Boustead Projects reports 972% surge in 2H21 earnings of $133.9 mil due to the Boustead Industrial Fund
https://www.theedgesingapore.com/boustead-projects-reports-972%-surge
Boustead Projects, a leading provider of real estates solutions, has reported earnings of $133.9 million for the 2HFY2021 ended March on May 25.
The figure, which represents a 964% y-o-y surge or 10.6 times higher than earnings of $12.6 million in the corresponding period the year before, was due to the successful launch of the Boustead Industrial Fund (BIF) on March 4.
The BIF came with a BIF value unlocking gain of $134.8 million recorded from the BIF divestment.
After adjusting for the BIF value unlocking gain, the 2HFY2021 would have seen a total loss of $0.9 million instead, mainly due to lower profit from the Engineering & Construction (E&C) segment (previously known as the design-and-build segment), which saw cost increases related to the Covid-19 pandemic.
The earnings in 2HFY2021 marks a sequential reversal from the $2.2 million loss registered in the 1HFY2021 ended September 2020.
As a result of the higher earnings in the 2HFY2021, FY2021 earnings surged 487% y-o-y to $131.2 million.
Earnings per share (EPS) for the 2HFY2021 stood at 43 cents from 4 cents in the 2HFY2020 on a fully diluted basis, while EPS for the FY2021 stood at 42.3 cents, from 7.1 cents in the FY2020.
Revenue for the 2HFY2021 stood 21% lower y-o-y at $213.7 million mainly due to lower revenue from the E&C segment on the back of Covid-19-related costsand offset by the higher revenue from real estate segment. Boustead Projects’ E&C segment was impacted by unprecedented costs arising from the Covid-19 pandemic, the government’s built environment sector advisories and measures, a gradual ramp-up in construction activities, lower productivity and lower worker productivity following a prolonged closure of project sites in Singapore for the 1HFY2021.
2HFY2021 cost of sales fell 15% y-o-y to $202.5 million, while gross profit plunged 63% y-o-y to $11.2 million.
Share of profit of associated companies and joint ventures in the 2HFY2021 stood at $11.7 million compared to the share of loss of $1.7 million for the 2HFY2020. This was mainly due to recognition of the group’s share of gain from the sale of properties by two joint ventures to BIF.
Total profit for the 2HFY2021 surged 972% y-o-y to $133.9 million due to the BIF launch.
FY2021 revenue stood 29% lower y-o-y at $301.4 million, while total profit for the full-year stood at a record $131.6 million due to the BIF value unlocking gain.
After adjusting for the BIF value unlocking gain, the group would have seen a loss of $3.2 million for the FY2021.
FY2021 cost of sales fell 24% y-o-y to $283.8 million, while gross profit plunged 66% y-o-y to $17.6 million.
Share of profit of associated companies and joint ventures in the FY2021 stood at $11.1 million compared to the share of loss of $3.4 million for the FY2020 for the same reasons as that of the 2HFY2021.
Due to the group’s successful unlocking of value and capital recycling from BIF, the group has proposed a final ordinary dividend of 0.9 cent per share and a special dividend of 14.5 cents per share for the FY2021, bringing the total dividend to 15.4 cents for the year.
As at March 31, cash and cash equivalents increased by $182 million to $298 million, with the higher net cash provided by operating and investing activities.
During the FY2021, the group secured $178 million worth of new contracts, bringing its order backlog to $351 million.
Thomas Chu, managing director of Boustead Projects, attributed the “limited loss” to the “resilience of our core businesses including the better performance of the real estate segment, along with stringent cost management measures” despite the “most challenging year” seen in Boustead Projects’ history since its establishment in 1996, due to the Covid-19 pandemic and ensuing measures.
“Special mention should go to our real estate team, which delivered the successful launch of Boustead Industrial Fund, leading to record profit. The strategic value of Boustead Industrial Fund should be emphasised as a transformation of our business model that now integrates the entire industrial real estate value chain, has created a flexible and ready platform to inject our pipeline of future development projects and established our new fund management business,” he says.
“In addition, our shareholders will continue to benefit from our leasehold properties sold to Boustead Industrial Fund through our current unitholding of 25% in Boustead Industrial Fund,” he adds.
“As we push forward, we expect an eventual but slow recovery of our engineering & construction segment, welcome the addition of our new fund management business led by Boustead Industrial Fund and have strengthened our balance sheet to weather this storm and yet, have sufficient capabilities and funding to invest in strategic growth initiatives across the region.”
The group says it continues to face “significant margin impact” on its current projects due to the Covid-19 pandemic with elevated pandemic costs, and rising costs on construction materials and labour.
It adds that while it expects the performance of its E&C segment to eventually recover, recovery is expected to be slow and to take place after the FY2022 as it completes projects secured from before the Covid-19 pandemic at margins that do not take into account unprecedented pandemic-related costs and builds on the growth traction achieved in regional markets.
In addition, the group says it expects to remain profitable in FY2022 “barring unforeseen circumstances” and disruptions from the pandemic.
Shares in Boustead Projects closed 2 cents higher or 1.8% up at $1.11 on May 25.
