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Frasers Centrepoint Q4 net profit up 12.1% to S$248m

Panote Sirivadhanabhakdi, group chief executive of FCL, said that FY2017 has been a "fruitful year" for the group as it focused on growing its overseas income and building up a defensive portfolio of quality, income-producing assets in markets that it is familiar with.

FRASERS Centrepoint (FCL) has posted a 12.1 per cent increase in group net profit for the fourth quarter ended Sept 30 to S$248 million from S$221.3 million in the year-ago period. Revenue slipped 20 per cent to S$950.6 million. Earnings per share rose to 7.42 Singapore cents from 6.52 Singapore cents.

The property and hospitality group controlled by the family of Thai tycoon Charoen Sirivadhanabhakdi provided the fourth-quarter numbers when requested by BT but would not comment on the reasons for the year-on-year changes, saying that full-year figures present a more holistic picture.

The group said on Friday morning that net profit for the year ended Sept 30, 2017 climbed 15.4 per cent to S$689.1 million from S$597.2 million in the previous year. This was due mainly to a S$215.3 million fair value gain on investment properties, almost double the S$106.3 million in the previous year.

There was also an exceptional item of a net loss of S$14.4 million, due mainly to transaction costs incurred on the acquisitions of subsidiaries and offset by the gain on acquisitions of associates; this compares with an exceptional net gain of S$11.1 million previously.

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Profit before interest, fair value change, taxation and exceptional items (PBIT) rose 16.1 per cent to S$1.09 billion. Revenue expanded 17.1 per cent to slightly over S$4 billion. The improvements were on the back of increased contributions from the group's Australia and international businesses.

Giving a breakdown of PBIT by business segments, FCL said that the figure for the Singapore strategic business unit shrank 4.7 per cent to S$408.2 million in FY2017 - amid the absence of a lump-sum profit contribution from the Twin Fountains executive condo, which obtained Temporary Occupation Permit in March 2016.

PBIT for Australia improved 33.2 per cent to S$290.2 million. The increase came mainly from the sale of student accommodation components at the Central Park project in Sydney, and higher level of completions and settlements of residential projects.

The hospitality business segment's PBIT expanded 14.2 per cent to S$154.2 million, on the back of contributions from Frasers Hospitality Trust's newly acquired Novotel Melbourne on Collins in Australia and Maritim Hotel in Dresden, Germany.

The international business segment achieved a 47.6 per cent jump in PBIT to S$274.1 million; this was primarily due to sales and settlements of residential projects in China and the UK. Contributions and share of fair value gains from associates Golden Land Property Development and TICON Industrial Connection in Thailand also provided a boost.

Panote Sirivadhanabhakdi, group chief executive of FCL, said that FY2017 has been a "fruitful year" for the group as it focused on growing its overseas income and building up a defensive portfolio of quality, income-producing assets in markets that it is familiar with.

"Our recent acquisitions of four business parks in the UK and Geneba Properties, an Amsterdam-headquartered company that has a portfolio of long-lease, industrial and logistics assets in Germany and the Netherlands, are testaments to our efforts," he said.

The group has reshaped its portfolio over the past five years. In FY2012, Singapore accounted for 66 per cent of total assets; in FY2017, 55 per cent of assets were outside Singapore.

The proportion of total property assets in recurring-income sources has also grown from 46 per cent to 82 per cent.

The group's net-debt-to-equity ratio rose to 70.6 per cent as at Sept 30, 2017 from 64.4 per cent as at Sept 30, 2016.

Over the same period, net asset value per share increased to S$2.46 from S$2.30.

Earnings per share grew to 21.48 Singapore cents in FY2017 from 18.38 Singapore cents in the preceding year.

The counter closed four Singapore cents higher at S$2.08 on Friday.

FCL has proposed a final dividend of 6.2 Singapore cents, unchanged from the previous corresponding period, to be paid on Feb 14, 2018. The total dividend for FY2017 is 8.6 Singapore cents, also unchanged from FY2016.

The group does not have any undeveloped residential site in Singapore.

Christopher Tang, CEO of Frasers Centrepoint Singapore, said that the group has participated in tenders for both Government Land Sales and private-sector en bloc sale sites - taking a "very selective, disciplined approach with bids". "So far, we have not been successful in clinching sites but we are in this business for the long term," he added.

He said that there is "a lot of interest" in Frasers Tower, a 38-storey office development in Cecil Street that is slated for completion in the first half of next year.

Apart from reiterating that Microsoft has signed up for 125,000 sq ft, Mr Tang would only say that further leasing updates will be provided in due course.

BT understands that leases have been inked for about 40 per cent of the development, which has some 660,000 sq ft net lettable area of offices and 23,000 sq ft of retail space. FCL's strategy will be to ride the office upcycle and take some time to fill up the building, said analysts.

Over in Yishun, the newly completed South Wing of Northpoint City mall is slated to begin operations by Christmas. Said Mr Tang: "Coupled with the completion of Frasers Tower next year, the group's Singapore business is set to receive a fillip in recurring income that should help us 'buy time' to restock our residential landbank."