“We cut costs, deferred capex and held back investments. At the same time, the team worked hard to make sure we had sufficient liquidity to last for 24 months,” notes Lee Chee Koon, CapitaLand’s group CEO. Still, CapitaLand had revaluation losses of $1.627 billion and impairments of $861 million. Some $450 million in impairments were due to Lai Fung, an illiquid Hong Kong-listed company. CapitaLand had acquired a stake in Lai Fung for $150 million in 2006.
CapitaLand made a headline loss of $1.57 billion in FY2020 ended Dec 31, 2020. However, Andrew Lim, CFO at CapitaLand, is not overly worried. “It’s important to look beyond the headline number. Our operating resilience has delivered a very credible north of $1.5 billion in operating cash flow,” says Lim, referring to the group’s operating cash flow of $1.53 billion in FY2020.
In 2HFY2020, CapitaLand generated net cash from operating activities of $1.23 billion. This came primarily from collections from development projects in China and recurring cash flow from its investment properties, partially offset by prepaid land costs for a residential project in China. Including net cash from investing activities of $152 million which came from the proceeds of divestments, plus dividends from associates and JVs, this took free cash flow in 2HFY2020 to $1.38 billion. The cash generated was partially used for the acquisition and development of investment properties, investments in and loans to associates and JVs. In all, CapitaLand notched up free cash flow of $1.56 billion in FY2020.
