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Unaudited First Quarter Financial Statements And Dividend Announcement For The Financial Period Ended 31 March 2017

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Profit & Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

* $236.7 million (31 December 2016: $314.0 million) relates to the Group's pre-sold development properties as at 31 March 2017.

Review of Performance

(i) Operating Segments

* In 1Q2016, corporate expenses include $2.5 million impairment of investment in associates (1Q2017: Nil) and $0.9 million provision for directors' performance bonus (1Q2017: Nil).

n/m: not meaningful

(ii) Geographical segments

Revenue and gross profit analysis - 1Q2017 vs 1Q2016

(i) Revenue

The Group achieved revenue of $65.4 million in 1Q2017, 36% lower than $103.0 million in 1Q2016. This was mainly due to lower revenue from the Property Development and Hotel Ownership segments.

(a) Property Development

Revenue from the Property Development segment, which made up 79% of the Group's turnover in 1Q2017, decreased 41% to $51.7 million in 1Q2017 from $88.3 million in 1Q2016. The decrease was largely due to lower revenue recognition from Jade Residences, Whitehaven, and absence of revenue recognition from LIV on Sophia following the completion of these projects in 4Q2016 and early 2017. The decrease was partially offset by higher revenue recognition on construction progress of Trilive.

(b) Hotel Ownership and Property Investment

The Hotel Ownership segment, which contributed 16% to the Group's turnover, registered $10.5 million in revenue as compared to $11.7 million in 1Q2016. The decrease was mainly due to lower revenue per available room ("RevPar") from Grand Mercure Roxy Hotel.

Revenue from the Property Investment segment constituted the balance of 5% of the Group's turnover and contributed $3.2 million in 1Q2017 as compared to $3.0 million in 1Q2016. The increase was mainly from higher rental rate of office units at 59 Goulburn Street as compared to 1Q2016.

(ii) Cost of sales and gross profit

In line with the decrease in revenue, cost of sales decreased by 39% to $49.1 million in 1Q2017 from $79.9 million in 1Q2016.

Gross profit from the Property Development segment contributed $8.4 million or 51% of the Group's total gross profit, with the remaining 49% or $7.9 million contributed by the Hotel Ownership and Property Investment segments. Gross profit margin from the Property Development segment was 16% in 1Q2017, which was consistent with 1Q2016. The gross profit margin of the Hotel Ownership segment decreased 4 percentage points to 54% in 1Q2017 as compared to 58% in 1Q2016 mainly due to lower RevPar in 1Q2017. Gross profit margin of the Property investment segment decreased 1 percentage point to 71% in 1Q2017 from 72% in 1Q2016.

The Group's overall gross profit margin in 1Q2017 was 25%, higher as compared to 1Q2016 of 22% mainly due to higher percentage contribution of revenue in the current quarter from Hotel Ownership & Property Investment segments which have higher gross profit margins.

Commentary

Property Development

Singapore

The Ministry of Trade and Industry ("MTI")1 announced on 13 April 2017 that the Singapore economy grew by 2.5% on a year-on-year basis in 1Q2017, easing from the 2.9% growth in 4Q2016. For 2017, MTI has maintained the GDP growth forecast at 1.0% to 3.0%.

Latest statistics from the Urban Redevelopment Authority2 showed a 0.4% decline in private residential property prices in 1Q2017, compared with the 0.5% decline in 4Q2016. New homes sales reached a near four-year high following the easing of the coolingmeasures inMarch for the first time since 2009 – developers sold 1,780 homes inMarch 2017, 82%more than 979 in February and double the 843 homes sold in March 2016. This brings the total units sold in 1Q2017 to 3,141 homes, the best quarterly results since 2Q20133.

The Group's most recent project launch, StraitsMansions, received warm reception from buyers and is currently 100% sold. Additionally, to replenish its land bank in Singapore, The Group completed new development site acquisitions for 120 Grange Road and 211-223A Pasir Panjang Road in Singapore during 1Q2017. The new development projects are expected to contribute positively to the Group's performance.

Australia

Latest statistics from the Australian Bureau of Statistics ("ABS")4 showed a 2.4% year-on-year seasonally-adjusted growth in Australia's GDP for the quarter ended 31 December 2016 and a 1.1% growth on a quarter-on-quarter seasonally adjusted basis. The Reserve Bank of Australia projected that GDP growth will come in between 2.5% and 3.5% for the year ended December 2016 and December 20175. The ABS also reported a 7.7% year-on-year increase in the weighted average residential property prices of eight capital cities, and 4.1% quarter-on-quarter growth for the quarter ended December 2016. On a year-on-year basis, prices rose in Sydney (10.3%), Melbourne (10.8%), Brisbane (3.8%), Adelaide (4.1%), Hobart (8.8%) and Canberra (5.5%) and declined 4.1% in Perth and 7.0% in Darwin6.

The Group's latest project in Australia, West End Glebe – The Foundry, has received warm reception and is over 60% sold since launched. It is expected to contribute positively to the Group's profits upon its completion in 2019.

The Group has also announced that it has entered into a Heads of Agreement to dispose of the 59 Goulburn Street office building for A$158 million, subject to the Purchaser's due diligence exercise.

As at 26 April 2017, based on units sold from the following ongoing development projects, the Group has total attributable pre-sale revenue of $439.3 million, profits of which will be progressively recognised from 2Q2017 to FY2020.

In addition, the Group has the following portfolio of properties:

The Group will focus to complete sale of properties for sale under development and launch its newly acquired properties for sale in FY2017 and FY2018.

Hotel Ownership

Latest report from the Singapore Tourism Board ("STB")7 showed that both visitor arrivals and tourism receipts exceeded forecasts to hit historical highs in 2016. While visitor arrivals grew by 7.7% to 16.4 million, tourism receipts rose even higher by 13.9% to $24.8 billion. For 2017, STB forecasts tourism receipts to be in the range of $25.1 to $25.8 billion (1% to 4%) and international visitor arrivals to be in the range of 16.4 to 16.7 million (0% to 2%).

Following the launch of the Group's Noku Roxy hospitality brand name upon the opening of its first upscale boutique hotel in Kyoto, Japan, Roxy-Pacific looks forward to bringing its hospitality brand to the rest of Asia, with a resort in Maldives scheduled to open by 4Q2017 and Phuket to follow in 2019. Where feasible, the Group plans to self-manage these hospitality assets to develop its hotel management expertise and branding, thereby strengthening recurring income streams.

Outlook

Barring any unforeseen circumstances, the directors expect the Group to be profitable in 2017.


1 Ministry of Trade and Industry, April 13, 2017 – Singapore's GDP grew by 2.5% in 1st Quarter 2017

2 Urban Redevelopment Authority, April 28, 2017 – Release of 1st Quarter 2017 real estate statistics

3 Straits Times, April 18, 2017 – New private home sales surge 82%; Business Times, April 18, 2017 – Developers' private home sales soar

4 Australian Bureau of Statistics, March 1,2017 – Australian National Accounts: National Income, Expenditure and Product, Dec 2016

5 Reserve Bank of Australia, May 2016 – Statement on Monetary Policy

6 Australian Bureau of Statistics, March 21, 2017 – Residential Property Price Indexes: Eight Capital Cities, Dec 2016

7 https://www.stb.gov.sg/news-and-publications/lists/newsroom/dispform.aspx?ID=696