Petaling Jaya, 29 May 2020: Paramount Corporation Berhad (Paramount) reported a record RM467 million in profit attributable to shareholders in 1Q2020 due to a non- recurring gain from the disposal of its controlling stake in its pre-tertiary education business.
The completion of the disposal on 20 February 2020 has provided Paramount a strong cash buffer that places the company in good financial position to cushion against challenges posed by the COVID-19 pandemic.
The Group’s Profit Before Tax (PBT) from continuing operations dropped by half to RM4.3 million in 1Q2020 (1Q2019: RM8.6 million) mainly due to lower contribution from its property division. The Group also recorded a marginal drop in revenue from continuing operations to RM122.1 million from RM122.3 million in the corresponding quarter last year.
Paramount Group CEO Jeffrey Chew said operations was impacted by the COVID-19 pandemic, and like other property businesses, offices, construction sites and sales galleries were closed in compliance with the Movement Control Order (MCO).
“However, the Property division continued to pursue sales and marketing activities online, supported by virtual sales galleries during the MCO period. The response to our PrioritY campaign launched during the period was encouraging. The incentives we offered such as loan repayment subsidies, free maintenance fees for up to two years, and zero cost for sales and purchase agreement (SPA) legal fees, loan stamp duties, and Memorandum of Transfer were well received by our buyers.
“We believe Paramount Property’s brand, and our reputation as one of the most trusted property developers in Malaysia have played a big role in these bookings. As the people’s developer, we are known to deliver value through quality products. Our products are built with people in mind, delivered in a timely manner and supported by excellent customer service,” he said.
Chew said operations and construction activities have resumed progressively, complying with health and safety requirements. In addition, the company has also taken this opportunity to adapt and redefine business processes, products, and service offerings to meet new market demands.
“In terms of our coworking business, Paramount foresees greater demand for flexible workspaces arising from business continuity planning. Many companies are keen to decentralise and create smaller teams that operate from multiple locations.
“Co-labs Coworking has moved swiftly to serve this emerging market by rolling out enterprise business continuity packages for corporates looking to accommodate split operations,” he said.
The property division achieved a revenue of RM119.7 million for 1Q2020, marginally lower than that of 1Q2019 of RM121.5 million while PBT decreased by 60% to RM6.1 million (1Q2019: RM15.1 million). This was mainly due to lower contribution from the Utropolis Batu Kawan, Penang development as the launch of Phase 3 of its service apartments had been deferred, and slower site progress due to the MCO.
In addition, all on-going phases of Sejati Residences in Cyberjaya and Sekitar26 in Shah Alam had been completed in 2019 while on-going projects such as Sejati Lakeside in Cyberjaya, Berkeley Uptown in Klang and Kemuning Idaman in Kemuning Utama are at the initial stages of development.
Meanwhile, Paramount’s education division through its pre-tertiary education business (now discontinued operations) contributed a PBT of RM472.8 million in 1Q2020. This was a substantial increase as compared to RM10.6 million achieved in the corresponding quarter last year mainly due to a gain of RM460.6 million recognised from the sale of this business.
For the financial year ending 31 December 2020, the Group expects the COVID-19 pandemic to significantly affect the demand of its products and services as well as the projects’ construction progress and hence, the Group’s financial performance. However, this would be bolstered by the RM460.6 million gain on disposal of the pre-tertiary education business that was recognised in 1Q2020.