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Financials
Condensed Interim Financial Statements For The Six Months Ended 30 June 2024
Financials Archive
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Condensed Interim Consolidated Statement Of Comprehensive Income
Notes:
- Included in Profit before tax is net profit on sale of development properties of approximately $609,000 (2023: $2,124,000).
- NM – Not Meaningful.
Condensed Interim Statements Of Financial Position
Review of Performance
The Group posted a revenue of approximately $44.6 million for this period as compared to approximately $50.8 million for the previous corresponding period. The decrease in revenue of approximately $6.2 million was attributed mainly to decreases in revenue from the sale of its residential units in Concourse Skyline and income from its investment properties due to lower occupancy rates.
The Group’s other income increased mainly due to gain on redemption of its debt investments in this period.
The decrease in depreciation of property, plant and equipment was mainly due to certain assets being fully depreciated as at 31 December 2023 and the estimated useful life of the improvements to the office lease in Hong Kong has been adjusted due to the extended lease period.
The decrease in depreciation of right-of-use assets was mainly due to lower rental rates committed for its renewal of office lease in Hong Kong.
The changes in fair value of other investments at fair value through profit or loss was mainly due to the net fair value loss in the valuation of its other investments as at 30 June 2024 as compared to the net fair value gain in the valuation as at 30 June 2023.
With the recognition of lower sales revenue from its development properties, there was also a decrease in cost of sales of development properties for this period as compared to the previous corresponding period.
The increase in property tax was mainly due to the properties being assessed at higher annual values in this period.
The decrease in rental commission was due to less new leases for this period as compared to the previous corresponding period.
The increase in net exchange gain for this period was mainly due to the weakening of the Singapore dollar for its investments in securities and cash and cash equivalents denominated in Hong Kong dollar and United States dollar.
The increase in finance income was mainly due to more Hong Kong dollar deposits placed with financial institutions in Hong Kong at higher interest rates and the higher deferred day one gain on Hong Kong dollar unsecured bonds. This increase was partially offset by a decrease in interest income from its debt investments that were redeemed in the first quarter of 2024.
The decrease in tax expense was attributed to a tax refund and less taxable profit for this period as compared to the previous corresponding period.
Overall, the Group posted a profit of approximately $2.7 million as compared to approximately $6.3 million in the previous corresponding period.
Consequently, the Group’s profit attributable to Owners of the Company was approximately $3.6 million as compared to approximately $6.8 million in the previous corresponding period.
The increase in right-of-use assets was mainly due to the renewal of its office lease in Hong Kong in this period.
The decrease in other investments was mainly due to the redemption of its debt investments and net fair value loss on valuation of its other equity investments as at 30 June 2024. However, this was partially cushioned by the Group’s purchase of other equity investments in this period.
With the increase in right-of-use assets in this period, there was a corresponding increase in lease liabilities. As the office space has a lease term of three years, a portion of the lease liabilities was classified as non-current liabilities.
The increase in loans and borrowings was mainly to enhance the liquidity of the Group. There was a reclassification of the Hong Kong dollar unsecured bonds due in the first quarter of 2025 from non-current liabilities as at 31 December 2023 to current liabilities as at 30 June 2024. The Group intends to discuss with the bondholders to extend the maturity date of these bonds.
The decrease in trade and other payables was mainly due to the payment in this period of employee benefit expenses accrued as at 31 December 2023 and the refund of tenancy deposits in this period for leases that have expired.
As at 30 June 2024, the Group’s cash and cash equivalents stood at $82.5 million. Net cash from operating activities arose mainly from rental income of its properties and collection from sale of its development properties and was utilised to pay operating costs and expenses. Net cash from investing activities arose mainly from the interest income and redemption monies received on its debt investments and was utilised mainly for purchase of other equity investments. Net cash from financing activities was mainly attributed to net proceeds from bank loans and borrowings and was utilised mainly for interest payment on loans and borrowings and dividend payment to shareholders of the Company.
Commentary On Current Year Prospects
The leasing demand for commercial units is likely to remain subdued due to the ongoing geopolitical tensions, weak economy and high-interest rate environment. This economic situation coupled with corporate cost-cutting measures such as home working and hot-desking could result in a decline in demand for office space. However, the Group will boost its targeted marketing efforts and rental income from the Group’s investment properties is likely to remain stable.
In Singapore, hotel room revenue, revenue per available room and average occupancy have overall registered decreases in the first half of 2024. This decline was due to an increase in hotel room supply in the market, change in travellers’ profile and macroeconomic factors, including the strong Singapore dollar against foreign currencies that may deter tourists to visit Singapore as compared to neighbouring countries. However, hotels in Singapore are eyeing a pickup in demand in the coming months driven by various top-tier events that are likely to bring more visitors in Singapore. The Group is in discussion with its hotel operator to adopt strategies to improve the performance of YOTEL Singapore Orchard Road.
The residential market continues to be slow in reaction to the existing property cooling measures in Singapore and sustained high interest rates. The Additional Buyer’s Stamp Duty has dampened market interest in the demand of residential properties in Singapore.