Ho Bee's Q4 earnings fall on lower fair value gain, takes impairment loss for Cape Royale

PROPERTY group, Ho Bee Land reported on Thursday that its net profit for the fourth quarter ended December 31, 2015 fell 32.1 per cent from a year ago to S$193.7million.

For the full year, net profit was S$242.2 million, down 23.1 per cent from 2014.

The weaker profit was due to a lower gain in fair value of investment properties which amounted to S$186.4 million, compared to S$281.7 million in 2014. In addition, an impairment loss of S$34.7 million was recognised for the group's 35 per cent interest in Cape Royale, Sentosa.

In Q4, rental income was S$35.8 million, up 23.9 per cent from a year ago. Other operating income, however, fell 33.8 per cent to S$186.8 million. As a result, revenue fell 28.5 per cent to S$222.6 million.

For the full year, rental income rose 30.5 per cent to S$129,9 million. This is due to stronger recurring income from its portfolio of commercial properties in Singapore and London. Other operating income fell 31.1 per cent to S$195.4 million, resulting in a 15.1 per cent drop in revenue to S$325.4 million.

During the year, Ho Bee acquired three additional properties in London. As a result, its net gearing increased from 0.35 times as at the end of last financial year to 0.55 times.

A special dividend of 2 cents per share has been proposed, in addition to a first and final dividend of 5 cents per share.

Looking ahead, the group sees a more challenging year ahead.

"However, with The Metropolis at full occupancy and the rental income from the six commercial properties in London, the group will have substantial recurring income to face the headwinds. Moreover in FY2016, we expect profit contribution from the completion of development projects in Australia and China," Chairman and CEO Chua Thian Poh said.