Pacific Star Q3 net loss widens; flags uncertainty over operating as going concern

PROPERTY developer Pacific Star Development, whose management is voicing uncertainty over its ability to operate as a going concern, sank further into the red in the third quarter ended March 31, 2021 as gross profit dwindled and other operating expenses rose.

Net loss widened to S$8.2 million from S$8 million as revenue came in 81 per cent lower at S$674,000 due to the lower number of Puteri Cove Residences units sold. Gross profit plunged 90 per cent to S$56,000.

The group booked an increase of S$1.28 million in other expenses largely due to an increase in trade receivables written off as a result of cancellation of sales and purchase agreements for Puteri Cove Residences units.

Finance costs of S$5.4 million, largely unchanged from the year before, included transactional costs relating to loans and borrowings reclassified from administrative expenses.

Share of results of its joint venture fell 98 per cent to S$35,000 while share of results of its associate fell 86 per cent to S$90,000 amid bankruptcy proceedings against a developer in Thailand.

Loss per share was 1.64 Singapore cents, higher than 1.6 Singapore cents the year before.

As at March 31, 2021, the group's net liability position was S$69.3 million.

Pacific Star said there is uncertainty as to whether the group is able to meet its contractual obligations in the next 12 months as and when they fall due, and hence there is uncertainty over its ability to operate as a going concern for the next 12 months.

It noted that sale of units in Puteri Cove Residences has slowed down significantly and may continue to be so until the pandemic is brought under control. And while the group is in various stages of discussions with various parties for the en bloc sale of Tower 3, as well as the bulk sale of 10 to 50 units in Tower 1 and 2, the fruition of the discussions is uncertain and likely to be delayed.

Pacific Star has also not concluded discussions with lenders on a package deal that will allow it to restructure a significant portion of its loans and borrowing, provide additional funding, and enable the group to avoid the risks of contractual defaults and cross defaults.

Trading in the group's shares has been suspended since March 24, 2020.