UOL full-year net profit slips 51% on one-off gain in previous year

UOL Group on Tuesday posted a 51 per cent drop in group net profit to S$433.7 million for the year ended Dec 31 from S$880.2 million in the preceding year, due mainly to a S$535.6 million gain recognised upon the consolidation of the United Industrial Corporation group (UIC) in FY2017.

Excluding this one-off gain, net profit would have risen 26 per cent.

Group revenue climbed 13 per cent to S$2.4 billion in FY2018 due mainly to the full-year consolidation of revenue of the expanded group.

Revenue from property development eased 15 per cent to S$989.3 million mainly from the completion of Alex Residences and Principal Garden in September 2017 and December 2018 respectively. The revenue drop was partially offset by Amber45, which was launched in May 2018, and higher revenue from The Clement Canopy as well as Park Eleven in Shanghai.

Revenue from property investments increased 60 per cent to S$541 million following the consolidation of UIC's investment properties and 120 Holborn Island. Revenue from hotel ownership and operations, including those of UIC's hotels, expanded 29 per cent to S$678.7 million, while revenue from management services and technologies climbed 163 per cent to S$140.1 million, mostly from the technology arm of UIC.

The increases arose mainly from full-year consolidation of revenue for FY2018 compared to four months for FY2017. Dividend income grew 62 per cent to S$48.2 million on the back of higher dividends from United Overseas Bank in FY2018.

Group pre-tax profit before fair value and other gains/(losses) rose 18 per cent to S$595.2 million, due mainly to higher profits from property investments and hotel operations with the full-year contributions from the consolidation of UIC and higher dividend income.

Share of profit from associated and joint-venture companies declined 95 per cent to S$5.6 million as UIC and the common associated and joint-venture companies with UIC were no longer equity accounted but were consolidated with those of the group from September 2017.

Earnings per share declined to 51.49 Singapore cents in FY2018 from 107.50 Singapore cents in FY2017.

Net asset value per share rose to S$11.45 as at Dec 31, 2018 from S$11.23 as at Dec 31, 2017.

The counter closed two Singapore cents lower at S$6.77 on Tuesday before the results were announced.

The directors have proposed a first-and-final dividend of 17.5 Singapore cents per share for FY2018, unchanged from the previous year.

UOL Group chief executive Liam Wee Sin said: "With the property cooling measures imposed last year, land prices will moderate and en bloc sales will have very limited traction. However, projects with land price advantage, strong product differentiation and in locations with limited supply will see healthy take-up."

Singapore office rents are expected to appreciate further amid tight supply. "With the group's broadened office portfolio in the CBD, we are positioned to ride the continued wave of growth in the office market," he added.

In line with its diversification strategy, the group has acquired investment properties overseas to further strengthen its recurrent income stream and will continue to deploy its capital overseas.

"The challenges that we face in the market are multifaceted. Going forward, with the consolidation of UIC, we will play to our strengths of scale for office portfolio, strong execution for our residential projects, a shift towards experiential appeal for our retail malls and expansion of our hospitality footprint," said Mr Liam.