KUALA LUMPUR, Aug 23 (Bernama) -- Sime Darby Property Bhd (SDP) expects minimal future impact from the accounting adjustments related to International Financial Reporting Standards 17 (IFRS 17), despite incurring a wider share of joint venture losses due to a rental guarantee on the Battersea Power Station office tower.
Its group managing director Datuk Azmir Merican said the significant losses in the first half of 2024 (1H2024) were primarily driven by the negative accounting impact of IFRS 17, related to a five-year rental guarantee.
“With the new building's occupancy rate starting at just 20 per cent, the accounting impact for 2024 has been notably large.
“However, we do not foresee any further impact because we have taken a prudent move to account for the major effects in the current quarter, and do not foresee substantial additional impacts for the remainder of the year,” he said during the press conference after the SDP’s virtual media briefing on its 1H2024 financial results today.
Azmir said by aiming to increase the building's occupancy to a minimum of 50 per cent within the next 12 months -- and eventually to 80 per cent -- the company anticipates a reduction in the financial impact as the tenancy improves.
“Our focus is now on increasing tenant occupancy, which will help mitigate future accounting impacts,” he said.
He said SDP will review the situation again at the end of the year, but current assessments suggest that any further financial impacts will be minimal unless significant changes occur.
SDP’s net profit surged 127.9 per cent to RM161.96 million in the second quarter ended June 30, 2024 (2Q 2024) from RM71.07 million in 2Q 2023, while revenue soared 74.2 per cent to RM1.20 billion from RM688.92 million previously.
For the cumulative six-month period ended June 30, 2024, the company’s net profit more than doubled to RM285.54 million from RM131.74 million in 1H2023, while revenue jumped to RM2.18 billion from RM1.37 billion previously.
Overall, Azmir said the company remains positive about its financial outlook and is confident of its strategy to manage and mitigate the impacts of these accounting adjustments.
Previously, it was reported three Malaysian entities - the Employees Provident Fund (EPF), SDP and SP Setia are likely to shoulder losses of some RM250 million a quarter or RM1 billion a year from a five-year rental guarantee at the iconic Battersea development in London.
SDP and SP Setia Bhd each have 40 per cent in the venture, while the EPF has 20 per cent.
-- BERNAMA
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