Tropicana Corporation Berhad Annual Report 2019

Financial Highlights & Insights Key Financial Highlights for Financial Year Ended 31 December 2019 • Total sales RM718.3 million and high unbilled sales of RM836.5 million • Net gearing increased from 0.29x (2018) to 0.38x (2019) Group Financial Review RM’000 FY2019 FY2018 Revenue 1,135,843 1,635,471 Profit before tax (“ PBT ”) 367,474 320,231 Profit attributable to owners of the parent (“ PATMI ”) 320,759 170,029 The financial year ended (“ FY ”) 31 December 2019 was in fact a challenging year in the property market. However, the Group achieved total sales of development properties of RM718.3 million for the fiscal year 2019 with our effective marketing and sales strategies. The strong sales performance has sustained the Group’s unbilled sales at RM836.5 million, where the level of such unbilled sales places the Group in a comfortable position to deliver sustainable earnings performance in the coming year. The Group’s revenue in FY2019 stood at RM1.14 billion compared to RM1.64 billion in FY2018. The performance was in line with expectations following the weak market and consumer sentiments in Malaysia’s housing market. However, the Group’s steady construction progress as well as the Malaysian Government initiatives such as the Home Ownership Campaign (“ HOC ”) partially mitigated these weak sentiments. The Group’s PBT increased to RM367.5 million from RM320.2 million in FY2018 and profit attributable to owners of the parent in FY2019 was RM320.8 million compared to RM170.0 million in FY2018. The higher PBT and PATMI were mainly attributable to the recognition of a one-off gain on bargain purchase which arose when the Group acquired development lands held by 12 acquiree companies from a related party at a favourable price of an average discount of 13.4% to the market value of these lands and where the corporate exercise to acquire was completed in November 2019. With unbilled sales of RM836.5 million and strategic approaches to unlock the value of 2,167.5 acres of prime land with potential gross development value in excess of RM61.3 billion, the Group is expected to be on track to register positive earnings in FY2020. Whilst the overall prospects for the industry remain challenging in the short term, the Group believes that there will still be demand for properties in prime locations with attractive pricing, particularly in Tropicana’s established developed townships. Although the Malaysian property market is currently very challenging, we believed the Government will provide continued support towards home ownership, especially for the first time house buyers. The pace of growth is expected to be modest but will stay resilient going into FY2020. Therefore, the Group will continue to focus on being market-driven in its product offerings whilst continuing to unlock the value of its landbank, at strategic locations across the Klang Valley, Genting and Southern Regions. In FY2020, the Group plans to introduce new developments and phases across its signature Tropicana townships amounting to a GDV surpassing RM1.6 billion. The upcoming launches include the first phase of Tropicana Grandhill, the TwinPines Serviced Suites with fully furnished serviced apartments in Genting Highlands; Shoppes & Residences (South), a mixed development comprising retail lots and serviced apartments at Tropicana Metropark, Subang Jaya; a new landed residential phase at Tropicana Aman, Kota Kemuning; Tropicana Miyu condominiums at Jalan Harapan, Petaling Jaya; and shop offices at Gelang Patah, Johor. Detailed analysis of the various business segments are as follows: Property Development & Property Management The Group revenue from the property development and property management segments decreased by 37.6% or RM542.8 million to RM900.5 million from RM1,443.2 million in FY2018. The segmental operating profit was lower by 33.7% or RM95.7 million to RM188.4 million from RM284.1 million in FY2018. The lower segmental profit was contributed by lower sales resulting from weak real estate conditions and lower progress billings across projects in the Klang Valley as well as the Southern Regions. Overall, this segment continued to be the main contributor to total Group revenue at 79.3%. Tropicana Corporation Berhad Annual Report 2019 About Tropicana Our Strategic Performance Our Leadership pg 32