MKH Annual Report 2017

Hotel and Property Investment This segment comprises principally a hotel, and 2 shopping complexes located in Kajang, namely Plaza Metro Kajang (with net lettable area of about 270,000 ft ² ) and Metro Point Complex (with net lettable area of about 160,000 ft ² ), 4 parcels of commercial land in Kajang and Semenyih which are leased to 2 hypermarkets and 2 leading fast-food restaurants, and Rafflesia International School. Other properties included in this segment are 4 lots of office cum car park bays, 3 lots of 2-storey shops and car park bays, and 1 lot of 6-storey shop at MKH Avenue in Kajang. This segment, which provides a steady rental income stream to the Group with an average rental yield of 5.0% per annum, posted revenue and profit before taxation of RM33.9 million and RM 15.1 million for the year under review. This represents a decline of RM5.2 million and RM2.5 million from preceding year’s revenue of RM39.1 million and profit before taxation of RM 17.6 million respectively. The decrease in revenue and pre-tax profit was mainly due to an inclusion of a gain from changes in fair value of investment property amounting to RM3.0 million and the absence of lease income amounting to RM4.6 million from certain long term leased investment properties recognised in accordance with Financial Reporting Standard 117 Leases during the year. Prospects The Board expects the Group to achieve satisfactory results for the financial year ending 30 September 2018, mainly from the following principal business segments: • Property Development and Construction There are ongoing development projects which have been launched with total locked-in unbilled sales of about RM926.5 million. Although the Klang Valley residential market is expected to remain challenging, the Group is well positioned to take on this challenge as most of its properties are in the affordable segment where demand remains buoyant; • Plantation Whilst CPO prices are expected to remain at sustainable levels, the Group will continue to focus and emphasise on estate management to unlock production efficiencies in the realms of oil extraction rate enhancement and optimising capacity utilisation of the mill; and • Property Investment Rental yield from this segment is expected to average approximately 5.0% per annum based on fair values of the properties as at 30 September 2017 to provide a steady income stream to the Group. We are in the midst of converting the furniture manufacturing division's land and factory buildings in China into property investment for better returns. 25 MKH Berhad • Annual Report 2017 A proposed pavillion at the core of Kajang 2 as the heart of the township's central business district MKH Avenue is the first commercial development with Small Office Flexible Office (SoFo) concept in Kajang Management Discussion and Analysis Report Artist’s Impression Artist’s Impression