Extracted from the Annual Report 2021

OVERVIEW

The Group registered a net profit of $11.57 million in FY2021, compared to a net loss of $0.98 million in FY2020 when the onset of COVID-19 pandemic significantly impacted our performance with prolonged closures of our Attractions in 1H2020, and subsequent re-openings with daily capacity restrictions and precautionary measures in place. Although there were no prolonged closures of our major attractions in 2021, the re-imposition of tightened measures when the more transmissible Delta variant of the virus emerged, continued to negatively impact the Group in 2021. FY2021 net profit included a one-off arbitration award arising from the breakdown incident relating to the ride operations of Singapore Flyer in 2018.

Group revenue was $41.91 million for FY2021, 41.8% higher than the $29.56 million for FY2020. Overall visitor arrivals to all the Group's attractions were 1.61 million, 22.9% higher than FY2020.

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

The protracted COVID-19 pandemic continued to impact the global tourism industry and our Group's attractions in 2021. While our three China attractions saw improved performance in the first half compared to corresponding period, which was affected by the prolonged closures in 2020, the emergence of the Delta variant in various provinces in the second half of the year resulted in lower visitor arrivals during the peak summer holiday period and subsequent months including the National Day golden week holiday. The reimposition of strict prevention and control measures and advisories against cross-province travels whenever there was resurgence of Covid cases, as well as area lockdowns when cases of infections occurred curtailed movements.

China's economy grew 8.1% in 2021, compared to 2.3% in the previous year, while Singapore's economy grew 7.2%, rebounding from the 5.4% contraction in 2020. However, the emergence of new waves of infections with mutated variants and accompanying restrictions continued to weigh on the tourism sectors in which the Group operates.

The Group's flagship attraction, SOA, reported higher earnings in 2021 compared to 2020 as visitor numbers increased 34% above 2020, while average ticket yield was in line with 2020. During the Spring festival of 2021, a temporary Chinese Zodiac theme exhibition was organized to celebrate the Year of the Ox, presenting eight kinds of cattlethemed aquatic creatures; along with holding of traditional cultural activities such as calligraphy, paper-cutting art etc. to enhance the Spring Festival atmosphere. However, due to the government's strict prevention and control requirements and advisory against cross-province travels during this period, revenue and visitor arrivals during the seven days golden week holiday was about 25% of the pre-Covid corresponding period in 2019, while SOA was closed during 2020 Spring Festival.

A special exhibition on the protection of aquatic wild animals, named "Where are the rare animals" were co-organised with local government departments during the Labour Day holiday in May. This exhibition, first of its kind in Shanghai, aimed to create awareness of the new "List of key species under National Protection", helped convey the importance of wildlife conservation to visitors, as well as the growing importance of sustainable development. More than ten species of live and rare protected turtles under the three habitat forms of sea turtles, tortoises and water turtles were displayed, together with an informative exhibition board and interactive content to convey biological science knowledge and environmental protection concepts to visitors in a fun and educational way. Revenue and visitor numbers during the five days Labour Day holiday was about 79% of 2019 corresponding period. SOA was also closed during Labour Day holiday in 2020.

During the summer holiday period in July to August, SOA cooperated with the Whales Environmental Protection Agency, and presented a multi-dimensional and 3D Ocean World to visitors, "A Colourful Journey Under Oceans", through multimedia sound and painting, exhibition board graphics, offline activities, etc. However, new COVID-19 cases in Shanghai and nearby provinces occurring in late July resulted in heightened measures being reimposed, sharply reducing our projected visitorship.

A special themed exhibition was launched during the National Day in October. This themed exhibition focusing on fishes or marine creatures with names containing "China" or "Chinese", aimed to create awareness of China's rare protected creatures and at the same time promote Chinese culture. Interactive activities featuring SOA's mascot "Seahorse Didi" were held to enhance visitors' experience. SOA received more than 56,000 visitors during the National Day holidays, which was about 90% of 2020 corresponding period.

With the wide-spread use of social media platforms, SOA routinely maintains its Tik Tok, WeChat, Weibo and official website platforms, updating content and expanding the publicity reach. The official website was regularly updated with latest developments, new reports, venue activities, short video sharing etc. and has been shared extensively throughout the year.

At UWX, annual visitor numbers increased 11% over 2020 as the aquarium was closed for more than three months from the start of Chinese New Year in 2020, while closure of about three weeks occurred in 2021 from mid-September 2021 due to the resurgences of COVID-19 cases in Fujian province.

In 2021, UWX continued to provide Science related activities and held three large-scale scientific education themed exhibitions. In January, the goldfish themed exhibition of "Goldfish filled the hall and bullish into the sky" was held during the Spring Festival. A popular activity of "A Little Experience of the Night" to actively involve young children was also organised. This activity involved popular science courses, handicrafts and sleeping in an underwater tunnel, and guided the children in the absence of their parents, about how to build self-reliance and self-care, so that children can learn while experiencing the underwater world at UWX.

During summer in June, the intertidal themed exhibition of "Exploring the intertidal zone" was held, and during Christmas in December, the sea turtle theme exhibition of "Protecting the 'turtle' way of love" was held.

By holding different themed special exhibitions and science and education activities, UWX covers the diverse and interesting aspects of marine life from both scientific and humanitarian perspectives, introducing to residents and tourists the wonders of marine organisms, and encouraging visitors to play their part in the conservation of marine environments.

In 2021, UWX released 48 science related articles in official WeChat, Weibo, company website and Tik Tok. Through regular updating of the science content in its official website and WeChat account, it aims to raise visitors' awareness of the various Tik Tok activities held during different time periods, and attract more tourists and residents to visit and learn. In addition, UWX advertised in WeChat circle of friends this year, effectively promoting their activities and new exhibition advertisements to 200,000 Xiamen residents and tourists, and achieved good marketing results. At the same time, it also printed a large number of popular science publicity materials for free distribution. There were a wide variety of popular science materials, including single page flyers and fun quizzes about biology. A total of 50,000 copies were distributed at scenic spots, event sites and cooperative units in 2021.

Despite the impact from COVID-19, UWX innovated its various promotional models with good results. The first was the "50% off card purchase" campaign to the public-in alignment with government's efforts to encourage residents to stay in Xiamen during the Spring Festival, attracting 4,143 people who purchased the personal discount card. This helped to generate about RMB 500,000 and improved membership card performance. Secondly, using the bundle of "tickets + cultural innovation", the "Whale Happiness Bag" promotion with two price package options was launched in the summer, with a total of 192 sets sold, further driving the retail shop sales. Thirdly, UWX continued to bundle "ticket + merchandise" to launch the activity of "super value cuties package", which has successfully attracted families with young children to purchase, achieving the purpose of generating income from secondary sales. Other promotional campaigns included discounted tickets for the elderly, discounted family tickets, as well as a launch of new merchandise for our sperm whale mascot.

In 2021, UWX actively participated in and organized various popular science academic activities. These included participation in "Xiamen preliminary competition of 2021 national popular science explanation competition" on April 28, 2021; participation in the launch ceremony of 2021 Chinese White Dolphin Protection Publicity Day of "protecting Chinese white dolphins and maintaining marine biodiversity" sponsored by the Chinese White Dolphin Reserve of Xiamen Natural Resources Bureau on May 8; assisted Gulangyu Tourism Development Center to hold the "3rd Ocean Defense War" series of activities on Gulangyu Island on June 24; participated in the launch ceremony of "connecting mountains and seas and building dreams with one heart" on July 3; joined the public welfare study tour of "building dreams with one heart" on July 21 and received a group of 35 teachers and students from mountainous areas of Yunnan Province free of charge; participated in the "national science popularization day" - rural science popularization service Carnival in Xiamen on November 5; Collaborated with Xiamen Marine Comprehensive Administrative Law Enforcement Department to carry out the activity of "caring for aquatic wildlife and building a harmonious and beautiful home" on November 12; participated in the theme Carnival of science and technology in the lead up to the Winter Olympics on December 4, contributing to the theme practice of the "December 5" International Volunteer Day of the Winter Olympic Games; Through communication and active participation in various popular science academic activities, the aquarium also learned extensively from other attractions accredited as "popular science education bases", especially in the different ways of fulfilling the mission of public education. In the follow up, UWX will integrate these valuable learnings into our daily work and strive to launch more popular science activities that will be well received by the public.

In 2021, UWX's science and education team launched the first online joint science cloud classroom together with Shambhala Charity during the spring and fall semesters. Eight popular science courses full of marine interest were brought to the students in four primary schools in the mountainous area of Yunnan, which helped fulfill the children's aspirations to understand the ocean and explore science. On December 22, the science and education team overcame challenges brought about by COVID and travelled to the school again to bring a lively and interesting "biodiversity" science popularization lecture to 150 students, which was happily received by the teachers and children. In 2021, through online and offline interactive teaching, the teaching of marine science popularization continued, and also helped to uncover the real needs from schools during the pandemic. This will help in better planning for such courses in the future.

Lixing Cable Car registered about 18% decline in revenue and more than 60% decrease in profitability in FY2021 compared to a year ago. More than 70% of the revenues were from the first half of 2021 as the company faced prolonged closures since end July due to the Covid measures and inclement weather. For the whole year, Lixing Cable Car had only effectively operated for seven and a half months, including the July peak season. When the Cable Car subsequently reopened at the beginning of December, ridership was low due to the non-opening of the Lishan Mountain scenic spot and due to new Covid infections in Xi'an, the local district government called for a lockdown and the Cable Car was shut down again on 23 December 2021.

In Singapore, the wave of infections caused by the Delta variant had caused the government to implement "Heightened Alert" measures between May to August. While international tourist numbers remained low, Singapore Flyer's revenue and visitor numbers doubled compared to FY2020, with the government's support for local tourism via the SingapoRediscovers Vouchers scheme.

In 2021, Singapore Flyer launched new and interesting in-capsule experiences to rejuvenate its product offerings. Some of these experiences were the Mooncake and Cocktail Experience, Candyland in the Sky, and Yoga in the Sky. Apart from that, Singapore Flyer also partnered with tenants in its Retail Terminal to introduce family and buddy bundles for cross-promotion. The bundles received encouraging feedback from the local market, with an inclination towards F&B product bundles. On the ground, Singapore Flyer had worked with Invade, Singapore's largest flea market operator, to pilot an artisanal pop-up market featuring local crafts during the year-end festive season.

In collaboration with Disney+, Singapore Flyer and several landmarks across the globe pulled off a high-profile publicity event for the celebration of the highly-anticipated Disney+ series, "The Falcon and the Winter Soldier". Media members were hosted for the screening of its first episode onboard the giant observation wheel.

To prepare for the arrival of Chinese travellers - one of Singapore Flyer's key source markets before COVID-19 - in 2022, Singapore Flyer has also been working on the development of Singapore Flyer WeChat Mini Programme. One of the key features is to offer online ticket purchase to help drive direct bookings while supporting the execution of marketing campaigns within the WeChat ecosystem. The Mini Programme is slated to launch in the first half of 2022.

Supporting the local social enterprise, It's Raining Raincoats, and the migrant worker community, Singapore Flyer participated in the SingapoRediscovers Vouchers donation campaign. For every three tickets donated by the public using their SingapoRediscovers Vouchers, Singapore Flyer sponsored two tickets. The initiative also received wide press coverage, and nearly 30,000 tickets were donated by the public. The Singapore Flyer team made many large group visits possible by operating out of normal operating hours to ensure that the migrant workers are able to enjoy their visits exclusively in a safe setting.

Singapore Flyer also supported three of Trip.com's programmes, allowing beneficiaries from Filos Community Services, My Buona Vista Place, and MINDS (a social agency caring for persons with intellectual and developmental disabilities), to enjoy a visit to the Singapore Flyer.

As part of its digital transformation roadmap, Singapore Flyer participated in the Data Analytics Shift (DASH) programme by the Singapore Tourism Board. Mentored by industry experts, the pioneer team is working on implementing the two proofs of concepts (i.e. key revenue and digital marketing data to track key performance metrics and enable more timely data driven business decisions) that were developed in the Data Transformation Programme in the preceding year.

Another initiative is the Lighthouse Programme, which is co-run by the Singapore Tourism Board and its appointed partner, VMLY&R. Through the series of workshops, the Singapore Flyer team has identified potential quick wins and big bets that can be implemented to attract locals to visit and return to the Singapore Flyer. The transformation goes beyond digital and into the four key pillars of enhanced in-capsule experience, shop/dine, loyalty and infrastructure.

FINANCIAL COMMENTARY

The Group reported a net profit before tax of $16.55 million as compared to a loss before tax of $0.87 million a year ago, mainly attributable to higher profit generated by SOA, an arbitration award of $10.4 million received for the insurance claims arising from the breakdown incident relating to the ride operations of Singapore Flyer in 2018, offset by an impairment loss of $2.1 million recognized on its property, plant and equipment and investment property. Expenses, excluding finance cost, increased $2.13 million, or 5.4% as compared to FY2020, mainly attributable to higher operating expenses and staff cost incurred, lower exchange gain recognised; partially offset by lower impairment loss recognised this year.

The Group's net cash flow from operating activities amounted to approximately $20.27 million in FY2021, including the arbitration award received. During the year, the Group used $10.52 million to pay out dividends and $20.64 million to repay borrowings and interest on loans. Proceeds from borrowing amounted to $6.1 million, as a temporary bridging loan under the Enterprise Financing Scheme to support businesses impacted by COVID-19 and a minority shareholder's loan were extended to Singapore Flyer. As of 31 December 2021, the Group's cash and cash equivalent balance (excluding bank deposits pledged) amounted to $177.49 million, a marginal decrease from a year ago.