Hyflux's 2014 profit up 31% on capital gain treatment

ENVIRONMENTAL solutions firm, Hyflux, posted a net profit gain of 31 per cent to S$57.47 million for the year ended Dec 31, 2014.

Over the same period, revenue plunged 40 per cent to S$321.39 million, mainly due to the timing of project construction activities following the completion of Tuaspring desalination plant, and the slower than anticipated start of the Dahej project.

In FY14, Hyflux entered into a sale and leaseback agreement on its building, Hyflux Innovation Centre (HIC), and disposed of its investments in its joint venture, Hyflux Marmon Development, and an associate to Marmon Water (Singapore), recognising gains of S$103.8 million and S$54.1 million respectively.

In the last quarter of FY14, Hyflux also received confirmation on the capital gain treatment from the tax authority relating to the sale and leaseback of HIC building. Accordingly, taxes previously accrued were reversed, adding to the gain on the sale and leaseback of HIC building. These were collectively reported in "other income" of S$170 million and contributed to the increase from S$10.2 million in FY13.

The group is cautiously optimistic about the rebound in the water industry in 2015 amid a weaker oil price environment. While the first half is likely to be slow, the group expects a pick-up in the second half. There may also be opportunities in asset divestment during the year, Hyflux said in a statement.

In FY14, the municipal sector continued to be the main contributor to Hyflux's revenue, accounting for 84 per cent of its total revenue, while revenue from the industrial sector made up 14 per cent.

For the full year, earnings per share stood at 1.66 cents while net asset value per share was 56.6 cents.

A final dividend of 1.6 cents per share was recommended for the period.

Before the results were announced on Friday, Hyflux's counter closed trading 0.556 per cent down at S$0.895.