Wheelock Prop takes $200m investment hit

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Published February 21, 2009

Wheelock Prop takes $200m investment hit

This drove FY2008 net profit down 63% to $101 million

By JOYCE HOOI


WHEELOCK Properties, which has changed its financial year-end from March 31 to Dec 31, recorded a 63.1 per cent fall in net profit to $100.95 million for the 12 months ended Dec 31, 2008, from $273.49 million for the nine months ended Dec 31, 2007.

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EARNINGS BOOST
Wheelock started recognising in FY2008 revenue from units sold in its upcoming Scotts Square, which also produced higher profit margins

The profit fall was driven by an investment impairment loss.

Explaining the use of a shorter nine-month period in FY2007 for comparison, Wheelock said: 'The group changed its financial year-end from March 31 to Dec 31. The group's businesses are not affected significantly by seasonal factors. Therefore, the results for the 12 months ended Dec 31, 2008 are compared against those of the nine months ended Dec 31, 2007.'

Of the $200 impairment loss, $120 million was attributed to its investment in SC Global Developments and $80 million to its investment in Hotel Properties.

Over the course of 2008, the share prices for Hotel Properties and SC Global Developments have fallen 72 per cent and 77 per cent, respectively.

During FY2008, Wheelock had invested an additional $16 million in SC Global.

Revenue for FY2008 rose 19.4 per cent to $454.64 million from $380.89 million.

This increase was due to both the comparison of a 12-month period against a nine-month one as well as the start of revenue recognition of units sold in its Scotts Square development during its 2008 financial year.

Scotts Square also drove higher profit margins for Wheelock in 2008, with 13 units sold at an average price of $4,028 per square foot.

'Gross profit margin was 48 per cent compared to 38 per cent for the nine-month period ended Dec 31, 2007,' the group said.

While revenue from property investment increased from $24.62 million for the nine months ended Dec 31, 2007 to $37.66 million for FY2008 primarily due to improved rental rates, property investment profits actually dropped from $218.07 million to $116.04 million for the same periods.

'The decrease in profit for property investment was mainly due to lower valuation surplus of $90 million in 2008 compared to $200 million in 2007 on Wheelock Place,' the group said.

Wheelock has also proposed a first and final cash dividend of 6 cents per share, which will total $71.79 million - the same as the year before.

Its earnings per share for FY2008 stood at 8.44 cents against 22.86 cents for the nine-month period ended Dec 31, 2007.

The period saw a tax credit of $2.86 million against a tax expense of $59.62 million for the nine-month comparative period. This was mainly due to a writeback of prior-year tax provision on gain from the sale of Hamptons Group. IRAS has ruled the gain as capital in nature.

The company also announced yesterday the appointment of David Lim as an independent director.

'Presently, Mr Lim is chairman of Jurong International Holdings and director of Ascendas India Trust,' the company said in a statement yesterday.

His appointment comes as part of Wheelock's 'rejuvenation of the board members'. Last year, Greg Seow and Colm McCarthy joined Wheelock's board as independent directors as well.

Wheelock's share price closed at 90 cents yesterday, down 2.5 cents.

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February 21, 2009 Saturday

Property developers' earnings sink

Wheelock Properties posts 63% drop in profit; MCL Land reports loss of $165m

By Michelle Tay


EARNINGS at property developers here have sunk like a tonne of bricks as confidence in the residential property market continues to take a beating.

Wheelock Properties yesterday reported a 63 per cent drop in full-year net profit for last year, while MCL Land sank deep into the red, reversing a healthy bottom line a year earlier.

In view of the poor market, Wheelock Properties says it is 'currently reviewing the building plans' for its proposed luxury project Ardmore 3, while MCL Land is reviewing 'the carrying value of development properties for sale in Singapore'.

For the year ended Dec 31 last year, Wheelock Properties posted a net profit of $100.9 million, down from $273.5 million, even though revenue rose 19.4 per cent to $454.6 million. The previous period was nine months due to a change in the company's year-end.

The company attributed the higher revenues to the sale of units at Scotts Square as well as higher rental rates accrued by Wheelock Place, the group's office and retail property in Orchard Road.

Although the depressed residential market here meant prices of freehold non-landed private prime homes fell 14 per cent in the last quarter, the group sold 13 units in Scotts Square last year for a revenue of $54 million, or $4,028 per sq ft, it said.

Total sales for the project have now reached $903 million, and 'this revenue will be recognised progressively in the accounts until Scotts Square is completed' next year.

Wheelock Place was also revalued - from $700 million to $790 million - last year.

Earnings per share were 8.44 cents, down from 22.86 cents the previous year.

Net asset value per share stood at $1.72, down from $1.82 a year earlier.

The board has proposed a final dividend of six cents a share.

MCL Land reported a net loss of US$107.3 million (S$165 million) for the year ended Dec 31 last year, after posting a net profit of US$61.9 million in 2007.

The group recorded full-year revenue of US$343.1 million, a 12 per cent drop. This was mainly attributable to the completion of Mera Springs and The Esta.

The group acknowledged that the residential property markets in Singapore and Malaysia 'were difficult due to the damaging effects of the global financial crisis'.

It noted that the prices of high-end condominiums in the prime district fell by 20 per cent to 30 per cent last year, while prices of mid-tier homes in the central areas fell by 10 per cent to 15 per cent.

Still, the group believes it is 'well-placed to weather the difficult economic and market conditions', with 'strong cash flow' generated from the sale of three projects - The Fernhill, Tierra Vue and Hillcrest Villa.

Loss per share was 29 US cents, down from earnings per share of 16.73 US cents the previous year.

Net asset value per share stood at US$1.06 as at Dec 31, down from US$1.42 a year earlier.

The board has recommended a final dividend of 10 Singapore cents per share.

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