KUALA LUMPUR (Sept 21): Ekovest Bhd slipped back into the red in its quarter ended June 30, 2021 (4QFY21) after three quarters in the black, hit by higher tax despite strong revenue and pre-tax profit recorded.

Quarterly loss was booked at RM2.66 million or 0.1 sen per share, compared with net profit of RM27.54 million or 1.02 sen per share in 3QFY21.

It incurred RM89.86 million in tax in the quarter, making up 85% of its full-year tax of RM105.3 million, as opposed to a tax refund in 3QFY21.

In the quarter, Ekovest saw a reversal of the deferred tax assets recognized in prior years arising from unabsorbed business losses under Section 44(5F) of the Income Tax Act, with the imposition of a seven-year limitation on carried forward losses and no longer carried forward indefinitely, it said.

The weaker performance was despite pre-tax profit rising nearly six-fold to RM87.54 million from RM13.22 million, on the back of negative goodwill incurred, lower cost of sales and higher revenue which more than offset higher administrative expenses incurred.

Quarterly revenue rose 23.53% quarter-on-quarter (q-o-q) to RM376.17 million, from RM304.51 million, due to higher contribution from construction, toll operations and plantation segments, as well as recognition of negative goodwill.

Negative goodwill refers to the bargain purchase amount of money paid when a company acquires another company or its assets at far below their fair market values.

On a year-on-year (y-o-y) basis, Ekovest narrowed its losses from RM53.52 million or 2.02 sen per share in 4QFY20, thanks to better performance led by construction, toll and plantation segments, which more than offset the higher tax incurred.

Revenue rose 95.1% to RM376.17 million, from RM192.81 million, it said.

For the full-year ended June 30, 2021 (FY21), Ekovest net profit came in at RM43.4 million or 1.62 sen per share, down 8.54% from RM47.45 million or 1.79 sen per share. No dividend was declared for this year, as opposed to 0.5 sen for FY20.

The weaker FY21 performance was due to the property segment posting losses, and higher interest expense and higher tax, offset by improved construction segment performance and negative goodwill recognised.

The increase from construction segment contribution was mainly from improved progress for the DUKE 3 highway project after adjusting to the new Covid-19 SOPs, it said.

Full-year revenue rose 6.71% to RM1.35 billion from RM1.27 billion, largely due to the incorporation of plantation segment contribution this year after completion of the acquisition of PLS Plantation Bhd.

“The board remains optimistic in delivering positive financial results and expects the new plantation segment, the ongoing construction of SPE (Setiawangsa-Pantai Expressway), toll revenue and the sales of completed properties to contribute positively to the group’s revenue and earnings for the new financial year 2022,” Ekovest said.

Shares of Ekovest settled unchanged at 38.5 sen today, valuing the group at RM1.02 billion.