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Far East Orchard's full-year profit slumps 66.8%
DRAGGED by a decline in revenue, other income and share of profit from joint ventures, Far East Orchard reported a 66.8 per cent slump in net profit for the full year ended Dec 31, 2017 to S$21.61 million.
Revenue was down 18.2 per cent to S$151.17 million, due mainly to the end of certain onerous hospitality lease agreements in Australia and New Zealand in late 2016.
The group's hospitality business in Perth also recorded lower sales in the year due to challenging operating environment.
Its share of profit of joint ventures fell 83.1 per cent to S$11.66 million, because of an absence of a one-time recognition from joint-venture property development project SBF Center and the sale of Vibe Hotel Sydney in FY16.
SBF Center's temporary occupation permit (TOP) was obtained in late June 2016.
The group's share of profit from joint-venture development project, RiverTrees Residences, was also lower in fiscal 2017 as most of the profit from the sale of units was recognised in fiscal 2016. RiverTrees Residences obtained its TOP in May 2017 and all units have been fully sold.
Far East Orchard said it expects residential property sentiments to remain positive while the office market recovery looks underway. But most of its residential and commercial projects have been substantially sold. "The company will remain disciplined as we continue to look for development opportunities."
Elsewhere, it has started the development of its first residential project in the UK. The development of Newton Court, its student accommodation building in Newcastle upon Tyne is on track and expected to be completed this year. Its student accommodation development in Brighton is slated for completion next year.
But Far East Orchard cited a subdued outlook for the hospitality sector in Singapore in the near-term as the market absorbs additional rooms that came on stream in the second half of 2017. However, it remains positive on the hospitality markets of Australia and Europe.
"The group plans to continue to grow its hospitality businesses by increasing the number of management contracts, acquiring strategic assets and divesting properties to recycle capital for re-deployment towards higher yielding growth opportunities," it added.