GSH gives updates on hospitality, property segments amid pandemic

PROPERTY developer GSH Corporation posted a 32 per cent decline in its hospitality segment's Q1 2020 revenue, down to S$13.2 million from S$19.5 million the year before.

The Covid-19 pandemic situation is expected to continue to cast a negative impact on the group's hospitality business, which comprises two hotels in Sutera Harbour Resort and an island resort, Sutera @ Mantanani, in Kota Kinabalu, Sabah, it said in an update on Thursday.

Due to the Covid-19 outbreak, visits from Chinese and South Korean tourists - which account for the top two contributors of international arrivals in Sabah - were suspended. These were a major source of business for the group's hospitality business, it said.

Additionally, in compliance with the Malaysian government's Movement Control Order (MCO), the group implemented a temporary closure of its hospitality business in Sabah from March 18.

Since then, cost reduction initiatives have been implemented, and overheads are partially mitigated by the various support measures from the Malaysian government, it said in the update.

Its hospitality segment had originally posted a 16 per cent increase in unaudited revenue to S$7.9 million in January 2020.

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Construction works had originally been suspended from March 18 due to the MCO, but on May 4, its project at Eaton Residences in Kuala Lumpur was allowed to resume construction.

The group's property business's progressive recognition of deferred revenue of about S$120 million commence once construction has resumed, it said.

As at March 31, the group's balance sheet recorded a cash balance of S$114.6 million and a net gearing ratio (excluding non-controlling interests) of 0.8 times, it said.

On the other hand, the group's property business registered an 332 per cent increase in unaudited revenue to S$29.4 million for Q1 2020, from its Eaton Residences and Coral Bay projects.

Meanwhile, on Tuesday, the Supreme Court in Singapore issued a judgement in favour of GSH for a dispute with Edward Ong, who was the previous sole owner of SH Group, where he was ordered to pay GSH its damages and costs.

GSH took Mr Ong, who was the previous owner of the land, to court over a one-acre plot in its Sutera Harbour resort it purchased in 2014.

During the negotiations and due diligence for the sale of the resort, which comprised two hotels, a 104-berth marina and 27-hole golf course, GSH said Mr Ong had failed to highlight that he had carved out the one-acre piece of land and sold it to another one of his companies for RM1,000 (S$328) two days before the sale was completed.

It was one year after the acquisition, that during a routine tax review, this anomaly was detected. However, Mr Ong claimed that the plot of land was not included in the sales agreement.

GSH had previously acquired 77.5 per cent of SH Group for RM700 million, as well as the two plots adjacent to the resort for RM157 million.

GSH shares closed up 0.5 Singapore cents or 2.63 per cent to S$0.195 on Wednesday.