UOL Profit Doubles On Valuation Gains

Source : The Business Times, February 21, 2008

Group to launch 3 freehold condos this year even as it sees cautious market

UOL Group, which yesterday posted a 124 per cent jump in group net profit to $758.9 million on the back of $590.5 million in fair value gain on investment properties, is planning to launch three freehold condos this year.

They are the 100-unit Nassim Park Residences, an 88-unit boutique development named Breeze by the East, and a 401-unit condo on the former Green Meadows site along Upper Thomson Road. opposite Peirce Reservoir.

In its outlook for the current year, UOL said: 'Following the strong price appreciation in 2007 and with the removal of deferred payment scheme and the turmoil in the global financial markets, the residential property market has turned cautious and any price appreciation is expected to be modest.'

However, the group's hotels should benefit from high occupancy and improved average room rates, it added.

The group also has exposure to the office market through Novena Square, United Square, Odeon Towers and Faber House, which analysts say should provide UOL with upside from positive rental reversions.

UOL also owns Velocity and United Square retail malls.

The group did not list its Q4 performance, but comparing the full-year results with that for the first nine months, net profit for the quarter ended Dec 31, 2007 came to $332.1 million, up 43.3 per cent from the same year-ago period.

On its latest full-year performance, UOL said that even excluding fair value gains and exceptional items, profit surged 72 per cent to $273.2 million. The increase came from higher income from property development, quoted investments, property investments and hotel operations.

'Operating profit from property development grew by 117 per cent compared to 2006, while operating profit from hotel operations and property investments increased by 45 per cent and 10 per cent respectively,' UOL said.

Full-year group revenue rose 18 per cent to $709.1 million. UOL said that it benefited from the progressive recognition of revenues from the sale of residential projects like Duchess Residences, Pavilion 11, Southbank, and The Regency at Tiong Bahru.

And despite the exclusion of revenue from Parkroyal on Coleman Street which was sold in December 2006, revenue from hotel operations was higher, due to improved performance of the group's hotels in Australia, Singapore and Vietnam and the inclusion of revenues from Pan Pacific Orchard (formerly Negara on Claymore) and Pan Pacific Hotels & Resorts Pte Ltd, which were acquired in June 2006 and July 2007 respectively.

UOL's net asset value per share rose to $4.96 as at Dec 31, 2007 from $3.97 as at end-2006 on the back of capital appreciation of office and retail properties and quoted investments.

UOL's listed hotel arm Hotel Plaza reported a 26 per cent drop in net earnings for the year ended Dec 31, 2007 to nearly $85 million - due to the absence of exceptional gains from the sale of Parkroyal on Coleman Street, although this was partly offset by better operating performance from the group's hotels, as well as lower interest expense and the recognition of $49.3 million in fair value gain on investment properties.

Hotel Plaza's group revenue increased a mere one per cent to $290.2 million, again due to the absence of contribution from Parkroyal on Coleman Street which was divested in late 2006. Hotel Plaza's Q4 net earnings - based on comparing the full-year and nine-month results - fell 52.1 per cent to $44.8 million.

Hotel Plaza is proposing a five-cent per share (one-tier) first & final dividend. UOL shareholders will receive a 10-cent per share first & final dividend and a five-cent per share special dividend. Both payouts are one tier.