CDL names Sherman Kwek CEO-designate with resignation of Grant Kelley, Q2 profit falls 17.9%

Sherman Kwek, CDL's newly-appointed CEO-designate.
Sherman Kwek, CDL's newly-appointed CEO-designate.PHOTO: CDL

SINGAPORE - City Developments Ltd (CDL) announced on Friday (Aug 11) the appointment of deputy chief executive officer, Sherman Kwek, as CEO-designate with immediate effect after CEO Grant Kelley tendered his resignation the day before.

Mr Kelley, who served as CEO for more than three and a half years, will remain with the company until Dec 31, 2017. He will then be moving to Australia as CEO of a listed company based in Melbourne. CDL said the offer was "timely as he intends to return home to Australia for personal reasons".

Mr Sherman Kwek - who is the elder son of CDL's executive chairman, Kwek Leng Beng - will work alongside Mr Kelley before assuming full responsibilities as CEO on Jan 1, 2018.

CDL noted that since April 2016, it has put in place a succession plan to ensure continuity of leadership within the senior management team. Mr Sherman Kwek has been the deputy CEO of CDL and the executive chairman of CDL China Ltd since April 2016.

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In his previous roles as the chief investment officer of CDL and the CEO of CDL China Ltd, he established a presence for the company in Japan and Australia as well as spearheaded the expansion into China for the past seven years, helping to obtain prime sites in Shanghai, Suzhou and Chongqing and investing in various innovative startups.

He has experience in the areas of investments, mergers and acquisitions, real estate and hospitality, and has worked in New York, Hong Kong, Shanghai and Singapore.

In a separate pre-market filing on Friday, CDL reported a 17.9 per cent fall in second-quarter net profit to S$109.9 million for the second quarter ended June 30, 2017, down 17.9 per cent from the net profit of S$133.8 million a year ago.

Revenue for the three months to end June dropped 21.8 per cent to S$854.1 million from S$1.1 billion a year ago.

CDL said that excluding the contribution of Lush Acres executive condominium (EC) which obtained its Temporary Occupation Permit (TOP) in the second quarter of 2016, when revenue and profit were recognised in entirety upon completion under prevailing accounting policies for ECs, the group's revenue and net profit for Q2 2017 would have increased by 15.7 per cent and 43.4 per cent respectively.

For the first half-year, net profit dropped 18.3 per cent to S$239.1 million on a 9.8 per cent decline in revenue to S$1.82 billion.

A special interim dividend of 4.0 cents a share was declared.

CDL said the group is well positioned to benefit from any upturn in the Singapore residential market given its range of properties for different market segments - from ECs, to mid- and high-end developments.

"To replenish our land bank, we will continue to bid strategically while remaining disciplined to core fundamentals," said Mr Kwek Leng Beng.

He added: "We remain hopeful that the Qualifying Certificate policy can be reviewed in due course, so that developers can look towards both Government Land Sales and private sales for land replenishmentand avoid a dangerous upward spiral in land cost and property prices that is not in line with the growth of the economy."

For the first half-year, CDL and its joint venture (JV) associates, sold 691 residential units including ECs in Singapore, more than double the 324 units sold in the first half of 2016. Sales value for the first half of 2017 tripled to about S$1.15 billion compared to S$385.7 million a year ago, largely due to the movement of the group's high-end inventory.

For the third quarter of 2017 to date, the group and its JV associates, sold another 182 units including ECs. This brings the total number of units sold year-to-date to 873 units, or over 85 per cent of the units sold for the whole of 2016 (FY 2016: 1,017 units). Sales value amounted to S$1.36 billion (FY 2016: S$1.25 billion).