OUE's full-year profits slump 31.5% on lower revenue, surge in certain expenses

OUE Limited's full-year net profit last year fell 31.5 per cent to S$98.9 million amid a slump in revenue and a surge in administrative and other operating expenses.

Revenue for the period ended Dec 31, 2017 slipped 14.7 per cent to S$754.1 million.

Excluding a non-recurring revenue of S$205 million on the disposal of the extension to Crowne Plaza Changi Airport to OUE Hospitality Reit in fiscal 2016, the group would have recorded a S$74.9 million increase in revenue in fiscal 2017.

Revenue from the investment properties division rose 2.4 per cent to S$271 million in fiscal 2017, due mainly to rental income from OUE Downtown office towers and Downtown Gallery, the latter having commenced operation in May 2017.

The group's revenue from the hospitality division also rose 9.1 per cent to S$220.1 million, amid increased contribution from both Mandarin Orchard Singapore and Crowne Plaza Changi Airport. Oakwood Premier OUE Singapore, the serviced residences at OUE Downtown which opened in June 2017, also contributed positively.

The development property division recorded higher revenue from the sale of units at OUE Twin Peaks last year. This luxury project was fully sold in October 2017.

As for the new healthcare division, it recorded revenue of S$33.8 million in fiscal 2017, contributed by OUE Lippo Healthcare Limited, which derives its revenue from rental income from its nursing facilities in Japan, and from the operation of the Wuxi New District Phoenix Hospital in Wuxi, Jiangsu, China.

But administrative expenses also shot up by 48.4 per cent to S$83.72 million with the consolidation of administrative expenses of OUE Lippo Healthcare, the former International Healthway Corporation Limited that became a subsidiary of the group on March 2, 2017.

Other operating expenses increased by S$46.5 million to S$58.8 million in fiscal 2017. The increase was mainly due to a S$46 million provision for legal and related expenses by OUE Lippo Healthcare.

The board of directors has proposed a final cash dividend of 2 Singapore cents per share, unchanged from a year ago. This brought the total cash dividend for fiscal 2017 to 3 Singapore cents per share.

"Going forward, contributions from Downtown Gallery and Oakwood Premier OUE Singapore will further increase our recurring income base and enhance shareholder value," said OUE executive chairman Stephen Riady.

"With the group's timely entry into the healthcare sector in early FY2017, it is now positioned to expand into healthcare real estate, which fits strategically into its existing asset portfolio comprising commercial, hospitality, retail and residential properties," he added.

More recently, OUE Lippo Healthcare welcomed a new strategic investor, Tokyo Stock Exchange-listed ITOCHU Corporation, which took a 25.3 per cent stake in the company. Mr Riady noted that OUE Lippo Healthcare will be able to tap into Itochu's extensive network in Asia.