Singapore’s CDL posts 8.4% increase in revenue to S$783.8 million for Q1 2017
Despite a challenging market, City Developments Limited (CDL) posted Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) of S$186 million for Q1 2017 (Q1 2016: S$205 million), and Profit after Tax and Minority Interests (PATMI) of S$85.5 million (Q1 2016: S$105.3 million).
The lower EBITDA and PATMI compared to Q1 2016 were due to a range of factors, including the absence of contribution from two joint venture (JV) projects Bartley Ridge and Echelon which were completed in 2016; exchange losses incurred primarily from the repayment of a New Zealand dollar denominated intercompany loan under the Group’s indirect subsidiary, CDL Hospitality Trusts (CDLHT); a disappointing performance by the Group’s subsidiary, Millennium & Copthorne Hotels plc; and lower investment income earned from the realisation of an investment in Real Estate Capital Asia Partners (a private real estate fund).
Revenue for Q1 2017 rose 8.4% to S$783.8 million (Q1 2016: S$723.3 million). The increase was attributable to improved performance from the property development segment which posted a 33.9% increase in contribution, primarily led by the progressive handover of units in Phase 1 of Suzhou Hong Leong City Center (HLCC) and a strong take up for Gramercy Park.
As at 31 March 2017, the Group’s net gearing ratio remained conservative at 16%, excluding revaluation surpluses from investment properties, with cash reserves of S$3.7 billion and interest cover at 8.1 times (Q1 2016: 9.4 times).
Mr Kwek Leng Beng, CDL Executive Chairman, said, “Looking ahead, in a dislocating market, we remain alert to deploy our strong balance sheet for acquisitions in Singapore and abroad. We will seek new opportunities, value accretive assets and synergistic partnerships that complement our core business.”
“The residential property market in Singapore is beginning to show some signs of recovery. Property prices appear to be stabilising, especially in the high-end market, and there is increased investor confidence as Singapore remains a relatively safe haven in a highly volatile marketplace. Recent policy relaxations are measured and prudent, and support the aim of buying property as a form of long-term investment. We are confident that the Singapore Government will continue to monitor market conditions closely and make the necessary tweaks to the other property cooling measures as and when the situation warrants.”
Mr Grant Kelley, CDL Chief Executive Officer, said, “Since the start of 2017, we have been highly acquisitive in Singapore and overseas, having made approximately S$770 million of investments yearto-date. These comprise our investment in Distrii – China’s largest co-working space operator; Ransomes Wharf in Battersea, London; a Shanghai commercial project – Meidao Business Plaza in Hongqiao; the Tampines Avenue 10 site in Singapore; and the recent acquisition of The Lowry Hotel in Manchester, UK, by CDLHT. In particular, we are taking advantage of the subdued sentiment and weaker currency in some of our key target markets such as the UK which may offer an attractive entry point. We will remain disciplined in our capital deployment for physical assets, equities or debt instruments. We also continue to look for accretive funds management executions.”