Property developer UOL has booked an 81 per cent drop in full-year earnings to S$147.2 million in 2008. The decline was largely due to fair value losses and impairments.
UOL said revenue climbed 27 per cent over the same period to hit S$899 million. It is expecting the environment for office space to become more difficult in the coming quarters.
UOL said that at the operating level, profit grew by 21 per cent to S$354.2 million. The property developer said this was supported by residential sales which amounted to about S$1 billion for the full year.
It was fair value losses and impairments on existing developments that took the biggest slice from its bottom line.
Gwee Lian Kheng, group chief executive, said: “The impairment loss relates more to offices, which is approximately S$106 million, while the S$37 million is from a hotel development in progress on Upper Pickering Street.”
UOL said it expects the office rental market to continue performing poorly in 2009. According to some industry estimates, office rentals have dropped by some 15 to 20 per cent over the past year. The firm said 2009 will be challenging.
At its results briefing, UOL said little about its bid for United Industrial Corporation, reiterating that financial adjustments would be made if the sale went through during this downturn.
UOL also said that despite the tough times, raising money for its bid on UIC had the support of its banks. Its coffers will also be bolstered by sales over the next two years.
Mr Gwee added: “The cash in 2009, we should see a fair bit of sales, but the main bulk will come in 2010 from those launches we made two years ago.”
For this year, UOL said it plans to concentrate on enhancing its properties to improve value and save costs. But it added that it had no intention to cut manpower.
Source : Channel NewsAsia – 24 Feb 2009