Far East Orchard’s net profit slumped 97.3 percent to about S$1 million in Q2 2017 from S$37.04 million in the same period a year ago, revealed an SGX filing on Wednesday (2 August).
The sharp decline is primarily attributed to a slump in contributions from joint ventures (JV), which dropped 99.8 percent to S$57,000 from S$36.69 million in Q2 2016.
“The group’s share in JVs decreased mainly due to the absence of a one-time recognition of profits in Q2 2016 from the sale of units in a joint venture project, SBF Center, which obtained its Temporary Occupation Permit (TOP) in June 2016.”
Far East Orchard’s revenue also declined by 19.4 percent to S$36.02 million from S$44.7 million.
“The decline was mainly due to completion of certain onerous lease agreements in Australia and New Zealand in late-2016 and weaker performance from the two hospitality assets in Perth, Australia. This was partially offset by higher revenue contribution from Oasia Suites Kuala Lumpur, which ramped up operations following its opening in April 2016.”
In Singapore, the construction of the group’s JV project Woods Square is on track, while RiverTrees Residences received its TOP in May 2017 and is sold out.
Regarding its Harbourfront Balmain development in Sydney, this is expected to be completed by Q4 2017. The mixed-use project is a 50:50 JV with Toga Group and consists of 121 residential units and retail/commercial space.
In the UK, construction of student accommodation in Brighton is progressing as planned, while the Marshall Court and Bryson Court projects in Newcastle upon Tyne are targeted for completion by Q3 2017.
Looking ahead, Far East Orchard intends to expand its hospitality business by acquiring strategic assets, increasing the number of management contracts, and disposing properties to re-deploy capital towards higher yielding properties.
This article was edited by Denise Djong.