OUE reports 2018 net profit dropped 89 percent on goodwill impairment

The OUE Bayfront building in Signapore’s central business district. Credit: Shenton WireThe OUE Bayfront building in Signapore’s central business district. Credit: Shenton Wire

Singapore-listed property company OUE reported on Tuesday its full year net profit dropped 89.4 percent on-year to S$10.0 million on impairment of goodwill for its investment in OUE Lippo Healthcare and lower net fair value gains on investment properties.

However, earnings before interest and tax for the full year rose 9.9 percent to S$182.5 million on higher contributions from the hospitality division and higher dividend income, partly offset by lower contributions from development property, OUE said in a filing to SGX late on Tuesday.

Revenue for 2018 fell 14.7 percent on-year to S$642.9 million, as higher contributions from investment properties and the hospitality division failed to offset declines from development property and healthcare, OUE said.

The company proposed a final dividend of 1.0 Singapore cent a share and special dividend of 11.0 Singapore cents a share, bringing the 2018 total dividend, including the 1.0 Singapore cent interim dividend, to 13.0 Singapore cents.

Dividends proposed

“We are satisfied with the group’s performance in FY2018 and are pleased to share with our shareholders the value unlocked on office components of OUE Downtown via a special dividend,” Stephen Riady, OUE’s executive chairman, said in the statement.

In September, OUE Commercial REIT announced plans to acquire the office components of OUE Downtown in Singapore’s central business district from OUE for S$908.0 million.

“Meanwhile, our growing recurring income from a well-diversified portfolio continues to provide us greater resilience and flexibility as we work towards delivering sustainable shareholder return in the long term,” Riady added.

Development property division revenue fell by S$143.6 million to S$65.9 million for the year on lower sales completed for units sold under deferred payment plans during 2018, OUE said.

The healthcare division, which is the contribution from OUE Lippo Healthcare, fell by S$5.0 million on-year to S$28.8 million for 2018, on lower contributions from China operations, the filing said.

Investment properties’ revenue increased 1.3 percent on-year to S$274.4 million for 2018, mainly on a full year contribution of rental income from the Downtown Gallery project, which began operations in May 2017, OUE said.

The hospitality division posted a 7.5 percent on-year revenue rise to S$236.6 million for 2018 on higher contributions from Oakwood Premier OUE Singapore, which is the serviced residences at OUE Downtown, which opened in June 2017, it said.

The net fair value of investment properties fell 25.1 percent on-year to S$83.98 million, while the impairment loss on intangible assets and goodwill was S$19.16 million, OUE said.

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