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1.52b yuan bargain purchase gain led to FY19 income surge: Yanlord
A GAIN on bargain purchase of 1.52 billion yuan (S$303.6 million) was one of the key reasons for a surge in Yanlord Land Group's other operating income and other gains for FY2019, the company said on Wednesday in response to queries from the bourse.
Yanlord Land had more than doubled its other operating income and other gains to 1.90 billion yuan for FY2019 from 714.6 million yuan a year ago.
The mainboard-listed company had reported no gain on bargain purchase for fiscal 2018.
The gain on bargain purchasing arose from acquiring additional interest in three firms - Yanlord Investment (Singapore) (YIS), United Engineers (UE) and UE subsidiary WBL Corporation.
The net fair value of assets acquired and liabilities assumed for these deals exceeded the fair value of consideration transferred, the non-controlling interests and the fair value of any previously held equity interests at the dates of the acquisitions, resulting in a gain on bargain purchase, said Yanlord Land.
The Chinese real estate player had bought an additional 51 per cent interest in YIS, giving it a 100 per cent stake.
An acquisition of additional interest in UE resulted in Yanlord Land owning 51.5 per cent of UE and 65.6 per cent of WBL as at Nov 15, 2019.
A 168 million yuan increase in interest income for FY2019 also contributed to the rise in other operating income and other gains. The increase in interest income was mainly attributable to loans to associates and non-controlling shareholders of subsidiaries, said Yanlord Land.
Another contributing factor was a fair-value gain from put liability to acquire non-controlling interests of 168 million yuan for FY2019 versus 13.4 million yuan a year ago. The amount was derived from a decrease in fair value of put liability to acquire non-controlling interests to about 1.15 billion yuan for FY2019 from about 1.32 billion yuan a year ago.
This was due to a lower average selling price per square metre for a project in Suzhou, which resulted in lower estimated profit.
Yanlord Land shares traded up S$0.01 or 0.9 per cent to S$1.14 as at 9.25am on Thursday.