Straco Corporation Limited

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Extracted from the Annual Report 2016

"Despite the cautious sentiments surrounding the world economy, domestic tourism in China maintained its momentum, amid strong support from the Chinese government for the industry, registering double-digit increases in both tourist trips and revenues, while visitors to Singapore increased 7.7% year on year, hitting a record of 16.4 million, with China visitors topping key growth markets at a 36% year on year increase."

STAYING THE COURSE

2016 proved to be a dramatic year in world events, as many were caught off guard by the surprise results of Brexit and the US presidential election, the effects of which still remain to be played out in the coming years. Thankfully, these events did not have any noticeable effect on the tourism industries in China and Singapore, and Straco's results for the year were largely in line with our performance expectations, which took into consideration the slowing of economic growth in China, as well as localized events such as typhoons impacting our operations in Xiamen.

Despite the cautious outlook, I remain proud of our team's achievements for the year 2016:

  • Overall Group Revenue of $125.16 million
  • Group Net Profit of $46.46 million
  • Operating Cash Flow of $67.07 million

The depreciation of the Chinese currency during the year had impacted our financial result in Singapore dollar terms. Nevertheless, we are pleased with the margins at both the operating and net levels.

In view of this continued strong performance, we are proposing a first and final dividend of 2.5 cents per share. This proposed payment represents 46% of the net distributable profit for the year. We remain committed to generating favorable returns for our shareholders, while balancing our cash requirements for new projects and asset renewal and enhancements.

CONTINUING TO BUILD FOR THE FUTURE

As we had shared with you previously, we are embarking on a number of major asset enhancement programs for our existing attractions such as the Singapore Flyer and our aquariums in China. These will be implemented within the 2017/2018 period, and will serve to create compelling new-to-market experiences for our visitors in China and Singapore.

We remain on the lookout for good projects to build or acquire, and continue to assess potential tourism investments, but until we come across the rare opportunity that is a true step forward in terms of quality, scale and potential returns, we will remain prudent in matters of cash management.

TOURISM IN CHINA AND SINGAPORE REMAIN STRONG

Despite the cautious sentiments surrounding the world economy, domestic tourism in China maintained its momentum, amid strong support from the Chinese government for the industry, registering double-digit increases in both tourist trips and revenues, while visitors to Singapore increased 7.7% year on year, hitting a record of 16.4 million, with China visitors topping key growth markets at a 36% year on year increase. We are convinced that this is part of a continuing and sustainable trend, and will continue to stay laser-focused on enhancing our capabilities in attractions development and management.

A WORD OF APPRECIATION

As always, I would like to thank our staff, management, directors and partners for their part in our continuing success:

  • Our ground staff and management team across our subsidiaries for their unwavering commitment to product development and service quality, their positive attitude and ability to adapt to an evolving business environment.
  • Our various other stakeholders, business partners and consultants who have contributed to our sustained performance.
  • My fellow directors on the Board and all directors of our group companies for their valuable advice and guidance.
  • Last but not least, our shareholders for their trust and encouragement.

We will continue to build on the strong foundation and adopt a multi-prong approach towards future successes through effective corporate governance, innovation of our offerings, and seizing investment opportunities.

Wu Hsioh Kwang
Executive Chairman