KUALA LUMPUR – Malaysian Resources Corporation Bhd (MRCB) recorded revenue of RM1.2 billion and loss before tax of RM152.9 million last year, as a result of RM175.3 million impairment provisions relating to completed construction projects impacted by Covid-19.
Without these provisions, the group would have recorded a profit of RM22.4 million in 2020.
Since the resumption of construction activities, which were disrupted by the various iterations of the movement control order, the group has seen continued improvements in its profitability, reflecting its ability to recognise more revenue as construction progress gained momentum, albeit at a slower pace than pre-pandemic levels.
This is seen in its stronger performance in the second half of 2020, producing revenue of RM606.5 million and profit before tax of RM42.2 million, compared with revenue of RM592.9 million and profit before tax, excluding impairments, of RM7.3 million in the first half of the year.
The property development and investment division recorded a 12% increase in revenue to RM635.1 million, largely due to revenue recognition from its 1060 Carnegie project in Melbourne, Australia, upon the financial settlement of purchased units.
However, there have been delays in financial settlements and a slowdown in sales as Victoria state implemented much tougher movement curbs and total lockdowns in the second half of 2020.
The division recorded lower operating profits of RM46.7 million in 2020 compared with RM76.8 million in 2019, mainly due to disruptions from movement curbs throughout the year and their impact on construction progress billings.
The 39% decline in operating profits was amplified by gains before tax of RM58.8 million from the disposal of the group’s entire 30% equity interest in One IFC Sdn Bhd recorded in 2019.
The division sold RM187.3 million worth of properties, and had unbilled property sales of RM1.1 billion at the end of last year.
The engineering, construction and environment division recorded revenue of RM514.9 million, largely contributed by the new Employees Provident Fund headquarters at Kwasa Sentral, DASH Elevated Highway Package CB2, SUKE Elevated Expressway Package CA2 and MRT2 Package V210 projects.
It also completed the RM68 million Larkin Indoor Stadium in Johor and RM173 million PR1MA Kajang in 2020.
The group’s 50%-owned LRT3 joint-venture company contributed profit after tax of RM8.1 million compared with RM600,000 in 2019.
Due to the pandemic, the division performed a detailed business impact assessment on the recoverability of assets’ carrying amounts, and subsequently provided RM197.4 million for the impairment of contract assets, trade and other receivables that it believed would be impacted by the coronavirus crisis in the second quarter of 2020.
However, after some recoveries in the fourth quarter, the provision was reduced to RM170.2 million.
This resulted in the division incurring an operating loss of RM174.3 million in 2020, compared to an operating profit of RM23.1 million a year ago. – The Vibes, February 26, 2021
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