Chairman's Statement

On behalf of the Board of Directors of Roxy-Pacific, it is my pleasure to present to you the Annual Report for the full year ended 31 December 2019 (“FY2019”).


Despite economic and geo-political uncertainties, 2019 turned out to be a rewarding year for Roxy-Pacific. Globally, there were various sources of volatility, which began to subside in the last quarter of 2019, including the trade tension between the US and China; and the progress made in the Brexit negotiation, with its irreversible departure from EU. In Singapore, the economy expanded by 0.7% for 2019, down from 3.4% in 2018. The property sector grew at a slower pace, dampened cooling measures implemented in 2018 with a raise of Additional Buyer’s Stamp Duty and a tightening of Loan-to-Value limits.

For Roxy-Pacific, our diversity by assets and geographical regions continued to provide a resilient platform. Apart from significant revenue contributions from our property developments in Singapore and Sydney, our investment properties in Australia and New Zealand enjoy high occupancy rates and provided us with good recurring income. At the same time, we expanded our recurring income streams during the year through hotel and property investments overseas, in both Australia and Japan.


For FY2019, we achieved revenue of S$444.0 million, a 234% increase from S$132.9 million recorded in preceding financial year (“FY2018”), mainly due to significantly higher revenue from our Property Development segment, supported by some growth in the Hotel Ownership segment, partially offset by a marginal decline in revenue from the Property Investment segment.

The Property Development’s 415% revenue growth was mainly driven out of both Australia and Singapore. In Australia, revenue was recognised for both The Hensley and West End Residences, upon settlement from the purchasers in 1Q2019 and 4Q2019. In Singapore, we saw a progressive revenue recognition from 120 Grange, The Navian and Harbour View Gardens. This was partially offset by the absence of revenue recognition from Trilive and Straits Mansions which obtained TOP in June 2018 and October 2018, respectively.

The Group’s total attributable pre-sale revenue remained strong at S$471.2 million, with profits from the residential projects to be recognised from 1Q2020 to FY2023.

In terms of Property Investment, contributions were mainly derived from both Roxy Square in Singapore and NZI Centre in Auckland, New Zealand, which dipped 3% to S$7.7 million.

During the year, we saw a 58% decrease in share of results of associates mainly due to the absence of fair value gains of 117 Clarence Street divested in FY2018, coupled with share of loss from showflat expenses incurred in FY2019. Other operating income declined 46% to S$7.2 million, mainly due to a higher fair value gain from NZI Centre as well as higher foreign exchange gain recorded in FY2018.

Consequently, mainly lifted by the significant topline growth, FY2019 net profit rose 42% to S$30.3 million in FY2019 from S$21.3 million in FY2018.

Our strategy for sustainable growth remains focused on having a well-balanced asset portfolio across sectors and geographies. We will continue to look for opportunities to suitably recycle our capital to enhance shareholder value.

Our strategy is supported by our strong balance sheet, with cash and bank balances of S$331.0 million, a comfortable net debt-to-adjusted Net Asset Value ratio of 0.60 time.




Data from the Urban Redevelopment Authority (“URA”) showed a 0.5% increase in the private residential property index in 4Q2019, compared to the 1.3% increase in 3Q2019. For the whole of 2019, prices of private residential properties increased by 2.7%, compared with the 7.9% increase in 20181.

The URA data also showed that for the whole of 2019, developers launched 11,345 uncompleted private residential properties, compared with the 8,769 units in the previous year1.

We successfully launched all remaining six of our properties comprising a total of 606 units during the year under review including the freehold, prime developments – RV Altitude, Fyve Derbyshire, Wilshire Residences, Dunearn 386 and NEU AT NOVENA – of between 35 to 140 units; and the 99-year leasehold development with 188 units including two commercial units, View at Kismis. These projects are expected to contribute positively to the Group’s earnings progressively from 1Q2020.

Amidst a challenging property landscape in 2019, we have placed a greater emphasis on unique concepts and well-designed space for each of our properties, which are all strategically located and well-connected to key amenities and public transportation. Our priority will be on the sale and delivery of these predominantly freehold sites. The Group acquired many of these sites in the early stage of the property upcycle and received encouraging response for the projects, which were launched at attractive price points.

Property developers are likely to face further challenges in 2020 due to the 2019 Novel Coronavirus (“COVID-19”) situation. The construction industry has been impacted beyond labour shortage as the lockdown in several Chinese cities have resulted in delays for the delivery of construction material and finished products. As a result of the unforeseen circumstances, property developers are facing an increasing risk of construction delays and potentially missing the additional buyer’s stamp duty deadline.


In Australia, the price index for residential properties for the weighted average of eight capital cities registered a 3.7% decline in the September quarter 2019 as compared to the September quarter 2018, with all capital cities except for Hobart recording declines2.

Notwithstanding a weaker market, the Group’s two remaining residential development projects in Sydney, Australia have sold well. The Octavia Killara is fully sold10, while the 231-unit West End Residences project, which was launched in two phases, has obtained the Interim Occupancy Certificate4, and is currently overall about 97% sold3.


In Malaysia, The Colony by Wisma Infinitum is 81% sold3, having found a niche in the form of compact dual key configurations that are efficiently designed. Phase Two of our Malaysian freehold JV project, The Luxe by Wisma Infinitum, which is strategically located in the Kuala Lumpur City Centre and is positioned higher than The Colony to target a different market segment, is 53% sold3.

Overall, for Property Development, we will adopt a prudent approach, with a focus on well-located and unique sites, both locally and abroad.


On the hospitality front, latest statistics from the Singapore Tourism Board (“STB”) showed a 3.3% year-on-year growth in international visitor arrivals for 2019 to 19.1 million5, though headwinds are expected in the year ahead, due to the COVID-19, volatility of the global political and economic environment, and stiffer regional competition. According to the STB, tourism arrivals and receipts for 2020 are expected to be impacted by the COVID-19. The ongoing COVID-19 outbreak has significantly impacted visitor arrivals, especially from China, which accounts for around 20% of international visitor arrivals. Based on the current situation, visitor arrivals for 2020 is expected to fall by about 25% to 30%6.

The Grand Mercure Singapore Roxy hotel remained resilient, buoyed by stronger tourist arrival numbers in Singapore last year. With a weaker demand forecast by STB for 2020, we will monitor the situation closely and have stepped up precautionary measures in the meantime.

Japan’s hospitality sector has also been impacted by the COVID-19 outbreak with cancellations from mainland Chinese tourists, which make up the largest group of tourists for the country. According to the Japan National Tourism Organisation the estimated number of international travelers to Japan for the year was about 31.9 million, an increase of 2.2% from the previous corresponding period7. The government has earlier set a target of 40 million annual visitors by 2020, when Japan will host the Olympics8.

The Group’s self-managed hospitality assets under the Noku hotels hospitality brand – Noku Kyoto, Noku Osaka and our first upscale resort in Maldives, Noku Maldives – continue to contribute recurring income. The Group’s second resort asset in Phuket, Thailand, Noku Phuket, is targeted to launch in 2021.

We have also grown our hospitality presence in Australia with plans for 322-room upscale hotel in Melbourne CBD to open in 2022. This is in line with our strategic efforts to strengthen and grow our stable recurring income streams.

With a geographically-diversified portfolio, we hope to progressively build a sustainable stream of recurring income for the Hotel Ownership segment. While we intend to self-manage hotel assets where possible, we will also explore collaborations with international hotel operators to manage larger-scale city hotels.

Going forward, we will work towards the launch of our pipeline hospitality assets to strengthen our recurring income and deepen our presence in existing markets and new geographical markets to build up our yield-accretive hospitality asset base.



For the Australian office sector, the overall sentiment in commercial property markets, as measured by the NAB Commercial Property Index, fell four points to +3 in 3Q2019. By sector, Office and Industrial sentiment remained the highest, despite a decline as below average business conditions persisted.

The Group’s investment properties in Australia – namely the office building at 312 St Kilda Road and the centrally-located industrial building at 33 Argyle Street, are at 100% occupancy9.

Auckland, New Zealand

Of our two key assets in New Zealand, 205 Queen Street, located in the core of Auckland’s CBD, enjoyed high occupancy of 88%9 during the year. We will look for opportunities to raise occupancy to maximise rental yield.

Additionally, our wholly-owned building, NZI Centre, situated in the western end of Auckland’s CBD, is fully leased to a well-known tenant – IAG New Zealand Limited – the largest insurer in New Zealand.

Tokyo, Japan

During the year, we expanded into Japan’s retail property sector with the acquisition of a 53.07% stake in a retail building situated at Ginza, which is widely known as a popular upscale shopping and entertainment district of Tokyo.

Subsequent to FY2019, we further expanded our presence in Japan with the acquisition of a 49% stake in a retail building at Shibuya, one of the most popular retail districts of Tokyo. As a testament of the Group’s foresight in its property investments, the Group has also entered into an agreement for the sale of the retail building situated at Ginza for approximately JPY8.6 billion, representing a premium of over 43% in less than a year, from the initial purchase price of JPY6.0 billion.

Overall, as part of our ongoing strategy to grow our investment portfolio and recurring income regionally, we will continue to be on the acquisition of well-located and tenanted commercial buildings which will strengthen our recurring income stream. The Group will also place a strong focus on nurturing the properties in its investment portfolio and unlocking value by reinvesting towards potentially higher yielding assets when the opportunity arises.


To reward our loyal shareholders for their continuous support, the Board has proposed a final cash dividend (one-tier tax exempt) of 1.09 SGD cent. Coupled with the interim dividend (one-tier tax exempt) of 0.195 SGD cent, this brings the total distributions for the financial year to 1.285 SGD cent, representing a dividend payout ratio of 55%.


I would like to thank our Board of Directors for their guidance in steering the Group through the macro volatilities. At this juncture, on behalf of the Board, I will like to warmly welcome our new Independent Director, Ms. Cecilia Tan. Ms. Tan, who brings with her strong expertise in fund management, real estate and retail management, has been appointed as a member of the Audit Risk Management Committee, Nominating Committee and Remuneration Committee. On behalf of the Board, I would like to take this opportunity to express our appreciation to Mr. Tay Kah Poh, our Lead Independent Director, who will be stepping down from the Board at the forthcoming Annual General Meeting. Mr. Tay has been an invaluable member of our Board for the past 12 years, and his strong commitment and expertise has contributed greatly to the Group’s success.

I am also deeply appreciative of our senior management team, who has actively led the Group to overcome challenges and continues to work tirelessly to meet evolving demands in the industry.

In closing, I would like to thank our management and staff for their dedication and contributions to Roxy-Pacific. Last but not least, I would like to extend our appreciation to our shareholders, clients, consultants, suppliers, partners and business associates for their ardent support as we remain focused on broadening our perspective for sustainable growth.

Teo Hong Lim
Executive Chairman and
Chief Executive Officer

5 March 2020

1 Urban Redevelopment Authority, 23 January 2020 – Release of 4th Quarter 2019 real estate statistics
2 Australian Bureau of Statistics, 10 December 2019 – Residential Property Price Indexes: Eight Capital Cities, Sep 2019
3 As at 12 February 2020
4 Obtained on 10 October 2019
5 Singapore Tourism Board, 5 February 2020 – International Visitor Arrivals Statistics
6 Singapore Tourism Board, 11 February 2019 – STB rallies tourism sector to face biggest challenge since SARS
7 Japan National Tourism Organization, December 2019 – Japan Tourism Statistics
8 The Japan Times, 11 January 2019 – Tourists to Japan hit record 31 million in 2018, helped by easier visas for visitors from India, Russia and others
9 As at 31 December 2019
10 As at 5 March 2020