CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 BUSINESS OVERVIEW 84 85 FINANCIAL REVIEW The Group reported its highest net profit after tax and non-controlling interest (PATMI) of $1.3 billion for FY 2022 since its inception in 1963 (restated FY 2021: $84.7 million1). The stellar FY 2022 performance was boosted by a bountiful year of divestment gains, including the record sale of Millennium Hilton Seoul and the gain on deconsolidation of CDLHT from the Group following the distribution in specie of CDLHT Units in 1H 2022, as well as the completion of the collective sales of Tanglin Shopping Centre and Golden Mile Complex in 2H 2022. Revenue for FY 2022 increased by 25.4% to $3.3 billion (FY 2021: $2.6 billion), propelled by a 58.1% increase in revenue from the hotel operations segment. The Group’s hotel revenue per available room (RevPAR) grew 91.0% for FY 2022. The RevPAR growth for FY 2022 is attributable to a 48.9% increase in average room rates and a 14.2 percentage points improvement in occupancies across all geographies. Notably, hotels in London, Singapore and New York outperformed in 2022. The property development segment continued to be the biggest contributor accounting for 42% of FY 2022 revenue, led by three strong-performing Singapore projects – Amber Park, Haus on Handy and Irwell Hill Residences. This does not include revenue from the substantially sold joint venture (JV) projects such as Boulevard 88 and CanningHill Piers, which are equity accounted for. The Group recorded a pre-tax profit of $1.9 billion for FY 2022 (restated FY 2021: $214.8 million1). The extraordinary profits were driven by the distribution in specie of 144,191,823 stapled securities in CDLHT, resulting in the accounting deconsolidation of CDLHT from a subsidiary to an associate in May 2022 and the recognition of a total gain (inclusive of negative goodwill) of $492.4 million, as well as pre-tax divestment gains on the sale of properties amounting to $1.26 billion. PROPERTY DEVELOPMENT Revenue increased by $127.8 million to $1,382.3 million (FY 2021: $1,254.5 million) for FY 2022, while the pre-tax profit decreased by $83.5 million to $161.3 million (FY 2021: $244.8 million) for FY 2022. Projects that contributed to both revenue and profit in FY 2022 include Amber Park, Irwell Hill Residences and Haus on Handy in Singapore, Hong Leong Tech Park Shenzhen and Hongqiao Royal Lake Shanghai in China, Sydney Street and Teddington Riverside in the UK as well as New Zealand land sales. In accordance with the Group’s policy of equity accounting for the results of its joint ventures, whilst revenue from joint venture developments such as Boulevard 88, The Jovell and Sengkang Grand Residences had not been consolidated into the Group’s total revenue, the Group’s share of profit arising from these joint venture developments had been included in pre-tax profit. The increase in revenue for FY 2022 was attributable to higher progressive revenue contribution from Amber Park, Irwell Hill Residences and Haus on Handy, due to a higher percentage of completion achieved and units sold. Pre-tax profit decreased for FY 2022 mainly due to allowance for foreseeable losses made on four development properties in the UK and one development property in China. Included in the pre-tax profit for this segment for FY 2021 was the negative goodwill recognised by the Group for the acquisition of Hong Leong Tech Park Shenzhen. Excluding the allowance for foreseeable losses and the aforesaid negative goodwill, pre-tax profits for this segment would have remained relatively constant at $223.1 million (FY 2021: $219.0 million) for FY 2022. HOTEL OPERATIONS Revenue for this segment increased $507.6 million to $1,380.7 million (FY 2021: $873.1 million) for FY 2022. This segment reported a pre-tax gain of $1,383.2 million (FY 2021: pre-tax loss of $71.0 million) for FY 2022. The increase in revenue is attributable to the recovery of the hospitality sector, backed by improved occupancy and room rates achieved by the Group’s hotel portfolio. The Group’s hotel RevPAR grew 91.0% for FY 2022. The substantial pre-tax profits recognised for FY 2022 was mainly due to the divestment gains recognised from the disposal of Millennium Hilton Seoul and the deconsolidation of CDLHT in FY 2022. This was partially offset by lower reversal of impairment losses made by the Group of $31.8 million (FY 2021: $96.4 million) on its hotel properties during the year. INVESTMENT PROPERTIES Revenue for this segment remained relatively constant at $341.2 million (FY 2021: $341.1 million) for FY 2022. This segment reported a pre-tax gain of $383.6 million (restated FY 2021: $11.4 million1) for FY 2022. The substantial pre-tax profit recognised for FY 2022 was due to profit from the collective sale of Tanglin Shopping Centre and Golden Mile Complex in 2H 2022, partially offset by higher impairment losses made on investment properties of $35.7 million (restated FY 2021: $2.1 million1). 1 As the proposed REIT listing of the two UK commercial properties did not materialise, in accordance with SFRS(I) 5, the Group has reclassified the assets held for sale and the liabilities directly associated with the assets, back to the Group’s respective assets and liabilities. Restated PBT and PATMI are lower by $12.9 million for FY 2021 vis-à-vis previously reported. Revenue by Business Segment ($ million) 1,255 873 341 1,382 1,381 341 157 189 Property Development Hotel Operations Investment Properties Others * Includes share of after-tax profit/(loss) of associates and joint ventures. Property Development Hotel Operations Investment Properties Others Revenue by Business Segment Profit Before Tax by Business Segment* $1.9 BILLION 0 EBITDA by Business Segment 245 11 30 (71) (71) 161 384 1,383 Profit Before Tax by Business Segment*1 ($ million) Property Development Hotel Operations Investment Properties Others 2021 2022 9% 6% (4)% 10% 25% 21% 42% 42% 74% $3.3 BILLION 66% (1)% 10% $2.3 BILLION OTHERS Revenue, comprising mainly income from building maintenance contracts, project management, club operations, laundry services and dividend income, increased by $32.2 million to $189.3 million (FY 2021: $157.1 million) for FY 2022. The increase for FY 2022 was due to higher project management fees earned. This segment reported a pre-tax loss of $71.3 million (FY 2021: pretax gain of $29.7 million) for FY 2022. Despite the increase in revenue, the Group recognised pre-tax loss for FY 2022, mainly due to the impairment loss made on the loans granted to Sincere Property Group of $62.7 million and the USD denominated bonds issued by Sincere Property Group which the Group had subscribed to of $18.0 million, totalling $80.7 million. With this final impairment, the Group has no further exposure to Sincere Property Group.
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