PETALING JAYA: Eco World International Bhd recorded a net loss of RM67.35 million for the second quarter ended April 30, 2022 (Q2’22), compared with a net profit of RM11.30 million a year ago, mainly due lower profit contribution from projects in Australia in line with lower revenue and the group’s share of losses in joint ventures.
This comes on the back of the revision of profit margins for the EW-Ballymore joint-venture projects and higher inventory holding costs as a result of the longer time taken for sales realisation.
Along with fewer handovers and lower progressive profit recognised from EW London’s built-to rent projects, this has resulted in share of losses in joint ventures during the quarter compared with share of profits in joint ventures recorded in the previous corresponding quarter.
Following the revision of project profit margins and a longer time expected to realise sales proceeds, an impairment on investment in EW-Ballymore amounting to RM36.16 million was recognised during the quarter.
The group recorded revenue of RM33.08 million in Q2’22, a decrease of 69.24% compared with RM107.56 million in the preceding year’s corresponding quarter mainly due to fewer units sold being handed over to customers as the majority of units were handed over in the last financial year.
For the six months period, the group recorded a net loss of RM82.01 million compared with a net profit of RM67.34 million a year ago mainly due to a combination of factors, including the share of losses in joint ventures in the current financial period as opposed to share of profits in joint ventures in the previous corresponding financial period, lower revenue and profit contribution from Yarra One and West Village, impairment of investment in EW-Ballymore and lower other income.
The group’s revenue for the six months fell 79.96% to RM82.32 million from RM410.83 million in the preceding year’s corresponding period following less handover of the remaining units in West Village and Yarra One sold to customers in the current period as compared to when Yarra One commenced handover in December 2020.
The group plans to monetise its completed stocks in the UK and Australia, which is expected to generate substantial cash reserves. The group said it will strive to accelerate sales to achieve improved overall returns to shareholders. A portion of the funds generated from the sales of its completed stocks will be earmarked for reinvestment, with the balance to be repatriated to Malaysia for planned distribution to shareholders within the next 1-2 years.
EcoWorld International president and CEO Datuk Teow Leong Seng said its monetisation strategy has progressed well, enabling the group to repay all the project development loans for its Australian projects as well as all the bank borrowings of our EW-Ballymore joint-venture. At the group level, it has also begun receiving some repayment of shareholders’ advances from EWBallymore.
“However, despite the resurgence in demand we have seen over the last seven months, selling prices for properties have not increased at quite the same pace as yet. This is because market sentiment continues to be weighed down by inflationary concerns and rising interest rates, compounded by geopolitical tensions caused by the ongoing conflict between Russia and Ukraine.
“Interestingly though, rents in London have been going up particularly at our EW-Ballymore projects due to their prime location, transport accessibility and excellent liveability. Such rental growth augurs well for an eventual price recovery which should help us to achieve better overall returns from the sale of our completed properties for the benefit of our shareholders,” he continued.
Teow highlighted that EW-Ballymore currently has about £400 million (RM2.13 billion) worth of completed properties which are readily monetisable given the sustained interest received on all three projects within the portfolio.
“Once the remaining completed properties in our EW-Ballymore portfolio, as well as our Australian projects, are sold, EcoWorld International will have substantial cash reserves to be deployed. We intend to set aside a portion of the cash generated for reinvestment in new projects for our future growth – the balance we are targeting to be repatriated from the UK and Australia for distribution to our shareholders within the next 1-2 years,” Teow said.
