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Lum Chang records 33% increase in FY2018 net profit to S$24.9 million on fair-value gains

FAIR-VALUE gains lifted construction company Lum Chang Holdings' full-year earnings despite a slide in revenue, according to unaudited financial results out on Friday.

Net profit came in at S$24.9 million for the 12 months to June 30, up by 33 per cent on the year before, even as turnover fell by 29 per cent to S$260.7 million.

Lum Chang saw a net fair-value gain on investment properties on the back of a freehold property in Britain. It also booked S$7.4 million in its share of profits from joint ventures, against a S$1.1 million loss the previous year, which it said was largely due to recognition of fair-value gain on an investment property owned by a joint venture company in Singapore.

Meanwhile, revenue was down year on year after two construction projects were completed in the previous financial year. Lum Chang also recorded lower turnover from another construction project, partially offset by commencement of revenue recognition for three other projects.

The group had S$648.3 million in outstanding value of ongoing construction projects, as at June 30.

Earnings per share was 6.51 Singapore cents, up from 4.91 Singapore cents the previous year, while net asset value came in at 63.91 Singapore cents a share, against 57.91 Singapore cents previously.

Lum Chang said in its outlook statement that the construction of Tekka Place in Serangoon "is progressing according to schedule" and should be done in H2 2019.

It added that it "has finalised plans for its landed residential project at One Tree Hill", with construction to start in September and finish in H1 2020. One unit has been sold and an option to purchase  another has been inked, it said. The project consists of 12 semi-detached homes and two bungalows.

As for Malaysian operations, development plans for its Petaling Jaya project "are being fine-tuned", and  marketing for the landed homes in Twin Palms Sungai Long is still going on, Lum Chang said. It is also continuing its plans to redevelop Kelaty House in the Wembley Regeneration Area in London.

Lum Chang added: "In parallel with efforts to secure projects, the group continues to exercise prudent financial discipline while working to improve operational performance and cost efficiency."

The board has proposed a final dividend of 1.5 Singapore cents a share - up from 1.2 Singapore cents the year before - bringing the full-year payout to 1.8 Singapore cents.

Lum Chang closed flat at S$0.34, before the announcement.

Amendment note: An earlier version of this article incorrectly stated that construction at One Tree Hill will finish in H2 2020. The completion date is in fact in H1 2020. The article above has been revised to reflect this.

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