Paramount Charts Steady Course on the Back of Strength through Synergy Strategy

Petaling Jaya, 3 June 2015: Paramount Corporation Berhad (PCB) is confident that its strategy of strength through synergy will keep the company’s performance on track, despite market challenges.

Briefing shareholders at the company’s Annual General Meeting today, PCB’s Group Chief Executive Officer, Mr Jeffrey Chew said that in 2014, the company had continued its single-minded focus on consistent value creation for shareholders, staying on course with its strength through synergy strategy, which helped to drive growth of its two core businesses – property and education.

Last year, the Paramount Group recorded revenue of RM510.0 million (2013: RM512.1 million), mainly attributable to higher contributions from its property division, Paramount Property. Profit before tax (PBT) rose a significant 14% from RM75.1 million in 2013 to RM85.8 million in 2014. Earnings per share rose to 16.17 sen in 2014, up from 15.84 in 2013.

As a result of the cessation of external construction activities last year, revenue from Paramount Property decreased slightly by 2% from RM385.8 million in 2013 to RM376.4 million in 2014. However, PBT increased by 34% to RM68.3 million (2013: RM50.8 million) on the back of steady property sales from its on-going property development projects, namely Paramount Utropolis in Glenmarie, Shah Alam; Sejati Residences in Cyberjaya; Sekitar26 Business in Shah Alam; as well as Bukit Banyan in Sungai Petani, Kedah.

Revenue from PCB’s education division, Paramount Education, showed positive growth, increasing 5% to RM131.2 million (2013: RM124.7 million). PBT decreased by 12% to RM24.6 million (2013: RM27.8 million), attributable to higher operating costs related to the opening of KDU University College’s new campus in Paramount Utropolis, Glenmarie which commenced operations in January this year.

Touching on the Group’s prospects, Chew said, “We do see the potential for upsides, with the Malaysian gross development product still expected to grow between 4– 5%. The Government is actively pursuing opportunities to make home ownership more accessible to a larger segment of the population, and we anticipate that the market will also eventually adjust to the impact of Goods and Services Tax. Improved road and light rail transit connectivity will open up new areas of growth in the Greater Klang Valley area.”

He said that this would spur growth in property demand, with PCB well poised to take advantage of this, especially with its upcoming development in Salak Tinggi, which would pave way for Paramount Property’s second township development in the Klang Valley.

The Group started this year with stronger than expected performance, with financial performance registering a 67% rise in group revenue from RM98.8 million in the 1Q2014 to RM165.0 million in 1Q2015.

Revenue from Paramount Property increased by 94% to RM128.46 million (1Q2014: RM66.1 million), while revenue from Paramount Education increased by 12% in the corresponding period to RM36.1 million (1Q2014: RM32.3 million).

“These results have given us a good foundation on which to drive growth in 2015, which we anticipate to be a challenging year. Our strategy this year will be to make the most of the synergistic opportunities offered by our complementary businesses in property and education, whilst improving operational efficiencies,” Chew said.

“However,” he added, “We will also be operating under an environment where building and marketing costs will be higher, and where buyers will be more discerning. We will need to up the ante on innovation, offering more interesting lifestyle themes, while putting in place more robust sales and marketing efforts, and ensuring we have outstanding customer service.”

On the education front, Chew said the market was more resilient. “The market has been extremely competitive in current years, and the current slowdown will, we anticipate, lead to some consolidation. Our 32-year track record in this business has taught us that education is generally recession-proof, and can sometimes lead to growth opportunities, as it encourages students and working adults to further their academic qualifications to be more attractive to employers.”

Amidst this, Paramount Education would grow organically with the development of a new flagship campus in Batu Kawan for KDU College Penang which mirrors the unique live-and-learn, work-and-play concept of Paramount Utropolis in Glenmarie.

“Our strategy will be to make good quality education more affordable and more accessible through twinning, franchise and home-grown programmes at the tertiary level, and to offer budget schools in the primary and secondary segments,” he said.

“We are becoming more innovative, more agile and more dynamic. We are gearing ourselves to take advantage of the inherent strengths across our two businesses to build a brand that is trusted, progressive and engaged with our stakeholders, while staying true to our cornerstones of quality and value. This is the unique differentiator that will give our businesses the impetus for growth, underpinning our performance in the coming years.”