Admiral Tan Sri Dato’ Setia Mohd Anwar
bin Hj Mohd Nor (Retired)
Independent Non-Executive Director
On behalf of the Board of Directors, it is my pleasure and honour that I present to you the Annual Report and Audited Financial Statements of Titijaya Land Berhad (“Titijaya” or “the Group”) for the financial year ended June 30, 2020 (“FYE2020”).
An Unprecedented Year of Pandemic Shock
The year 2019 continued to carry the heavy economic turbulence from 2018, and into 2020, bringing an increasingly testing time to both the global and local economies. The unsettled and rising trade tensions between two of the largest economies in the world, United States and China, continue to shackle the already sluggish global Gross Domestic Product (“GDP”) growth. This was further compounded by the volatile commodity prices and the uncertainty over the aftermath of Brexit’s full-blown effect on the global trade growth moving forward.
On the local front, Malaysia’s economy was definitely not spared from the crises, with slowdown seen in the output of crude oil, natural gas, and palm oil, as well as deterioration in exports amidst the global geopolitical tension. This made Malaysia to record a lower GDP growth of 4.3% in 2019, 30 basis points lower than 2018, a low not seen post-2010.
Having already faced with the economic uncertainties, the Pandemic Covid-19 that has struck at the cusp of 2020 became the Achilles heel that has brought the world demand to its knees from multiple economic and social fronts.
In the face of the brutal challenges faced in FYE2020, the Group’s performance was impacted due to the stop-work order during the period of Movement Control Order (“MCO”) which had impacted the second half of financial year ended 2020 (“2H FYE2020”) performance of the Group.
The Group is well aware of all the ongoing uncertainties and has taken proactive measures to curtail the negative impacts of the crisis by improving our operational efficiencies, training our people to be practical and flexible in tackling all the adverse impact of the crises. It is vital that we continue to strive and position ourselves and more importantly to acknowledge the unavoidable change that is reshaping our world. This is imperative for us to grasp the opportunities and improve our resiliency against any future market uncertainties.
We strongly believe that our Group’s position now has improved compared to pre-Covid 19 crisis, and is adapting to the changes by innovating to stay relevant in these ever-changing times. It is our focus and our core value that we continue to drive and spearhead sustainable growth for our businesses to create long term value for our stakeholders.
ISSUES AND CHALLENGES
Policy and Measures to Pull the Property Industry Together
The local housing demand and supply gaps are widening and will continue to deteriorate due to the adverse economic condition, causing an all-time high property glut in the market. This condition is also not helped by the unaffordability issues where the mismatch of house prices and Malaysian household’s annual income is becoming more acute. However, the Group sees this as an opportunity to bank on by providing better and more affordable housing for the market via our affordable product pricing points.
The Government has also put in place great measures and initiatives to tackle the property overhang situation. One of the initiatives is the Home Ownership Campaign (HOC), introduced in 2019 where it has helped aspiring home buyers to secure a home at a lower entry cost. This was subsequently reintroduced in June 2020 for residential property purchases on the primary market due to its stream of positive feedback. We will work hand-in-hand with the government to offer our products for the aspiring first time home buyers or up-graders to own a new home.
As the world grapples with the low interest rate environment, Malaysia also saw its Overnight Policy Rate reduced to 1.75 percent, a fourth consecutive cut since the beginning of 2020 and a level not seen since the Global Financial Crisis in 2008. This move was inevitably made in order to prioritise the nation’s economic well-being by encouraging and spurring the private consumption and business spending to support the local economy.
The Malaysian government’s stance in its expansionary monetary policy and measures to boost consumer spending is the right move to prevent a sudden plunge in the domestic demand caused by the unprecedented impact of Covid-19 pandemic. Among cushioning policies is the announced economic stimulus package totaling RM250 billion targeted to assist the welfare of citizens and businesses. Easing policies have also been implemented to support the affected industries and the economic growth from sliding further.
We remain cautiously optimistic about the outlook for 2020-2021 due to the ongoing global economic headwinds and continued pressure on the local economy, which inadvertently altered the dynamics and sentiment of the property market. We are confident that the Malaysian economy will remain resilient with efforts that have been put in place along various measures to counter the impending crises.
The Group’s stance moving forward in this demanding operating environment would be to continue to focus on delivering products that are innovative and cater to the mass market demand. It is imperative that our launched products adapt to what the market needs.
For the FYE2020, in view of the adverse impact of Covid-19 pandemic, coupled with the uncertainties on the global economy and markets going forward, the Board has decided to conserve its firepower to ensure its solid sustenance, as well as to prepare for internal and external opportunities.
We wish to inform that the Board is not proposing any dividend for FYE2020 as the challenges ahead signal that financial resiliency is critical in order to withstand and respond to the impacts of external shocks moving forward.
Challenging yet Rewarding Recovery Road Ahead
The year 2020 would mark as one of the most challenging years the Group has ever faced where all the crises congregate to create a perfect storm for the economy and property industry. As the economy continues to face the brunt of slowing GDP growth, geopolitical tensions, Covid-19 pandemic, and volatile commodity prices, it will be an uphill battle to emerge from these crises unscathed. On top of that, Malaysia had also experienced a change in the political climate, bringing upon new measures, policies and regulations with which we must comply and work together as a country to support the recovery and future growth of the property industry and the economy as a whole.
These events have also caused a review and revision by Bank Negara Malaysia (“BNM”) where they have forecasted a contraction in Malaysia’s GDP in 2020 of between -3.5% and -5.5% before looking at a potential recovery in 2021.
During the MCO, the Group’s operations were halted to ensure the wellbeing and safety of our staff are well taken care of. As the MCO subsequently eased, the Group resumed its operations in stages during the Conditional Movement Control Order (“CMCO”), with some of our workforce continuing to work from home. The strict measures are a short-term pain but a long-term benefit for the country to regain its footing. All that said, it is undeniable that the measures undertaken to curb the spread of the Covid-19 pandemic have taken a considerable toll on both external demand and domestic growth and disrupted a wide range of economic activities.
On the property front, it will continue to be sluggish due to the contraction in the economy, increasing unemployment rate and cost of living. Coupled with the lower risk appetite stance seen by banks on loan requirements, it is not dazzling that the property industry will continue to be a challenging environment to thrive in. To top it off, developers are also aggressively offering a myriad of attractive packages, freebies and even financial assistance to attract purchasers to purchase their products, further spiking up the competition amongst the players.
Against these backdrops, the Group remains cautious on the outlook for the financial year ending June 30, 2021 (“FYE2021”) and continues to remain committed to delivering the highest standard and quality products to the market. We will be prudent in new higher-end launches but remain nimble by focusing on delivering products that cater to the demands of the market.
It has not been an easy time to be the captain of the ship especially during the stormy days but our Board of Directors, employees, and the stakeholders have been utmost supportive to keep the Group going strong.
I would like to express our gratitude to the members of our Board of Directors for their unwavering support, wise counsel and strategic direction since the inception of the Group. On top of that, it is my utmost gratitude to our employees for their dedication and the stakeholders for their support and faith in committing to our Group’s vision and mission.
CHANGE IN BOARD MEMBER
The Board members and I are delighted to welcome Dato’ Mohd Ibrahim Bin Mohd Nor onboard as our Independent and Non-Executive Director in November 2019. He is the Chairman of the Audit Committee and a member of the Board Risk Management Committee of the Company. His vast experience of having sat and chaired multiple boards both in the past and present would be invaluable to Titijaya.
The retirement of Datuk Nozirah Binti Bahari (“Datuk Nozirah”) has also brought upon a change to our Board of Directors, effective in November 2019. On behalf of the Group, I would like to express our appreciation to Datuk Nozirah on her contributions for the past two years with us.
Admiral Tan Sri Dato’ Setia Mohd Anwar Bin Hj Mohd Nor