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Financial Highlights

Consolidated Income Statement

Statement of Comprehensive Income

Balance Sheet

Review of Performance

Revenue and Net Property Income - 4Q FY2016/17 vs. 4Q FY2015/16

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 1Q FY2017/18 was S$53.5 million, an increase of S$1.1 million (2.2%) as compared to 1Q FY2016/17 primarily due to stronger AUD against SGD. Overall portfolio underlying performance is largely flat to last year.

Net property income for the quarter decreased S$0.3 million (1.5%) over last year due to lower contributions from the Australia and Singapore portfolios.

Australia

Gross revenue for the Australia hotels for 1Q FY2017/18 was S$36.5 million, an increase of S$1.1 million (3.2%) over 1Q FY2016/17 primarily due to the stronger AUD against SGD. Overall, Australia portfolio performance was flat compared to last year.

Novotel Sydney Central, Pullman Sydney Hyde Park and Courtyard by Marriott Sydney North Ryde showed improved performances in 1Q FY2017/18. The two Sydney city hotels continued to experience strong public demand and conferencing business during the quarter and Novotel Sydney Central was also able to yield better during peak periods due to the contracted air crew business. Courtyard by Marriott Sydney North Ryde showed better performance as the hotel underwent room refurbishment during the same quarter last year.

Novotel Sydney Parramatta and Pullman & Mercure Brisbane King George Square continued to face downward pressure on room rates due to increased competition from additional room supply in the market and weaker conference and event demand. Pullman and Mercure Melbourne Albert Park was affected by fewer events held in the hotel in the current quarter.

Overall NPI performance of the Australia hotels was also affected by higher manpower cost, in part due to more occupied rooms and more public holidays falling in the current quarter. Commission expenses were also higher due to higher room bookings which materialized through travel agents/online channels.

China

Gross revenue for the China hotels for the quarter was flat at S$5.4 million. In local currency terms, the underlying performance of the hotels increased by S$0.2 million but this was offset by weaker RMB against SGD.

Both hotels’ performance improved due to positive momentum in the hospitality sector. In addition, Ibis Beijing Sanyuan continued to benefit from China Lodging Group’s loyalty programme.

Net property income for the China hotels grew S$0.3 million (12.3%) year-on-year, despite the weaker Renminbi against SGD, 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 S$0.1 million (1.6%) and S$0.3 million (4.3%) better than last year.

Contribution from Oakwood Ariake was higher than last year as a result of securing several new corporate and group booking during the quarter and additional events held at Tokyo Big Sight (Tokyo International Exhibition Center). Sunroute Osaka Namba’s performance was marginally better than last year.

Singapore

Gross revenue and net property income for Park Hotel for the quarter were both S$0.1 million (4.3%) lower than prior year.

The hotel continued to face soft corporate segment demand 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$15.8 million. With the retention of S$1.1 million for the quarter, income to be distributed for the quarter would be S$14.7 million, an increase of S$0.3 million (1.8%) over last year.

The increase was mainly due to the following:

  1. Lower net finance cost of S$0.8 million.
  2. Realised exchange gain of S$0.2 million
  3. Lower other expenses of S$0.1 million

Partially offset by:

  1. Lower net property income of S$0.3 million (excluding non-cash items)
  2. Higher retention sum of S$0.4 million

Commentary

In the near term, the hotel market in Sydney CBD is expected to remain buoyant with limited upcoming supply, although increased competition in the Sydney suburban markets may impede performance of hotels in these markets. While the Melbourne hotel market is expected to remain positive in the near term, upcoming supply may pose challenges. Conditions in the Brisbane hotel market are expected to remain soft in the near term as further supply enters the market.

In Beijing, robust domestic travelling is expected to continue driving the performance of the hotel sector amidst the declining trend of international arrivals into the city. As a result, the performance of the hotels in the city is expected to be healthy in the near term.

While inbound arrivals to Japan continued to be healthy with a year-to-date (“YTD”) June 2017 increase of 17.4% y-o-y1, the growth rate of inbound arrival is expected to slow down, compared to recent years. In the near term, while the hotel markets in Tokyo and Osaka is expected to remain healthy in general, further improvement in performance may be moderated by increasing competition.

Inbound arrivals into Singapore in May 2017 continued the growth trend from the earlier three months of the year, resulting in a y-o-y growth of 3.6% YTD May 20172. However, with the large inventory of hotel rooms and further upcoming supply, the performance of the Singapore hotel market is expected to remain subdued in near term.

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