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Chairman’s Message

Dear Shareholders,

FINANCIAL PERFORMANCE

I am pleased to report another year of stellar results. Our profit for the financial year ended 31 March 2019 amounted to S$47.7 million. This, however, is a decline of 15.4% compared to the last financial year.

Similar to the last financial year, the Property Development Segment’s earnings supplemented that of the Hotel Owning and Management and Property Investment Segments.

As previously foreshadowed, property development within this particular market segment currently faces tough challenges from excess supply caused by a deluge of foreign developers competing and driving land costs up to unrealistic levels. In addition, the recent slew of government cooling measures in Australia, including increased stamp duties, levy of foreign buyers’ property taxes and loan curtailment by banks, have contributed to a listless market.

For the Property Investment Segment, we provided an impairment write-down of S$6.7 million in Dynons Plaza owing to a reduced tenure in the remaining lease.

OUTLOOK

Other than the remaining 39 units built under the Urban Activation Precinct, we have fortunately disposed all of the Macquarie Park Village (“MPV”) units while the new supplies in this area are expected to languish from poor take-up. To maintain price integrity of our well-located and high quality products at MPV, we will opt to lease out unsold units to earn recurring income.

Meantime, we are continuing with our development application for a new project in the high-end segment and location. As is consistent with the nature of development application approvals, patience is required.

Our Hotel Owning and Management Segment is stable as we continue to tweak and improve operational efficiency. As it is not commonly appreciated, I have to emphasise that this is very much a hands-on type of business, requiring a huge amount of management time and resources. Unlike passive owners, we have built a valuable brand name over the years. As such, our properties are unencumbered from long, if not, onerous management contracts. The future of the luxury 5-star hotel segment remains challenging due to the ever increasing room stock in some cities.

In our Property Investment Segment, our current long tenancy lease at Dynons Plaza will expire in 2020. Even though the overall sentiment for the office market in Perth has improved, there has been a 40% decline in rental rates. This, coupled with lower demands for space, makes for a daunting leasing environment. Still, Dynons Plaza has a first-class location within Perth’s Central Business District, and we are working at finding substitute tenancies.

More significantly, the Australian Dollar has depreciated against the Singapore Dollar by 26.5% since its peak in 2012. Fortunately, our borrowings are low and we are in a net cash position. This allows us to actively seek new investments in developed countries to augment our earnings. Such an enviable position would not have been possible without having adopted a conservative approach in terms of fiscal prudence and cash flow management. For this, I thank the Board of Directors (the “Board”) for their wise counsel as well as the shareholders for their forbearance.

DIVIDENDS

I am pleased to announce that our Board has recommended a final dividend of 1 Singapore cent per ordinary share for the financial year just ended.

APPRECIATION

Finally, I also thank all our valued customers for their support and the many long-serving employees for their loyal hard work. Without their continued contributions, we could not have achieved the more than two decades of growth and success.

C. K. Ow

Executive Chairman
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