Tropicana Corporation Berhad Annual Report 2019

Property Investment, Recreation & Resort The Group revenue from the property investment, recreation & resort segment recorded at RM146.2 million as compared to RM98.3 million in FY2018, which increased by RM47.9 million or 48.7%. Notwithstanding the increase in the revenue, the segment reported a loss at RM64.0 million as compared to profit of RM43.9 million in FY2018 which was attributed to the one-off impairment loss of W KL amounting to RM50.5 million. Besides that, there was a one-off fair value gain on one of the Group’s investment properties amounting to RM31.4 million being recognised in FY2018 where there was no such gain in FY2019. Overall, the base earnings from this segment continue to remain at sustainable levels through recurring incomes of its investment properties. Investment Holdings & Others The Group revenue from this segment stood at RM89.1 million in FY2019 as compared to RM93.9 million in FY2018, a slight decrease of RM4.8 million or 5.1%. The revenue from this segment continues to remain at sustainable levels which are contributed from a few subsidiaries namely Tropicana Building Materials Sdn Bhd, Tropicana Innovative Landscape Sdn Bhd and Tropicana SJII Education Management Sdn Bhd. The segmental profit has increased significantly by RM250.9 million mainly contributed by the recognition of a one-off gain on bargain purchase subsequent to the completion of the corporate exercise in November 2019. Group Capital Structure RM’000 FY2019 FY2018 Shareholders’ Equity 4,661,982 3,403,670 Gross Borrowings 2,519,115 1,956,185 Cash and Bank Balances 754,949 975,774 Net Borrowing 1,764,166 980,411 Gross Gearing Ratio (times) 0.54 0.57 Net Gearing Ratio (times) 0.38 0.29 Net Assets per Share (RM) 3.20 2.36 Overall, our balance sheet as at 31 December 2019 remained strong with total cash and bank balances and total equity of RM754.9 million and RM4,662.0 million respectively. The Group is well positioned to continue implementing its planned growth strategies. The shareholders’ equity of the Group improved by 37.0% or RM1,258.3 million to RM4,662.0 million as at 31 December 2019. The improvement was mainly due to the completion of the corporate exercise in November 2019 coupled with a better performance and higher retention of the current profit. The Group’s financial position has strengthened, with healthy gross gearing at approximately similar levels to 31 December 2018 being 0.54x (2018: 0.57x) on the back of a larger total shareholders’ equity whilst the net gearing of the Group at the end of December 2019 was at 0.38x (2018: 0.29x). The net assets per share will be diluted from RM3.20 as at 31 December 2019 to RM1.91 or RM1.77 per share if the Irredeemable Convertible Preference Shares of RM1,178.9 million is fully converted at RM1.20 or RM1.00 per share respectively. The Group is expected to continue its satisfactory performance in FY2020 amid a more challenging business environment driven by the momentum created from the Group’s stellar performance in FY2019 and the various pipelines of on-going projects. While prospects for the property sector remains challenging in the short-term, the Group believes that there will still be demand for properties in prime locations that have accessibility to superb amenities and competitive pricing. Sustainability at Tropicana What We’ve Governed Financial Statements & Other Information pg 33 Tropicana Corporation Berhad Annual Report 2019