Third Quarter Financial Statement Announcement for the Period Ended 30 September 2017
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Profit & Loss
- Included in Revenue is investment income of approximately $2,000 (2016 : $2,000).
- Included in Other income is net loss on disposal of property, plant and equipment of approximately $17,000 (2016 : $Nil).
- Included in Loss before tax is net profit on sale of development properties of approximately $758,000 (2016 : $Nil).
- NM – Not Meaningful.
- NA – Not Applicable.
A Statement of Financial Position
Review of Performance
The Group’s revenue for the current period increased significantly from approximately $14.0 million to $20.2 million. This was mainly due to the sales of two residential units in Singapore.
The Group’s other income decreased mainly due to the loss on disposal of property, plant and equipment in the current period and a decrease in licence fee income from its investment properties.
With the recognition of sales revenue, the Group recorded the corresponding amount of cost of sales for these two units.
The increase in impairment loss written back on trade and other receivables was mainly due to the doubtful debts provided in prior periods being reversed in the current period.
The increase in other expenses was mainly due to pre-opening and other costs incurred for Yotel Singapore Orchard Road (“Yotel”).
The increase in finance expense for the current period as compared to the previous period was mainly due to increases in loans and borrowings, amortised transaction costs on loans and borrowings and amortised imputed interest on unsecured bonds. In addition, upon completion of construction of Yotel in June 2017, interest expense incurred has been expensed off in this current period.
Hence, the Group recorded a loss of approximately $5.6 million as compared to a loss of approximately $2.1 million in the previous corresponding period. The Group’s loss attributable to owners of the Company was approximately $3.8 million as compared to a loss of approximately $0.8 million in the previous corresponding period.
The increase in the Group’s other assets (current) was mainly due to the purchase of 5.7% fixed rate notes due January 2018 by its investee in Hong Kong. The notes are listed on The Stock Exchange of Hong Kong Limited.
The Group’s increase in loans and borrowings (current) was due mainly to the reclassification of certain secured bank loans and $100 million in principal amount of unsecured notes due in the first quarter of 2018 from non-current liabilities in 2016 to current liabilities. The Group is confident that these loans and borrowings will be refinanced and/or repaid from its available undrawn facilities by their respective due dates.
In line with the above, the Group recorded a decrease in loans and borrowings under non-current liabilities. In addition, there was also an increase in its loans and borrowings and a decrease in cash and cash equivalents to fund the construction costs of Yotel and the renovation costs of an investment property in Hong Kong.
The decrease in trade and other payables was mainly due to recognition of the deferred consideration received in advance to gain on disposal of subsidiaries in the second quarter of 2017 and the payment of expenses accrued as at 31 December 2016.
The Group’s net cash used in investing activities was mainly for the construction costs of Yotel. As at 30 September 2017, the Group’s cash and cash equivalents amounted to approximately $56.5 million.
Commentary On Current Year Prospects
The Group’s investment property, Yotel, a 30-storey hotel with 610 guest rooms, commenced operations on 1 October 2017. The Group’s recurring income will be from rental income from its investment and development properties and Yotel is expected to contribute additional recurring income for the Group.
The hospitality sector is expected to be challenging with demand being price sensitive due to the increase in supply of hotel rooms.The Group will continue to market its development properties for sale given that the residential sales market is showing more positive sentiments.