SINGAPORE (May 13): Fragrance Group recorded a loss of $3.7 million in 1Q19, compared to earnings of $8.5 million in 1Q18.

This came on the back of a 78% fall in revenue to $14.5 million from $65.7 million a year ago, mainly due to lower revenue contribution from the group’s property development and commercial investment segments.

The group’s property development segment saw revenue drop 96.3% y-o-y to $2.0 million while revenue from the commercial investment segment declined 5.7% y-o-y to $5.5 million.

The drop in revenue was partially offset by a 36.2% y-o-y increase in hospitality investment and flat y-o-y revenue from hotel operations.

Cost of sales also declined by 90.8% y-o-y to $3.9 million, bringing 1Q19 gross profit to $10.6 million, 54.8% lower than $23.3 million last year.

Finance costs increased by 86.2% to $7.3 million, compared to $3.9 million in the previous year, mainly due to an increase in costs relating to additional loans drawn down and issuance of new debt notes, as well as the general increase in average interest rates across the floating rate borrowings.

As at end March, the group’s cash and cash equivalents stood at $87.3 million.

Overall there was an improvement in occupancy for the group’s commercial investment properties, save for Tower 15 for which redevelopment plans are in progress. As a result, the group’s commercial investment revenue decreased by 5.7% to $5.5 million.

Following the completion of City Gate in 4Q18, the group does not have any ongoing development projects in Singapore, save for 31 Jervois Road and 205 Jalan Eunos Road projects which are in prelaunch stage.

The group’s on-going key development projects are in Australia (Premier Tower & NV Apartments), which revenue will only be recognised upon completion in accordance with the relevant accounting standards. This may cause the group to report negative results for certain quarters in FY19.

Looking forward, the group expects that the development works at NV Apartments in Perth to complete in 2H19 which may contribute positively to its FY19 results.

In addition, the group‘s results will be dependent on the sales and progress of Singapore development projects; fair value changes in the investment properties; performance of the hotel properties; and the prevailing exchange rates of AUD and GBP against SGD.

Shares in Fragrance Group closed 2.34% lower on Monday at 12 cents.

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