The net profits of Sim Lian Group, a property developer, have slumped by 71 % to $68.8 million from the $241.2 million that was recorded in 2015 financial year. The Group’s 2016 financial year that ended on June 30 also recorded reduced revenue by 52 % at $570.9m from last year’s $1.193 billion.
The decline was attributed to the reduced contributions from the development property completed last year in February. This resulted in the property development section revenue reducing by 91 % to $86.6 m from $914.3 m in 2015.
However, the construction division had an increase in work done in the financial year causing the contributions to rise by 88% to $430m.
The Group also incurred fewer contract costs that was reduced by 52% to $434 million a drop from $ 906.1 million recorded in the previous year. The plummeting of the contract costs was in line with the fall in revenues in the financial year.
Still, in the same financial year, the Group recorded a loss in foreign exchange of $8.2 million. Sim Lian explained that this was mainly attributed to the intercompany balances that were revalued because they did not have the same functional currency as their respective subsidiaries.
The reduction in prices of office space and retail space rented also affected the revenues. Office space prices reduced by 1.5% in quarter two 2016 unlike 0.3% experienced in the previous quarter. Retail space rentals also reduced by 3.5% in the second quarter in comparison to 1.9% in quarter 1.
Due to these results, Sim Lian Group proposed a dividend of 1.5 Singapore cents, which is first and final, a reduction from 7.28 Singapore cents that had been declared in the financial year 2015.
In an SGX filing, the group observed that it expects the property market-operating environment to keep on being challenging due to the loan restriction and property cooling measures that have been in effect from June 2013 as well as the slow growth expected globally.