Mulpha International Bhd, which posted a pre-tax loss of RM214.86 million for the fiscal year 2019, says that its revenue and earnings will be materially impacted from mid-March, amid the coronavirus (Covid-19) outbreak.
It said that the two divisions that will be affected are its hotel and education assets, because of recently-introduced travel bans in Malaysia, Australia, the UK, and New Zealand.
In a recent filing with Bursa Malaysia, Mulpha said the impact is expected to be most severe in the group’s hotel assets, where occupancies are expected to reduce substantially.
Mulpha said closure may be necessary, while restrictions remain in place.
It said the group’s education assets, held via Mulpha Education Group will also see some impact this year.
Mulpha anticipates that earnings for the first school term will not be materially impacted, while future enrollments from international markets will be down substantially, due to restrictions placed on entry from China and other Asian nations.
On the real estate side, Mulpha said the operations have not been materially impacted by the Covid-19 pandemic, although it expects that sales enquiry will reduce over the coming weeks, due to further government restrictions on entry by international visitors to Australia and enforcement of self-isolation and limits to public interaction.
In its quarterly report in February, Mulpha had said that following a material slowdown in real estate markets in 2018 and during the first half of 2019, a rebound is being experienced particularly in the Sydney market for land and townhouse products.
However, the group said strong competition remains in the apartment segment and it is anticipated that recovery will be more gradual.
Mulpha also expected the travel ban from China to result in slower international sales at Sanctuary Cove.
For the hospitality division, Mulpha had already anticipated that trading will be impacted in the short term by the China travel ban imposed by the Australian Government following the Corona Virus outbreak.
Mulpha said, while the group’s hotels generally do not attract a large amount of Chinese business, the overall impact of the travel ban across all Australian markets has seen material occupancy declines and a general reduction in room rates.
“These changes will place greater pressure on meeting revenue budgets until travel patterns return to more normalised levels,” it said.
Mulpha posted a pre-tax loss of RM214.86 million for the financial year ended December 31, 2019 (FY2019), compared with a pre-tax profit of RM308.61 million a year earlier.
Revenue for the year stood at RM850.01 million, which was 8.3 per cent higher than the RM784.9 million it recorded in FY2018.
Mulpha said the group’s unfavourable performance was adversely impacted by the underperformance of an associate, AVEO Group by RM171.85 million mainly due to sluggish retirement assets sales and a loss relating to an adverse change in fair value of its retirement investment portfolio valuation.
In addition, the group also recognised an impairment loss on investment in AVEO of RM312.71 million following the latter’s privatisation scheme which was completed on 29 November 2019.
Mulpha said the property division registered revenue of RM347.66 million and pre-tax profit of RM147.34 million for FY2019 as compared to revenue of RM333 million and pre-tax profit of RM152.89 million in the previous year. Despite the increase in revenue due to higher settlements from the Sanctuary Cove developments in Australia, the lower pre-tax profit was mainly due to the increase in land tax and the lower fair value gain of investment properties in Australia as compared to the previous year.
The hospitality division reported revenue of RM408.25 million and pre-tax profit of RM109.31 million for FY2019 as compared to revenue of RM370.22 million and pre-tax profit of RM92.83 million in the previous year.
Mulpha said the better performance was mainly attributed to the sale of Rdyges Esplanade Resort located in Cairns, Australia.
The group’s assets, meanwhile, decreased by 10 per cent to RM5.31 billion as of 31 December 2019 mainly attributable to decreases in
investment in associates, investment properties and property, plant and equipment.
An investment property located in Australia was reclassified to assets held for sale during the financial year as the sale is expected to be completed in the second quarter of this year.