Chairman Statement

Chairman Statement

Despite the challenges caused by Covid-19, First Sponsor recorded a record annual pre-tax profit of S$202.6 million, underpinned by higher profit contributions from all three core business segments. In conjunction with the good set of results and healthy financials, the Group declared a record total dividends for FY2021 of 3.45 Singapore cents.

Dear Shareholders,

While the Covid-19 pandemic continued to disrupt economic activities throughout 2021, the Group managed to navigate through these unprecedented times with a good set of results for the financial year ended 31 December 2021. I am happy to report that the Group recorded a record annual pre-tax profit of S$202.6 million. The corresponding net profit attributable to shareholders was S$121.5 million, a 17.7% growth from 2020, underpinned by higher profit contributions from all three core business segments.

In conjunction with the good set of results and healthy financials, the Board announced a second interim taxexempt (one-tier) cash dividend of 2.35 Singapore cents per ordinary share in lieu of a final dividend for FY2021, resulting in a record total dividends declared for FY2021 of 3.45 Singapore cents per ordinary share, 11.3% higher than the FY2020 full year dividends. The Board will continue to work towards a stable dividend payout with a steady growth when appropriate, subject to the successful implementation of the Group's business strategy and prevailing market conditions amidst the current economic uncertainties arising from the Covid-19 pandemic.

The Group's property development projects in the Greater Bay Area (“GBA”) achieved good overall sales performance in 2021. The Group had further expanded its business presence in the GBA through the acquisition of four more property development projects, one in Fenggang, Dongguan (18% equity interest), two in Humen, Dongguan (48.2% and 36% equity interest) and the fourth in Panyu, Guangzhou (95% equity interest) in FY2021. Although sales rate had slowed down fairly substantially since the Evergrande crisis, the Group remains confident in the medium term prospects of the GBA region. The Group has 5 property development projects in the People's Republic of China (“PRC”) which are expected to launch for pre-sales in 2022.

The Group's European operating hotels showed some signs of recovery in 2021, mainly underpinned by leisure demand. While demand was adversely affected following the resurgence of Covid-19 cases and the consequential implementation of restrictions in late 2021, the Group's European hospitality business, including those owned by associated companies and joint ventures, achieved earnings before interest, taxes, depreciation and amortisation (“EBITDA”) of €1.1 million compared to a loss before interest, taxes, depreciation and amortisation (“LBITDA”) of €1.1 million in FY2020 after taking into account €10.1 million of government subsidies (FY2020: €8.4 million). Similarly, in the PRC, the Crowne Plaza Chengdu Wenjiang and Holiday Inn Express Chengdu Wenjiang Hotspring hotels (“Wenjiang Hotels”) recorded an overall EBITDA of RMB12.5 million for FY2021 which represented a growth of 58% from the EBITDA of RMB7.9 million recorded in FY2020.

The Group's property financing segment performed well in FY2021 with its highest full year average PRC loan book todate of RMB2.7 billion. The challenge for the Group would be to maintain a similar average loan balance for FY2022 as the credit liquidity situation in the PRC continues to improve.

Group Performance

The Group recorded a strong 188.9% increase in revenue from S$203.9 million in FY2020 to S$589.2 million in FY2021, and an overall 17.7% increase in net profit attributable to shareholders from S$103.2 million in FY2020 to S$121.5 million in FY2021. The Group achieved a record profit before tax of S$202.6 million in FY2021, which was a 61.3% increase from the profit before tax of S$125.6 million in FY2020. The bulk of the revenue growth for FY2021 stemmed mostly from the property development sector due mainly to the handover of SOHO loft units at Plot F of the Chengdu Millennium Waterfront in 1H2021 and the six fully sold residential apartment blocks of The Pinnacle, Dongguan in December 2021. The Group's property holding and property financing segments saw moderate growth in FY2021 due mainly to the modest recovery of the European and PRC hospitality sectors from the impact of the Covid-19 pandemic, the effect of the consolidation of the East Sun property portfolio and a larger average PRC loan portfolio.

As at 31 December 2021, the Group's total equity, consolidated gross borrowings and consolidated net gearing ratio based on book value amounted to approximately S$2.0 billion, S$1.1 billion and 0.38 respectively.

The Group continues to adopt a foreign exchange hedging strategy fairly similar to prior years. Its European and Australian investments are substantially hedged via a combination of local currency-denominated borrowings and financial derivatives such as cross-currency swaps and foreign currency forward swaps. Given the increase in the Group's RMB-denominated assets, the Group has also been conscientiously increasing its hedge against RMB exposure. Nevertheless, relative to the Group's net exposure to its European and Australian investments, RMB exposure remains a key business risk to the Group. This is mainly because of the substantially higher cost to hedge RMB as compared to other currencies. As at 31 December 2021, the Group recorded a cumulative translation gain of S$91.7 million (Dec 2020: gain of S$19.3 million) arising from the Group's exposure to RMB.

Property Development

Revenue and gross profit from property development surged by 628.4% to S$415.1 million (FY2020: S$57.0 million) and 84.0% to S$119.2 million (FY2020: S$64.9 million) respectively. Property development performance for FY2021 was mainly driven by the handover of SOHO loft units at Plot F of the Chengdu Millennium Waterfront in 1H2021 and the six fully sold residential apartment blocks of The Pinnacle, Dongguan in December 2021.

The Group has 5 PRC property development projects which are expected to launch for pre-sales in FY2022, namely, (i) the 17.3%-owned Time Zone, (ii) the 48.2%-owned Bolong Bay Garden and (iii) the 36%-owned Boyong project, all of which are situated in Humen, Dongguan, as well as (iv) the 95%-owned Primus Bay in Panyu, Guangzhou and (v) Plot E1 of the Millennium Waterfront in Wenjiang, Chengdu.

The Pinnacle, Dongguan, PRC

In December 2021, the 60%-owned The Pinnacle in Dongguan commenced its first handover of six of the eight fully sold residential apartment blocks. The remaining two fully sold residential apartment blocks and 202 SOHO units are expected to be handed over during the course of 2022. As at 11 March 2022, 27% of the 202 SOHO units were sold.

Skyline Garden, Dongguan, PRC

The last of the five residential apartment blocks of the 27%-owned Skyline Garden project in Dongguan, comprising 364 units were launched for pre-sales in July 2021 and substantially sold. The project is expected to commence its first handover of the four fully sold residential apartment blocks in late 2022.

Time Zone, Dongguan, PRC

The first two residential apartment blocks (452 units) of the 17.3%-owned Time Zone were substantially sold on the first day of its pre-sale launch in August 2021 at the maximum permitted selling price. Two other residential apartment blocks (515 units) that were launched for presales in October and December 2021 were 33% and 14% sold respectively at similar price level. Two SOHO loft blocks (648 units) were launched for pre-sales on 13 November 2021 and were, on average, 85% sold.

Pre-sales for the remaining two residential apartment blocks (308 units) of Phase 1.1, as well as two residential apartment blocks (292 units) and two SOHO loft blocks (648 units) of the neighbouring Phase 1.2 are expected to be launched in 2022.

The first handover of the residential apartment blocks is expected to commence in 2023.

Fenggang Project, Dongguan, PRC

In January 2021, the Group signed a cooperation agreement in relation to, among other things, the acquisition by the Group of an 18% equity stake in a real estate developer which has the rights to redevelop a plot of land in Fenggang, Dongguan with a site area of about 33,800 sqm (“Fenggang Project”). The resettlement exercise for the existing inhabitants is on-going and the majority of the existing inhabitants have agreed and signed the resettlement compensation agreements. A large number of the remaining inhabitants have agreed on the principal terms and will be progressing to the documentation phase. The land is expected to be successfully re-zoned by the second half of 2022.

Bolong Bay Garden, Dongguan, PRC

In April 2021, the Group entered into a joint venture with a wholly-owned subsidiary of a HKSE-listed property development company (“HK ListCo”) pursuant to which the Group acquired a 48.2% equity interest in a piece of development land in Humen, Dongguan. The project company commenced construction works in June 2021 to develop the 30,000 sqm land parcel into a predominantly residential project with a total saleable gross floor area (“GFA”) of approximately 78,400 sqm.

As at 31 December 2021, the Group had subscribed for approximately S$97 million and S$89 million of junior and senior convertible bonds with an annual coupon rate of 15% and 12% respectively (“Convertible Bonds”) issued by the JV holding company (“JV HoldCo”) of the Bolong Bay Garden project. The subscription monies were used to finance the acquisition, conversion from industrial to residential use of the land parcel and the development of Bolong Bay Garden. The Convertible Bonds are secured on, among other things, a share pledge over the shares of JV HoldCo and are guaranteed by the HK ListCo.

Construction work has been progressing well with pre-sales expected to commence in 1H2022.

Primus Bay, Guangzhou, PRC

The Group completed the acquisition of the 95% equity interest in the project in May 2021. The project comprises 20 residential apartment blocks of 1,527 units in Panyu, Guangzhou (“Primus Bay”).

Construction work of the Primus Bay has been progressing well. The Group expects to launch its first pre-sales of three residential apartment blocks under Phase 1 in 1H2022. Presales for the remaining residential apartment blocks are expected to be launched progressively from 2H2022.

Humen Boyong Project, Dongguan, PRC

In July 2021, the Group entered into a joint venture pursuant to which it subscribed for a 36% equity stake in a project company that owns and will redevelop two adjacent plots of mixed-use development land in Humen, Dongguan.

The site is situated at a prime location, between the Time Zone and Bolong Bay Garden, accessible via two metro lines (under planning), and is approximately 800 metres away from the Humen East high-speed train station which connects to Shenzhen and Guangzhou. It is also approximately 1.7 kilometres away from the Humen municipal office, and well supported by amenities such as hospitals, schools, commercial retail and malls.

The project will have a saleable GFA of approximately 110,000 sqm which comprises approximately 82,000 sqm (75%) of residential GFA and 28,000 sqm (25%) of commercial GFA.

Construction of the Humen Boyong Project has commenced and pre-sale is expected to be launched in 2H2022.

Millennium Waterfront Project, Chengdu, PRC

Following the successful development of Plot F, Plot E, the last development plot of the Millennium Waterfront comprising approximately 2,800 SOHO units, 37,500 sqm of lettable commercial space and a medical facility with a GFA of 74,200 sqm, will be developed in two phases (Phase 1 and Phase 2).

Construction under Phase 1, which comprises approximately 2,124 SOHO units (149,700 sqm) and 28,400 sqm of retail podium, has begun with SOHO presales expected to commence in late 2Q2022.

City Tattersalls Club, Sydney, Australia

Following the Stage 2 development approval application for the CTC Project in Sydney in March 2021, the Group is pleased that the Stage 2 development approval has been obtained in November 2021, paving the way for the construction and pre-sale launch of the 241 residential units (net saleable area: 18,600 sqm) to commence in 3Q2022.

In addition, October 2021 saw the 39.9%-owned developer trust and CTC entering into a legally binding heads of agreement in relation to the sale by CTC of the 101-room hotel component of the project to the developer trust or its nominee. The parties are in the midst of finalising the detailed documentation in relation to the sale. The Group is expected to take a 70% stake in the hotel component.

The Group will also be providing construction financing to the developer trust as part of its property financing business.

Dreeftoren Redevelopment, Amsterdam Southeast, the Netherlands

The Group commenced construction of the Dreeftoren Amsterdam Southeast redevelopment in February 2022. The redevelopment project comprises a new 130-metre high residential tower with a lettable floor area of approximately 20,300 sqm (312 apartment units) and an adjacent newly refurbished and enlarged 18-storey office tower with lettable floor areas of 15,600 sqm (office component) and 1,600 sqm (commercial component). The entire redevelopment is expected to be completed in 2025.

Redevelopment of Meerparc, Amsterdam, the Netherlands

The five-storey Meerparc located in Amsterdam South-Axis, the central business district of Amsterdam, was acquired in December 2017. The multi-tenanted property with a GFA of 19,130 sqm is situated along the Nieuwe Meer Lake and next to Zuiderhof I, an office property which is 33%-owned by the Group. Meerparc is well connected by a nearby metro and a train station, as well as the A10 highway exit which connects to the Netherlands' main A1, A2, A4 and A9 highways. The main drivers for acquiring Meerparc were its prime location, freehold tenure and the good redevelopment potential of the property.

The Group has commenced discussions with the relevant authorities in relation to the redevelopment opportunity of Meerparc into a mixed residential/office property with a substantial increase in GFA.

Property Holding

The property holding business segment recorded a 31.9% and 76.9% increase in revenue and gross profit to S$55.1 million (FY2020: S$41.7 million) and S$16.1 million (FY2020: S$9.1 million) respectively in FY2021. The increase was due mainly to the modest recovery of the European and PRC hospitality sectors from the impact of the Covid-19 pandemic and the effect of the consolidation of the East Sun property portfolio.

The Group's Dutch office portfolio displayed strong resilience despite the negative global economic conditions, recording a 5.7% growth to an income of S$31.7 million (FY2020: S$30.0 million) in FY2021. The Group’s European hospitality business also improved with an EBITDA of €1.1 million as compared to an LBITDA of €1.1 million in FY2020 after taking into account €10.1 million of government subsidies (FY2020: €8.4 million). Similarly in the PRC, the Wenjiang Hotels recorded a 58% growth in EBITDA to RMB12.5 million for FY2021.

The Netherlands

The Dutch Bilderberg hotel portfolio, comprising 11 owned hotels, continued to operate in a challenging environment with changes in the easing and tightening policies due to the Covid-19 pandemic. Notwithstanding this, the hotel portfolio managed to recover and achieve modest growth with the occupancy for the portfolio increasing to 37.3% in FY2021 (FY2020: 35.5%). EBITDA increased to €2.1 million in FY2021 (FY2020: €0.7 million) after considering government subsidies of €6.1 million (FY2020: €6.0 million).

Despite the uncertainty caused by the Covid-19 pandemic, the Group remains optimistic about the eventual recovery of the European hospitality business in the medium to long term. As such, the Group is discussing with its business partners in the Dutch QBN hotel portfolio to increase its current 31.4% equity interest.

Following the easing of the Covid-19 restrictions, the Rotterdam hotel market saw signs of recovery until another lockdown in December 2021. The 33%-owned Hilton Rotterdam recorded an improved occupancy of 29.9% in FY2021 (FY2020: 26.4%) and managed to minimize its LBITDA to €0.6 million (FY2020: €0.9 million) after considering government subsidies of €1.3 million (FY2020: €1.2 million). Through a lease arrangement with the hotel owning company, the Group has a 100% economic interest in the hotel operations.

In Utrecht, the Hampton by Hilton was thriving after the Covid-19 measures were lifted over the summer period until the lockdown in December 2021. Occupancy for 2H2021 more than doubled to 67.8% (2H2020: 32.9%) with FY2021 occupancy increasing to 42.7% from 17.7% in FY2020 during which the Covid-19 restrictions were more severe.

The Crowne Plaza hotel, which suspended its room operations since mid-September 2020, restarted its room operations on 17 January 2022.

For FY2021, the 2 Utrecht hotels jointly recorded an EBITDA of €0.1 million recovering from an FY2020 LBITDA of €0.6 million after including €0.8 million of government subsidies (FY2020: €0.4 million).

In May 2021, TVHG Budget Amsterdam II B.V. (“TVHG”), the tenant of the two hotels at the Arena Towers in Amsterdam Southeast, commenced preliminary relief proceedings against the Group's wholly-owned subsidiary, FS NL Property 2 B.V. (“FSNLP2”), to, inter alia, suspend TVHG's obligation to pay 45% (amended to 43.4% on 1 June 2021) of the rent for a period commencing retrospectively from April 2020 up to March 2021 and thereafter, such percentage of the rent equal to 50% of the percentage turnover decrease until such time that the Covid-19 restrictions are lifted or the hotels' turnover returns to pre-Covid-19 levels. On 9 June 2021, the Amsterdam preliminary relief judge issued a favourable ruling, rejecting all of TVHG's claims.

In August 2021, TVHG commenced further legal action against FSNLP2 claiming, among other things, that it is entitled to a refund of over-paid rent from April 2020 onwards as the rent should be reduced with effect from April 2020 by 45%. FSNLP2 filed its statement of defence in October 2021, rejecting all of TVHG's claims. In November 2021, the court issued an interim judgment stipulating, among other things, that an oral hearing will be held to allow the parties to provide information and examine the possibility of a settlement. The oral hearing is scheduled to be held on 22 March 2022.

As at 31 December 2021, TVHG was current on its monthly rent payments.


The 94.9%-owned Bilderberg Bellevue Hotel Dresden recorded strong occupancy levels during the summer break in 2021. Unfortunately, the increased Covid-19 infection rate resulted in leisure demand decreasing in late November and December 2021. The hotel recorded an occupancy of 36.0% for FY2021 (FY2020: 31.2%). The hotel reported an EBITDA of €1.0 million for FY2021, recovering from an LBITDA of €0.3 million in FY2020. These results included the FY2021 German wage subsidy of €0.8 million (FY2020: €0.9 million).

Business recovery remains modest in Frankfurt, with the 50%-owned hotel recording an improved occupancy of 27.7% in FY2021 (FY2020: 22.5%). The Le Méridien Frankfurt hotel recorded an LBITDA of €1.5 million including €1.1 million of German wage subsidy. Prior to 31 January 2021, the hotel was leased by a third party. After that date, the hotel was leased to an operating company which is effectively 16.5% held by the Group.


The Wenjiang Hotels continued their recovery trajectory in FY2021. Revenue for the hotels increased twofold in 1H2021 but a resurgence of Covid-19 cases in 2H2021 which resulted in the swift implementation of restrictions adversely impacted trading and also resulted in the temporary closure of the Holiday Inn Express hotel from 5 November to 25 November 2021. Due to the good performance in 1H2021, the hotels recorded an EBITDA of RMB12.5 million for FY2021, representing a growth of approximately 58% from the RMB7.9 million recorded in FY2020.

The Group completed the divestment of a 51% controlling equity interest in Dongguan Wan Li Group Limited (“Wan Li”) on 30 June 2021. The deal valued the properties held by Wan Li at RMB320 million which represents a premium of approximately 100% over its allocated cost. By way of background, in March 2017, the Group acquired a 90% equity interest in Dongguan East Sun Limited (“East Sun”) which in turn acquired the entire equity interest in Wan Li in January 2018. East Sun and Wan Li own a number of outdated commercial and industrial properties in Dongguan. During 1H2021, the Group entered into two other agreements to divest a 40.5% and 72% effective equity interest in two properties owned by East Sun, namely, the Wentang Recycling Factory and Liaobu Factory, at a substantial premium of 219% and 128% over the allocated cost of RMB40.3 million and RMB61.4 million respectively. The divestment of the 40.5% effective equity interest in the Wentang Recycling Factory was completed in December 2021 and the divestment of the 72% effective equity interest in the Liaobu Factory is expected to be completed in 2Q2022.

Property Financing

Arising mainly from a larger average PRC loan portfolio in FY2021 which stood at RMB2.7 billion compared to RMB2.4 billion in FY2020, the Group's property financing segment performed well in FY2021, registering a revenue and gross profit of S$119.0 million and S$106.0 million respectively for FY2021, a 13.1% and 8.3% increase respectively over FY2020. That said, as the credit liquidity situation in the PRC continues to improve, the challenge for the Group would be to maintain a similar average loan balance for FY2022.

In relation to the debt recovery process of the defaulted loans with an aggregate loan principal of RMB330 million, the court-commissioned valuations for the purpose of determining the opening bid prices for the foreclosure auctions of certain mortgaged assets, namely, a villa and a retail mall in Pudong, Shanghai, were received in early December 2021. With the court-commissioned valuations, the Group submitted an application to the Shanghai court on 27 January 2022 to start the process for the online foreclosure auctions of the above-mentioned mortgaged assets. The foreclosure auctions are expected to take place in 2Q2022. The Group is optimistic about the full recovery of the RMB330 million loan principal and accrued interest thereon.

Corporate Social Responsibility

Despite the ongoing challenges, the Group is happy to have been able to give back through its Corporate Social Responsibility (“CSR”) activities. This year, the CSR activities were undertaken by the Singapore office, the Wenjiang Hotels, the Hilton Rotterdam and the Bilderberg Bellevue Hotel Dresden.

In 2021, the Singapore office donated S$100,000 to the POSB PAssion Run for Kids, an annual charity run which raises funds for the POSB PAssion Kids Fund, and was recognised as the top donor for the event. This charity, which aims to help children from low income families, children with disabilities and youths at risk, has benefitted more than 700,000 children.

The Wenjiang Hotels organised a charity event for staff participation whereby staff members donated items such as books, clothes, toys and food to a local school. The Wenjiang Hotels also participated in a charity event organised by the IHG cluster of eight hotels in Chengdu, and helped to raise approximately RMB41,000 through the sale of charity tickets, which will be donated to a school and a named charity foundation.

In 2021, the team at the Hilton Rotterdam participated in the Hilton Effect Week. The team (i) donated unused soap bottles (left by guests in their rooms) to Nico Adriaans Stichting, a charity which provides shelter and guidance to the needy, (ii) raised donations for two charities that provide young underprivileged children with birthday parties and Christmas gifts, (iii) collected clothing for donation to the salvation army and (iv) collected plastic bottles which were exchanged at a local supermarket for cash, which will be donated in 2022 to the Homerun event for the Ronald McDonald charity. In line with the Group's CSR towards the environment, in 2021, the Hilton Rotterdam team (i) participated in Earth Hour, (ii) partnered with the South Pole Group, a leading carbon offset provider, to find a solution for zero CO2 emissions meetings by calculating the CO2 emission at every meeting with more than 10 attendees and purchasing the requisite carbon credits from the South Pole Group to offset the CO2 emissions, and (iii) donated soap bars left by guests to the Clean the World Charity which will re-use them in its cause.

The Bilderberg Bellevue Hotel Dresden is the new participant of the Group's CSR activities. In 2021, the hotel team organised an orientation course at the hotel for young people, along with their parents, to help them in their decision making on an apprenticeship in hospitality, and, in cooperation with the DRH Children's Aid Foundation, the hotel inaugurated a Donating-Stars Christmas Tree, decorated with elaborately handcrafted stars made by children from schools around the state of Saxony, Germany. After the event, the donors to the campaign were allowed to take a star back with them. The funds raised from the event will be used to support numerous projects in the state of Saxony to provide facilities for socially disadvantaged children and youths.

The Group will continue to support programs that bring communities together, have a socially and environmentally positive impact, or build and foster business-to-community relationships.

Future Prospects

As the Covid-19 situation transitions from “pandemic” to "endemic" status, the Group's operational priorities are in the fostering of a strong health and safety culture for our customers and staff at all our properties.

The Group is backed by a strong balance sheet, substantial unutilised committed credit facilities and potential equity infusion from the exercise of outstanding warrants. The above, together with substantial cashflow expected to be generated from the upcoming new pre-sale launches of several PRC property development projects and the PRC property financing loan repayments in 2022, will further financially strengthen the Group so that it will be ready to capitalise on any new business opportunities when they arise.


On behalf of the Board, I would like to express our utmost appreciation to our shareholders, customers, business associates, bankers and partners for their steadfast support throughout what was undoubtedly one of the most difficult years any of us has experienced. I would also like to thank my fellow Directors for their shared vision, wisdom, experience and counsel in navigating this tumultuous period. I would also like to make a special mention to the management team and staff for their hard work and dedication amidst the operational challenges due to Covid-19, for always diligently safeguarding the Group's interest and for their continued contributions to the Group's growth. As one, we look towards a brighter 2022 as we stand together to overcome these challenging times.

Ho Han Leong Calvin
11 March 2022