First Sponsor Q2 earnings up 24.7% to $15.1m

SINGAPORE - Mainboard-listed First Sponsor Group on Thursday (July 25) reported a 24.7 per cent rise in net profit to $15.1 million for the second quarter, from $12.1 million a year ago. This comes on the back of increased revenue from the sale of properties and hotel operations.

For the three months ended June 30, earnings per share (EPS) stood at 1.86 cents, up 12 per cent from 1.66 cents a year ago, it said in a regulatory filing before the market opened.

An interim cash dividend of 1.1 cents per share has been declared for the period, up from one Singapore cent a year ago. This will be payable on Sept 13, the group said.

First Sponsor shares last closed at $1.31, one cent or 0.8 per cent lower on July 22.

Revenue for the second quarter rose 80.1 per cent to $79.4 million, from $44.1 million a year ago.

Revenue from the sale of properties more than quintupled to $42.2 million, from $8.0 million the year before. This was mainly due to the recognition of revenue from more commercial units in the Millennium Waterfront project at 100 units, compared with a single unit a year ago.

The group also saw a 34.4 per cent rise in hotel operations revenue to $16.0 million, from $11.9 million the year prior. This was due to a full quarter contribution from the 94.9 per cent owned Westin Bellevue Dresden Hotel which was acquired in late March this year.

These increases were partially offset by a 13.7 per cent decrease in revenue from property financing to $18.2 million, from $21.0 million a year ago.

This is due to the absence of net penalty interest income of $5.1 million from the receipt of net auction proceeds by the court in June 2018 regarding the successful enforcement on two of the Case 2 defaulted loans; and a $3.8 million contribution from a loan to a 30 per cent owned associate which was repaid in March 2019.

First Sponsor's European loan portfolio also contributed a $6.9 million increase in interest income; offset by a contribution of $6.4 million in interest income from a higher average secured China loan portfolio for the quarter.

The group also saw its other expenses quadruple to $13.4 million from $3.3 million a year ago. This is mainly from a $14.1 million net fair value loss on financial derivatives, hotel management fees of $900,000, and hotel pre-operating expenses of $500,000.

It is also due to a write-off of $0.5 million hotel base stocks, from the group's Hampton by Hilton hotel in Utrecht in the Netherlands which started operations in June 2019.

These expenses were partially offset by net foreign exchange gain of $3.0 million.

For the first half of the year ended June 30, net profit rose 33.1 per cent to $38.9 million, from $29.2 million a year ago. EPS was 5.35 Singapore cents, up 24.4 per cent from 4.3 cents a year ago.

Revenue increased 35.7 per cent to $124.8 million, from $91.9 million the year prior, also from a rise in revenue from the sale of properties and hotel operations, partially offset by a drop in revenue from property financing and rental income from investment properties.

On outlook, First Sponsor group chief executive Neo Teck Pheng said that the group would continue to grow its property financing business in China and Australia in a "prudent manner".

With the completion of its second rights issue in May, he added that the group has further strengthened its balance sheet and is ready to capitalise on good business opportunities in the Netherlands, Germany, China and Australia for further growth and expansion.

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