E&O ... Oct10

It has set a dividend policy to pay out at least 30% of its after-tax profit as dividends, starting this financial year.

The financial year ended March 31, 2010 saw a remarkable turnaround in performance with the group returning to the black with a profit-after-tax of RM74.4 million against an after-tax loss of RM32.10 million recorded in the previous financial year.

For its first three months of FY11 ending March, E&O posted a net profit of RM10.23 million or 0.96 sen a share on the back of RM46.31 million in revenue. The 1QFY11 net profit had more than doubled from RM5.05 million registered in the previous corresponding period.

E&O has cash and bank balances amounting to almost RM559 million as at end-June 2010. The group has beefed up its war chest after raising RM481 million from a rights issue of irredeemable convertible secured loan stocks (ICSLS) in 2009 and the disposal of non-strategic landbank.

It plans to spearhead the F&B expansion. However, the bulk of the cash will be used to generate fresh cash flow by launching new projects and buying more land.

The developer's businesses are currently in Kuala Lumpur and Penang, where it is involved in property development and investment, and operating hotels and restaurants.

Its Property Division …

It wants to expand regionally to grow its property development units.

The stronger balance sheet will strengthen E&O’s position in further expanding its landbank and to kickstart more development projects.

Property development projects would contribute a major portion of its group revenue in years to come. The company is also involved in two other core business activities of property investment and, hospitality and lifestyle.

E&O's brand presence and balance sheet strength, the company would concentrate on the execution of eight projects and the development of its 520 hectares of prime landbank collectively amounting to RM4 billion in gross development value.

E&O aims to launch flagship projects in Singapore and Jakarta, Indonesia, but there are no concrete plans yet. The company would remain focused on developing properties in the prime areas of the Klang Valley and Penang as regional markets were not the company's top priority for now. It has more than RM4 billion worth of high-end housing projects to launch in Penang and Kuala Lumpur.

Among the projects that E&O plans to launch are seafront terraces, villas and semi-detached homes in Penang, and condominiums at Jalan Yap Kwan Seng and Jalan Kia Peng as well as in Bukit Tunku in Kuala Lumpur.

E&O aims to achieve record sales of RM1 billion. No time frame was, however, given.

It has over 300 acres in the Klang Valley, which will last them six to eight years. In Penang, including what is to be reclaimed, they have over 1,000 acres of landbank, and that will last them 12 to 15 years.

At present, in the Klang Valley, E&O is developing the St Mary’s Residences project located in the golden triangle, The Peak in Damansara Heights, and other developments in Jalan Yap Kwan Seng and Bukit Tunku, among others. In Penang, the group is developing its Seafront Terraces, Seafront Villa’s, and Quayside 1 and 2, all on the mainland.

In total, these developments have an estimated gross development value of RM4 billion, but the group will time its launches carefully depending on demand situation.

Other than these projects, E&O is also planning developments at Kemensah Heights near the national zoo, and the second phase of Seri Tanjung Pinang, which involves land reclamation.

Its F&B Division …

It wants to expand regionally to grow its food and beverage (F&B) units.

Under the F&B division, E&O operates the Delicious Chain of restaurants in Malaysia and it wants to expand this to Singapore, Thailand and Indonesia.

E&O operates six Delicious outlets and one Chinese restaurant.

For its financial year ended March 31 2010, E&O posted RM70.5 million in net profit on revenue of RM352.4 million.

For FY10 ended March 31, E&O is paying a first and final dividend of 3.8% or 3.8 sen per share, less 25% tax.