New Australian project behind jump in H1 2020 cost of sales, says Fragrance Group

MAINBOARD-LISTED property developer Fragrance Group saw its first-half cost of sales balloon on contributions from a new project in Australia, it said on Monday.

NV Apartment in Australia tipped the company's revenue mix towards higher contributions from the property development segment, which draws a lower profit margin, Fragrance Group told the bourse operator when queried.

The Singapore Exchange had asked the company why its cost of sales had a "material increase" to S$43.7 million for the six months to June 30, from S$7.34 million before.

The surge came even as "revenue increased by a relatively lower percentage" to S$60.6 million, from S$27.6 million in the year-ago period.

But Fragrance noted that the new development, which was completed during its ongoing financial year, contributed revenue of S$38.5 million in its latest half-year.

Separately, it told the bourse that other operating expenses for the six months rose by S$3.8 million to S$17.5 million mainly on the back of:

* Expensed-off commission costs for NV Apartments, which were previously capitalised;

* Higher depreciation and amortisation, professional fees and payroll expenses for a new hotel in Australia; and

* Grant expenses from a property tax rebate.

These expenses were partly offset by lower repair and maintenance fees and a decline in showflat costs for its Singapore development projects, Fragrance added.

The counter shed 0.1 Singapore cent, or 0.87 per cent, to S$0.114 on Monday, before the latest announcement.