Forging Ahead
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A Member of Far East Organization FORGING AHEAD Annual Report 2018 Far East Orchard Limited More than 50 years on, Far East Orchard remains unwavering in its commitment to deliver value to its stakeholders. Amidst a fast-changing global Annual Report 2018 landscape, it proactively manages challenges with strategic manoeuvres. With fortitude, Far East Orchard continues to Forge Ahead. CONTENTS 02 Corporate Profile 24 Properties of the Group 04 Chairman’s Statement 26 Corporate Governance 08 CEO’s Messsage 56 Sustainability 14 Board of Directors and 57 Financial Report Management 148 Statistics of Shareholdings 20 Corporate Information 150 Notice of Annual General Meeting 21 5-Year Financial Highlights Proxy Form 22 Business Structure 01 businesses of hospitality management and CORPORATE healthcare real estate. In 2015, it diversified its PROFILE real estate portfolio to include PBSA properties in the UK. Far East Orchard is developing Woods Square, Far East Orchard Limited (“Far East Orchard”) an integrated office development at Woodlands is a property developer and a hospitality owner Regional Centre, Singapore’s Northern Gateway, and operator. Far East Orchard has been listed on with Far East Organization and Sekisui House, the Mainboard of the Singapore Exchange since Ltd. Its track record in Singapore includes 1968. It is a member of Far East Organization, RiverTrees Residences, SBF Center, euHabitat, Singapore’s largest private property developer. Floridian, The Nexus, The Manor Houses, Kew Residencia, Village Residence Clarke Quay and Established since 1967, Far East Orchard has Orchard Rendezvous Hotel, Singapore (formerly developed residential, commercial, hospitality and known as Orchard Parade Hotel). purpose-built student accommodation (“PBSA”) properties in Australia, Malaysia, Singapore and In Malaysia, Far East Orchard completed the the United Kingdom (“UK”). redevelopment of its commercial building into a hotel – Oasia Suites Kuala Lumpur, in 2016. Redefining itself through a strategic transformation of the business in 2012, Far Since 2014, Far East Orchard expanded into East Orchard expanded into the complementary property development in Australia and the UK. Annual Report 2018 2018 MILESTONES Ariake Hotel Project, Japan (under development) Far East Orchard Limited May First foray into Japan via a joint acquisition of a hotel project in Ariake, Tokyo with Far East Organization 02 It is redeveloping the former Westminster Fire Today, Far East Hospitality owns more than Station located in the prime central borough 10 hospitality assets and manages over 90 of the City of Westminster, London, UK, into a properties with more than 14,500 rooms mixed-use development comprising residential internationally. Its stable of nine unique and apartments and a restaurant. In Brighton, UK, Far complementary hospitality brands are Oasia, East Orchard is developing Hollingbury House, a Quincy, Rendezvous, Village, Far East Collection, student accommodation property with 193 beds. Adina Apartment Hotels and Adina Serviced It has recently completed Harbourfront Balmain, Apartments, Vibe Hotels, Travelodge Hotels and a mixed-use residential and retail/commercial TFE Hotels Collection. development in Australia along Sydney’s iconic harbourfront and three PBSA properties in Far East Orchard has a PBSA portfolio in the UK Newcastle upon Tyne, UK. comprising 2,000 beds in the cities of Bristol, Liverpool and Newcastle upon Tyne. This Through its hospitality partnerships with The includes the 622 beds added in March 2019 Straits Trading Company and Toga Group, Far East through the acquisition of a portfolio of three Orchard’s hospitality arm – Far East Hospitality freehold student accommodation properties – is present in Australia, Denmark, Germany, in Bristol and Liverpool. The Group also holds Hungary, Malaysia, New Zealand and Singapore. a portfolio of purpose-built medical suites for In 2018, Far East Hospitality made its first foray lease and for sale in Singapore’s premier medical into Japan via a joint acquisition of a hotel project hub in Novena. in Ariake, Tokyo with Far East Organization. Far East Orchard Limited Annual Report 2018 Newton Court, United Kingdom August Completed the development of Newton Court, a 295-bed student accommodation property, in Newcastle upon Tyne, UK 03 team opened four properties under management CHAIRMAN’S in Australia and secured contracts for 2,600 rooms STATEMENT across five countries – Australia, Germany, New Zealand, Singapore and Switzerland. This includes our first contract in Geneva, Switzerland. In May 2018, we made our maiden entry into Japan through the DEAR SHAREHOLDERS, joint acquisition of a hotel development project in 2018 was an unpredictable year. Many of the Tokyo, Japan with Far East Organization. The 306- economic and political issues continue to unfold room hotel is anticipated to be completed in 2020. and will impact global investment decisions in 2019. We aim to maintain our growth momentum to attain Slower growth is expected this year due to a possible our 2023 target of managing 30,000 rooms or 150 escalation in trade conflicts and uncertainty around properties. Brexit. On the purpose-built student accommodation PLANTING THE SEEDS FOR SUSTAINABLE GROWTH (“PBSA”) front, creditable progress was made towards For the financial year ended 31 December 2018 our goal of doubling our portfolio to 3,000 beds by (“FY2018”), the Group registered revenue of S$150.9 2023. We completed the development of Newton million compared with S$151.6 million a year ago. Court in August 2018, adding 295 beds to our PBSA Profit attributable to equity holders rose to S$32.9 portfolio in Newcastle upon Tyne, United Kingdom million in FY2018 from S$21.8 million a year ago. (“UK”). To further grow our PBSA portfolio in the UK, Faced with a challenging operating environment in we acquired three freehold properties with 622 beds FY2018, we are heartened to have delivered a stable in Bristol and Liverpool in March 2019. Together with financial performance year-on-year. This was made the expected completion of Hollingbury House, our possible with our continued efforts to grow our Brighton student accommodation building, we will recurring income base. grow our PBSA portfolio to 2,200 beds across four UK cities by the end of this year. In 2018, we gathered momentum in the expansion of our hospitality business, a key contributor to For our property development business, Westminster Annual Report 2018 our recurring income. Our hospitality management Fire Station, our first residential project in the UK and Far East Orchard Limited 04 Westminster Fire Station, United Kingdom (under development) We will continue our pursuit of a diversified strategy, taking steps to adjust our approach and reshape our business amid industry disruption and changing economic cycles. Woods Square, an integrated office development in approach and reshape our business amid industry Singapore, are both slated for completion this year. As disruption and changing economic cycles. I am we continue to evaluate development opportunities, confident that the Group will be able to build on its we will maintain investment discipline and strike a solid foundation and deliver long-term sustainable balance between our portfolio of development and growth for all stakeholders. investment properties. ACKNOWLEDGEMENTS DIVIDENDS In closing, I would like to thank my fellow Board Having considered the Group’s financial performance members for their guidance and wise counsel, and and outlook, the Board is pleased to propose a first extend a warm welcome to Shailesh Anand Ganu and final one-tier tax exempt dividend of six cents who joined the Board in February 2019. I believe his per ordinary share for FY2018. expertise in human capital management, organisation development, and business transformations will STEERING THE GROUP IN A WORLD OF UNKNOWNS be extremely valuable for the Group. Last of all, a Far East Orchard Limited There are major uncertainties that could impact the big thank you to all our shareholders, management global economy going forward. In 2019, economic team, employees and business partners for their growth globally and in Singapore are expected to support and hard work in 2018, I look forward to slow marginally. These forecasts are fragile and your continued support for the Group. dependent on outcomes of major events worldwide. Koh Boon Hwee Annual Report 2018 Nonetheless, we will continue our pursuit of a Chairman diversified strategy, taking steps to adjust our 18 March 2019 Vibe Hotel Darling Harbour, Australia (pipeline contract) 05 DELIVERING STAKEHOLDER VALUE Far East Orchard draws upon its well-honed capabilities to optimise operations and maximise value from each property in its portfolio. The result is complementary assets across different geographies coming together to create a strong portfolio, aligned with Far East Orchard’s strategy of creating long-term value. Left to right: Orchard Rendezvous Hotel, Singapore The Calile Hotel Brisbane, Australia Adina Apartment Hotel Berlin Hauptbahnhof, Germany CEO’S MESSAGE DEAR SHAREHOLDERS, 2018 started on a positive note with signs of a broad- based global economic recovery. As the year progressed, downside risks increased with weaker growth momentum and increased political tensions. In a fast- changing market with elevated uncertainty, we focused on enhancing recurring income streams from our hospitality and student accommodation businesses, to complement earnings from our property