United Industrial Corporation (UIC) saw a 85% plunge in its earnings for the FY2020 ended December to $90.2 million, from $605.1 million a year ago.

Excluding a fair value loss on investment properties amounting to $125.8 million, earnings for the full-year would have been 12% y-o-y lower at $217.7 million.

This was partly due to the derecognition of an associate during the year. The gain of $272.8 million in FY2019 arose from Marina Centre Holdings Private Limited’s (MCH) acquisition of an additional 25% interest in its 50%-held associate, Aquamarine Hotel Private Limited (AHPL).

FY2020 revenue fell 15% y-o-y to $671.1 million due to lower revenue from property investments and hotel operations, which fell due to the impact of the Covid-19 pandemic.

Revenue from property trading fell 20% y-o-y to $91.0 million due to the lower sales from the Pollen & Bleu and Mon Jervois residential projects, which were sold substantially in 2019.

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Revenue from technology operations was the only bright side, with a 41% growth y-o-y to $225.7 million.

Cost of sales fell 2% y-o-y to $448.0 million, in line with the respective increase and decrease in the various segments’ revenues.

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Gross profit fell 33% y-o-y to $223.1 million.

Profit from operations fell 25% y-o-y to $197.0 million.

Share of results of associates fell 20% y-o-y to $38.5 million due to poorer performance by the hotels, and the absence of share of profits from AHPL.

Due to the acquisition of AHPL in April 2019, the group has recorded a fair value uplift of $582.4 million on property, plant and equipment, resulting in a higher depreciation charge over the useful lives of the property, plant and equipment.

The loss on disposal of property, plant and equipment mainly arose from the fixed asset disposal by Parkroyal Collection Marina Bay during their renovation this year.

Earnings per share (EPS) for the FY2020 stood at 6.3 cents, which includes fair value loss on investment properties. Excluding the loss, EPS would have been at 15.1 cents.

UIC has declared a final dividend of 3.5 cents for the FY2020, 0.5 cent lower than the 4.0 cents declared in FY2019.

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Cash and cash equivalents as at Dec 31, 2020, stood at $178.6 million.

Amid the gradual improvement of the local economy, UIC says it is “cautiously optimistic” about the office and retail sectors amid returning employees to office workspaces and higher shopper traffic.

It adds that its hotels expect “significant revenue challenges” due to the hospitality industry being continually affected by the travel restrictions and lockdowns in certain countries.

The residential sales market is expected to remain “resilient” due to the lack of announcements on cooling measures by the government.

Shares in UIC closed 3 cents lower or 1.3% down at $2.28 on Feb 23.