Asia-Pacific Strategic Investments Limited - Annual Report 2021

Operations Review

FY2021 IN REVIEW

BUILDING OUR NAME

Hospitality Division

Asia-Pacific Strategic Investments Limited (“APS” or the “Group”) almost doubled its revenue to S$1.2 million in the financial year ended 30 June 2021 (“FY2021”) due to higher monthly receipts from its hotel which was operating for 12 full months. In contrast, the Group’s 113-room luxury boutique hotel Anatole by Landison Hotel Huzhou 湖州雷迪森怿曼酒 店 (“Landison Hotel”, previously known as Cheery Hotel Huzhou) commenced full operations in October 2019 but had to temporarily suspend operations for about two months in February and March 2020 in compliance with a local government directive as part of China’s anti- coronavirus measures. In line with the improved hotel operations, the Group's gross profit increased from S$0.2 million in FY2020 to S$0.9 million in FY2021. This, together with lower expenses in distribution, marketing and administration and higher net other gains largely enabled the Group to pare its net loss to S$5.1 million in FY2021 compared with the previous net loss of S$6.9 million. In FY2021, the Group recorded a decline of S$2.5 million in cash and cash equivalents due mainly to the rise in net cash used in operating activities to S$5.8 million which was partially offset by net cash provided by investing and financing activities. The cash outflow resulted largely from the operating loss of S$3.2 million and the net decrease in working capital of S$2.5 million.

Landison Hotel has been steadily growing its clientele base in spite of temporary disruptions to its operations as a result of sporadic outbreaks of COVID-19 in China – occupancy rates during the April to June 2021 quarter, for instance, averaged about 40%. While this is encouraging, we decided that after having been in operation for 22 months, a revamp was timely to push Landison Hotel and its nearby attractions towards attaining their full potential. After reviewing various options, including a management contract with a new hotel group, the Group entered into a hotel brand franchise agreement with the Zhejiang Tourism Investment Hotel Group 浙江浙旅投酒店集团有限公 司 (“ZTIHG”), one of China’s largest hotel management groups, in August 2021. On top of the licence to use ZTIHG’s Anatole by Landison brand and related branding standards and procedures, the agreement allows the Group to ride on ZTIHG’s brand management and centralised booking systems to operate the Anatole by Landison franchise. Other benefits include the ability to cross-sell with other hotels within ZTIHG, centralised procurement of certain items, and access to structured training programmes for our hotel management and staff.

ASIA-PACIFIC STRATEGIC INVESTMENTS LIMITED

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