Published May 13, 2009

UOL gets big boost from negative goodwill

Its Q1 net profit rises over seven-fold to $331.8m with UIC shares acquisition

By JOYCE HOOI

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UOL Group posted a more than seven-fold year-on- year rise in first-quarter net profit to $331.8 million - from $42.85 million a year ago - largely due to gains of $277.7 million from negative goodwill recognition relating to the acquisition of United Industrial Corporation (UIC) shares.

Higher revenue came from property development, with progressive recognition of revenue from six projects.

For the three months ended March 31, the group's operating profit rose 18 per cent year-on-year to $70.8 million on the back of a 22 per cent increase in revenue to $196.7 million.

Higher revenue was driven by its property development activities, with progressive recognition of revenue from six residential projects.

The group also reported higher revenue from its property investments due to higher average rental rates from office space and retail shops, as well as contribution from the Pan Pacific Serviced Suites, which opened in April last year.

Its subsidiary, Pan Pacific Hotels Group, formerly known as Hotel Plaza Ltd, posted a 24 per cent decline in net profit, from $14.5 million for the first quarter a year ago to $11 million for Q1 2009.

The hotel group reported a 13 per cent drop in revenue to $66.5 million for the quarter, due to weaker performance from the group's hotels, which was partially offset by revenue from management services after the acquisition of Pan Pacific operations last October.

'The global economic downturn, coupled with the outbreak of the H1N1 flu virus will have a negative impact on the tourism sector in Singapore and the Asia Pacific region,' Pan Pacific Hotels Group said in a statement yesterday.

UOL Group had a similarly cautious outlook. 'Against a backdrop of economic slowdown and increase in new supply, occupancy and rental rates of office and retail space in Singapore will face further downward pressure.

'Although sales of lower-end residential units in first-quarter 2009 were encouraging, buying sentiment remains cautious,' the group said yesterday.

UOL Group's earnings per share rose from 5.38 cents in Q1 2008 to 41.68 cents in Q1 2009, while Pan Pacific Hotels Group's earnings per share fell from 2.42 cents to 1.83 cents in the same periods.

UOL Group's share price fell two cents in trading yesterday to $2.65, and Pan Pacific Hotels Group's counter closed 1.5 cents lower at $0.955.