SINGAPORE (Nov 9): Fragrance Group today posted earnings of $4.2 million for 3Q17, up 35.2% on-year from $3.1 million previously on higher turnover with increased contributions from its property development and hotel segments.
Over the quarter, the group recorded a 69.5% higher turnover of $55.92 million from $32.97 million in the corresponding period a year ago.
The property development segment contributed to $45.1 million of turnover, 59.4% higher than the $28.3 million recorded a year ago due to substantial revenue contribution from the group’s 50%-owned City Gate project, for which construction commenced in the second quarter of 2016.
Additionally, Fragrance sold one of its properties held for sale at Wak Hassan, which contributed $5.3 million to revenue whereas no such revenue was recorded in 3Q16.
Another significant contributor to group revenue was a total of $5.1 million from the hotel segment, which came from ibis Styles Hobart in Australia as well as hotels in UK, namely: the Lyndene Hotel, The Townhouse Hotel, The Crown Hotel, and The Imperial Hotel.
While overall gross profit grew 38.7% to $18.1 million in line with the higher revenue, gross profit margin fell to 32.4% compared to 39.6% a year ago due to the lower margin contributed by City Gate and the sale of the property at Wak Hassan.
Other operating income fell 59.1% to $0.3 million from $0.8 million a year ago, mainly due to recognition of foreign exchange gain in relation to the translation of Pounds Sterling at lower exchange rates vis- a- vis the Singapore dollar between date of transaction and end-Sept.
This was partially offset by loss on disposal of one investment property and fair value loss on investment properties.
Other operating expenses nearly doubled to $9.1 million from $5.1 million a year ago on the depreciation of fixed assets, utilities and payroll expenses due to operation of hotels in the United Kingdom and Australia – as well as the increase in commission expenses relating to the development projects and leasing of investment properties.
For 9M16, the group reported 3% higher earnings of $13.1 million compared to $12.7 million a year ago.
Looking ahead, Fragrance says its profits and cashflows for the remaining months of FY17 will depend highly on the further sales of City Gate; the occupancy rate of its investment properties; as well as ibis style Hobart and its UK hotels portfolio, both of which are expected to generate stable income streams.
Shares of Fragrance Group closed 1.8% lower at 16 cents on Thursday.
