City Developments Q4 profit down 54.7% to S$77.9m

PROPERTY group City Developments (CDL) on Thursday posted a 54.7 per cent fall in net profit for its fiscal fourth quarter, reflecting in part impairment losses.

Net profit for the three months ended Dec 31 2018, stood at S$77.9 million, compared with a restated net profit of S$171.9 million posted the same period a year ago. The results translate to earnings per share (EPS) of 7.9 Singapore cents, against EPS of 18.2 Singapore cents.

In addition to the final ordinary dividend of eight Singapore cents per share, the board is also recommending a special final ordinary dividend of six Singapore cents per share.

CDL said that excluding S$94.1 million impairment losses for hotels and the S$20.1 million allowance for foreseeable losses for the two small-scale development projects in Central London which potentially may be leased out, as well as a gain from the partial divestment of the group's interest in two China projects in Chongqing in 2017, profit after tax and minority interests for Q4 2018 rose 17 per cent compared with Q4 2017.

The hotel operations segment also registered a loss of S$53.2 million for Q4 2018, following significant hotel impairments particularly in the US and full closure of the Mayfair hotel in July 2018.

Revenue dropped 40.6 per cent from a year ago to S$788.3 million. In Q4 2018, revenue was recognised primarily from New Futura, The Tapestry and Park Court Aoyama The Tower while in Q4 2017, revenue was boosted by the full recognition of revenue and profit from The Brownstone EC, which obtained its temporary occupation permit in October 2017, and a gain from the partial divestment of the group's interest in two Chongqing projects.

Gross profit fell 7.4 per cent.

Its other operating income stood at S$640,000 compared with S$76.5 million a year ago. Other operating income comprises mainly gains from disposal of investments, investment properties and property and plant and equipment. City Development said that forQ4 2017, a gain of S$52 million arose from the partial disposal of two China entities that held residential projects, and another S$30 million from the disposal of an office building in Tokyo in September 2017. The balance of the operating income comprises management fee and miscellaneous income such as the refund of stamp duty for Q3 2017 from the monetisation of three office buildings in the Profit Participation Securities 2 arrangement.

For the full year, CDL posted a net profit of S$557.3 million, up 6.7 per cent, as it hit record revenue of more than S$4 billion.

In a press statement, Kwek Leng Beng, CDL executive chairman, said: "We are confident that when the global issues are stabilised, Singapore is well-poised to recover given its strong fundamentals. The residential property market sentiments should thereby improve with pent-up demand. Singapore remains attractive for investments and talents given its political stability, high quality of living and established infrastructure.

"Moreover, the group has a geographically-diversified and income-stable portfolio primarily comprising residences, offices, hotels, serviced apartments, integrated developments and shopping malls, which can weather cyclical impacts and market shifts. When one segment is impacted, another class of asset can help cushion and often make up the difference. While we continue to strengthen our foothold in Singapore, we will also look abroad to diversify for growth and manage our risk."

Shares of CDL closed at S$9.53 on Wednesday, up eight Singapore cents.