CapitaLand achieves 1Q2011 net profit of S$101.5 million

Singapore, 26 April 2011 – CapitaLand has achieved net profit of S$101.5 million in 1Q2011, 241% higher than the restated 1Q2010 net profit of S$29.8 million.

The 2010 results were required to be restated to be comparable to the current year’s results as a consequence of the adoption of the INT FRS 115 accounting policy which was effective on 1 January 2011.

Revenue in 1Q2011 was S$611.5 million, 39% higher than 1Q2010. This was mainly due to higher contributions from the Group’s development projects. These include residential projects such as The Interlace and The Wharf Residence in Singapore, Beau Residences and The Riviera in China; as well as commercial, industrial and residential projects in Australia.

Group Earnings before Interest and Tax (EBIT) for 1Q2011 was S$283.5 million, 46% higher than that achieved in 1Q2010. This was mainly due to higher profits from development projects, higher portfolio gains and lower foreign exchange losses.

EBIT from overseas operations represented 54%, or S$152.0 million, of the Group’s total EBIT for 1Q2011. China recorded higher EBIT due to higher development profits as well as portfolio gains from the realisation of available-for-sale reserves in respect of LFIE Holding.

In respect of INT FRS 115 which became effective on 1 January 2011, CapitaLand is of the view that the implementation of this standard will result in the accounting recognition of the Group’s overseas development projects in a manner that may not reflect the sales and construction progress of those projects. In particular, the new standard will result in income recognition that is lumpy and back-ended, thus creating more volatility in profit recognition even though the underlying projects’ cashflows have not changed. It also does not reflect the gradual reduction of risk and the increase in economic value from these underlying projects as they are built and sold over their development phases.