UOL Group has posted a 609 per cent jump in net profit to $618.1 million for the third quarter ended Sept 30.
This is on the back of a $542.1 million gain on acquisition and consolidation arising from accounting for United Industrial Corporation (UIC) as a subsidiary. This follows the purchase of 60 million UIC shares from Haw Par Corp, which was completed on Aug 31.
Following this, UOL's stake in UIC has risen to 48.96 per cent from 44.71 per cent previously.
"The gain on acquisition and consolidation arose from the application of the accounting standards on business combinations which require the acquirer when buying a business to allocate the purchase price into the fair value of the various assets and liabilities acquired from the transaction," UOL said in a statement.
"As a result of this exercise, UOL recorded a fair value uplift of $421.1 million to property, plant and equipment, which would result in higher depreciation in future; and a $82.3 million fair value uplift to development properties which will lead to less development profit to be recognised for certain development projects in future."
The $421.1 million boost is mainly for three hotels in the Marina Centre area - Pan Pacific, Marina Mandarin and Mandarin Oriental, while the $82.3 million gain relates to The Clement Canopy condo in Singapore and Park Eleven project in Shanghai.
Net profit, excluding other gains, amounted to $90.9 million, up 8 per cent. The rise was due mainly to higher profit from property development and investment, and higher contributions from joint-venture entities.
Group revenue climbed 37 per cent to $537.9 million, due mainly to the consolidation of UIC, and the associated and joint venture companies of UOL and UIC, which contributed an additional $144.3 million in revenue.
AT A GLANCE
$537.9 million (+37%)
$618.1 million (+609%)
UOL said Singapore office rents are expected to stabilise on the back of a more positive economic outlook. It said it will redevelop Pan Pacific Orchard hotel into a new hotel with more rooms. The existing hotel will cease operations from the second quarter of next year.
Next year, the group is targeting to launch a condominium with about 750 units on the Raintree Gardens site in Potong Pasir, as well as a condo of about 140 units at 45, Amber Road.
It also expects to launch in 2019 a new project on the Nanak Mansions site along Meyer Road. Acquisition of the site is expected to be completed next month.This project is an equal joint venture with Kheng Leong.