Published November 13, 2008

SC Global's Q3 net income up 121%


UPMARKET property group SC Global Developments yesterday reported a 121 per cent jump in third-quarter profit to $9.6 million, from $4.3 million a year earlier, despite weaker sales.

Revenue fell 15 per cent to $25.5 million, from $30 million in Q3 2007. But the bottomline improved on higher selling prices for homes and lower sale costs and expenses. Pre-tax margin rose to 48 per cent from 26 per cent a year earlier.

SC Global said that to boost its cash in hand, it recently drew $100 million from reserve facilities. It cited volatile financial markets and the credit environment in October and November as reasons for the move.

The developer had cash and cash equivalents of $67.4 million at end-September. Long-term liabilities were $1.3 billion, while current liabilities stood at $13.5 million.

The net debt to equity ratio now stands at 3.38 times. Most of SC Global's assets are held as development properties, which it is not allowed to revalue upwards should market values be higher.

SC Global also said it now holds an interest of 49.63 per cent in Australian-listed AVJennings (AVJ), and that if its holding crosses 50 per cent, it intends to consolidate AVJ's results and financial statements in accordance with accounting standards. 'Should the group consolidate AVJ as a subsidiary, it is expected to significantly reduce the group's gearing ratio,' SC Global said in a filing to the Singapore Exchange yesterday.

The group's Q3 earnings per share rose to 2.43 cents, from 1.14 cents a year earlier.

During the quarter, it launched and sold 33 apartments at the 91-unit Martin No. 38 at an average price of $2,133 per sq ft and achieved about $85 million for the units sold. There are no plans at present to release the rest of the units.

With sales at The Marq on Paterson Hill and Hilltops, SC Global has achieved total sales of about $750 million. This revenue will be progressively recognised in the accounts as construction takes place.

SC Global said its sites at Ardmore Park and Sentosa Cove are progressing in terms of planning and design. Following the acquisition of an adjoining plot at Ardmore Park, the amalgamated land cost has been lowered to $2,000 psf per plot ratio from $2,371 psf ppr at the time of the original acquisition.

The group's commercial development Newton 200 received a temporary occupation permit last month and the first lease on the site has been secured at more than $13 psf per month. SC Global intends to reclassify the property as an investment property. and revalue it in its accounts based on market valuation.

For the first nine months of this year, SC Global's net profit rose 96 per cent to $40.3 million, from $20.6 million in 2007. Revenue fell 14 per cent to $101 million from $117.9 million previously.

SC Global said that although the short-term outlook for the Singapore property market is uncertain, medium to long-term fundamentals remain sound and should underpin the market. The group expects to remain profitable for the year ending December 31, 2008, it said.

SC Global's shares fell one cent to close at 59 cents yesterday. The stock has lost 75.6 per cent this year.