CHAIRMAN’S STATEMENT OVERVIEW Resilient Performance Amid Challenges In this Diamond Jubilee Year, we are pleased to report a record revenue of $4.9 billion (FY 2022: $3.3 billion) – the highest since our inception in 1963. The record revenue was driven by the stellar performance of our property development segment, which saw a 50% year-on-year (y-o-y) increase in revenue, primarily due to the completed and fully sold Executive Condominium (EC) project Piermont Grand, as well as the revenue from the sale of a land site in Tokyo for JPY 50 billion ($495.0 million), which contributed $1.5 billion to revenue in total. Our investment properties and hotel operations segments also showed strong performance, with a 31.8% and 8.5% increase in revenue respectively for FY 2023. However, the global real estate sector has faced significant macroeconomic headwinds in the past year due to a high interest rate environment, inflationary pressures, geopolitical tensions, and weak global economies. Singapore’s property cooling measures in April 2023 further compounded the situation. As a result, the Group achieved a lower net profit of $317.3 million (FY 2022: $1.3 billion) due to the impact of higher financing costs in FY 2023 and the absence of substantial divestment gains recorded in the prior year arising from the sale of Millennium Hilton Seoul, the deconsolidation of CDL Hospitality Trusts (CDLHT) as well as the completion of the collective sales of Tanglin Shopping Centre and Golden Mile Complex. Excluding divestment gains and impairment losses, the Group’s net profit would have been $188.6 million for FY 2023 (FY 2022: $47.0 million) on a like-for-like basis. Prudent Capital Management As at 31 December 2023, the Group maintained a robust capital position with cash reserves (net of overdraft) of $2.2 billion, and cash and available undrawn committed bank facilities totalling $3.6 billion, ensuring sufficient liquidity to fulfil our working capital and financial obligations. After factoring in fair value on investment properties, the Group’s net gearing ratio stands at 61% (FY 2022: 51%), following the completion of various acquisitions in 2023, including St Katharine Docks, three hotels and several living sector assets. Net Asset Value (NAV) per share moderated to $10.12 (FY 2022: $10.16) as at 31 December 2023. The Group adopts the policy of stating our investment and hotel properties at cost less accumulated depreciation and impairment losses. Had the Group factored in fair value gains on our investment properties, its Revalued NAV (RNAV) per share would have been $17.21 (FY 2022: $16.98). Had the revaluation surpluses of our hotels been included, the Group’s RNAV per share would be $19.46 (FY 2022: $19.14). The Group maintains a substantial level of natural hedge for our overseas investments and will continue our proactive and disciplined approach to capital management. We will continue to focus on strategic capital recycling initiatives to strengthen our financial metrics. Strong Portfolio Resilience In 2023, all our business segments achieved a strong operating performance. In Singapore, CDL, together with our joint venture (JV) associates, sold 730 units, including ECs, with a total sales value of $1.5 billion. The Group’s office portfolio reported a healthy committed occupancy of 97.1%, above the island-wide occupancy of 90.1%. Our retail portfolio was also well-leased, with a committed occupancy of 97.6%, above the island-wide occupancy of 93.5%. Key properties under each portfolio, including Republic Plaza, City House, King’s Centre, City Square Mall and Palais Renaissance, achieved positive rental reversions. Our hotel operations segment reported a strong performance in FY 2023, with global RevPAR growth of 25.3% to $168.7 (FY 2022: $134.6), surpassing 2019’s pre-pandemic levels by 22.0%, primarily fuelled by strong average room rate (ARR) growth. All regions recorded extraordinary RevPAR growth y-o-y especially Asia and Australasia. BUILDING FOR THE FUTURE Growth opportunities lie amid every crisis. Taking this contrarian approach in 2023, we invested in undervalued assets, deploying our dry powder from significant divestment initiatives in the previous year. We seized opportunities to expand our portfolio, optimise operational efficiencies, refurbish assets and strengthen synergies across the Group’s business segments to enhance performance and drive value extraction. Dear Shareholders, CDL celebrated our Diamond Jubilee in 2023, marking our remarkable growth from only eight employees in 1963 to a global real estate company with over 8,000 employees worldwide and a global presence in more than 20 countries. Over the past 60 years, the CDL Group has transformed into a global industry leader and our assets have grown from $18 million in 1972 (when the Hong Leong Group took a controlling stake in the company) to $33 billion today. Together with our hospitality arm, Millennium & Copthorne Hotels Limited (M&C), our Group has also expanded to over 155 hotels globally. Reflecting on our journey, much has changed. From a struggling local residential developer, we are recognised today as Singapore’s market leader with a strong development pipeline. Homeowners and business communities rely on us for quality homes and offices locally and abroad. Our global portfolio of hotels is the preferred choice for many esteemed guests. Kwek Leng Beng Executive Chairman Growth opportunities lie amid every crisis. Taking this contrarian approach, in 2023, we invested in undervalued assets, deploying our dry powder from significant divestment initiatives in the previous year. I am immensely privileged to have been intricately involved in the CDL Group’s growth journey for the last six decades. Together, we have shaped global skylines with architectural icons, achieved business milestones and weathered numerous geopolitical storms and cyclical challenges with resilience and grit. I am confident in our Group’s ability to continually adapt, innovate and prosper in an ever-evolving landscape. As we embark on the next phase of our growth story, the Board and Management will stay steadfast in advancing our strategy, anchored by financial discipline and prudence — the cornerstones of our business success. We will pursue new growth engines and prospects through opportunistic acquisitions, portfolio recalibration and optimisation initiatives. On the sustainability front, we will work towards achieving our ESG goals as set out in the CDL Future Value 2030 Sustainability Blueprint. OVERVIEW 17 16 ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED
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