Koh Brothers profits down 61% on exceptional gain

Net falls despite 55% surge in revenue due to real estate and construction materials sales increase.

Koh Brothers Group Limited reported Feb. 22 a 55% climb in revenue to S$333.8 million for the full year ended Dec. 31, 2009 (FY2009). This increase in sales was attributed to the Group’s Real Estate and Construction & Building Materials divisions.

The Group however experienced a 61% decline in net profit attributable to shareholders to S$10.7 million in FY2009, from S$27.7 million in FY2008. This was largely due to an exceptional gain of S$25.0 million in FY2008, which arose from gain on disposal of Changi Hotel and acquisition of a subsidiary’s shares from a minority interest, which was not repeated in FY2009.

Excluding the exceptional items, the Group’s net profit attributable to shareholders for FY2009 would have increased by S$9.4 million or 347% to S$12.1 million.

Mr Francis Koh, Group Managing Director and CEO of Koh Brothers said: "The property sector is currently facing a positive outlook. Property analysts have said that demand for new homes is expected to be strong, in particular at the higher-end segments of the market, in 2010. We are encouraged by the performance of the sale of the Lumos development and the positive response to the launch of our residential development projects, namely, The Fiorenza and Lincoln Suites. In addition, our investment properties such as Sun Plaza continue to receive good, recurring income. Going forward, we will continue to exercise prudence in our business and be selective in tendering for new projects."

The Group maintained a healthy balance sheet with cash and bank balances of S$41.5 million as at December 31, 2009 compared to S$34.4 million as at December 31, 2008.

Prospects and growth plans

The residential property market was active in 2009 with more than 14,000 residential units sold. In terms of pricing, the URA residential property price index rose by 1.8% in 2009 compared to a decline of 4.7% in 2008. Although the government took certain measures to moderate property price increases in 2009, the general market sentiment was positive with a number of new projects being launched by developers. The Group will monitor the market closely and release more residential units for sale at the appropriate time.

The construction industry was one of few sectors showing positive growth in 2009.
However the Group has noted that tender prices have become more competitive.

Added Mr Koh: "We have a healthy order book that will keep us busy for the next two years. We are further encouraged by the Government's decision to sustain the current level of infrastructure expenditure and remain positive about this sector."

The outlook of the hospitality division has not improved much. However, the Group has noted a slight increase in occupancy and are cautiously optimistic that this trend will improve.

Proposed dividend

The Directors have recommended a first and final cash dividend of 0.3 cent per ordinary share to be approved by shareholders at the Annual General Meeting to be held on April 29, 2010.

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