Brand Name
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Financial Highlights

Consolidated Income Statement for 1Q FY2018/19 and 1Q FY2017/18

Statement of Comprehensive Income for 1Q FY2018/19 and 1Q FY2017/18

Balance Sheet

Review of Performance

Revenue and Net Property Income - 1Q FY2018/19 vs. 1Q FY2017/18

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
2 Sale of China assets was completed on 18 May 2018

Group

Gross revenue and net property income ("NPI") for 1Q FY2018/19 were S$48.2 million and S$20.2 million, a decrease of S$5.3 million (9.8%) and S$2.1 million (9.3%) respectively as compared to 1Q FY2017/18. This was mainly due to lower contribution from Australia portfolio and absent of full quarter earnings from China portfolio, exacerbated by unfavourable FX movement in AUD (-3.4%) and JPY (-2.7%).

Australia

Gross revenue and NPI for the Australia hotels for 1Q FY2018/19 were S$34.3 million and S$9.1 million, a decrease of S$2.2 million (6.1%) and S$1.7 million (15.5%) as compared to 1Q FY2017/18 due to weaker performance across the portfolio hotels other than Courtyard by Marriot Sydney North Ryde ("Courtyard").

Overall, market conditions were weak in the first quarter and hence the Sydney hotels in the portfolio contributed lower NPI with the exception of Courtyard, which continued to improve following the major refurbishment in 2016.

Pullman & Mercure Melbourne Albert Park was affected by lower room demand from group and corporate segments as well as less conferences and events ("C&E"), but the hotel managed to secure an aircrew contract in June 2018. NPI was further affected by higher land tax compared to same period last year.

Pullman & Mercure Brisbane King George Square continued to operate under challenging market conditions and the hotel focused on public, loyalty and group segments, including securing new aircrew contracts, to boost revenues. The consequent reduction in ADR and increased contribution from F&B outlets with their higher associated costs further impacted NPI.

China

The China portfolio was divested on 18 May 2018. Following the divestment, AHTRUST will no longer have any assets in China but remains open to opportunities in China.

Japan

Gross revenue and NPI for the Japan hotels for the quarter were S$1.5 million (18.2%) and S$0.2 million (3.4%) lower than last year.

Under the new master lease arrangement for Hotel Sunroute Ariake, the variable rent, if any, is payable in fourth quarter of FY2018/19. As such, the extension of the new master lease to the serviced apartments component (previously under management contract) resulted in slightly lower NPI this year as 1Q FY1718 was a seasonally high period while the Group received fixed rent for 1Q FY1819.

Sunroute Namba posted an improvement y-o-y.

Korea

Splaisir Dongdaemun started contributing to the Group following the completion of the acquisition on 21 May 2018.

Singapore

Gross revenue and net property income for Park Hotel for the quarter were both S$0.2 million higher than prior period.

The hotel performed better by focusing on the higher yield transient segment and recovering corporate segment.

Income available for distribution

Income available for distribution for the quarter was S$16.4 million. With the retention of S$1.1 million for the quarter, income to be distributed for the quarter would be S$15.3 million, an increase of S$0.6 million (3.8%) over last year.

The increase was mainly due to the following:

  1. S$1.8 million partial distribution from China sale proceeds;
  2. lower net finance cost of S$0.5 million; and
  3. higher foreign exchange gain of S$0.4 million.

Partially offset by lower NPI of S$2.1 million.

Commentary

The market condition in Sydney is expected to remain competitive. While demand is expected to remain healthy in the near term, increase in hotel room inventory in the city may moderate growth. As Melbourne is faced with more supply of hotel rooms in the next 12 months and competes for C&E business with Sydney, the performance of the hotel market is expected to be moderate in the short term. In the coming year, the increasingly competitive environment in Brisbane will continue to exert pressure on the performance of the hotel market.

Inbound arrivals to Japan recorded a y-o-y increase of 15.6% for YTD June 20181. As international inbound arrivals to Tokyo and Osaka continue to grow, this is expected to support the hotel markets in these cities. However, the recent earthquake in Osaka and the adverse weather that affected certain parts of Japan may dampen travel sentiments into the country temporarily. On the supply front, stricter laws recently implemented on private home rentals are likely to lessen their adverse impact on the hotel market in Japan.

Inbound arrivals to South Korea continue to improve and posted y-o-y growth of 6.9% for YTD June 20182. This will help to lift the performance of the hotel market which endured a challenging year in 2017. Inbound arrivals from the key source market of China recorded a fourth consecutive month of y-o-y growth in June 2018, while effective marketing efforts saw strong growth in visitorship from South East Asian countries such as Malaysia, Thailand and Vietnam2.

The number of international visitors to Singapore kept up the momentum following a record year last year and posted y-o-y growth of 7.6% YTD June 20183. As supply of new hotel rooms begin to taper, the performance of the hotel market in Singapore is expected to recover.

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