One-off acquisition expenses drag down Straco's Q4 profit

Singapore

ONE-OFF expenses of S$1.98 million related to the acquisition of the Singapore Flyer, coupled with an exchange loss of S$37,000 versus an exchange gain of S$0.48 million from the corresponding period a year ago, dragged tourism operator Straco Corpora-tion's fourth-quarter net profit down 21.4 per cent to S$4.43 million.

For the three months ended Dec 31, 2014, Straco's operating and administrative expenses surged 82.2 per cent or S$6.02 million, due mainly to expenses incurred by its subsidiary Straco Leisure, as it took over the operation of the Singapore Flyer, of which it owns a 90 per cent stake, in late-November last year.

The expenses included a paid stamp duty of S$1.49 million as well as legal and professional fees incurred for the acquisition. Excluding the one-off expenses, Q4 FY14 net profit was approximately S$6.21 million, 10.3 per cent higher than the same period a year before.

Revenue for the three months ended Dec 31, 2014 was up 32.8 per cent at S$19.42 million, as Straco's Shanghai Ocean Aquarium recorded higher visitor numbers, along with revenue contributions from the Singapore Flyer.

Revenue gains, however, were partially offset by lower turnover from Underwater World Xiamen and Lixing Cable Car as visitor numbers fell.

Both Shanghai Ocean Aquarium and Underwater World Xiamen received a combined 609,000 visitors for the quarter, up 2.9 per cent from Q4 FY13.

For the full year, both attractions achieved double-digit growth in visitor numbers, which led to a 26.7 per cent jump in Straco's FY14 revenue to S$92.32 million. Over the same period, net profit gained 10.5 per cent to S$37.69 million.

Excluding acquisition-related costs of the Singapore Flyer, which amounts to S$2.19 million, FY14 net profit was S$39.66 million, 16.3 per cent above that of FY13.

A slower 7 per cent growth target is expected for the Chinese economy in 2015. However, Straco's executive chairman, Singapore entrepreneur Wu Hsioh Kwang, expects domestic travel in China to continue to rise in line with the government's initiatives for the tourism industry.

The increasingly larger domestic tourism market will boost the development of China's tourism industry, which is expected to have another decade of booming growth, Straco said in a statement on Monday.

For the three months ended Dec 31, 2014, Straco's earnings per share was 0.52 cent while net asset profit was 22.02 cents. A first and final dividend of two cents per share was declared for the quarter.

On Monday, Straco's counter closed up 2.03 per cent at S$0.755.