This article first appeared in The Edge Financial Daily on February 27, 2019

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB), whose largest shareholder is the Employees Provident Fund, closed 2018 on a low note on absence of one-off disposal gains recognised in 2017, and the slowdown in the construction work on the light rail transit line 3 (LRT3) project undertaken by its 50%-owned unit MRCB George Kent Sdn Bhd.

The group’s net profit for the financial year ended Dec 31, 2018 (FY18) dropped by 37.5% to RM101.17 million from RM161.91 million for FY17, dragged down by weak quarterly earnings which fell 73.2% for the three months ended Dec 31, 2018 (4QFY18) to RM26.4 million from RM98.65 million a year ago.

This resulted in lower earnings per share of 0.6 sen for 4QFY18 compared with 4.5 sen for 4QFY17. This was despite quarterly revenue increasing 7% to RM374.11 million from RM349.65 million for 4QFY17.

Revenue for FY18, however, fell 29.2% to RM1.87 billion from RM2.64 billion for the previous year.

In a statement yesterday, MRCB group managing director Imran Salim said the company’s major challenge during 2018 was the remodelling of the LRT3 project, which impacted its performance considerably, resulting in profits being much lower than budgeted.

“Now that the new contract has been signed (on Jan 25), this deferred revenue will begin to flow again this year and continue until the project’s completion in 2024,” he added.

The group’s FY18 performance was also impacted by the concession termination for the Eastern Dispersal Link Expressway and the disposal of an 80% stake in Bukit Jalil Property Sdn Bhd, both of which marked the culmination of its corporate transformation and allowed MRCB to pare down net debt to 0.19 times.

Nevertheless, the group has proposed a first and final dividend of 1.75 sen per share, totalling RM77 million, for the financial year ended Dec 31, 2018 (FY18), subject to shareholders’ approval in the forthcoming annual general meeting.

MRCB said the property development and investment division sold RM470 million worth of properties in 2018, with unbilled property sales totalling RM1.6 billion as at Dec 31, 2018.

It added that the RM1.6 billion figure is expected to deliver RM1.56 billion in revenue, which will be booked over the development lifespan of its projects — 87% of which are residential and 13% commercial.

With interests in 282.28 acres (114.23ha) of urban land, MRCB has a sustainable stream of future projects with a total gross development value of RM31 billion.

As for its construction, engineering and environment division, MRCB said the unbilled order book stood at RM21.5 billion as at Dec 31, 2018.

“The division currently has open tenders valued at RM2.93 billion, and is placing greater emphasis on seeking infrastructure and long-term fee-based management projects,” it said.