Singapore Corporate News - 23 Feb 2008

SembMarine posts $241m profit for 2007

DESPITE having to provide for the 'unauthorised transactions' of former finance head Wee Sing Guan, Sembcorp Marine, the world's second-largest builder of offshore drilling rigs, reported a remarkably fine set of financial results for last year, thanks to the thriving marine and offshore industry.

Even the fourth quarter saw a net profit, albeit of only $792,000 compared to the previous corresponding period's $95.3 million, on a 0.4 per cent rise in turnover to $1.34 billion from $1.33 billion. Pre-tax profit of $77 million for the quarter was after providing for $308.23 million, almost all for the unauthorised transactions.

Another sum of US$50.7 million, which is being disputed with BNP Paribas, has been disclosed as contingent liability.

But the company said it had adopted a prudent approach to taxation and had set aside $71.53 million for the taxman. But if the amounts in dispute with regard to the unauthorised transactions with French banks Societe Generale and BNP Paribas are available for tax deduction, then the improvement to the group's after-tax profits would be $55.48 million instead of the $792,000 reported.

SembMarine described 2007 as 'an outstanding year, with solid operational growth'. And indeed it was, with profit after tax and minority interests jumping 130 per cent to $549.2 million from $238.4 million - excluding the forex transactions. Net profit after taking into account the forex debacle was up just one per cent to $240.99 million. During the year, the group reported non-operating income of $230.62 million, almost all from the proceeds of its sale of 39 million shares in Chinese shipping company Cosco Corporation.

Turnover was up 27 per cent to $4.51 billion from $3.51 billion, with rig-building accounting for $2.5 billion or more than half the total. This was 44 per cent more than last year's $1.73 billion.

Offshore and conversion jobs brought in $1.13 billion, 24 per cent higher than last year's $913.4 million; repairs was up 19 per cent to $713.1 million; while shipbuilding fell 61 per cent to $81.6 million as the company scales down this business to channel resources to the higher margins business of rig building and offshore production sectors.

Earnings per share was up one per cent to 11.72 cents while net asset value per share rose 24 per cent to 81.1 cents. The group has a net cash position of $298.8 million, more than double last year's $112.5 million.

Group president and chief executive Tan Kwi Kin said: 'We firmly believe that the amount arising from the unauthorised transactions is a 'one-off charge'. The group has taken steps to ensure that this will not recur. Looking ahead, we are confident that the group is poised to grow further.'

His confidence was based on the group's strong net order book of $7.4 billion with completion and deliveries till 2011.

Like its rival Keppel Corporation, it continues to believe that 'the fundamentals for the offshore market remain strong, underpinned by a positive growth in the global demand for oil and gas resulting in sustained high oil prices supporting continued exploration and production activities'.

It also said high demand for ship repair and dock space booking continues to benefit the group. The repair sector was so busy last year that it had to turn away more than 400 vessels.

Demand for rig-building continues to be strong with demand trending towards deepwater rigs. It added that the offshore production market will see increasing demand for fixed and floating production systems, including Floating Production Storage and Offloading (FPSO) units. The group is also looking at venturing into drillships.

SembMarine's share price closed one cent up at $3.53.

CapitaLand full-year profit soars 172.5%

CAPITALAND achieved a record performance in 2007, with full-year net profit soaring 172.5 per cent to $2.76 billion, from $1.01 billion the year before.

Revenue increased 20.5 per cent to $3.79 billion, from $3.15 billion in 2006.

The stellar performance was attributed to strong sales of development projects in China and Australia, and the consolidation of revenue from Raffles City Shanghai and One George Street, which became group subsidiaries from Q4 2006 and Q4 2007 respectively.

Fuelled by sales registered in China and Australia, overseas revenue accounted for 76.4 per cent of group revenue, up from 71.2 per cent in 2006. Revenue from China grew 66.3 per cent to $1.1 billion, while revenue from Australia rose 16 per cent to $1.4 billion.

Directors have proposed a total annual dividend of 15 cents a share, comprising eight cents core dividend and seven cents special dividend.

If approved at the group's annual general meeting in April, this will amount to around $420.9 million in dividends paid.

CapitaLand chief executive officer and president Liew Mun Leong said the group's business model 'has enabled us to deliver four consecutive years of record profits since 2004'.

But he said the first six months of 2008 are likely to reflect the dampening effects of the US sub-prime crisis and global credit crunch. However, he believes the market may turn around in the second half of the year.

Last year, CapitaLand sold more than 1,400 homes in Singapore and about 2,000 homes in China.

For 2008, Mr Liew said the group expects to launch between 800-1000 residential units in Singapore. Projects slated for launch include Latitude at Jalan Mutiara and the development at the former Silver Tower site. CapitaLand has a pipeline of of 3,500-4,000 units in Singapore, of which about 20 per cent are in the high-end region, he said.

The group has a pipeline of 35,000 homes in China, where it will launch about 2,000 units this year.

In Vietnam, it intends to launch three projects in Ho Chi Minh City. Over in Thailand, it is looking to launch two projects in Bangkok and Krabi.

On a business segment basis, revenue from residential developments in 2007 was $2.86 billion, up 21.5 per cent year-on-year. Earnings before income tax were $1.07 billion, up 52.6 per cent year-on-year.

CapitaLand's commercial business unit reported revenue of $241.8 million, up 73.7 per cent year-on-year. Earnings before income tax were $1.96 billion, up 443.8 per cent year-on-year and attributed to fair value gains from investment properties, divestment gains, improvement in operating results as well as the consolidation of Raffles City Shanghai and One George Street.

CapitaLand's retail unit saw revenue increase 31.3 per cent to $124.2 million year-on-year, with earnings before income tax rising 34.7 per cent to $297.9 million. This was attributed to revenue from Clarke Quay, malls in China and property management fees from the group's China funds.

CapitaLand's financial services unit saw assets under management grow $2.6 billion to $15.9 billion, excluding Ascott Residence Trust and Ascott Serviced Residence Fund. Revenue grew 17.7 per cent to $119.2 million and earnings before income tax increased 13.2 to $69.7 million.

The serviced residence unit saw revenue fall 3.9 per cent mainly due to consolidation of Ascott Residence Trust. But earnings before income tax rose 66.5 per cent to $337.2 million.

Bonvests Hldgs full-year earnings more than double

HENRY Ngo's Bonvests Holdings yesterday posted group net earnings of $113.8 million for the year ended Dec 31, 2007, more than double the $50.7 million (restated) net earnings the preceding year.

The increase came on the back of an $85.7 million gain on revaluation of investment properties in 2007, as well as higher contributions from hotel operations and industrial division, lower finance costs incurred partly offset by lower contributions from sale of marketable securities.

Bonvests owns Liat Towers along Orchard Road and Sheraton Towers Singapore on Scotts Road as well as the Burger King franchise in Singapore. It also owns hotels in Mauritius and Tunisia.

Shareholders will receive a 3.69 cent per share, one-tier, tax-exempt first and final dividend.

Bonvests' net asset value per share as at Dec 31, 2007 was $1.49, unchanged from the restated figure a year earlier. Earnings per share doubled from 15.139 cents in 2006 to 30.602 cents last year. On the stock market yesterday, the counter ended three cents lower at $1.12.

Bonvests' revenue edged up 2.3 per cent to $297.8 million last year, due largely to higher turnover from hotel operations and the industrial division, partly offset by lower sale of properties and marketable securities.

The group reported that its 141-villa development in Tunis is expected to be completed by this quarter.

Mitsubishi UFJ Securities to buy 11% stake in Kim Eng

LOCAL stockbroker Kim Eng Holdings saw its share price rise 10 per cent on news that Japanese financial firm Mitsubishi UFJ Securities (MUS) is making an offer for an 11 per cent stake in it.

The stock, which featured among the top 10 most actively traded yesterday, ended 20 cents or 10 per cent higher at $2.22, with 7.7 million shares changing hands. At one stage, its share price surged 19.8 per cent to a seven-month peak of $2.42.

MUS said in a statement yesterday that it will pay $166.21 million in cash or $2.70 per share for the stake in Kim Eng. This is a premium of 34 per cent over Thursday's share price of $2.02 a share. Morgan Stanley Asia is advising the Japanese firm.

The bid by MUS comes one day after the two firms agreed to set up an asset management joint venture as part of a broad cooperation agreement. Under the deal, Mitsubishi and Kim Eng will join forces in equity, brokerage, asset management and other businesses. MUS said its brokerage affiliates will refer a majority of their retail and institutional trades to be executed in Singapore, Hong Kong, Thailand, Indonesia, Philippines and Vietnam to Kim Eng.

Through the alliance, and leveraging on Kim Eng's strong presence outside of Japan, Mitsubishi aims to offer a range of Asian products to customers in Japan and various Western markets. MUS, the securities arm of Japan's largest financial services operation, Mitsubishi UFJ Financial Group, and mainboard-listed Kim Eng first announced the alliance last year when they signed a memorandum of understanding.

The joint venture will manage at least $1 billion within the first two years, raising funds via MUS's extensive distribution network in Japan, while tapping Kim Eng's expertise to invest in Asian-listed equities outside Japan. Kim Eng and its affiliates will hold a majority stake in the joint venture, and they can nominate and appoint a majority of directors to the board of the joint-venture company.

Yasumasa Gomi, chairman and CEO of MUS, said that the partnership would tap the vast distribution capability of Mitsubishi in Japan and elsewhere in the world, and the equity research and dealing expertise of Kim Eng in South-east Asia.

After the acquisition, MUS will hold a total of 85.35 million shares or 14.63 per cent of Kim Eng, making it one of Kim Eng's substantial shareholders.

Petra Foods' Q4 profit falls 32.9% to US$4.5m

PETRA Foods yesterday reported a net profit of US$4.5 million for the three months to Dec 31, down 32.9 per cent from the previous year.

While revenue was up 70.6 per cent to US$236.8 million, cost of sales soared 87.3 per cent to US$209.9 million. Administrative expenses were 50 per cent higher at US$6.9 million. And finance costs more than doubled to about US$4 million.

Earnings per share on a fully diluted basis came in at 0.85 US cents, down from 1.27 US cents in the previous corresponding period.

For full-year 2007, net profit fell 9.7 per cent to US$26.3 million, even though revenue jumped 60 per cent to US$836.6 million. Earnings per share on a fully diluted basis were 4.94 US cents, down from 5.47 US cents.

Petra said its investment in European operations incurred initial losses but these are expected to be short-term. The benefits should be apparent by Q1 2009, it said.

It also took a US$5 million loss due to a negative adjustment for Financial Reporting Standard (FRS) 39, much of it incurred in its fourth quarter when it booked negative US$6.1 million due to volatility in financial and commodity markets.

FRS 39 requires companies to fair-value original transactions and associated economic hedges.

Both of Petra's divisions - branded consumer and cocoa ingredients - showed good gains, with sales rising 22.7 per cent and 82.3 per cent respectively.

Cocoa ingredients make up roughly 70 per cent of total sales, but profit for the division was hurt by negative contributions from European operations, financing costs and FRS 39 adjustments due to hedging losses.

Petra has proposed a final dividend of 1.02 US cents per ordinary share, payable on May 16, subject to shareholder approval at an annual general meeting in April.

The company said it expects modest growth in net profit for 2008.

Petra's share price closed at S$1.29 yesterday, up four cents.

Wheelock may not launch Orchard View this year

WHEELOCK Properties (Singapore) is likely to hold off launching Orchard View at Angullia Park for sale until next year, when the project is slated for completion. The company had earlier indicated that the development would be launched some time this year.

The group, which yesterday posted a six-fold jump in group net profit for the quarter ended Dec 31, 2007, to $217.5 million, also said it expects to launch Ardmore 3 next year. Piling work for the project is in progress and the development is slated for completion in 2012.

For Orchard View, the main construction work is already in progress and the development is scheduled for completion next year.

For the quarter ended Dec 31, 2007, Wheelock's revenue from continuing operations rose 43.8 per cent to $189.3 million. Wheelock's strong topline and bottomline were mainly due to the start of revenue and profit recognition for units sold in Ardmore II condo. The bottomline also received a boost from a $200 million revaluation surplus on Wheelock Place, the group's retail-and-office investment property on Orchard Road.

Wheelock, which has changed its financial year-end from March 31 to Dec 31, said that for the current year it will book the remaining profits from The Sea View condo in the Amber Road area and The Cosmopolitan at the River Valley/Kim Seng Road corner, which are slated for completion in first-half 2008 and mid-2008 respectively.

It will also continue to book profits from Ardmore II based on the progress of construction work and expects to book maiden profits on Scotts Square, a 338-unit apartment development which is already 67 per cent sold at an average price of $3,988 psf. 'Sales of the remaining units are ongoing and we expect to sell progressively over the next two years,' the group said.

Wheelock Place is also expected to continue maintaining full occupancy in the current strong market conditions and 'prospects for improved rental rates are good for both office and retail space'.

'The group remains in a strong financial position to take advantage of opportunities which may arise,' Wheelock said.

As at Dec 31, 2007, the group had total liabilities of $749.5 million and total equity of $2.18 billion. It had cash and cash equivalents of $557.7 million as at the same date. Shareholders will receive a 6-cent per share (one-tier) first and final dividend for the period ended Dec 31, 2007.

With the change in its financial year, the group reported net earnings of $273.5 million for the nine months ended Dec 31, 2007, against net profit of $297.9 million for the 12 months ended March 31, 2007.

Wheelock's net asset value per share stood at $1.82 as at Dec 31, up from $1.69 as at March 31, 2007.

Earlier this month, the group boosted its investment in fellow upscale residential developer SC Global Developments from 12.01 per cent to 13.09 per cent.

Apollo FY07 net profit drops 24.5%

APOLLO Enterprises plans to give shareholders a 75 cents per share special dividend when it completes the sale of Apollo Centre.

The counter ended eight cents higher at $2.63 on the stock market yesterday.

The $205 million sale of Apollo Centre on Havelock Road, announced in late December, is expected to be completed by the end of April. It is subject to approval by shareholders at an extraordinary general meeting to be held on Thursday.

The transaction will result in an exceptional gain of about $127.4 million, which will be reflected in the group's first-half 2008 results.

For the year ended Dec 31, 2007, Apollo's net profit fell 24.5 per cent to $29.5 million in the absence of a one-time gain on disposal of investment held by a subsidiary company of $28.8 million in the preceding year.

The group's latest result included an $11 million write-back of prior-year allowance for impairment loss relating to Apollo Centre.

Group turnover slipped 1.8 per cent to $76.5 million last year. The lower turnover was due primarily to the sale of an investment held by subsidiary company Laudet Pty Ltd on Nov 2, 2006 (Laudet had contributed $13 million revenue in financial year 2006). However, this was partially offset by the higher average room rates brought about by yield management and higher demand for hotel rooms in Singapore.

Apollo shareholders will receive a six cents per share (tax-exempt) final dividend for the year ended Dec 31, 2007.

As for the current year, Apollo pointed out that there will be no revenue contribution from Apollo Centre upon the completion of its sale. The property contributed $6.6 million revenue last year.

The group's hotels should continue to benefit from improved average room rates. Barring unforeseen circumstances, the directors expect the group to continue to improve its operating performance in the next quarter and possibly for the financial year 2008.

Net tangible asset backing per share rose from $1.22 as at Dec 31, 2006 to $1.27 as at Dec 31, 2007.

Fed Int'l seeks carbon credits from plant

MAINBOARD-LISTED Federal International is building what it says will be Singapore's first third-party-owned cogeneration plant, and is seeking to obtain over 180,000 carbon credits a year from the project. The project was announced at a stakeholders meeting with government agencies and scientists yesterday, which is a key part of the process for obtaining carbon credits.

Federal's 60 per cent-owned subsidiary Banyan Utilities (BU) will construct the 5 megawatt plant for Natural Fuel's biodiesel facility on Jurong Island. The plant will burn natural gas and supply all of Natural Fuel's needs, substituting electricity. The bulk of Singapore's power generation is natural gas-driven.

BU's cogen plant will also use waste heat to help deliver up to about 45 tonnes per hour of steam, with capacity for an added 20 per cent. The use of waste heat replaces the diesel steam boiler that Natural Fuel, which uses the steam for refining purposes, would otherwise build.

The cogen plant, with an efficiency of about 82.5 per cent, would generate less than 4,000 tonnes of carbon dioxide equivalent a year, said Arijit Paul, project manager for KYOTOenergy, the carbon developer helping Federal register the plant with the United Nations to earn carbon credits. Natural Fuel would otherwise generate over 188,000 tonnes of carbon a year, largely from burning diesel to generate steam, said Mr Paul. A steam boiler would use some 62,000 tonnes of diesel a year; the cogen plant will use 2 million standard cubic feet of natural gas.

Construction of the project started last September and is expected to be completed by May. The carbon credit application process is at an initial Project Design Document stage. KYOTOenergy expects to register it with the UN by Q1 2009. It will then generate credits for seven years.

Federal, a provider of oil and gas-related engineering services, said its contract to provide power to Natural Fuel lasts 12 years, with an option for another five years. It will pay upfront to build the plant, then recoup its investment by selling electricity and steam back to the biodiesel manufacturer.

Sanjeev Gupta, chief operating officer at Federal, shrugged aside concerns that Natural Fuel's plant may run at far below capacity, due to high crude palm oil prices that have affected profitability for the biodiesel sector. Fixed revenues built into the contract are sufficient to cover costs, even without selling any power, he said. Further, the plant can also manufacture glycerin, which Natural Fuel will do for the time being.

SuperBowl net profit quintuples to $19.8m

SUPERBOWL Holdings' net profit has quintupled to $19.8 million for the year ended 2007, due mainly to a gain on property sale at Balestier Road. Group revenue eased 0.8 per cent to $18.9 million.

Hosen warns of lower FY2007 net profit

HOSEN Group has warned that it will report considerably lower net profit for the year ended 2007, due mainly to additional provision for doubtful debts and depreciation for the group's existing office and warehouse building. Hosen said it still expects to be profitable in FY2007.

Link Hi expects loss for H2 2007

LINK Hi Holdings said it is expecting a loss for H2 2007, although it expects to remain profitable for full year 2007. It cited factors such as the increase in operational costs, and the tax rebate removal on welded steel pipes.

GuocoLand unit ownership questioned

GUOCOLAND yesterday said some directors have received from the vendors of the Beijing Dongzhimen project, a notice containing allegations related to the company's ownership in the subsidiary which owns the project. The company is investigating the matter.