Straco Corporation Limited

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Extracted from the Annual Report 2016

Overview

The Group achieved net profit of $46.46 million in FY2016, a decline of 5.2% compared to FY2015. Group turnover was $125.16 million for the year ended 31 December 2016, 2.0% lower than FY2015. This was the result of a weakened Renminbi against Singapore dollars, as well as lower revenue contribution from our Underwater World Xiamen. Overall visitor arrivals to all the Group's attractions was 5.05 million.

The Group's main operating assets during the year include:

  • Shanghai Ocean Aquarium ("SOA"), a premier tourist attraction located in the Lujiazui Financial District of Pudong, Shanghai
  • Singapore Flyer, one of the world's largest observation wheels located on the iconic Marina Bay skyline
  • Underwater World Xiamen ("UWX"), located on the scenic Gulangyu Island in Xiamen City
  • Lixing Cable Car ("LCC"), a cable car service at the historic Mount Lishan in Xi'an

China's economy grew 6.7% in 2016 from a year ago, with consumption accounting for 64.6% of GDP, amid the transition towards domestic consumption led growth. The Group's flagship attraction, SOA, continued to generate positive growth in earnings in 2016 on higher visitations. As part of our ongoing content renewal, special exhibitions were launched during major holidays, including an Octopus exhibit for the Labour Day break, fish hatching exhibitions for the Dragon boat festival and Children's Day, as well as a cold-water marine mammal exhibit for the National Day holiday. We continued to strengthen our presence on social media platforms like Weibo and WeChat, with online interactive games and activities increasing public awareness of SOA. Collaborations with online travel agencies this year also contributed to the increased visitations. During the year, SOA continued its participation in various volunteering activities in schools for children with special needs. We also supported visits to SOA for children and teachers from low-income areas, and organized activities on World Sight Day (global awareness day for the visually impaired).

UWX registered single digit percentage declines in revenue and profitability in FY2016, after Xiamen city was hit by super typhoons in the month of September which caused an unprecedented closure of the aquarium for more than a week. The authorities' subsequent restriction on visitor numbers to Gulangyu Island in the aftermath of the typhoon further affected UWX performance in the last quarter of 2016. Throughout the year, UWX had launched eight special themed exhibitions, which included interactive performances and activities to attract visitors. To boost ticket sales, online ticketing and ticket sales through appointed agents were also introduced in April 2016.

Lixing Cable Car registered positive growth in revenue and profitability despite an overall ridership decline compared to a year ago, as better yield was achieved from increased walk-in passengers and fewer tour groups.

Our Singapore Flyer continued to generate healthy growth in revenue in 2016, on better ticket yield and a new restaurant which opened in February 2016. In February 2016, we partnered with "River HongBao", the annual national event for Lunar New Year celebrations in Singapore. We also collaborated with the National Heritage Board to host travelling exhibitions showcasing cultural events, including performances and craft demonstrations during the Malay and Indian festivals of Hari Raya Puasa and Deepavali. In December 2016, Singapore Flyer became the official venue for the highly anticipated Heineken "Shape Your City" campaign, where five of our giant observation wheel capsules were transformed to showcase different interactive, multi-sensory experiences. These were curated by Heineken's City Shapers, key ambassadors selected from the fields of media and communications.

As part of the continued efforts to support community engagement projects, our Singapore Flyer was the venue partner for the Thye Hua Kwan Moral Society launch of the Harmony Truck on 15 May, a roving medium holding information about the diversity of cultures in Singapore, promoting intercultural understanding and tolerance. In addition, we also collaborated with community partners to provide concessionary flights and subsidized meals to local senior citizens throughout the year.

On 1 July 2016, the Singapore Flyer was presented the Top 50 Engineering Feats Award, recognizing the Flyer's position as an iconic structure on Singapore's skyline. The Engineering Feats @ IES-SG50 was a national competition to recognise the top 50 engineering achievements across the various fields of engineering, deemed to have made the greatest economic, infrastructural or societal impact to Singapore since 1965. It also won the Asian Tourism's Red Coral Award on 2 September 2016, for the 'Most Popular Attraction' in Singapore. This award ceremony was held in Pudong, Shanghai, with the winners decided by a judging panel including senior practitioners from the tourism industry, research and investment institutions and the media.

FINANCIAL COMMENTARY

The Group generated a net profit before tax of $68.21 million as compared to $72.93 million last year, a decrease of 6.5%, mainly attributable to lower profitability of UWX.

Expenses in total increased $3.24 million, or 5.6% compared to FY2015, mainly attributable to higher staff cost on more headcount and general salary increment, as well as the start-up cost and operating cost of a new restaurant at Singapore Flyer.

Finance cost of $1.61 million was recorded in the year, mainly arising from the interest incurred on the bank loan taken up for the acquisition of the Singapore Flyer.

The Group's cash flow from operating activities amounted to $67.07 million in FY2016. During the year, the Group used $23.10 million to pay out dividends and $13.50 million to repay borrowings and interest on loans. The company also utilized $0.52 million cash for share buybacks and received $1.18 million from the exercises of share options. As of 31 December 2016, the Group's cash and cash equivalent balance (excluding bank deposits pledged) amounted to $163.23 million, an increase of 20.4% for the year.