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| Lion Diversified Holdings Berhad |
| REVIEW OF OPERATIONS |
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| The Group is principally engaged in the following activities: |
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Manufacturing and sale of steel related products ("Steel"); |
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Manufacturing and sale of computer and related products ("Computer"); |
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Property development and management ("Property"); and |
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Investment holding, trading and others ("Others"). |
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| (RM Million) |
Revenue |
Operating Profit |
| 2009 |
2008 |
2009 |
2008 |
|
Steel |
1,042 |
61 |
161 |
16 |
|
Computer |
166 |
208 |
12 |
6 |
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Property |
33 |
43 |
1 |
12 |
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Others |
8 |
15 |
4 |
17 |
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Retail (Disposed of in 2008) |
1,249 |
327 |
178 |
51 |
|
– |
1,290 |
– |
144 |
|
1,249 |
1,617 |
178 |
195 |
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| Steel Division |
The Group’s core steel operation, located strategically in Banting, Malaysia, produces direct reduced iron ("DRI"), a high quality ferrous charge material used in iron and steelmaking. As a hot charge substitute for scrap (main ingredient for steelmaking), DRI would generate savings through lower consumption of electrical power and replace the usage of the more expensive imported scrap.
The global recession has severely affected steel demand in key consuming industries, such as the building and vehicle manufacturing sectors, forcing steelmakers to reduce production sharply. Our DRI operation is not spared from the crisis although the damage is comparatively less severe. The long term off-take agreement with a guaranteed return has led to the Division to report a revenue of RM1.0 billion and an operating profit of RM161 million. The substantially lower results registered in the preceding year was due to the results of our DRI plant being accounted for only less than a month following the commissioning of the plant in June 2008.
The Group’s other downstream steel business is through its investments in 59% interest in LCB (equity accounted
for instead of consolidated in view of the potential dilution in the interest to below 50%) and a stake in Megasteel.
Megasteel is involved in the manufacturing and sale of hot rolled coils ("HRC"), and is the sole producer of HRC in
Malaysia serving the domestic and international markets. Since the beginning of the financial year, the performance
of Megasteel has been adversely affected by the sharp deterioration in the steel market as a result of the severe
global economic crisis.
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| Computer Division |
Our Computer Division is involved in the provision of integrated one-stop original equipment manufacturing ("OEM") services for the production of personal computer ("PC") casings and enclosures especially the assembly of computer peripherals and electronics components. It has also diversified its product range into other non-PC segments such as flat panel television frames and components, internet protocol TV set-top boxes, audio visual equipment, telecommunication, security-alarm and electrical switching products to reduce its dependence on the PC market. The production facilities are located in Melaka, Malaysia and Mexico, together with a sales representative office in the USA to provide customer support services.
With the global economic and financial crisis, consumers are tightening their belts on spending on non-essential items which has led to slower demand and lower revenue being posted for the year under review. However, the Division has managed to improve its profitability mainly due to the strengthening of the US Dollar against the Ringgit coupled with the ongoing cost-reduction efforts implemented by the management.
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| Property Division |
In the Property Division’s assets portfolio, there were two (2) property projects as follows:
| (i) |
Cheng Avenue Project, Melaka |
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Located near to our computer operation in Melaka, this commercial project is situated on 20 acres of leasehold land. A total of 84 units of shop office and semi-detached factory have been launched during the financial year, recording an encouraging sale of approximately 80%. |
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| (ii) |
“D’ Venice Residence” Project, China |
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Located at Changshu City, Jiangsu Province, China, the project comprises four pieces of contiguous land totalling 20.1 hectares. Phase 1 development is expected to be launched by end 2009. |
In addition, the Group also has a 35% interest (treated as a jointly controlled entity) in Twins, a project located in
the prestigious residential enclave of Damansara Heights, Kuala Lumpur. This exclusive high-end condominium
development comprises two (2) iconic 36-storey tower blocks and consists of about 300 residential units. Since
the sales launches in the previous financial year, the response has been overwhelming. The construction works
is progressing well and it is expected to contribute a satisfactory profit over the next two years. |
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