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Unaudited First Quarter Financial Statements And Dividend Announcement For The Financial Period Ended 31 March 2018

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Profit & Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

* $276.0 million (31 December 2017: $247.3 million) relates to the Group’s pre-sold development properties as at 31 March 2018.

Review of Performance

(i) Operating Segments

n/m: not meaningful

(ii) Geographical segments

Revenue and gross profit analysis

(i) Revenue

The Group achieved revenue of $46.4 million in 1Q2018, 29% lower than $65.4 million in 1Q2017. This was mainly due to lower revenue from the Property Development and Property Investment segments, partially offset by higher revenue from Hotel Ownership segment.

(a) Property Development

Revenue from the Property Development segment, which made up 68% of the Group’s turnover in 1Q2018, decreased 39% to $31.8 million in 1Q2018 from $51.7 million in 1Q2017. The decrease was largely due to lower revenue recognition from Trilive, a project at its final stage of completion, and absence of revenue recognition from Jade Residences, Whitehaven and LIV on Wilkie following the completion of these projects in 2017. The decrease was partially offset by higher revenue recognition on construction progress and sales of The Navian and Straits Mansions. Although the Group has made good progress in the sales and construction of its projects in Australia and Malaysia, unlike in Singapore, it cannot progressively recognise the revenue as the completed contract method in accounting is adopted for these projects.

(b) Hotel Ownership and Property Investment

The Hotel Ownership segment, which contributed 28% to the Group’s turnover in 1Q2018, registered $12.7 million in revenue as compared to $10.5 million in 1Q2017. The increase in 1Q2018 was mainly due to contribution from newly acquired hotel in Osaka, Japan and higher revenue from resort in Maldives after its partial opening.

Revenue from the Property Investment segment constituted the balance of 4% of the Group’s turnover and contributed $2.0 million in 1Q2018 as compared to $3.2 million in 1Q2017. The decrease was mainly due to the sale of investment property in 59 Goulburn Street in October 2017, partially offset by revenue generated from NZI Centre which was acquired in December 2017.

(ii) Cost of sales and gross profit

In line with the decrease in revenue, cost of sales decreased by 33% to $33.0 million in 1Q2018 from $49.1 million in 1Q2017.

Gross profit from the Property Development segment contributed $5.6 million or 42% of the Group’s total gross profit in 1Q2018, while the remaining 58% or $7.9 million was contributed by the Hotel Ownership and Property Investment segments. Gross profit margin from the Property Development segment was 18% in 1Q2018, as compared to 16% in 1Q2017. The gross profit margin of the Hotel Ownership segment decreased 4 percentage points to 50% in 1Q2018 mainly due to lower RevPar from GMRH. Gross profit margin of the Property Investment segment was 74% in 1Q2018 as compared to 71% in 1Q2017; this is mainly due to higher gross profit margin from NZI Centre, which was acquired in December 2017.

The Group’s overall gross profit margin in 1Q2018 was 29%, higher than the 25% recorded in 1Q2017 due to higher margin from Property Development and Property Investment segments.


Latest statistics from the Ministry of Trade and Industry1 showed that the Singapore economy grew 4.3% year-on-year in 1Q2018, higher than the 3.6% growth registered in 4Q2017. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew at a slower pace of 1.4% compared to the 2.1% growth in 4Q2017.

Australia’s economy also posted positive growth – its economy grew 2.4% year-on-year in 4Q2017 compared to a year ago on a seasonally adjusted basis2. The Reserve Bank of Australia had projected that the country’s GDP will grow around 3.25% for the year ending December 20183.

In Japan, the economy advanced 0.4% quarter-on-quarter in 4Q2017

Property Development


In its latest release, the Urban Redevelopment Authority (“URA”) reported that private residential property prices in 1Q2018 grew 3.9%, a sharp increase compared to the 0.8% growth recorded in the preceding quarter4. During the quarter, 921 private residential units were launched for sale and 1,581 units were sold. This compares to 877 units launched and 1,864 units sold in 4Q2017.

Ahead of the property market’s gradual recovery, the Group has prudently replenished its land bank with predominantly freehold sites in Singapore at attractive prices to maximise the yield potential of these projects. The Group looks forward to the launch of another six development land sites in FY2018 as it continues to prudently seek attractive sites for development.

Amidst the current upcycle, the Group has launched The Navian in January 2018, and has sold 77% of its units as of 3 May2018. The Group’s latest project, Harbour View Gardens, was more than 90% sold since its launched in April 2018.


In Australia, residential property prices rose 5.0% through the 2017 full year. Key cities where the Group has a presence in also registered year-on-year growth of 3.8% in Sydney, and 2.1% in Brisbane5.

The Group’s residential development projects in Australia have received warm reception – The Hensley and Octavia in Sydney are only left with two units for sale each, while West End Glebe that was launched in two phases is currently overall 72% sold.

As at 3 May 2018, based on units sold from the following ongoing development projects, the Group has total attributable pre-sale revenue of $548.1 million, the profits of which will be recognised from 2Q2018 to FY2021.

In addition, the Group has the following development land bank in Singapore:

The Group currently has eight development sites in Singapore as its land bank, of which Roxy-Pacific plans to launch another six development sites for sale in FY2018, depending on market conditions. Roxy-Pacific will continue to monitor the residential market closely to launch its projects at an opportune time to capitalise on the current positive sentiments and upcycle.

In Australia, the Group has completed the acquisition of Melbourne House, a freehold six-storey commercial and retail building in Melbourne’s Central Business District, Australia, that is planned to be redeveloped into a mixed-use development, comprising hotel and retail units.

Hotel Ownership

Latest statistics from the Singapore Tourism Board (“STB”)6 reported a second consecutive year of record tourism performance in 2017 with a 3.9% growth in tourism receipts to S$26.8 million and a 6.2% growth in visitor arrivals. Total gazetted room revenue rose 3.9% to reach S$3.7 billion while hotel occupancy grew 1.5 percentage points.

For 2018, STB remains optimistic, forecasting toruism receipts to be in the range of $27.1 to $27.6 billion, an increase of 1% to 3%, while international visitor arrivals is expected to be in the range of 17.6 to 18.1 million, an increase of 1% to 4%.

According to Japan National Tourism Organisation7, the estimated number of international travelers to Japan in February 2018 was about 2.5 million (+23.3% from the previous year), being the best February ever.

While the Group’s flagship Grand Mercure Singapore Roxy hotel, and self-managed boutique hotels in Japan – Noku Kyoto and Noku Osaka – continue to contribute healthy recurring income, its resort in Maldives, Noku Maldives, had commenced operations in December 2017. Despite last stages of renovation still ongoing, Noku Maldives received warm reception on its opening and maintained strong occupancy since its soft launch. It is expected to be in full operation by June 2018, while its counterpart in Phuket is targeted to open in 2019.

Property Investment

For the Australian office sector8, the December quarter records the fastest growth in rents of 0.8%, led by the states of New South Wales (+2.0%) and Victoria (1.6%). Property analysts believe the office property sector will grow fastest in the next 1 to 2 years (1.4% and 1.9%, respectively), with expectations for the states of New South Wales and Victoria to outperform.

The Group is exploring opportunities to divest its Grade A commercial building, 117 Clarence Street in Sydney, like it has successfully done so with 59 Goulburn Street in 2017 to unlock shareholder value and recycle capital into other yield-accretive investments. The Group’s associate company has entered into a Heads of Agreement to sell 117 Clarence Street. The sale is subject to due diligence exercise to be carried by the purchaser.

With the divestment of 59 Goulburn Street, the capital was recycled into the acquisitions of two commercial buildings in Auckland, New Zealand. The first property at 205 Queen Street is a Grade A office building that is 50%-owned by the Group, while the second commercial office building, known as NZI Centre, is strategically located on the western side of Auckland’s Central Business District. The Group has also acquired a 45% stake in an office building located at 312 St Kilda Road, Southbank, VIC 3006, Australia. These properties have commenced revenue contribution this financial quarter.


Barring any unforeseen circumstances, the directors expect the Group to be profitable in 2018.

1 Ministry of Trade and Industry Singapore, April 13, 2018 – Singapore’s GDP grew by 4.3 per cent in the first quarter of 2018

2 Australian Bureau of Statistics, March 7 2018 – Australian National Accounts: National Income, Expenditure and Product, Dec 2017

3 Reserve Bank of Australia, November 2017 – Statement on Monetary Policy, Table 6.1: Output Growth and Inflation Forecasts

4 Urban Redevelopment Authority, April 27, 2018 – Release 1st Quarter 2018 real estate statistics

5 Australian Bureau of Statistics, March 20, 2018 – Residential Property Price Indexes: Eight Capital Cities Dec 2017

6 Singapore Tourism Board, February 12, 2018 – Singapore tourism sector performance breaks record for the second year running in 2017

7 Japan National Tourism Organisation -

8 National Australia Bank, February 24, 2018 - NAB Commercial Property Survey Q4 2017