First Sponsor Group ADN , which is 35.72% held by City Developments, and 45.63% owned by Tai Tak Estates, reported earnings of $59.9 million for the 2HFY2022 ended Dec 31, 2022, 14.1% higher than the earnings of $52.5 million in the corresponding period the year before.
For the FY2022, the group’s earnings increased by 8.1% y-o-y to $131.3 million.
The higher earnings are attributable to the share of after-tax profit of associates and joint ventures (JVs), which surged by 59.6 times to $19.4 million in the 2HFY2022, up from $325,000 in the 2HFY2021.
The contribution by the group’s associates and JVs in China improved from a loss of $2.8 million in 2HFY2021 to a profit of $39.7 million in 2HFY2022. In particular, the 27%-held Skyline Garden project in Dongguan contributed a share of profit of $39.6 million to the group in the 2HFY2022, mainly boosted by its handover of the four fully sold residential blocks in December 2022.
The reversal to profitability was offset by the contribution from its European associates and joint ventures, which fell to a loss of $20.1 million in 2HFY2022 from a profit of $3.1 million in the same period the year before as the performance was significantly affected by the impairment of the various investment properties held which led to a share of loss of $19.0 million in total.
“Property development remains the key business segment of the group. The group, on its own and with joint venture partners, made a record purchase of four development land plots (all of which are in Dongguan) in FY2022,” says Neo Teck Pheng, group CEO of First Sponsor Group.
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“The group’s share of the land purchase consideration is approximately $656 million. As a result, the group will see a record number of development projects under pre-sale in FY2023,” he adds.
During the 2HFY2022, the group’s revenue fell by 27.8% y-o-y to $312.2 million mainly due to the lower revenue from sale of properties, property financing and rental of investment properties and partly offset by the increase in revenue from hotel operations.
Revenue from sale of properties in the 2HFY2022 fell by 44.7% y-o-y to $184.8 million due mainly to a lower number of residential units in The Pinnacle project handed over in 2HFY2022 compared to 2HFY2021. The decrease was partially offset by the first time handover of 111 car park lots from The Pinnacle project in the 2HFY2022.
Rental income from investment properties fell by 6.8% y-o-y to $6.7 million mainly due to the depreciation of the Euro against the Singapore dollar (SGD) during the period. This is partly offset by the contribution from the retail mall in Shanghai that was acquired by the group via an auction in April 2022.
Revenue from hotel operations increased by 224.6% y-o-y to $86.7 million due to the consolidation of revenue from the eleven Bilderberg hotels in the Netherlands after the group’s acquisition of a 95% stake in Queens Bilderberg (Nederland) B.V. from its 33%-held associate, FSMC, in May 2022.
The other hotels in Europe also recorded an increase in their aggregate revenue of $14.4 million, up 81.4% y-o-y due to the recovery in the hospitality sector arising from the removal of Covid-19 restrictions.
Revenue from property financing fell by 47.2% y-o-y to $34.1 million mainly due to the lower average Chinese property financing loan book for 2HFY2022 of $223.1 million compared to $560.7 million in 2HFY2021. The decrease was also attributed to the absence of a one-off $5.2 million (RMB25 million) fee earned in 2HFY2021 for the early redemption of the three-year convertible bond secured on a hotel in Dongguan.
Gross profit for the 2HFY2022 fell by 17.8% y-o-y to $139.9 million mainly due to the lower gross profit from the sale of properties and property financing.
In the 2HFY2022, the group obtained a higher overall gross margin of 44.8% compared to 2HFY2021’s 39.3%.
During the same period, the group recorded other losses of $0.1 million which is related to the write off of goodwill arising from the group’s acquisition of an indirect 70%-owned subsidiary, CDFQ. This is down from the other gains of $5.7 million recorded in 2HFY2021.
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FY2022 revenue fell by 27.4% y-o-y to $427.5 million due to lower revenue from sale of properties, property financing and rental of investment properties.
Gross profit fell by 14.6% y-o-y to $206.1 million. The group achieved a higher overall gross margin of 48.2% in FY2022, up from FY2021’s 41.0%.
Earnings per share (EPS) for the 2HFY2022 and FY2022 stood at 4.52 cents and 9.90 cents respectively.
A final cash dividend of 2.70 cents per share has been declared for the period, up from 2.35 cents per share declared in the same period the year before.
If approved, the total dividend declared for the FY2022 will come up to 3.80 cents per share, making this a record dividend payout for the group.
The final dividend is expected to be paid out on May 19.
As at Dec 31, 2022, cash and cash equivalents stood at $270.3 million.
“Backed by a strong balance sheet, substantial potential equity infusion from the exercise of outstanding warrants and unutilised committed credit facilities, the group is ready to capitalise on any good business opportunities when they arise,” says Neo.
As at 9.08am, shares in First Sponsor Group are trading flat at $1.29.
