No 'significant impact' from Covid-19 on Melbourne project, says World Class Global

PROPERTY developer World Class Global on Wednesday said it has not seen any "significant" impact of the Covid-19 fallout on the settlement rates of its residential development in Australia. 

Credit remains "generally available" under current market conditions, said the Catalist-listed group, in response to queries raised by the Securities Investors Association (Singapore), or Sias. 

The settlement rates of its Australia 108 development in Melbourne for stages completed between February to May 2020 remain "largely in line" with the previous stages, the group noted. 

It added the pandemic has not caused any construction delays, given that construction is classed as an essential service in Australia. Australia 108, a residential skyscraper located in Melbourne's Central Business District, is targeted to be ready in the third quarter of 2020. 

This development is expected to contribute positively to the group's revenue and profitability in the financial year ending Dec 31, 2020 (FY2020). 

In FY2019, the group's net profit had slumped 41 per cent to S$13.6 million year on year, while revenue fell 54 per cent to S$205 million. This was revenue recognised from the settlement by purchasers of the Australia 108 and AVANT residential developments. 

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In response to Sias' queries about the expected number of settlements at Australia 108 in the final phase, World Class Global said the number is "subject to many factors which are beyond the company's control" and hence inappropriate to forecast publicly. 

The group's total indebtedness in FY2019 amounted to S$591.8 million. With equity attributable to owners of the company at S$116.4 million, the group's gearing ratio stood at 5.1 times.

World Class Global said its businesss is capital-intensive in nature, and relies on bank and project financing, equity, and shareholder's borrowings. It reviews its gearing ratio on a regular basis to ensure that it is in compliance with its loan covenants, if any.

In FY2019, the group capitalised approximately S$28.6 million in borrowing costs. The weighted average interest rate of 6.66 per cent per annum was the actual borrowing costs of the loans used to finance the projects. 

When asked by Sias if it had explored different sources of financing to reduce financing costs, World Class Global said it may also consider options to minimise capital outlay, including joint ventures with other partners, issuance of debt securities or structured finance arrangements.

This will be subject to market conditions, business opportunities, funding availability, financing cost and other considerations, said the group. 

Shares of World Class Global closed flat at S$0.12 on Tuesday.