SINGAPORE (May 23): Real estate solutions specialist Boustead Projects posted a 2% drop in earnings to $5.7 million for the 4Q19 ended March, compared to restated earnings of $5.8 million for 4Q18.

This brings full year earnings for FY19 to $30.6 million, some 5% higher than earnings of $29.2 million a year ago.

The group recorded earnings per share (EPS) of 1.8 cents for 4Q19, the same as a year ago. For FY19, EPS rose to 9.8 cents, compared to 9.1 cents for FY18.

The decline in 4Q earnings was mainly due to lower gross margins in design-and-build projects and depreciation incurred on ALICE @ Mediapolis, where leasing income has yet to be stabilised.

Total 4Q19 revenue jumped 50% to $69.3 million, from $46.2 million a year ago.

This was on the back of higher design-and-build revenue, which grew 60% to $62.0 million in 4Q19, supported by the healthy order book backlog carried forward at the end of FY18.

In particular, the group says there was a sizeable project under a deferred payment arrangement that provided significant revenue.

However, gross profit fell 3% to $12.6 million in 4Q19, as gross margin tumbled 10 percentage points to 18% during the quarter.

The decrease in gross margin was mainly attributable to lower quantum of cost savings from previously completed projects and tighter gross margins for ongoing projects.

Cost of sales surged 70% to $56.7 million in 4Q19, from $33.3 million a year ago.

Other income rose 14% to $1.6 million in 4Q19, from $1.4 million a year ago. This was mainly attributable to a 21% rise in interest income to $1.3 million for 4Q19.

Boustead Projects registered a share of loss of an associated company and joint ventures amounting to $1.6 million in 4Q19, compared to a share of profit of $0.9 million a year ago. This was mainly due to depreciation incurred on the newly completed ALICE @ Mediapolis.

As at end March, cash and cash equivalents stood at $108.3 million.

Boustead Projects has proposed a final dividend of 1.5 cents – the same as a year ago – and a special dividend of 0.5 cents for FY19. This brings the total full-year dividends up to a total of 2.0 cents, some 33% higher than a year ago.

“We delivered healthy results for FY19 while achieving significant progress on several business development fronts,” says Thomas Chu, managing director of Boustead Projects.

In particular, Chu highlights that the group has secured record $633 million worth of contracts in FY19, which are expected to be progressively recognised over the next two years. These include sizeable contracts for the JTC Multi-Storey Recycling Facility and Surbana Jurong Campus.

“On the real estate front, we completed ALICE @ Mediapolis, which in the short-term has been a dampener on our leasehold portfolio’s profitability, but once fully stabilised and tenanted, is expected to contribute meaningfully to profitability,” Chu adds.

Shares in Boustead Projects closed 1.0% lower at $1.02 on Thursday, before the announcement of its results.