It has been a challenging 12 months and our bottom line has been dented by the general business slowdown, depreciation of the AUD and NZD, and a hefty fair value write-down of our investment property in Perth.
The Group reported net profit of S$22.4 million for the financial year ended 31 March 2016, representing a 25% decrease from the previous year.
Specifically, there were (i) a 10% weaker translation of the Australian and New Zealand currencies compared to the previous year, (ii) a S$23.4 million write-down in the fair value for Dynon’s Plaza, despite four years remaining of the tenancy on the property, and (iii) a 56% decline in property development sales accounted for during the financial year just ended.
Had there been no write-down, our bottom line would have been significantly better than the previous year. In terms of hotel owning/management, the operating profit for the year just ended is consistent with the previous financial year after allowing for foreign exchange translation differences and the loss of contribution from the closure of Stamford Grand North Ryde.
Given the foregoing reasons, I seek shareholders’ understanding for the Board’s recommendation to reduce dividend for the financial year under review to 0.5 cents. On a more optimistic note, I am confident the subsequent years will deliver a better financial outcome.
As the construction of our Macquarie Park Village (MPV) progresses, the opportunity of building an additional 60 units has arisen. As this will add considerable value, we are now lodging our supplementary development application. Concurrently, a significant part of MPV is expected to be completed during 1H2017. The entire project is slated for completion in 2018.
Currently, we are also processing development applications for two important sites, one of which requires the purchase of its freehold title. When crystallised, both will be noteworthy projects. As foreshadowed in my previous Annual Report, a second Argentinian grill, La Boca Sydney, successfully made its debut in the NSW market. Works have also started on 26 new suites at Stamford Plaza Melbourne. These initiatives will increase both revenue and enhance our existing assets’ value.
In the last Annual Report, I reported that some 142 units at MPV were under review as development application for a portion of the carpark was not granted. I am pleased to update that only 22 of these units are unsold and marketing efforts continue for these units.
Looking ahead, management expects the hotels to continue to perform profitably despite looming oversupply in certain cities. To support a longer-term strategic growth plan, we are also in the process of recruiting resources for property development (focusing on different geographies) as well as for hotel management in the different market segments. We hope to share more details in the near future.
As part of our Board renewal, I am pleased to welcome Dr Stanley Lai, a Senior Counsel aboard. At the same time, I thank Mrs Lim Hwee Hua for her invaluable counsel to the Board. I would also like to take this opportunity to thank all colleagues in Australia, New Zealand and Singapore for their hard work to keep the Stamford brand flying high. Last but not least, my thanks to my fellow Board members for their wise counsel and to shareholders for keeping faith with us.