Fair value gain boosts FCL's Q2 net

Singapore

FRASERS Centrepoint Ltd (FCL) has posted a net profit of S$143.05 million for the second quarter ended March 31, 2015, double the S$70.02 million in the same period last year, on the back of a big jump in fair value gain in the latest period and absence of negative exceptional items reported in the same year-ago period.

Attributable profit before fair value change and exceptional items fell 7.3 per cent to S$99.36 million for Q2 FY2015 due chiefly to higher interest and hedging expenses. Net interest expense rose to S$45.96 million from S$7.83 million - due mainly to increased cost of funding the acquisition of Australand and consolidating the borrowing cost of Australand's existing loan facilities.

Fair value gain jumped to S$43.66 million from S$4.66 million in the same year-ago period. The Q2 FY2015 fair value gain includes a revaluation gain recognised upon the acquisition of the remaining 50 per cent interest in Capri by Fraser Changi City. There was was only S$29,000 in exceptional items in the latest period, compared with negative S$41.78 million in the same year-ago period.

Revenue dipped 0.5 per cent to S$441.65 million. New streams of contribution from Australand Property Group and six hotels acquired by Frasers Hospitality Trust (FHT) from the TCC Group helped to offset lower contributions from development projects in Australia and the United Kingdom. Profit before interest and tax (PBIT) climbed 14.3 per cent to S$197.96 million, bolstered by gains recognised on the disposal of Crosspoint in Beijing.

For the first-half, Frasers Centrepoint's net profit rose 72.9 per cent to S$329.92 million. Revenue was up nearly 52 per cent to S$1.51 billlion.

Shareholders will receive an interim dividend of 2.4 Singapore cents per share, same as in the previous corresponding period. to be paid on June 11.

Earnings per share before fair value change and exceptional items fell to 3.06 Singapore cents in Q2 FY2015 from 5.34 Singapore cents in Q2 FY2014. After fair value change and exceptional items, EPS rose to 4.57 Singapore cents from 3.49 Singapore cents previously. The counter closed 1.5 Singapore cents higher at S$1.835 on Friday. FLC announced its results after the stock market closed.

Net asset value per share stood at S$2.20 as at end-March 2015 from S$2.22 at end-September 2014. The group's net debt to equity stood at 84.8 per cent as at end-March 2015, down from 88.2 per cent at end-September 2014.

FCL's chief executive, Lim Ee Seng, said that the group's first-half performance demonstrates the benefits of its acquisition of Australand and reflects the group's strategy of increasing recurring income. "A significant level of residential project completions by Australand boosted our first-half revenue and PBIT. Contributions from the group's development properties can, however, be lumpy. As FCL grows, a good base of recurring income to balance the lumpy contributions from development properties becomes increasingly important for delivering sustainable earnings growth.

FCL said that PBIT from the development properties segment rose 17.9 per cent to S$77.17 million, boosted by the recognition of a one-time gain of S$38 million from the sale of Crosspoint in Beijing. PBIT from commercial properties fell 4.1 per cent to S$75.54 million. This was because of lower occupancy at The Centrepoint mall to faciliate the upcoming asset enhancement work, which more than offset an increase in revenue arising mainly from Frasers Centrepoint Trust's acquisition of Changi City Point in June 2014.

In the hospitality sector, PBIT nearly doubled to S$26.46 million from S$13.89 million - due to contributions from Frasers Hospitality Trust and new properties acquired, and stronger operating performance in Australia and Europe properties.

Frasers Australand saw PBIT growth of 30.8 per cent to S$27.56 million.