2013 AR is out:
http://www.boustead.sg/Annual%20Reports/...3%20AR.pdf
Highlights:
i) To be fair, the record net profit for FY2013 was boosted by
several items which were bonuses to the Group. After waiting
patiently for a response to tax evaluations on assets which had
been sold eight years ago, the tax authorities finally concluded
evaluations in our favour, resulting in S$8.3 million in writebacks
of tax overprovisions and a tax refund – certainly worth
the wait. In addition, we registered a S$5.8 million gain on the
disposal of an available-for-sale investment in a self-storage
business, selling it for nearly double our investment, just another
small example of the Group’s ability to unlock value over
the years. Lastly, before the end of FY2013, we received the
Temporary Occupation Permit for a S$38 million building which
had been scheduled to be completed and sold only in FY2014.
Due to our expertise in fast-track design and construction,
the delivery of the building and subsequent completion of the
sale and purchase agreement took place in FY2013 instead and
resulted in an early pay cheque from the client.
ii) Since recommencing annual dividend payments in FY2003,
we have paid out an average of 46% of our earnings,
a decent level which is in fact higher than the average
for the S&P 500.
iii) Despite the fact that global financial markets may have
difficulty with our four divisions, we would rather not follow
the path of rationalisation for the sake of rationalisation.
Instead, our focus will be on building value in our four divisions
and unlocking that value on our own set of terms so that
shareholders are not short changed. The various options
including divestments, mergers and spin-offs of any of our
four divisions can only take place at the right price, right size
and right time.
iv) Letting Go and Looking Forward
Having held onto our investment in ASX-listed OM Holdings
Ltd (“OMH”) for slightly over a year, we decided to part with this investment that looked so promising at the beginning
that I once used the term “blue sky” to describe it.
When a relationship is not going as planned and one is not
in the driver’s seat, then difficult decisions like separation need
to be made. The fortunate part was that we managed to exit at
a price in excess of our initial investment, chocking up a slight
profit in the process.
v) In FY2013, we made two investments with longer gestation
periods. First, we pumped S$20.1 million into a 4% stake
in the first phase of a promising mixed development at the heart of Tongzhou, the next central business district of
Beijing. The projected development cost for the first phase
is RMB15,800 per square metre of gross floor area, a very
attractive price that provides a good margin of safety and
plenty of upside. Second, we entered into a joint venture
for utility-scale solar power plant projects in Japan, a small
start-up with the potential to generate long-term recurring
income. We are looking into building up a renewable energy
asset portfolio that could be made up of assets such as solar
power and hydro power, along with any other interesting
renewable source that comes along.
vi) Although we won just one design-build-and-lease deal in
FY2013 with Jabil, a Fortune 500 corporation, we still have
funds earmarked for the expansion of our industrial leasehold
portfolio. We would like to bring this portfolio far beyond the
current 101,000 square metres. We will continue to actively
explore several options to unlock the value of the portfolio.