Dear Valued Shareholders,

Year 2011 marked yet another significant milestone for WCT when the Company celebrates its 30th Anniversary. In 1981, WCT Earthworks and Building Constructions Sdn Bhd set off on a journey riding on the construction boom in Malaysia contributed by the nation’s industrialization focus. With a pioneer staff of six and one unit of construction machine at the outset, WCT Berhad today employs more than 900 people with businesses in:-

1.             Engineering & Construction;

2.             Integrated Township, Residential and Mix-Commercial Property Development; and

3.             Assets Investments & Management in Retail Malls, Hotel and Highway Concessions. 

At the end of 2010, WCT Berhad’s market capitalization stood at RM2.5 billion and is a component stock of the FBM100, the top 100 public listed companies quoted on Bursa Malaysia. As a company, we have received numerous accolades from the construction industry over the years with the most recent being the highly coveted “Contractor of the Year Award 2010” by the Construction Industry Development Board of Malaysia (CIDB). The award, accorded towards the end of last year, stamped a remarkable 30-year journey for all associated with WCT.

It is therefore worth mentioning that the above are only possible because of the men and women who tirelessly work the miles at WCT, and to all those who have in more ways than one, been associated with our walk in history, although it is not possible to mention each by name. WCT takes this opportunity to record its appreciation and thanks to YOU, who made real what had begun as only a dream.

YEAR 2010

For the year 2010, WCT Group registered a consolidated revenue of RM1.7 billion while recording operating and net profits of RM300 million and RM141 million, respectively.

The Engineering and Construction Division continued to be the main thrust of the Group’s business activities. It contributed RM1,443 million or 84% to the Group’s consolidated revenue. In terms of operating profit, it achieved RM195 million or 65% of the total operating profit of the Group.

Meanwhile, the Group’s Property Development registered a revenue of RM231 million or 14% of the Group’s consolidated revenue. Operating profit was RM42 million or 14% of the Group's total operating profit.

Assets Investment and Management contributes a recurring flow of income since 2008, derived mainly from rental income at Bukit Tinggi Shopping Centre. In 2010, total revenue from this segment amounted to RM35 million, registering an operating profit of RM63 million or 21% of the Group’s total operating profit.

ENGINEERING & CONSTRUCTION

The global construction market recovered gradually in 2010 amidst stable prices of raw materials and introduction of fiscal stimulus by Governments with most activities remained robust in the Asia region. During the period we remained focused in executing projects in hand and selectively bidding for new jobs in markets we operate in.

At the start of the year, WCT set a modest target of RM1.5 billion new contract orders considering the recovering global economic climate. Despite that, the construction team successfully secured new contracts in the Gulf States (“Gulf”) and Malaysia which totaled RM2.2 billion. We continued to strengthen our presence in Qatar with the award of a Government Administrative Building in Doha valued at RM1.36 billion. Back at home, the Group was successful at the bidding for the Build, Operate and Transfer Concession (BOT) by Malaysia Airports Holdings Berhad to undertake the privatisation of the development of an Integrated Complex at the new Low Cost Carrier Terminal (KLIA-2) at the Kuala Lumpur International Airport (KLIA), Sepang, Malaysia. Strategically located next to the new KLIA-2 airport terminal building, the integrated complex will house a retail mall, a multi-storey building with 6,000 car park bays and a transportation hub for bus, taxi and rail connectivity, When completed, it will be one of the earliest Entry Point Projects (EPPs) under the Malaysian Government’s Economic Transformation Programme (ETP) to take off towards fulfilling Malaysia’s aspiration to being a developed nation in 2020.

Construction activities in Malaysia are expected to expand at a faster pace for the rest of the year with the continuing infrastructure spending attributed to various Entry Point Projects and initiatives under the Economic Transformation Program (ETP) as well as allocations under the 10th Malaysian Plan. The commitment towards greater transparency and efficiency by the Government will elevate the opportunities offered to competent contractors like WCT. As one of the nation’s most prominent builders in the global market, WCT will remain focused on the domestic market and continue to contribute towards Malaysia’s development.

In the Gulf, recent events and the uptrend of energy prices are expected to spur public infrastructure and social welfare spending as Governments in the region undertake strategic plans to create economic diversification. WCT has been in the Gulf for 9 years where we have successfully built a sound reputation and solid track record. Our Gulf construction profile includes iconic projects such as Formula One circuits in Abu Dhabi, U.A.E. and Bahrain, the Yas Marina Royal Yacht Club in Abu Dhabi and in Qatar, the West Dukhan Highway and the New Doha International Airport. The ability to deliver a world-class project in a timely manner is key to building a solid foundation in order to be successful in securing more projects in the future.

PROPERTY DEVELOPMENT

Malaysia’s residential property market performed well in 2010 with the return of consumer confidence resulting in good take up rates and rising property prices. Strong demand for residential property was also contributed by the attractive financial packages offered by the financial institutions and incentives extended by developers. Moving into 2011, the residential property market is expected to continue performing strongly especially for landed properties due to the depleting supply of prime development land. With the increased land prices and higher construction cost, residential property prices are expected to be on an uptrend.

The retail market also performed well in 2010 consistent with steady GDP growth and strong consumer confidence. Retail activities and sentiment was stronger with occupancy in Greater Kuala Lumpur was at approximately 85%. For 2011, the outlook for retail will remain positive due to the healthy employment rate, rising disposable income and strong demand for lifestyle and quality products. Well-positioned retail centres with good tenant mix and offerings, supported by growing suburban population, will continue to perform well.

The occupancy rate for offices remained at 82% in 2010 despite new supply of office space helped by the continuing economy recovery in Malaysia. In 2011 and 2012, supply of office space in Greater Kuala Lumpur is set to have additional 16.8 million square feet office space prompting greater pressure on selling and rental prices. Nevertheless, office buildings in good location with modern facilities and amenities are expected to still enjoy good take-ups and occupancy.

Township Development - Bandar Bukit Tinggi I, II and Parklands

In 2010, Bukit Tinggi townships registered property sales amounting to RM197 million as compared with RM134 million a year before, marking an increase of 47%. The various facilities and amenities which the township offers, anchored by the presence of Aeon Bukit Tinggi Shopping Centre provides residents with conveniences at their door steps and thus resulting in Bandar Bukit Tinggi being a preferred residential township.

BBT_ONE office towers saw the entry of anchor tenants such as the Employees Provident Fund (EPF), Tenaga Nasional Bhd (TNB) and Standard Chartered Saadiq. Shipping and logistic companies which form the majority of the tenants continue to show strong interest in BBT_ONE Towers. Located adjacent to the office towers, Première Hotel and BBT_ONE Boulevard have created an integrated commercial development with good synergy and value.

The Group is currently planning developments on the remaining commercial lands in Bandar Bukit Tinggi I and II in particular the prime lands adjacent to Aeon Bukit Tinggi Shopping Centre. Moving forward, the focus would be on development that would add value to the township and enhance its competitive edge.

Residential development is currently focused in Bandar Parklands which has experienced strong demand and good price appreciation. The well planned township which is anchored by a lushly landscaped 12 acres People’s park will also see the completion of the SJK (C) Wu Teck primary school which will commence its first school term in 2012. The police station, which will be built by WCT as a contribution to the community and provide the residents with peace of mind, is currently under construction.

The Paradigm Mix-Commercial Development @ Petaling Jaya

The Paradigm, which comprises of Paradigm Mall and three commercial blocks is an integrated mixed development with Gross Development Value of RM1.4 billion. Located along the Damansara-Puchong Expressway in Kelana Jaya, Petaling Jaya, the project will be developed over the next 5 years starting with the construction of a neighbourhood mall that will be completed in end 2011. Other commercial components to be developed include a business hotel, premium offices and service apartments. 

Medini, Iskandar Malaysia

Medini is one of Malaysia’s largest integrated city developments in Iskandar Malaysia spanning an area of 2,300 acres at the Southern tip of Peninsula Malaysia. The development offers three new environments; Medini North, a lifestyle, retail and tourism destination; Medini Business District, the heart of business; and Medini South; high-end waterfront residential and leisure community.

Today, Medini Iskandar Malaysia is reaching a tipping point, a crucial stage of development where a host of planned catalytic projects turn into reality. Apart from the existing Kota Iskandar Government Administrative Centre, United Kingdom’s Newcastle University of Medicine will be completed later part of this year and LEGOLAND Theme Park is expected to open its doors to leisure and fun-seekers in 2012. Adding on to these, Malborough College, Pantai Gleneagles Hospital, Pinewood Studios and Raffles University will be operational in the following years.

On 28 October 2009, WCT signed a joint venture agreement with Iskandar Investment Berhad to develop a high-rise residential project located in Medini, Iskandar Malaysia. The joint venture company, One Medini Sdn. Bhd., a 70% subsidiary of WCT, has since signed a Sale and Purchase agreement on 21 June 2010 to purchase a 10.96 acre land for the development of 1,332 units of condominium named 1Medini Residences. This parcel of land is located at a strategic location with existing highway connectivity and infrastructure, travelling distance to Singapore within 15 minutes driving time and is close proximity to excellent facilities and amenities. It is the 1st residential development in Medini Iskandar Malaysia with a Gross Development Value of approximately RM700 million. WCT has planned to launch first phase of 1Medini Residences later part of this year thus providing quality housing accommodation to meet the needs of the working population and students within Medini and Iskandar Malaysia.

Medini Business District

On 14 December 2010, WCT formalised the purchase of its second land in Medini Isknadar Malaysia measuring 10.3 acres from Global Capital Development. The commercial land, located opposite of 1Medini Residences, is situated within Medini Business District, the financial and business centre at the heart of Medini. The inking of this investment deal forms part of the Group’s business plans to expand our property development presence in the southern region of Malaysia as well as complementing the development of 1Medini Residences.

Platinum Plaza, Ho Chi Minh City, Vietnam

In 2010, Vietnam’s property market was gradually recovering from its downturn a year earlier. Despite high inflation rate and the weakening of the Dong, property price remained steady for most of the year. For the rest of 2011, it is expected to consolidate further with demand remaining firm for medium cost housing, grade-A offices and modern shopping malls.

The Group’s 67% subsidiary, BSC-WCT Company Limited, holds the Investment Certificate for the Platinum Plaza which was awarded by the People’s Committee of Ho Chi Minh City in December 2007.  It sits on 9 hectares or approximately 22.2 acres of land located in the District of Binh Chanh in Ho Chi Minh City. It fronts the Nguyen Van Linh Road, a new10-14 lanes highway, which connects District 2, Phu My Bridge and Phu My Hung residential area at eastern end, and Highway 1A at western end accessible to Mekong Delta.  

The proposed development comprises a shopping mall, 2 office towers, a 4-star hotel, a SOHO block and car park. The total gross floor area is about 671,960 square metres or 7.2 million square feet. The shopping mall is expected to be the largest in Vietnam when completed. The project will be developed in 3 phases over a 4-year period after the land has been resettled.

The architectural design and retail concept of the shopping mall under Phase 1 is on-going while land compensation and resettlement are the main activities in 2011. WCT Engineering Vietnam Company Limited, a wholly-owned subsidiary, will be fully involved in the construction of the Platinum Plaza development when the land is fully acquired.

ASSETS INVESTMENT AND MANAGEMENT

Première Hotel

The Group’s first hotel property portfolio which commenced operation on 10 October 2010 in Bukit Tinggi Township Klang will carry the brand name “Première”. Première Hotel is individually distinctive yet contemporary in terms of positioning and value and is based on customary Asian hospitality excellence.

Première will cater to both leisure and business travelers looking for an affordable alternative without compromising on service or quality and embodying Asian flair, modern perspective and a down to earth vibe. The hotel will offer 250 rooms including suites in a gleaming 22-storey white tower. Six versatile function rooms and a pillarless 1,250-square metre ballroom with a capacity of 1,500 persons for cocktail reception and 880 persons for banquet, all equipped with the state-of-the-art dedicated technology providing an ideal space for a range of meetings, seminars or other business gatherings. It will offer leisure and corporate guests alike the perfect place to relax in comfort or conduct business with ease. The hotel offers guests a whole host of facilities including an outdoor swimming pool, a fully equipped fitness centre with the latest equipment, spa and 2 on-site restaurants serving cuisine ranging from Chinese to local and continental delights.

Bukit Tinggi Shopping Centre

The Group’s first major investment property, Bukit Tinggi Shopping Centre with a net lettable area of 1.0 million sq ft and 5,000 car parks, opened on 24 November 2007. The shopping centre is leased to Aeon Jusco for an initial term of 10 years with an option to renew the lease for another 3 terms of 5 years each with lease rental reviewable every 3 years, continues to provide a steady recurring income base to the Group.

The Paradigm Mall @ Petaling Jaya

The group’s retail mall investment and management business will be further strengthened with the completion of Paradigm Mall in Petaling Jaya which has a net lettable area of 700,000 sf and 4,400 car parks. Construction of the mall is progressing rapidly and is due for completion at year-end. Leasing activities to secure the prospective tenants is already at an advanced stage with objective to ensure a good tenant mix. Our leasing team has done a splendid job by securing quality anchor, junior anchor and general tenants. When opened, we expect the Paradigm Mall to be a neighbourhood hub for good leisure and entertainment.

KLIA-2 Integrated Complex

The award of the BOT Concession for 25 years to operate and manage the KLIA-2 Integrated Complex (IC) marked an importance milestone for WCT as this is the Group’s first concession in Malaysia. The IC will have at least 350,000 square feet of retail space that will be operated on the Departure and Arrival levels with seamless connectivity to and from the main terminal building. Apart from being a leisure and shopping hub, the IC will also have 6,000 car parks which also serve as KLIA-2 airport car park facility. At the heart of the IC is the main transportation hub of KLIA-2 where taxis, busses and the Express Rail Link will all meet at a centralized location. The construction of the IC is progressing rapidly with target completion by 3rd quarter of 2012. When the IC commences operation, we expect about 20 million air passengers per annum to utilize the IC. 

Platinum Plaza Shopping Mall and Offices

In Ho Chi Minh City, Vietnam, the Group has also planned to retain part of the office and the shopping mall at the Platinum Plaza mix-commercial development in growing the Group’s property investment and management business. When completed, the Platinum Plaza Shopping Mall will be the largest retail mall in Vietnam.

India Highway Concessions

The Group’s investments in Highway Concessions date back to 1999 when WCT, via a consortium of Malaysian contractors, ventured into India and constructed the 145 km Tada to Nellore highway under the BOT scheme. Our investments in 2 other BOT highway projects, the Durgapur Expressway and the Panagarh-Palsit Expressway, were open to traffic in 2005 and the concessions expire in 2020. The concession companies for both highways are paid on a semi-annuity scheme by the National Highways Authority of India.

MOVING FORWARD STRATEGIES

In 2011, The Group will leverage on the sound financial and operational profile and track record built in the Gulf States and Malaysia to continue our business expansion in the global market.

To strengthen and diversify our businesses in the longer term, the Group will focus in 3 core and equally important business segments, namely Engineering & Construction, Property Development, and Assets Investment & Management. In pursuit of this, WCT, amongst others, plans to:

a)   Strengthen our existing construction market presence in Malaysia and the Gulf States by leveraging on our track record in iconic projects, skilled & experienced human capital and large fleet of plant and machineries;

b)   Actively participate in infrastructure and development projects under the Economic Transformation Programme, 10th Malaysian Plan and other initiatives promoted by the Government;

c)   Form strategic alliance with international construction partners to enhance WCT's capacity and competitiveness to compete in a globalised market;

d)   Extend our profile in big scale township planning and development into niche residential and commercial development, investment and management; and

e)   Establish strategic partnership in property development and investment opportunities in Malaysia and abroad.

The Group continues to adopt strict financial discipline and conservative approach in doing business. We will remain selective about the type of work we accept and concentrate on construction projects that fit our profile and strengths. The Group’s land acquisition will continue to be focused in growth corridors and designated economic zones with good infrastructure and amenities. Developments will concentrate on properties in the middle and up-market range with a good mix of residential and commercial content. Although business environment is robust, we are committed to exercise prudent cost and cash flow management with shareholders’ interest as our main priority.

My team and I look forward to a successful 2011 and beyond.

Happy 30th Anniversary!

Taing Kim Hwa

Managing Director

11 April 2011