BOUSTEAD Projects has reported record earnings for the second half of financial year 2021, following the divestment of its interests in 14 properties to an industrial fund.

 

The property firm intends to reward shareholders with a special dividend of 14.5 Singapore cents in addition to a final dividend of 0.9 cent, Boustead Projects' regulatory statement to the Singapore Exchange on Tuesday said.

 

Boustead Projects generated S$133.9 million in net profit for the second half of the financial year ended March, more than 10 times the S$12.6 million it recorded in the corresponding period a year ago.

 

The property group was able to unlock value when it divested interests in 14 leasehold properties out of its portfolio of 25 to the Boustead Industrial Fund, which it launched.

 

Excluding the one-off, it would, however, have made a loss of S$0.9 million for H2 FY2021, mainly attributable to lower profit from the engineering and construction segment.

 

Thomas Chu, managing director of Boustead Projects, said: " The strategic value of Boustead Industrial Fund should be emphasised as a transformation of our business model, which now integrates the entire industrial real estate value chain. This has created a flexible and ready platform to inject our pipeline of future development projects and established our new fund management business."

 

He added that shareholders will continue to benefit from the company' s leasehold properties sold to Boustead Industrial Fund through its current unit-holding of 25 per cent in Boustead Industrial Fund.

 

Boustead Projects has a portfolio of leasehold properties outside of Boustead Industrial Fund - mostly on joint-venture arrangements - with an expected total market valuation that exceeds S$700 million and that can potentially be injected into the fund or other future property trusts to further unlock value in future years.

 

Total revenue was 21 per cent lower year on year at S$213.7 million for H2 FY2021, mainly due to lower contribution from the engineering and construction segment hit by the pandemic.

 

Total profit was S$131.7 million for the full financial year, or about six times the S$22.2 million made in the preceding year, This was supported by the profit from the divestment of properties to the industrial fund. Excluding it, the loss would be S$3.2 million for the full year.

 

Total revenue was 29 per cent lower year on year at S$301.4 million, notably because its Singapore project sites were closed for at least four months as a result of the " circuit breaker" imposed by the government during H1 FY2021.

 

Net asset value per share climbed to S$1.369 as at March 31, from S$0.957 in the year-ago period.

 

Boustead Projects secured S$178 million in new orders in FY2021, including a significant design-and-build contract to deliver an advanced high-tech industrial facility in Penang, Malaysia.

 

Its order backlog (unrecognised project revenue as at March 31 and the total value of new orders secured since then) stands at approximately S$351 million, the bulk of which is expected to be recognised over FY2022, barring further disruptions from the pandemic.

 

But it continues to face significant margin impact on its current projects due to the pandemic, with elevated pandemic-related costs, and rising construction materials and labour costs.

 

These costs are expected to be partially mitigated by its cost-management measures. Recent travel restrictions imposed by the government have further reduced the ability to bring in foreign labour from specific key sources, while the recently announced Phase 2 (Heightened Alert) has elevated potential short-term risks, Boustead Projects said.

 

While it expects the performance of the engineering and construction segment to eventually recover, the recovery is expected to be slow and only take place after FY2022, as the group completes projects secured pre-pandemic at margins that do not take into account pandemic-related costs and builds on the growth traction achieved in regional markets.

 

Boustead Projects expects to be profitable for FY2022, in view of strong showing from its real estate segment and new fund-management business.