PETALING JAYA: Berjaya Land Bhd (BLand) posted a net profit of RM144.18 million in the third quarter ended March 31, mainly contributed by the higher share of profit from its associated company, namely Berjaya Kyoto Development (S) Pte Ltd (BKyoto) amounting to RM224 million.
BKyoto reported a substantial gain arising from the disposal of the trust beneficial interest on the hotel component of the Four Seasons Hotel & Hotel Residences Kyoto, Japan.
Its revenue of RM1.52 billion was substantially contributed by the gaming business segment operated by Sports Toto Malaysia Sdn Bhd, motor retailing business operated by HR Owen Ltd and the property development business segment from the completion of the development of Kensington Gardens in Penang.
Other than the impact of Covid-19, the hotels and resorts business segment incurred a write-off about RM7.06 million in respect to certain property, plant and equipment which were destroyed in a fire at Berjaya Tioman Beach Resort, Pahang, and the full quarter’s operating expenses of the recently opened Ansa Okinawa Resort, Japan. The other business segments have also reported loss from operations mainly due to lower revenue and higher operating expenses.
BLand said the implementation of the movement control order (MCO) has resulted in the cancellation of six draws by Sports Toto in March 2020, while in the UK, HR Owen has shut down its operations since March 23.
Prior to the imposition of the global lockdown, the group’s hotels, resorts, clubs and recreation business segments were already affected by lower sales, cancellation of events and room sales primarily due to the growing concerns and uncertainties created by the Covid-19 pandemic.
In addition, the shopping malls and complexes of the group had granted a 14-day rental relief to its eligible tenants who were also unable to operate during the MCO or lockdown period.
For the nine-month period, BLand posted a net profit of RM74.46 million, while its revenue of RM4.63 billion was contributed by the gaming, motor retailing and property development business segments.
“The group’s results were impacted by the implementation of the lockdown measures by the various countries which has resulted in the closure of operations of its subsidiaries.
“Prior to the imposition of the global lockdown, the group’s hotels, resorts and recreation had registered lower occupancy rates mainly due to the lower demand from the leisure and corporate markets and lower revenue from events arising from the low influx of tourists as the tourism industry was severely affected by the Covid-19 pandemic since January 2020.”
Moving forward, during the recovery MCO (RMCO) period, almost all business operations of the group in Malaysia will resume fully or partially and will implement social distancing rules and other guidelines under the standard operating procedures (SOPs) issued by the National Security Council.
To date, the group’s gaming business is still suspended. Based on the assumption that the number forecast operation (NFO) operators are allowed to resume operations on after June 10, but before June 30, Sports Toto will effectively have only eight draws or fewer during the fourth quarter ending June 30.
“The introduction of the preventive SOPs and fear of the pandemic may affect customers’ confidence in the immediate term. In spite of the above, the directors are cautiously optimistic that the business will gradually recover given that the NFO industry was fairly resilient in the past economic crises,“ BLand said.
The property development business segment is expected to be impacted by slower property sales mainly due to the expected liquidity squeeze arising from the contraction of the economy. The lockdown measure has also affected the progress of construction of the group’s ongoing projects.
The group’s shopping mall and complexes had granted rental relief to eligible tenants during this challenging time. Going forward, footfall to shopping malls is expected to continue to remain low due to the general public being still wary of Covid-19 infection despite the implementation of preventive SOPs. The low footfall may create downward pressure on rental collections and revenue.
As for the hotels and resorts business segment, BLand also expects occupancy rates and the revenue from events will remain low arising from low tourist arrivals coupled with new social distancing rules during the RMCO period.
The group says the recent incentives announced under the Short-term Economic Recovery Package in Malaysia, particularly for the hotels and resorts and property development business segments, may partly mitigate the adverse impact of Covid-19 pandemic.
