GuocoLand Posts 26% Drop In Q2 Earnings

Source : The Business Times, January 31, 2008

QUEK Leng Chan's Singapore-listed property arm GuocoLand yesterday posted a 26 per cent year-on-year slide in group net profit to $32.95 million for the second quarter ended Dec 31, 2007. This was due largely to a 26 per cent drop in other income, from $39.4 million to $29.3 million largely because of a non-recurring profit of $19.3 million that arose from GuocoLand selling its stake in BIL in the year-ago corresponding period.

However, gross profit for Q2 rose 145 per cent, from $16.38 million to $40.21 million on the back of contributions from the group's development projects in Singapore (including The Stellar, Quartz, Le Crescendo and The View @ Meyer condos) as well as the West End Point project in Beijing.

The decrease in other income was mitigated by higher net foreign exchange gains of $11.3 million from revaluation of US dollar bank loans.

Revenue for Q2 more than doubled from $99.6 million to $211.1 million. For the half year ended Dec 31, 2007, revenue also more than doubled from $187.8 million to $402.1 million. Net earnings for the half year rose 15 per cent to $60.6 million.

GuocoLand's results statement also showed it has withheld payment of 2.58 billion yuan (S$509.2 million) out of the total 5.8 billion yuan purchase price for the acquisition of a 90 per cent stake in Beijing Cheng Jian Dong Hua Real Estate Development Company (CJDH) and a 100 per cent stake in CJDH's holding company, Hainan Jing Hao Asset Limited, to cover potential liability relating to separate lawsuits involving guarantees and loans given by Beijing Dong Hua Guang Chang Zhi Ye Co Ltd, formerly a related company of CDJH.

One law suit, for 1.5 billion yuan, has been lodged by Shenzhen Development Bank against CJDH and the other, by Agricultural Bank of China, has been lodged against CJDH and Hainan for a loan of about two billion yuan given to Zhiye. GuocoLand said in its statement it will vigorously contest both suits and give further updates when appropriate.

CJDH owns the land use and development rights to a prime plot of land along Dongzhimen Road on the East Second Ring Road in Beijing's Dong Cheng District.