Frasers Property reports fiscal year net profit surged amid fair value change

Sign at Frasers Tower, owned by Frasers PropertySign at Frasers Tower, owned by Frasers Property
  • Frasers Property reported fiscal year net profit jumped on the industrial and logistics portfolio
  • Fair value gains and a one-time reclassification accounting gain boosted earnings
  • Hospitality posted poor performance across all properties

Frasers Property reported Friday its fiscal year net profit climbed to S$833.1 million from S$188.1 million in the previous year on strong performance from industrial and logistics, including valuation gains, and a one-time gain on portfolio re-classification.

The group has been expanding its industrial and logistics platform, with the segment making up 11 percent of total property assets in fiscal 2016, compared with 31 percent in fiscal 2021, the company said in a filing to SGX.

“As part of the group’s strategic focus on growing its exposure in this sector, a portfolio of industrial and logistics properties in Australia and Europe was reclassified from properties held for sale to investment properties,” Frasers Property said. Properties held for sale are held at the lower of cost and net realisable value, while investment properties are set at fair value based on independent valuations.

“The one-time accounting gain arising from this reclassification, as well as fair value gains from the group’s industrial and logistics properties, boosted the group’s attributable profit,” the company said.

Frasers Property said the gain on the change of  use of properties held for sale to investment properties was S$355.68 million.

Profit before interest, fair value change, taxation and exceptional items increased 14.4 percent on-year to S$1.42 billion, Frasers Property reported. Excluding the gain on change of use, profit before interest and tax (PBIT) would have fallen 14 percent on-year to S$1.07 billion, the filing said.

“Maiden contributions from a development project in Vietnam, higher contributions from development projects in Australia and contributions from newly completed industrial properties in Australia were partially offset by lower contributions from development projects in China and Thailand,” the filing said. “PBIT was further impacted by lower share of results from development projects held via joint ventures and associates in China and Singapore.”

Revenue for the 12 months ended 30 September grew 4.6 percent on-year to S$3.76 billion, the property company said in a filing to SGX.

Panote Sirivadhanabhakdi, group CEO of Frasers Property, said the industrial and logistics segment was a bright spot for the year.

“Several business segments remain affected by the Covid-19 pandemic, especially our hospitality business, although it is starting to show some green shoots,” he said in the statement.

The hospitality segment posted PBIT for the year of S$4.42 million, compared with S$19.63 million in the previous year.

The decline was “mainly due to poor performances across all properties for the full financial year as occupancies and room rates suffered from the lockdowns and travel restrictions amidst the Covid-19 pandemic,” Frasers Property said.

Frasers Property declared a dividend of 2 Singapore cents, up from 1.5 Singapore cents in the previous year.

Outlook

In its outlook, Frasers Property pointed to its investments in technology and innovation, prioritising improving productivity and protecting data.

Sirivadhanabhakdi said the company expected uncertainty around global economic activity would persist amid the global transition to endemic Covid-19.

“We will continue to focus on investment discipline and portfolio value enhancements, and will actively assess opportunities for enlarging our development base and unlocking value where feasible. In addition, we will continue to optimise our hospitality business model, a journey we have embarked on well before Covid-19,” he said.

In August, Frasers Property, via indirect wholly owned subsidiary Frasers Property Yarraville Unitholder entered a joint venture with Irongate FM No.2, as trustee for the Yarraville Investment Trust (Irongate) to develop an urban redevelopment site in Yarraville, located in Melbourne, Australia.

At end-September, Frasers Property’s indirect wholly owned subsidiary Watchmoor Park SARL completed a deal to divest the Watchmoor Business Park to Watchmoor Park Camberley PropCo for around 42.5 million pounds, or around S$77.8 million, the filing said.

Watchmoor Business Park is located in Camberley, Thames Valley, west of London, in the U.K.

Read more details on Frasers Property’s fiscal year results.