United Engineers' FY16 profit rises 38% on divestment gains

UNITED Engineers on Monday reported a 38 per cent year-on-year surge in full-year net profit to S$140.6 million, lifted by a S$113.2 million gain from discontinued operations in 2016, including divestment gains of about S$123 million.

The group's attributable profit on continuing operations plunged 62 per cent to S$27.4 million in 2016. This translates to earnings per share of 4.3 Singapore cents, down from 11.2 Singapore cents in the previous year.

Revenue for the 12 months ended Dec 31, 2016, came in at S$479.7 million, down 44 per cent from a year ago, mainly due to lower revenue from property development following the completion of Eight Riversuites.

Cost of sales more than halved to S$286 million.

A first and final dividend of five Singapore cents per share has been declared, as well as a special dividend of seven Singapore cents a share. The group also said there is a preference dividend of 7.5 Singapore cents per preference share.

In its outlook, United Engineers said the global economic and geopolitical uncertainties as well as the weaker economic outlook in Singapore will continue to weigh on the sentiment of the property markets in Singapore.

"The group's China property division continues to face challenging operating conditions against the backdrop of slower economic growth and patchy recovery in the property market in China.

"The accounting treatment on revenue recognition for certain projects using the completion-of-construction method will result in volatility in the recognition of revenues and profits.

"Rental income from the group's portfolio of investment properties will help reduce this volatility but the group is likely to face downward pressure on rental income in Singapore given the growing supply of office, industrial and retail space amid softening demand."