Singapore Companies
Published November 10, 2006

CapitaLand's Q3 profit down 38.4% at $273.4m
Group's earnings pushed down by absence of gains from Raffles Hldgs


THE vacuum left by CapitaLand subsidiary Raffles Holdings when it sold off its hotels business last year has helped push the property company's latest quarterly group net profit down 38.4 per cent to $273.4 million.

CapitaLand's bottom line in Q3 last year included operating contributions and strategic divestment gains of $369 million from the sale of Raffles Holdings' hotels operations.

Giving a like-for-like comparison, CapitaLand said that excluding such contributions from the hotel business, net earnings for the third quarter ended Sept 30, 2006 were $266.1 million, against $74.8 million in the corresponding period last year.

On a more positive note, CapitaLand's Q3 earnings before interest and tax (Ebit) jumped 177 per cent to $530.4 million. This was due partly to higher portfolio gains, an increase in fee-based income, and a writeback of asset revaluation reserves previously charged to the income statement. Other factors that contributed to the increase in Ebit were a higher share of joint ventures' profits and higher interest income.

The portfolio gains came mainly from the disposal of The Ascott Mayfair and 10 apartment units in Hong Kong Parkview, as well as 'dilution gain' from the recent equity fundraisings by CapitaMall Trust (CMT) and CapitaCommercial Trust (CCT). Issue prices for new units in CMT and CCT were at premiums to their net tangible asset values.

Ebit for the first nine months of the year jumped 74.8 per cent to $1.06 billion. And although Ebit from Singapore and overseas operations both continued to grow, the share of overseas contribution to group Ebit fell from 69.8 per cent during the first nine months of last year to 56.7 per cent in the first nine months of 2006, as overseas Ebit growth of 42 per cent was slower than the 150.7 per cent jump in Singapore.

The good domestic performance came from a sparkling recovery in sales volumes and prices for the group's Singapore residential projects.

CapitaLand is involved in property, real estate fund management and serviced residences, particularly in Singapore, China, Australia and Europe. It has also been expanding in Thailand, Vietnam, Japan and India.

President and CEO Liew Mun Leong said: 'We have pushed the envelope in all our businesses to ensure sustained growth and profitability. Our assets under management grew to around $11 billion and we are well on course to exceed our 2007 target of $13 billion.

'The long-term outlook for our businesses in Singapore and the other overseas markets remains favourable.'

CapitaLand's net profit for the first nine months of the year slipped 14.5 per cent to $562.2 million due to the absence of operating contributions and divestment gains following the sale of the group's former property management arm Premas International and of Raffles Holdings' entire hotels business.

Group revenue from continuing operations fell 15.6 per cent in Q3 to $718.7 million due to lower sales from development projects in Australia and the deconsolidation of assets divested last year. The drop was cushioned by higher residential sales in China - the group sold 545 homes in China in Q3 this year worth over 800 million yuan (S$159 million) - an increase in fee-based income, improvement in revenue from serviced residences operations and revenue from retail malls in China.

Revenue for the first nine months of 2006 fell 27.1 per cent to $2.1 billion.