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Boustead Projects Q4 earnings slip 2% to S$5.7m on weaker margins

REAL estate player Boustead Projects saw earnings fall 2 per cent year-on-year to S$5.7 million for the fourth quarter ended March, amid weaker gross margins in its core design-and-build segment, coupled with depreciation costs for its Alice@Mediapolis project.

The mainboard-listed firm however saw revenue rise 50 per cent year-on-year to S$69.3 million, supported by a change in accounting policy and a 60 per cent surge in design-and-build revenue to S$62 million, due to order book backlog carried forward at the end of FY2018.

Specifically, one sizeable project under a deferred payment arrangement contributed significantly to the revenue increase, the company said on Thursday. Meanwhile, revenue from the real estate segment was flat at S$7.3 million.

In view of "healthy performance", Boustead has proposed a final ordinary dividend of 1.5 cents and special dividend of 0.5 cent, adding up to two cents per share.

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For the full year, Boustead saw earnings go up 5 per cent year-on-year to S$30.6 million on a 38 per cent rise in revenue to S$234.2 million.

Bottom line growth was driven by the S$5.9 million gain from the sale of 25 Changi North Rise, net of fees, as well as higher revenue conversion and interest income, and income tax credits. But overall gross margin for FY2019 fell to 26 per cent from 35 per cent in the previous year, mainly due to lower cost savings from previously completed projects.

The company's rise in topline for its latest results was supported partly by a restatement of its 4QFY2018 revenue to S$46.2 million (from S$57.6 million initially) and a restatement of FY2018 revenue to S$169.6 million (from S$201.3 million initially).

The revenue restatement for 2018 was because of a change in accounting policy, where the elimination of unrealised gains and losses on transactions between the group, its associated company and joint ventures were made through proportionate reductions in revenue and cost of sales. There was no impact on profit. 

Boustead's order book remains resilient, with S$633 million worth of contracts secured in FY2019. The firm's order book backlog - comprising unrecognised project revenue as at end-March and new orders - stands at  S$660 million. This includes contracts for the JTC Multi-Storey Recycling Facility and Surbana Jurong Campus.

However, the firm has moved into a net debt position of S$37.9 million, due to borrowings to finance its Braddell Road land purchase and to provide working capital for the project under the deferred payment arrangement.

Nevertheless, alongside progress in the design-and-build segment, the real estate arm is also expected to perform well moving forward, said Thomas Chu, managing director of Boustead.

"Together with the new lease for 85 Tuas South Avenue 1 commencing soon, we expect the latest development projects to boost our leasehold portfolio's cash flow, income, quality and size as each project comes online over the next two years," he said in a press statement.  

Shares of Boustead Projects closed at S$1.02 on Thursday, down one cent.