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Full Year Financial Statement Announcement For The Financial Period Ended 31 December 2017

Financials Archive

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Income Statement

Profit and loss

Comprehensive Income Statement

Comprehensive Income Statement

Statement of Financial Position

Balance Sheet

Review of Performance

Overview

FY2017 compared with FY2016

Revenue increased 12% to $539.4 million in 2017 from $479.7 million in 2016 mainly due to higher revenue from property development, which was partially offset by lower revenue from other business divisions. Gross profit increased 2% to $197.8 million in 2017.

Interest income increased 20% to $3.1 million in 2017 from $2.6 million in 2016 mainly due to higher interest income from fixed deposits.

Other income increased 171% to $70.2 million in 2017 from $25.9 million in 2016.

In 2017, other income included mainly the following:

  • revaluation gains of $44.4 million from the Group's investment properties; and
  • $16.8 million reduction in the provision for rental support for UE Bizhub East which is no longer required.

In 2016, other income included mainly the following:

  • $5.0 million of fidelity insurance compensation;
  • $5.0 million reduction in the provision for development charge in relation to the divestment of the Group's Automotive business as this is no longer required;
  • $4.0 million gain from the disposal of available-for-sale financial assets; and
  • $3.6 million reversal in the provision for construction cost which is no longer required.

Finance costs decreased 41% to $21.2 million in 2017 from $35.7 million in 2016 mainly due to lower borrowings.

Other expenses decreased 43% to $16.7 million in 2017 from $29.5 million in 2016 mainly due to the absence of revaluation deficit on certain investment properties and lower impairment loss in relation to certain overseas development projects.

Share of profit from equity-accounted associates and joint ventures decreased 34% to $1.9 million in 2017 from $2.9 million in 2016 mainly due to lower contribution from a joint venture in Singapore arising from revaluation deficit from its investment property.

Income tax expense increased 122% to $19.5 million in 2017 from $8.8 million in 2016 mainly due to higher profit in 2017 and under provision of prior years' income tax.

The Group's attributable profit from continuing operations increased 227% to $89.6 million in 2017 from $27.4 million in 2016.

Financial position review

  • Current trade and other receivables decreased by approximately $140 million mainly due to the collection of balance receivables from Eight Riversuites project upon obtaining the Certificate of Statutory Completion.
  • Total borrowings decreased by approximately $360 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 loans by certain subsidiaries.
  • Current trade and other payables decreased by approximately $76 million. The progress billings received in advance from home buyers of certain overseas projects which were previously classified under other payables were recognised as revenue following the completion of these projects under the completion-of-construction method.

Cash flow review

As at 31 December 2017, the Group had cash and cash equivalents of approximately $385 million. In 2017, the Group received approximately $135 million mainly from the collection of remaining receivables upon obtaining the Certificate of Statutory Completion for Eight Riversuites project. Separately, the Group utilised approximately $74 million for dividend payments and approximately $357 million for the net 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 31 December 2017 were mainly due to the Group's other ongoing operations.

Operation review

Property Rental & Hospitality

Revenue decreased 3% to $131.6 million in 2017 from $135.2 million in 2016. Operating profit before interest increased 62% to $126.1 million in 2017 from $77.8 million in 2016 mainly due to net revaluation gains of $44.4 million from the Group's investment properties and $16.8 million reduction in the provision for rental support for UE Bizhub East. The higher operating profit was partially offset by the absence of a gain of $3.9 million in relation to the disposal of an available-for-sale financial asset, $5.0 million fidelity insurance compensation recorded in 2016 as well as lower contribution from UE Bizhub West in 2017.

Property Development

Revenue increased 106% to $146.0 million in 2017 from $70.8 million in 2016 mainly due to revenue recognition from Chengdu Orchard Villa (Phase 4) in China and The Manhattan in Malaysia following projects completion in 2017 and higher revenue from the sales of other completed phases at Chengdu Orchard Villa and Shenyang Orchard Summer Palace. The increase was partially offset by lower revenue from the property sales at Eight Riversuites in 2017 as compared to 2016. Operating loss before interest decreased 69% to $7.1 million in 2017 from $23.2 million in 2016 mainly due to higher revenue and lower impairment loss on certain overseas development projects in 2017.

Engineering & Distribution

Revenue decreased 1% to $135.1 million in 2017 from $136.9 million in 2016 mainly due to lower revenue from distribution businesses. The decrease was partially offset by higher revenue from the system integration business. Operating profit before interest decreased 13% to $7.9 million in 2017 from $9.1 million in 2016 mainly due to lower revenue and margin from distribution businesses, which was offset by improved contribution from system integration business in 2017.

Manufacturing

Revenue decreased 4% to $85.6 million in 2017 from $89.5 million in 2016. Operating profit before interest decreased 19% to $5.4 million in 2017 from $6.7 million in 2016 mainly due to lower revenue and profit margin as well as the absence of foreign exchange gain in 2017.

Commentary

Despite present volatilities in the global equities and bond markets, the global economic environment showed signs of strengthening and the Group believes that this improved outlook will continue to bode well for Singapore's property market. The Group intends to embark on asset enhancement initiatives for its investment properties in Singapore and may make selective acquisitions if and when such opportunities arise. In China, the property cooling measures have brought about a relative slowdown in activity but the property market may continue to see sustainable growth in the longer term.

Other Matters

Pre-Conditional Voluntary Unconditional Cash Offer for WBL Corporation Limited

On 14 December 2017, Deloitte & Touche Corporate Finance Pte Ltd made an announcement (the "Pre-Conditional Offer Announcement"), for and on behalf of UE Centennial Venture Pte. Ltd. (the "Offeror"), a wholly-owned subsidiary of the Company, that the Offeror intends to make a voluntary unconditional cash offer (the "Offer") for all the issued ordinary stock units in the capital of WBL Corporation Limited ("WBL"), other than those already owned, controlled or agreed to be acquired by the Offeror, its related corporations and their respective nominees as at the date of the Offer (the "Offer Shares"). The consideration for each Offer Share will be S$2.07 per Offer Share.

The formal Offer will only be made if approval of the interested person transaction (the "Proposed IPT") between the Offeror and Yanlord Perennial Investment (Singapore) Pte. Ltd. arising from the proposed Offer by the shareholders who are considered to be disinterested for the purposes of the Proposed IPT is obtained at the extraordinary general meeting to be convened by the Company on 23 February 2018 (the "EGM").

Please refer to (i) the Pre-Conditional Offer Announcement; (ii) the Company's announcement on 14 December 2017 in relation to the Offer and the Proposed IPT; and (iii) the Company's circular (the "Circular") to its shareholders dated 31 January 2018 containing, inter alia, information relating to the Proposed IPT, the Notice of Extraordinary General Meeting dated 31 January 2018 enclosed therewith, and the letter from SAC Capital Private Limited dated 31 January 2018, as reproduced in Appendix 1 to the Circular (the "IFA Letter"), copies of which are available on UEL's corporate website at https://uel.sg/ and the website of the Singapore Exchange Securities Trading Limited at http://www.sgx.com, for further information on the Offer and the Proposed IPT.

Financial Information of WBL Group

The Circular and the IFA Letter were prepared as of 19 January 2018, being the latest practicable date prior to the printing of the Circular. Accordingly, the analysis set out in the IFA Letter had been based on the financial information of WBL and its subsidiaries, associates and joint ventures (the "WBL Group") as at the 9-month financial period ended 30 September 2017. Set out below is an update of certain salient financial information based on the latest unaudited financial statements of the WBL Group as at 31 December 2017 ("Unaudited FY2017 WBL Results"), presented against the relevant information extracted from the audited consolidated financial statements of the WBL Group for the financial period ended 31 December 2016, for shareholders' information:

Notes:
(1) The figures were re-presented to exclude the discontinued business in relation to Multi-Fineline Electronix, Inc ("MFLEX") and its subsidiaries subsequent to a merger agreement with Suzhou Dongshan Precision Co., Ltd., and Dragon Electronic Sub Inc., which was completed in July 2016.

(2) Refers to the discontinued business in relation to MFLEX and its subsidiaries.

SAC Capital Private Limited, being the independent financial adviser to the directors who are considered to be independent for the purpose of making a recommendation to the shareholders in respect of the Proposed IPT (the "Independent Directors") in connection with the Proposed IPT (the "IFA"), has considered the Unaudited FY2017 WBL Results and, subject to the assumptions and qualifications set out in the IFA Letter and having considered the impact of the Unaudited FY2017 WBL Results in its assessment, are of the view that the IFA's opinion (as stated in the Circular and the IFA Letter) that the Proposed IPT is (i) on normal commercial terms and (ii) not prejudicial to the interests of the Company and the shareholders who are disinterested for the purposes of the Proposed IPT remains unchanged.