The Property Division maintained its role as a strong contributor to the Group’s bottom-line with a profit of RM85 million, a 77% jump against RM48 million last year.
PROPERTY DEVELOPMENT
Our ‘Mutiara Homes’, the brand name for all houses built by Mutiara Rini Sdn Bhd, set the pace by registering a profit of RM53 million. In Mutiara Damansara, 2007 saw the launch of 98 super- linked homes, 78 semi-detached homes and 9 bungalow units. The gross development value for these new offerings were in excess of RM300 million and we are pleased to note that the response was very encouraging.
We continue to see strong demand and appreciating value for our remaining land bank in this highly sought after area given the infrastructure and aesthetics that have been invested in Mutiara Damansara. We are confident we will be able to enhance the yield further from the remaining land bank over the next few years.
Appealing to urbanites and currently registering strong capital appreciation in the secondary market, our 376 units of Surian Condominiums have been handed over to homeowners.
2007 2006
387m 308m 85m 48m 1,641m 1,629m 630 516
Revenue Operating Profit
Total Assets Employees Financial Highlights
183 Ampang
PROPERTY DIVISION
We are confident that the construction of Surian Tower, a high rise state of the art office complex when completed, will not only be an iconic structure i n M u t i a r a D a m a n s a r a b u t w i l l a l s o h a v e a significant impact on the overall office market outside the city centre.
As for Johor, the Group launched a total of 612 terrace homes and shop lots in Taman Mutiara Rini during the year. The launch of Phase 2F in particular, which consists of 104 units of double storey terrace homes, achieved an 80% take-up on launch day.
Taman Mutiara Rini is expected to benefit from its l o c a t i o n w i t h i n t h e g r o w t h r e g i o n o f t h e Government’s Iskandar Development Region (IDR), as investments as much as RM4 billion are expected to be pumped into the IDR to create new jobs, opportunities and houses for this southern gateway.
In 2007 commenced the construction of a 43-unit low-rise condominium in Jalan Ampang, which will be leased to generate recurring income given that prices of properties surrounding the Kuala Lumpur city centre has surpassed RM2,000 per sq.ft.
The Property Development Division is embarking on a redevelopment project of the Weld Quay landbank in Penang into a 300-room ‘Royale Bintang’ hotel.
Looking ahead, we expect this property to benefit from the Northern Corridor Economic Region.
We are also developing a mixed residential township i n S e m e n y i h a d j a c e n t t o t h e U n i v e r s i t y o f Nottingham in Malaysia, which has the potential to become another thriving township.
PROPERTY INVESTMENT
We a r e p l e a s e d t o i n f o r m o u r i n v e s t m e n t s particularly Menara Boustead and Wisma Boustead, as well as Menara Affin in Kuala Lumpur and Menara Boustead Penang, maintained a steady rental income for the Group.
To ensure its on-going appeal, we have embarked on a major refurbishment exercise of two of our landmark properties - Menara Boustead and Wisma Boustead. We expect not only to retain, but to attract high-quality tenants in search of strategic locations in the central business district of Kuala Lumpur.
The increasing popularity of the Curve as a leading suburb shopping mall is demonstrated by its current occupancy rate of 92% and its visitor traffic exceeding 23 million for the year. To maintain our lead, we are improving specific areas at the Curve with a view to increase number of daytime visitors and enhance business for our tenants.
Cineleisure Damansara also saw improved occupancy during the year with the opening of its audio/visual tunnel and the addition of two more cinemas to the existing ten.
Our hotels, namely Royale Bintang Damansara and Royale Bintang Kuala Lumpur, performed remarkably well. These hotels recorded a pre-tax profit of RM9 million on the back of a turnover of RM39 million, which was an improvement in pre-tax profit of 68%
compared with last year. In addition we have taken over the management of the Royale Adelphi Hotel (formerly the Hilton Seremban), which has since been renamed the Royale Bintang Seremban.
Menara Boustead Penang
Finance & Investment Division
Finance & Investment Division
This Division undertook significant corporate initiatives, with a view to further strengthening your Group’s position in the banking and general insurance sectors.
We achieved a profit of RM70 million compared with last year’s RM8 million. This was attributed to e a r n i n g s f r o m B H I n s u r a n c e a n d i m p r o v e d performance from the Affin Group. The purchase of additional shares in our listed subsidiary Boustead Properties Berhad at prices below its fair value had brought a gain of RM38 million.
Affin Holdings Berhad (Affin Group) remained the primary contributor to the Division’s overall profit by closing the year with a pre-tax profit of RM353 million on the back of a turnover of RM2.18 billion;
a notable improvement of RM39 million or 12%
over the previous financial year. The improved performance was due to positive contributions across the Affin Group’s core businesses.
As the Affin Group evolves to become a total solutions provider, plans are in place for the formation of three core banking entities namely Affin Bank Berhad, Affin Investment Bank Berhad and Affin Islamic Bank Berhad. These three entities have been structured under Affin Capital Sdn Bhd which in turn is wholly-owned by Affin Holdings Berhad. This would position the three banking entities to move forward as a universal banking entity providing a comprehensive and seamless range of products and services. Affin Group would benefit from the synergy and cost optimisation that will arise from this development.
2007 2006
74m 7m 70m 8m 1,467m 982m 476 145
Revenue Operating Profit
Total Assets Employees Financial Highlights
Remaining on course to further enhance operational efficiencies and reduce non-performing loans (NPL) ratio, Affin Bank Berhad achieved a pre-tax profit of RM251 million (2006: RM218 million).
Affin Bank’s initiative to roll-out programmes aimed at restructuring overdue loans and assisting loan holders in clearing their long-term loans have proven to be successful. The Bank recorded a higher loan recovery during the year despite provisions of RM227 million in relation to NPLs aged 5 years and above. At the close of the financial year, the Bank’s net NPL ratio had improved significantly to 8.25%.
In tandem with Affin Bank’s improved position, the bank embarked on a rebranding initiative to effectively position itself as a medium-sized bank of prominence based on the brand promise of ‘Banking without Barriers’. Additionally, BEA’s stake in the Affin Group will enable the bank to leverage on BEA’s expertise and international reach.
Affin Investment Bank Berhad was formed through the merger of Affin’s stock broking and Affin Merchant Bank and is today a one-stop investment banking group. During the year it recorded a pre-tax profit of RM62 million with a strong contribution from its stock broking business as a result of a bullish stock market. With this consolidation Affin Investment’s human capital resources have been strengthened, and this business is poised to offer innovative and successful corporate finance, fund raising and capital market solutions to its broad range of clientele.
Affin Islamic Bank Berhad (Affin Islamic), which was established in April 2006, registered an encouraging pre-tax profit of RM58 million. With backing from both corporate and consumer banking, its total financing grew by 41% compared with the previous year. Aligned with the upside in finances, total assets rose by 50% whilst, total customer deposits increased by 85% recording a high of RM6.3 billion and RM5.8 billion respectively.
Towards the tail end of 2007, Affin Islamic obtained the right to establish an International Currencies Business Unit from Bank Negara Malaysia. This timely approval will enable the Group to achieve its business plan and strategies that encompass developing new products, moving into new territories, developing human capital talents and fostering strategic relationships.
BH Insurance (M) Bhd (BHI) recorded a pre-tax profit of RM44 million for the year, with investment profit increasing by 8% to RM25 million and its broking and agency sectors contributing a 14%
growth. This subsidiary improved in operational efficiencies with a view to enhance underwriting, risks and claims management competencies. It also broadened its product range and adopted an electronic agent system to support its motor and non-motor businesses while intensifying efforts to expand into other classes of insurance such as Directors & Officers and Professional Indemnity policies. Since becoming a subsidiary of the Boustead Group, BHI’s objective to diversify its business is in line with plans to tap into new premium opportunities that will enhance profitability.
Boustead Credit Sdn Bhd recorded an improved profit due to strict credit control policies that are complemented with its expertise in catering to its niche market.