The property developer maintained the better year-to-date results despite its third-quarter (Q3) profit being weighed down by finance costs and share of initial losses in relation to joint ventures and associated firms.
In its interim financial report to Bursa Malaysia on Thursday, EWM said its Q3 net profit was 41% lower at RM26.09mil due partly to finance costs incurred on new term loans taken to fund the investments in and advances to joint venture (JV) and associated companies.
Another reason for the drop was an RM11.75mil share of the initial losses incurred by JV companies – namely Eco World International Bhd, Eco Grandeur Sdn Bhd, Eco Ardence Sdn Bhd and BBCC Development Sdn Bhd – pending the start of property development profit recognition.
However, revenue for the quarter was 5% higher at RM762.92mil compared with the same period last year due to a higher percentage of completion compounded by a higher number of sold units.
EWM noted that the higher year-to-date earnings was largely due to the inclusion of a gain on dilution of equity interest in wholly-owned Paragon Pinnacle Sdn Bhd, which arose in the first quarter of FY17 after the Employees Provident Fund Board took a 40% stake.
Paragon Pinnacle is the developer of the 1,400-acre Eco Grandeur mixed residential and commercial development and 518-acre Eco Business Park V in Kuala Selangor.
The company also said that Up to Aug 31, group sales year-to-date amounted to RM2.39bil, 9% higher than RM2.20bil achieved in the corresponding period of FY16.
Meanwhile, EWM’s 27%-owned associate firm Eco World International Bhd (EWI), which was listed in April and has development projects in London and Sydney, reported a lower loss attributable to equity holders of RM24.2mil in Q3 compared with a loss of RM46.4mil a year earlier.
This was achieved on revenue of RM97,000 versus RM288,000 previously.
EWI said the lower loss was mainly due to unrealised foreign exchange differences as a result of an appreciation in exchange rate of the pound in the quarter.
“Revenue and profits associated with the group’s property development activities will be recognised by its subsidiary and joint venture when the construction of the relevant units are completed and delivered in the first half of 2018,” it noted.
The group’s revenue for the quarter came about from fees for marketing services rendered by a subsidiary of the group’s joint venture in respect of property sales of its UK projects.
For the nine-month financial period to July 31, EWI slashed its loss by 67% to RM55.08mil on 8% lower revenue of RM461,000.
In a separate announcement to the exchange, EWI said Datuk Heah Kok Boon had resigned as its non-executive director effective Thursday to focus on his executive role in EWM (Heah is an executive director and chief financial officer at EWM).
Meanwhile, EWM executive director Datuk Voon Tin Yow has been appointed as EWI non-executive director.