Properties Limited ("Aseana") and a mark-to-market
loss for share investment in Vietnam-based
Kinh Bac City Development Shareholding
Corporation. Profits were also affected
by lower construction margins due to
higher costs associated with delays in the
completion of one of the company's major
construction project.
|