Straco Corporation Limited

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Second Quarter Ended 30 June 2017 Unaudited Financial Statement And Dividend Announcement

Financials Archive

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Income Statement

Income Statement

Statement Of Comprehensive Income

Comprehensive Income Statement

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Balance Sheet

Balance Sheet

Review of the performance

Revenue

In the second quarter of FY2017, the Group achieved sales of $30.21 million, an increase of 8.4% from the corresponding period in 2Q2016, as Shanghai Ocean Aquarium ("SOA"), Lixing Cable Car ("LCC") and Singapore Flyer reported higher revenue, mainly on higher visitor numbers, partially offset by lower revenue at Underwater World Xiamen ("UWX").

Overall visitation to all our attractions was 1.23 million visitors for the quarter, 8.3% higher than the corresponding period in 2Q2016.

Cumulatively, overall revenue for first half of FY2017 amounted to $57.74 million, 6.4% higher than the corresponding period in 1H2016.

Operational Results

Total Expenses (excluding finance cost) for 2Q2017 increased $0.16 million, or 1.1% from 2Q2016. Cost of sales for 2Q2017 increased over corresponding period, mainly attributable to higher retail cost of sales, in line with the higher retail revenue. Sales and marketing expenses for the quarter decreased, mainly due to lower sales tax in the current quarter, as China's tax reforms where sales tax was replaced with value-added tax took effect from 1 May 2016. Other operating expenses for the quarter increased over 2Q2016, mainly attributable to higher service fee paid to ferry operators, as more UWX tickets were sold through them.

Finance cost for 2Q2017 decreased 33.3% from 2Q2016, due to lower principal outstanding for the term loan as well as lower interest rate this quarter.

Profit before tax was $16.62 million for the current quarter, 18.8% higher than the profit before tax of $13.99 million for 2Q2016, attributable to improved profitability at SOA, LCC, and Singapore Flyer.

Balance Sheet items

Trade and other receivables decreased 20.1% from $3.73 million at 31 December 2016 to $2.98 million at 30 June 2017 mainly due to decreases in trade debtors at SOA, UWX, and Singapore Flyer, refund of 2016 sales tax paid on ticket revenue were received by SOA upon the waiver being granted, partially offset by higher interest receivable from fixed deposits.

Reserves decreased 13.9% from $18.86 million at 31 December 2016 to $16.23 million at 30 June 2017, mainly due to the translation loss of $3.59 million arising from the weaker RMB currency against SGD at the end of current period compared to the end of last year, loss on treasury shares reissued of $0.34 million; partially offset by increase in share option reserves of $0.62 million during the period arising from share options granted in May 2016 and May 2017, as well as decrease in treasury shares upon treasury shares being reissued of $0.62 million.

Deferred income decreased from $259,000 at 31 December 2016 to $218,000 at 30 June 2017, mainly due to the periodic recognition of deferred income to profit & loss in the current period.

Trade and other payables decreased 18.9% from $10.58 million at 31 December 2016 to $8.58 million at 30 June 2017, mainly due to decrease in trade payables, as well as payments of 2016 performance bonus and directors fee which were accrued in last year.

Current tax liabilities increased 73.7% from $2.08 million at 31 December 2016 to $3.61 million at 30 June 2017, mainly due to the provision of income taxes for 2Q2017 profits at our subsidiaries, partially offset by the payment of 4Q2016 income taxes by SOA, LCC, and UWX in the current period.

Cash flow Statement

The Group generated net cash from operating activities amounting to $16.64 million for 2Q2017. During the quarter, the Group paid out approximately $1.69 million to a non-controlling shareholder for dividend declared by SOA in March 2017; and the Company paid out dividends of $21.51 million for the financial year ended 31 December 2016. As at 30 June 2017, the Group's cash and cash equivalent balance amounted to $159.50 million.

Commentary

The National Bureau of Statistics of China reported that China's gross domestic product ("GDP") grew 6.9% in the second quarter of 2017 from a year ago, backed by a strong manufacturing sector and healthy domestic consumption.

Investment in China's tourism sector is expected to maintain strong growth momentum through 2017. According to the China National Tourism Administration, direct investment in the industry is predicted to increase more than 20% to reach 1.5 trillion Yuan.

Singapore economy grew 2.5% year-on-year in 2Q2017, based on advance estimates from the Ministry of Trade and Industry. On the tourism sector, it was reported that the outlook for Singapore Tourism looks positive this year, as visitor numbers hit 4.3 million in first quarter, a 4% increase over corresponding period last year. In addition, a second edition of the SMAP (Singapore MICE Advantage Programme) has been launched in Frankfurt on 16 May 2017, with the aim to boost business events in Singapore.