ANNUAL REPORT FY2015
17
Dear Shareholders,
It has been another year of
challenges,
exacerbated
by
economic
and
geo-political
turbulence all round. In particular,
the regional haze situation in 2015
affected tourism in Singapore,
Malaysia and Southern Thailand,
and the significant volatility
in regional currencies eroded
earnings due to foreign exchange
losses.
As a result, in FY2015, we recorded
a 74.1% decrease in net profit
attributable
to
shareholders
to S$2.9 million mainly due
to impairment losses on the
building for Hotel Royal Bangkok
@ Chinatown and goodwill for
investment in The Baba House in
Melaka; lower sales from some
of the Group’s hotels and higher
foreign exchange loss from our
Malaysia subsidiaries. Group
revenue rose 1.0% to S$57.3 million,
on the back of additional room
revenue and food and beverage
sales generated by Burasari Resort
in Phuket.
In the 12 months to 31 December
2015, the Group posted earnings
per share of 3.44 cents and the net
assets value at 31 December 2015
was S$6.37 per share.
Without the impairment losses of
approximately S$0.8 million and
S$1.4 million relating to our hotels in
Bangkok and Melaka respectively,
the
net
profit
attributable
to shareholders would have
increased to S$5.1 million.
DIVIDEND
As always, we deeply appreciate
the support of our shareholders
and are pleased to recommend
a one-tier tax-exempt first and final
dividend of 5 cents per ordinary
share – amounting to S$4.2 million
in dividend payout – for your
approval at the upcoming Annual
General Meeting to be held on
30 April 2016. If approved, the
proposed dividend will be paid
out at a date to be announced
later.
A SUSTAINABLE GROWTH STRATEGY
Moving ahead, we reiterate
our optimism in our strategy of
growth through acquisitions. Our
acquisitions of two hotels in 2014
and 2015 – namely The Burasari
Resort in Phuket and The Baba
House in Melaka – are expected to
provide further revenue upside for
the Group as we work to enhance
these assets.
In the years ahead, the Group
will continue its growth strategy
at a measured pace as we seek
opportunities for acquisition of
attractive hospitality real estate
assets in key gateway cities in the
Asia Pacific region. The Group
also intends to further strengthen
its passive income component to
mitigate the effects of the cyclical
nature of hotel earnings.
The Group is financially healthy
with net assets of approximately
S$535 million at 31 December 2015
and a healthy net gearing ratio of
26.2%. This, we believe, provides
adequate headroom to fund
further acquisitions.
OUTLOOK FOR 2016
Visitor arrivals to our largest
market, Singapore, rose 0.9% to
15.2 million in 2015, according to
the latest preliminary statistics from
Singapore Tourism Board, thanks to
an increase in tourists from China,
Taiwan, India and South Korea
despite the prolonged regional
haze situation and the stronger
Singapore dollar. However, tourist
spending fell by 6.8% in 2015 due
to a fall in the number of business
visitors and MICE arrivals. STB
expects tourism receipts to grow
between 0% to 2% while visitor
arrivals are forecast to grow
between 0% to 3% in 2016.
With the increased room inventory
and shortage of manpower in
Singapore, coupled with the
slowdown in the world economy,
the
Group
expects
more
challenges in the year ahead.
We will continue with our strategy
of competitive pricing and
progressive enhancements of our
hotel assets in Singapore, Malaysia
and Thailand. We will continue
to focus on improving service
quality, enhancing the customers’
experience, and monitoring
our room occupancy and room
rates, as we seek to expand our
customer base and enlarge our
share of tourist arrivals.
With regard to our investments to
augment our core earnings, the
Group will continue to actively
upgrade our properties in New
Zealand so as to maximise rental
income. The Group’s managed
fund portfolio may be impacted
by the current instability in the
Middle East and the uncertain
world economy in the short to
medium term.
