SC GLOBAL DEVELOPMENTS LTD UNAUDITED 2012 SECOND QUARTER FINANCIAL STATEMENT ANNOUNCEMENT

Transcription

1 Company Registration : K SC GLOBAL DEVELOPMENTS LTD 1(a)(i) Income Statement 3 months ended 30 Jun 6 months ended 30 Jun Change Change $'000 $'000 % $'000 $'000 % Revenue 123, ,794 (53) 172, ,022 (64) Cost of sales (89,844) (163,088) (45) (129,513) (276,590) (53) Gross profit 33,245 98,706 (66) 43, ,432 (79) Other income 434 1,916 (77) 1,432 4,718 (70) Administrative expenses (11,525) (13,841) (17) (23,058) (23,729) (3) Other operating expenses (77,691) (13,920) 458 (88,266) (23,403) 277 Results from operating activities (55,537) 72,861 NM (66,566) 164,018 NM Finance costs (4,259) (6,242) (32) (8,751) (11,620) (25) Share of profits of associates and joint ventures (net of tax) (41) (46) (Loss)/profit before income tax (59,270) 67,504 NM (74,853) 153,258 NM Income tax expenses 18,208 (18,648) NM 21,667 (34,133) NM (Loss)/profit for the period (41,062) 48,856 NM (53,186) 119,125 NM Attributable to: Equity holders of the company (21,715) 46,289 NM (31,700) 119,099 NM Non-controlling interests (19,347) 2,567 NM (21,486) 26 NM (Loss)/profit for the period (41,062) 48,856 NM (53,186) 119,125 NM

2 1(a)(ii) Additional Information to Income Statement 3 months ended 30 Jun 6 months ended 30 Jun Change Change $'000 $'000 % $'000 $'000 % Other income Interest income , Others (506) 1,717 NM (61) 4,051 NM 434 1,916 (77) 1,432 4,718 (70) Other operating expenses Depreciation of property, plant and equipment Loss/(gain) on disposal of property, plant and equipment Allowance for impairment of equity accounted investments (89) 1 (122) NM 1,709 - NM 1,709 - NM Allowance for impairment of inventories 63,401 - NM 63,401 - NM Reversal of impairment loss on trade receivables - (40) (100) - (117) (100) Sales & promotion expenses 8,805 9,009 (2) 15,391 15,856 (3) Maintenance and service charges 2,827 3,121 (9) 5,583 4, Operating lease expenses Others 284 1,315 (78) 410 1,934 (79) 77,691 13, ,266 23, Income tax expenses Under/(over) provided in prior years 8 9 (11) (146) 9 NM Current year tax expense 13,047 33,774 (61) 16,783 32,182 (48) Deferred tax expense (31,263) (15,135) 107 (38,304) 1,942 NM (18,208) 18,648 NM (21,667) 34,133 NM NM: not meaningful Page 2 of 13

3 1(b)(i) Balance Sheet Non-current assets Company $'000 $'000 $'000 $'000 Property, plant & equipment 27,625 23, Investment properties 64,863 69, Intangible asset 3,637 3, Interest in subsidiaries ,470 78,524 Investment in associates & jointly controlled entities 31,526 39, Other financial assets Amount due from subsidiaries (non-trade) ,578 42,256 Current assets 127, , , ,557 Inventories 2,300,565 2,284, Trade & other receivables 144, , , ,876 Cash & cash equivalents 278, ,332 43,363 45,695 Less: Current liabilities 2,723,265 2,751, , ,571 Trade & other payables 157, ,095 59,068 7,666 Financial liabilities 72,553 32, Receipts in advance 113, , Current tax payable 35,750 35,908 1, , ,136 60,469 8,686 Net current assets 2,344,544 2,427, , ,885 Non-current liabilities Financial liabilities 1,621,843 1,588,382 35,325 45,391 Other non-current liabilities 76,097 94, ,562 Deferred tax liabilities 21,818 60, ,719,758 1,743,246 36,080 46,966 Net assets 752, , , ,476 Capital & reserves Share capital 239, , , ,503 Other reserves 67,849 71,114 1,870 1,614 Retained earnings 304, , , ,359 Shareholders equity 612, , , ,476 Non-controlling interests 140, , , , , ,476 Page 3 of 13

4 1(b)(ii) Borrowings and Debt Securities As at As at $'000 $'000 Amount repayable in one year or less, or on demand Secured 72,421 32,749 Unsecured - - Amount repayable after one year Secured 1,621,518 1,587,991 Unsecured - - Details of collaterals Secured borrowings are generally secured by the investments, investment property, properties under development or developed properties for sale and assignment of all rights and benefits with respect to the properties. Page 4 of 13

5 1(c) Consolidated Cash Flow Statement 3 months ended 30 Jun 6 months ended 30 Jun $'000 $'000 $'000 $'000 Cash Flows from Operating Activities (Loss)/profit before income tax (59,270) 67,504 (74,853) 153,258 Adjustments for: Depreciation of property, plant and equipment Loss/(gain) on disposal of property, plant and equipment, net (122) Allowance for impairment of equity accounted investments 1,709-1,709 - Allowance for impairment of inventories 63,401-63,401 - Reversal of impairment loss on trade receivables - (40) - (117) Share-based expenses 665 2, ,340 Interest income (940) (199) (1,493) (667) Interest expense 4,259 6,242 8,751 11,620 Share of profit of associates and joint ventures (net of tax) (526) (885) (464) (860) Operating profit/(loss) before working capital changes 9,590 75,088 (1,049) 165,359 Changes in working capital: Inventories (28,234) (29,665) (73,752) 99,009 Trade and other receivables 77,145 10,776 99,156 (121,210) Trade and other payables 13,861 42,346 20,462 (683) Other non-current liabilities (13,727) 481 (17,030) 464 Cash from operating activities 58,635 99,026 27, ,939 Income tax paid (12,588) (1,266) (17,146) (2,483) Net cash from Operating Activities 46,047 97,760 10, ,456 Cash Flows from Investing activities Dividend received 232 1, ,310 Interest received , Purchases of property, plant & equipment (216) (504) (507) (2,323) Proceeds from disposal of property, plant & equipment Additional investment in associates & joint ventures - (4,693) (640) (4,697) Net cash from/(used in) Investing Activities 963 (3,537) 718 (4,693) Cash Flows from Financing Activities Dividends paid to shareholders of the Company (8,253) (20,628) (8,253) (20,628) Dividends paid to non-controlling shareholders (886) (1,793) (962) (1,793) Interest paid (11,512) (8,399) (22,016) (31,961) Purchase of treasury shares (586) (215) (586) (570) Repayment of bank loans (60,942) (521,480) (109,384) (539,432) Proceeds from bank loans 68, , , ,258 (Payment of)/proceeds from finance lease liabilities (131) (293) (66) 290 Net cash (used in)/from Financing Activities (14,008) (137,742) 43,645 (145,836) Page 5 of 13

6 1(c) Consolidated Cash Flow Statement (cont d) 3 months ended 30 Jun 6 months ended 30 Jun $'000 $'000 $'000 $'000 Net increase/(decrease) in cash and cash equivalents 33,002 (43,519) 55,004 (10,073) Cash and cash equivalents at beginning of period 244, , , ,026 Effect of exchange rate changes on balances held in foreign currency (176) Cash and cash equivalents at end of period 278, , , ,777 Note to Consolidated Cash Flow Statement: Cash and cash equivalents included in the consolidated cash flow statement comprise the following balance sheet amounts: As at 30 Jun $'000 $'000 Fixed deposits 43,076 29,194 Cash and bank balances 234, , , ,777 1(d) Consolidated Statement of Comprehensive Income Company 3 months ended 30 Jun 3 months ended 30 Jun $'000 $'000 $'000 $'000 Profit for the period (41,062) 48,856 14,331 2,266 Other comprehensive income: Foreign currency translation differences foreign operations (4,421) 3, Net change in fair value of available-for-sale financial assets (81) (202) - - Total comprehensive income for the period (45,564) 51,784 14,331 2,266 Total comprehensive income attributable to: Equity holders of the Company (24,062) 49,217 14,331 2,266 Non-controlling Interests (21,502) 2, Total comprehensive income for the period (45,564) 51,784 14,331 2,266 Page 6 of 13

7 1(d)(i) Statement of Changes in Equity Share Capital Other Reserves Retained Earnings Total Noncontrolling Interests Total Equity $'000 $ 000 $'000 $'000 $'000 $'000 The At 1 Apr ,503 65, , , , ,484 Total comprehensive income for the period - 2,928 46,289 49,217 2,567 51,784 Purchase of treasury shares - (215) - (215) - (215) Final dividend paid of $0.05 per share (one tier tax-exempt) - - (20,628) (20,628) - (20,628) Dividends paid to non-controlling shareholders (1,793) (1,793) Value of employee services received for issue of long term incentive bonus At 30 Jun ,503 68, , , , ,067 At 1 Apr ,503 70, , , , ,502 Total comprehensive income for the period - (2,347) (21,715) (24,062) (21,502) (45,564) Issue of shares by a subsidiary to a non-controlling shareholder Dividends paid to non-controlling shareholders (886) (886) Final dividend paid of $0.02 per share (one tier tax-exempt) - - (8,253) (8,253) - (8,253) Purchase of treasury shares - (586) - (586) - (586) Value of employee services received for issue of long term incentive bonus At 30 Jun ,503 67, , , , ,761 Page 7 of 13

8 1(d)(i) Statement of Changes in Equity (cont d) Share Capital Other Reserves Retained Earnings Total Noncontrolling Interests Total Equity $'000 $ 000 $'000 $'000 $'000 $'000 The Company At 1 Apr ,503 (88) 37, , ,801 Total comprehensive income for the period - - 2,266 2,266-2,266 Purchase of treasury shares - (215) - (215) - (215) Final dividend paid of $0.05 per share (one tier tax-exempt) - - (20,628) (20,628) - (20,628) Value of employee services received for issue of long term incentive bonus At 30 Jun , , , ,580 At 1 Apr ,503 2, , , ,172 Total comprehensive income for the period ,331 14,331-14,331 Purchase of treasury shares - (586) - (586) - (586) Final dividend paid of $0.02 per share (one tier tax-exempt) - - (8,253) (8,253) - (8,253) Value of employee services received for issue of long term incentive bonus At 30 Jun ,503 1, , , ,086 Page 8 of 13

9 1(d)(ii) Changes in the Company s Share Capital Number of issued and fully paid ordinary shares 3 months ended 30 Jun 2012 As at beginning of period 412,637,216 Transfer of treasury shares from the Share Buy Back Account pursuant to the SC Global Performance share Scheme ,611,265 Purchase of treasury shares (611,000) As at end of period 413,637,481 As at As at Number of shares held as treasury shares 1,159,325 2,391,226 Total number of issued shares excluding treasury shares 413,637, ,405,580 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. As at As at Total number of issued shares excluding treasury shares 413,637, ,005,580 1(d)(iv) Treasury Shares During the quarter ended 30 June 2012, 1,611,265 shares were transferred from the Share Buy Back account pursuant to the SC Global Performance Share Scheme There were no other sales, transfers, disposals, cancellations and/or use of treasury shares during the quarter ended 30 June Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited nor reviewed by the Company s auditors. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of matter) Not applicable. 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied The financial statements have been prepared based on the accounting policies and methods of computation consistent with those adopted in the most recent audited financial statements for the year ended 31 December Page 9 of 13

10 5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change Not applicable. 6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends Earnings per ordinary share for the period: - On weighted average number of ordinary shares in issue - On a fully diluted basis 3 months ended 30 Jun 6 months ended 30 Jun cents cents cents cents (5.25) (7.66) (5.23) (7.63) Net asset value per ordinary share based on issued share capital (excluding treasury shares) at the end of the period Company Net asset value per ordinary share $1.48 $1.59 $1.03 $ Review of s performance 2 nd Quarter 2012 vs. 2 nd Quarter 2011 Revenue in the second quarter of 2012 declined 53% to $123.1 mil from $261.8 mil in the corresponding quarter of revenue in the second quarter comprised mainly contributions from sales of new units and progressive recognition of the s development project, Seven Palms Sentosa Cove, in Singapore. In addition, contributions from the s subsidiaries AVJennings Limited ( AVJ ) in Australia and Kairong Shenyang in China also contributed to the Revenue. Revenue was comparatively lower this quarter due to lower sales and the absence of significant contributions from the progressive recognition from Hilltops and Martin No. 38 which received TOP in the second and fourth quarter of 2011 respectively. Gross Profit during the quarter decreased by 66% to $33.2 mil from $98.7 mil. Gross margin for 2Q 2012 was lower at 27% as compared to 38% recorded in 2Q Total operating expenses, including administrative expenses, were higher at $89.2 mil in 2Q 2012 as compared to $27.8 mil in 2Q This was mainly due to the allowances for asset impairment of $65.1 mil made by AVJ. Excluding these allowances, total operating expenses would have been lower. AVJ has made allowances for impairment of inventories and equity accounted investments of $63.4 mil and $1.7 mil respectively, totaling $65.1 mil as at 30 June Recent factors including the deteriorating residential market conditions in early 2012 especially in many regional areas; and the delay in the timing and extent of the forecast recovery in Queensland and New South Wales, have resulted in reduced volumes and margins. Additionally, AVJ has reassessed its operational strategies in relation to various projects. As a result, AVJ has reassessed the bases and assumptions used to determine the carrying value of its assets in undertaking its year end impairment testing and has therefore taken the prudent course to provision against the carrying value of those assets. The provisioning represents a 10.2% reduction in book value of its inventory. The projects affected are primarily in regional areas of Queensland and New South Wales. Page 10 of 13

11 Income tax expenses of $18.2 mil was written back in 2Q 2012 as compared to an expense of $18.6 mil last year mainly due to the pre-tax loss in 2Q Overall, Loss After Tax attributable to Equity holders was $21.7 mil as compared to a profit after tax of $46.3 mil in the corresponding quarter of The Net Loss was mainly attributed to the allowance for asset impairment of $65.1 mil made by AVJ. Excluding these allowances, the would have been profitable for 2Q In addition, the absence of significant profit recognition from Hilltops and Martin No. 38 which received TOP in the second and fourth quarter of 2011 respectively, also contributed to the lower result. The requirement in 2011 to adopt the new INT FRS 115 accounting standard no longer permits revenue and profit recognition from overseas contributions to be recognized based on percentage of completion. As such, contributions from the s subsidiaries, Kairong Developments in China and AVJ in Australia, can only be recognized on completion and handover of developments. The s business of real estate development is long term in nature and the manages its business in this manner rather than from quarter to quarter. The completed 3 development projects in Singapore in 2011 which was a record number achieved by the in a single year. Over the past 2 years in 2010 and 2011, the has achieved significant record net profits of $92.9 mil and $132.2 mil, respectively and as at 30 June 2012, the held a healthy Cash and Cash Equivalents position of $278.1 mil, a 25% increase from $222.3 mil as at year end st Half 2012 vs. 1 st Half 2011 Revenue for the 6 months declined 64% to $172.8 mil as compared to $483.0 mil last year. The decrease was due mainly to lower sales and the absence of significant contributions from progressive recognition from The Marq on Paterson Hill, Hilltops and Martin No. 38 which received their TOP in the first, second, and fourth quarter of 2011 respectively. Progressive recognition of the s development project, Seven Palms Sentosa Cove in Singapore, was higher in 2H 2012 as compared to 1H 2011 as construction progressed further for the project. Gross Profit during the half year decreased by 79% to $43.3 mil from $206.4 mil. Gross margin was lower at 25% as compared to 43% last year. Total operating expenses, including administrative and other operating expenses, were higher at $111.3 mil this half year as compared to $47.1 mil last year mainly due to the allowances for asset impairment of $65.1 mil made by AVJ. Overall, Loss After Tax attributable to Equity holders for the half year was $31.7 mil as compared to a profit after tax of $119.1 mil in 1H2011. The Net Loss was mainly attributable to the allowance for asset impairment of $65.1 mil made by AVJ. In addition, the absence of significant profit recognition from The Marq on Paterson Hill, Hilltops and Martin No. 38 which received their TOP in the first, second, and fourth quarter of 2011 respectively also contributed to the lower result. Further as stated above, the requirement in 2011 to adopt the new INT FRS 115 accounting standard also affected the accounting of results. Balance Sheet Review 30 June 2012 vs. 31 December 2011 For the 6 months ended 30 June 2012, the s Total Equity decreased by about 8% to $752.8 mil from $821.6 mil as at the end of 2011 due mainly to the Net Loss for the half year and dividends paid to shareholders during 1H As a result, the s Net Asset Value per share decreased 7% to $1.48 as compared to $1.59 as at 31 December Inventories comprised mainly of land and development properties held for resale and under construction. The s Inventories are held at historical cost and are not permitted under accounting standards to be re-valued upwards should fair market value represent a higher value. Inventories stood at $2.30 bil as at 30 June 2012 as compared to $2.28 bil at the end of last year. The s Net Financial Liabilities (less cash and cash equivalents) increased slightly to $1.42 bil as at 30 June 2012 as compared to $1.40 bil as at 31 December The continued to generate strong cash flow with a 25% increase in Cash and Cash Equivalents to $278.1 mil as at the end of the second quarter as compared to $222.3 mil as at year end Page 11 of 13

12 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results Not applicable. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months Prices of private residential properties increased by 0.4% in the second quarter of 2012, compared to a 0.1% decrease in the previous quarter, according to statistics from the Urban Redevelopment Authority ( URA ). In the Core Central Region which the operates, prices of private residential properties were flat for the half year. New home sales had achieved 11,928 units during the first half of the year, more than the 8,039 units recorded in the same period last year. However, in the Core Central Region, new home sales of uncompleted properties registered only 532 units during the first half of 2012, as compared to 1,062 units in the corresponding period in Following the introduction by the government of the Additional Buyer s Stamp Duty in December 2011, purchases by foreigners accounted for 7% of the private home purchases in the first half of the year, down sharply from 20% last year. Most of the new sales in the quarter comprised units in the mass market sector and were taken up by Singaporeans and in particular first time purchasers and those with Housing Development Board addresses. The Singapore economy contracted 0.7% on a quarter-on-quarter basis in the second quarter of 2012, compared to the 9.5% expansion in the preceding quarter. The global economic climate continues to remain uncertain as Europe struggles to contain its debt crisis which is having a negative effect on economic growth prospects. US economic recovery remains lackluster as economic growth slowed to an annual rate of 1.5% in the second quarter of 2012 and the unemployment rate increased slightly to 8.3% in July With the continued rounds of property measures over the past 2 years, including the most recent in December 2011, sentiment in the residential property market remains cautious, and the rate at which these recent property measures might be reflected in the market over the longer term would need to be monitored as they could well take time for acceptance. The s Singapore development project, Martin No. 38, was recently awarded both the prestigious Building of the Year award and the Top Design award within the residential category at the Singapore Institute of Architects ( SIA ) Architecture Design Awards An Honourable Mention was also awarded to both The Marq on Paterson Hill in the residential category and Newton 200 within the commercial category. In May 2012, the unveiled the highly anticipated world s first apartment fully decorated by Hermès at The Marq on Paterson Hill. In Shenyang, China, the s development project, Kairong International Gardens, which comprise a total of some 2,150 residential units is expected to be fully completed by the second half of Due to the nature of the 's business and the requirement in 2011 to adopt the new INT FRS 115 accounting standard, the performance of the as reported from quarter to quarter may vary depending on the timing of sales, completions of overseas developments, and progress of construction during the quarter. In particular, as the continues to move from having more finished units on hand rather than developments under construction, variations in performance from quarter to quarter are more dependent on the timing of sales and the increasing proportion of overseas contributions. The variation of reported accounting results from quarter to quarter may be more pronounced to the extent it may vary from a reported loss making quarter to a very lumpy recognition of substantial profits in a next or subsequent quarter. Page 12 of 13

13 11. Dividend (a) Current Financial Period reported on: Any dividend declared for the current financial period reported on? None. (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? None. (c) Date payable Not applicable. (d) Books closure date Not applicable. 12. If no dividend has been declared/recommended, a statement to that effect No interim dividend has been declared or recommended for the current reporting period. 13. Interested Person Transactions The has not obtained a general mandate from shareholders for Interested Person Transactions. 14. Confirmation by the Board of Directors pursuant to Rule 705(5) of the Listing Manual The Directors confirm that to the best of their knowledge, nothing has come to their attention which may render the unaudited interim financial results of the and the Company (comprising the balance sheet, consolidated income statement, statement of comprehensive income, statement of changes in equity and consolidated cash flow statement, together with their accompanying notes) for the six months ended 30 June 2012 to be false or misleading in any material respect. BY THE ORDER OF THE BOARD Tan Wee Boon John Company Secretary 10 August 2012 Page 13 of 13