MPar2014_Layout 1 4/24/15 9:16 AM Page ii MPar2014_Layout 1 4/24/15 9:16 AM Page iii CONTENTS Group Structure 02 Corporate Information 03 Chairman’s Statement 04 Management Discussion & Analysis 11 Board of Directors 13 Profile of Directors 14 Statement on Corporate Governance 17 The Audit Committee 26 Statement of Risk Management and Internal Control 30 Financial Statements 35 Properties Held by the Group 102 Analysis of Shareholdings 103 Notice of Annual General Meeting 106 Share Buy-Back Statement 109 Proxy Form MPar2014_Layout 1 4/24/15 9:16 AM Page 2 Group Structure PROPERTY CONSTRUCTION PROPERTY TRADING DEVELOPMENT & ENGINEERING MANAGEMENT 100% 100% 100% 100% 100% Magna Prima Magna Shah Alam Magna Prima Prima Awan Magna Mix Development Sdn Bhd Sdn Bhd (381065-U) Construction (M) Sdn Bhd Sdn Bhd (296427-M) Sdn Bhd (184897-V) (786061-H) (800279-H) 100% 91% Magna City Shah Alam 100% Magna Park Sdn Bhd Sdn Bhd (785936-U) MPrima (227337-X) (Shah Alam) Sdn Bhd 100% (397974-W) 100% Twinicon (M) Sdn Bhd Amanabina (816605-V) Sdn Bhd 100% (496831-K) 100% Dunia Epik 33 Sentral Park Sdn Bhd Sdn Bhd (95974-K) 100% (646429-H) Embassy Court 100% Sdn Bhd 100% Magna Park (644306-P) Monetary Icon (M) (Mentakab) Sdn Bhd (828804-V) Sdn Bhd 70% (346648-T) Magna Ecocity Sdn Bhd 100% (496141-A) Permata Juang (M) 100% Sdn Bhd (828780-T) Pembinaan 100% Contamaju-Infocast Winicon (M) Sdn Bhd 100% Sdn Bhd Everhall (M) Sdn Bhd (817534-M) (627933-X) (786053-V) 100% Ibsul Development 100% 100% Magna City Development (Sel) Sdn Bhd Kontrakmal 1 Sdn Bhd (412099-K) (700479-V) (M) Sdn Bhd (700562-U) 100% Crossborder Team (M) Sdn Bhd (821484-P) 100% (369519-P) Magna Prima Australia Pty Ltd (ACN No.151747910) 70% Pavilion Uptrend Sdn Bhd (1075159-M) Magna Prima Berhad 2 MPar2014_Layout 1 4/24/15 9:16 AM Page 3 Corporate Information Board of Directors TAN SRI DATUK ADZMI BIN ABDUL WAHAB Ir. TAN WEI DAR Independent Non-Executive Director, Chairman Executive Director DATUK WIRA RAHADIAN MAHMUD BIN ONG AH LENG MOHAMMAD KHALIL Independent Non-Executive Director Group Managing Director SAZALI BIN SAAD Independent Non-Executive Director Audit Committee Registered Office Solicitors Ong Ah Leng Lot No. C-10, Block C, Zul Rafique & Partners Chairman Jalan Persiaran Surian, Lee Choon Wan & Co. Palm Spring @ Damansara, Ringo Low & Associates Tan Sri Datuk Adzmi bin 47810 Kota Damansara, Manjit Singh Sachdev, Mohammad Abdul Wahab Petaling Jaya, Radzi & Partners Selangor Darul Ehsan. Teh & Lee Sazali bin Saad Tel : 603-7805 5505 Mohd Mokhtar & Co. Fax : 603-7803 0156 Satha & Co. Website: www.magnaprima.com.my Zulpadli & Edham Nomination Committee Ong Ah Leng Share Registrar Principal Bankers Chairman Symphony Share Registrars Sdn Bhd Export-Import Bank of Malaysia Tan Sri Datuk Adzmi bin (378993-D) Berhad Abdul Wahab Level 6, Symphony House, Malaysia Building Society Berhad Block D13, Pusat Dagangan Dana 1, Affin Hwang Investment Bank Sazali bin Saad Jalan PJU 1A/46, Berhad 47301 Petaling Jaya, Selangor. OCBC Bank (M) Berhad Tel : 603-7841 8000 Hong Leong Bank Berhad Remuneration Committee Fax : 603-7841 8151/ 8152 Malayan Banking Berhad Tan Sri Datuk Adzmi bin Abdul Wahab Auditors Stock Exchange Listing Chairman Messrs Morison Anuarul Azizan Bursa Malaysia Securities Berhad Ong Ah Leng Chew (AF 001977) Main Board Chartered Accountants Listed since 16 January 1997 Sazali bin Saad Bursa’s Code: 7617 Company Secretary Yuen Yoke Ping (MAICSA 7014044) Annual Report 2014 3 MPar2014_Layout 1 4/24/15 9:16 AM Page 4 Chairman’s Statement Dear Shareholders, It is with great honour that I present to you Magna Prima Berhad’s Annual Report for the financial year ended 31 December 2014. Magna Prima (the Group) achieved success in 2014 despite a challenging business environment. I am pleased to note that we have been able to reinforce our presence as a strong and dependable organization in a fiercely competitive market. This bodes well for us as it is in line with our long term aspirations of being a force to reckon with in the Malaysian scene. ECONOMIC OVERVIEW On a macro basis, domestic demand remained as the anchor contributor towards the Malaysian economy’s 6.1% growth for 2014. A Bank Negara bulletin noted that private consumption and investment activities were robust and underpinned by stable labour market conditions as well as continued wage growth. On the supply front, growth was supported by key industries such as construction, manufacturing and services – three industries which now account for more than two thirds of the local economy. Inflation averaged at 3.2% in 2014 compared to 2.1% the year prior. Interest rates remained stable with the Overnight Policy Rate being retained at 3.25%. For property players specifically, 2014 started on a passive note as we had to contend with various property cooling measures introduced via Budget 2014. These austerity policies resulted in the first six months of the year being generally utilized to realign business and sales strategies to adapt to the new changes while active marketing campaigns and new launches dominated (369519-P) the second half. It is worth noting that while stricter access to financing was introduced to moderate household debt and the removal of Developers Interest Bearing Scheme (DIBS) has significantly eradicated speculators from the property market, it did however put negative pressure on genuine first time Magna Prima Berhad home owners. Moving forward, we will endeavour to ensure that a segment of our product offering meets the demand of this group as we do our part to encourage equal opportunity of 4 home ownership for all Malaysians. MPar2014_Layout 1 4/24/15 9:16 AM Page 5 Chairman’s Statement The Istana (Melbourne) MPar2014_Layout 1 4/24/15 9:16 AM Page 6 Chairman’s Statement FINANCIAL HIGHLIGHTS For the financial year ended 31 December 2014 (FY14), we achieved a revenue of RM142.6 million, compared to the previous year’s RM135.9 million. However, the Group’s earnings were constrained due to an unexpected overall loss before taxation of RM7.0 million arising from our Construction division being party to a legal dispute. On a segmental level, our Property Development division contributed RM132.9 million in revenue and grossed RM40 million in profit before tax for FY14. The higher revenue and profit figures are attributed to earnings generated by our Seri Jalil project during the first quarter of 2014. Ongoing sales and progress on construction from current projects yielded additional income as well. As at 31 December 2014, the Group’s Property division’s coffers had on record nearly RM200 million of unbilled sales in Malaysia and an additional RM404 million (AUD $137 million) in Australia. Our Construction division fared better during FY14, recording a revenue of RM4.8 million compared to a loss of RM0.09 million during the previous corresponding period. However, significant pre-tax losses amounting to RM39 million were sustained due to a legal dispute. Trading activities derived a further RM4.1 million in revenue for the Group. CORPORATE DEVELOPMENTS On 23 December 2014, the company completed a fund raising exercise with the issuance of 40,000,000 new Magna Prima redeemable convertible preference shares (RCPS) to Lembaga Tabung Angkatan Tentera. The RCPS were valued at an issue price of RM1.00 each in accordance with the terms and conditions of a subscription agreement entered between said parties on 11 August 2014. It was with mixed emotions that Executive Director, Choh Kim Chiew, resigned from Magna Prima on 13 June 2014. Though we regret his departure from the organization, I thank him for his service to the company and wish him all the best as he embarks on the next stage in his career. I am pleased to update our shareholders that we have completed the acquisition of the much sought after 10,587 sq. m of prime freehold land in The Golden Triangle from the Lai Meng Girl’s School Association. The purchase price was fully paid on 2 May 2014 subsequent to the relevant documents being presented to the Registry of Land Titles for registration. The Istana (Melbourne) Seri Jalil MPar2014_Layout 1 4/24/15 9:16 AM Page 7 Chairman’s Statement The Istana (Melbourne) Alam D’16 REVIEW OF OPERATIONS Boulevard Business Park @ Jalan Kuching, Kuala Lumpur Approximately 62% of construction work on the Boulevard Business Park development has been duly completed as at 31 December 2014. The shop office, supermarket and serviced apartment components are expected to be completed during the third quarter of 2015 while the shopping mall will be completed by year end. Jalan Ampang Iconic Towers, Kuala Lumpur City Centre With its strategic location close to KLCC and equipped with our Development Order, an approved plot ratio of 1:12 as well as a tentative Gross Development Value (GDV) of RM1.8 billion, we are progressively examining our development plans with a fine tooth comb to ensure that the Jalan Ampang Iconic Towers unlocks the maximum possible value in terms of return on investment for our shareholders. Desa Mentari, Petaling Jaya, Selangor Sales of more than 60% of the commercial units have been achieved in the weeks following the soft launch of Desa Mentari. This development is currently being fined tuned even as teams have been mobilized to commence preliminary work on site. Construction of the 36 units of 3-storey shop offices is targeted to be completed and units handed over to purchasers during the third quarter of 2017. Magna Ecocity, Shah Alam, Selangor Development plans for this parcel of land are in place and subject to further refinement.