City Developments (CDL) has reported a net loss after tax and minority interest of $32.1 million for the 1HFY2021 ended June, reversing from earnings of $3.1 million the year before.
"The impact of the prolonged Covid-19 pandemic and the resurgence of infections led by the Delta variant have been detrimental to the Group’s business segments to varying degrees,” says Kwek Leng Beng, executive chairman of CDL.
CDL had previously disclosed it expected net losses of up to $35 million in a profit guidance statement released on August 6.
See: CDL pencils 1H21 net loss of up to $35 million, no thanks to the Covid-19 restrictions
The net loss is largely due to higher tax expenses following the absence of deferred tax credit of $17.6 million recognised in 1HFY2020 which was part of the New Zealand government’s Covid-19 Business Continuity Package.
1HFY2021 revenue increased by 11.1% y-o-y to $1.2 billion, boosted by the property development segment, which saw an increase of 35.5% compared with 1HFY2020.
CDL’s hotel operations segment registered a 10.8% y-o-y decline in revenue for the 1HFY2021, with RevPAR declining 10.1% y-o-y due to travel restrictions still largely in place for most countries.
CDL’s investment properties segment also generated lower rental income, impacted by decreased footfalls, sustained rental rebates given to its retail tenants and significantly lower contribution from its Jungceylon mall in Phuket. The mall has been temporarily closed since March as Phuket had shut its borders to international travellers.
The group registered a pre-tax profit of $9.7 million for the period, down 29.3% y-o-y from $13.8 million in the 1HFY2020, mainly impacted by higher net financing costs, foreign exchange losses and lower divestment gains compared with the previous corresponding period.
All its business segments are in positive territory except for the hotel operations segment which reported an operational loss, albeit a lower pre-tax loss in 1HFY2021 compared with 1HFY2020. Notably, hotel occupancies across all regions are improving and the group expects this segment to bounce back strongly by end-2021/2022, as border restrictions are starting to ease.
In terms of its balance sheet, CDL reported cash reserves of $2.8 billion as of June 30, while cash and available undrawn committed bank facilities totaled $4.4 billion. Net gearing ratio (after factoring in fair value on investment properties) stands at 65%.
The Board has declared a payment of a tax-exempt (one-tier) special interim dividend of 3 cents per ordinary share to express its appreciation to shareholders for their confidence and support.
CDL also highlighted that the group recognised negative goodwill of $35.6 million in the 1HFY2021 following the completion of its acquisition of an 84.6% equity interest in Shenzhen Tusincere Technology Park Development Co in February. The acquisition accorded it an effective 55% equity interest in Shenzhen Longgang Tusincere Tech Park.
“Going forward, we look confidently towards a steady economic recovery and better growth trajectory in the near-term horizon given a universal resolve to open economies,” says Kwek.
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Sherman Kwek, the group CEO of CDL, adds that the group has remained steadfast in the execution of its Growth, Enhancement and Transformation (GET) strategy, while also placing a strong emphasis on capital recycling. “There remains deep value in our asset portfolio to be unearthed. While the road to recovery remains uneven, the accelerated vaccine deployment across the globe and the gradual easing of border restrictions offer light at the end of the tunnel,” he says.
Shares in CDL closed 10 cents or 1.49% lower at $6.61 on August 11.
Photo: Samuel Chua/The Edge Singapore
