Published August 13, 2009

UOL posts $20.1m loss for Q2

Its subsidiary Pan Pacific Hotels reports 64% year-on-year decline in Q2 earnings to $5.9m


UOL Group has posted a $20.1 million net loss for the second quarter ended June 30, 2009, against a $144.96 million net profit a year earlier.

The reversal was due partly to a $76.96 million fair-value loss on investment properties, due mainly to a drop in the value of offices, chiefly at Novena Square and United Square.

Operationally, the group was profitable, with property development revenue rising 48 per cent year on year and property investment revenue rising 16 per cent over the same period.

But income from hotel operations fell, dividend income was lower following the reclassification of United Industrial Corporation (UIC) as an associated company, interest expenses rose and profit share from associated companies dropped.

The last item reflects UIC's net loss for the period.

For the first half, UOL's net profit rose 66 per cent year on year to $311.6 million, thanks to a $277.7 million negative goodwill item from the acquisition of UIC shares.

UOL subsidiary Pan Pacific Hotels Group - formerly Hotel Plaza - posted a 64 per cent year-on-year decline in Q2 net earnings to $5.9 million.

Q2 revenue slipped 18 per cent to $65.8 million, due to a weaker performance from the group's hotels, though this was partly offset by the inclusion of revenue from hotel management services following the acquisition of the Pan Pacific operations in October 2008.

H1 net profit was down 45 per cent year on year to $16.9 million on a 16 per cent drop in revenue.

Pan Pacific Hotels' net asset value (NAV) per share was $1.26 at June 30, 2009, up two cents from Dec 31, 2008. The counter closed unchanged at $1.45 yesterday.

UOL ended four cents lower at $3.42. Its NAV per share rose from $4.26 at end-2008 to $4.93 at end-June 2009.

The increase was due mainly to fair-value gains on available-for-sale financial assets and the recognition of negative goodwill and capital reserves arising from the acquisition of an additional interest in UIC, offset by adjustments for share buy-back and dividends declared.

The group's interest in UIC increased from 14.3 per cent at Dec 31, 2008 to 31.6 per cent as at June 30, 2009.

UOL and Pan Pacific Hotels maintained their policies of not paying an interim dividend.

'With substantial new supply of office space in the pipeline in Singapore, rentals are likely to face further downward pressure. Retail rentals may be affected by new mall completions,' UOL said.

'Sentiment in the residential property market has improved following the surge in buying activity in recent months, especially for the mass and mid-market category.

'The outbreak of H1N1 flu and the global slowdown will continue to affect the hospitality industry in Singapore and the Asia-Pacific region,' UOL added

The group has sold 322 units at its freehold Meadows @ Peirce condo on Upper Thomson Road this quarter. The project has a total of 479 units.