Sime Darby Property Berhad (“Sime Darby Property” or “the Group”) posted a revenue of RM592.6 million for the third quarter, an increase of 105.6% compared to the preceding quarter, and RM1,357.6 million for the nine-month period under review ended 30 September 2020.

The Group, however, recorded an RM358.6 million loss for the third quarter and RM456.0 million losses for the nine-month period under review, mainly due to impairment of inventories at the Battersea Power Station project (“Battersea project”) and the Property Development segment.

Excluding the aforesaid impairment of inventories, the Group’s operating performance saw an improved result across all its business segments with Profit Before Interest and Tax (“PBIT”) of RM92.6 million for the third quarter, representing an increase of more than four-fold, and RM63.7 million for the nine-month period under review.

The operating performance of the Property Development segment improved significantly to a profit of RM110.2 million as compared to a loss of RM5.1 million in the preceding quarter, excluding the impairment of inventories. This was driven by on-site development activities in line with the easing of lockdown restrictions as well as higher sales of new launches and ongoing projects.

The Group’s Investment and Asset Management segment also showed improvement and registered a higher revenue of RM17.0 million and marginally lower loss of RM4.6 million as compared to a loss of RM5.0 million in the preceding quarter. The segment performance, albeit vulnerable to the COVID-19 pandemic, has improved in line with the resumption of activities and cessation of rent concessions for the quarter under review.

The Leisure segment recorded a profit of RM1.4 million as compared to a loss of RM10.4 million in the preceding quarter, mainly due to higher revenue from golfing and membership as well as an increase in events and functions.

The Group’s quarterly result was impacted by the share of impairment loss of RM337.1 million (GBP62.4million) from Battersea Project Holding Company Limited and its subsidiaries, a 40% owned joint venture of the Group, in respect of the Battersea project in London, and the impairment of inventories of RM97.8 million.

The said impairment from the Battersea project was due to the challenges presented by the Covid- 19 pandemic in the United Kingdom which had an impact on the delivery of the project. Notwithstanding the impact of Covid-19 on the global market, it is encouraging to note that the Battersea project continues to maintain good momentum with respect to both residential sales and commercial leasing where agreements for leases have been entered into with leading brands.

“Our third quarter operating performance demonstrates the stability of our core business segments and the resilience of our organisation, as shown in the improved core results compared to the previous quarter. I am pleased to report that within the nine-month period, we have achieved a total sales of RM1.3 billion and am confident to exceed our revised annual sales target of RM1.4 billion,” said Sime Darby Property Group Managing Director Dato’ Azmir Merican.

He also added, “Acknowledging the ongoing Covid-19 pandemic, we have initiated the process of proactively assessing the value of our assets to ensure prudent measures are in place to reflect the evolving market conditions. Given the uncertainty with respect to the pandemic and its related economic consequences, assessments will continue to be made to ensure the Group will be on a stronger footing as the overall economic environment gradually recovers.”

Future Growth Prospects Remain Strong

Riding on the national Home Ownership Campaign (“HOC”) that was reintroduced in June 2020, the Group has intensified its marketing and sales efforts, garnering total bookings of RM1.1 billion, as at 31 October 2020. Take-up rates have been encouraging, with launches of residential homes such as Elmina Green Three and Serenia Ariya achieving 100% take-up on the launch weekend.

Aligned with the Group’s plan to broaden the funding structure for its working capital and to support future business growth, the Group has also revised its RM4.5 billion Islamic Medium Term Notes Programme based on the Shariah principle of Musharakah (“Sukuk Musharakah Programme”) to incorporate terms for the potential issuance of ASEAN Sustainable and Responsible Investment (SRI) Sukuk with a credit rating of AA+IS and a stable outlook accorded by Malaysian Rating Corporation Berhad (MARC). MARC had also assigned a “Gold” Sustainability Sukuk Assessment to the Group’s sustainability Sukuk Framework, which sets out the guidelines for any future issuance of ASEAN SRI Sukuk Musharakah under the RM4.5 billion Sukuk Musharakah Programme.

The Group’s resilient financial position and revenue visibility, supported by a moderate net gearing level of 0.26 times and unbilled sales of RM1.5 billion, puts it in good stead to ride out market uncertainties.

(26 November 2020)