United Engineers Limited

Email This Print This

Q2 2017 Financial Statement Announcement

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Income Statement

Profit and loss

Comprehensive Income Statement

Comprehensive Income Statement

Statement of Financial Position

Balance Sheet

Review of Performance

Overview

Q2 2017 compared with Q2 2016

Revenue increased 9% to $121.9 million in Q2 2017 from $111.7 million in Q2 2016. This was mainly due to higher revenue from sales of property units in China. As a result, gross profit increased 2% to $47.2 million in Q2 2017.

Interest income increased to $0.8 million in Q2 2017 from $0.3 million in Q2 2016 mainly due to higher interest income from fixed deposits.

Other income increased to $46.2 million in Q2 2017 from $5.3 million in Q2 2016 mainly due to revaluation gains of $45.4 million from the Group's investment properties, which was partially offset by the absence of a gain of $3.9 million recorded in Q2 2016 in relation to the disposal of an available-for-sale financial asset.

Finance costs decreased 41% to $5.3 million in Q2 2017 from $9.0 million in Q2 2016 mainly due to lower borrowings.

Other expenses increased to $9.1 million in Q2 2017 from $1.4 million in Q2 2016 mainly due to impairment loss in relation to Shenyang Orchard Summer Palace project.

Share of profit from equity-accounted associates and joint ventures increased 29% to $1.7 million in Q2 2017 from $1.3 million in Q2 2016. The higher share of profit in Q2 2017 was mainly due to higher contribution from the overseas associates.

Income tax expense increased to $5.9 million in Q2 2017 from $0.1 million in Q2 2016. The higher income tax expense in Q2 2017 was mainly due to higher losses incurred by certain overseas subsidiaries which were not available for group relief. The lower income tax expense in Q2 2016 was mainly due to the write-back of over provision of prior years' income tax.

6 months 2017 (6M 2017) compared with 6 months 2016 (6M 2016)

Revenue decreased 13% to $223.3 million in 6M 2017 from $256.5 million in 6M 2016 mainly due to lower revenue from property development following the completion of Eight Riversuites in 2016. As a result, gross profit decreased 6% to $92.0 million in 6M 2017.

Interest income increased to $1.6 million in 6M 2017 from $0.7 million in 6M 2016 mainly due to higher interest income from fixed deposits.

Other income increased to $47.1 million in 6M 2017 from $6.4 million in 6M 2016 mainly due to revaluation gains of $45.4 million from the Group's investment properties, which was partially offset by the absence of a gain of $3.9 million recorded in 6M 2016 in relation to the disposal of an available-for-sale financial asset.

Finance costs decreased 39% to $11.7 million in 6M 2017 from $19.1 million in 6M 2016 mainly due to lower borrowings.

Other expenses increased to $11.2 million in 6M 2017 from $2.9 million in 6M 2016 mainly due to impairment loss in relation to Shenyang Orchard Summer Palace project.

Share of profit from equity-accounted associates and joint ventures decreased 24% to $2.2 million in 6M 2017 from $2.9 million in 6M 2016 mainly due to lower contribution from the overseas associates and joint ventures.

Income tax expense increased to $7.5 million in 6M 2017 from $1.6 million in 6M 2016. The higher income tax expense in 6M 2017 was mainly due to higher losses incurred by certain overseas subsidiaries which were not available for group relief. The lower income tax expense in 6M 2016 was mainly due to the write-back of over provision of prior years' income tax.

The Group's attributable profit on continuing operations increased to $45.3 million in Q2 2017 from $11.2 million in Q2 2016. For 6M 2017, attributable profit on continuing operations increased to $53.6 million in 6M 2017 from $20.7 million in 6M 2016.

Financial position review

  • Current trade and other receivables decreased by $123 million mainly due to the collection of balance receivables from Eight Riversuites project upon obtaining the Certificate of Statutory Completion.
  • Total borrowings decreased by $341 million mainly due to:
    • the repayment of the $250 million 4.2% p.a. fixed rate notes previously issued pursuant to the $500 million Multicurrency Medium Term Note Programme; and
    • the partial repayment of bank loan by a subsidiary.

Cash flow review

As at 30 June 2017, the Group had cash and cash equivalents of $327 million. In 6M 2017, the Group received approximately $116 million mainly from the collection of remaining receivables upon obtaining the Certificate of Statutory Completion for Eight Riversuites project. Separately, the Group utilised $74 million for dividend payments and $533 million for the repayment of external borrowings. Apart from the above, the Group's components of cash flow and changes in these components from 31 December 2016 to 30 June 2017 were mainly due to the Group's other ongoing operations.

Operation review

Property Rental & Hospitality

Revenue decreased 2% to $32.8 million in Q2 2017 from $33.3 million in Q2 2016 and 2% to $65.6 million in 6M 2017 from $67.2 million in 6M 2016. Operating profit before interest increased 176% to $59.6 million in Q2 2017 from $21.6 million in Q2 2016 and increased 93% to $76.8 million in 6M 2017 from $39.7 million in 6M 2016 mainly due to revaluation gains from the Group's investment properties. The higher operating profit was partially offset by lower contribution from UE Bizhub Tower and UE Bizhub West as well as the absence of a gain of $3.9 million recorded in Q2 2016 in relation to the disposal of an available-for-sale financial asset.

Property Development

Revenue increased 145% to $18.6 million in Q2 2017 from $7.6 million in Q2 2016 mainly due to higher revenue from the China's operations. Revenue decreased 48% to $26.8 million in 6M 2017 from $51.3 million in 6M 2016 mainly due to lower revenue recognition from the property sales at Eight Riversuites. Operating loss before interest increased 200% to $10.8 million in Q2 2017 from $3.6 million in Q2 2016 and 245% to $13.8 million in 6M 2017 from $4.0 million in 6M 2016 mainly due to impairment loss on Shenyang Orchard Summer Palace project and lower profit contribution from Eight Riversuites.

Engineering & Distribution

Revenue increased 4% to $35.0 million in Q2 2017 from $33.5 million in Q2 2016 mainly due to higher revenue from the system integration business in Malaysia which was in turn, partially offset by lower distribution revenue. Despite higher revenue from the Engineering division, revenue for 6M 2017 decreased 2% to $62.8 million from $64.0 million in 6M 2016 mainly due to reduction in distribution revenue. Operating profit before interest decreased 44% to $1.4 million in Q2 2017 from $2.5 million in Q2 2016 and 53% to $2.2 million in 6M 2017 from $4.7 million in 6M 2016 mainly due to lower profit contribution from the Distribution division.

Manufacturing

Revenue decreased 5% to $20.9 million in Q2 2017 from $22.1 million in Q2 2016 and 5% to $42.2 million in 6M 2017 from $44.5 million in 6M 2016. Operating profit before interest decreased 26% to $1.4 million in Q2 2017 from $1.9 million in Q2 2016 and 41% to $2.2 million in 6M 2017 from $3.7 million in 6M 2016 mainly due to lower revenue and foreign exchange loss.

Commentary

Global economic and geopolitical uncertainties may continue to weigh on the sentiment of the property market in Singapore amidst early signs of an inflexion in the office and residential markets. Hence, the Group is likely to face some downward pressure on rental income in Singapore. The Group's China Property division continues to operate in challenging conditions against the backdrop of slower economic growth and patchy recovery in the property market in Shenyang, Liaoning Province. Nonetheless, Chengdu Orchard Villa Phase 4 development which is almost fully sold will contribute to the Group's performance over the next 12 months.

Subsequent event

On 13 July 2017, United Overseas Bank Limited ("UOB"), for and on behalf of Yanlord Perennial Investment (Singapore) Pte. Ltd. (the "Offeror") announced that:

  1. a mandatory conditional cash offer (the "UEL Ordinary Share Offer") for all the issued and paid-up ordinary stock units in the capital of United Engineers Limited (the "Company"), other than those already owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with the Offeror, at $2.60 per ordinary stock unit;
  2. a comparable offer for all the issued and paid-up preference shares in the capital of the Company, other than those already owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with the Offeror, at $2.60 per preference share (the "UEL Preference Share Offer"); and
  3. (in the event that the UEL Ordinary Share Offer becomes unconditional as to acceptances or the Offeror acquires statutory control of the Company) the mandatory unconditional cash offer to be made by the Offeror pursuant to the chain principle for all the issued and paid-up ordinary shares in the capital of WBL Corporation Limited, other than those already owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with the Offeror, at $2.07 per ordinary share.

On 1 August 2017, UOB, for and on behalf of the Offeror, issued the formal document in relation to the UEL Ordinary Share Offer and the UEL Preference Share Offer.