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Thursday, May 28, 2009

MK Land back in the black

PROPERTY developer MK Land Holdings Bhd has posted a net profit of RM13.2 million for the nine months to March 2009, against a loss of RM18 million in the same period last year, attributed largely to higher property sales.

The improved performance has allowed MK Land to make an early payment of RM60 million as the final settlement of its outstanding bond, which is only due in September this year.

MK Land, in which Tan Sri Mustapha Kamal Abu Bakar holds a majority stake, slipped into the red in the 12 months to June 2007 and 2008 due to additional cost incurred because of errant contractors.

It was the period when Mustapha Kamal stepped down as executive chairman from April 2007.
Chief operating officer Fatimah Wahab said the profit for the period reviewed was driven by strong sales performance after Mustapha Kamal returned and turned the company around in June 2008.

Sales for the nine months jumped 180 per cent to RM185 million, in spite of the weaker property and economic market condition, Fatimah said.

Top company executives have also mapped out a turnaround plan that includes cutting operating overheads, increasing cash position and reducing debt on a timely basis.

"The early (bond) payment is a significant milestone for MK Land in its turnaround efforts. We have sent a message to our bankers, bondholders and other stakeholders that we are serious about our efforts to reposition MK Land," Fatimah said.

MK Land will also embark on a corporate restructuring to lower the overall costs of funds and enhance earnings of share, she told Business Times.

The group had debts of RM500 million as at December 31 2008 and aims to reduce this to RM400 million by June and RM300 million by early next year.

"We will revisit the capital structure, treasury function and funding situation and see how they could be best structured to carry us forward. We have strategies in place to lower the cost of funds through innovative financial packages. We are talking to bankers," Fatimah said.

She added that MK Land is looking at various ways to enhance its margins and banking on Armanee Terrace Condominium and Rafflesia, its two core products within its Damansara Perdana township in Selangor, to drive profits.

By Business Times (by Sharen Kaur)

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