ARA Asset Management posts lower Q2 profit on one-off adjustments

ARA Asset Management said on Thursday its second-quarter net profit fell 21 per cent to S$16.4 million, including one-off adjustments.

The weaker earnings come on the back of lower finance income, which comprises mainly distribution income, interest income, net gain on fair valuation/disposal of financial assets and net foreign-exchange gain. It fell by 53 per cent to S$3 million in Q2.

This was mainly due to net gain on fair valuation/disposal of financial assets of S$4.1 million included in Q2 2014.

Q2 2015 had recorded a net loss on fair valuation/disposal of financial assets of S$0.3 million under finance costs.

Other income dropped 99 per cent to S$19,000, on the back of a negative goodwill arising from the acquisition of ARA Korea, amounting to S$2.1 million, which was recognised in Q2 2014.

Excluding the one-off adjustments, net profit for the three months from April rose 11 per cent to S$16.9 million.

Revenue shrunk 9 per cent to S$36.8 million for the quarter, weighed down by a plunge in finance income.

Results from operating activities dropped 26 per cent to S$17.8 million.

Share of profit of associates, net of tax, came in at S$2.4 million, up 106 per cent, mainly due to higher income contribution from Cache Property Management Pte Ltd and Hui Xian Asset Management Limited.

Earnings per share stood at 1.95 cents, down from 2.47 cents in the year-ago period.

An interim dividend of S$0.023 per share has been declared. It is payable on Aug 28.

ARA Group CEO John Lim said: "The second quarter was an active one for both our Reit (real estate investment trust) and ARA Private Funds divisions. Both Fortune Reit and Cache Logistics Trust had successfully unlocked value in their respective divestments. Suntec Reit announced its proposed sale of Park Mall in conjunction with its 30.0 per cent interest in a joint venture to redevelop Park Mall into a commercial development whereby ARA is to be the strategic advisor, asset manager and property manager to the joint venture."

In early July 2015, ARA China Investment Partners received additional capital commitments of about US$300 million, boosting its overall committed capital to over US$800 million.

"For ARA Private Funds, we had raised capital commitments for our new ARA Harmony Fund III, with its acquisition of a portfolio of retail-focused income-producing commercial properties in Malaysia worth 1,700 million ringgit (S$602.5 million) from the ARA Asia Dragon Fund I. I'm pleased to report that Straits Real Estate Pte Ltd, the co-investment vehicle established by The Straits Trading Company Limited and me, is one of the major investors in the fund with a 40 per cent stake, and that the acquisition is expected to be completed today (Aug 6)."