CEO's Message
On behalf of the Board, I am pleased to present Aspial Corporation Limited’s annual report for
the financial year ended 31 December 2010.
FY2010 Highlights
The Singapore economy has performed exceptionally well with a GDP growth of 14.7% in 2010.
In line with the strong economic growth, consumer sentiments have also improved. Although all
our three core businesses results benefitted from the strong economic growth, financially, they
have performed differently in 2010.
Property Business
In 2010, we launched a total of 8 projects and achieved 100% sales for 6 of the projects, namely, Glasgow Residence, Tembeling Residence, Dunearn Suites, Espira Suites, Onan Suites and Heritage East. Overall, we were able to sell close to 90%, or about 300 units, of all the units launched during the year. Most of the sales were contracted in Q4 2010 when the bulk of our units were launched.
The exceptional sales were contributed by the good location of the projects and affordability
of the units. Most of our new launches are either near MRT or in popular locations such as East
Coast Road and Telok Kurau. Moreover, as we purchased our land in 2009 when the prices were
relatively low, we enjoyed a very comfortable margin for our developments.
Although the sales in Q4 2010 was the highest quarterly sales ever recorded by our Property
Business, we were only able to book in a small percentage of the overall sales contracted as
construction of most of the projects have just started.
During the year, we obtained Temporary Occupation Permit (TOP) for 2 of our projects, namely,
38-unit Palmera Residence and 31-unit Glasgow Residence.
We acquired another 2 plots of land through en-bloc sales in 2010 and plan to build
approximately 345 residential and commercial units at these sites.
Jewellery Business
The robust economic growth in 2010 helped to improve consumer spending in Singapore. Our
jewellery recorded revenue of $146.1 million, a growth of 12.6% from $129.8 million in FY2009.
Operating costs such as rental, staff cost and depreciation increased substantially in 2010 mainly
due to the opening of more shops at the new shopping malls such as Somerset, ION and Marina
Bay Sands. As there is only one major shopping mall to open in 2011 as compared to the multitude
of malls that opened in 2009 / 2010, we will be able to rationalize our retail network as and when
leases are due for renewal so as to increase rental effectiveness.
Financial Business
Our new Financial Business which was set up in 2009 continued to achieve better results in 2010.
Despite our continued heavy investment in the branding of “Maxi-Cash”, we managed to achieve
our first operating profit in 2010. At the same time, we managed to grow our store network from
11 in 2009 to 17 in 2010, cementing our leadership position in the market.
Our full-year loss of approximately $0.9 million in 2010 was a significant improvement from the loss
of $5.2 million recorded in 2009.
Our branding effort and shop concept for the Maxi-Cash brand have been successful and we
have received good response from the market. Our loan portfolio has grown steadily and we
expect our Financial Business to be profitable in 2011.
In view of our good performance, the directors have recommended a final dividend of 0.5 cents
per share. In addition to this cash dividend, we are also proposing a bonus issue of one bonus
share for every 5 existing ordinary shares.
Prospects for 2011
The exceptional GDP growth of 14.7% in 2010 was partly due to the low growth recorded in
the previous year and high manufacturing output in 2010. The Singapore economic growth is
expected to moderate to a more sustainable level of 4% to 6% in 2011. The continued growth is
expected to support the current high employment rate and strong consumer spending.
Property Business
The overall prices of private residential property continued to increase in the 4Q 2010 according to data released by URA. In 2010, developers sold a total of 16,300 units, surpassing the record sales volume of 14,811 units registered in 2007.
The latest government measures to cool the property market will provide a more sustainable
growth in the middle to long term. We expect the prices of private residential property to
moderate in 2011.
The Property Business is expected to contribute significantly to our revenue and profitability in FY
2011.
The table below provides an update on the projects that we have launched in 2010 and
2011:
In 2010, we managed to acquire and amalgamate a few plots of land at 371 to 389 Bedok Road
with a maximum permissible gross floor area of about 120,000 sq ft. We plan to develop a mixed
commercial and residential project with about 30 retail shops on the first level and 150 residential
units on the second to fourth level. As the property has a wide frontage and is prominently located
at the busy junction of Bedok Road and Upper Changi Road, we have submitted plans for a
landmark development with a “vibrant, hip village ambience”, alfresco eateries and lifestyle
retail shops.
To ensure continuing revenue stream from Property Business, we have acquired another plot of
leasehold land at 101 to 103 Cardiff Grove for $31.63 million in Nov 2010. We plan to develop a
condominium project comprising 165 residential units at the site.
The table below provides an overview of our upcoming projects:
*Projects are within minutes to MRT station
# The proposed developments above are subject to the approval of the relevant authorities.
Our Property Business is expected to contribute substantial revenue and profits in 2011 and 2012
due to the following reasons.
First, as at the date of this announcement and based on the units sold in the projects that have
been launched, we have locked in a total revenue of about $180 million
which will be progressively recognized in accordance with the stage of construction.
Second, at current market prices, the potential sales revenue from the sales of the remaining
units in the projects that have been launched and units from the upcoming projects is estimated
to be in excess of $300 million. Based on the prices today, we enjoy a comfortable margin from
the potential sales revenue as the land costs for these projects are relatively low when compared
to current market prices.
Jewellery Business
We are cautiously optimistic that improved consumer sentiments in 2010 will continue into 2011.
Riding on positive consumer sentiments and a more efficient store network, we expect the turnover
for the Jewellery Business to be higher this year. We will continue to review and consolidate our
store network as leases are due for renewal so as to achieve greater sales and rental efficiency.
We will also maintain a tight control over operating costs while working to strengthen the
long-term competitive advantage of our Jewellery Business.
Financial Business
As the leader and innovator in the pawnbroking industry, our modern, professional and friendly
store concept has been well-received by consumers.
We have a network of 19 stores, making us the largest chain of pawnshops in Singapore. With our strong brand awareness and largest network, we expect our loan portfolio to grow further this year.
A Word of Thanks
Our strategic diversification into the Property Business and subsequently into the Financial Business has provided us the opportunities to widen our revenue and profit base.
Although our Jewellery Business was affected by rising operating costs, profit contributions from
our Property Business enabled our Group to remain profitable in 2010. Our new Financial Business
which is non-cyclical or even counter-cyclical in nature and complementary to our existing
Jewellery Business is expected to contribute to our profitability in 2011.
On behalf of the Board, I would like to thank our management and staff for their commitment
and hard work in contributing to this success. I would also like to take this opportunity to thank
our customers, bankers, shareholders, business associates and suppliers for their support during
the year. In addition, I would like to thank Madam Tan Su Lan, who is retiring and not seeking
reappointment at the forthcoming Annual General Meeting after more than 30 years with the
Board.
Koh Wee Seng
Chief Executive Officer
