Company Registration No. 197001177H
(Incorporated in the Republic of Singapore)
__________________________________________________________________________________
50TH ANNUAL GENERAL MEETING
Responses to substantial and relevant questions received from: (1) the Securities Investors
Association (Singapore); and (2) Isetan Singapore Limited shareholders
__________________________________________________________________________________
The Board of Directors (the "Board") of Isetan (Singapore) Limited (the "Company") wishes to thank the Securities Investors Association (Singapore) and the Company's shareholders who submitted their questions in advance of the Annual General Meeting ("AGM") to be convened and held by way of electronic means on 28 April 2021 at 10.00 am.
Responses to questions raised by the Securities Investors Association (Singapore)("SIAS")
Please refer to Appendix (1) for the Company's responses to the questions raised by SIAS in relation to our Investment Property at Wisma Atria, retail operations, capital structure and Return on Equity.
Responses to questions submitted by shareholders which are relevant to the Resolutions of the
AGM
We received questions from shareholders relating to the Company's 2020 financials, business operations, strategy, and Isetan Wisma Atria. As there were overlaps in the questions received, we will not be providing responses to every question. We have, therefore, grouped related and similar questions together, and provided our corresponding responses to them. Please refer to our responses as set out in Appendix (2).
We have also received some questions from shareholders which were similar to those posed by SIAS. As such, please refer to our responses in Appendix (1).
By Order of the Board
Lun Chee Leong
Company Secretary
27 April 2021
Appendix 1
RESPONSES TO QUESTIONS FROM SECURITIES INVESTORS ASSOCIATION (SINGAPORE)
Questions | Responses | ||||||||||
1) As noted in the chairman's statement, on 22 | The Company's investment property at | ||||||||||
Wisma Atria ("the Property") is currently | |||||||||||
January 2021, the company announced that | |||||||||||
used to generate rental income for the | |||||||||||
it was exploring | options | for | the | group's | |||||||
Company in line with the Company's | |||||||||||
investment property | at | Wisma Atria. No | |||||||||
strategy of diversifying its income stream | |||||||||||
definitive decision or agreement has been | |||||||||||
having regard to the challenges being faced | |||||||||||
made or entered into by the company to date. | |||||||||||
in its retail business. The Board recognises | |||||||||||
The group ceased its own retailing activities at | that the Isetan Wisma Atria Investment | ||||||||||
Property is a strategic asset and carefully | |||||||||||
Wisma Atria at the end of March 2015 and | |||||||||||
and regularly reviews how the use of this | |||||||||||
converted it into an investment property for | |||||||||||
strategic asset can contribute towards the | |||||||||||
rental income. As disclosed in Note 20 (page | |||||||||||
Company's long-term strategy while paying | |||||||||||
90 - Investment properties), the fair value of | |||||||||||
close attention to evolving circumstance | |||||||||||
the investment property is estimated to be | |||||||||||
relating to the Investment Property. | |||||||||||
$292.5 million (estimation based on $300.6 | |||||||||||
million less $8.1 million for the portion of the | One of the key factors that the Board closely | ||||||||||
Kallang Pudding warehouse that is recognised | |||||||||||
monitors is the remaining leasehold interest | |||||||||||
as investment property). | |||||||||||
of the property. The Board periodically | |||||||||||
(i) | Can the board help shareholders | reviews whether or not it would be in the | |||||||||
best interest of the Company to continue | |||||||||||
understand how it is carrying out | |||||||||||
using the property for generation of rental | |||||||||||
the strategic | review of Wisma | ||||||||||
income or to dispose of the property. In so | |||||||||||
Atria? | What | is | included in | the | |||||||
doing, the Company will have to take into | |||||||||||
scope of the review? | |||||||||||
account many different other factors such | |||||||||||
(ii) | What is the progress made so far? | as the future potential of the property to | |||||||||
generate rental income, the costs of any | |||||||||||
Has the company | commenced | ||||||||||
necessary upgrading to obtain better yields, | |||||||||||
exploratory | discussions | on | the | ||||||||
the prospect of the retail rental market, the | |||||||||||
matter with third parties? | |||||||||||
effect of surrounding developments on | |||||||||||
(iii) | In addition, | what | impact | does | rental yields and resale price (including the | ||||||
potential positive impact of the completion | |||||||||||
management think the Thomson- | |||||||||||
of the Thomson-East Coast MRT line on | |||||||||||
East Coast MRT line would have on | |||||||||||
this), opportunity costs and the price at | |||||||||||
Wisma | Atria | given | that Orchard | ||||||||
which the Property may fetch in the | |||||||||||
Road | already | enjoys | good | ||||||||
immediate future. The situation is dynamic | |||||||||||
connectivity? | |||||||||||
with the uncertainties presented by the | |||||||||||
Covid-19 pandemic making it even more | |||||||||||
challenging to make accurate assumptions | |||||||||||
and predictions regarding some of these | |||||||||||
factors. | |||||||||||
Questions | Responses | |||||||
The Independent Directors, as part of the | ||||||||
In September 2019, it was reported in the | Board participate actively in such reviews | |||||||
media that the manager of Starhill Global REIT | and provide their own views, opinions and | |||||||
had submitted a non-binding expression of | judgments, as well as challenge | |||||||
interest to acquire the group's stake in the | management's proposals and strategies. In | |||||||
Wisma Atria mall. Citing an unnamed source, it | all such matters, the Board focuses on what | |||||||
said that the REIT was seeking to buy the stake | would be in the best interests of the | |||||||
for more than $290.7 million which was the | company while also taking into account the | |||||||
then-fair value as reported by the group. | interests of the Company's various | |||||||
stakeholders, including whether or not any | ||||||||
(iv) | Can the board help shareholders | action that requires shareholder approval | ||||||
understand its efforts in 2019 to | will likely have the support of the | |||||||
crystallise the value of the asset | Company's shareholders. | |||||||
for the benefit of all shareholders? | ||||||||
As mentioned in our announcement dated | ||||||||
(v) | What was the involvement by the | 22nd January 2021, the Company is currently | ||||||
independent directors then? What | exploring its options regarding the Property | |||||||
is the role played by the | and in this connection, may be appointing | |||||||
independent | directors | in | the | property agents and valuers to assist the | ||||
current strategic review? | Company and/or commencing exploratory | |||||||
discussions on the matter with third parties | ||||||||
(vi) | Has the board approached Starhill | (including Starhill Global REIT). We have | ||||||
Global REIT who | would | be | the | since shortlisted a few marketing agents to | ||||
assist us with the matter and are currently | ||||||||
most | logical | strategic | ||||||
evaluating which one to be appointed. | ||||||||
buyer/partner | for | the | group's | |||||
strata area in Wisma Atria? | The Company will make the necessary | |||||||
announcements on the SGXNET if there are | ||||||||
any developments that will materially affect | ||||||||
the price of the shares. | ||||||||
2) Would | the | board/management | provide | Since the completion of the renovations in | ||||
shareholders with greater clarity on the | November 2020, we are pleased that the | |||||||
following operational matters? Specifically: | store's new offerings such as the Food and | |||||||
Beverage outlets operated by third-party | ||||||||
(i) Flagship Isetan Scotts: Has the rejuvenation | tenants have helped to draw in customers | |||||||
of the store been completed? Are the | as well as diversify the store's revenue. The | |||||||
spaces earmarked for rental fully occupied | store is also enjoying the synergy from the | |||||||
by third party tenants? Has the | opening of all the different departments. | |||||||
performance (prior to COVID) met | However, the full potential of the | |||||||
management's expectations? | rejuvenation of Isetan Scotts is likely to have | |||||||
been impacted by the ongoing Covid-19 | ||||||||
(ii) Recovery: What is the recovery in footfall | situation as sales have yet to recover to pre- | |||||||
and in sales since the circuit breaker was | Covid 19 levels. We are still monitoring its | |||||||
lifted and the nation entered phase 2 of the | performance as the economy re-opens | |||||||
re-opening? | further. | |||||||
Questions | Responses | |||||
(iii) Can management elaborate further on its | The Covid-19 pandemic has shifted | |||||
digital strategy? How many downloads and | consumers towards more online shopping. | |||||
active users are there on the Isetan app? | Our revenue from online shopping which | |||||
How does the group intend to stay relevant | experienced a four-fold increase in 2020, | |||||
to the younger consumers? | continues to show positive signs. This is a | |||||
positive development for the Company, | ||||||
which has been moving towards an | ||||||
omnichannel approach, with more | ||||||
touchpoints and a more seamless | ||||||
experience for its customers. To reach out | ||||||
to a younger group of customers, we have | ||||||
our own website and a presence in Lazmall, | ||||||
as well as leverage on social media | ||||||
platforms to market our merchandise and | ||||||
promotions. Our present app users have | ||||||
exceeded 100,000. | ||||||
3) Revenue | for | the group decreased | to $77.2 | The Board periodically reviews the | ||
million from $111.9 million a year ago due to | Company's capital structure to make sure | |||||
various reasons such as the circuit breaker, | that it is aligned with the Company's needs. | |||||
weak consumer sentiment and challenge from | The cash and cash equivalents and other | |||||
online shopping. The group reported a loss of | investments, at amortized cost presently | |||||
$(20.2) million although cash provided by | contribute towards a healthy balance sheet | |||||
operating activities was $11.4 million (page 62). | that is able to meet the Company's mid- | |||||
term and future needs, and obligations. | ||||||
The losses incurred in the year resulted in | ||||||
retained earnings turning negative. This was | The Board constantly evaluates the | |||||
given as the reason that the company had not | performance of the Company, which has | |||||
declared dividends for FY2020. In FY2019, the | been very poor over the past 6 years. The | |||||
$0.05 dividend paid per share amounted to | main reasons for the recent deterioration in | |||||
$2.063 million in total cash paid out. | the ROE are the growing competition in the | |||||
retail market, high rental expenses, tight | ||||||
As at 31 December 2020, the group has cash and | labour conditions, slower economic | |||||
cash equivalent of $49.16 million (Note 11 | growth, and more recently, (i) the | |||||
- Cash and cash equivalents; page 84) and bond | disruption caused by the remodelling of | |||||
holdings worth $44.4 million (Note 14 - Other | Isetan Scotts which commenced in June | |||||
investments, at amortised cost; page 86). | 2019 and (ii) the COVID-19 pandemic being | |||||
an unexpected event with its negative | ||||||
(i) Has | the | board | evaluated | the | group's | impact on operations as well as causing a |
optimal capital structure? | delay in completion of the renovation of | |||||
Isetan Scotts. | ||||||
In light of the poor performance, the Board | ||||||
(ii) Is the board satisfied with the group's ROE | has taken the following actions: | |||||
over the past 3-year,5-year or 10-year | a) converted Wisma Atria into an | |||||
period? | investment property to diversify the | |||||
Company's income stream; | ||||||
As net losses in the past three years | b) ceased the operations of Isetan | |||||
exceeded | $(60.3) | million, | the | group's | Jurong East due to its substantial | |
losses; |
Questions | Responses |
retained earnings have slipped into | c) streamlined operations to make the |
accumulated losses of $(4.07) million. | Company more efficient in the use of |
its resources; | |
d) revamp of Isetan Scotts store; | |
(iii) Given the group's financial position, has the | e) strengthen Isetan's online business. |
board considered a capital reduction to | |
right-size the balance sheet to return excess | The Board periodically evaluates what to do |
capital to shareholders? This would also | with its cash and cash equivalents having |
bypass the accounting issue of not having | regard to the needs of the Company and |
sufficient retained earnings to fund the | the Company's plans and strategies. In so |
dividends. Paying out half the cash and half | doing, the Board focuses on what would be |
of the bond holdings in the form of a capital | in the best interests of the company while |
reduction would give shareholders more | also taking into account the interests of the |
than $1 per share. This would still leave the | Company's various stakeholders, including |
group in a strong financial position to | whether or not any action that requires |
pursue its strategic objectives. | shareholder approval will likely have the |
support of the Company's shareholders. | |
Appendix (2)
Responses to substantial and relevant questions received from shareholders
Questions | Responses | ||||
1) What is the plan for the Investment Property at | Please refer to our response to Question 1 | ||||
Wisma | Atria | after | the | Company's | in Appendix (1) above. |
announcement on 22 Jan 21? Is it planning to | |||||
sell the Property and returning money back to | |||||
the shareholders? Would the Company be | |||||
looking at offers only above independent | |||||
valuation, and how long is the process expected | |||||
to take? | |||||
Can the Board provide the shareholders with | |||||
more information on the options that are being | |||||
considered for the Investment Property? | |||||
2) Can the board elaborate on the defaults by | As disclosed in the Annual Report 2020 on | ||||
tenants at Isetan Wisma Atria, and the steps | page 107, other than the one tenant who | ||||
taken to recover & reduce such losses? | was in significant financial difficulty and | ||||
where the amount of $1.141 million due | |||||
from the tenant was fully written off after | |||||
legal means to recover the sum was futile, | |||||
the Company's exposure to bad debts in | |||||
relation to tenants (including those in Isetan | |||||
Wisma Atria) is not significant. That said, we | |||||
continue to monitor closely the debts owed | |||||
by our tenants, send reminders or demand |
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Disclaimer
Isetan (Singapore) Limited published this content on 27 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2021 08:56:02 UTC.