FINANCIAL HIGHLIGHTS AND INSIGHTS The emerging variants of the COVID-19 viruses, the ensuing effects of lockdowns and various other restrictions including the shutdown of economic sectors, affected the Group’s financial performance in FY2021. Despite the uncertainties brought on by the COVID-19 pandemic, the Group sold RM1.3 billion worth of development properties for the financial year (“FY”) 2021 or 62.4% more than last year’s sales of RM0.8 billion on the back of an aggressive marketing and sales campaign. Notwithstanding cautious consumer sentiments, demand remains strong supported by low interest rates and home ownership incentives introduced by the government. The strong sales performance has sustained the Group’s unbilled sales at RM1.5 billion as at 31 December 2021, where the level of such unbilled sales places the Group in a comfortable position to deliver sustainable earnings performance in the coming years. The Group’s revenue in FY2021 stood at RM876.0 million compared to RM1.1 billion in FY2020. The higher revenue in the preceding year reflected the completion of the disposals of four parcels of freehold development lands in Johor Bahru for a total cash consideration of RM399.2 million, whereby there were no land disposals in the current year. Excluding these said land disposals, the revenue in the current year is higher by RM206.3 million on a comparative basis, which was contributed by higher property sales and progress billings across ongoing key projects in the Klang Valley and the Southern Region. The Group recorded a loss before tax of RM36.0 million and a loss attributable to owners of the parent of RM52.2 million in FY2021. There was higher profit in the preceding year which had gains arising from the sale of the four parcels of development lands whereby there were no sales of land in the current year. Despite the loss for the year, the Group’s property development and property management division still performed strongly with profits of RM72.0 million for the year which were backed by strong sales and cost savings from projects. Besides that, the results also reflected the challenges in the business environment amid the COVID-19 pandemic in FY2021. With unbilled sales of RM1.5 billion and strategic approaches to unlock the value of 2,452.0 acres of prime land with potential gross development value in excess of RM152.2 billion, the Group is expected to be on track to register positive earnings in the next few years. Although the industry remains challenging in the short term, the Group believes that there will still be demand for properties in prime locations in Tropicana’s established, matured and developing townships, with attractive pricing and innovative ownership packages and offerings, especially first-time house buyers. Therefore, the Group will continue to focus on being market-driven in its product offerings whilst continuing to unlock the value of its land bank, at strategic locations across the Klang Valley, Genting Highlands, Langkawi and Southern Regions. In FY2022, the Group plans to introduce new developments and phases across its signature Tropicana townships such as Gemala Residences, a garden-linked villas at Tropicana Aman, Kota Kemuning; a mixed development comprising retail lots and serviced apartments at Tropicana Heights, Kajang, SouthPlace 2 Residences and SouthPlace 2 Shoppes, a mixed development comprising retail lots and serviced apartments at Tropicana Metropark, Subang Jaya; and Aster Heights, first residential development located at Tropicana Uplands in Gelang Patah, Johor. Group Capital Structure FY2021 FY2020 RM'000 RM'000 Shareholders' Equity 4,636,144 4,706,181 Total Equity 5,984,117 5,759,306 Gross Borrowings 3,915,803 3,596,771 Cash and Bank Balances 638,603 621,892 Net Borrowings 3,277,200 2,974,879 Gross Gearing ratio 0.65 0.62 Net Gearing ratio 0.55 0.52 Net Assets Per Share 3.21 3.22 FY2021 FY2020 RM'000 RM'000 Revenue 876,015 1,062,571 (Loss)/Profit before tax (35,982) 238,404 (Loss)/Profit attributable to owners of the parent (52,171) 91,307 Overall, our balance sheet as at 31 December 2021 remained strong with total cash and bank balances and total equity of RM638.6 million and RM5,984.1 million respectively. The Group is well positioned to continue implementing its planned growth strategies. The total equity of the Group improved by 3.9% or RM224.8 million to RM5,984.1 million as at 31 December 2021. The gross gearing and net gearing of the Group has increased as compared to 31 December 2020 being 0.65x (2020: 0.62x) and 0.55x (2020: 0.52x) respectively due to issuance of Islamic Medium Term Notes of RM293.0 million during FY2021. The Group is expected to improve its performance in FY2022 amid a more challenging business environment driven by the momentum created from the Group’s stellar performance in FY2021 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. Detailed analysis of the various business segments are as follows: Property Development & Property Management The property development and property management segments remain the key contributor to the Group’s revenue, generating RM685.2 million for the full financial year, decreasing by 24.0% or RM216.5 million from RM901.7 million in FY2020. The segmental profit was lower by 82.3% or RM354.0 million to RM76.2 million from RM430.2 million in FY2020. The higher segmental revenue and profit in the preceding year reflected the completion of the disposals of four parcels of freehold development lands in Johor Bahru for a total cash consideration of RM399.2 million as well as gains on disposal of RM236.0 million, whereby there were no land disposals in the current year. Overall, this segment continued to be the main contributor to total Group revenue at 78.2%. Property Investment, Recreation & Resort The Group revenue from the property investment, recreation & resort segment recorded at RM105.3 million as compared to RM95.3 million in FY2020, which increased slightly by RM10.0 million or 10.5%. The slight increase was mainly due to the lifting of bans on interstate travel in FY2021 for those who have been fully vaccinated. However, Malaysian borders remain closed to foreign nationals who seeking to enter the country for tourism purposes. This segment was also impacted by various MCOs during the year but reported a lower loss at RM85.4 million as compared to a loss of RM110.6 million in FY2020 which was attributed to the recognition of one-off impairment loss of W KL and Courtyard by Marriott Penang amounting to a total of RM33.7 million in FY2020 whereby there was no such impairment in FY2021. Overall, the base earnings from this segment continues to remains at sustainable levels through recurring incomes of its investment properties. Investment Holdings & Others The Group revenue from this segment stood at RM85.5 million in FY2021 as compared to RM65.6 million in FY2020; an increase of RM19.9 million or 30.3%. 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. This segment reported a lower loss at RM26.8 million as compared to a loss of RM81.2 million in FY2020 which was mainly due to recognition of unrealised gains on quoted shares as well as a one-off gain on bargain purchase subsequent to the completion of the acquisition of a subsidiary in FY2021. Key Financial Highlights for Financial Year Ended 31 December 2021 Total sales of RM1.3 billion High unbilled sales of RM1.5 billion 94 95 Annual Report 2021 TROPICANA CORPORATION BERHAD PERFORMANCE REVIEW
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