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Second Quarter Financial Statement Announcement for the Period Ended 30 June 2018

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Profit & Loss

Profit & Loss

Notes:

  1. Included in Revenue is investment income of approximately $3,000 (2017 : $Nil).
  2. Included in Profit before tax is net profit on sale of development properties of approximately $3,423,000 (2017 : $Nil).
  3. NM – Not Meaningful.
  4. NA – Not Applicable.

Balance Sheet

Balance Sheet

# Amount less than $1,000

Review of Performance

The Group posted a revenue of approximately $30.9 million for this period as compared to $14.7 million in the previous corresponding period. The increase was mainly due to the recognition of revenue from the sales of its development properties in Singapore and income from its hotel, YOTEL Singapore Orchard Road (“YOTEL”). YOTEL had commenced operations only in the last quarter of 2017.

The decrease in the Group’s other income of approximately $0.04 million was mainly due to lower government grants/schemes and licence fees from its investment properties.

With the recognition of sales revenue from its development properties in Singapore, the Group recorded the corresponding amount of cost of sales for these units.

The depreciation expense in this period was higher than the previous corresponding period mainly due to office equipment purchased in this period.

The increase in net exchange gain was mainly due to the weakening of the Singapore dollar for investments in securities and cash balances denominated in United States dollars and Hong Kong dollars.

The Group recorded a once-off gain from disposal of subsidiaries of approximately $9.0 million in the second quarter of 2017 but there was no gain in this period. That gain was mainly from the recognition of the deferred consideration received in advance in relation to the estimated tax exposure on the gain from the disposal of a subsidiary in 2014.

The increase in finance income was contributed mainly by its investment income.

The increase in finance expense for the current period as compared to the previous corresponding period was mainly due to the non-capitalisation of interest expense and increases in loans and borrowings.

Hence, the Group posted a profit of approximately $3.4 million in this period as compared to $6.3 million in the previous corresponding period.

The Group’s profit attributable to Owners of the Company was approximately $4.1 million in this period as compared to $2.2 million in the previous corresponding period.

The increase in the Group’s property, plant and equipment was mainly due to the purchase of furniture and fittings for the residential units of its investment property in Hong Kong that was recently renovated.

The increase in the Group’s other assets was mainly due to its investment in unquoted equity securities.

The increase in the Group’s pledged bank deposits was mainly due to the monies collected from the rental of its investment properties in Hong Kong.

The increase in the Group’s other investments was mainly due to the purchase of equity and equity-linked securities.

The Group’s decrease in trade and other receivables was mainly due to the reclassification of transaction costs paid in December 2017, which was previously classified as prepayments, to loans and borrowings when the loan was drawn down in January 2018.

The Group has reclassified certain secured loans from current to non-current as these loans were refinanced in January 2018. There was a net decrease in unsecured borrowings due to the repayment of its $100 million fixed rate notes in the first quarter of 2018. In addition, the Group has reclassified its $120 million unsecured fixed rate notes due in the first quarter of 2019 from non-current in 2017 to current. The Group is confident that these notes can be refinanced or repaid from its available undrawn facilities by its due date. There was also an increase in its loans to pay for accrued expenses and other investments.

The decrease in trade and other payables was mainly due to the payments of staff costs, accrued development costs and interest expense accrued as at 31 December 2017.

The increase in current tax liabilities was mainly due to the net effect in provision of tax for the first half of 2018 and the payment of prior year tax in this period.

Commentary On Current Year Prospects

The Group is expected to continue to recognise more profit from the sales of the residential units of Concourse Skyline in the next two quarters of 2018. The existing series of cooling measures on the property market will nevertheless have an impact on the pace of our sales. However, the Group will continue to actively market the sales and leases of these residential units.

The Group has also ventured into providing co-working spaces at International Building commencing from June 2018.