Faber sinks into the red

KUALA LUMPUR (Dec 1): Faber Group Bhd sank into the red recording a RM26.87 million net loss for the third quarter ended Sept 30 (3QFY11) in contrast to the RM29.01 million net profit for the corresponding period a year ago.

However, for the quarter, group revenue rose 34.1% to RM309.4 million from RM230.7 million a year earlier. For 3Q, Faber suffered a basic loss per share of 7.4 sen versus an earnings per share of 7.99 sen a year earlier.

In a filing with Bursa Malaysia, the group said the bleeding was mainly due to the recognition of costs amounting to RM44.5 million for works completed at projects in the United Arab Emirates (UAE). Faber added that the corresponding revenue was not recognised as it could not be measured reliably.

The company added that there was a RM12.9 million impairment loss at the expense level, due to the group's expectation of the significant delay in collection of trade receivables from its principal, Western Region Municipality (WRM) in UAE.

"The group has determined the amount of impairment loss as the difference between the carrying amount for the assets and the present value of the estimated future cash flow discounted at the financial assets original effective interest rate," it said.

Faber added that it is putting in maximum effort to recover the revenue, costs and receivables from the UAE projects and is in active discussions with WRM.

The group noted that the losses were mitigated by higher profit from integrated facilities management (IFM) concession and property division by RM5.4 million and RM2.9 million respectively.

Faber added that revenue for the quarter was higher due to increased contributions from IFM non-concession projects in UAE.

"The recognition of RM107.7 million in revenue was on the work orders issued prior to the expiry of contracts where works and documentation for invoicing were fully completed post expiry of the contracts," Faber said. It added that the final amount of revenue would be determined upon the final acceptance by WRM.

Its property division recorded higher revenue by RM39.8 million mainly due to the launch of new projects in 4Q10 and 1Q 11.

The IFM concession also recorded higher revenue by RM1.9 million on more variation orders and additional facilities at government hospitals within Faber Group's concession area.

For the nine-month period ended Sept 30 (9MFY11), Faber's net profit fell sharply to RM3.78 million from RM75.9 million a year earlier. Its revenue was 1.3% higher at RM694 million from RM684.89 million.

"Property division and IFM concession recorded a positive variance of RM73.4 million and RM17.4 million respectively. IFM non-concession recorded negative variance of RM81.7 million as a result of the non-renewal of contracts for infrastructure and low-cost houses maintenance in UAE," it said.

The company said it expects to record lower profit for FY11 due to recognition of cost for completion of work orders in UAE, and the delay in collecting trade receivables.

Faber fell one sen to close at RM1.50 on Wednesday with 514,700 shares done.

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.