Page 8 - ar2012

Chairman’s Statement (continued)
the value of Rendezvous Grand Hotel
Singapore and Rendezvous Gallery
has increased by S$117 million since
2009. We are now transforming these
properties into cash and a stake in
FEHT from which we will enjoy a steady
income stream.
At the same time, Straits Trading has
also signed a separate Joint Venture
Implementation Agreement (JVIA) with
Far East Orchard Limited (FEOrchard)
to establ ish a 30/70 joint venture
to pursue and conduct hospitality
management and hospitality-related
businesses, and investments in real
estate used primarily for hospitality
purposes.
These two transactions would not have
been possible hadwe not refurbished and
upgraded our properties and invested
sufficiently to build up our Rendezvous
Brand. Further details on how this was
achieved can be found in the business
review on hospitality on pages 28 and
29 of this annual report.
The strategic alliance created by the JVIA
will allow us to have a stake in a larger
portfolio of hospitality assets comprising
hotels and serviced residences. It will
also enable us to position our hospitality
business for further growth into new
and existing markets in the Asia Pacific.
PROPERTY
Over the past year, the Property division
adopted a deliberately prudent stance,
and avoided making any acquisitions
that would have increased our gearing
and business risk. This proved to be an
appropriate decision, especially with the
announcement of additional government
coolingmeasures that further dampened
sentiment in certain segments of the
residential property market. Although
our existing holdings of residential
properties in Singapore will be affected
by the recent government cooling
measures, our less aggressive strategy
in 2012 for the Singapore residential
market has made us less vulnerable to
such policy changes.
RESOURCES
Our Resources division was especially
impacted by an exceptional provision
taken by Malaysia Smelting Corporation
Berhad (“MSC”) to cover investment
and contingent liabilities at PT Koba Tin,
pending renewal of the Contract of Work
(CoW) by the Indonesian government.
The MSC Group delivered mixed results
in 2012 amid continuing volatility in
global commoditymarkets and extremely
difficult challenges faced by its Indonesian
operations.
On 2 April 2013, the Board of Directors
of MSC announced that PT Koba Tin
had received notification from the
Government of Republic of Indonesia
(GOI) that it was still continuing with
its evaluation for the extension of PT
Koba Tin’s CoW which expired after
31 March 2013. In the meantime, the
GOI had given permission to PT Koba
Tin to continue production operations
until the completion of its evaluation
for a period of up to three months with
effect from 1 April 2013.
In view of the material uncertainty over
the extension of the CoW, MSC made
a provision of S$57.9 (RM145 million) in
respect of PT Koba Tin in the accounts
for the financial year ended 31 December
2012. The Company’s share of this
provision is S$24.2 million.
T R A N S F O R M AT I ON / 06