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Straco Corporation Limited • Annual Report 2014
OPERATIONS REVIEW
With a growing focus on social media marketing, SOA launched its official Weibo
and WeChat accounts and intensified its online publicity for various events and
themed exhibitions organized in the year via these public platforms.
As a key attraction on the scenic Gulangyu Island in Xiamen, UWX registered
double-digit growth in revenue and profitability in FY2014. Visitorship grew 18.7%
in FY2014, attributable to more extensive fast speed rail networks facilitating travel
from neighbouring provinces to Xiamen, favourable weather in the year, as well
as creative marketing efforts coupled with various themed exhibitions launched
during festive seasons, school holidays, and major events like the World Cup 2014
during the summer months. For example, hundreds of seahorses were displayed to
celebrate the lunar year of the Horse during the Chinese New Year period, while
in October’s golden week, “Big-belly” seahorses from Australia were introduced to
visitors. While visitor numbers grew strongly in the first three quarters, new ferry
regulations, including the restriction of daily visitor numbers to Gulangyu Island,
as implemented by the Island’s Administrative Bureau, took effect in October 2014
and impacted UWX’s visitorship in the fourth quarter.
FINANCIAL COMMENTARY
The Group generated a net profit before tax of $57.64 million as compared to
$50.27 million last year, an increase of 14.7%, mainly attributable to higher
visitation to our attractions.
Expenses in total increased $11.65 million, or 41.4% compared to FY2013.
Depreciation, repair and maintenance, staff cost, and utilities expense increased,
partly due to the operating expenses incurred by SLPL when the operations
of the Singapore Flyer was transferred to SLPL on 28 November 2014. Higher
variable costs from the existing business units, in line with overall higher revenue
earned, acquisition-related cost such as stamp-duty, legal and professional fees
amounting to $2.19 million incurred for the acquisition of the Singapore Flyer;
as well as an exchange loss of $1.48 million recorded this year, as opposed to an
exchange gain of $2.18 million recorded last year, also contributed to the overall
higher expenses this year.
Finance cost of $0.16 million was recorded in the year, as a term loan from a bank
was taken up for the acquisition of the Singapore Flyer.
Overall tax expenses increased due to the higher profit before tax earned by SOA
and UWX, as well as the deferred tax recognized on the distributable profits of
these attractions which are subject to a 5% PRC withholding tax.
The Group’s cash flow from operating activities amounted to $36.99 million in
FY2014. During the year, the Group paid $116.4 million, net of deposit of $21.2
million paid in FY2013, for the acquisition of the Singapore Flyer. The acquisition
was funded partly by internal resources and partly by borrowings. The company
also utilized $18.79 million cash for dividend payments and share buybacks. As of
31 December 2014, the Group’s cash and cash equivalent balance amounted to
$112.47 million, an increase of 4.1% for the year.
