Roxy-Pacific Q4 2009 profit up 104% to S$5.9mln

87% rise in Group’s property development propelled profit to S$5.9mln in Q4 2009 amidst economic downturn.

Roxy-Pacific Holdings Limited, a homegrown specialty property and hospitality group, today announced a 104% increase in net profit after tax to S$5.9 million for the fourth quarter ended December 31, 2009 (4QFY2009). This was largely driven by a 47% increase in revenue to S$44.1 million for the 4QFY2009, resulting from a strong 87% rise in revenue to S$33.5 million from the Group’s Property Development segment.

For the full year, the Group recorded a 26% increase in turnover to S$163.5 million from S$130.1 million in FY2008. Sales from the Group’s Property Development division registered the highest growth at 55% to S$124.1 million. Hotel Ownership recorded a 23% decline to S$37.5 million as a result of the decline in AOR and ARR; whilst Property Investment grew 46% to S$1.9 million mainly due to the recognition of rental from the Group’s retail shop units at Kovan Centre from September 2009, as well as an overall increase in rental yield from shop units at Roxy Square. Driven mainly by higher sales and lower overall expenses, pre-tax profit was up 19% to S$36.2 million in FY2009.

Said Mr Teo Hong Lim, Executive Chairman and CEO of Roxy-Pacific: “We are pleased to have achieved good profit growth notwithstanding the economic downturn in 2009. We have started to replenish our landbank through the acquisition of six plots of land for residential development. With strong pre-sale revenue of S$280.8 million to be progressively recognised from FY2010 to FY2011, strong cash position of S$108.3 million and a healthy balance sheet, we are well positioned to seize opportunities as the economy recovers.”

Performance review

Group revenue climbed 47% to S$44.1 million in 4QFY2009 from S$30.0 million in 4QFY2008. The improvement in turnover was a result of an 87% and a 114% increase in revenue from the Group’s Property Development segment and Property Investment segment respectively. The increase in revenue was offset by a 16% decrease in revenue from the Group’s Hotel Ownership segment as compared to the previous corresponding quarter last year.

Revenue from the Group’s Property Development segment rose 87% in 4QFY2009 to S$33.5 million. This increase was largely due to the progressive recognition of revenue from more development projects as compared to the corresponding quarter last year. The Group recognised revenue from nine development projects namely, The Marque@Irrawaddy, The Azzuro, The Verte, The Adara, The Ambra, The Ambrosia, The Florentine, Nova 48 and Nova 88 in 4QFY2009. This segment accounted for 76% of the Group’s revenue.

The remaining 24% of the Group’s turnover in 4QFY2009 was attributable to the Group’s Hotel Ownership and Property Investment segment. Revenue from the Hotel Ownership segment decreased by 16% to S$9.9 million in 4QFY2009 from S$11.7 million in 4QFY2008. This was due to a decline in the Group’s average room rate (ARR) at the Grand Mercure Roxy Hotel by 24% to S$141.1, in line with the overall hotel industry performance. The hotel’s average occupancy rate (“AOR”), however, increased from 87.9% in 4QFY2008 to 93.0% in 4QFY2009. Overall, revenue per available room (RevPar) decreased by 20% from S$163.3 in 4QFY2008 to S$131.2 in the current quarter.

Revenue from the Property Investment segment improved significantly by 114% for the current quarter compared to 4QFY2008. The increase was mainly due to the recognition of rental from Kovan Centre and increased rental yield from shop units at Roxy Square.

Outlook

The Singapore economy is expected to grow between 3 to 5 per cent in 2010. Furthermore, based on latest statistics released by Urban Redevelopment Authority, overall prices of private residential properties increased by 7.4% in 4QFY2009, compared with the 15.8% increase in 3QFY2009.

Added Mr Teo: “Going forward, we see a sustainable pace of growth for the property segment in 2010 as optimism returns with the completion of the two integrated resorts (“IRs”) and a recovering global economy, which should draw well-heeled foreign buyers back to the Singapore property market.”

The latest tourism statistics released by the Singapore Tourism Board for December 2009 show that visitors’ arrival in Singapore hit an all-time high of 971,000.

“Our hotel is strategically positioned in that it is near the IRs and city area. Having already seen an improvement of both our hotel’s AOR and ARR in the fourth quarter of 2009 as compared to other quarters, we foresee a significant increase in demand for hotel rooms as the opening of both IRs will create jobs and lift tourism arrivals,” said Mr Teo.

Barring unforeseen circumstances, the directors expect the Group to be profitable in 2010.