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Chairman’s Message

Dear Shareholders,


We have just ended a very difficult year with a profit of S$27.7 million for the financial year ended 31 March 2020. This is a decline of 41.9% compared to the last financial year. We continue to suffer currency declines from the weakening of the Australian Dollar (“A$”) and New Zealand Dollar (“NZ$”). For this financial year, we saw a further diminution of 8.6% for the A$ and 7.4% for the NZ$, bringing a total accumulated decline of 32.9% for the A$ and 17.3% for the NZ$ since 2012.


2019 broke weather records with the hottest ever summer resulting in several serious uncontrolled bushfires raging across Australia. This catastrophe inflicted devastating damages and our hospitality industry had to endure lower occupancies for rooms and convention/meeting facilities. These bushfires, soon followed by floods, caused destruction of agricultural products and live stocks and resulted in spiralling food costs. With hardly much of a pause, COVID-19 set in, causing dampening consumers’ sentiments. Before long, COVID-19’s insuperable spread across the globe had caused seismic disruptions to everyday life. Our hotels had to be shuttered down in April 2020. This is a disaster of unprecedented scale. A longer period of stress may have to be factored in before our business returns to normalcy.


As indicated in previous reports, Chevron’s tenancy for our Grade A commercial property, Dynons Plaza, ended on 15 April 2020. This is an inopportune time to seek replacement tenancies during the COVID-19 lockdown but plans are in place to refurbish and rename it to Stamford Green which will be repositioned for multi-let tenancies. Meantime, we are taking a further impairment of S$19.3 million on the value of this property.

According to figures published by the Property Council of Australia, the Perth Central Business District (“CBD”) office vacancy rate eased down to 17.6% from 18.4% over the six months to January 2020. It was the sixth consecutive period (three years in total) that the office vacancy rate in the Western Australia capital has fallen though it still has the highest vacancy rate nationally and more than double the national CBD vacancy rate of 8.0%.

To cushion the impact from this near-term loss of recurring income from Dynons Plaza to our property investment segment, the acquisition of 8 Finsbury Circus (“8FC”) in the City of London, United Kingdom, will position the Group for at least 13 years of multi-let tenancy revenue. Since the acquisition of this trophy asset, we have seen further compacting of yields from a market with a low vacancy rate of 4% yet facing a shortage of new supplies. However, with the onset of COVID-19, valuers swiftly turned cautious and tempered this optimism by ascribing a smaller mark to market gain on 8FC as at 31 March 2020.


For our property development segment, we have 30 units at Macquarie Park Village remaining unsold, of which 1 unit is under contract for sale and 20 units are leased out for recurring income. Meantime, we have ongoing applications for two new developments. Unfortunately, it is in the nature of the system and the market place that time is required for such approvals to crystallise.


The current economic indicators are dismal and the outlook extremely grim. The COVID-19 pandemic has caused massive disruptions and negative impacts to our business operations with the travel curbs, quarantines and lockdowns currently in place. The Group is eligible to various support schemes from the Singapore, Australia and New Zealand Governments. These include wage subsidies for our employees. However, such temporary reliefs are not able to fully mitigate our loss of revenue as the negative impacts are likely to be severe and prolonged. Thus, we embarked on further cost savings with the senior management taking pay cuts ranging from 10% to 30%, directors taking cuts in directors’ fees as well as containment of manpower costs through employees accelerating the utilisation of annual leaves. We remain vigilant to resume our hotel operations at the earliest opportunity while utilising the lockdown to upgrade our various properties.


Given the dire straits confronting the global economy and especially immense challenges we are currently facing, the Directors will recommend a final dividend of half a Singapore cent per ordinary share for the financial year just ended.


Finally, I am grateful for the support of every one of our guests, Board of Directors and all our colleagues in New Zealand, Australia, United Kingdom and Singapore for their invaluable contributions.

C. K. Ow

Executive Chairman
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