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OUE reports 31.5% fall in FY17 earnings to $99 mil on provisions and absence of one-off gains

By PC Lee

/ The Edge Singapore |

February 23, 2018 12:23 PM SGT

SINGAPORE (Feb 23): OUE, the integrated property developer, reported FY17 earnings fell 31.5% to $98.9 million from $144.4 million in FY16, led by lower earnings before interest and tax but partially mitigated by higher fair value gains on investment properties.

Excluding a non-recurring revenue of $205.0 million on the disposal of the extension to Crowne Plaza Changi Airport (CPEX) to OUE Hospitality Real Estate Investment Trust in FY2016, the Group recorded $74.9 million higher revenue in FY17.

Revenue from the Investment Properties Division increased 2.4% to $271.0 million in FY17 due mainly to rental income from OUE Downtown office towers and Downtown Gallery, the latter having commenced operation in May 2017.

The Development Property Division recorded higher revenue from the sale of units at OUE Twin Peaks in FY2017 (Credit: Samuel Isaac Chua/The Edge Singapore)

Revenue from the Hospitality Division rose 9.1% to $220.1 million with increased contribution from both Mandarin Orchard Singapore and Crowne Plaza Changi Airport. Oakwood Premier OUE Singapore, the serviced residences at OUE Downtown which opened in June 2017, also contributed positively to revenue recorded by the Hospitality Division.

The Development Property Division recorded higher revenue from the sale of units at OUE Twin Peaks in FY2017. With the group’s active marketing activities, OUE Twin Peaks was fully sold in October 2017. The Healthcare Division recorded revenue of $33.8 million in FY17, contributed by OUE Lippo Healthcare -- formerly known as International Healthway Corporation. OUE Lippo Healthcare derives its revenue from rental income from its nursing facilities in Japan, and from the operation of the Wuxi New District Phoenix Hospital in Wuxi, Jiangsu, China.

Earnings before interest and tax decreased to $166.1 million in FY17 from $274.6 million in FY16, mainly due to provision for legal and related expenses of $46.0 million recorded by OUE Lippo Healthcare, as well as the absence of $68.7 million non-recurring gain on disposal of CPEX recorded in FY16.

The board of directors has proposed a final cash dividend of 2 cents per share, bringing the total cash dividend for FY2017 to 3 cents per share.

Looking ahead, Dr Stephen Riady, OUE’s Executive Chairman, says, “With the Group’s timely entry into the healthcare sector in early FY2017, it is now positioned to expand into healthcare real estate, which fits strategically into its existing asset portfolio comprising commercial, hospitality, retail and residential properties."

More recently, OUE Lippo Healthcare welcomed a new strategic investor, Tokyo Stock Exchange-listed ITOCHU Corporation (ITOCHU), which took a 25.3% stake in the company.

“As OUE Lippo Healthcare embarks on its growth path to becoming a leading healthcare real estate company in Asia, we will be able to tap into ITOCHU’s extensive network in Asia. We see tremendous growth potential in this sector, given the rapidly ageing population and the consequent rising demand for healthcare in Asia,” says Riady.

This story, written by PC Lee for The Edge Singapore, first appeared on Feb 23.

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