EcoWorld International recorded a loss before tax of RM94.64 million in 4Q 2022 as compared to the LBT of RM55.52 million in 4Q 2021. The higher LBT was mainly due to further impairment on the Group’s investment in EW-Ballymore recognised during the quarter.
The developer said it was due to changes in the market environment that led to the slowdown in sales, higher yield for valuation of commercial properties, and the higher weighted average cost of capital applied in determining the recoverable amount of its investment in EW-Ballymore. It added the higher WACC was used in view of the more than 200 basis points increase in the UK risk-free rates as at 31 October 2022 as compared to 31 October 2021 – this resulted in a larger impairment.
For FY2022, EcoWorld International recorded a loss for the year of RM233.26 million, as compared to profit after tax (“PAT”) of RM15.88 million in FY2021. The current year’s loss was mainly due to projects undertaken by its subsidiaries and joint ventures having been substantially completed in prior years, revision of profit margins on certain ongoing projects, recognition of impairment on the investment in EW-Ballymore, and lower other income.
The strategy to pursue monetisation of stocks, cash preservation and generation in FY2022 has delivered the desired results – thanks to the higher sales of RM2.158 billion achieved this year we were able to turn into a net cash position by 31 October 2022 which is ahead of schedule. We also have sufficient funds now in place to fully settle the Company’s MTN when it matures in May 2023,” said Dato’ Teow Leong Seng, President & CEO of EcoWorld International.
Commenting on prospects for FY2023, Teow noted that macroeconomic uncertainties remain with cost pressures expected to continue outstripping property price increases in the near to mid-term.