Straco Corporation Limited

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Third Quarter Ended 30 September 2017 Unaudited Financial Statement And Dividend Announcement

Financials Archive

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Income Statement

Income Statement

Statement Of Comprehensive Income

Comprehensive Income Statement

n.m. – not meaningful

Balance Sheet

Balance Sheet

Review of the performance

Revenue

In the third quarter of FY2017, the Group achieved sales of $46.11 million, a decrease of 3.2% from the corresponding period in 3Q2016, mainly due to lower revenue at Underwater World Xiamen ("UWX"), partially offset by higher revenue from Shanghai Ocean Aquarium ("SOA"), Lixing Cable Car and Straco Leisure which operates the Singapore Flyer.

Overall visitation to all our attractions was 1.91 million visitors for the quarter, 5.1% lower than the corresponding period in 3Q2016.

Cumulatively, overall revenue for the first nine months of FY2017 amounted to $103.85 million, 1.9% higher than the corresponding period in FY2016.

Operational Results

Total Expenses (excluding finance cost) for 3Q2017 increased $0.55 million, or 3.5% from 3Q2016, in the absence of a sales taxes reversal as in the corresponding period. Sales taxes paid on ticket revenue for the period January to April 2016 was reversed in 3Q2016 when SOA received notification of the waiver being granted. Sales tax has been replaced with value-added tax with effect from 1 May 2016.

Finance cost for 3Q2017 decreased 17.1% from 3Q2016, due to lower principal outstanding for the term loan as well as lower interest rate this quarter.

Profit before tax was $31.28 million for the current quarter, 5.6% lower than the profit before tax of $33.13 million for 3Q2016, mainly due to decrease in revenue and the absence of sales taxes reversal as mentioned above.

Balance Sheet items

Other current assets increased 16.5% from $1.08 million at 31 December 2016 to $1.26 million at 30 September 2017 mainly due to increase in prepayments.

Reserves decreased 13.6% from $18.86 million at 31 December 2016 to $16.29 million at 30 September 2017, mainly due to the translation loss of $2.95 million arising from the weaker RMB currency against SGD at the end of current period compared to the end of last year, net increase in treasury shares from share buyback of $0.78 million and treasury shares reissued of $0.62 million, loss on treasury shares reissued of $0.34 million; partially offset by increase in share option reserves of $0.81 million during the period arising from share options granted in 2016 and 2017.

Deferred income decreased from $0.26 million at 31 December 2016 to $0.20 million at 30 September 2017, mainly due to the periodic recognition of deferred income to profit & loss in the current period.

Trade and other payables increased 13% from $10.58 million at 31 December 2016 to $11.95 million at 30 September 2017, mainly due to increase in payables and accruals on higher business volume at Shanghai Ocean Aquarium.

Current tax liabilities increased 271% from $2.08 million at 31 December 2016 to $7.71 million at 30 September 2017, mainly due to the provision of income taxes for 3Q2017 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 $33.06 million for 3Q2017. During the quarter, the Company used approximately $0.78 million to buy back 900,000 of its own shares. As at 30 September 2017, the Group's cash and cash equivalent balance amounted to $189.11 million.

Commentary

The National Bureau of Statistics of China reported that China's gross domestic product ("GDP") grew a stable 6.8% in the third quarter of 2017 from a year ago. Consumption contributed 64.5% to GDP growth in the first nine months.

On the tourism sector, the China National Tourism Administration reported that a total of 705 million tourists travelled around the country during the National Day golden week, generating 583.6 billion Yuan of revenue, representing 11.9% and 13.9% increase year-on-year respectively. According to the State Council five-year tourism plan (2016-2020), the sector will contribute more than 12% of GDP growth, as the nation works towards developing tourism into a major driver of economic transformation.

Singapore economy grew 4.6% year-on-year in 3Q2017 on a strong showing by the manufacturing sector, based on advance estimates from the Ministry of Trade and Industry. On the tourism sector, it was reported that the Singapore Tourism Board ("STB") has signed a memorandum of understanding with Alipay to enhance Chinese tourists' overall experience in Singapore with better access to information before and during their trip. The collaboration is part of STB's overall strategy to better engage visitors through digital channel, which will in turn increase overall visitor satisfaction, increase tourism receipts and drive repeat visits.