Published February 25, 2009

UOL's 2008 earnings sink 81% on writedowns

By UMA SHANKARI

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UOL Group said yesterday its 2008 earnings sank 81 per cent as it wrote down a development project and recorded a revaluation loss on investment properties.

Net profit fell to $147.2 million, from $758.9 million in 2007. The weaker earnings came despite a 27 per cent jump in revenue to $899.2 million, from $709.1 million in 2007.

The bottom line was hit by a $106.8 million fair value loss on investment properties, compared with a gain of $590.5 million in 2007. The developer also took an impairment charge of $37 million for its Upper Pickering hotel project, as the projected carrying value exceeded estimated fair value.

Earnings per share fell to 18.5 cents, from 95.4 cents a year ago. But UOL's turnover rose as it booked progressive revenue recognition from home sales, including from units at Panorama and Breeze by the East, which were launched in 2008.

Revenue from property investments also improved on the back of higher rents and a contribution from Pan Pacific Serviced Suites which opened in April 2008.

Revenue from hotel operations was higher due to higher room rates at hotels in Singapore, Australia and Vietnam.

UOL's gearing ratio increased to 0.42 - from 0.21 at end-2007 - as its cash holdings fell from $406 million to $264 million.

In a bid to conserve cash, UOL said it is cutting its dividend payout for the year to 7.5 cents a share. In 2007 it paid an ordinary dividend of 10 cents a share and a special dividend of five cents a share.

This year, three of UOL's residential projects - Pavilion 11, One Amber and One North Residences - will receive temporary occupation permits (TOPs). The company expects to book significant revenue from these projects as buyers have to pay the bulk of the purchase price when a project obtains TOP.

UOL hopes to launch at least two projects this year. The 646-unit Double Bay condo in Simei is set to be rolled out in March. UOL, which has a 60 per cent stake in the project, said units there will be priced to attract HDB upgraders. It also hopes to launch a project in its landbank at Upper Thomson.

Separately, UOL subsidiary Hotel Plaza, which also released its results yesterday, said 2008 earnings fell 85 per cent to $12.8 million, from $85 million in 2007.

This was despite a rise in revenue, which went up 9 per cent to $315.2 million, from $290.2 million in 2007. The hotel company was hit by the $37 million impairment charge for the Upper Pickering development. Hotel Plaza also registered a fair value loss of $9.8 million - versus a gain of $49.3 million in 2007 - on its investment properties.

2009 will be a challenging year, said UOL chief executive Gwee Lian Kheng. 'In this uncertain climate we will focus on revenue protection and cost management while we look out for distressed assets that will enhance our long-term earnings capability,' he added.

UOL shares lost three cents to end at $1.66 yesterday, while Hotel Plaza closed unchanged at $1.06.