Frasers Property Limited (FPL) has reported losses of $45.7 million for the 2HFY2020 ended Sept 30, from the $294.3 million earnings posted a year ago.
This translates to a loss per share of 2.56 cents on a fully diluted basis, after taking into consideration fair value change and exceptional items.
Before fair value change and exceptional items, loss per share stood at 0.60 cents for the 2HFY2020.
For the FY2020, FPL reported earnings of $188.1 million, down 66.4% from earnings of $560.3 million in FY2019, bringing FY2020’s earnings per share (EPS) to 3.77 cents on a fully diluted basis after factoring in fair value change and exceptional items.
EPS for the FY2020 before fair value change and exceptional items stood at 5.16 cents on a fully diluted basis.
Group revenue for 2HFY2020 fell 17.5% y-o-y to $1.46 billion, while profit before interest, fair value change, taxation and exceptional items (PBIT) fell 27.5% y-o-y to $455.5 million.
The declines were primarily attributable to poorer operating results from FPL’s hospitality and retail properties following the Covid-19 outbreak and subsequent lockdowns. The declines were also due to lower contributions from development projects in China.
The lower figures were partially mitigated by higher revenue contributions from AsiaRetail Fund Limited (ARF) and Golden Land Property Development Public Company Limited (GOLD) following the group’s step-up acquisition and consolidation of their results since July 2019 and August 2019 respectively.
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Net interest expense was up 13.5% y-o-y to $218.0 million due to the higher net debt positions.
Other income was up at $53.8 million from the $567,000 loss the year before, which includes government grant income in relation to rental relief and wage credits in Singapore.
Gross profit fell 27.3% y-o-y to $470.8 million.
Share of results of joint ventures and associates fell 23% y-o-y to $221 million. This includes the share of fair value change, which fell by $21 million to $81 million.
Excluding FPL’s share of fair value change and exceptional items from joint ventures and associates, share of net profits decreased by $46 million to $140 million.
The decreases were mainly due to the absence of share of ARF’s and GOLD’s equity-accounted results and fair value change with the consolidation of their results from July and August 2019, respectively.
FPL recorded a lower net fair value gain of $162 million, compared to the $544 million the year before, mainly due to lower valuations recorded by some of FPL’s hospitality properties and the absence of one-off fair gain from the dilution of interest in an office tower in the corresponding period in 2019.
Exceptional items was a net loss of $160 million, compared to the $115 million net loss in 2019 mainly due to the impairment of certain hospitality assets of some $137 million.
For the FY2020, group revenue and PBIT fell 5.1% y-o-y and 3.6% y-o-y to $3.60 billion and $1.25 billion respectively.
This was due to the worldwide hotel closures and movement restrictions, as well as temporary cessations of non-essential services, which negatively affected the operations of FPL’s hospitality and retail properties.
Rental rebates were also extended to FPL’s retail tenants.
Lower revenue contributions from development projects in Singapore and Australia also resulted in the lower revenue and PBIT, and partially mitigated by higher contributions from ARF and GOLD due to the step-up acquisition and consolidation of their results.
In Singapore, revenue and PBIT declined by 11% and 33% y-o-y to $609 million and $313 million respectively, mainly due to the lower revenue from its commercial properties portfolio and residential properties.
The decline was partially mitigated by higher revenue for its retail investment properties portfolio.
PBIT declined for all three Singapore segments mainly due to the impact of Covid-19 on operating results and rental rebates, absence of 5.5 months of results from Frasers Commercial Trust (FCOT) as a result of its merger into Frasers Logistics and Commercial Trust (FLCT) and a write-down to net realisable value and lower contributions.
Revenue and PBIT for FPL in Australia fell by $501 million and $41 million to $619 million and $38 million respectively due to the irregular number of sales settlements of the residential projects, and absence of “significant contributions” from Discovery Point in Wolli Creek, New South Wales.
FPL’s industrial revenue and PBIT was up by $32 million and $104 million to $500 million and $351 million respectively mainly due to the inclusion of FCOT’s results within FLCT and higher contributions following the acquisitions of the Maxis business park and additional interest in the Farnborough business park in the UK. PBIT was up due to higher share of results from joint ventures in Australia.
Hospitality revenue and PBIT fell sharply by $310 million and $112 million to $489 million and $20 million following worldwide hotel closures and lower occupancies and room rates as a result of the Covid-19 pandemic.
In Thailand and Vietnam, revenue and PBIT was up by $554 million and $135 million to $823 million and $265 million respectively. The consolidation upon the step-up acquisition of GOLD contributed to the higher figures for Thailand.
Other revenue and PBIT was up by 24% and 10% y-o-y to $556 million and $319 million respectively. This was contributed by the higher level of settlements in the Chengdu Logistics Hub project in China and from settlements in Nine Riverside Quarter and maiden contributions from Lakeshore Business Park in the UK.
Panote Sirivadhanabhakdi, group CEO of Frasers Property, commented, “We have done a lot of work around building the foundation of a business that aims to deliver value over the long-term and through market cycles. As a result of this groundwork, there were bright spots in certain segments, particularly industrial and logistics, Thailand and, to a certain extent, China”.
“Positive contributions from these segments helped to partially offset the adverse impact of the COVID-19 pandemic on our earnings in FY20. Our hospitality business has unsurprisingly been hardest hit, registering significantly lower contributions and accounting for the bulk of the impairments and fair value losses we recorded. The extension of tenant support across the Group has also affected our bottom line,” he says.
While there are near-term challenges, the Group’s fundamentals remain intact,” he adds. “Recognising that we must continue to respond with agility and demonstrate tenacity in order to sustain growth over the long term, we have put in place strong leadership, competent teams and robust processes across our business, and built up a resilient, well-diversified portfolio over the years. We will continue to build upon our foundation to enable Frasers Property to evolve in the post-Covid-19 world.”
A final ordinary dividend of 1.5 cents has been recommended, which will be paid on Feb 10, 2021.
As at Sept 30, cash and cash equivalents stood at $3.08 billion.
Looking ahead, FPL says it will continue to “maintain a high level of business and financial discipline even as the Group continues to manage the operational challenges posed by the Covid-19 pandemic.”
It adds that the group’s overall business and financial position remains “healthy” and the business platforms built up over the years will help grow it in a post-Covid-19 environment.
In Singapore, Seaside Residences is on schedule to complete in end 2020. Planning is also progressing well for the Fernvale Lane executive condominium site. FPL’s suburban malls are seeing recent recovery in tenant sales to near pre-Covid-19 levels, outpacing the recovery of shopper traffic.
Frasers Property Australia has around 1,955 residential units due for settlement over the coming financial year, of which around 89% have already been sold. It has also completed three retail assets this year, of which one was sold to a third party.
Frasers Property Industrial has eight new assets spanning over 204,000 sqm across Australia and Germany that are planned for completion over the next two financial years.
Frasers Hospitality is capitalising on the uptick in domestic travel in various markets. It also added four new properties in FY2020 to “capture opportunities from the resumption of domestic tourism”.
It adds that it is “cautiously calibrating” the re-opening of its properties in the UK and Europe along possible cost containment strategies on Covid-19 related measures imposed by the respective governments.
Shares in FPL closed flat at $1.14 on Nov 10.
