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Summary of Results

Summary

 

Consolidated Income Statement

 

Statement of Comprehensive Income

 

Consolidated Balance Sheet (Group)

 

Review of performance

2Q FY17/18 vs 2Q FY16/17

Total property income for the quarter ended 30 September 2017 ("2Q FY17/18") increased by 18% to ₹2.2 billion mainly due to income contribution of ₹285 million (S$6.0 million) from:

  • Victor, which was leased out in phases after development was completed in June 2016;
  • BlueRidge 2, which was acquired in February 2017; and
  • aVance 4, which was acquired in April 2017.

In addition, positive rental reversions also contributed to the increase. In SGD terms, total property income increased by 24% to S$46.1 million. The SGD depreciated by about 5% against the INR over the same period last year.

Total property expenses for 2Q FY17/18 increased by 15% to ₹685 million (S$14.5 million) mainly due to property expenses of ₹102 million (S$2.2 million) from addition of new properties.

Net property income for 2Q FY17/18 increased by 20% to ₹1.5 billion due to the above factors. In SGD terms, net property income grew by 26% to S$31.6 million.

Other trust operating expenses increased by 235% to ₹23 million (S$0.5 million) mainly due to one-off professional fees incurred on the renewal of the Master Property Management Agreement approved via an Extraordinary General Meeting in 2Q FY17/18 and reversal of overprovision of bank charges in 2Q FY16/17.

Finance costs increased by ₹23 million (6%) to ₹388 million (S$8.2 million) mainly due to increase in borrowing levels. Total loans increased by 14% from S$420.2 million in 2Q FY16/17 to S$479.4 million in 2Q FY17/18 on loans taken for acquisition of BlueRidge 2, aVance 4 and the development of Atria.

Interest income decreased by ₹150 million (75%) or S$3.0 million (73%) mainly due to lower interest income pertaining to BlueRidge 2 debentures, which was treated as inter-company income after acquisition, and hence, was eliminated on consolidation. Cash reserves were also used to partially fund the acquisition of BlueRidge 2 thereby lowering the interest income.

As a result, ordinary profit before tax was ₹990 million in 2Q FY17/18, an increase of 6% as compared to ₹937 million in 2Q FY16/17. In SGD terms, ordinary profit before tax increased by 11% to S$21.0 million.

Income tax expenses increased by ₹86 million (49%) or S$2.0 million (56%) mainly due to:

  • recognition of deferred tax assets of ₹23 million (S$0.5 million) in 2Q FY16/17 mainly arising from a revision of useful life of fixed assets at ITPB;
  • deferred tax provisions of ₹35 million (S$0.7 million) at The V due to timing differences between accounting depreciation and tax capital allowances on account of completion of Atria building; and
  • higher current income tax from higher net property income.

Distribution adjustments:

  • Current income tax expenses of ₹265 million (S$5.6 million).
  • Trustee-manager fees to be paid in units at ₹71 million (S$1.5 million). The Trustee-manager has elected to receive 50% of its base fee and performance fee in units and 50% in cash; hence 50% of the fees are added back to the income available for distribution.
  • Income due to non-controlling interests of ₹60 million (S$1.3 million) is deducted from income available for distribution.

Income available for distribution for 2Q FY17/18 increased by 5% to ₹737 million, mainly due to higher ordinary profit before tax. In SGD terms, income available for distribution increased by 10% to S$15.6 million.

Income available for distribution per unit for 2Q FY17/18 was ₹0.79, or 1.67 S₵. DPU was ₹0.71 or 1.50 S₵ after retaining 10% of income available for distribution. This amounts to an increase of 5% over 2Q FY16/17 in INR terms, and an increase of 10% in SGD terms.

 

1H FY17/18 vs 1H FY16/17

Total property income for the 6 months ended 30 September 2017 ("1H FY17/18") increased by 20% to ₹4.3 billion. This was mainly due to incremental rental income of ₹600 million from Victor, BlueRidge 2 and aVance 4, which were completed/acquired in June 2016, February 2017 and April 2017 respectively. Positive rental reversions also contributed to the increase. In SGD terms, total property income increased by 27% to S$92.8 million. The SGD depreciated by about 5% against the INR over the same period last year.

Total property expenses for 1H FY17/18 increased by 19% to ₹1.4 billion (S$30.8 million), mainly due to additional expenses arising from the addition of new properties to the portfolio and a one-off settlement amounting to ₹32 million (S$0.7 million) in 1Q FY17/18 with a tenant at Park Square, ITPB as part of an on-going initiative to revamp and refresh the mall ("Park Square Initiative").

As a result, net property income for 1H FY17/18 grew by 20% to ₹2.9 billion. In SGD terms, net property income grew by 27% to S$62.0 million.

Finance costs increased by ₹63 million (9%) or S$2.2 million (15%) mainly due to an increase in borrowing levels. Total loans increased due to additional loans taken to invest in BlueRidge 2, aVance 4 and the development of Atria.

Interest income decreased by ₹259 million (72%) or S$5.1 million (71%) mainly due to lower interest income pertaining to BlueRidge 2 debentures, which was treated as inter-company income after acquisition, and hence, was eliminated on consolidation. Cash reserves were also used to partially fund the acquisition of BlueRidge 2 thereby lowering the interest income.

Realised loss on derivative financial instruments for 1H FY17/18 of ₹48 million (S$1.0 million) arose from the settlement of foreign exchange forward contracts entered into to hedge income repatriated from India to Singapore. The Trust maintains a policy of hedging distribution as it is earned, by entering into forward contracts to be settled at each 6-monthly distribution.

Ordinary profit before tax increased by 2% to ₹1.9 billion. In SGD terms, ordinary profit before tax increased by 8% to S$39.9 million.

Distribution adjustments:

  • Current income tax expense at ₹521 million (S$11.1 million).
  • Trustee-manager fees to be paid in units at ₹138 million (S$3.0 million). The Trustee-manager has elected to receive 50% of its base fee and performance fee in units and 50% in cash; hence 50% of the fees are added back to the income available for distribution.
  • Income due to non-controlling interests of ₹121 million (S$2.6 million) is deducted from income available for distribution.

Income available for distribution for 1H FY17/18 decreased by 2% to ₹1.4 billion. In SGD terms, income available for distribution increased by 4% to S$29.2 million.

Income available for distribution per unit for 1H FY17/18 was ₹1.46, or 3.12 S₵. DPU was ₹1.31 or 2.81 S₵ after retaining 10% of income available for distribution.

 

2Q FY17/18 vs 1Q FY17/18

Total property income for 2Q FY17/18 remained stable at ₹2.2 billion (S$46.1 million).

Total property expenses for 2Q FY17/18 decreased by 9% to ₹685 million (S$14.5 million) mainly due to:

  • a one-off settlement amounting to ₹32 million (S$0.7 million) in 1Q FY17/18 due to the Park Square Initiative;
  • lower fuel rates and utilities consumption at ITPB, which led to lower expenses of ₹17 million (S$0.4 million); and
  • lower ad-hoc miscellaneous expenses of ₹8 million (S$0.2 million) across the properties.

As a result, net property income for 2Q FY17/18 increased by 6% to ₹1.5 billion. In SGD terms, net property income increased by 4% to S$31.6 million.

Income available for distribution increased by 18% to ₹737 million, mainly due to realised loss on settlement of foreign exchange forward contracts in 1Q FY17/18 of ₹48 million (S$1.0 million) and higher net property income. In SGD terms, income available for distribution increased by 16% to S$15.6 million.

Commentary

Based on the market research report by CBRE South Asia Pvt Ltd ("CBRE") for the quarter ended 30 September 2017, some of the key highlights include:

Bangalore

  • In Whitefield (the micro-market where ITPB is located), vacancy rates remained stable at 7.7% while rental values increased 2-3% quarter-on-quarter. With limited supply in this micro-market coupled with sustained demand, CBRE expects rental values to further increase over the next few quarters.

Chennai

  • In Old Mahabalipuram Road ("OMR", the micro-market where ITPC is located), vacancy rates decreased from 6.0% in the preceding quarter to 3.3% this quarter. With limited supply in this micro-market, CBRE expects rental values to further increase in 2017. In Grand Southern Trunk ("GST", the micro-market where CyberVale is located), vacancy rates decreased marginally from 5.2% to 4.7% due to a lack of new supply. CBRE expects rental values in GST to further improve in 2017.

Hyderabad

  • In IT Corridor I10 (the district where The V, CyberPearl and aVance are located), vacancy rates decreased from 4.4% to 4.0% quarter-on-quarter, while rents climbed 1-3% over the same period. With a sustained demand for space, CBRE expects rental values in IT Corridor I to improve in 2017.

Pune

  • In Hinjewadi (the micro-market where BlueRidge 2 is located), vacancy rates decreased from 8.9% in the preceding quarter to 6.9% this quarter while rental values increased by 1.5-2%, due to a lack of new supply in the micro-market. CBRE expects rental values to remain stable for the rest of 2017.

The performance of a-iTrust is influenced by its tenants' business performance and outlook, condition of each city's real estate market and global economic conditions. Besides investing in quality IT parks, a-iTrust is seeking opportunities to expand into the fast-growing logistics sector by acquiring investment-grade warehouses. The Indian logistics sector is supported by healthy growth in the Indian economy and other favourable macro factors, including Goods and Services Tax reform and rapid growth in e-commerce. a-iTrust will continue to focus on enhancing the competitiveness of its properties to distinguish itself from competitors, while maintaining financial discipline, and seeking growth opportunities.

Notes
  1. Includes Hitec City and Madhapur.