CDL posts 6.6% rise in Q4 net profit after monetising prime office assets

The three assets monetised were 7 & 9 Tampines Grande, Manulife Centre and Central Mall (pictured).
The three assets monetised were 7 & 9 Tampines Grande, Manulife Centre and Central Mall (pictured). PHOTO: CITY DEVELOPMENT LIMITED

SINGAPORE - Property and hotel heavyweight City Developments (CDL) reported record earnings for the fourth quarter ended Dec 31, on gains from monetising three prime office assets.

The net profit of S$410.5 million was 6.6 per cent higher than the S$384.9 million recorded in the year-ago quarter.

Revenue rose 1 per cent to S$855 million from S$847 million a year ago, CDL said in its earnings statement on Thursday (Feb 25).

The assets monetised were 7 & 9 Tampines Grande, Manulife Centre and Central Mall (Office Tower) valued at S$1.1 billion on a 99-year leasehold basis via a second Profit Participation Securities investment platform (PPS 2) in December 2015.

There was also a maiden contribution of S$12 million from the UK property development platform from the sale of Emerald House in Croydon, and higher revenue from the progressive sale and profit recognition from pre-sold projects in Singapore.

This was partially offset by impairment losses from certain hotels under the group's 65-per cent subsidiary, Millennium & Copthorne Hotels plc (M&C).

For the full year, net profit rose 0.5 per cent to S$773 million despite a 12.2 per cent fall in revenue to S$3.3 billion. Net asset value per share rose 6.9 per cent to 9.89 cents from 9.25 cents a year ago.

The decrease in revenue was largely due to the absence of revenue recognition from Executive Condominium (EC) projects as compared to revenue recognised in its entirety for the Blossom Residences EC in the third quarter of 2014 upon its completion.

In terms of pre-tax profit for 2015, the rental properties segment was the highest contributor, up 215.4 per cent year-on-year to S$460 million, on gains arising from PPS 2, which was completed in the fourth quarter of 2015.

Property development contributed pre-tax profit of S$985 million with S$171 million from hotel operations.

On prospects for 2016, CDL said it will be challenging year for businesses across many sectors as the global growth outlook remains dim due to fears of a global recession, stock market volatility, a dramatic fall in oil prices, and other uncertainties.

At home, the property market has softened due to oversupply, higher land and construction costs, and property cooling measures.

"The Group has been cognisant of the storm that has been brewing," said CDL. "Over the years, it has set out its plans to mitigate its risks, through its diversification strategy, building value in new geographies and products.

As such, CDL said it remains focused on developing more overseas projecrs and growing its funds management platform.

A final dividend of eight cents per share and a special final dividend of four cents per share were declared, similar to a year ago.