CityDev posts 60% surge in net profit, to speed up diversification initiatives

CITY Developments (CityDev) on Thursday reported that its net profit for the third quarter ended September 30, 2016 rose 60.1 per cent to S$170.3 million, from S$106.4 million a year ago.

The improved performance was mainly due to strong sales performance in its property development segment and gains from the divestment of its entire 52.52 per cent interest in City e-Solutions.

As a result, other operating income comprising mainly management fee, miscellaneous income and profit on sale/realisation of investments and property, plant and equipment rose significantly by S$49.6 million to S$50.2 million. Increased realisation of investment in a private real estate fund and gain accounted following settlement with the insurers on damage claim relating to Millennium Hotel Christchurch, which was affected by the 2011 New Zealand earthquake, also attributed to the increase for the nine months to end Sept.

Revenue was up 14 per cent at S$922.8 million, compared to S$809.3 million a year ago. This was driven by the property development segment, including maiden contribution from the Gramercy Park project in Singapore and Hanover House project in Reading, United Kingdom, as well as contribution from Coco Palms, D'Nest and The Venue Residences and Shoppes projects in Singapore.

Kwek Leng Beng, CDL Executive Chairman, said to enhance shareholder returns, the group is reviewing its asset portfolio and business model.

"We are accelerating our diversification initiatives and will continue to focus on improving the group's performance wherever possible, across all segments - property development, hotel operations, investment properties and funds management.

"We have an exceptionally robust balance sheet and are building our war chest to capture attractive opportunities during this period of market dislocation."

CDL Chief Executive Officer, Grant Kelley, added that the group has stepped up the growth of its international property and funds management businesses as part of its diversification strategy.

"Following the successful execution of our third Profit Participation Securities platform in October, we now have over S$3.5 billion in funds under management, on track to achieving our target of S$5 billion.

"Moving forward, we will continue to explore initiatives to enhance recurring income streams, and hone in on our existing development projects," Mr Kelley said.

By end Sept, CityDev's net gearing stood at 27 per cent, excluding any fair value surpluses on investment properties. It also boasted of S$3 billion in cash and cash equivalents.

The group expects to remain profitable for the current year.