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Financial Highlights

Consolidated Income Statement for 3Q FY2017/18 and 3Q FY2016/17

Statement of Comprehensive Income for 3Q FY2017/18 and 3Q FY2016/17

Consolidated Income Statement for 3Q YTD FY2017/18 and 3Q YTD FY2016/17

Statement of Comprehensive Income for 3Q YTD FY2017/18 and 3Q YTD FY2016/17

Balance Sheet

Review of Performance

Revenue and Net Property Income 3Q FY2017/18 vs. 3Q FY2016/17

1Computation 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 and net property income (NPI) for 3Q FY2017/18 were S$58.1 million and S$25.2 million, a decrease of S$1.1 million (1.8%) and S$1.2 million (4.7%) respectively as compared to 3Q FY2016/17, mainly due to weaker performance of the Australia portfolio. This was further exacerbated by the weakening of JPY, RMB and AUD against SGD.

Australia

Gross revenue for the Australia hotels for 3Q FY2017/18 was S$41.1 million, a decrease of S$0.9 million (2.1%) as compared to 3Q FY2016/17, primarily due to lower contribution from the conferences and events (C&E) business for the quarter and weakening of AUD against SGD.

Novotel Sydney Central continued to perform well due to strong ADR and high occupancy, as well as tight control on cost. Courtyard by Marriott Sydney North Ryde posted strong ADR and revenue growth as operations ramped up following the completion of room refurbishment in September last year. Parramatta's result was flat due to increased supply around its vicinity.

Pullman Sydney Hyde Park recorded lower revenue and NPI as it was impacted by the refurbishment of its executive floor guest rooms, lower corporate and group business and an increase in commission expense.

Despite RevPAR improvement at Pullman & Mercure Melbourne Albert Park, revenues were lower due to a decline in C&E following the reopening of the ICC in Sydney which has drawn business away from Melbourne and increased competition amongst the larger conference venues in and around the city. Higher land tax expense also contributed to the decline in NPI.

Pullman & Mercure Brisbane King George Square recorded higher revenue in rooms due to higher occupancy and in food and beverage driven by the restaurant and the roof top bar. However, NPI declined due to higher operating costs incurred to drive occupancies.

China

Gross revenue for the China hotels for the quarter was flat at S$5.3 million against the same period last year.

Novotel Beijing Sanyuan's performance improved due to strong public and corporate demand which allowed the hotel to drive higher room rates and occupancy. However, this was partially offset by weaker performance from Ibis Beijing Sanyuan mainly due to weaker room demand from participants attending exhibitions and local corporate clients.

Net property income for the China hotels at S$2.0 million was flat against the same period last year.

Japan

Gross revenue and net property income for the Japan hotels for the quarter were lower than last year by S$0.4 million (4.7%) and S$0.3 million (5.4%) respectively.

The hotels' performance were marginally better than same period last year as a result of more events held at Tokyo Big Sight and more inbound guest groups during the quarter. 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 S$0.2 million higher than 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, but managed to achieve higher RevPAR by increasing its higher yield transient segment.

Income available for distribution

Income available for distribution for the quarter was S$17.2 million. With the retention of S$1.2 million for the quarter, income to be distributed for the quarter would be S$16.0 million, a decrease of S$2.5 million (13.7%) over the same period last year.

The decrease was mainly due to the following:

  1. Lower net property income of S$1.2 million (excluding non-cash items),
  2. Higher trust expense of S$1.4 million
  3. Realized loss on foreign exchange of S$0.3 million; and
  4. Higher retention sum of S$0.2 million.

Partially offset by:

  1. Lower net finance cost of S$0.4 million; and
  2. Lower income tax expenses of S$0.2 million.

Revenue and Net Property Income 3Q YTD FY2017/18 vs. 3Q YTD 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 3Q YTD FY2017/18 increased by S$2.9 million (1.8%) compared to 3Q YTD FY2016/17.

Overall underlying gross revenue performance of the portfolio had improved by S$1.9 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 3Q YTD FY2017/18 decreased slightly by S$1.4 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. Japan hotels' performance was impacted by the JPY.

After retention of S$3.4 million, income to be distributed for 3Q YTD FY2017/18 stood at S$46.8 million, a decrease of S$1.7 million (3.5%) as compared to 3Q YTD FY2016/17, primarily due to lower NPI of S$1.4 million, higher trust expense of S$1.4 million, and higher retention sum of S$0.9 million. This was partially offset by lower net finance cost of S$2.0 million.

Commentary

The performance of the hotel market in Sydney CBD in general is expected to remain healthy in the near term given its popularity as a destination and relatively limited upcoming supply of rooms. However, the hotel markets in suburban Sydney are expected to face challenges from increased competition. The performance of the Melbourne hotel market is expected to moderate in view of an increase in supply over the next few years. Further, the C&E business in Melbourne will continue to be affected in the near term by competition from International Convention Centre Sydney which reopened in late 2016. The oversupply situation is expected to continue affecting the performance of the hotel market in Brisbane in the near term.

Domestic travelling continued to drive the hotel market performance in Beijing amidst declining international arrivals. In the near term, domestic travelling is expected to remain robust, and coupled with limited supply in the city centre, the outlook for the Beijing hotels market in the city centre, in general, is expected to be stable. The Managers have, on 29 January 2018, announced that A-HTRUST will be divesting the two hotels in Beijing and completion of the divestment is expected to take place in the first half of FY2018/19.

The growth momentum in international arrivals to Japan continued as the country welcomed almost 29 million foreign visitors in 2017, registering a growth of 19.3% y-o-y1. The strong inbound has benefitted the hotel markets in Tokyo and Osaka and is expected to remain robust in near term. However, the increased competition from the upcoming supply of new rooms and legalisation of "minpaku" will limit further performance improvement in these hotel markets.

On the Singapore front, inbound arrivals remains buoyant with YTD November 2017 growth of 6.4% y-o-y2. However, the hotel trading performance in general is likely to be moderate in the short term, in view of the significant new supply over the past two years and continued pressure on room rate growth from corporate due to tightening of budgets.

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