SP Setia: GST not payable for land

  • Business
  • Friday, 11 Jan 2019

“We believe the outlook for SP Setia remains stable premised on its strong unbilled sales of RM10.95bil and overseas contribution beginning 2020,” AmInvestment said in a note.

PETALING JAYA: SP Setia Bhd’s wholly owned subsidiary, Setia Fontaines Sdn Bhd, has received solicitor advice that the acquisition of five adjoining parcels of freehold land should be goods and services tax (GST) exempted.

In a filing with Bursa Malaysia yesterday, SP Setia said the tax exemption would be pursuant to item 1(1) of the first schedule of the GST (exempt supply) order 2014.

“Setia Fontaines disagrees with the position taken by Boustead Plantations Bhd, and hence, strongly believes that GST is not payable for the parcels of land acquired.”

To recap, CIMB Islamic Trustee Bhd and Boustead Plantations had filed a writ of summons and a statement of claim on Setia Fontaines on Dec 28, 2018, claiming for relief against the defendant (Setia Fontaines) on account of the defendant’s breach of a sale and purchase agreement dated Dec 22, 2016.

Specifically, Boustead Plantations’ claims are in relation to a refund under the GST Act, whereby the declaration is that the GST is chargeable to the sum of RM37.21mil on the sale of land by CIMB Trustee.

Secondly, it is claiming damages amounting to RM37.21mil to be paid by Setia Fontaines to the plaintiffs.

Thirdly, it is claiming for interest at the rate of 8% per annum (or a rate deemed fit by the Court) computed from Oct 31, 2017 until full settlement by the defendant; and other costs or other relief deemed fit by the Court.

Setia Fontaines has 14 days from the date of receipt of the writ of summons to enter its appearance in the suit, and the matter has been fixed for case management on Jan 28, 2019.

Boustead Plantations said that in consultation with its solicitors, the board is of the view that it has a good case in this suit and is, therefore, positive on the outcome of the litigation.

For the third quarter ended Sept 30, the group posted a lower net profit of RM65.19mil, down 81.3% from RM348.89mil in the corresponding period last year during which it registered a significant profit contribution from the completion of phase one of the Battersea Power Station in London, United Kingdom.

Consequently, SP Setia’s earnings per share (EPS) fell to 1.67 sen from 9.10 sen previously.

During the quarter in review, SP Setia’s revenue fell 6.1% to RM993mil from RM1.06bil in the previous corresponding quarter.

For the cumulative period, the group’s net profit stood at RM569.41mil for the nine months to September 2018, down 20% from RM711.57mil in the previous corresponding period, resulting in a lower EPS of 14.07 sen, compared with 20.31 sen previously.

Revenue fell 12.8% to RM2.57bil from RM2.95bil previously.

Year-to-date, the group has achieved sales of RM3.21bil, of which RM2.32bil, or 72%, came from local projects, while international projects contributed RM894.5mil, or 28% of the total sales. For the remaining months of 2018, SP Setia said the group’s launches would focus on the local market, with emphasis on launches of mid-range landed properties in the Klang Valley and Johor Baru.

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