Wheelock Properties (Singapore) said its second-quarter net profit fell by 85.3 per cent to $17.7 million, mainly due to an accounting entry that had skewed profit last year.
A sum of $109 million arising from provisional negative goodwill padded the bottom line last year. It had to do with the fact that shares of Hotel Properties Ltd (HPL) were being traded at a discount to their fair value of net assets at the time of a mandatory conditional cash offer.
Last year, Wheelock and HPL managing director Ong Beng Seng launched a general offer for HPL shares at $4.05 apiece.
Wheelock would have posted a higher profit if the effect of last year's negative goodwill had been stripped off. Gross profit for the second quarter was 48.9 per cent higher at $24.9 million.
Revenue for the three months to June 30 soared by 232.9 per cent to $80.1 million, mainly owing to revenue recognised from The Panorama residential project based on the progress of construction works and sales from Scotts Square, a luxury residence that sits above Scotts Square mall. This was partially offset by lower rental income from Scotts Square Retail.
AT A GLANCE
Net profit: $17.7 million (-85.3%)
Revenue: $80.1 million (+232.9%)
As at June 30, 82 per cent or 276 units of the 338 units at Scotts Square have been sold, representing 87 per cent of the net saleable area at an average price of $4,000 per sq ft. Due to the weak demand for homes in the luxury sector, Wheelock's current focus for Scotts Square is on leasing.
For the period under review, a total of 30 units were leased at an average rental of $5,100 per month.
Ardmore Three, a 36-storey freehold development in Ardmore Park, has fared worse. Only five units out of 84 have been sold at an average price of $3,300 psf. The project obtained its temporary occupation permit last December.
Meanwhile in Ang Mo Kio, a total of 451 units or about 94 per cent of the 480 units launched at The Panorama have been sold at an average price of $1,250 psf.
The group's investments in equity and debt securities have provided satisfactory yield return, in addition to appreciation of $37 million from last year, which has been accounted for under fair value reserve in the statement of changes in equity.
Earnings per share fell to 1.48 cents from 10.11 cents previously, while net asset value per share was unchanged at $2.62.
Looking ahead, the company said that rental income from Wheelock Place and Scotts Square Retail will continue to contribute to the group's recurring income.
The Panorama is targeted for completion in 2017.