Financials

First Half Unaudited Financial Statements & Distribution Announcement 2020

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Financial Statement (362 KB)
Press Release (234 KB)
Presentation Slides (2827 KB)

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2020 HALF YEAR UNAUDITED FINANCIAL STATEMENTS & SECOND QUARTER DISTRIBUTION ANNOUNCEMENT

Summary of First REIT's Results

Note:

  1. Rental and other income for 1H 2020 decreased by 33.0% to S$38.6 million, and net property and other income for 1H 2020 decreased by 33.4% to S$37.5 million as compared to 1H 2019 mainly due to a two-month rental relief extended to all tenants.
  2. The distributable amount to Unitholders included the 1Q 2020 distribution of S$14.9 million which was paid on 18 June 2020. The 2Q 2020 distributable amount to Unitholders is S$3.5 million as the result of a two-month rental relief extended to all tenants.
  3. Distribution per unit (“DPU”) included 1Q 2020 DPU of 1.86 cents which was paid on 18 June 2020. The 2Q 2020 DPU is 0.44 cents.

Statement of Comprehensive Income

Note:

NM - Not meaningful

  1. Rental and other income for 1H 2020 decreased by 33.0% to S$38.6 million compared to 1H 2019 mainly due to a two-month rental relief extended to all tenants to alleviate the economic distress caused by the COVID-19 pandemic.
  2. Property operating expenses for 1H 2020 decreased by 15.7% to S$1.1 million compared to 1H 2019 mainly due to lower property expenses as a result of property tax rebates received for Singapore property.
  3. Interest income for 1H 2020 increased by 67.8% to S$1.4 million compared to 1H 2019 mainly due to the returns from the progress payments for the development of new Siloam Hospitals Surabaya which notice of termination has been served on 29 June 2020.
  4. Manager’s management fees for 1H 2020 decreased by 16.6% to S$4.7 million compared to 1H 2019 mainly due to lower property income as the result of a two-month rental relief extended to all tenants.
  5. Finance costs for 1H 2020 decreased to S$9.9 million compared to 1H 2019 mainly due to lower interest rates.
  6. Other expenses for 1H 2020 increased to S$1.5 million compared 1H 2019 mainly due to the higher unrealised exchange loss on USD loan.
  7. Net change in fair value of derivative financial instruments for 1H 2020 relates to the revaluation of interest rate swap contracts.
  8. Income tax expense for 1H 2020 decreased to S$6.4 million compared to 1H 2019 mainly due to lower rental income.

Statements of Financial Position

Note:

  1. The carrying amounts of the investment properties were based on valuations, using discounted cash flow or income capitalisation methods, performed by independent valuers in December 2019. The Managers will be engaging independent valuers soon to perform a full valuation of the Group’s investment properties by December 2020, in accordance with Appendix 6 of the Code of Collective Investment Scheme which stipulates that a full valuation of each of the property fund’s real estate should be conducted by a valuer at least once a financial year.

    The carrying values of the investment properties were maintained based on the independent valuation as at 31 December 2019 without any recognition of the COVID-19 impact or the one-off two-month rental relief extended to the tenants to cushion the impact caused by COVID-19 pandemic.
  2. Trade and other receivables decreased from S$48.8 million to S$48.4 million mainly due to advance rental receivables from tenants offset by a two-month rental relief extended to all tenants.
  3. Other financial liabilities, non-current decreased from S$486.4 million to S$292.9 million mainly due to reclassification of the S$195.7 million bank loans, net of unamortised cost from non-current to current as the bank loans will be maturing in March 2021.

Review of the performance

1H 2020 vs 1H 2019

Rental and other income for 1H 2020 decreased by 33.0% to S$38.6 million compared to 1H 2019 mainly due to a two-month rental relief extended to all tenants to alleviate the economic distress caused by the COVID-19 pandemic.

Property operating expenses for 1H 2020 decreased by 15.7% to S$1.1 million compared to 1H 2019 mainly due to lower property expenses as a result of property tax rebates received for Singapore property.

Interest income for 1H 2020 increased by 67.8% to S$1.4 million compared to 1H 2019 mainly due to the returns from the progress payments for the development of new Siloam Hospitals Surabaya which notice of termination has been served on 29 June 2020.

Manager’s management fees for 1H 2020 decreased by 16.6% to S$4.7 million compared to 1H 2019 mainly due to lower property income as the result of a two-month rental relief extended to all tenants.

Finance costs for 1H 2020 decreased to S$9.9 million compared to 1H 2019 mainly due to lower interest rates.

Other expenses for 1H 2020 increased to S$1.5 million compared 1H 2019 mainly due to the higher unrealised exchange loss on USD loan.

Net change in fair value of derivative financial instruments for 1H 2020 relates to the revaluation of interest rate swap contracts.

Income tax expense for 1H 2020 decreased to S$6.4 million compared to 1H 2019 mainly due to lower rental income.

Commentary on the competitive conditions of the industry

The Indonesian government expects gross domestic product to contract 0.4% this year under the worst-case scenario or grow 1% under the baseline scenario, with second half growth expected to range between 0.3% and 2.2%1 . The country is now looking to accelerate state spending in the second half of the year to mitigate impacts of COVID-19. It has announced an increase in fiscal spending to IDR695.2 trillion, as part of the national economic recovery programme2 , as well as the gradual loosening of restrictions in the country since early June.

Amid the ongoing COVID-19 that has affected patient visits to hospitals in Indonesia, First REIT will continue to work closely with its tenants to weather the headwinds of the pandemic. Its healthcare assets in Indonesia, Singapore and South Korea, continue to carry on its business under strict precautionary measures and regulations that put the health and safety of all its staff, tenants and visitors first.

To help alleviate the financial stress of its tenants, First REIT announced on 20 July 2020 that it has extended a two-month rental relief in May and June 2020 to all its tenants in Singapore, Indonesia and South Korea, amounting to a total of S$19.6 million Additionally, it will also pass on all property tax rebates announced by the Singapore government, through rental relief or capital expenditure works, where applicable, to all its Singapore properties which include Pacific Healthcare Nursing Home @ Bukit Merah, Pacific Healthcare Nursing Home II @ Bukit Panjang and The Lentor Residence. The Manager will monitor the situation closely and it is possible that a further relief similar to that announced for the first half of the year may be considered for the second half of the year.

  1. 10 July 2020, The Jakarta Post - Indonesia’s economy could enter recession in Q3: Sri Mulyani
  2. 15 July 2020, The Jakarta Post - Government, lawmakers set 2021 state budget deficit at up to 4.7% of GDP

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