Far East Orchard recorded a profit after income tax of $16.8 million in FY2021, reversing the net loss of $8.9 million in FY2020. This was primarily due to fair value gains on investment properties. Excluding the fair value gains, the Group would have registered a wider net loss. Profit attributable to equity holders of the Company was $28.1 million in FY2021 (FY2020: $1.5 million), resulting in earnings per share of 6.12 Singapore cents (FY2020: 0.35 Singapore cents).
Group Chief Executive Officer of Far East Orchard, Mr Alan Tang commented on the results achieved, “In the face of a challenging environment, our team actively took steps to mitigate the headwinds posed by COVID-19. The hospitality sector continues to be weighed down by changing COVID-19 restrictions. However, we will continue to persevere with our current momentum and stand ready to steer our business through these times.”
Revenue for FY2021 declined by 4.8% year-on-year to $106.8 million compared to FY2020. This was mainly attributable to the Group’s hospitality business being impacted by the protracted COVID-19 pandemic as well as the ongoing lockdowns and border closures which impeded international travel and tourism. The decline was partially mitigated by the demand for accommodation facilities for isolation purposes and from companies for accommodation for their foreign workers in Singapore.
Far East Orchard has been building its purpose-built student accommodation (PBSA) portfolio since FY2016. The adverse impact from the hospitality business segment has been partially mitigated by the increase in contribution from the PBSA business segment. Stronger demand for the United Kingdom’s higher education in 2021, as well as the full year contribution from a PBSA asset acquired in November 2020 contributed to an improvement for our business.
The company hopes to achieve its goals of 25,000 rooms and 5,000 beds in 2025. To date, Far East Orchard owns or operates more than 100 hospitality assets with approximately 18,000 rooms. Concurrent to the hospitality expansion, the Group continually seeks opportunities to grow the student accommodation business in the UK cities with high-tariff universities. Based on the 2021 end of cycle data from Universities and Colleges Admission Services, the number of UK applications continued to increase. While the number of applications and acceptances from European Union students showed a decline because of Brexit and the loss of their home fee status1 , the total number of applicants from outside the EU showed a 12% increase.
Far East Orchard expects its hospitality business to continue to be impacted in the near term. The PBSA sector remains resilient. In February 2022, the UK has reduced the number of travel restrictions, which aids in easier travelling. In the longer-term, the company is confident that this sector bodes well due to the prestige of UK universities and the desire of students to live and study in the UK.
