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Lian Beng Q1 net profit falls 39% on share of losses from SLB Development

MAINBOARD-LISTED construction player Lian Beng Group saw smaller profits in the first quarter, as new accounting standards ate into its share of profits from a Catalist-listed spin-off.

Net profit fell by 38.9 per cent year-on-year to S$6.97 million for the three months to Aug 31, according to unaudited results released on Friday.

The drop came even though revenue was up by 15.9 per cent to S$83 million on higher turnover from construction and investment holdings.

A 74.41 per cent-owned property development arm, SLB Development, swung into the red in the quarter, owing to tweaks that made it progressively recognise revenue contributions rather than booking them all at once. Besides eating into Lian Beng's top line, this also pushed down the share of results to S$1.49 million in losses, compared with S$1.19 million in earnings in the year before.

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Meanwhile, other operating income slid from S$10.5 million to S$2.22 million on a high base effect from the disposal gains for investment properties in Melbourne the year before.

Earnings per share fell to 1.39 Singapore cents from 2.28 Singapore cents, while net asset value was 135.79 Singapore cents a share, against 135.1 Singapore cents as at May 31.

No dividend was recommended for the period, unchanged from the year before.

Executive chairman Ong Pang Aik said in a media statement: "Despite the impact of the change of accounting treatment reflected in this quarter, the overall performance of the group has been encouraging and we look forward to the contributions from the property development and construction segments."

The group also expects to collect recurring income from investment properties such as the newly acquired Wilkie Edge and Sembawang Shopping Centre, and dormitory projects in Mandai and Papan.

Lian Beng said in its 12-month outlook statement that it is "cautiously optimistic" on the construction industry but will continue to tender for public and private sector projects. The order book stood at S$1.25 billion as at Aug 31 and will provide the company with a steady flow of activity until FY2022, it added.

Lian Beng closed flat at S$0.485 before the announcement.