KUALA LUMPUR (June 24): Sime Darby Bhd today said the results of the United Kingdom’s referendum to exit the European Union will not impact the viability of the Battersea Power Station project.

Reiterating its long term commitment as a shareholder of the Battersea Power Station project, the government-linked conglomerate said the project will continue to generate interest in the longer term.

“We are confident [that] the iconic development will continue to generate interest in the longer term,” the group said in a statement.

“Sime Darby is confident that London will continue to remain a key investment destination and financial centre,” it added.   

In an unprecedented move, UK voters polled for the country to leave the EU, with 52% or 17.41 million voters commanding the winning decision. A total of 48% or 16.14 million voters chose to stay in the EU. Voter turnout was 72.16%.

The ‘Leave’ decision has prompted UK Prime Minister David Cameron to resign, while sending the pound plunging to levels not seen since 1985 (1.3240 against the US dollar), as well as causing markets across the Asian region to roil.

UK’s FTSE 100 saw £100 billion wiped off as investors fleed risky assets, after tumbling more than 8% within the first few minutes of trading — its biggest fall since the collapse of the US investment bank, Lehman Brothers, in 2008, The Guardian reported.

In a note today, Maybank IB Research said a weaker British pound should result in lower ringgit-denominated profits from the foreign exchange impact and margins, which will impact Sime Darby’s profit margins.

“Based on our sensitivity analysis, a 10% weakness in the (pound-ringgit rate) from our base case would impact our financial year 2017 net profit estimates for S P Setia Bhd/Sime Darby by 3.5%/1.1%, our revalued net asset value (RNAV) estimates by 1.5%/less than1%,” the note read.

The research firm also said a potentially slower UK economy could affect future take-up rates at Battersea Power Station, but noted the project has locked in sizeable sales (which have yet to be recognised), totalling GBP1.6 billion or 18.3% of its total project GDV.

The Battersea Power Station regeneration project, with an estimated gross development value of £10 billion (RM57 billion), involves the redevelopment of London’s iconic Battersea Power Station.

Sime Darby and SP Setia have also jointly invested in the project with 40% stakes each, while the Employee Provident Fund owns the remaining 20%.

The projects sees the development of residences, parks and commercial areas at the site of the decommissioned coal-fired power station located on the south bank of the River Thames, in Nine Elms.