reporter2
03-07-13, 18:46
http://www.businesstimes.com.sg/archive/monday/premium/top-stories/sc-global-saves-millions-qc-cancellations-20130701
Published July 01, 2013
SC Global saves millions with QC cancellations
Step was taken after the group successfully privatised
By Felda Chay
[SINGAPORE] SC Global has managed to cancel the qualifying certificates (QCs) that were issued to its developments after it delisted from the stock market earlier this year, saving millions of dollars it would otherwise have to pay for failing to meet the sales deadline under the government's QC rules.
The luxury property firm is the first to delist and obtain QC cancellations since tough additional buyers' stamp duties (ABSD) were introduced for land bought from late 2011 onwards. The duties upset listed property developers because they face a double whammy from hefty ABSD and QC charges if they fail to sell all units at their developments within the time stipulated by both rules.
While SC Global would not have been hit with the ABSD for the projects it got the QC cancellations for, its case is significant because many developers and market watchers had believed that the rule was not retroactive, and would still apply to its existing projects. It was therefore seen as a test case.
Yet BT understands that SC Global is not the first listed property developer here to delist and subsequently obtain QC cancellations. In 2010, Soilbuild Group became the first such company when it applied for and obtained QC cancellations when it delisted.
Prior to its delisting, the residential and industrial property developer reported record net profits for FY 2009. In August 2010, Soilbuild declared its maiden dividend, and reported net profit growth in the first half of FY2010. The group has since relisted earlier this year.
SC Global successfully obtained the QC cancellations on March 1 this year, although news of the cancellations has not been made public.
BT understands that the cancellations include the QC issued for the 66-unit The Marq on Paterson Hill. Its sales deadline came up in January this year and would have cost SC Global $5.5 million for a six-month extension.
SC Global's chairman and CEO Simon Cheong launched his $745 million privatisation bid for the firm in December last year. SC Global officially delisted on March 11.
The group has seen slow sales for its projects as a result of the government's property cooling measures. For the first nine months of FY2012, net profit fell 98 per cent to $2.9 million from $150.9 million over the same period a year ago.
It stood to lose as much as $71.7 million in 2013 if it failed to obtain a waiver, deadline extension or a cancellation of the QCs for three of its projects - Hilltops, Martin No 38 and The Marq, according to a Maybank Kim Eng report in December last year.
The Singapore Land Authority (SLA), in response to BT's queries on the QC cancellations for SC Global, said: "As SC Global's wholly-owned subsidiary companies that had acquired residential development sites satisfied the conditions of being Singapore companies, the subsidiary companies had applied for, and were issued with, clearance certificates on 1 March 2013. The QCs issued for those developments have been cancelled and the QC conditions are no longer applicable.
"The cancellation of the QC in such a situation is consistent with past cases where a developer was subsequently issued with a clearance certificate. SC Global is not the first listed housing developer to delist and apply for a clearance certificate. Another housing developer had delisted in 2010 and obtained a clearance certificate after it satisfied the conditions of being a Singapore company."
When contacted, SC Global declined to comment, although a source close to the firm said that the cancellations came as a "pleasant surprise".
Stock analysts whom BT spoke to said that the QC cancellations obtained by SC Global would be relevant to listed high-end developers, many of whom are seeing sales languish as a result of the ABSD, which has hit the luxury market the hardest.
Said OCBC Research analyst Eli Lee: "I believe SC Global's waivers would be interesting for developers facing QC-related penalties in future. This may be especially so for those with mostly unsold high-end projects nearing/with TOP status."
Still, he does not believe that the case will lead to many delistings.
"Relative to peers during its delisting, SC Global faced the heaviest potential impact from QC penalties. At this juncture, I believe other developers potentially affected, such as Wing Tai, are still looking at a long enough runway for sales."
Echoing this view, Wilson Liew, an analyst at Maybank Kim Eng, said: "I think there is a possibility (that some developers will follow in its footsteps and delist), but there is no pressing need to do so, at least not for the next one to two years."
Published July 01, 2013
SC Global saves millions with QC cancellations
Step was taken after the group successfully privatised
By Felda Chay
[SINGAPORE] SC Global has managed to cancel the qualifying certificates (QCs) that were issued to its developments after it delisted from the stock market earlier this year, saving millions of dollars it would otherwise have to pay for failing to meet the sales deadline under the government's QC rules.
The luxury property firm is the first to delist and obtain QC cancellations since tough additional buyers' stamp duties (ABSD) were introduced for land bought from late 2011 onwards. The duties upset listed property developers because they face a double whammy from hefty ABSD and QC charges if they fail to sell all units at their developments within the time stipulated by both rules.
While SC Global would not have been hit with the ABSD for the projects it got the QC cancellations for, its case is significant because many developers and market watchers had believed that the rule was not retroactive, and would still apply to its existing projects. It was therefore seen as a test case.
Yet BT understands that SC Global is not the first listed property developer here to delist and subsequently obtain QC cancellations. In 2010, Soilbuild Group became the first such company when it applied for and obtained QC cancellations when it delisted.
Prior to its delisting, the residential and industrial property developer reported record net profits for FY 2009. In August 2010, Soilbuild declared its maiden dividend, and reported net profit growth in the first half of FY2010. The group has since relisted earlier this year.
SC Global successfully obtained the QC cancellations on March 1 this year, although news of the cancellations has not been made public.
BT understands that the cancellations include the QC issued for the 66-unit The Marq on Paterson Hill. Its sales deadline came up in January this year and would have cost SC Global $5.5 million for a six-month extension.
SC Global's chairman and CEO Simon Cheong launched his $745 million privatisation bid for the firm in December last year. SC Global officially delisted on March 11.
The group has seen slow sales for its projects as a result of the government's property cooling measures. For the first nine months of FY2012, net profit fell 98 per cent to $2.9 million from $150.9 million over the same period a year ago.
It stood to lose as much as $71.7 million in 2013 if it failed to obtain a waiver, deadline extension or a cancellation of the QCs for three of its projects - Hilltops, Martin No 38 and The Marq, according to a Maybank Kim Eng report in December last year.
The Singapore Land Authority (SLA), in response to BT's queries on the QC cancellations for SC Global, said: "As SC Global's wholly-owned subsidiary companies that had acquired residential development sites satisfied the conditions of being Singapore companies, the subsidiary companies had applied for, and were issued with, clearance certificates on 1 March 2013. The QCs issued for those developments have been cancelled and the QC conditions are no longer applicable.
"The cancellation of the QC in such a situation is consistent with past cases where a developer was subsequently issued with a clearance certificate. SC Global is not the first listed housing developer to delist and apply for a clearance certificate. Another housing developer had delisted in 2010 and obtained a clearance certificate after it satisfied the conditions of being a Singapore company."
When contacted, SC Global declined to comment, although a source close to the firm said that the cancellations came as a "pleasant surprise".
Stock analysts whom BT spoke to said that the QC cancellations obtained by SC Global would be relevant to listed high-end developers, many of whom are seeing sales languish as a result of the ABSD, which has hit the luxury market the hardest.
Said OCBC Research analyst Eli Lee: "I believe SC Global's waivers would be interesting for developers facing QC-related penalties in future. This may be especially so for those with mostly unsold high-end projects nearing/with TOP status."
Still, he does not believe that the case will lead to many delistings.
"Relative to peers during its delisting, SC Global faced the heaviest potential impact from QC penalties. At this juncture, I believe other developers potentially affected, such as Wing Tai, are still looking at a long enough runway for sales."
Echoing this view, Wilson Liew, an analyst at Maybank Kim Eng, said: "I think there is a possibility (that some developers will follow in its footsteps and delist), but there is no pressing need to do so, at least not for the next one to two years."