Lian Beng Group said on Friday that its fiscal first quarter net profit fell 38.9 percent on-year to S$6.97 million from S$11.39 million in the year-earlier quarter due to the adoption of new accounting rules.
Under the new rules, revenue in the quarter ended 31 August rose 15.9 percent to S$82.98 million, it said in a filing to SGX after the market close on Friday. The revenue rise was mainly on increased revenue from the construction and investment holding segments, offset by lower revenue from the property development segment, Lian Beng said.
Before the adoption of Singapore Financial Reporting Standards International, net profit attributable to the owners of the company would have been S$36.44 million, up from S$8.94 million in the year-earlier quarter, it said. Revenue before the adoption of SFRS (I) would have been S$276.40 million in the fiscal first quarter, up from S$37.18 million in the year earlier quarter, it said.
The new standards require that the performance obligations for the sale of industrial properties be satisfied over time, rather than the previous completion of contract method, it said.
Under SFRS(I), cost of sales increased 11.9 percent on-year in the fiscal first quarter to S$58.59 million, it said.
Other operating income fell 78.8 percent on-year in the quarter to S$2.22 million, mainly due to a year-earlier gain on disposal of investment property at 247 and 249 Collins Street, Melbourne Australia by Lian Beng Ventures (Melbourne), it said.
Administrative expenses in the quarter rose 18.6 percent on-year to S$6.69 million mainly on increased staff costs, Lian Beng said.
The share of results of joint ventures fell 14.4 percent on-year in the quarter to S$1.38 million, it said.
The share of results of associates swung to a loss of S$1.49 million from a year-earlier gain of S$1.19 million, mainly due to the marketing and showflat costs incurred for new projects launched, Affinity @Serangoon and Riverfront Residences, while revenue has yet to be recognized, Lian Beng said.
In its outlook, Lian Beng said it was “cautiously optimistic” on the outlook for Singapore’s construction industry over the next 12 months.
It pointed to Ministry of Trade and Industry Singapore (MTI) data which showed the pace of contraction in the construction sector slowed to 4.6 percent on-year over the April-to-June period from a 5.2 percent decline over the January-to-March period.
“This shows a nascent sign of bottoming out in view of an improved construction demand since September 2017,” Lian Beng said, adding it would continue to tender for public and private sector projects.
Lian Beng said its construction order book was around S$1.25 billion as of 31 August, offering a steady flow of activity through fiscal 2022.
“Despite the impact of the change of accounting treatment reflected in this quarter, the overall performance of the group has been encouraging and we look forward to the contributions from the property development and construction segments,” Ong Pang Aik, Lian Beng’s executive chairman, said in the statement.
Lian Beng also said it was looking forward to recurring income from its investment properties portfolio, which includes newly acquired properties such as Wilkie Edge and Sembawang Shopping Centre, and two dormitory properties in Mandai and Papan.