Straco Corporation Limited

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Extracted from the Annual Report 2017

Overview

The Group achieved a net profit of $47.74 million in FY2017, an increase of 2.7% as compared to FY2016. Group turnover was $128.44 million for the year ending 31 December 2017. This is 2.6% higher than FY2016 as our attractions, with the exception of Underwater World Xiamen, reported positive growth in revenue. Overall visitor arrivals to all the Group's attractions was 5.19 million, a 2.7% increase over FY2016.

The Group's main operating assets during the past 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 in the Marina Bay Precinct, Singapore
  • 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

Backed by a strong manufacturing and services sector, healthy domestic consumption and in part due to a global recovery, China's economy grew 6.9% in 2017. The Group's flagship attraction, SOA, continued to generate positive growth in earnings in 2017 on the back of increased visitor numbers. During the year, SOA continued to create brand awareness and enhanced interaction with visitors and tourists through various online interactive activities on the WeChat platform and other offline activities conducted during major holidays. Examples of such activities organized by SOA include various themed exhibitions such as the "Good Fortune Aquatic Animals Exhibition" during the Chinese New Year, "Finding Fantastic Animals" during the Labour Day holiday, the "Pufferfish Special Exhibition" on National Day, and "Special Baby Fishes" over the Christmas and New Year period. SOA also collaborated with a French Orchestra for the first time and successfully organized a first ever Underwater Symphony Live Orchestra on the 15th Day of the Chinese New Year. This event received positive feedback and garnered rave reviews while also promoting cultural exchange between the East and West. The aquarium also continued to support charitable causes by organizing visits to SOA for the mentally handicapped, students from low-income families, and cancer patients.

UWX registered a decline in both revenue and profitability in FY2017 as it was adversely impacted by the tightened security controls in the months before the BRICS Summit held in September 2017. This resulted in a decline in visitor numbers to Gulangyu Island from July 2017 which significantly affected UWX performance during the peak season of the summer holidays in July and August. In July 2017, the "Gulangyu Historical International Community" was successfully listed in the World Heritage List. As a national, provincial and municipal science education base, UWX had granted free admission to over 40,000 children and teenagers in 2017 for science education sessions. In March 2017, UWX was named "National Marine Science Popularization Education Base" in Xiamen. Throughout the year, it successfully held 15 lectures on marine science in communities and schools. In addition, UWX has been participating in various public welfare activities and providing social welfare sponsorship amongst other philanthropical pursuits. In 2017, UWX was also awarded the honour of the Star of Civilisation Service Window in Xiamen Siming District, and regularly paid visits to families with special difficulties and children in the welfare homes of Gulangyu. Additionally, it had also organized a charity initiative called "Love in the Habour" for children with autism.

With strong growth in overall ridership compared to a year ago, Lixing Cable Car registered significant growth in revenue and profitability in FY2017. The new facade at the base station and a newly opened tourist service center have also been well received by the visitors.

The Singapore Flyer registered marginal growth in revenue and profitability in 2017. In January, the Singapore Flyer partnered with River Hongbao for the third consecutive year to feature three wheels – Wheel of Longevity, Happiness and Fortune – along the Lucky Trail from the Marina Bay floating platform to Singapore Flyer to usher prosperity, health and wealth into the year of the rooster. Throughout the year, the Singapore Flyer also collaborated with the National Heritage Board to enrich Singapore's heritage landscape. It hosted exhibitions during festivals such as Hari Raya Puasa and Deepavali to showcase to foreign visitors how Singaporeans of different races and religions strengthen the fabric of its multicultural society through celebrations of major festivals.

As a way of giving back to the society, Singapore Flyer has continued to collaborate with the People's Association to offer flights and meals at a subsidised rate for local senior citizens. To date, close to 3,000 elderly members of society have benefited from this initiative.

2017 also marked the 10th edition of the Grand Prix Season in Singapore and the Singapore Flyer was once again part of the event. Guests enjoyed a bird's eye view of the thrilling race as it took place at F1 Circuit Park. The Sky View Pavilion, a Chinese restaurant operated by the Singapore Flyer was also recognized in the list of Best Restaurants 2017/18 by Tatler Dining, a guide that provides recommendations from passionate foodies' and discerning consumers' on the best restaurants and gourmet experiences.

In 2017, the Singapore Flyer continued to work closely with the Singapore Tourism Board (STB) to promote inbound traffic and increase its visibility in overseas markets. It participated in the In Singapore Incentives and Rewards (Inspire) scheme, a rewards programme designed by STB to grow Singapore's share of the meetings, incentives, conferences and exhibitions (MICE) market in the Asia Pacific region. In one such effort targeted at corporate incentive and meeting groups from India and the Middle East, the Singapore Flyer curated exclusive experience packages that include a Meet and Greet session, priority boarding and custom food and beverage options. Another notable collaboration with STB was the Internationale Tourismus Borse (ITB) Asia, an annual trade show that brings together all sectors in the Asia Pacific travel industry to facilitate local travel trade. The Singapore Flyer also participated in this show as a co-exhibitor in STB's Singapore Pavilion from October 25 to 27 to increase international awareness of our flight offerings and event spaces.

To further enhance the on-site experience for Singapore Flyer guests, it began the development of FLYER 360+, a Multimedia In-Capsule Experience focused on using integrated digital solutions and interactive story-telling to offer an immersive flight experience as well as foster a memorable experience for all guests. Large mounted screens and customized tablets will be installed in the capsules to allow guests to learn more about Singapore's history, our unique and diverse culture and how the Singapore cityscape transformed over the years. The project is presently slated to launch in 2018.

FINANCIAL COMMENTARY

The Group generated a net profit before tax of $70.46 million as compared to $68.21 million last year, an increase of 3.3%. Expenses, excluding finance cost increased $1.83 million, or 3.0% as compared to FY2016. A finance cost of $1.25 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 $66.10 million in FY2017. During the year, the Group used $23.26 million to pay out dividends and $13.12 million to repay borrowings and interest on loans. The company also utilized $0.80 million cash for share buybacks and received $0.86 million from the exercising of share options. As of 31 December 2017, the Group's cash and cash equivalent balance (excluding bank deposits pledged) amounted to $190.41 million, an increase of 16.7% for the year.