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.