OUE reports $92.2m full-year loss

OVERSEAS Union Enterprise (OUE), controlled by the Riady family’s Lippo group and Malaysian tycoon Ananda Krishnan Tatparamandan, has posted a net loss of $92.2 million for the year ended Dec 31, 2009, against a $40.9 million net profit in 2008.

The group did not provide fourth quarter results in its statement.

Earlier this week, OUE issued a warning that it expected to post a loss for FY2009 due to a fair value writedown on an investment property of an associated company and an impairment charge on the group’s development properties, arising from a revaluation of the properties at the end of last year.

OUE’s results statement yesterday showed a $99.9 million share of net fair value loss on investment property of an associated company. Market watchers believe this to be OUB Centre at Raffles Place.

In addition, OUE recognised $23.8 million fair value loss on investment properties of the group plus a $30.9 million impairment loss on development properties. The latter item is for The Grangeford at Leonie Hill Road, analysts say.

OUE’s latest valuation announcement as at Dec 31, 2009, listed Grangeford’s valuation at $533.8 million – about $29 million lower than the $562.8 million at end-2008. Both valuations were based on the site having 99-year leasehold tenure from 1974.

In its results statement, OUE did not identify the properties on which it had booked fair value losses and impairments. However, it released the valuations for the group’s properties at end-2009, which showed that the group’s redevelopment site at Collyer Quay comprising the former Overseas Union House (OUH) and the Change Alley Aerial Plaza (CAAP) was valued at $526.9 million at end-2009 based on the site’s lease being topped up to a fresh 99-year term from Nov 12, 2007, by the Singapore Land Authority.

This is lower than the $596.8 million the property was appraised for at end-2008 based on the earlier residual lease term of 99 years from February 1968 for OUH and 99 years from June 1970 for CAAP.

Mandarin Gallery at Orchard Road, which was opened after a major revamp in November last year, was worth $418 million at end-2009 – $193 million above the $225 million valuation at end-2008. For both valuations, the lease tenure on the site issued by The Ngee Ann Kongsi is 99 years from July 1957.

The Meritus Mandarin Singapore hotel – based on the same leasehold tenure – was valued at $800 million at Dec 31, 2009, reflecting an appreciation of $20 million from the end-2008 valuation of $780 million.

No dividend has been recommended.

OUE’s results statement yesterday showed that group revenue for FY2009 dropped 10.3 per cent to $137.5 million largely due to lower revenue from the hospitality division, resulting from the global recession and the refurbishment works at Mandarin Orchard.

The group’s rental income from investment properties was $1.5 million in 2009 (2008: $700,000) as Mandarin Gallery began operations in November last year. Overseas Union House (OUH)/Change Alley Aerial Plaza is still undergoing development.

The new project on the OUH site, 50 Collyer Quay, is expected to receive Temporary Occupation Permit in Q4 this year, BT reported this week. The 18-storey office block will have about 400,000 sq ft of net lettable area.

OUE’s cash and cash equivalents stood at about $198 million at end-2009, higher than the $182.8 million at end-2008. Net asset value per share fell from $10.87 to $10.37.

The counter ended yesterday two cents higher at $9.02.

Source : Business Times – 13 Feb 2010