SINGAPORE (Aug 3): UOL Group reported a 21% increase in earnings to $132.7 million for the 2Q18 ended June, from $109.2 million a year ago.

The increase was on the back of a 59% jump in group revenue to $635.4 million in 2Q18, from $399.1 million a year ago. This was mainly due to the consolidation of United Industrial Corporation (UIC) and higher attributable fair value gains on investment properties.

UOL in end-August 2017 completed the acquisition of 60 million shares in UIC from a wholly-owned subsidiary of Haw Par Corporation. Following the acquisition, UIC, its subsidiary Marina Centre Holdings, as well as the common associated and joint venture companies of UOL and UIC have been accounted as subsidiaries of UOL.

Revenue from its property development segment rose 27% to $280.6 million, while revenue from its property investments segment surged 134% to $131.8 million, and revenue from its hotel ownership and operations segment grew 55% to $155.3 million.

Excluding the effects of the consolidation, revenue from the property development segment would have been 31% lower year-on-year. This was due to lower revenue recognition from Principal Garden and the completion of sales of Riverbank @ Fernvale in August last year.

Revenue from property investments would have been 4% lower year-on-year excluding the effect of the consolidation due to lower contribution from OneKM Mall, while revenue from hotel ownership and operations would have been flat.

Dividend income grew 75% to $27.7 million in 2Q, with higher ordinary and special dividends received from United Overseas Bank.

Gross profit margin improved 6 percentage points to 39% in 2Q18, due mainly to a higher proportion of revenue from property investments which command better margins.

As at end June, cash and cash equivalents stood at $739.7 million.

Looking ahead, UOL says the recent property cooling measures will likely moderate both the sales take-up and prices for the rest of the year.

“We have been diversifying into income-producing assets geographically in recent years. Our latest acquisition of 180 apartments in Jakarta and clinching of a hotel management contract will help bolster our presence in Indonesia and build up our future recurring income,” says Liam Wee Sin, UOL’s deputy group chief executive officer.

UOL notes that office rents are expected to improve due to limited new supply, while retail rents are showing signs of stabilising despite challenges from e-commerce and manpower shortage.

Meanwhile, it adds that the London property market continues to face economic and political uncertainties.

Shares in UOL closed 4 cents lower at $7.00 on Friday.