Financials

Second Quarter Financial Statement And Dividend Announcement 2019

Financials Archive

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2019 SECOND QUARTER UNAUDITED FINANCIAL STATEMENTS & DISTRIBUTION ANNOUNCEMENT

Summary of First REIT's Results

Note:

  1. Actual distribution paid for FY 2018.

Statement of Comprehensive Income

Note:

NM - Not meaningful

  1. Property operating expenses for 2Q 2019 increased by 52.2% to S$647,000 compared to 2Q 2018 mainly due to higher property expenses incurred for Sarang Hospital and Indonesia properties.
  2. Finance costs for 2Q 2019 decreased to S$5.0 million compared to 2Q 2018 mainly due to absence of write off of unamortised loan related costs due to refinancing of bank loans incurred in 2018.
  3. Other expenses for 2Q 2019 decreased to S$0.2 million compared 2Q 2018 mainly due to the lower unrealised exchange loss on USD loan.
  4. Net change in fair value of derivative financial instruments for 2Q 2019 relates to the revaluation of interest rate swap contracts.
  5. Income tax expenses for 2Q 2019 increased to S$4.7 million compared to 2Q 2018 mainly due to withholding taxes on higher dividend income received from foreign subsidiaries.

Statements of Financial Position

Note:

  1. Trade and other receivables decreased from S$32.4 million to S$21.5 million mainly due to rental received from tenants and VAT refunds received from Indonesian tax authority for acquisition of Siloam Hospitals Buton and Lippo Plaza Buton and Siloam Hospitals Yogyakarta.
  2. Other financial liabilities, non-current and current decreased from S$496.4 million to S$485.1 million mainly due to repayment of loan in March 2019.

Review of the performance

2Q 2019 vs 2Q 2018

Property operating expenses for 2Q 2019 increased by 52.2% to S$647,000 compared to 2Q 2018 mainly due to higher property expenses incurred for Sarang Hospital and Indonesia properties.

Interest income for 2Q 2019 increased by 5.0% to S$441,000 compared to 2Q 2018 mainly due to the returns from the progress payments for the development of new Siloam Hospitals Surabaya.

Finance costs for 2Q 2019 decreased to S$5.0 million compared to 2Q 2018 mainly due to absence of write off of unamortised loan related costs due to refinancing of bank loans incurred in 2018.

Other expenses for 2Q 2019 decreased to S$0.2 million compared 2Q 2018 mainly due to the lower unrealised exchange loss on USD loan.

Net change in fair value of derivative financial instruments for 2Q 2019 relates to the revaluation of interest rate swap contracts.

Income tax expense for 2Q 2019 increased to S$4.7 million compared to 2Q 2018 mainly due to withholding taxes on higher dividend income received from foreign subsidiaries.

1H 2019 vs 1H 2018

Property operating expenses for 1H 2019 increased by 77.6% to S$1.3 million compared to 1H 2018, mainly due to the higher property expenses incurred for Sarang Hospital and Indonesia properties.

Interest income for 1H 2019 increased by 2.3% to S$856,000 compared to 1H 2018, mainly due to the returns from the progress payments for the development of new Siloam Hospitals Surabaya.

Finance costs for 1H 2019 decreased to S$10.1 million compared to 1H 2018 mainly due to absence of write off of unamortised loan related costs due to refinancing of bank loans incurred in 2018.

Other expenses for 1H 2019 decreased to S$0.5 million compared 1H 2018 mainly due to the lower unrealised exchange loss on USD loan.

Net change in fair value of derivative financial instruments for 1H 2019 relates to the termination and revaluation of interest rate swap contracts.

Income tax expense for 1H 2019 increased to S$9.3 million compared to 1H 2018 mainly due to withholding taxes on higher dividend income received from foreign subsidiaries.

Commentary on the competitive conditions of the industry

Despite the global economic environment, the healthcare market is a resilient sector and the demand for quality healthcare services continues to rise in Indonesia and the rest of Asia. First REIT will continue to look for accretive acquisition opportunities from third parties, or from the pipeline of healthcare assets from its sponsors PT Lippo Karawaci Tbk and OUE Lippo Healthcare Limited, to grow its portfolio to maximise returns to Unitholders. The recent review by the Monetary Authority of Singapore to further raise the current leverage limit of 45% for S-REITs, if implemented, will further bolster growth opportunities across the industry.

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