Petaling Jaya, 11 May 2016: Paramount Corporation Berhad (PCB) today announced its first quarter results for the financial year ending 31 December 2016, posting a revenue of RM113.3 million and a Profit Before Tax (PBT) of RM20.1 million. Compared with 1Q2015, revenue for the period decreased by 31% (1Q2015: RM165.0 million), while PBT decreased by 60% (1Q2015: RM33.6 million), with higher revenue contributions from Paramount Education, the Group’s education division, offsetting lower revenue contributions from the Group’s property division, Paramount Property.
Announcing the results, PCB Group Chief Executive Officer Jeffrey Chew said, “Paramount Property has been adversely affected by the muted economic environment of the first quarter of 2016, but the cyclical nature of the property business has been mitigated somewhat by the resilient performance of Paramount Education, comprising the Sri KDU primary and secondary schools and the KDU tertiary education businesses, which turned in a higher performance for the quarter compared to the same period last year.”
He added, “Our operational performance remains intact with a healthy balance sheet. We remain on track with our 5-year business plan, which is anchored on our strategy of strength through synergy, exploring and maximising opportunities across our property and education businesses.”
Revenue for Paramount Property decreased by 42% in 1Q2016 to RM74.5 million (1Q2015: RM128.5 million) attributable to lower progressive billings recorded on its Sejati Residences in Cyberjaya, Paramount Utropolis in Glenmarie, Shah Alam and Sekitar26 Business in Shah Alam developments. Paramount Property registered sales of 83 units with a sales value of RM54.0 million in 1Q2016, primarily from its affordable homes segment, comprising Greenwoods Salak Perdana in Sepang as well as Bandar Laguna Merbok and Bukit Banyan in Sungai Petani. Lock-in sales as at 31 March 2016 was RM342.0 million. As a result of the lower revenue, Paramount Property’s PBT decreased by 58% to RM12.1 million (1Q2015: RM29.1 million).
During the same period, revenue for Paramount Education, comprising the primary and secondary schools and the tertiary institutions, grew by 7% to RM38.6 million (1Q2015: RM36.1 million) due to a higher student population of 8,519 (1Q2015: 8,242). Revenue from KDU University College (KDU UC) in Paramount Utropolis, Glenmarie and Sri KDU schools grew by 21% and 5% respectively, whilst revenue from KDU Penang University College was maintained. As a result of the higher revenue and a gain of RM2.3 million recognised on the sale of apartments that served as student accommodation and were no longer feasible following KDU UC’s move to its new campus in Glenmarie, Shah Alam, PBT jumped 67% to RM10.2 million (1Q2015: RM6.1 million), with higher PBT from Sri KDU schools and lower losses incurred by KDU UC.
KDU UC’s new home-grown programmes launched last year were well received and the overall steady flow-through of students at KDU UC is also an indication that students have confidence in its academic quality as well as new teaching and learning facilities.
Commenting on prospects for the rest of the year, Chew said that economic growth was expected to hover at around 4–4.5%. “We expect demand to be driven by the affordable segment, where demand remains positive. Our current affordable properties in Greenwoods Salak Perdana, Sepang and Bukit Banyan, Sungai Petani will be further complemented by the launch later this year of our new Batu Kawan township in Penang. Paramount Utropolis Penang will mirror our very successful Paramount Utropolis’ university metropolis concept in Glenmarie, and is primed to meet demand for what is planned to be Penang’s third satellite city.”
He added that on the education front, Paramount Education will continue to see intense competition in the tertiary business, with many private higher education providers offering significant reductions in tuition fees by way of discounts and promotions. In the primary and secondary school segment, competition is also stepping up due to new schools opening, with more in the pipeline scheduled for 2016 to 2018.
“Sri KDU’s excellent reputation, its strong value proposition and its consistent enrolment, which is on track with budget, is expected to drive the performance of Paramount Education in 2016,” said Chew. “2016 will be challenging, but with cost containment efforts across the Group and a focus on improving quality and competitiveness, we are confident that the Group will weather the challenges of 2016.”