Financial Review
PROPERTY DEVELOPMENT
Revenue decreased by $216.7 million to $1,198.1 million (FY 2012: $1,414.8 million) for FY 2013. Pre-tax profits decreased by $55.2 million to $412.9 million (FY 2012: $468.1 million) for FY 2013.

The decrease in revenue for FY 2013 was mainly attributable to the absence of revenue from sale of a warehouse at Tagore Avenue, sold in Q1 2012 and sale of the industrial land parcels situated at Jalan Lam Huat in Q4 2012 as well as lower contribution from Volari, NV Residences, Hundred Trees, Cube 8 and Tree House. This was partially mitigated by sale of strata units in Sunshine Plaza and an industrial site at 100F Pasir Panjang, coupled with increased contributions from Buckley Classique, H2O Residences and The Glyndebourne* as well as maiden contributions from The Palette, HAUS@SERANGOON GARDEN and UP@Robertson Quay.

The decrease in pre-tax profit was in tandem with the decrease in revenue, partially mitigated by maiden contribution from The Inflora and Bartley Ridge.


HOTEL OPERATIONS

Notwithstanding the challenging conditions in certain Asia markets, particularly Seoul and the temporary closure of hotel rooms during the year due to on-going hotel renovation works, the hotel operations segment managed to achieve steady revenue at $1,543.4 million (FY 2012: $1,535.6 million) for FY 2013. This was mainly due to contribution from W Singapore – Sentosa Cove which commenced operations in October 2012 and gradual re instatement of refurbished rooms which achieved higher room rates than before.

Though revenue was steady, pre-tax profit for this segment decreased by $90.2 million to $160.1 million (FY 2012: $250.3 million).

The decrease in pre-tax profit for FY 2013 was due to higher operation costs coupled with local factors such as increase in room supply, rising labour costs due to government’s guest worker restrictions in Singapore and the geo-political tensions between Japan and South Korea which affected the overall hotel performance. Further, impairment loss was made on a hotel in United States in 2013.

There was no impairment on hotels last year. There was also a gain recognised in 2012 on the disposal of Copthorne Hotel Christchurch following an insurance settlement on this hotel, which was affected by the New Zealand 2011 earthquake.


RENTAL PROPERTIES

Revenue for this segment remained relatively steady at $313.7 million (FY 2012: $303.8 million) for FY 2013.

Pre-tax profit increased by $121.4 million to $299.6 million (FY 2012: $178.2 million) for FY 2013 largely due to gains recognised from the sale of an industrial site at 100G Pasir Panjang, more strata units sold in Elite Industrial Building I, as well as profits on disposal of equity interest in a China subsidiary in 2013. This was however, partially offset by the lesser strata units sold in 2013 for GB Building and Citimac Industrial Complex as compared to 2012.


OTHERS

Revenue, comprising mainly income from building maintenance contracts, project management, club operations and dividend income, increased by $7.6 million to $107.0 million (FY 2012: $99.4 million) for FY 2013. The increase was attributable to higher management fee income earned in 2013 as compared to last year.

Pre-tax profit for this segment decreased by $43.7 million to $19.9 million (FY 2012: $63.6 million) for FY 2013 due mainly to lower gains recognised on realisation of investments in a private real estate fund and lower fair value gains recognised on financial assets held for trading in 2013.

* The Glyndebourne is developed by the Group’s 59% owned subsidiary, Millennium & Copthorne Hotels plc (M&C). While M&C’s 2013 performance was significantly boosted by profit recognition from this development, it should be noted that the Group has been progressively recognising profit for this project based on stages of construction for the units sold, whereas M&C could only book in the profits in entirety in Q4 2013, when the development was completed, based on UK accounting standards. Therefore, the substantive jump in profits as seen in M&C’s performance would not be reflected on the Group level.

 

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