Dear Shareholders, On behalf of the Board of Directors of IPC Corporation Ltd (“IPC” or the “Group”),it is my pleasure to present to you our annual report for the financial year ended 31 December 2024 (“FY2024”). The Group’s main business and investments in hospitality are primarily focused in Japan and China.
Japan had a spectacular year with a record 36.8 million tourists in 2024, surpassing the pre-pandemic record of nearly 32 million. The significant increase in tourist arrivals substantially benefitted the tourism industry. Japan has also set a goal to double the tourist number to 60 million by 2030, this should help the tourism industry continue to thrive. Our investment in Nest Hotel Japan Corporation (“NHJC”) benefitted from Japan’s strong tourism growth, driven by a weak JPY and government initiatives to promote regional attractions. NHJC manages 19 hotels across Japan, and its financial performance was outstanding in FY2024.
In contrast, China faced many challenges in 2024, including but not limited to increased unemployment, subdued personal consumption, and the prolonged downturn in the property sector. In China, our Grand nest HOTEL zhuhai with MICE activities, faced numerous challenges due to the economic downturn and intense competition from new hotels resulting from repurposed properties.
Japan
Through our convertible preference shares investment in NHJC, IPC has interests in the business of hotel management, operation and investment in Japan. NHJC manages a total of 19 hotels across the country under the brand names “nest”, “Bespoke” and “Tissage”.
The significant increase in tourist arrivals benefitted the tourism industry in Japan. Similarly, NHJC benefitted from the increase in demand for rooms, improved room rates and higher occupancy. Consequently, NHJC’s financial performances was spectacular for FY2024. The positive performance has resulted in the value of our convertible preference shares increased substantially from S$4.494 million in FY2023 to S$11.766 million in FY2024 based on an independent valuation of NHJC at year-end 2024.
China
Over in China, IPC owns and operates the Grand nest HOTEL zhuhai, which has 217 rooms. Zhuhai is a popular venue for Meetings, Incentives, Conferences and Exhibitions (“MICE”) and tourism. However, the macro and micro challenges facing China had a negative impact on the hospitality and MICE businesses in the year under review.
A slew of new hotels entered the market, these were repurposed from commercial buildings under a new policy implemented by the Zhuhai government as a way to unlock non-performing office properties,industrial buildings, serviced apartments,dormitories and kindergarten schools. Entrance of these new hotels caused a glut of hotel rooms due to an imbalance of supply and demand. As a result, Grand nest HOTEL zhuhai faced stiffer competition.
As a recovery measure, Grand nest HOTEL zhuhai is undergoing a floor by floor renovation to its rooms to make it more compelling and appealing for customers to return and also to attract new customers. Cost cutting measures are concurrently being implemented to achieve higher efficiency as well as more proactive marketing efforts to improve occupancy rate.
The Group recorded sales of S$2.235 million for the financial year ended 31 December 2024 compared to S$3.166 million for the previous corresponding financial year. The decrease was mainly due to the decrease in the sales revenue in Zhuhai, China. The increase in the gross profit from S$0.581 million to S$0.870 million was mainly due to the decrease in the cost of sales from the sales of properties in FY2024.
However, the spectacular performance of NHJC in FY2024 resulted in a significant increase in the valuation of NHJC. Hence, the value of our convertible preference shares in NHJC also increased substantially, by S$7.272 million between FY2023 and FY2024. Consequently, the Group has turnaround by recording a profit before tax of S$6.070 million and profit after tax of S$6.065 million for the financial year ended 31 December 2024.
Barring any negative surprises, driven by a weak JPY and strong tourism growth, we are optimistic on NHJC’s performance outlook in 2025. For Grand nest HOTEL zhuhai, China, we are cautiously managing expectations and operating costs amidst China’s economic uncertainty.
The Group will continue to work on monetizing some of its assets in China, improving its cash position and seeking removal from the Singapore Exchange’s watch list.
For the fifth year running, our directors have again taken a voluntary 20% reduction in their remuneration for FY2024.I would like to thank them for being understanding, as well as for their guidance and advice to the Group.
To close, I would also like to express my gratitude to all employees, shareholders and business partners. We appreciate your unwavering commitment in the midst of all the uncertainties. Let us look forward to a brighter and stronger 2025 for IPC!
Chairman & Chief Executive Officer