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Financial Highlights

Consolidated Income Statement for 2Q FY2017/18 and 2Q FY2016/17

Statement of Comprehensive Income for 2Q FY2017/18 and 2Q FY2016/17

Consolidated Income Statement for 1H FY2017/18 and 1H FY2016/17

Statement of Comprehensive Income for 1H FY2017/18 and 1H FY2016/17

Balance Sheet

Review of Performance

Revenue and Net Property Income 2Q FY2017/18 vs. 2Q FY2016/17

1 Computation is based on the financials rounded to the nearest dollar
Any differences between the individual amounts and total thereof are due to rounding

Group

Gross revenue for 2Q FY2017/18 was S$58.4 million, an increase of S$2.9 million (5.2%) as compared to 2Q FY2016/17, primarily due to stronger top line performance from Australia portfolio and favourable impact from AUD against SGD. This was negated partially by weaker JPY against SGD.

Net property income for the quarter increased S$0.2 million (0.8%) over the same period last year due to favourable impact from AUD against SGD.

Australia

Gross revenue for the Australia hotels for 2Q FY2017/18 was S$41.0 million, an increase of S$3.2 million (8.4%) over 2Q FY2016/17, primarily driven by more conferences and events and favourable impact from AUD against SGD.

Novotel Sydney Central continued to perform well due to good yield management strategies and tight control on cost. Courtyard by Marriott Sydney North Ryde showed better performance as the hotel underwent room refurbishment during the same quarter last year.

Revenue for Novotel Sydney Parramatta and Pullman Sydney Hyde Park increased mainly due to contribution from food and beverage as a result of more conferences and events. However, net property income for Novotel Sydney Parramatta was flat due to high operating expenses, and Pullman Sydney Hyde Parks net property income performance was impacted by higher commission expense.

Pullman & Mercure Brisbane King George Squares revenue improved mainly due to food and beverage driven by conferences and events, and the roof top bar which opened in November 2016. However, net property income declined due to higher operating costs as a result of increased occupancy at lower average rates in executing a volume strategy to maintain market share.

Despite better top line performance this quarter, Pullman and Mercure Melbourne Albert Parks net property income declined due to higher land tax expense.

China

Gross revenue for the China hotels for the quarter was at S$5.8 million, an increase of S$0.2 million (3.7%) against same period last year primarily driven by increase in average room rates.

Both hotels performance improved due to strong public demand which allowed the hotels to drive higher room rates. In addition, Ibis Beijing Sanyuan continued to benefit from China Lodging Groups loyalty programme.

Net property income for the China hotels grew S$0.2 million (7.9%) as a result of the better underlying performance and tighter cost control measures.

Japan

Gross revenue and net property income for the Japan hotels for the quarter were lower than last year by S$0.5 million (6.0%) and S$0.3 million (4.9%) respectively.

The hotels performance was marginally better than same period last year as a result of more inbound guest groups. However, the underlying performance was negated by weaker JPY.

Singapore

Gross revenue and net property income for Park Hotel Clarke Quay for the quarter were flat to last year.

The hotel continued to face weak demand from the corporate segment amid a competitive landscape due to additional room supply in the market.

Income available for distribution

Income available for distribution for the quarter was S$17.2 million. With the retention of S$1.1 million for the quarter, income to be distributed for the quarter would be S$16.1 million, an increase of S$0.6 million (3.7%) over last year.

The increase was mainly due to the following:

  1. Higher net property income of S$0.2 million (excluding non-cash items), and
  2. Lower net finance cost of S$0.7 million.

Partially offset by:

  1. Higher retention sum of S$0.3 million.

Revenue and Net Property Income 1H FY2017/18 vs. 1H FY2016/17

1 Computation is based on the financials rounded to the nearest dollar
Any differences between the individual amounts and total thereof are due to rounding

Gross revenue for 1H FY2017/18 increased by S$4.0 million (3.7%) compared to 1H FY2016/17.

Overall underlying performance of the portfolio had improved by S$1.7 million over the same period last year. The better performance was augmented by stronger AUD, but partially offset by weaker JPY.

Net property income for 1H FY2017/18 decreased slightly by S$0.1 million over the same period last year mainly due to lower contribution from Australia hotels. This was partially mitigated by higher contribution from China hotels.

After retention of S$2.2 million, income to be distributed for 1H FY2017/18 stood at S$30.8 million, an increase of S$0.8 million (2.8%) as compared to 1H FY2016/17, primarily due to lower net finance cost of S$1.5 million. This was partially offset by higher retention sum of S$0.7 million.

Commentary

In general, performance of Sydney CBD hotels are expected to remain strong on the back of limited supply, while hotels in suburban Sydney may be affected by increased competition. While the Melbourne hotel market is expected to remain positive in the near term, upcoming supply may moderate growth. More intense competition is also expected for meeting and conference facilities in Melbourne following the reopening of the International Convention Centre Sydney. The oversupply situation continues to persist in the Brisbane market, although the upcoming Commonwealth Games to be held in April 2018 in Gold Coast may provide a lift to the hotel market in the city.

While international arrivals into Beijing remained on the downtrend, domestic travelling is expected to continue supporting the hotel market in Beijing. As business and leisure demand continues to improve, the outlook of hotel market in Beijing is expected to remain healthy in the near term.

Inbound arrivals to Japan continued to be robust as the number of international visitors YTD September posted growth of 17.9% y-o-y1. Looking ahead, the hotel markets in Tokyo and Osaka are expected to continue trading at a healthy level in the near term. However, performance improvement in these markets is expected to be moderate amidst increasingly competitive operating environment.

Inbound arrivals continued to grow, increasing by 4.0% y-o-y YTD August 20172 and Singapore remained a premium destination for MICE. Singapore was awarded 2016s top international association meetings city in Asia Pacific and Middle East by International Congress and Convention Association for the 15th consecutive years, and has secured large congresses in the coming years2, which will benefit the hotel market in Singapore. While the performance of hotel market in the near term is likely to remain subdued due to the large inventory of rooms, the sector is expected to improve in the longer term as demand and supply begin to balance out.

1 Source: Japan National Tourism Organization
2 Source: Singapore Tourism Board