Higher fair value, other gains boost UOL's FY2019 earnings

HIGHER fair value and other gains boosted UOL's net profit by 14 per cent to S$478.8 million for the full year ended Dec 31, while revenue dipped 5 per cent to S$2.3 billion, the company said on Friday.

The property developer saw higher attributable fair value and other gains of S$165.1 million compared with S$85.3 million in the previous year. Other gains of S$28.1 million came mostly from the sale of Pan Pacific Suzhou, versus restated other losses of S$34.4 million a year ago.

Fair-value gains on investment properties, up 48 per cent to S$220.3 million, were attributable to higher valuation of its two London properties, 120 Holborn Island and 110 High Holborn, office towers at United Square and Novena Square, as well as subsidiary United Industrial Corporation's (UIC) portfolio - Singapore Land Tower, The Gateway, Clifford Centre and UIC Building. UOL has a 50.13 per cent stake in UIC.

Group revenue fell, due mainly to lower progressive recognition of revenue from development projects, such as Principal Garden, The Clement Canopy and Botanique at Bartley which obtained their temporary occupation permits in 2018 and 2019.

Hotel operations also recorded a 4 per cent decline from the closure of Pan Pacific Orchard for redevelopment and lower contributions from Parkroyal Collection Marina Bay, which has been rebranded from Marina Mandarin Singapore, as well as Parkroyal Darling Harbour.

The sale of Pan Pacific Suzhou in December 2019 and refurbishments at Parkroyal on Kitchener Road also led to the lower turnover.

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Revenue from management services and technologies was 25 per cent higher at S$175.6 million, mainly from UIC's sales of information technology and related services, while dividend income was 15 per cent higher mainly from the group's investments in United Overseas Bank and Haw Par Corporation.

The group's directors have proposed a first and final dividend of 17.5 cents per share, unchanged from a year ago.

UOL Group CEO Liam Wee Sin said the company sees challenges ahead for this year due to the Covid-19 outbreak.

Its hotel occupancies across the board currently range about 40 to 50 per cent. It has cut banquet contract staff and all overtime bookings, and is using the downtime to do renovations, preventive maintenance and deep-cleaning. In China, it has closed two of the group's hotels, Pan Pacific Suzhou and Pan Pacific Beijing, which it operates for third parties.

Its retail malls also saw a 20 to 30 per cent drop in footfall when the virus broke, but last weekend, some malls saw a rebound. The situation has not improved at Velocity and Marina Square, but is back to pre-Covid-19 levels at Kinex (formerly OneKM Shopping Mall) and United Square.

Mr Liam said: "For now, it is our hope that the Covid-19 outbreak can be contained as soon as possible so that businesses can return to normalcy."

He noted that while buying sentiment for new homes is expected to be dampened by the virus outbreak, home buyers seem to be able to smell good deals "even with masks on", referring to the brisk sales at Parc Canberra and The M recently.

UOL on Friday also said that after considering the compliance efforts needed for quarterly reporting, it has decided to switch to announcing its financial statements on a half-yearly basis instead.

UOL shares closed 38 cents or 4.9 per cent lower at S$7.37 on Friday amid a broad market sell-off.