CDL posts lower Q4, FY16 earnings on absence of one-time gain, weak market

ABSENCE of the substantial profits recognised in the year-ago period from the second Profit Participation Securities (PPS) platform weighed down on City Developments Limited's (CDL) fourth-quarter net profit.

Net profit for the three months at end Dec 2016 fell 40.6 per cent year on year to S$243.8 million, and down 15.5 per cent to S$653.2 million for the full year, amid tough market conditions.

The full-year earnings was lower despite strong residential sales in Singapore and China, and divestments including the sale and recapitalisation of Summervale Properties (which holds Nouvel 18), which led to the establishment of the group's third PPS platform.

Revenue in Q4 grew 36.5 per cent to S$1.2 billion, while it rose 18.2 per cent to a record S$3.9 billion for FY16. This growth was driven by the property development segment, with strong maiden contribution from Hong Leong City Centre in Suzhou and steady sales of Singapore projects Gramercy Park, Coco Palms, D'Nest and The Venue Residences and Shoppes, as well as revenue recognition in entirety from the fully sold Lush Acres Executive Condominium (EC), which obtained Temporary Occupation Permit (TOP) in June 2016.

As at end 2016, net gearing ratio was 16 per cent compared with 26 per cent in FY15, with cash position of about S$3.9 billion. Interest cover for FY16 was 12.5 times, down from FY15's 13 times.

In addition to a final dividend of four Singapore cents a share, the board has recommended a special final dividend of eight S cents per share. Taking into account the special interim dividend of four S cents per share paid in September 2016, the total dividends for 2016 amounted to 16 S cents per share, same as 2015.

Said Kwek Leng Beng, CDL executive chairman: "Looking ahead, we plan to be more acquisitive with a focus on finding in-place income in Singapore and overseas. Our robust balance sheet and war chest place us in a strong position to deploy capital for acquisitions which can be in the form of physical assets, equities or debt instruments. We will continue to exercise strict discipline in capital management, remaining highly selective and value oriented, and may take a contrarian approach when needed, to enhance shareholders' returns."

In a separate filing to the Singapore Exchange on Thursday, CDL said that independent non-executive director Tang See Chim has informed the board of his intention to step down from the post. Concurrent with his resignation, he will also step down as a member of the Board Committee, Audit & Risk Committee and Remuneration Committee after the 2017 annual general meeting slated in April.

The board thanked Mr Tang for his contributions to the group. He has served on the board of CDL for more than 20 years since his appointment in 1995 as an independent non-executive director.