2016 Operating Environment
The trading conditions in 2016 were challenging due to a number of significant global events. Equity and commodity prices corrected sharply in the early part of 2016. Investor confidence was further affected for the most part of 2016 by debt levels in a number of EU countries and expectation of a possible slowdown of the Chinese economy. Concerns over the stability of the post-Brexit EU weighed heavily on global markets for a significant part of 2016. It was only in late 4Q16 that investor interest in the equity market was revived following the strong post-US presidential election rally.
The Hong Kong and South East Asian equity markets, particularly Singapore, Malaysia and Indonesia, were weak in 2016 due to volatility in commodity prices, slowing economic growth and rising interest rate concerns.
The weak prevailing market sentiment adversely affected primary market transactions and secondary market volumes, leading to fewer IPOs and share placements being executed during the year.
The lacklustre South East Asian markets motivated more retail investors to engage in a higher volume of cross-border trading activities in more liquid markets like the US and Hong Kong.
2016 Operating PerformanceWe were able to maintain a return on shareholder funds at a rate of 4.24% which we considered creditable given the challenging environment.
Our 2016 group operating revenue decreased 12.1% to S$333.6m (2015: S$379.5m) while profit after tax declined 20.8% to S$56.6m (2015: S$71.5m).
Our regional and product diversification strategy cushioned us from the full brunt of the low SGX trading volumes from which we had historically derived most of our revenue and profits.
DividendWe are maintaining our policy of paying out 50% of distributable profits in dividends. Our Board of Directors has recommended a first and final tax-exempt (one-tier) dividend of S$27,420,874 amounting to 3.5 cents per share (2015: 4.5 cents per share). As in the previous year, our shareholders will be able to opt to receive their dividends in cash or in shares.
Current Year ProspectsThe strong market rally in late-2016 is expected to continue at least for the early part of 2017. Improved investor sentiment is also expected to provide a much needed boost to primary market transactions.
We are hopeful stable commodity prices and moderately rising rates from reflationary policies will help underpin global markets. We remain cautiously positive over our Group’s prospects in 2017.