PROPERTY developer OUE recorded a S$30.1 million net profit for the six months ended June, reversing the year-ago loss of S$207.2 million. The improvement has been attributed to the absence of the fair-value loss recognised on the US Bank Tower last year.

 

The company proposed an interim dividend of 1 Singapore cent per share, to be paid on Sept 23. The sweetener comes even as OUE' s revenue fell by 49.5 per cent to S$152 million, with lower contributions across most divisions.

 

Following the divestment of the US Bank Tower and the partial divestment of OUE Bayfront, OUE Tower and OUE Link, revenue from the investment properties division decreased to S$105.2 million in H1, down from $139.1 million a year ago.

 

Meanwhile, revenue for the hospitality division fell by S$18 million to S$25.8 million, due to continued travel restrictions and other pandemic movement curbs in Singapore.

 

The development properties division recorded only S$0.2 million in revenue, due to the absence of completion of OUE Twin Peaks units sold under deferred payment schemes in H1. Instead, rental income was derived from unsold units, which continue to be marketed.

 

There were some bright spots. H1 revenue from the healthcare segment held steady at S$14.7 million. The consumer division posted S$6.1 million in revenue, up from S$5 million a year ago, as F& B business picked up during the relaxation of dine-in restrictions.

 

OUE' s latest financial results come as the company has made a number of strategic moves, besides the property divestments. In March, it had acquired 6 per cent of OUE Lippo Healthcare. In July, OUE' s joint venture unit, Auric Digital Retail, acquired about 32 per cent of Indonesia-listed Matahari Department Store, becoming its single-largest shareholder.

 

Looking ahead, OUE is set to rebrand the Mandarin Orchard Singapore to Hilton Singapore Orchard, and is currently executing the phased asset enhancement works. The launch is anticipated in early-2022.

 

OUE' s total borrowings stand at S$2.6 billion as of end-June, down from S$3.5 billion in December last year. The company said: " The group has sufficient liquidity to meet its near-term debt obligations and operational needs. It will also continue to exercise prudence in managing its non-essential capital and operating expenditure as the prolonged pandemic is still impacting businesses and economies worldwide.&rdquo

 

PROPERTY developer OUE: LJ3 -1.4% on Wednesday morning announced it had established a joint venture (JV) company with Auric Bespoke I - a wholly-owned subsidiary of Auric Capital Holdings - with the intention of acquiring up to a 40 per cent stake in Jakarta-listed PT Matahari Department Store Tbk (Matahari).

 

Named Auric Digital Retail, the JV firm will be 60 per cent owned by Auric Bespoke I, with the remaining 40 per cent stake held by OUE' s subsidiary OUE Retail Holdings.

 

The acquisition will be made by way of a voluntary tender offer for Matahari for a consideration of 1,530 rupiah (S$0.14) per offer share.

 

This is to be funded via a S$95 million facility agreement granted by CIMB' s Singapore branch - as well as shareholder loans of up to an aggregate principal amount of S$150 million, made by OUE and Auric Bespoke I to the JV company.

 

As part of the deal, Auric Digital Retail has also agreed to acquire a 5.32 per cent stake in Greater Universal Limited (GUL) as well as a 4.8 per cent interest in OUE Investments after the voluntary offer is made.

 

GUL and OUE Investments are wholly-owned subsidiaries of Auric Capital and OUE, respectively.

 

Auric Digital Retail will hold up to 50.12 per cent of Matahari and thus become its controlling shareholder upon completion of the abovementioned acquisitions.

 

In its filing, OUE notes that Matahari' s shares have underperformed those of its peers on a five-year basis, despite its market leadership position with a unique portfolio of assets.

 

" (Auric Digital Retail) recognises the challenges in the Indonesian large format retail industry and the threat from competition, but believes that (Auric Bespoke I and OUE Retail) possess sufficient experience and expertise in the consumer, retail and digital sectors and can work with management of (Matahari) to develop a refreshed strategy and improve the prospects of (Matahari' s) business," said OUE.

 

Highlighting that Matahari has " generally recorded healthy positive cash flows" prior to Covid-19, OUE said it believes its proposed acquisitions through Auric Digital Retail will allow it to expand the group' s consumer division footprint into the growth market of Indonesia.