CATALIST-LISTED OUE Lippo Healthcare : 5WA 0% (OUELH) on Friday (Aug 5) posted a 93 per cent drop in net profit to S$8.4 million for its half year ended Jun 30, 2022, from S$113.8 million a year earlier. Its revenue, however, was several times that of the previous years: S$42.6 million for H1 FY2022, versus S$9.7 million for H1 FY2021.

The company’s financial statement was laden with exceptional items, reflective of a restructuring and the shuffling of control of assets among related companies by the healthcare group’s parent OUE.

Most of the increase in OUELH’s revenue came from the consolidation of First Reit : AW9U 0%, a healthcare Reit within the OUE stable.

On Mar 1, OUELH had sold 2 subsidiaries to First Reit in exchange for units of First Reit. The deal took OUELH’s stake in First Reit from 15.3 per cent to 33.1 per cent. The change in ownership allows OUELH to consolidate First Reit’s revenue into its own.

The transaction was also accounted for as a disposal of an associate, and allowed OUELH to recognise a net gain of S$3.1 million.

On top of this, OUELH recognised a fair value gain of S$4.2 million on First Reit’s investment properties.

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Both items were reported as other income in OUELH’s statements, and should have boosted the company’s profits. But OUELH had booked a far larger exceptional item in the year-ago period.

Its net profit of S$113.8 million for H1 FY2021 was boosted by a one-off S$110 million gain from a shareholder loan conversion.

On Mar 16, 2021, OUELH had converted a total of S$189.6 million in loans and accrued interest owing to its parent, OUE, into convertible perpetual securities. OUELH booked a one-off gain representing the difference between the principal amount and the fair value of the perps, of S$79.6 million.

Stripping out these transactions and exceptional items, OUELH’s healthcare operations reported revenue of S$2 million — up from S$1.2 million. Segment losses widened, too, to S$1 million from S$892,000.

Shares of OUELH closed at S$0.033, up S$0.001 or 3.1 per cent, before the results were announced.