SINGAPORE, 13 MAY 2020
Frasers Property Limited (“Frasers Property”, and together with its subsidiaries, the “Group”) today announced its financial results for its second quarter and first half year ended 31 March 2020 (“2Q FY20” and “1H FY20”, respectively).
Financial highlights
2Q FY20 (S$ ‘mil) |
2Q FY19 (S$ ‘mil) |
Inc/(Dec) (%) |
1H FY20 (S$ ‘mil) |
1H FY19 (S$ ‘mil) |
Inc/(Dec) (%) |
|
Revenue |
954.7 |
934.3 |
2.2 |
2,133.5 |
2,017.6 |
5.7 |
PBIT1 |
328.9 |
293.7 |
12.0 |
790.1 |
664.3 |
18.9 |
Attributable Profit |
74.5 |
120.5 |
(38.1) |
233.8 |
266.0 |
(12.1) |
Mr Panote Sirivadhanabhakdi, Group Chief Executive Officer of Frasers Property, commented, “’Business as usual’ is not an option. Along with many businesses around the world, we are facing an unprecedented crisis that has greatly disrupted the business environment and operating conditions in all our markets. FPL’s 1H FY20 results reflected only the initial impact of the COVID-19 outbreak on the Group’s financial performance. Until there is clarity on the duration, severity and consequences of this pandemic, significant uncertainties will persist and the operating environment of the Group’s various businesses will remain challenging.”
The Board deems it prudent to conserve the financial resources of the Company in view of the significant uncertainties in the months ahead. It has therefore taken the precautionary decision to temporarily suspend interim dividend. In addition, effective from 1 May 2020, board members of FPL and its subsidiaries which are managers of REITs and stapled trust listed on the SGX-ST2, will take a voluntary 10% reduction in their directors’ fees. Group CEO will take a 25% reduction in his base salary, while other members of senior management will take base salary reductions of up to 10%. The directors' fees and salary reductions will be reviewed at the end of FY20.
“We have worked consistently over several years to build scalable business platforms across asset classes and geographies to enhance portfolio resilience,” added Mr Sirivadhanabhakdi. “While these extraordinary circumstances will have an impact on our business performance and inevitably, revenue and earnings, we believe the Group’s strong foundation will stand us in good stead as we face the headwinds and maintain key business continuity measures. We are taking proactive actions to strengthen our financial position. This includes optimising cash flows and liquidity, reducing operational costs, and deferring uncommitted capital expenditure. At the same time, we remain committed to supporting the safety and well-being of Frasers Property’s customers, people and the communities we operate in.”
Key highlights in year-to-date FY20
In line with Frasers Property’s strategy to build scalable business platforms, it announced several corporate developments in 1H FY20. In Singapore, it formed Frasers Property Retail, a retail-focused platform with around S$8.6 billion3 of assets under management (“AUM”), and acquired property manager AsiaMalls Management in February 2020. It formed Frasers Property Industrial as well, a multi-national integrated industrial and logistics strategic business unit with over S$5.4 billion4 of AUM. In addition, it acquired Lakeshore Business Park, Heathrow, in the United Kingdom (“UK”) for S$238 million5, growing the number of properties in its UK business park portfolio to seven.
Managing its residential development business in a disciplined and prudent manner, the Group replenished its land bank in Singapore and Australia during the reporting period. Maintaining its focus on the deepest parts of each market, the Group successfully bid for a ~500-unit executive condominium site in Fernvale Lane, Singapore and acquired a 473-unit housing and medium density project site in Keperra, Queensland, Australia.
The Group continued to actively manage its balance sheet, recycling capital through its real estate investment trusts in 1H FY20. It completed the divestment of two properties to Frasers Logistics & Industrial Trust (“FLT”) for S$94 million6 and entered into an agreement to sell its remaining 50% stake in the Farnborough Business Park (“FBP”) in the UK’s Thames Valley to FLT for S$158 million7. Thereafter, the merger of FLT and Frasers Commercial Trust, which was first proposed on 2 December 2019, was completed on 29 April 2020 and the enlarged REIT was renamed Frasers Logistics & Commercial Trust (“FLCT”). FLCT completed the acquisition of the 50% stake in FBP on 30 April 2020.
Change to half-yearly reporting of financial results
Following the amendments to Rule 705(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited which took effect from 7 February 2020, FPL will be announcing its financial results on a half-yearly basis instead of a quarterly basis. The Group remains committed to engaging the investment community through clear, timely, as well as consistent communications, and will provide first and third quarter business updates, commencing with the third quarter ending 30 June 2020. It will continue to keep shareholders updated on material developments relating to the Group in compliance with its continuing disclosure obligations.
Looking ahead
The Group closely monitors all regional and global developments that could have an impact on its multi-national business operations, including developments resulting from the economic impact and disruptions caused by the COVID-19 outbreak.
Frasers Property Singapore’s portfolio of commercial properties registered a 90% occupancy rate in 1H FY20 and its private condominium project Seaside Residences is on schedule for completion in the second half of 2020. Integration work is in progress following the acquisition of AsiaMalls Management. As an enlarged retail management platform, Frasers Property Retail is focused on supporting tenants and ensuring business continuity through the pandemic.
Frasers Property Australia (“FPA”) has around 1,600 residential units due for settlement in the second half of FY20. Managing settlement risks amid the subdued economic environment is currently its main area of focus. On the retail front, the sale of Central Park Retail for S$160 million8 has been settled and Shell Cove Retail, Stage 3, has been sold to a third party for S$4.8 million9. The FPA team is now concentrating on stabilising operations at the recently completed Burwood Brickworks and Eastern Creek Quarter Stage 1 retail assets while managing the development of a new retail asset with 24,332 sq m of NLA10 at Edmondson Park. These retail assets are positioned as super neighbourhood centres, weighted towards the nondiscretionary sector, and anchored by major supermarket tenants.
In the industrial and logistics space, Frasers Property Industrial continues to have a solid development workload, with 12 assets spanning 299,235 sq m planned for completion over the next 12 months. Its investment portfolios in both Australia and Europe are over 99% occupied, with strong leasing activity in 1H FY20 totalling ~146,500 sq m of renewals and new leases across both these regions.
On the hospitality front, the Group is actively exploring alternative uses of its rooms to mitigate the impact of lower customer traffic amid the COVID-19 pandemic. These include government contracts for the hosting of people on stay home notices. Proactive cost containment measures have been implemented speedily as well, with all possible steps being taken to preserve staff employment to the best of the Group’s abilities.
While its people continue to manage the situation on the ground, the Group is concurrently developing plans to ensure that its businesses are positioned to take advantage of the eventual recovery after the pandemic.
1 Profit before interest, fair value change, taxation and exceptional items
2 Singapore Exchange Securities Trading Limited
3 Comprises property assets in Singapore in which the Group has an interest, including assets held by REITs (excluding Eastpoint Mall) and PGIM ARF’s Singapore retail portfolio.
4 Comprises industrial & logistics property assets (outside Thailand) in which the Group has an interest, including assets held by FLT
5 Based on an exchange rate of £1: S$1.7625 as at 21 January 2020
6 Based on exchange rate €1: S$1.5403 as per FLT's announcement dated 2 December 2019 and 23 December 2019
7 Based on an exchange rate of £1: S$1.75 as per FLT’s circular dated 14 February 2020
8 Based on average FY20 exchange rate of S$/A$: 0.9153
9 Based on exchange rate S$/A$ : 0.8723 as at 31 March 2020
10 Net lettable area