SINGAPORE (Aug 7): GK Goh, the investment holding company, reported 2Q17 profits from continuing operations of $4.4 million, compared to $1.7 million in 2Q16.
Total revenue from continuing operations grew 3% to $20.4 million. Corporate services revenue rose 4% to $18.1 million while investment income more than doubled to $1.9 million. Other income fell 76% to $351,000.
The change in the status of Habitat Assets from subsidiary to associate means that management fees earned from Habitat’s retirement villages in Australia are no longer included in GK Goh’s group revenues.
Adjusting for the $1.1 million of revenues attributable to Habitat in 2Q16, group revenues would have shown growth of 9%.
FY16 data has also been adjusted for the reclassification of GK Goh Financial Services (S) to “discontinued operations” following its sale at the end of February.
Boardroom’s revenues grew by 4% while profits grew by 64% year-on-year to $3.0 million through business growth, and through improved efficiencies and cost savings.
Stronger equity markets helped the group’s investment portfolio to return $2.0 million, compared to breakeven results a year ago.
During the quarter, GK Goh increased its equity market exposure to $42.5 million from $34.9 million at the end of March, reflecting a more positive stance, particularly in Japanese equities.
Collectively, associates contributed profits of $3.8 million.
Opal Aged Care Group, its Australian aged care associate, contributed $5.3 million, a 12% year-on-year growth on the back of increased capacity.
Opal has grown its network to 72 homes and over 6,300 beds, and will continue its expansion both by building new homes and by upgrading existing facilities.
Habitat, which builds and operates retirement villages in Australia, was previously consolidated as a subsidiary. Following the introduction of additional investors, our stake was diluted to 38% and the investment was reclassified from subsidiary to associate at the end of March.
Concurrently, Habitat did a restructuring to consolidate its investments in Arcadia and Hidden Valley. This restructuring led to a write-down of goodwill and old facilities, GK Goh’s share of which was $1.1 million.
Together with increased marketing costs for launch of a new project at Hidden Valley to the north of Melbourne, Habitat contributed a loss of $1.4 million in the second quarter.
Looking ahead to next year, GK Goh expects its operating companies to be satisfactorily profitable.
Shares in GK Goh last traded at $1.00.
