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PROPERTY giant Far East Organization announced yesterday that executive director Leong Horn Kee would be leaving the company on June 30 after more than 15 years of service.

Mr Leong, who served as Member of Parliament for 32 years until he retired in 2006, said that he was venturing out to work on his own ‘projects’.

‘I’m 56 years old now and I’ve had a good run in government service, GLCs, the financial sector and the private sector. It’s time to move on and I have some private business ventures in mind. Far East is in great shape and will continue to do well.’

A Colombo Plan scholar, Mr Leong started out in the Administrative Service at the Ministry of Trade in 1977. In 1984, he joined NatSteel, where he remained until 1989. Following that, he joined investment banking group NM Rothschild & Sons (S) Ltd for four years before moving on to Far East.

He was managing director of its Orchard Parade Holdings Ltd from 1993 to 2000, and managing director and CEO of Yeo Hiap Seng from mid-1999 to 2002. In recent years, he handled many of the group’s investment ventures and oversaw its internal audit operations.

‘He has been instrumental in completing our Novena Medical Centre agreement with Tan Tock Seng Hospital, and has assisted several departments in resolving various problems encountered with external agencies,’ Far East said in a statement yesterday.

Mr Leong, who has four children, is Singapore’s Non-Resident Ambassador to Mexico. He became a member of the Securities Industry Council in January.

Source : Business Times - 4 Mar 2008

Fund will cushion cost of integrating solar panels into new Green Mark buildings

DEVELOPERS of new and green buildings can now tap into a $20 million fund set up by the Government - a decision that is certain to sit well all-round as oil prices continue to surge.

The fund will partly offset the cost of integrating solar panels into new buildings “which attain a certain level of Green Mark standard”, Mr S Iswaran (picture), the Minister of State for Trade and Industry (MTI) told Parliament yesterday.

Under a 2005 scheme, buildings that meet environment sustainability standards will be Green-Mark-certified by the Building and Construction Authority of Singapore.

“This (Solar Capability Scheme) is a grant-based incentive, to spur more innovative approaches and capability development, in the architecture, design and system integration of solar panels as part of green buildings,” he said, adding that more details would be released soon by the Economic Development Board.

It is part of the Republic’s drive to encourage the adoption of renewable energy amidst concerns of high-energy costs fuelled by spiralling oil prices.

While the Government will encourage the use of solar energy through incentives and lowering grid connection fees, Mr Iswaran stressed that it will, however, stop at subsidising the cost of renewable energy through feed-in tariffs (Fit).

Fit is a form of energy subsidy where renewable energy companies are guaranteed contracts for energy produced at higher prices as compared to those from traditional sources.

The issue cropped up recently when Today ran a story on how the business community had urged MTI to consider Fit to promote the energy sector. MTI had argued against it, citing distortion to market and a possible increase in electricity prices.

Responding to a query from Nominated Member of Parliament Eunice Olsen as to how much more it would cost consumers with the adoption of Fit, Mr Iswaran said compared to a pool price of 22 cents per kilowatt, solar energy produced under Fit would be as high as “two to three times the cost, perhaps a little lower because oil prices have gone up now”.

He added that it was not an “optimal strategy because what we are effectively doing is encouraging solar”.

“The question is why solar when it can be bio-energy, bio-diesel and so on … why not subsidise others as well?” he asked.

Asked by Ms Olsen if MTI’s insistence against Fit for renewable energy is a reflection of its low priority for developing the industry, especially when tax credits are granted for expensive commodities like green cars, Mr Iswaran explained that the promotion of solar energy, or any other industry, can be done through other means.

Citing research and test-bedding initiatives such as the recently launched Solar Energy Research Institute of Singapore and the $170 million allocated to the Research, Innovation and Enterprise Council for Solar Research and Development that aim to develop alternative energy technologies, Mr Iswaran said such approaches “give better returns in the long run”.

“The right strategy is to help the industry get into a position of competitiveness vis-à-vis existing supplies of energy, but to subsidise it is to distort the market in terms of production and consumption decisions and we don’t think that’s the right thing to do,” he said.

Amid the ongoing debate, Singaporeans were hit again by the impact of higher oil prices - which hovered around US$102 per barrel yesterday - as Caltex raised its price for petrol and diesel by 4 cents a litre.

Source : Today - 4 Mar 2008

UIC and SingLand to pay $41.3m and $82.5m in dividends respectively.

UNITED Industrial Corporation (UIC), which counts Singapore Land as a subsidiary, has racked up $1.68 billion worth of valuation gains for the 2007 financial year, taking its net profit to $1.17 billion, more than double 2006’s $492.1 million.

Key buildings like Singapore Land Tower at Raffles Place and Marina Bayfront at Raffles Boulevard have both increased by over 70 per cent in value.

Singapore Land Tower is now worth $1.49 billion, up from $868.4 million a year ago, while Marina Bayfront is now worth $70 million, up from $40 million a year ago.

UIC’s portfolio, which includes other properties like The Gateway at Beach Road and Marina Square, is now valued at about $5.48 billion, up from about $3.77 billion a year ago.

The valuations were done by DTZ Debenham Tie Leung.

In its financial statement for FY2007 released yesterday, UIC said that net profit of $1.17 billion comprised $123.6 million from operations and $1.05 billion from fair value gain on investment properties .

Revenue for the year was up 62 per cent to $528.4 million, and was attributed to higher sales of residential properties and revenue recognition on a percentage of completion basis, contributions from Pan Pacific Singapore Hotel (Panpac), and higher rental income.

Gross rental income for FY2007 was up 17.6 per cent to $226.1 million while gross revenue from sales of properties (held for sale) increased by 131 per cent to $157.6 million.

Gross revenue from hotel operations was $77.9 million.

In the year, UIC’s Marina Centre Holding acquired the remaining 50 per cent interest in Hotel Marina City, which owns the Pan Pacific Singapore hotel.

UIC reported that earnings per share (EPS), excluding net fair value gain, were 9 cents for FY2007, up from 5.5 cents. Including net fair value gain, it was 85.3 cents, up from 35.7 cents.

SingLand, which also released its full-year results for 2007 yesterday reported a fair value gain of $1.46 billion.

Net profit for the year was $1.36 billion, up from $100.4 million a year ago.

Revenue increased by 34 per cent to $271 million for the year. It was attributed to the contribution from Panpac and higher rental.

SingLand said that gross rental income of $187.4 million increased by 20 per cent or $30.6 million.

While net profit was $1.36 billion, SingLand said that $137.5 million was derived from operations and $1.22 billion was from fair value gain on investment properties .

Excluding fair gain, EPS was 33.3 cents per share, up from 24.3 cents. Including fair value gain, EPS was 329.1 cents, up from 24.3 cents.

Singland directors have proposed a first and final dividend of 20 cents per share, amounting to $82.5 million, while UIC directors have proposed a first and final dividend of 3 cents per share amounting to $41.3 million.

Source : Business Times - 1 Mar 2008

CONSTRUCTION and property company United Engineers (UE) said yesterday that its net profit rose five-fold to $176.2 million for 2007 - from 2006’s $34.83 million - on the back of revaluation gains.

UE saw a fair value gain of $186 million on the value of UE Square, as well as fair-value adjustments and gains from the divestment of investments.

Revenue for the year fell 12 per cent to $539.8 million, from $614.1 million the year before. The company’s engineering and construction (E&C) division - from which it made most of its revenue in 2006 and 2007 - reported a 21 per cent slide in revenue to $405.9 million in 2007.

UE said that yearly comparisons of E&C results are not meaningful as progress billings vary from project to project.

The group’s integrated facility management division, which includes property development, lifted revenue 19 per cent to $138.1 million in 2007. This was mainly due to higher rental income and occupancy in an improving economy, UE said.

Earnings per share rose to 80.4 cents, from 16.1 cents in 2006.

The company has declared a dividend of 10 cents a share for 2007, comprising a normal dividend and a special dividend of five cents each. It will also pay a dividend of 7.5 cents for each preference share.

UE, which had an order book of $1.1 billion at end-2007, said that it will continue to carry out large building and infrastructure projects in Singapore and the region in 2008.

‘Additionally, the rapidly developing economies of China, Middle East, Indonesia and Vietnam are expected to contribute to the region’s strong demand for infrastructure development,’ UE said.

UE’s shares closed 12 cents up at $3.84 yesterday.

Source : Business Times - 1 Mar 2008

It posts full-year profit of $725m; bottom line would be $2.8b if fair value gains included.

THE top brass at City Developments Ltd (CDL) yesterday said the property group has ‘the financial muscle to weather the current period of uncertainty even for the next three years’, after announcing a record full-year net profit of $725 million.

The group sold about $6.2 billion of residential projects in 2006 and 2007, which means it has locked in, to a very large extent, handsome profits which have yet to be booked.

These substantial and better-than-expected profits will continue to be recognised progressively based on construction progress. ‘Some will come in 2008, 2009, perhaps also into 2010,’ CDL managing director Kwek Leng Joo said at the group’s results briefing yesterday.

‘Even if the market recovery should take place a little bit later than expected, I think we’ll be OK,’ he added.

In short, the group can afford to delay launches of new residential projects if necessary to ride out the current weak sentiment.

As a major office landlord, CDL will also benefit from the office crunch as many of its key tenant leases are up for renewal between now and 2011 - a period when office supply is expected to be limited.

In the hospitality sector, CDL’s hotel arm Millennium & Copthorne Hotels has a string of hotels with a wide geographical spread - which should act as ‘an insurance against a downturn in any particular geographical area’, CDL executive chairman Kwek Leng Beng said.

The group also has many other attractive assets such as City Square Mall and St Regis Hotel in Singapore which it could potentially sell, boosting its bottom line.

As well, CDL has a healthy balance sheet, with relatively low net gearing of 48 per cent.

CDL posted a 106 per cent jump in group net profit for the year ended Dec 31, to a record $725 million. However, had it adopted the revaluation policy of its peers, its bottom line would have surged to $2.84 billion after factoring in about $2.1 billion of fair value gains on investment properties.

The $2.84 billion net earnings for the year ended Dec 31 would pip the $2.76 billion net profit posted by fellow property giant CapitaLand for the same period.

CDL’s fourth-quarter net profit rose about 71 per cent year-on-year to $235 million, with revenue inching up 3.7 per cent to $765.7 million.

The group has also yet to recognise any profits for One Shenton, The Solitaire, Cliveden at Grange and Wilkie Studio, as these residential projects are still in the initial stage of construction. These projects alone account for $1.7 billion in sales value.

Even if the group defers or paces its launches, it will proceed with the construction of its projects where construction cost had been favourably secured earlier, CDL said.

It may also consider building selected projects when the construction cost stabilises at a reasonable level. It expects that when sentiment improves and the market begins to recover, there will be pent-up demand which the group will be in a position to meet.

The group is planning to launch in the first half of this year some 427 private homes in four Singapore projects - Shelford Suites, a condo on the former Lock Cho Apartments site at Thomson Road, The Quayside Isle @ Sentosa Cove and a condo at Pasir Ris.

In its results statement, CDL also said that it has an investment commitment in the private fund Real Estate Capital Asia Partners, which acquired Jungceylon complex at Phuket’s Patong Beach. This is a 1.5 million sq ft mall which opened for business recently and is next to the Millennium Resort Patong Phuket.

CDL also reckons it has ‘ample time’ to review its strategy for its office portfolio, given improving office rental yields.

Its options include retaining its office properties at a low cost base, monetising the portfolio and/or extracting maximum value by selling its assets wholesale or individually. Another option would be to spin off an office real estate investment trust.

The group has all along been following its conservative policy of stating investment properties at cost less accumulated depreciation and impairment losses. On adoption of Financial Reporting Standard FRS 40, the group continues to state these assets at cost less accumulated depreciation and impairment losses.

Most other Singapore- listed property groups state investment properties at fair value, as permitted by FRS 40.

CDL’s full-year revenue for the year ended Dec 31, 2007, rose 22 per cent to $3.1 billion, also a record for the group.

The group also gave a segmental breakdown of profit before tax, including share of after-tax profit of associates and jointly controlled entities, which showed that pre-tax from property development more than doubled from $225.8 million in 2006 to $506.3 million in 2007.

Pre-tax profit from hotel operations fell from $396.6 million in 2006 to $285.4 million in 2007, mainly because the 2006 figure had included a $150.9 million one-off gain from the sale of long leasehold interests in four Singapore hotels to CDL Hospitality Trusts.

Profit before tax from rental properties more than quadrupled from $30 million in 2006 to $133.6 million in 2007.

CDL is proposing a final dividend of 7.5 cents per share as well as a special final dividend of 12.5 cents per share. Both payouts are tax exempt.

Source : Business Times - 29 Feb 2008