Paramount FY2020 Profit Up 368% Bolstered by Education Disposal Gain; Proposes Final Dividend of 2.5 sen

Petaling Jaya, 25 February 2021: Paramount Corporation Berhad (Paramount) reported that the Group registered a 368% increase in profit attributable to ordinary shareholders at RM486.7 million for FY2020 (FY2019: RM104.0 million). This was primarily due to the non-recurring gain from the Group’s disposal of its controlling equity stakes in the pre-tertiary education business which was completed in February last year.

Paramount also announced a 2.5 sen per share single tier final dividend for the financial year ended 31 December 2020, subject to shareholders’ approval in the upcoming annual general meeting. The total dividend for FY2020 would therefore be 31.5 sen including the special dividend of 29.0 sen paid in April 2020 from the divestment of the pre-tertiary education business.

For FY2020, the Group’s revenue from continuing operations, mainly property development, was RM593.6 million, which was 16% lower than that of the corresponding period last year (FY2019:RM706.0 million). On the back of lower revenue, the Group recorded a profit before tax (PBT) of RM51.8 million from continuing operations as compared to RM88.8 million in FY2019. This was mainly attributable to the lower contribution from the property division but mitigated by lower non-recurring expenses and interest expenses in the investment and others division.

Paramount Group CEO Jeffrey Chew said, “Despite the on-going pandemic, the Group’s property sales for 2020 had surpassed its 2019 sales by 11% to RM770 million. We delivered strong sales even when the economy contracted by 5.6%. This reflects on the quality and attractiveness of our properties and the Group’s strength and our resilience at creating value.”

“The Group intends to capitalise on the strong sales momentum generated last year and will intensify promotional activities to boost sales. We are grateful for the ongoing support of our customers, communities, authorities, and business associates.”

Continuing operations – Property division

In FY2020, the property division achieved a revenue of RM584.4 million (FY2019: RM700.3 million) with the top three revenue contributors being Utropolis Batu Kawan in Penang, Bukit Banyan in Kedah, and Greenwoods Salak Perdana in Selangor. On the back of lower revenue, the PBT of the property division dropped 47% to RM62.6 million as compared to RM117.4 million in FY2019. Among the other factors that have contributed to this drop were the unprecedented disruptions to the construction progress coupled with additional project related and compliance costs arising from the COVID-19 pandemic.

The Group’s property sales for FY2020 surpassed last year’s by 11% due to stronger sales in the second half of 2020, which was 51% higher than the corresponding period last year. The new project launches that drove up sales were Sinaran at Utropolis Batu Kawan, Cendana at Greenwoods Salak Perdana, and Sejati Lakeside at Cyberjaya.

Prospects

The property market will be weighed down by continued economic uncertainties which could result in cautious household spending, reduced business expenditure and weakened employment market. Nevertheless, the low interest rate environment coupled with the stamp duty exemption on the instruments of transfer and loan agreement for the purchase of residential homes under the home ownership campaign and 2021 Budget initiatives are expected to continue to spur buying interests in properties.

“The Group’s unbilled sales of RM1.1 billion as at 31 December 2020 was a new record achieved. Although this provides some visibility on the Group’s cashflow in the future, the pace at which this can be converted into billings would depend largely on the construction progress of the projects.”

“Paramount’s pipeline of property launches for 2021 is valued at RM1.2 billion, about 42% more than the GDV launched last year. The prolonged pandemic may, however, derail the timing of these launches although we are hopeful that the pandemic would be brought under control with the roll-out of the COVID-19 vaccines in Malaysia starting this week,” said Chew.

“Paramount will launch our first project in Kuala Lumpur in June – the Atrium at Ampang Hilir, a freehold, low density 20-storey tower of serviced apartments, with a GDV of RM968 million. We are starting to register interest for the units on our Paramount Property website. We expect strong interest as it is located at a premium location near the Embassy Row.

“Aside from that we be launching our Arinna smart homes at our expanding development of Kemuning Utama, and new phases of our ongoing projects at Sejati Lakeside, Greenwoods Salak Perdana, Bukit Banyan and Utropolis Batu Kawan,” Chew said.

In the coworking segment, Co-labs Coworking opened a new location in early January 2021 at Tropicana Gardens Mall in Kota Damansara, Selangor, prior to the implementation of MCO 2.0.  Co-labs Coworking also launched Scalable Malaysia in 2020 to provide an end-to-end consult, design, build and manage workspace ecosystem solution to corporates. This new business derives synergies between the Group’s property development and its coworking businesses.

As COVID-19 infection remains a risk, the Group will continue to be vigilant and has taken measures to ensure minimum disruption to its supply chain.

Barring new containment measures that require the closure of construction sites, the Group is cautiously optimistic that its earnings from continuing operations for the financial year ending 31 December 2021 would be relatively better than last year with the anticipation that the COVID-19 pandemic would be brought under control.

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