http://www.businesstimes.com.sg/prem...group-20130828

Published August 28, 2013

Full-year net profit falls 27% at Sim Lian Group

Results hurt by higher costs and lower revenue

By Felda Chay [email protected]


SIM Lian Group's net profit for its full year fell 27 per cent from $229 million to $166.9 million on the back of higher contract costs and a fall in revenue.

Revenue for the 12 months ended June 30, 2013, was 3 per cent lower at $742.2 million, compared with $764.3 million. This had been dragged lower by a drop in construction projects.

Earnings per share were 17.2 cents, down from the preceding year's 25.8 cents.

The group has declared a first and final dividend of 4.6 cents. In FY2012, it gave a first and final dividend of 5 cents and a special dividend of 2.5 cents.

The property and construction firm said yesterday that it expects to deliver profitable operating results for FY2014, although the outlook for the property sector is challenging.

Noting the many rounds of government measures introduced to cool the property market, Sim Lian said in its results statement: "With the past rounds of property cooling measures and the latest loan restrictions measures, the group expects the operating conditions for private residential property market to become increasingly challenging.

"The group remains committed to seeking strategic investment opportunities for its continued growth and is focused on building a stable base of recurring income to smoothen its fluctuating development profits."

Earlier this month, it announced the proposed acquisition of a freehold property at 50 Margaret Street in Sydney, Australia, for an aggregate consideration of A$65.3 million.

The property is Sim Lian's first commercial asset in Australia and "may provide opportunity for the group to explore further re-development potential in the future", it said yesterday.

Revenue from its property development division contributed $586 million to the group's revenue in FY2013, compared with $577.4 million in FY2012.

The 1.5 per cent dip was mainly the result of higher revenue from its Waterview and Parc Vera projects, on which more work was done during FY2013. Waterview, in Tampines, is fully sold, and Parc Vera in Hougang 99.5 per cent sold.

Sim Lian's construction division contributed $128.3 million to revenue, a decrease of 19 per cent from $158.3 million in FY2012. The lower revenue contribution was due mainly to there being fewer projects in FY2013 than in FY2012.

Sim Lian's contract costs rose 15 per cent to $523.3 million from $453.4 million a year ago, because of "different cost structures for different types of developments, including higher labour and raw materials costs".

Net asset value at the end of June was 85.4 cents, compared with 76.1 a year ago.

Yesterday, Sim Lian's shares fell 1.6 per cent to close at 91.5 cents.