46 SUNWAY BERHAD ANNUAL REPORT 2013 PRESIDENT’s REVIEW The Group delivered solid results in 2013 with strong contributions across all divisions. The three main drivers of performance were the synergies between our property and construction businesses achieved from the merger of Sunway Holdings Berhad and Sunway City Berhad in 2011, our large construction order book and the high unbilled property sales as at the end of 2012. DATO’ CHEW CHEE KIN President 47 LOOKING BEYOND THE HORIZON artiST’s IMPRESSION OF SUNWAY GEO Bandar Sunway Integrated PropertieS Property Development The Group launched RM1.8 billion of new properties in Total property sales in 2013 was RM1.8 billion, similar to 2013, of which RM1.2 billion was in Malaysia and RM555.0 that recorded in 2012, comprising sales of new launches and million in Singapore. This represented an approximate 30% previously launched projects, namely Sunway South Quay, increase from RM1.3 billion in 2012, of which RM1.1 Sunway Montana, Sunway Velocity, Sunway Eastwood, billion was in Malaysia and RM260.0 million in Singapore. Sunway Nexis, Sunway Alam Suria and Sunway Vivaldi. The Group’s unbilled sales at the end of 2013 stood at Our new properties launched comprised a range of product RM2.4 billion, compared with RM2.5 billion in 2012. types, price points and geographies. In the Klang Valley, we launched Sunway Geo Retail Shops and Flexi Suites (Phase In landbanking, we secured three parcels of land in 2013. 2), and Sunway Geo Residences, both located in Sunway We secured the Eastern Pendas South parcel, with a South Quay. These contributed a total Gross Development size of 300 acres, in early 2013 to augment our Sunway Value (“GDV”) of RM855.0 million, of which more than Iskandar township which now measures 1,770 acres in 80% of units had been sold as of the end of 2013. total. This will give us control of development on both sides of Sungai Pendas. In addition, we secured a major We launched our maiden development in the southern landbank in Paya Terubong, the heartland of Penang region of Malaysia, Sunway Lenang Heights, located near Island, at a cost of RM267.4 million, marking our first Taman Molek, Johor Bahru. Sunway Lenang Heights is an major landbank acquisition in Penang. We plan to build exclusive residential development that is expected to be the an integrated development with a GDV of RM1.5 billion standard-bearer in its immediate vicinity, as it is the only that will strengthen the Group’s competitive position in gated and guarded community with a private clubhouse. Penang. In Singapore, we secured a parcel of prime land The launch phase, comprising semi-detached and bungalow in Mount Sophia, just minutes from the Orchard shopping homes, had a GDV of RM200.0 million. belt. The land cost approximately SGD442.3 million, and our planned low rise residential development is expected to In Singapore, we launched our first integrated development, generate a GDV of SGD820.0 million. the Royal Square at Novena, which comprises medical suites, retail lots and a hotel. As at end 2013, 50% of the medical suites and retail lots have been sold. The hotel component will be sold en-bloc upon its completion. 48 SUNWAY BERHAD ANNUAL REPORT 2013 artiST’s IMPRESSION OF SUNWAY UNIVERSITY Bandar Sunway Property Investment and Real Estate Investment Leisure and Hospitality Trust (“REIT”) The Group held a 34.5% interest in Sunway REIT as at Our two theme parks entertained 1.6 million visitors in 31 December 2013. The REIT distributed a total of 8.27 2013, marginally lower than 1.7 million in 2012, largely sen per REIT unit in dividends in 2013, representing a resulting from increased competition from new entrants yield of 5.3% based on its closing price of RM1.55 as of 31 in the market. Despite the challenging industry conditions, December 2012. we increased profitability by introducing new offerings and growing our revenue per visitor, and by proactively The division generated continued growth in its recurring managing costs. income base. The division’s latest addition, Sunway Pinnacle, a 27-storey MSC status office tower in Sunway At Sunway Lagoon, we introduced our second new mega Resort City, was completed at the end of 2013. This adds ride in two years, the Vuvuzela, billed as the world’s largest 580,000 square feet of net lettable area under the division’s vortex water ride. In addition, through a strategic alliance management and Sunway Pinnacle is expected to welcome with Viacom International Media Networks, we secured the its first tenant by March 2014. rights to host the MTV World Stage for the next 3 years. This is a marquee event on the music calendar in the region, The Group continued to invest in asset enhancements. and will both increase the visitor figures for our parks and At Monash University Malaysia campus, we added two enhance Sunway’s brand recognition in the region as the academic blocks with 230,000 square feet of net lettable programme is broadcasted on MTV. space, which will be fully let by Monash University. In addition, we started the rejuvenation of Sunway Putra, with In the hospitality division, several of our properties extensive renovations of Sunway Putra Mall and Sunway were upgraded, namely Sunway Putra Hotel, Sunway Putra Hotel. These works are expected to complete in 2015. Hotel Seberang Jaya and Sunway Hotel Georgetown. Refurbishment of the latter two hotels was completed in 2013, while Sunway Putra Hotel’s renovation commenced at the end of 2013 and is expected to be completed in 2015. 49 LOOKING BEYOND THE HORIZON KLCC NORTH EAST CARPARK CONSTRUCTION SITE Kuala Lumpur Construction Our Construction division delivered excellent results, In addition, the Group was awarded two contracts by a joint securing RM2.6 billion worth of new jobs in 2013, the venture company between KLCC (Holdings) Sdn Bhd and highest order replenishment among Malaysian contractors. QD Asia Pasific Ltd for the construction of a basement The new jobs comprised RM1.8 billion of third party jobs car park and substructure works for an upcoming mixed and RM812.0 million of in-house jobs from the Integrated development adjacent to the KLCC Twin Towers (total Properties division. Our order book stood at a high of contract sum of RM526.0 million). RM3.9 billion at the end of 2013 and was diversified, a testament to our multi-discipline capabilities. In 2013, we completed several significant projects, including Legoland Water Park, Pinewood Iskandar Malaysia Studios During the year, the Group won the contract for construction and Universiti Teknologi Mara campus extension in Shah of the Elevated Bus Rapid Transit (“BRT”) – Sunway Line Alam. We made substantial progress on key ongoing (contract sum of RM452.5 million) by Syarikat Prasarana projects, including Package V4 of the MRT (20% completed Nasional Berhad. This is the first BRT line to be built in as at December 2013) and Package B of the Kelana Jaya the country and has the potential to be the template for LRT line extension (40% completed as at December 2013). additional new BRT lines in the country. We were honoured to be also selected to build the Afiniti Urban Wellness Centre, a joint venture project between Khazanah Nasional Berhad and Temasek Holdings, at a contract sum of RM282.9 million, in Medini Iskandar. In addition to enhancing the Iskandar Malaysia development, this project is also expected to contribute to the strengthening of bilateral ties between Malaysia and Singapore. 50 SUNWAY BERHAD ANNUAL REPORT 2013 FURUKAWA DRILL Strategic INVESTMENTS Trading and Manufacturing The Trading and Manufacturing division generated revenue of RM586.8 million in 2013, up from RM558.7 million in 2012, largely driven by sales growth in the heavy equipment and building materials businesses, underpinned by increased construction activity in Malaysia. Robust sales growth was achieved across our key agencies of Furukawa Crawler Drills, SANY concrete pumps and Airman compressors. A highlight for the division was the delivery to our client MMC-Gamuda of a SANY truck-mounted concrete pump equipped with Malaysia’s longest placing boom (48 meters). The truck was deployed for construction of the underground works of the MRT project at Jalan Tun Razak in Kuala Lumpur. Quarry and Building Materials Our quarry division achieved revenue of RM197.7 million in 2013, a marginal increase from RM196.9 million in 2012. Key drivers of revenue were the MRT and LRT projects in the Klang Valley, which contributed to strong demand for aggregates. We expect continued robust demand in 2014 and 2015 from ongoing infrastructure projects in Malaysia, as well as new projects such as the West Coast Expressway. In order to capture additional demand, we are looking to expand our geographic footprint with new quarries in 2014 and 2015. The Building Materials division achieved sales growth in its main products of pavers and clay pipes, with the division’s revenue increasing to RM143.1 million in 2013 from RM133.2 million in 2012, driven by expansion of domestic demand and increase in export sales. We maintained our industry leadership position in pavers, and continually differentiate ourselves through innovation, research and development. New products planned include new paver profiles that promote better interlocking properties and lighted pavers. SUNWay VCP’s FACTORY Kapar, Klang 51 LOOKING BEYOND THE HORIZON SUNWAY MEDICAL CENTRE Bandar Sunway Healthcare Outlook and Prospects The Healthcare division delivered another year of outstanding The outlook for the global economy is expected to be revenue growth with revenue increasing 20% to RM196.6 favourable, with economic activity and world trade expected to million from RM163.9 million in 2012, driven by higher be stronger in 2014-2015 than in 2013, largely on account of capacity utilization and greater demand for quality healthcare recovery in the advanced economies.