Page 5 - ar2013

ANNUAL REPORT 2012/2013
3
Dear Shareholders,
Stamford Land Corporation’s net profit dropped by 40.6% to $31.7 million from the previous
financial year (FY) and revenue fell by 45.1% to $266.7 million. This set of results reflect a quiet
year for our property development segment with the completed sales of 16 apartments
compared with 131 units in the last FY. Our hotel segment’s profitability also dropped as lower
exchange rates were used for translation fromAustralian to Singapore Dollars.The twoAdelaide
hotels’ weaker performance and our Auckland hotel’s reduced profitability, after an unusually
good year in the last FY due to the Rugby World Cup, also impacted on Group performance.
Our hotel owning and management segment’s profit fell by 14.2% to $38.5 million and
revenue dropped by 4.7% to $227.5 million. As a whole, the Group’s eight hotels attained
higher revenue per available room (revpar) that increased by 5.2% over the previous FY.This
is heartening in the light of a more challenging operational environment with the mining
industry boom coming to a plateau, moderating spending on room and F&B by corporates
in this higher-yield market segment.The introduction of the Carbon Emissions Tax in July 2012
also led to increased utility costs.
Most of our hotels met these challenges by nimbly diversifying their client base and
becoming more vigilant on watching their expenses, making cutbacks where possible,
without compromising on the top-notch service for which our Stamford brand is known.Three
of our hotels also underwent refurbishment which inevitably affected revenue generation
but we take a long-term view in implementing continual revitalisation to reinforce our strong
brand reputation.
In the year under review, revenue from our Property Development segment dropped by
90.4% to $22 million and operating profit fell by 96.2% to $680,000. We sold seven units of
The Stamford Residences and The Reynell Terraces. This leaves two penthouses and two
luxury apartments in The Stamford Residences plus four Reynell Terraces still available.These
large units are less readily affordable, accounting for the slower response. We intend to
hold onto these properties until there are suitable buyers as we are confident that they
present excellent investment opportunities being located in The Rocks - a renowned historic
precinct where no more residential towers are allowed to be built.
Nine units of The Stamford Residences in New Zealand were sold during the financial year
under review. We are seeing signs of the Auckland residential property market gathering
momentum and in the months of April and May this year, another five apartments were
picked up with sales to be completed soon. Forty of the remaining 60 units were leased out
to ride on the strong Auckland CBD rental market, reaping a gross yield of over 5% per annum.
Profit in our property investment segment rose by 3.5% to $12.5 million. The higher revenue
of $13.9 million represents a 2.1% growth over the last FY. This segment will continue to stay
healthy due to the rental income from Dynon’s Plaza in Perth’s CBD which is on a 10-year
lease to Chevron Australia until 2020. The property’s fixed lease income is over A$11 million
per annum.
Chairman’s Message