Far East Orchard O10 has reported earnings of $21.9 million for the FY2022 ended Dec 31, 2022, 22.1% lower than earnings of $28.1 million.
Earnings for the 2HFY2022 plunged by 53.7% y-o-y to $13.9 million.
The lower earnings were mainly attributable to the other losses during the 2HFY2022 and FY2022 compared to other gains in the corresponding periods the year before.
Revenue for the FY2022 increased by 32.0% y-o-y to $141.0 million thanks to the higher revenues from the group’s hospitality and purpose-built student accommodation (PBSA) businesses. The group’s hospitality business improved amid the reopening of borders and the pick-up in tourism. The higher PBSA revenue was due to the strong demand for student accommodation.
During the FY2022, gross profit increased by 56.7% y-o-y to $73.1 million.
Interest income more than doubled to $2.6 million from $1.0 million.
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Other losses for the year stood at $7.8 million compared to the other gains of $44.8 million in the FY2021.
The group’s hospitality joint ventures (JV) in Australia and Europe also did better on a y-o-y basis, leading to a higher share of profits from a gain from the derecognition of lease liabilities, government grants received in Germany and stronger operating performance.
However, the results were offset by the unrealised currency translation losses due to the weakening of the Australian dollar (AUD) and British pound against the Singapore dollar (SGD). The results were also offset by an impairment of $5.1 million, which was recognised on goodwill on the group’s Australian property ownership business.
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During the year, the group also recognised a total gain of $7.4 million following the completion of the sale of its reversionary interest of Village Residence Clarke Quay and its four office units in Tanglin Shopping Centre.
As at Dec 31, 2022, earnings per share (EPS) for the 2HFY2022 and FY2022 stood at 2.92 cents and 4.67 cents respectively.
Cash and cash equivalents stood at $233.2 million as at Dec 31, 2022. The group’s gearing ratio as at Dec 31, 2022 stood at 46.2%.
A first and final dividend of 3 cents per share has been declared, along with a special dividend of 1 cent per share. This brings the group’s FY2022 dividend to 4 cents per share, up from the 3 cents per share in the FY2021.
“This is a strong set of results for FY2022 against another volatile and challenging year for the global economy and our markets. The group’s hospitality performance strengthened after a long-awaited gradual resumption of international arrivals as the pandemic eases. Our other twin-engine, the PBSA business, continued to provide stable recurring income as student demand for UK higher education remains strong against inflationary cost pressures, particularly energy prices,” says Alan Tang, Far East Orchard’s group CEO.
“Given the persistent macroeconomic headwinds, we remain cautious in our 2023 outlook and will maintain a healthy balance sheet through disciplined capital management to execute the FEOR 25 strategy and deliver sustainable returns to shareholders,” he adds.
“Looking ahead, the global economy is poised to slow down despite signs of resilience and China’s reopening. As we navigate 2023, we will be prudent in managing the downside risks while continuing to pursue yield-accretive investment opportunities. Our efforts will be concentrated on optimising the group’s portfolio to diversify revenue streams and future-proof our business to thrive in an everchanging environment while taking judicious steps to manage cost and cash flows,” he continues.
Shares in Far East Orchard closed 1 cent higher or 0.94% up at $1.07 on Feb 27.
