AF Global full-year profit tumbles 88% to S$926,000

AF Global posted an 88 per cent drop in full-year net profit to S$926,000 from S$7.95 million a year ago, dragged by litigation fees incurred from a shareholders dispute, the property and hospitality company said on Wednesday night.

The company is also a subsidiary of Singapore-listed property companies Aspial Corp and Fragrance Group.

In December last year, AF Global announced that it has agreed to sell its full ownerships rights to the Crowne Plaza London Kensington hotel in the UK. The rights are the primary asset of LC London, which is AF Global's wholly owned subsidiary.

The disposal is slated to be completed by mid-April 2019, which will allow the group to realise an estimated gain on disposal of about S$14 million.

Therefore, LC London is classified as "discontinued operation" in its latest financial statements, while the prior year's figures were restated.

While net profit from its discontinued operation rose 15 per cent to S$1.99 million from a year ago, the group incurred a full-year net loss of S$1.06 million from continuing operations, versus a S$6.23 million profit from continuing operations last year.

In particular, the group's property sector recorded a pre-tax profit of S$1 million, which was S$6.8 million lower than the previous year. This was mainly attributed to higher legal and professional fees incurred with regard to a shareholders dispute for its joint venture (JV) company in Xuzhou, China, and the loss from this JV compared to a profit in the 12 months of 2017.

"The residential project in Xuzhou had reached its tail end, and the number of apartment units handed over to buyers was significantly lower," AF Global said.

Nonetheless, the firm's share of profits from its Knight Frank group of companies was higher, mainly due to greater commission and fee income earned.

Earnings per share (EPS) for the year was 0.09 Singapore cent, comprising a 0.1 cent loss per share from continuing operations, and a 0.19 cent EPS from discontinued operations. This was down from an EPS of 0.75 Singapore cent last year, including an EPS of 0.59 cent from continuing operations, and a 0.16 cent EPS from discontinued operations.

A special cash dividend of 0.75 Singapore cent, and a final dividend of 0.5 Singapore cent per share have been declared for the current financial period.

Revenue fell 6 per cent to S$33.9 million, in part due to the disposal of Zone X in June last year, which owned and operated the family entertainment business. Contributions from the group's hotel and serviced residence segment also declined, with lower revenue from Holiday Inn Resort Phuket as a result of fewer occupancies; and the revenue of Cityview Apartments and Commercial Centre affected by a weaker Vietnamese dong, the company said.

Looking ahead, AF Global expects its hospitality assets to provide stable income. The company has agreed with its Thai partner on a hotel refurbishment programme for the Holiday Inn Resort Phuket, and will maintain a "cautiously optimistic outlook" in Thailand, ahead of the of 2019 general election.

Meanwhile in China, the dispute with its local partner is in court proceedings, and the group has obtained an interim asset-freeze order from the local court to protect its interests, it said.

Closer to home, AF Global expects its Knight Frank Singapore agency business to remain stable. "In Singapore, the residential market is expected to remain slow as buyers are cautious. The office and hotel segments are expected to do well, supported by limited supply and improved outlook," AF Global said.

The counter closed at 16.4 Singapore cents apiece on Wednesday, up 0.6 per cent, or 0.1 Singapore cent.