BLand posts RM27 mil net loss in 1Q; buys lands from parent for RM155 mil

KUALA LUMPUR (Sept 23): Berjaya Land Bhd (BLand), which began the financial year ending April 30, 2017 (FY17) with a quarterly net loss, is buying 871.01 acres (352.49ha) of freehold lands in Sungai Tinggi, Ulu Selangor, to boost its land bank via a related-party transaction for RM155 million or RM177,954 per acre.

In a bourse filing, BLand said its unit Alam Baiduri Sdn Bhd had inked a sale and purchase agreement with BerjayaCity Sdn Bhd (BCity), a 100%-owned subsidiary of its parent, Berjaya Corp Bhd, to effect the land deal.

BCity owns a parcel of freehold land measuring about 2,597.4 acres (including the lands in the deal) in Sungai Tinggi, Ulu Selangor, and Bestari Jaya in Selangor.

“The lands are located within an area zoned for industrial, according to the Planning Department of [the] Hulu Selangor District Council,” the property developer said.

Currently, the lands comprise oil palm estates and vacant lands. The age of the oil palm trees, as of Aug 1, ranged between 15 and 26 years old.

The lands should be worth RM156.2 million or about RM179,332 per acre, as appraised by Messrs Jones Lang Wootton on Aug 26.

“The consideration of RM155 million thus represents a discount of 0.77% or RM1.2 million to the open market valuation of the lands,” said BLand. It targets to complete the deal this year.

Separately, BLand posted a net loss of RM27.24 million in the three months ended July 31, 2016 (1QFY17), compared to a net profit of RM9.91 million a year ago. It was its third straight losing quarter, though revenue gained 3.3% to RM1.55 billion from RM1.5 billion in 1QFY16.

The lower earnings were dragged down by, among others, unfavourable foreign-exchange effect recognised by a foreign subsidiary company of Berjaya Sports Toto Bhd, higher operating expenses incurred by HR Owen plc, and losses incurred by the property development and investment business on lower progress billings.

Going forward, BLand expects its operating performance for the remaining quarters of FY17 to continue to be challenged by escalating cost of living, prevailing economic conditions and increasing illegal gaming activities.

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This article first appeared in The Edge Financial Daily, on Sept 23, 2016. Subscribe to The Edge Financial Daily here.