Lian Beng Q4 profit down by 74.3% on lower revenue, lack of one-off gain

MAINBOARD-LISTED contractor Lian Beng Group saw fourth-quarter net profit plunge amid the absence of a one-off gain, but Catalist-listed spin-off SLB Development managed to post higher earnings in the same period, according to unaudited financial results out for both companies on Tuesday.

Lian Beng's earnings were down by 74.3 per cent year on year for the three months to May 31, to S$14.5 million, from S$56.7 million before, as construction costs rose on more activity and out-paced the revenue fall. The bottom line also took a hit from the drop in other operating income, largely thanks to the one-time gain from the disposal of an investment property in Melbourne the year before.

Revenue fell by 11.6 per cent to S$132.9 million, on the absence of revenue recognised from a development in Melbourne, as well as lower contributions from the property development business, as industrial project T-Space @ Tampines was largely finished the year before.

Lian Beng noted that a change in accounting standards - which affects how project revenue is booked - had led to the restating of the previous year's results. Earnings per share for the three months slipped to 2.91 Singapore cents, down from 11.34 Singapore cents previously.

Meanwhile, 74.1 per cent-owned development subsidiary SLB notched a 79 per cent drop in revenue, to S$10.4 million, also on the completion of T-Space @ Tampines in June 2018.

But net profit grew by 29.9 per cent, to S$1.48 million, as S$597,000 in post-tax losses was attributed to non-controlling interests. Earnings per share was flat at 0.16 Singapore cent.

For the 12 months, Lian Beng's profits dropped by 60.2 per cent, to S$32.9 million, on a 5 per cent slide in revenue, to S$386.8 million. And, amid a higher share of losses from its Affinity @ Serangoon and Riverfront Residence associates, SLB recorded a full-year loss of S$5 million, after reporting a net profit of S$15.6 million the previous year. Its revenue came in 69.2 per cent lower, at S$47.6 million.

Lian Beng said in its outlook statement that it is cautious on land bank replenishment, and will keep exploring regional opportunities to complement the property development business.

Still, the group pointed to improved contributions from its construction segment, which raked in revenue from external customers of S$291.7 million for the full year, up by 67.1 per cent.

Lian Beng said it was "cautiously optimistic of the outlook of the construction market for the next 12 months" and expects construction demand to be supported by public sector projects. The group's order book till FY2022 stood at S$1.4 billion, as at May 31, 2019.

Lian Beng's board recommended a final dividend of 1.25 Singapore cents a share for the quarter - taking the full-year pay-out to 2.25 Singapore cents a share, unchanged from the year before - while SLB will pay 0.1 Singapore cents a share, against no dividend in the year prior.

Lian Beng closed up by half a Singapore cent, or 0.97 per cent, at S$0.52, and SLB ended flat at S$0.145, before the results for both companies were released.