Keppel Land Q1 Net Profit Down 3.5%

Source : The Business Times, April 24, 2008

Writeback of provisions higher at $23.1 million

KEPPEL Land yesterday posted net earnings of about $60.3 million for the first quarter ended March 31, 2008, down 3.5 per cent from the corresponding period last year.

Earnings per share for the quarter fell to 8.4 cents from 8.7 cents.

The results were helped by a $23.1 million writeback of provisions made earlier for properties held for sale, mostly on Park Infinia at Wee Nam condo which received Temporary Occupation Permit at the end of Q1 2008. For Q1 2007, the writeback of provisions for properties held for sale was $13.34 million lower at $9.76 million.

Profit after tax and minority interest (Patmi) from property trading fell 13.1 per cent to $49.1 million due to the completion of several projects in Singapore and overseas, and reduced profit contribution from Marina Bay Residences (which was being developed by an associated company). In Q1 2007, an initial 20 per cent profit for this project was recognised upon signing of the sales and purchase agreements. Keppel Land also said that property trading posted a lower contribution in Q1 2008 as launches were held back due to market conditions brought on by US sub-prime problems.

Patmi from property investment fell by 33.9 per cent to $7.6 million in Q1 2008.

However, fund management activities achieved a higher Patmi of $4.2 million in Q1 2008 compared with $0.7 million in Q1 2007, on the back of higher management fee income from a larger portfolio of assets under management by K-Reit Asia (arising from the acquisition of a one-third stake in One Raffles Quay) and Alpha Investment Partners.

Keppel Land's Q1 sales slipped 7.6 per cent year-on-year to $273.1 million. The lower turnover was due largely to the completion of Urbana and The Belvedere in Singapore, as well as The Waterfront in China during the last financial year, and hence no sales were recognised in Q1 2008, Keppel Land said.

The group will monitor the market closely and launch Marina Bay Suites and the second phase of Reflections at Keppel Bay 'when market conditions are more favourable', the company said in its results statement.

In late January, it had indicated that Marina Bay Suites would be launched after Chinese New Year, within the first quarter. That itself was a delay from the earlier launch target of before Chinese New Year.

Keppel Land said that Jakarta Garden City, a gated residential township in eastern Jakarta was soft launched early last month and 76 per cent of the initial 191 landed homes released have been sold. In India, marketing is slated to begin in the second half of this year for Elita Horizon, a 1,142-unit condo in Bangalore.

As reported earlier, over 50 per cent of the 2.9 million square feet of total net lettable area at Marina Bay Financial Centre (MBFC) have been pre-committed. Over the last few months, about 150,000 sq ft were taken up, mainly by Barclays and Amex.

Keppel Land said that its other upcoming Ocean Financial Centre has secured financing at an attractive rate and appointed the main contractor.