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CDL achieves 12.5% increase in profit of S$87.7 million for Q4 2019 and a resilient PATMI of S$564.6 million for FY 2019

  • Sold 1,554 residential units in Singapore with sales value of S$3.3 billion in 2019
  • Successful privatisation of Millennium & Copthorne Hotels Limited (M&C) marks a transformative milestone to drive synergies, raise operational efficiencies and processes
  • Strong cash reserves of S$3.1 billion
  • Total dividends for 2019 amounts to 20 cents per share (FY 2018: 20 cents)

Following the successful privatisation of Millennium & Copthorne Hotels Limited (M&C) in 2019, the CDL Group is taking a holistic review of its enlarged hotel portfolio to drive synergies.

Singapore, 26 February 2020 – Despite a challenging macroeconomic environment, City Developments Limited (CDL) delivered a resilient performance. PATMI for Q4 2019 rose 12.5% to S$ 87.7 million (Q4 2018: S$77.9 million). Revenue increased 20.1% to S$946.9 million (Q4 2018: S$788.3 million) with positive contributions across all its core business segments.

PATMI for FY 2019 was S$564.6 million (FY 2018: S$557.3 million), supported by a portfolio with diversified income streams and boosted by the substantial gains from the successful unwinding of CDL’s second Profit Participation Securities (PPS 2) structure with the divestment of Manulife Centre and 7 & 9 Tampines Grande.

Revenue for FY 2019 amounted to S$3.4 billion (FY 2018: S$4.2 billion) due to the timing of profit recognition for the property development segment. The Tapestry and Whistler Grand were the main contributing projects where revenue and profits were recognised progressively based on their stage of construction, along with the sale of balance units in completed projects including Gramercy Park, New Futura, Hong Leong City Center (HLCC) in Suzhou and Hongqiao Royal Lake in Shanghai. Comparatively, revenue in FY 2018 was boosted primarily from completed projects including New Futura, Gramercy Park and also The Criterion Executive Condominium (EC) in which its entire revenue was recognised upon obtaining its Temporary Occupation Permit, as well as substantial revenue from overseas projects including HLCC and Park Court Aoyama The Tower in Tokyo.

As at 31 December 2019, the Group has strong cash reserves of S$3.1 billion. Post M&C privatisation, the net gearing ratio (including fair value gains on investment properties) is 43% while interest cover stands at 14.0 times.

In addition to the final ordinary dividend of 8.0 cents per share, the Board is also recommending a special final ordinary dividend of 6.0 cents per share. Considering the special interim ordinary dividend of 6.0 cents per share paid in September 2019, the total dividends for FY 2019 amounts to 20.0 cents per share (FY 2018: 20.0 cents).

  • In China, the Group’s wholly-owned subsidiary CDL China Limited and its JV associates sold 526 residential units and four villas in China, achieving sales value of RMB 1.81 billion (approximately S$350 million) in FY 2019 – a notable two-fold increase of units sold with a 37% increase in sales value (FY 2018: Sold 259 residential units and 18 villas with total sales value of RMB 1.32 billion, (approximately S$269 million)).
  • In Australia, the Group sold over 60% of its JV 195-unit freehold residential project The Marker in West Melbourne. In addition, the Group’s collaboration with Waterbrook Lifestyle Resorts for the 135- unit retirement village project in Bowral commenced pre-sales towards the end of 2019. Over 50% of the initial 52 units launched received reservations.

Upcoming Launch in Singapore

  • The Group’s residential GLS site at Sims Drive is being developed by its JV partner, Hong Leong Holdings Limited, and slated for sales launch in 1H 2020. Located near Aljunied MRT station and within an established residential estate, this residential project will comprise 566 units.

Enhancing Recurring Income

  • In Japan, the Group acquired four freehold rental apartment projects in Osaka for JPY 5.46 billion (approximately S$69.3 million), three of which are forward funded. One of the forward funded projects, Pregio Joto Chuo, was completed in September 2019 and has achieved a better-than-expected occupancy of 95% within three months of completion. The remaining forward funded projects are expected to be completed in Q1 2020.
  • In China, the Group completed its 100% stake acquisition in Shanghai’s Hongqiao Sincere Centre (Phase 2) in November 2019 for a total purchase price of RMB 1.75 billion (approximately S$344 million). The occupancy for the office and serviced apartment components is currently around 50% and 70% respectively.
  • In UK, the Group’s two freehold commercial buildings in Central London – Aldgate House and 125 OBS, have already shown significant positive rental reversions post-acquisition. The Group has also embarked on several asset enhancement initiatives (AEIs) and feasibility studies on these office assets, enhancing the potential for higher rental upside.

Hotels

  • 2019 marked a significant milestone with the S$1.3 billion successful privatisation of M&C. As at 31 December 2019, the Group has 156 hotels under its portfolio, of which 71 hotels (46%) are owned by the Group, 19 hotels (12%) are operated under JV arrangements or under CDL Hospitality Trusts, and the balance (42%) are managed or franchised hotels.

Mr Kwek Leng Beng, Executive Chairman of CDL, said, “CDL delivered a resilient set of results amidst a challenging macroeconomic environment. The privatisation of M&C in 2019 is a transformative milestone for CDL and in line with our focus to enhance recurring income. The roadmap for M&C is being formalised with priority initiatives to drive operational efficiency, sustainable hotel performance and integration with the Group. These initiatives will take time to materialise but the efforts lay the foundation for CDL’s growth.

The COVID-19 outbreak is one of the biggest disruptors that has created a thick cloud of uncertainty, placing the global economic and social resilience to the test. The situation remains fluid and the full impact on businesses, operations and supply chains is still unknown. Nevertheless, we view the outlook for 2020 with an optimistic prism. With the collective efforts from government, businesses and individuals, the situation will stabilise and recover in time.

CDL’s underlying fundamentals remain solid with a geographically diversified portfolio and a strong balance sheet. We are confident to manage the headwinds with tenacity, clear-mindedness, cost control and tight discipline.”

Mr Sherman Kwek, Group Chief Executive Officer of CDL, said, “2019 has been a bumper year for CDL with a record of six residential project launches in Singapore that registered healthy sales. We completed around S$2.3 billion of acquisitions and investments both in Singapore and our key overseas markets, including the successful takeover and privatisation of M&C. On the asset management front, Republic Plaza’s AEI achieved positive rental reversions and we are progressing forward with other AEIs in order to derive greater value from our assets.

The virus outbreak is a fitting reminder that with globalisation and CDL’s scale, we cannot be overly reliant on a specific geography or asset class. We will continue to build a diversified portfolio, enabling us to tap on various sustainable income streams to withstand cyclical headwinds and market shifts.”