SLB Development reverses out of the red to earnings of $10.8 mil for FY20

By Felicia Tan / The Edge Singapore | July 29, 2020 9:07 PM SGT
SLB Development, the development spin-off from Lian Beng Group, has posted earnings of $10.8 million for FY20 ended May 31, swinging out from losses of $5.0 million a year ago.
Revenue for FY20 came in at $46.2 million, a 3.1% decrease from the $47.6 million a year ago, mainly due to the absence of revenue recognised from T-Space @ Tampines. The project was mostly completed in June 2018 with revenue on sold units fully recognised in FY2019.
The decline was partly offset by an increase in revenue recognised from Mactaggart Foodlink and INSPACE.
Gross profit for FY20 grew by 41.3% y-o-y to $18.7 million, mainly due to higher profits from the contributing projects.
Other operating income skyrocketed 148% y-o-y to $5.6 million. This was primarily attributable to the $0.6 million gain on disposal of a subsidiary, Wellprime. The increase was also bolstered by forfeiture income from aborted sales of $0.6 million and a rise in interest income from loans to associates of $1.6 million.
Cost of sales for FY20 fell 20.2% y-o-y to $27.5 million mainly due to the absence of cost incurred by T-Space @ Tampines.
Sales and marketing expenses fell 38.1% y-o-y to $2.1 million, again, from the absence of sales amortised relating to T-Space @ Tampines.
Other operating expenses declined 29.9% y-o-y to $0.5 million mainly due to a decrease in foreign exchange loss.
Share of losses of joint ventures and associates decreased by 65.4% y-o-y to $2.5 million in FY20 mainly due to an increase in development profits recognised from Riverfront Residences and Affinity @ Serangoon.
As at May 31, cash and cash equivalents stood at $39.4 million.
On June 16, SLB exercised its option to subscribe to a 20% equity stake for £90,000 ($160,053) in Pinnacle Investment Management Limited (PIML), a fund management subsidiary of UK-based Pinnacle Investments (Holdings) Limited and Pinnacle Group Limited. Pinnacle Investments and Pinnacle Group aim to build a series of funds focused on the private rented sector in the UK, which is estimated to reach some £75.0 billion by 2025.
On 24 June, SLB’s associated company, 32 Real Estate (32RE) established a $150 million equity joint venture (JV) to acquire, develop, refurbish, and operate co-living assets in Singapore under Weave.
“The diversification of our business into fund management is timely and is in line with our long-term strategy to create new and recurring income streams for sustained growth, which has taken on greater importance given the unpredictable macroeconomic environment. We anticipate that our fund management segment will contribute meaningfully to our business in about three to five years,” says Matthew Ong, executive director and CEO of SLB.
In its outlook statement, SLB says it expects a possible delay of some of its development projects arising from the pandemic, but it will continue to monitor their progress.
“The diversified nature of our asset portfolio across the industrial, residential and mixed-use sectors will allow us to effectively manage exposure to the fluctuations and disruption caused by the pandemic,” Ong adds.
Shares in SLB Development closed 1.9 cents lower, or 19% down, at 8.1 cents on Wednesday (29 July) prior to the announcement.