Bukit Sembawang Estates : Annual Report

ANNUAL REPORT 2023

CONTENTS

01

02

04

05

06

09

10

11

Corporate Profile	12	Group Structure
Chairman's Statement	13	Board of Directors
Five-Year Financial Summary	15	Key Management
Group Financial Highlights	16	Directorate & Other Corporate
Projects for Sale		Information
Upcoming Projects	17	Corporate Governance Report
Operation of Serviced Apartments	45	Sustainability Report
Awards & Accolades	65	Financial Contents

CORPORATE

PROFILE

HOMES FOR EVERY GENERATION

Bukit Sembawang Estates Limited ("BSEL") started developing landed properties in the 1950s and was incorporated in Singapore in 1967. It is one of the pioneer companies that obtained public-listing on SGX Mainboard in 1968. BSEL now also focuses on property development, investments and other property-related activities.

OUR MISSION

As a leading and experienced property developer, we are committed to designing and building fine quality homes that satisfy the aspirations and lifestyles of our customers, for generations to come.

OUR MILESTONES

For over half a century, Bukit Sembawang Estates Limited has built many of Singapore's renowned and established residential developments comprising landed homes, private residences, and serviced apartments.

OUR COMMITMENT

We value every customer, every family, and we shall remain dedicated to creating quality homes that property owners will love, cherish, and appreciate - for generation after generation.

Bukit Sembawang Estates Limited | Annual Report 2023

1

CHAIRMAN'S

STATEMENT

Dear Valued Shareholders,

REVIEW OF PAST YEAR'S PERFORMANCE

On behalf of the Board of Directors, I am pleased to report that Bukit Sembawang Estates Limited ("BSEL", "the Company" or together with its subsidiaries, "the Group") has achieved net profit of $34.4 million for financial year ended 31 March 2023 ("FY2023").

While the past year saw border restrictions around the world lifting with more people freely travelling again, and economies starting to normalise, the real estate industry nonetheless continued to experience headwinds due to disruptive global geopolitical tensions that have led to greater inflation, high interest rates, increased development costs and uncertain economic conditions.

Although faced with difficulties, the Group remains dedicated to delivering top-notch products and had persisted in generating innovative ideas and producing superior quality products so as to provide the best value propositions to both our customers and the Company.

The Group's revenue for FY2023 was $197.1 million, a decline of 32%, compared to $288.2 million for FY2022. Gross profit declined by 66% to $34.1 million, mainly due to lower profit recognised on development projects and the cycle of development and sales. In FY2023, profits were recognised mainly from the sales of 8 St Thomas, Luxus Hills (Contemporary Collection), Nim Collection Phase 2, LIV @ MB and The Atelier.

The Group recorded a profit before tax of $37.5 million for FY2023, a decrease of 61%, as compared with $95.3 million for FY2022 mainly due to lower revenue recognised. Other operating income of $7.7 million included a write-back of impairment loss on property, plant and equipment relating to Fraser Residence Orchard, Singapore of $5.0 million and a reversal of allowance for foreseeable losses on development properties of $6.3 million. The decrease in finance costs was mainly due to repayment of bank loan.

Total equity stood at $1.5 billion.

Despite the economic uncertainties over the past year, the Group achieved several significant milestones. In May 2022, we introduced LIV @ MB, which was very well received by the market with an 88.2% sales rate achieved so far. The successful launch was indicative of how well our product, lifestyle and facilities catered to our customers' needs.

The Group has established a unique BSEL Landed Homes Flagship Gallery to promote and exhibit our collection of bespoke landed homes and is marketing the Pollen Collection with its in-house team of sales consultants. In November 2022, we released a limited batch of 24 landed homes at Pollen Collection, and another batch of 21 units in March 2023. This marketing approach provided a more personalised experience for our customers and the ability to individually customise their preferences. We had also successfully secured a government land sales parcel at Bukit Timah Link in November 2022 that will add to our land bank and expand our portfolio of bespoke lifestyle- centric private residences.

For the Group's current portfolio of developments for sale, as of 21 June 2023, we have sold 100% of Nim Collection Phase 2, 100% of Luxus Hills, 88.2% of LIV @ MB, and 91.6% of The Atelier. Out of 34% of Pollen Collection that was released for sale, 44.4% have been sold.

At the Fraser Residence Orchard, Singapore, the Group's luxury serviced apartments at Paterson Road, the property managed to achieve an average room rate of $342 and an average occupancy of 87.7% that are comparable with the numbers achieved by other serviced apartments within the competition set. The property continued to maintain its position as the preferred choice for both long and short-term guests looking for a premium location in the Orchard Road vicinity.

CURRENT YEAR'S PROSPECTS

Private home prices in Singapore increased by 3.3% in the first quarter of 2023, according to URA's Real Estate Statistics. The real estate sector expanded by 9.2% year- on-year, slowing from the 15.2% growth in the fourth quarter of 2022, according to Ministry of Trade and Industry ("MTI"). This growth was partially supported by the private residential property segment. However, with higher borrowing and construction costs, a projected weak economic growth, slower growth in Housing and Development Board ("HDB") resale prices and the recent cooling measures, private residential prices are expected to rise only moderately this financial year.

As a result of the April 2023 cooling measures, the demand from foreigners and entities is expected to fall, and the market would need to pivot and focus primarily on local residents to support the sales demand. High end developments targeting foreigners would be challenged, but developments which focus more on Singaporeans and Permanent Residents would be lesser impacted. Hence,

2 Bukit Sembawang Estates Limited | Annual Report 2023

developments that are well designed with clear product offerings to suit the needs of the target market segment will be key to generate sales demand.

With the Group's core philosophy of building homes that will stand the test of time and its diverse portfolio of bespoke private residences and landed properties, we will remain relevant to the industry as we continue to create high-value lifestyle private homes for our discerning homebuyers.

CURRENT YEAR'S PLANS

The main focus this year will be The Atelier, LIV @ MB, Pollen Collection, and the launch of the recently purchased residential site at Bukit Timah Link. Construction works for the three developments are progressing steadily, with The Atelier expected to obtain Temporary Occupation Permit ("TOP") by the first half of 2024.

Within the next twelve months, the Group expects to sell out all the units at The Atelier and LIV @ MB. As one of the very few developers of landed housing in Singapore, the Group is confident that the well-designed Pollen Collection will be well received by customers aspiring to own a landed home and who have a need for more space and multigenerational living. For our new development at Bukit Timah Link, we are planning a development that is suitable for both investors and end users with a hillside- resort themed lifestyle with complementary facilities within a 20-storey development.

The Group remains committed to creating value for our customers and to maintaining the quality of our products. By constantly evolving our approach and keeping a close eye on customers' expectations, overall demand and ever-changing economic trends, we will be able to fulfil these commitments in our upcoming developments. Finally, the Group will continue to take a forward-looking approach to achieve sustainable growth while actively seeking opportunities to supplement our land bank and to build upon our solid foundation.

DIVIDENDS

For FY2023, the Company did not declare any interim dividend.

In view of the current economic situation and its impact on earnings, and to conserve financial resources, the Board recommends a final dividend of 4 cents and a

CHAIRMAN'S

STATEMENT

special dividend of 6 cents per ordinary share, totalling 10 cents. The total dividend pay-out ratio is 0.8.

The dividend payment, which amounts to $25.9 million, is subject to shareholders' approval at the 57th Annual General Meeting ("AGM") to be held on 28 July 2023.

DIRECTORATE

The Board had announced that Mr Chng Kiong Huat ("Mr Chng") has stepped down as a Director of the Company with effect from 3 February 2023. Mr Chng was a Non-Executive Director of the Company for 7 years, prior to his redesignation to Executive Director and Chief Executive Officer with effect from 1 October 2022. In order to preserve the same level of independence for the Board, and to provide Management with sufficient resources by streamlining Mr Chng's workload, it was decided that he will focus on his role as Chief Executive Officer to meet the management and operational needs of the Company in its property development business.

On behalf of the Board, I would like to extend a warm welcome to Mr Chu Leong Tho who was appointed as an Alternate Director to Ms Fam Lee San with effect from 28 March 2023.

Pursuant to the Company's Constitution, Mr Lee Chien Shih and Ms Fam Lee San shall be retiring at the forthcoming AGM. Being eligible, Mr Lee Chien Shih and Ms Fam Lee San have consented to continue office and have offered themselves for re-election.

ACKNOWLEDGEMENTS

On behalf of the Board and Management, I would like to express my heartfelt gratitude to Mr Chng for his contributions during his tenure as a member of the Board, and our esteemed customers, shareholders, strategic partners, and our staff for their unwavering commitment and trust. We are confident that under Mr Chng's capable leadership as Chief Executive Officer and with your steadfast support, the Group will continue to build upon its strong foundation and strive towards greater heights in the years to come. Once again, we express our heartfelt appreciation and look forward to a bright future ahead.

Koh Poh Tiong

Chairman

21 June 2023

Bukit Sembawang Estates Limited | Annual Report 2023

3