Chairman's Message

Mr. Toh Khai Cheng Non-Executive Chairman

Dear Shareholders,
FY2017 was encouraging for both Heeton and the Singapore property market. The Group recorded stellar results in terms of financial performance on the back of improved confidence in domestic real estate.

Financial Performance FY2017

The Group registered a record net profit after tax of $71.63 million for FY2017, mainly from the disposal of the Lumos residential development as well as the $37.08 million fair value gain in FY2017 from its investment properties, which include Tampines Mart, The Woodgrove and Adam House in London. Revenue for the Group, however, declined by 15.2% from $67.37 million in FY2016 to $57.13 million in FY2017, mainly owing to lower revenue recognition from its residential projects. At the same time, revenue contribution from its hospitality assets grew 30.6% from $9.83 million in FY2016 to $12.83 million in FY2017, attributable primarily to Luma Concept Hotel commencing operations.

Special Dividend

In view of the stellar results, the Board of Directors (the “Board”) has recommended a special dividend of 0.4 Singapore cents per share to be paid. This is in addition to the final dividend of 0.6 Singapore cents per share, bringing the total dividend to be paid per share to 1.0 Singapore cents for FY2017. This will be subjected to shareholders’ approval in the upcoming Annual General Meeting.

Development Property

The Group has overcome many hurdles over the past two years. Through the continued efforts of the management team, unsold inventory has been greatly reduced. In particular, the disposal of the balance unsold units in The Lumos resulted in a one-off gain of $27.98 million. Additionally, sales from its residential projects – Onze@Tanjong Pagar and  Westwood Residences have improved significantly in FY2017. With market conditions improving, Heeton is cautiously optimistic on the outlook for the Singapore residential market. In FY2017, the Group committed to three new local joint
venture projects.

Investment and Hospitality Properties

Heeton’s hospitality division continues to exhibit strong growth potential. The Group’s eighth hotel – the Luma Concept Hotel – commenced operations in April 2017. There are three more hotel projects in the pipeline, which are currently undergoing planning and redevelopment. The hospitality division is exploring various options to further expand its recurring income base. As part of a strategy to allow the Group’s resources to be deployed for investments with potentially higher returns, and to realise investment gain thereby unlocking surplus value for shareholders, the decision was taken for Heeton to dispose of its interest in The Woodgrove. The transaction was completed in February 2018.

FY2018 and beyond

The strategy of consolidation by the Group and focus on recurring income in these challenging times has paid off. Whilst the hospitality division has grown in strength and is now contributing to Group revenue, Heeton will continue to identify opportunities for development projects. There are signs of improving sentiment in the local property market and the Group will seek out suitable ventures and joint venture partners. Apart from the proceeds from the sales of The Lumos, Heeton had issued bonds of $75M in May 2017 and $118 million in January 2018 gearing up for the Group’s investment opportunities and development projects for 2018 and beyond.

Word of thanks

It has been heartening for me to witness Heeton growing into a prominent industry player with an international hospitality property portfolio. On behalf of the Board, I thank the management and staff at Heeton Holdings and our subsidiaries for their hard work and dedication. My appreciation goes to my fellow Directors for their invaluable input and advice in the past year; our business partners and associates for their support and confidence as well as our
investors and shareholders for their unwavering belief in Heeton. They have all played important roles in Heeton’s
success.