Sime Darby Property Bhd reported slightly higher net profit of RM640mil in the financial year ended June 30, 2018 mainly due to higher contribution from concession arrangement segment and two sale transactions.
KUALA LUMPUR: Sime Darby Property Bhd
reported slightly higher net profit of RM640mil in the financial year ended June 30, 2018 mainly due to higher contribution from concession arrangement segment and two sale transactions.
It announced on Tuesday net profit had increased by 2.6% from RM624.03mil in FY17. However, the revenue fell 9.9% to RM2.353bil from RM2.611bil. It proposed a final dividend of three sen a share.
Sime Property said included in the FY18 results were other gains of RM317.6mil. It comprised of gains on disposal of Malaysia Land Development Company Bhd and the 40% equity stake in Seriemas Development Sdn Bhd of RM39.6mil and RM278.2mil respectively.
In FY17, the other gain consisted of the gain on sale of Sime Darby Property (Alexandra) Pte Ltd of RM130.4mil. This was net of the abortive cost for ending the proposed purchase of Saizen Real Estate Investment Trust of RM25mil.
However, contributions from property development fell by 38.2%. In FY17, the previous year’s result included gains on compulsory acquisition/disposal of land of RM468.8mil whilst FY18 included gain on disposal of land of RM87.6mil.
“Excluding these items, core operating profit for FY18 rose 161% mainly contributed by higher sales and development activities at Elmina West, Elmina East, Serenia City and Bukit Jelutong townships and Cantara Residences and Serini Melawati.
“This was in spite of the lower contribution from Nilai Utama, Nilai Impian and Bandar Bukit Raja townships,” it said.
Sime Property said that included in FY17 was an impairment of inventories of RM149mil.
In addition, Serenity Cove in Australia contributed a profit of RM56.1mil from reversal of write down of inventories and sale of plots of residential land as compared to a profit of RM4.8mil the previous year.
However, its share of profit from Battersea Project Holding Company Ltd of RM94.3mil fell by 32.4% from RM139.5mil in FY17.
The lower share of profit was due to under provision of tax in previous year and higher administrative cost. During the year, Battersea handed over 534 units of Phase 1 compared to 321 units the previous year.
“The lower share of results of joint ventures and associates by 48.8% was also due to the disposal of Seriemas in July 2017. Seriemas contributed a profit of RM32.2mil in the previous year,” it said.
Sime Property also highlighted the property investment segment registered a profit of RM2.4mil compared with RM157.6mil in FY17. In FY17, there was the share of profit of RM135.4mil after the salew of a property in Singapore by Sime Darby Real Estate Investment Trust 1.
However, its leisure and hospitality incurred a higher loss of RM26.4mil versus RM14.7mil a year ago which included the reversal of an impairment of property, plant and equipment of RM16.1mil.
As for the concession arrangement, the contribution jumped almost sixfold, from RM6.1mil to RM36.5mil.
“The strong performance was largely from supply of teaching equipment which contributed profit of RM29.6 million (2017: RM6.0 million). The revenue from this segment consisted of facility and asset management services following the completion of the construction of the Education Hub on May 2, 2017,” it said
In the final quarter, its net profit was RM46.57mil, down 85.8% from RM327.65mil a year ago. Its revenue fell 45.8% to RM617.36mil from RM1.14bil.
Sime Property said contribution from property development fell by 32.1% to RM20.7mi.
It explained that contribution for the quarter under review was adversely affected by lower revenue from Elmina West, Denai Alam, Serenia City and Taman Melawati.
However, it was partially mitigated by the reversal of write down of inventories of RM39.6million by Serenity Cove and better contribution from The Glades and Cantara Residences.
Its concession arrangement recorded a significant profit of RM33.5mil in Q4 largely attributable to supply of teaching equipment.
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