Singapore Press : Sph REIT Management Pte Ltd - Sph REIT Announcements

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Financial Statements and Related Announcement::Full Yearly Results‌‌

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Financial Statements and Related Announcement::Full Yearly Results Issuer & Securities

Issuer/ Manager	SPH REIT MANAGEMENT PTE. LTD.
Securities	SPH REIT - SG2G02994595 - SK6U
Stapled Security	No

Announcement Details

Announcement Title	Financial Statements and Related Announcement
Date & Time of Broadcast	12-Oct-2015 19:37:17
Status	New
Announcement Sub Title	Full Yearly Results
Announcement Reference	SG151012OTHRHV6I
Submitted By (Co./ Ind. Name)	Lim Wai Pun
Designation	Company Secretary
Description (Please provide a detailed description of the event in the box below - Refer to the Online help for the format)	The Announcement, Press Release and Results Presentation are attached.

Additional Details

For Financial Period Ended 31/08/2015

Attachments

SPH REIT - SGX Announcement Q4FY15.pdf

SPH REIT - Press Release Q4FY15.pdf

SPH REIT - Results Presentation Slides Q4FY2015.pdf Total size =3971K

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12/10/2015

SPH REIT FINANCIAL STATEMENT ANNOUNCEMENT * FOR THE YEAR ENDED 31 AUGUST 2015‌

Constituted in the Republic of Singapore pursuant to a Trust Deed dated 9 July 2013.

Introduction

The investment strategy of SPH REIT is to invest, directly or indirectly, in a portfolio of income- producing real estate which is used primarily for retail purposes in Asia Pacific, as well as real estate-related assets.

The portfolio of SPH REIT comprises the following two high quality and well located commercial properties in Singapore:

• Paragon, a premier upscale retail mall and medical suite/office property, well known for its upscale mall housing many luxury brands, located in the heart of Orchard Road; and

• The Clementi Mall, a mid-market suburban mall located in the centre of Clementi town, an established residential estate in the west of Singapore.

Audited Financial Information

The financial information as set out in this announcement for the fourth quarter and year ended 31 August 2015 has been extracted from the audited* financial statements for the fourth quarter and year ended 31 August 2015, in accordance with the Statement of Recommended Accounting Practice ('RAP') 7 'Reporting Framework for Unit Trusts', the Code on Collective Investment Schemes (the 'CIS Code') and the provisions of the Trust Deed.

• Please refer to the attached audit report.

  TABLE OF CONTENTS

  
  

  Item No.	Description	Page No.
  1	Statement of Total Return and Distribution Statement	3 - 4
  2 & 3	Balance Sheet	5
  	Borrowing	6
  	Statement of Cash Flows	6 - 7
  	Statement of Changes in Unitholders' Funds	8
  	Details of Changes in Issued and Issuable Units	8 - 9
  	Audit Statement	9
  4 & 5	Changes in Accounting Policies	9 - 10
  6	Earnings ('EPU') and Distribution ('DPU')	10
  7	Net Asset Value ('NAV')	11
  8	Review of Performance	11-12
  9	Variance from Prospect Statement	12
  10	Outlook and Prospects	12
  11 - 12	Distribution	13 - 14
  13 - 14	Segment Results	15
  15	Breakdown of Gross revenue and Net Income	15
  16	Breakdown of Total Distributions	16
  17	General mandate relating to Interested Person Transactions	16
  18	Confirmation Pursuant to Rule 704(13) of the Listing Manual	16

  1(a) An income statement together with a comparative statement for the corresponding period of the immediately preceding financial year

  
  

  1(a)(i) Statement of Total Return

  
  

  4Q 2015	4Q 2014	Change	FY 2015	FY 20141	Change
  S$'000	S$'000	%	S$'000	S$'000	%
  Gross revenue	50,789	51,074	(0.6)	205,113	202,241	1.4
  Property operating expenses	(12,624)	(13,071)	(3.4)	(49,493)	(51,590)	(4.1)
  Net property income	38,165	38,003	0.4	155,620	150,651	3.3
  Income support2	744	1,312	(43.4)	3,008	4,424	(32.0)
  Amortisation of intangible asset	(744)	(1,312)	(43.4)	(3,008)	(4,424)	(32.0)
  Manager's management fees	(3,994)	(3,960)	0.9	(15,976)	(15,521)	2.9
  Trust expenses3	(281)	(84)	234.5	(1,689)	(1,641)	2.9
  Finance income	196	78	151.3	657	219	200.0
  Finance costs	(5,951)	(5,006)	18.9	(21,669)	(19,797)	9.5
  Net income	28,135	29,031	(3.1)	116,943	113,911	2.7
  Fair value change on investment properties4	36,588	102,603	(64.3)	36,588	102,603	(64.3)
  Total return before taxes and distribution	64,723	131,634	(50.8)	153,531	216,514	(29.1)
  Less: income tax	-	-	NM	-	-	NM
  Total return after taxes and before distribution	64,723	131,634	(50.8)	153,531	216,514	(29.1)

  
  

  Notes:

• The comparative figures were for the period from 1 September 2013 to 31 August 2014. These figures were extracted from SPH REIT's results announcement which was audited by KPMG LLP for the period from 24 July 2013 (listing date) to 31 August 2014.

• Income support relates to the top-up payment from the vendors of The Clementi Mall pursuant to the Deed of Income Support.

• Includes recurring trust expenses such as trustee's fees, listing fees, valuation fees, audit and tax adviser's fees, cost associated with the preparation of annual reports, and investor communication costs.

  
  

• This relates to the fair value change on Paragon and The Clementi Mall as at 31 August 2015 and 31 August 2014, based on independent valuations conducted by DTZ Debenham Tie Leung (SEA) Pte Ltd.

NM Not Meaningful

1(a)(ii) Distribution Statement

4Q 2015	4Q 2014	Change	FY 2015	FY 2014	Change
S$'000	S$'000	%	S$'000	S$'000	%
Net income	28,135	29,031	(3.1)	116,943	113,911	2.7
Add: Non-tax deductible items1	5,418	5,909	(8.3)	21,595	22,453	(3.8)
Income available for distribution	33,553	34,940	(4.0)	138,538	136,364	1.6
Distribution to Unitholders2	35,158	34,949	0.6	138,044	136,193	1.4

Notes:

1. Non-tax deductible items refer to the Manager's management fees paid/payable in units, trustee's fees, amortisation of income support and amortisation of debt issuance costs.

   
   

2. Distribution for 4Q 2015 includes taxable income available for distribution retained earlier in the year. For FY2015, the distribution to unitholders was 99.6% of taxable income available for distribution.

1(b)(i) A balance sheet together with a comparative statement as at the end of the immediately preceding financial year

Balance Sheet	As at 31 Aug 15	As at 31 Aug 14
S$'000	S$'000
Non-current assets
Plant and equipment	1,044	1,055
Investment properties1	3,212,500	3,159,000
Intangible asset2	9,400	12,408
Derivative financial instruments3	3,949	-
3,226,893	3,172,463
Current assets
Trade and other receivables4	5,008	5,912
Derivative financial instruments3	365	-
Cash and cash equivalents	77,355	90,658
82,728	96,570
Total assets	3,309,621	3,269,033
Non-current liabilities
Borrowing	595,565	843,125
Derivative financial instruments3	-	8,758
Trade and other payables	36,685	28,953
632,250	880,836
Current liabilities
Borrowing	249,330	-
Trade and other payables	30,231	35,131
279,561	35,131
Total liabilities	911,811	915,967
Net assets attributable to Unitholders	2,397,810	2,353,066

Notes:

1. The fair value of Paragon and The Clementi Mall as at 31 August 2015 was S$2,641.0 million and S$571.5 million respectively. The fair value of the investment properties were based on independent valuations conducted by DTZ Debenham Tie Leung (SEA) Pte Ltd ('DTZ').

   
   

2. Intangible asset relates to income support provided by the vendors of The Clementi Mall.

   
   

3. Derivative financial instruments represent the fair value as at balance sheet date of the interest rate swap contracts to swap floating rates for fixed interest rates.

   
   

4. Trade and other receivables comprised mainly rental receivable and trade amount due from related parties.

1(b)(ii) Borrowing

Secured borrowing

As at 31 Aug 15	As at 31 Aug 14
S$'000	S$'000
Amount repayable within one year	249,330	-
Amount repayable after one year	595,565	843,125
Total	844,895	843,125

Details of collateral

On 24 July 2013, SPH REIT established a term loan facility available for drawdown up to the amount of S$975 million. As at the balance sheet date, the amount drawn down was S$850 million. The amount of S$844.9 million represented the loan stated at amortised cost. The loan has repayment terms ranging from three to seven years, of which S$250 million is repayable on 25 July 2016, S$135 million on 26 March 2018, S$185 million on 24 July 2018 and S$280 million on 24 July 2020.

Management is currently reviewing the refinancing options for the S$250 million tranche.

The term loan is secured by way of a first legal mortgage on Paragon, first legal charge over the tenancy account and sales proceeds account for Paragon, and an assignment of certain insurances taken in relation to Paragon.

1(c) A cash flow statement together with a comparative statement for the corresponding period of the immediately preceding financial year

Statement of Cash Flows

4Q 2015	4Q 2014	FY 2015	FY 2014
S$'000	S$'000	S$'000	S$'000
Cash flows from operating activities
Total return for the period/year	64,723	131,634	153,531	216,514
Adjustments for:
Fair value change on investment properties	(36,588)	(102,603)	(36,588)	(102,603)
Manager's fee paid/payable in units	3,994	3,960	15,976	15,521
Depreciation of plant and equipment	45	34	160	119
Finance income	(196)	(78)	(657)	(219)
Finance costs	5,951	5,006	21,669	19,797
Amortisation of intangible asset	744	1,312	3,008	4,424
Operating cash flow before working capital changes	38,673	39,265	157,099	153,553

1(c) Statement of Cash Flows ( Cont' d)
4Q 2015	4Q 2014	FY 2015	FY 2014
S$'000	S$'000	S$'000	S$'000
Changes in operating assets and liabilities
Trade and other receivables	490	289	955	10,991
Trade and other payables	1,390	2,520	321	9,981
Net cash from operating activities	40,553	42,074	158,375	174,525
Cash flows from investing activities
Additions to investment properties	(4,757)	(822)	(15,318)3	(2,729)
Purchase of plant and equipment	(92)	(2)	(125)	(160)
Interest received	220	81	606	214
Net cash used in investing activities	(4,629)	(743)	(14,837)	(2,675)
Cash flows from financing activities
Issue expenses paid	-	-	-	(8,959)
Distribution to unitholders1	(34,094)	(33,891)	(137,835)	(115,250)
Payment of transaction costs related to borrowing	(18)	(18)	(220)2	(18)
Interest paid	(4,551)	(4,466)	(18,786)	(17,837)
Net cash used in financing activities	(38,663)	(38,375)	(156,841)	(142,064)
Net (decrease)/increase in cash and cash equivalents	(2,739)	2,956	(13,303)	29,786
Cash and cash equivalents at beginning of the period/year	80,094	87,702	90,658	60,872
Cash and cash equivalents at end of the period/year	77,355	90,658	77,355	90,658

Notes:

1. Distribution to unitholders for FY2015 was for the 4Q 2014 ended 31 August 2014 of S$34.9 million, 1Q 2015 ended 30 November 2014 of S$33.5 million, 2Q 2015 ended 28 February 2015 of S$35.3 million, and 3Q 2015 ended 31 May 2015 of S$34.1 million. Distribution for FY2014 was for SPH REIT's inaugural distribution of S$46.5 million for the period 24 July 2013 (listing date) to 30 November 2013, 2Q 2014 ended 28 February 2014 of S$34.8 million, and 3Q 2014 ended 31 May 2014 of S$33.9 million.

   
   

2. This includes upfront fees paid for revision to the tenures of the existing loan facility. Please refer to paragraph 1(b)(ii) Borrowing.

   
   

3. This include payments relating to the replacement and relocation of chillers and decanting works.

   
   

   
   

   1(d)(i) St at ement of Changes i n Unit hol ders' Funds

   
   

   4Q 2015	4Q 2014	FY 2015	FY 2014
   S$'000	S$'000	S$'000	S$'000
   Balance as at beginning of period/year	2,354,360	2,251,121	2,353,066	2,243,788
   Operations
   Total return for the period/year	64,723	131,634	153,531	216,514
   Hedging reserve
   Movement in hedging reserve1	8,827	242	13,072	(7,778)
   Unit hol ders' transacti ons
   Issue expenses	-	-	-	271
   Distribution to unitholders2	(34,094)	(33,891)	(137,835)	(115,250)
   Manager's fee paid/payable in units	3,994	3,960	15,976	15,521
   (30,100)	(29,931)	(121,859)	(99,458)
   Balance as at end of period/year	2,397,810	2,353,066	2,397,810	2,353,066

   
   

   Notes:

4. This relates to interest rate swap arrangements.

   
   

5. Please refer to 1(c) Statement of Cash Flows [Note 1].




1(d)(ii) Details of Changes in Issued and Issuable Units







4Q 2015	4Q 2014	FY 2015	FY 2014
No. of units	No. of units	No. of units	No. of units
Issued units as at beginning of period/year	2,525,504,384	2,510,475,049	2,514,276,488	2,500,995,000
Issue of new units:
Manager's fee paid in units1	3,804,918	3,801,439	15,032,814	13,281,488
Issuable units:
Manager's fee payable in units2	4,211,448	3,678,691	4,211,448	3,678,691
Total issued and issuable units as at end of period/year	2,533,520,750	2,517,955,179	2,533,520,750	2,517,955,179

1(d)(ii) Details of Changes in Issued and Issuable Units ( Cont' d)




Notes:




1. For FY2015, there were 3,804,918 units, 3,845,216 units, 3,703,989 units, and 3,678,691 units issued to the REIT Manager as satisfaction of management fee for the 3Q 2015 ended 31 May 2015, 2Q 2015 ended 28 February 2015, 1Q 2015 ended 30 November 2014 and 4Q 2014 ended 31 August 2014, respectively. For FY 2014, there were 3,801,439 units, 3,980,929 units, and 5,499,120 units issued to the REIT Manager as satisfaction of management fee for the 3Q 2014 ended 31 May 2014, 2Q 2014 ended 28 February 2014, and period 24 July 2013 (listing date) to 30 November 2013.

   
   

2. There are 4,211,448 units to be issued to the REIT Manager as satisfaction of management fee incurred for the current quarter. This is calculated based on volume weighted average traded price for the last 10 business days for the respective periods, as provided in the Trust Deed. As at 31 August 2014, there were 3,678,691 units to be issued to the REIT Manager as satisfaction of management fee for 4Q 2014.




1(d)(iii) To show the total number of issued units excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year.




As at 31 August 2015, SPH REIT had 2,529,309,302 units (31 August 2014: 2,514,276,488

units).




1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on.




Not applicable.




1. Whether the figures have been audited or reviewed, and in accordance with which auditing standard or practice.

   
   

   The figures for the year have been audited. The auditors' report on the financial statements of SPH REIT was not subject to any modification.

   
   

2. Where t he f i gures have been audit ed or revi ew ed, t he audit ors' report ( i ncl udi ng any qualifications or emphasis of matter).

   
   

   Please refer to the attached auditor's audit report.

   
   

3. Whether t he same account i ng poli cies and methods of comput ati on as i n t he i ssuer' s most recently audited annual financial statements have been applied.

   
   

   The accounting policies and methods of computation have been consistently applied during the current reporting period.

4. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change.

   
   

   The financial information has been prepared in accordance with the same accounting policies and methods of computation adopted in the audited financial statements of the previous financial period, except for new or amended accounting policies adopted in the Statement of Recommended Accounting Practice ('RAP') 7 'Reporting Framework for Unit Trusts' which became effective from this financial year.

   
   

   The adoption of the new/revised accounting policies has not resulted in any substantial changes to SPH REIT's accounting policies nor any significant impact on these financial statements.

   
   

5. Earnings per unit ('EPU') and Distribution per unit ('DPU')

   
   

   4Q 2015	4Q 2014	FY 2015	FY 2014
   Earnings per unit
   Weighted average number of units1	2,529,354,586	2,514,316,044	2,523,660,181	2,508,533,801
   Total return for the period/year after tax (S$'000)	64,723	131,634	153,531	216,514
   EPU4 (basic and diluted) (cents)	2.56	5.24	6.08	8.63
   Distribution per unit
   Total number of units in issue at end of period/year	2,529,309,302	2,514,276,488	2,529,309,302	2,514,276,488
   Distribution to Unitholders2 ($'000)	35,158	34,949	138,044	136,193
   DPU3 (cents)	1.39	1.39	5.47	5.43

   
   

   Notes:

   
   

6. The weighted average number of units was based on the number of units in issue and issuable units to the Manager.

7. As shown in 1(a)(ii) Distribution Statement.

8. The DPU was computed based on the number of units entitled to distribution.

9. Included the effects of fair value change on investment properties for the respective periods/years.

   As at 31 Aug 15	As at 31 Aug 14
   NAV per unit1 (S$)	0.95	0.93

10. Net Asset Value ('NAV') per unit

    
    

    
    

    Note:

    
    

11. The NAV per unit was computed based on the number of units in issue at the end of the year.

    
    

12. Review of Performance




Review of Results for the Fourth Quarter ended 31 August 2015 ('4Q 2015') compared with the Fourth Quarter ended 31 August 2014 ('4Q 2014')




Gross revenue for 4Q 2015 was down marginally by S$0.3 million (0.6%) to S$50.8 million. Higher rental income from positive portfolio reversion was impacted by fitting-out period scheduled for the tenancy revitalisation program at Paragon.




Property operating expenses of S$12.6 million was S$0.5 million (3.4%) lower than 4Q 2014. Savings in utilities and lower maintenance cost were partially offset by higher property taxes and marketing expenses. Decrease in utilities was due to lower tariff rate and savings in consumption from the new and more efficient chillers.




Consequently, net property income ('NPI') of S$38.2 million for 4Q 2015 was S$0.2 million (0.4%) marginally above 4Q 2014. NPI of Paragon of S$31.2 million was S$0.4 million (1.3%) lower, while The Clementi Mall's NPI of S$7.0 million was S$0.6 million (8.9%) higher, compared to 4Q 2014.




Net income decreased by S$0.9 million (3.1%) to S$28.1 million for 4Q 2015 mainly due to the increase in finance cost arising from higher interest rate.




Income available for distribution to unitholders was S$33.6 million for 4Q 2015, a decrease of S$1.3 million (4.0%) against 4Q 2014, mainly due to the higher finance cost and lower NPI from Paragon.




Review of Results for the Full year ended 31 August 2015 ('FY2015') compared with the Full year ended 31 August 2014 ('FY2014')




Gross revenue for FY2015 was up S$2.9 million (1.4%) to S$205.1 million. The positive results were driven by good progress in leasing activities. The portfolio average rental reversion was 8.6% for the new or renewed leases in FY2015.




Property operating expenses was S$2.0 million (4.1%) lower against FY2014. This was largely due to lower maintenance, utilities and marketing cost, partially offset by higher property tax and property management fees.




Consequently, NPI of S$155.6 million for FY2015, was S$4.9 million (3.3%) higher than last year. Both Paragon and The Clementi Mall performed better than the previous year, by S$3.5 million (2.9%) and S$1.4 million (5.3%) respectively. NPI margin of 75.9% was achieved, better than FY2014 of 74.5%.