City Developments reports 2% rise in full-year net profit to S$593m

http://www.channelnewsasia.com/stori...039969/1/.html

City Developments reports 2% rise in full-year net profit to S$593m

By Ryan Huang, Channel NewsAsia | Posted: 25 February 2010 2238 hrs


SINGAPORE : Singapore's City Developments on Thursday said it expects to remain profitable this year, and does not expect to see much impact from recent government measures to cool the property market.

The developer booked a 2 per cent increase in full-year earnings to S$593 million or US$420 million.

That is its second highest on record.

Revenue last year hit an all-time high of almost S$3.3 billion.

The Oceanfront@Sentosa Cove was one of the projects that helped to boost the bottomline for City Developments last year.

The group sold some 1,500 residential units in 2009 - more than three times the previous year.

City Developments believes that there is potential in the high-end market, which it said is still 25 per cent off its peak.

Chia Ngiang Hong, group general manager, City Developments, said: "The recovery in the residential market was led mainly by the mass market segment, especially in the second quarter, but buyers' interest filtered up to the mid- and and high-end markets. "Healthy take up in the mid- to high-end market segments since the start of 2010 indicates that residential drivers remain strong - underlying demand is enough to support current pricing."

For the fourth quarter alone, City Developments booked a net profit of S$176.7 million - up some 77 per cent on year.

Revenue jumped by about 29 per cent to S$922.4 million.

City Developments expects cash flow in 2010 to be "healthy" but instead of committing the cash to pay dividends, the group might look at possible acquisitions or takeovers in the market.

With supply expected to flood the office sector in the next few years, the property developer said it is open to the idea of converting its office units into condominiums.

Kwek Leng Beng, chairman, City Developments, said: "Yield from office rentals here is relatively low, but once in a while, you have a chance to convert into residential development as we did in No.1 Shenton Way.

"It is a question of looking at the demand; we do not want to come out with everyone else and undercut each other. It does not follow that because today's market is not as buoyant as before, then you must quickly go and do something.

"I know of cases over the 40 years of business I have been in, when you convert, the market went down, when you convert back, the market went down again. One has to be careful with the timing."

City Developments is expecting to remain profitable over the next 12 months.

It sees little impact from recent government measures to cool the property sector.

These includes the introduction of a seller's stamp duty and reducing the loan-to-value ratio to 80 per cent from 90 per cent.

Mr Kwek said: "It will not help developers sell as fast as before but if there is a genuine demand with a medium- to long-term horizon, I think it should not affect the market that much."

City Developments is proposing to pay a final dividend of 8 Singapore cents per share. - CNA/ms

http://www.businesstimes.com.sg/sub/...74181,00.html?

Published February 26, 2010

CDL generates $1b cash from operating activities in '09

Srong contribution from property development helps lift Q4 profit 76.7%

By KALPANA RASHIWALA


(SINGAPORE) City Developments Ltd (CDL), which yesterday posted its second-highest full-year net profit, is getting ready for at least five Singapore residential property launches this year.

Fourth-quarter net earnings jumped 76.7 per cent year on year to $176.7 million on the back of strong contribution from property development. Pre-tax profit from this segment rose 107.2 per cent for the fourth quarter and 14.2 per cent for the full year.

As a result, property development accounted for 70.7 per cent of Q409 group pre-tax profit; for full-year 2009, its contribution came to 65.5 per cent.

For Q409, the group booked profits from Cliveden at Grange, The Arte, One Shenton, Shelford Suites, The Solitaire, Tribeca and Wilkie Studio. Profits were also booked from joint venture projects such as Livia and The Oceanfront @ Sentosa Cove.

The group also highlighted that profits from the Volari at Balmoral and Hundred Trees condos, which are nearly completely sold, have yet to be booked as these projects are in the early phase of construction. The same goes for The Gale, a joint venture project.

CDL is targeting to launch The Residences at W Singapore Sentosa Cove next month. In April, it hopes to release a 429-unit condo at Chestnut Avenue and a 158-unit condo on the former Concorde Residences site on Thomson Road, followed by a condo in Pasir Ris (next to Livia) in June. In July or August, the group plans to launch a condo with about 150 units on the Copthorne Orchid Hotel site in the Dunearn Road area, owned by its London-listed hotel arm Millennium & Copthorne Hotels (M&C). The projects will be launched in phases.

CDL executive chairman Kwek Leng Beng highlighted that two overseas hotels in M&C's portfolio - Millennium Seoul Hilton and The Tara in Kensington, London - could also be redeveloped into condos at the right time.

CDL's current landbank can potentially yield about 7.1 million square foot of gross floor area.

For the year ended Dec 31, 2009, group net profit edged up 2.1 per cent to $593.4 million, the second best showing since the group's inception in 1963. Its best bottom line, of about $725 million, was achieved for FY2007. CDL's latest full-year turnover of $3.27 billion (an 11.1 per cent increase from the preceding year) was its highest ever.

The group sold a total of 1,508 residential units with sales revenue of $1.87 billion (including joint venture share) last year - a marked jump from the 368 units sold for a total $348 million in 2008.

CDL generated about $1 billion cash from operating activities before tax last year (2008: $516.6 million) - a feat accomplished without resorting to any equity fund raising.

The group's board is recommending a final ordinary dividend of eight cents per share, up from 7.5 cents per share for 2008.

The group is conserving some of its cash for acquisition possibilities, especially in the West, where attractively priced deals are available.

Looking ahead, CDL expects cashflow this year to be healthy as it has pre-sold residential developments and with quite a number of its projects likely to be completed this year - including The Solitaire (which has already received Temporary Occupation Permit), Tribeca, The Oceanfront @ Sentosa Cove, Wilkie Studio and The Arte.

CDL's gearing ratio, without taking into account fair value gains on investment properties as is the group's accounting practice, dipped from 48 per cent at end-2008 to 40 per cent at end-2009.

It it had taken into account such gains, its gearing ratio would have fallen from 32 per cent to 27 per cent over the same period. The group managed to trim net borrowings by 10 per cent last year to $3.05 billion and achieved lower average interest rate on borrowings of 2.2-2.5 per cent, compared with 2.6-3.7 per cent for 2008.

Its interest cover ratio also increased from 11 times for FY2008 to 14.5 times for FY2009.

Net asset value per share rose from $5.97 at end-2008 to $6.57 at end-2009.

During yesterday's results briefing, Mr Kwek also questioned accounting conventions these days that allow companies to book upward revaluations on investment properties as profits as well as to recognise profit on exceptional items such as one-off divestments.

Core earnings, which are a business' recurring income, should be focused on instead, he argues.

'Why do you want to add in 'exceptional profit', or what we used to term as 'extraordinary profit' to your normal profit and say: 'My goodness, I got very good profit; I should ask my board to give me a big bonus!'?'