Business Times: Wed, Apr 27
PROPERTY giant CapitaLand reported first-quarter 2011 net profit of $101.5 million, which is 3.4 times the restated Q1 2010 net profit of $29.8 million. The latter was previously reported at $115.4 million.
The restated Q1 2010 net profit figure takes into account the retrospective adjustments relating to Financial Reporting Standard INT FRS 115 - Agreements for the Construction of Real Estate - which took effect on Jan 1, 2011.
The group said it will continue to adopt the percentage of completion method of revenue and profit recognition for units sold in development projects under the progressive payment scheme in Singapore.
For projects sold under the deferred payment scheme in Singapore (such as The Orchard Residences) as well as all overseas development projects, revenue and profits will be recognised when the units are handed over to buyers.
CapitaLand booked Q1 2011 revenue of $611.5 million, up 39 per cent from the restated figure of nearly $440 million in the same quarter last year. This was due chiefly to higher contribution from the group's development projects in Singapore, China and Australia. These include residential projects such as The Interlace and The Wharf Residence in Singapore; Beau Residences and The Riviera in China; as well as commercial, industrial and residential projects in Australia.
At earnings before interest and tax (Ebit) level, the group made $283.5 million in Q1 2011, up 46 per cent over Q1 2010. The improvement was largely fuelled by higher profits from development projects, higher portfolio gains and lower forex losses.
In Q1 2011, the group booked a net portfolio gain of $16.4 million mainly from realisation of available-for-sale reserves in respect of LFIE Holding Limited following CapitaLand China Holdings increasing its stake in LFIE from 6.95 per cent to 44.98 per cent. LFIE Holdings' shareholders include Fung Properties China, an investment arm of the privately held Fung Holdings Limited.
The latter belongs to the families of the controlling shareholders of Li & Fung Group. CapitaLand's investment is not related to the publicly listed companies of the Li & Fung Group. LFIE is developing 7,800 homes on a 1.1-million-sq-m waterfront site in Guangzhou.
CapitaLand Group president and CEO Liew Mun Leong said the group's core markets of Singapore, China and Australia accounted for 96 per cent of group Ebit in Q1 2011.
Ascott, the group's serviced residences arm, saw revenue fall 10.1 per cent year on year to $82.1 million in Q1 2011. Ebit fell 59.8 per cent to $3.6 million. The declines were on the back of lower share of contribution from the 28 properties divested to Ascott Reit in Q4 2010.
The group said it remains on track to launch 1,700 homes in Singapore this year from projects including The Interlace, d'Leedon and a new condo at Bedok Town Centre.
The group's net debt-to-equity ratio dipped from 0.28 at March 31, 2010 to 0.2 at March 31, 2011.
Cash and cash equivalents fell 12.6 per cent from $7.2 billion at Dec 31, 2010 to $6.3 billion at March 31, 2011. The latter figure includes cash balances of $3.2 billion held at CapitaLand Limited and CapitaLand Treasury.
'The strong balance sheet puts the group in good stead to seek investments in fast-growing Asian countries, in particular China, for sustainable growth in 2011,' CapitaLand said.
Earlier this month, CapitaLand acquired a 40 per cent stake in Surbana Corporation to complement and accelerate the growth of its value housing business. On INT FRS 115, CapitaLand said the implementation of the standard will result in the accounting recognition of the group's overseas development projects in a manner that may not reflect the sales and construction progress of those projects.
'In particular, the new standard will result in income recognition that is lumpy and back-ended, thus creating more volatility in profit recognition even though the underlying projects' cash flows have not changed. It also does not reflect the gradual reduction of risk and the increase in economic value from these underlying projects as they are built and sold over their development phases.'
Earnings per share rose from 0.7 cent in Q1 2010 to 2.4 cents in Q1 2011. Net asset value per share dipped from $3.29 as at Dec 31, 2010 to $3.27 as at March 31, 2011.
On the stock market yesterday, CapitaLand closed one cent lower at $3.40.