http://www.businesstimes.com.sg/arch...-gain-20130226

Published February 26, 2013

Heeton's Q4 profit soars on fair-value gain

Full-year earnings double even as revenue slips 36.3%

By carine lee


RIDING on a $38.74 million fair-value gain on investment properties, Heeton Holdings' fourth-quarter net profit leapt more than six-fold to $41.6 million from $5.4 million a year ago.

Heeton, whose turnover comprises rental income from investment properties and proceeds from residential projects, reported an 88.1 per cent year-on-year jump in revenue to $23.6 million for the three months ended Dec 31, 2012.

Earnings surged despite profit from continuing operations dropping 33.6 per cent year on year to $3.9 million.

The boost came as Q4 gains from fair-value adjustment of investment properties surged to $38.74 million from $1.1 million a year earlier.

This raised full-year fair-value gain from investment properties to $42.24 million, from 2011's $4.4 million.

This was due to revaluation gains on El Centro ($34.44 million) and Tampines Mart, The Woodgrove and 62 Sembawang Road ($7.8 million). El Centro, a fully owned mixed development previously classified under development properties, was reclassified as investment properties in FY 2012.

The revaluation gain led to a doubling in full-year net profit to $52.7 million despite 12-month revenue slipping 36.3 per cent to $52.52 million as a result of lower sales contribution from two of its residential projects, The Lumos and Lincoln Suites. The Lumos received its temporary occupation permit in August 2011 and its turnover, cost of sales and profits were mainly accounted for in FY 2011.

"Despite lower contribution from our development property business, we have managed to turn in a decent set of results, largely due to our success in balancing our portfolio of development and investment properties," said chief operating officer Danny Low.

As at Dec 31, 2012, development properties in Heeton's portfolio were worth $249.19 million, comprising residential property projects in various stages of development. Additionally, associated companies recorded an increase to $91.76 million from $66.46 million a year earlier, mainly due to new investments in and additional loans made to fund the working capital of associated companies.

Group net asset value per share was about $1.28, up from $1.06 a year earlier, while full-year earnings per share were 23.54 cents, up from 11.73 cents.

A final dividend of 1.30 cents per share has been recommended, up from 2011's 1.10 cents.

Heeton expects near-term demand for private residential properties to be dampened by the recent rounds of anti-speculation measures introduced by the government, even though projections of population growth point to a sustainable demand trend over the longer term.

Its joint-venture project, The Boutiq, at Killiney Road has sold more than 80 per cent of its 130 units, and Heeton expects to commence recognition of its share of profits from the sale of units from the first quarter of this year.

The counter closed up 1.5 cents at 71 cents yesterday.