SINGAPORE (May 10): UOL Group reported 1Q19 earnings of $72.4 million, 5% lower from $76.1 million in 1Q18, supported by a higher proportion of overseas profits with higher taxes and profits with higher non-controlling interests.
However, excluding the accounting reversal of $31.9 million relating to UIC consolidation, earnings would have increased by 27% to $104.3 million.
Revenue increased 12% to $741.2 million from $663.7 million a year ago, mainly due to recognition of property development revenue sales at Park Eleven, Shanghai where the remaining 103 units of the 150 units sold at the end of 2018 were handed over in 1Q19.
The revenue increase was partially offset by lower progressive recognition of revenue from development projects, Principal Garden, The Clement Canopy and Botanique at Bartley, which obtained TOP in Dec 2018, Mar 2019 and Apr 2019, respectively.
Revenue from property investments was up 4% to $139.2 million, due to ramped-up occupancy of UIC Building and maiden contribution from 72 Christie Street in Sydney, which was acquired in Dec 2018.
Hotel ownership and operations declined by 6% to $163.4 million, mainly from the closure of Pan Pacific Orchard for redevelopment, and lower revenue from the Group’s hotels in Australia.
Cost of sales was 3% higher y-o-y $427.2 million, bringing 1Q19 gross profit to $314.0 million, 27% higher than $247.5 million in 1Q18.
Gross profit margin for 1Q19 increased to 42% from 37% la year ago.
Finance income more than doubled to $4.3 million from $2.0 million last year, mainly attributable to exchange gains on the group’s borrowings in certain foreign currencies and higher interest income from loan to a joint venture company, Secure Venture Development, for its development project, MEYERHOUSE.
Other operating expenses increased by 160% to $104.7 million from $40.2 million in the previous year, as a result of the amortisation of development property backlog on sold development units in Park Eleven and The Clement Canopy, which was due to the purchase price allocation exercise in relation to the consolidation of UIC Group in Aug 2017 and is amortised as and when development profits are recognised.
As Park Eleven and The Clement Canopy have been completed, all of the group’s development property backlog previously recognised in respect of units sold as of Aug 2017 have been fully amortised.
Overall, group expenses rose 62% y-o-y to $182.3 million.
As at end March, the group’s cash and cash equivalents stood at $715.6 million.
UOL is scheduled to launch two residential projects, the 56-unit MeyerHouse along Meyer Road, and the 1,074-unit Avenue South Residence along Silat Avenue, by 3Q19
On the outlook, UOL expects steady demand and tightening vacancy to support office rents, while retail rents remain under pressure amidst competition from e-commerce and a tight labour market.
Liam Wee Sin, chief executive of UOL, says, “We are pleased with the strong operating results for 1Q19 and are particularly encouraged by the good sales momentum in the last two months for The Tre Ver, which is now over 70% sold. We expect keen interest for Avenue South Residence which capitalises on the Greater Southern Waterfront growth story.”
