> Eco World International to buy 70% stake in London property firm
Both plan to jointly develop 12 property sites in England
KUALA LUMPUR: Property developer Eco World International Bhd (EWI) has finalised the terms of agreement with Willmott Dixon Holdings Ltd’s development arm, Be Living Holdings Ltd, to acquire a 70% stake in the latter with plans to jointly develop 12 property development sites.
The acquisition, which will be done in two stages, will see EWI paying nearly £64.9mil (RM356mil) for the six sites under the first stage. This will be financed using the proceeds raised from the company’s initial public offering in April this year.
EWI targets to complete its first stage acquisition by the first quarter of 2018.
As for the remaining six sites, negotiations and documentation processes for the second stage are expected to conclude, shortly after the completion of the first stage’s acquisition.
However, the second stage will be funded via a combination of bank borrowing and other debt instruments.
EWI, which is the international arm of Eco World Development Group Bhd (Eco World), will also secure a 70% stake in a development management company currently owned by Be Living, via this joint-venture. This company will undertake the development of the 12 sites.
Overall, the estimated total gross development value of the 12 sites will worth at least £2.6bil (RM14bil), moving forward.
On another note, both Eco World and EWI announced their financial results for the financial year of 2017 (FY17) yesterday.
The EcoWorld brand continued to deliver a stronger performance in FY17, as its total property sales exceeded the RM6bil mark for the third consecutive year.
Eco World, which handles the brand’s domestic projects, achieved its FY17 sales target of RM4bil, despite the challenging domestic property market.
On the other hand, EWI recorded a total property sales of RM2.42bil in the same period.
Moving forward, Eco World president and chief executive officer Datuk Chang Khim Wah said that the group aims to record RM3.5bil in total sales in its current FY18.
“The sales target is slightly lower than our total sales last financial year because the group will not be launching any sizeable new projects next year.
“Instead, the group will concentrate on further enhancing the value of our existing landbank with the aim of delivering sustainable long-term growth for all stakeholders.
“As at end-Oct, our unbilled sales stood strong at RM6.4bil and this should set us on a steady growth path.
“By FY19, we are targeting to be in a position to commence payment of dividends to our shareholders,” he told reporters during a media briefing.
Eco World’s net profit in the fourth quarter ended Oct 31, 2017, rose by 14.85% yearon-year (y-o-y) to RM33.71mil, mainly due to the higher revenue and lower selling and marketing expenses.
The group’s revenue in the final quarter was up by 21.33% y-o-y to RM899.02mil.
Cumulatively for FY17, Eco World’s net profit surged by 62% to RM209.65mil, as compared to RM129.28mil a year earlier. Its revenue increased by nearly 15% y-o-y to RM2.92bil in FY17, largely because of a higher number of sold units having attained the criteria for profit recognition.
Meanwhile, EWI narrowed its net loss in the fourth quarter to RM32.56mil compared to a net loss of RM55.06mil a year earlier. For FY17, the bottom line also narrowed from a net loss of RM87.63mil from RM220.09mil in the corresponding period.
EWI president and chief executive officer Datuk Teow Leong Seng the company will only start to recognise profit from the current FY18.
“In the overseas market that we are currently operating in, we can only recognise profitability once we have sold the units. Hence, this was the reason why EWI has recorded a net loss.
“This year alone, we have performed commendably with RM2bil sales secured in FY17, not including our future development with Willmott Dixon,” said Teow.
Currently, EWI has three ongoing property projects in London and two in Australia.