Glomac Berhad’s (“Glomac”) ratings have been reaffirmed, a reflection of the company’s established position as a reputable property developer in the Klang Valley and its strong financial performance coupled with an adequate cashflow generating capacity. The moderating factor continues to be the vulnerability of the projects to adverse developments in the property market.

Glomac’s entry into property development began in 1988 and was primarily recognised as a commercial developer with landmark buildings in Kelana Jaya namely Glomac Business Centre, Kelana Business Centre and Kelana Centre Point. In line with market demand, Glomac is presently focusing on mixed residential developments, concentrating within the Klang Valley and Johor. As at 31 October 2005, total secured sales of its on-going developments stood at RM1.6 billion with over 80% billed.

In FY2005, Glomac’s main revenue earner continued to be its property development division, accounting for 85.0% of total revenue. Nevertheless, revenue recorded a moderate reduction in FY2005 as the Aman Suria Damansara development was near completion coupled with the deferment in the launch of Suria Stonor, an exclusive high rise condominium development. Nonetheless, operating margin improved aided by lower finance costs, higher interests income and the absence of any provisions required for low cost housing. Going forward, revenue will be mainly driven by Glomac Square, a commercial development project which has been fully sold; Suria Stonor, which was launched in July 2005 and has been well received by the public, with a take-up rate of approximately 60%. In addition, two new developments, The Residence in Cheras and Glomac Boulevard in Kelana Jaya are expected to be launched by early 2006.

Specific phases within the development projects of Aman Suria, Saujana Utama II and Sri Saujana have been earmarked for the redemption of the Senior BaIDS. As at 31 August 2005, the total amount billed from these phases stood at RM386.8 million with receivables at a mere RM3.4 million. The outstanding balance in the designated account as at 31 December 2005 was approximately RM30.0 million which is more than adequate to meet the Group’s immediate financial obligations.

The Group’s debt leverage level increased marginally in FY2005 due to increased long term borrowings to finance its various land acquisitions. Nevertheless, this was moderated by strong retained earnings and the progressive redemption of the Islamic debt securities. Sensitivity analysis performed on the Group’s projected cashflow revealed a moderate cashflow with minimum and average base case finance service coverage ratios at 1.3 times and 9.9 times respectively.