SINGAPORE (Feb 26): GK Goh, the investment holding company, reversed into losses of $9.4 million in 4Q18 from a profit of $8.5 million in 4Q17.
Various factors contributed to this, in particular the sharp declines seen in major equity markets in the fourth quarter, which led to investment losses of $6.4 million compared to income of $11.2 million in 4Q17.
In addition, both Boardroom and Opal Aged Care Group were affected by a combination of one-time costs and accounting changes. The group’s net loss, excluding these non-recurring items, would have been $2.1 million.
Boardroom saw a 17% year-on-year increase in revenues to $27.1 million, reflecting in part the merger of its Malaysian operations with the Symphony group. However, Boardroom’s profits were substantially lower at $0.4 million compared to $5.1 million in 4Q17 due to the adoption of a new financial reporting standard SFRS(I) 9.
Opal, its Australian aged care associate, contributed a fourth quarter loss of $1.7 million compared to a profit of $3.3 million in 4Q17. Much of the decline in performance relates to a number of one-off charges, the largest part of which relates to an accounting adjustment for the over-accrual of deferred tax asset from past acquisitions.
In Singapore, Allium Healthcare opened its first Allium Care Studio in Joo Chiat in August, with a second such facility opening soon in Seletar Hills. Its flagship nursing home, Allium Care Suites, will take its first residents in the second quarter of 2019. Revenues were minimal in the fourth quarter while costs have been building up ahead of the nursing home’s opening. Allium’s Singapore operations contributed a loss of $0.9 million for this quarter.
Habitat Assets contributed $1.5 million compared to $0.5 million in 4Q17, mainly from the net deferred management fees and revaluation gains from its portfolio of mature retirement homes in Australia.
GK Goh’s other comprehensive income was also affected by a combination of write-downs in the value of long-term listed investments totalling $5.1 million, and foreign currency translation losses of $2.9 million, the latter mostly reflecting the weakness of the Australian currency relative to the Singapore dollar. Consequently, total comprehensive income amounted to a loss of $17.7 million, compared with positive income of $60.8 million in 4Q17.
In FY18, net loss for the group amounted to $3.7 million. Investment losses totalled $2.9 million, reflecting weak stock markets. Excluding non-recurring items at Boardroom and Opal, core earnings after tax for the group would have been $3.8 million.
In its outlook, GK Goh expects Boardroom and Opal to return satisfactory profits in 2019, while Allium will continue to be loss-making as its nursing home scales up operations across the year. Meanwhile, investment returns and currency fluctuations are by their nature difficult to predict, but may have a significant impact on the group’s income in the year ahead.
Shares in GK Goh closed 1 cent higher at 90 cents on Tuesday.
