KUALA LUMPUR (Aug 17): Jaks Resources Bhd saw its net profit for the second quarter ended June 30, 2017 (2QFY17) fall by 79.9% to RM1.98 million, from RM9.83 million a year ago, due to losses in its property development division and one-off expenses in relation to the granting of share options.

A note filed with Bursa said the group’s profitability was affected by the property development division’s loss before tax (LBT) of RM13.9 million in the quarter under review, as compared with the LBT of RM7.1 million in 2QFY16.

“The main reason for the losses was the provision of RM6.9 million for liquidated and ascertained damages in the current quarter. Sale of property units of this quarter is low, caused by the slowdown in the property market. The EVOLVE mall’s revenue was hampered by weak retail sentiment, resulting in lower rental income.

“A one-off expense of RM7.6 million on recognition of fair value adjustment, pursuant to the granting of share options in the long-term incentive plan, was charged off in the quarter,” it said.

The group’s construction division remained profitable with a profit before tax (PBT) of RM11.6 million, where RM10.2 million of this profit was derived from the Vietnam EPC Construction work.

For the quarter under review, the group’s revenue grew by 7.4% to RM170.9 million, from RM159.1 million in 2QFY16, contributed mainly by the construction division of RM131.7 million, whereby RM43.1 million was derived from the Vietnam EPC Construction work. The property development division contributed about RM37.9 million to the group’s revenue, following the progress billings achieved.

In the first half of the year (1HFY17), the group’s net profit also fell by 12.7% to RM9.5 million, from RM10.9 million in 1HFY16, while JAKS Resources recorded 15.5% growth in its revenue to RM325.7 million, as compared with RM281.9 million seen in the corresponding period a year ago.

The filing added that the group’s construction division is expected to perform satisfactorily, as the progress of work moves according to schedule at the back of its existing orderbook in hand on jobs from the domestic market and construction jobs that have come onstream from the Vietnam venture.

It said however that the property market remains challenging on the back of slower economic momentum, due to weaker purchasing sentiment, coupled with tighter lending from banks that impact the sales of both commercial and residential units of its property development division.

Nonetheless, JAKS Resources said the group will endeavour to improve its present performance in the current year.

As of closing, JAKS Resources slipped by 1.4% to RM1.41, with about 4.98 million shares exchanging hands, giving it a market capitalisation of RM679.97 million.