Email This Print ThisFinancials

Unaudited Full Year Financial Statements And Dividend Announcement For The Financial Period Ended 31 December 2016

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Profit & Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

(1) $314.0 million (31-Dec-15: $342.7 million) relates to the Group’s pre-sold development properties as at 31 December 2016.

Review of Performance

Breakdown of Performance by Segments

4Q2016 vs 4Q2015

(i) Revenue

The Group achieved revenue of $93.1 million in 4Q2016, 14% higher than $81.4 million in 4Q2015. This was mainly from an increase in revenue from the Property Development and Property Investment segments.

(a) Property Development

Revenue from the Property Development segment, which made up 84% of the Group’s turnover in 4Q2016, increased 17% to $78.6 million in 4Q2016 from $67.3 million in 4Q2015. The increase was largely attributable to higher revenue recognition from Trilive, LIV on Sophia and LIV on Wilkie, partially offset by lower revenue recognition from Jade Residences and Whitehaven.

(b) Hotel Ownership and Property Investment

The Hotel Ownership segment, which contributed 12% to the Group’s turnover, registered $11.2 million in revenue as compared to $11.3 million in 4Q2015. Grand Mercure Roxy Hotel (“GMRH”) recorded an average occupancy rate (“AOR”), average room rate (“ARR”) and revenue per available room (“RevPar”) of 82.7%, $149.5 and $123.7 in 4Q2016, respectively, as compared to 4Q2015 (AOR: 89.4%, ARR: $163.7 and RevPar: $146.4). The Noku Kyoto hotel which officially opened in 4Q2015, recorded AOR, ARR and RevPar of 57.8%, $342.9 and $198.1, respectively, in 4Q2016.

Revenue from the Property Investment segment, which constituted the balance of 4% of the Group’s turnover, contributed $3.3 million in 4Q2016 as compared to $2.8 million in 4Q2015. The increase was mainly due to higher occupancy from office units at 59 Goulburn Street.

(ii) Cost of sales and gross profit

In line with increase in revenue, cost of sales increased by $11.5 million or 19% to $73.0 million in 4Q2016 from $61.5 million in 4Q2015.

Gross profit from the Property Development segment contributed $11.5 million or 57% of the Group’s total gross profit, with the remaining 43% or $8.7 million contributed by the Hotel Ownership and Property Investment segments. Gross profit margin from the Property Development segment decreased from 16% in 4Q2015 to 15% in 4Q2016. The gross profit margin of the Hotel Ownership segment decreased 8 percentage points to 56% in 4Q2016 as compared to 64% in 4Q2015 mainly due to lower RevPar in 4Q2016. Gross profit margin of the Property Investment segment increased 4 percentage points to 73% in 4Q2016 from 69% in 4Q2015.

The Group’s overall gross profit margin in 4Q2016 was 22%, 2 percentage points lower compared to the 24% in 4Q2015.

(iii) Profit for the period

Other operating income decreased by $2.7 million to $2.0 million in 4Q2016 from $4.7 million in 4Q2015 mainly due to lower net fair value gain on investment property. The Group recorded a fair value gain on its investment property in Australia, which was partially offset by fair value loss on the investment property in Singapore.

Distribution and selling expenses increased by $0.6 million to $1.0 million in 4Q2016 from $0.4 million in 4Q2015 mainly due to marketing and showflat expenses relating to the sales launches of Straits Mansions in Singapore, and Octavia and The Hensley in Australia.

Administrative expenses increased by $1.4 million to $4.9 million in 4Q2016 from $3.5 million in 4Q2015 mainly due to finalisation of 2016 directors’perfromance bonus in 4Q2016. The directors’performance bonus for FY2016 was lower as compared to FY2015.

Other operating expenses increased by $4.1 million to $6.8 million in 4Q2016 from $2.7 million in 4Q2015 mainly due to higher depreciation expenses, operating expenses incurred on the resort in Maldives in 2016 and higher fair value gain on cross currency interest rate swap which offset other operating expenses in 4Q2015.

Depreciation expense increased from $1.9 million in 4Q2015 to $2.3 million in 4Q2016 mainly due to depreciation of new additions following completion of refurbishment works for the Noku Kyoto hotel in 4Q2015 and new resort property in Maldives acquired in 2Q2016.

The Group’s share of results from associates after tax for 4Q2016 increased by $6.2 million to $8.1 million compared to $1.9 million in 4Q2015 mainly due to higher profits recognised from Eon Shenton and contribution from investment property at 117 Clarence Street in Australia, partially offset by the absence of profit recognition from Millage due to Temporary Occupancy Permits (“TOP”) obtained in May 2016.

The Group’s profit after taxation attributable to shareholders was $11.9 million in 4Q2016 compare to $12.3 million in 4Q2015.

Non-controlling interests increased from $0.1 million in 4Q2015 to $0.7 million in 4Q2016 mainly due to non-controlling interests share of profits recognised in Trilive, LIV on Sophia and LIV on Wilkie

FY2016 vs FY2015

(i) Revenue

For the full year ended 31 December 2016, the Group achieved revenue of $385.4 million, 16% lower than the $460.9 million recorded in FY2015. This is mainly due to a decrease in revenue from the Property Development segment, partially offset by an increase in revenue from the Hotel Ownership and Property Investment segments

(a) Property Development

Revenue from the Property Development segment, which made up of 85% of the Group’s turnover, decreased 19% from $404.2 million in FY2015 to $326.6 million in FY2016. The decrease was largely due to an absence of revenue recognition from the completion of Centropod@Changi, a commercial development project which obtained its TOP in January 2015. The decrease was partially offset with revenue recognised from Trilive, Sunnyvale, LIV on Wilkie and LIV on Sophia in FY2016.

(b) Hotel Ownership and Property Investment

Revenue from the Hotel Ownership segment, which contributed 12% to the Group’s turnover, increased 4% from $44.5 million in FY2015 to $46.3 million in FY2016 mainly due to additional contributions from the Noku Kyoto hotel which started operation from Nov 2015. Grand Mercure Roxy Hotel (“GMRH”) recorded an average occupancy rate (“AOR”), average room rate (“ARR”) and revenue per available room (“RevPar”) of 88.5%, $156.6 and $138.5 in FY2016, respectively, albeit a decrease from that in FY2015 (AOR: 89.6%; ARR: $169.2; RevPar: $151.6). The Noku Kyoto hotel recorded an AOR, ARR and RevPar of 52.0%, $310.5 and $161.6, respectively, in FY2016.

Revenue from Property Investment segment, which constituted the balance 3% of the Group’s turnover, contributed $12.5 million in FY2016 as compared to $12.2 million in FY2015.

(ii) Cost of sales and gross profit

Cost of sales decreased by $27.1 million or 8% from $331.3 million in FY2015 to $304.2 million in FY2016.

Gross profit from the Property Development segment contributed $45.3 million or 56% of the total gross profit of the Group, with the balance 44% or $35.8 million contributed by the Hotel Ownership and Property Investment segments. The gross profit margin for the Property Development segment decreased 9 percentage points to 14% in FY2016 from 23% in FY2015. This was mainly due to higher profit margins from Centropod@Changi in FY2015.

The gross profit margin of Hotel Ownership decreased 4 percentage points to 58% in FY2016 as compared to 62% in FY2015 mainly due to lower RevPar in FY2016.

The gross profit margin of the Property Investment segment increased 1 percentage point to 72% in FY2016 from 71% in FY2015. The Group’s overall gross profit margin decreased 7 percentage points to 21% in FY2016 as compared to 28% in FY2015.

(iii) Profit for the period

The Group’s other operating income increased by $10.7 million to $23.0 million in FY2016 from $12.3 million in FY2015, mainly from higher net fair value gains on investment property in Australia and higher interest income from fixed deposits.

Distribution and selling expenses increased to $5.2 million in FY2016 from $1.9 million in FY2015 mainly due to marketing and showflat expenses relating to the sales launches of Straits Mansions in Singapore, and Octavia and The Hensley in Australia.

Administrative expenses decreased by $2.3 million to $15.0 million in FY2016 from $17.3 million in FY2015 mainly due to lower provision for directors’ performance bonus for FY2016, in line with lower profitability of the Group for the year.

Other operating expenses increased by $2.1 million to $21.8 million in FY2016 from $19.7 million in FY2015 mainly due to higher depreciation expenses and unrealised foreign exchange loss on revaluation of bank loans in foreign currency and advance to / from associates.

Depreciation expense increased to $6.5 million in FY2016 from $4.9 million in FY2015 mainly due to depreciation from the addition of Noku Kyoto hotel, depreciation of refurbishment works for the Group’s head office in Singapore from 1H2015 and depreciation of resort property in Maldives acquired in 2Q2016.

Finance costs increased from $13.1 million in FY2015 to $15.2 million in FY2016 mainly from higher interest charges of the MTN Series Notes issued in July 2015 and working capital loans obtained to fund new investment of 117 Clarence Street in Australia and the resort property in Maldives.

The Group’s share of results of associates increased to $18.6 million from $11.1 million mainly due to higher profits recognised from Eon Shenton and contribution from investment property at 117 Clarence Street in Australia.

The Group’s profit after taxation attributable to shareholders decreased to $49.8 million in FY2016 from $85.1 million in FY2015.

Non-controlling interests increased from $0.1 million in FY2015 to $3.1 million in FY2016 mainly due to non-controlling interests share in profits recognised in Trilive, LIV on Sophia and LIV on Wilkie.

(iv) Cashflow, working capital and Balance Sheet

The Group’s non-current assets comprise property, plant and equipment, investment properties, investment in associates, amounts due from associates, intangible assets and available-for-sale financial assets. As at 31 December 2016, this amounted to $533.6 million and represented 37% of the Group’s total assets.

The Group’s property, plant and equipment increased $45.8 million to $175.5 million from $129.7 million as at 31 December 2015 and accounted for 33% of total non-current assets of the Group as at 31 December 2016. The increase was mainly attributable to acquisition of the resort property in Maldives.

Investment in associates increased $86.0 million to $146.5 million as at 31 December 2016 from $60.5 million as at 31 December 2015 while long term amount due from associates decreased $55.4 million to $11.3 million as at 31 December 2016 from $66.7 million as at 31 December 2015. This was mainly due to equity loans granted to associate in FY2016 and conversion of long term amounts due from associate to investment in associate.

Investment properties increased $19.0 million to $198.8 million as at 31 December 2016 from $179.8 million as at 31 December 2015. The increase was attributable to the fair value gain on investment property at 59 Goulburn Street in Australia, partially offset by the fair value loss on shop units at Roxy Square, Singapore.

As at 31 December 2016, available-for-sale financial assets were valued at $1.4 million and comprised equity securities listed on the Singapore Exchange.

At the Company level, investments in subsidiaries increased $78.8 million to $189.4 million from $110.6 million mainly due to long-term equity loans granted to subsidiaries for investment purposes.

The Group’s current assets mainly comprise of developed properties held for sale, properties for sale under development, trade and other receivables and cash and cash equivalents. As at 31 December 2016, these assets amounted to $928.0 million and represented 63% of the Group’s total assets. Developed properties held for sale amounted to $7.3 million as at 31 December 2016. This represents the development cost of five unsold units at Whitehaven, which the Group has obtained TOP in October 2016. Properties for sale under development amounted to $479.0 million or 52% of total current assets as at 31 December 2016. The decrease in properties for sale under development from $516.5 million as at 31 December 2015 was mainly due to Whitehaven and LIV on Sophia projects which obtained TOP in 4Q2016.

The Group’s trade receivables amounted to $93.1 million as at 31 December 2016 and comprised mainly of progress payments receivable from purchasers and unbilled revenues for the projects which obtained TOP. The increase in trade receivables of $64.2 million from $28.9 million as at 31 December 2015 was mainly due to unbilled revenues from projects which obtained TOP in 4Q2016.

The Group’s other receivables comprise mainly deposits, prepayments and other receivables. The decrease in other receivables to $22.4 million as at 31 December 2016 from $30.1 million as at 31 December 2015 was mainly due to repayments from associates and transfer of deposits on completion of acquisition of development sites in Australia and Singapore to properties for sale under development.

At the Company level, the amounts due from subsidiaries increased to $242.3 million as at 31 December 2016 from $235.9 million as at 31 December 2015 mainly due from additional funding provided to subsidiaries for new investments in Australia and Maldives. Other receivables increased to $9.3 million as at 31 December 2016 from $8.4 million as at 31 December 2015 mainly due to increase in interest receivable and accrued management fee.

At the Group level, cash and cash equivalents (refer to page 9, table 1(c)) amounted to $237.3 million as at 31 December 2016.

The Group recorded net cash inflows from operating activities of $7.5 million in FY2016 as compared to net cash inflows of $152.5 million in FY2015. This was mainly due to lower operating profits in FY 2016 and unbilled revenue for LIV on Sophia and Whitehaven which obtained TOP in 4Q2016.

The Group recorded net cash outflows from investing activities of $49.7 million in FY2016, mainly due to long term loans to an associate for acquisition of the investment property in Sydney and acquisition of the resort property in Maldives.

The Group recorded net cash outflows from financing activities of $34.8 million in FY2016 mainly due to dividend payment and interest paid for bank loans.

The Group’s current liabilities comprise trade payables, other payables, provision for taxation and bank borrowings. As at 31 December 2016, this amounted $663.0 million and represented 69% of total liabilities. Trade payables comprised mainly of progress claims from contractors and retention sums held. Other payables comprise mainly accruals for construction costs for completed projects, accruals for unbilled contractor progress claims, hotel management fees, and staff and directors’ performance bonus.

The decrease in other payables from $84.8 million as at 31 December 2015 to $83.2 million as at 31 December 2016 was mainly due to payment to an associate company and overall lower provision for directors’ performance bonus.

Provision for taxation decreased from $25.0 million as at 31 December 2015 to $2.1 million as at 31 December 2016 mainly due to tax paid for Centropod@Changi, Spottiswoode 18, Space@Kovan, Jupiter 18, the MKZ and Treescape in FY2016. These projects obtained TOP in early 2015 and 2014.

At the Company level, the decrease in amounts due to subsidiaries from $357.9 million to $352.7 million as at 31 December 2016 was mainly due to repayments to subsidiaries.

The Group’s non-current liabilities comprise bank borrowings and deferred tax liabilities. As at 31 December 2016, this amounted to $303.6 million and represented 31% of total liabilities. Deferred tax liability increased from $21.3 million as at 31 December 2015 to $33.1 million as at 31 December 2016 mainly due to provision for the fair value gain on the investment property at 59 Goulburn Street, Australia as well as unbilled receivable of projects which have obtained TOP in FY2016.

As at 31 December 2016, the Group’s total borrowings amounted to $832.7 million, with $347.4 million repayable within one year and $485.3 million repayable after one year (refer to page 7, table 1(b)(ii)). The increase in the total borrowings of $25.0 million from $807.7 million as at 31 December 2015 was mainly from loan drawdown on completion of acquisition of new development sites.

At the Company level, total borrowings amounted to $123.2 million, with $63.2 million repayable within one year and $60.0 million repayable after one year. The increase in total borrowings of $18.4 million from $104.8 million as at 31 December 2015 was mainly for drawdown of working capital loans to fund the acquisition of the resort property in Maldives.

Commentary

Property Development

Singapore

The Ministry of Trade and Industry (“MTI”)1 announced on 17 February 2017 that the Singapore economy grew by 2.9% on a year-on-year basis in 4Q2016, faster than the 1.2% growth in 3Q2016. For the whole of 2016, the Singapore economy grew 2%. For 2017, MTI has maintained the GDP growth forecast at 1.0% to 3.0%.

Latest statistics from the Urban Redevelopment Authority2 showed a gentler 0.5% decline in private residential property prices in 4Q2016 compared to the 1.5% decline in 3Q2016. For the whole of 2016, prices slipped 3.1% compared to a 3.7% decline in the 2015 – the slowest rate of decline in three years3. The URA data also suggested healthy demand, with developers selling 7.2% more units in 2016 at 7,972 units, compared to 7,440 units in 2015.

The Group launched the Straits Mansions freehold residential project (http://www.straitsmansion.com.sg/) in Singapore. The project has been fully sold within six months of its sales launch. Straits Mansions is expected to start contributing positively to the Group’s performance from 4Q2017.


1 Ministry of Trade and Industry, February 17 – Release of 4th Quarter 2016 and 2016 real estate statistics
2 Urban Redevelopment Authority, January 26, 2017 – Release of 4th Quarter 2016 real estate statistics
3 Straits Times, January 27, 2017 – Things looking up for property market

Australia

Latest statistics from the Australian Bureau of Statistics (“ABS”)4 showed a 1.8% year-on-year seasonally-adjusted growth in Australia’s GDP for the quarter ended 30 September 2016 albeit a 0.5% decline 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 3.5% year-on-year increase in the weighted average residential property prices of eight capital cities, and 1.5% quarter-on-quarter growth for the quarter ended September 2016. On a year-on-year basis, prices rose in Sydney (3.2%), Melbourne (6.9%), Brisbane (3.1%), Adelaide (3.2%), Hobart (6.8%) and Canberra (5.5%) and declined 4% in Perth and 7.2% in Darwin6.

The Group launched The Hensley and Octavia in Sydney, Australia. Both projects received warm reception and are over 90% sold. They are expected to contribute positively to the Group’s profits upon its completion in 2018.

As at 16 February 2017, based on units sold from the following ongoing development projects, the Group has total attributable pre-sale revenue of $369.3 million, profits of which will be progressively recognised from 1Q2017 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-$25.8 billion (+1 to 4%) and international visitor arrivals to be in the range of 16.4-16.7 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 by 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.


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