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Summary of Results

With effect from 1 April 2019, a-iTrust’s financial year end changed from 31 March to 31 December. The current financial period represented a six-month period from 1 January 2020 to 30 June 2020 ("1H FY2020"). The comparative previous financial period was a six-month period from 1 January 2019 to 30 June 2019 (“1H FY2019”), which comprises results for Q4 FY18/19 and Q1 FY2019. The immediately preceding half year was a six-month period from 1 July 2019 to 31 December 2019 ("2H FY2019").

Summary

 

Consolidated Income Statement

 

Statement of Comprehensive Income

 

Consolidated Balance Sheet (Group)

 

Review of performance

1H FY2020 vs 1H FY2019

Total property income for 1H FY2020 increased by INR217 million (4%) to INR5.2 billion. This was mainly due to:

  • income from Anchor building at ITPB, which was completed in May 2019;
  • positive rental reversions and
  • partially offset by lower utilities and carpark income during COVID-19 lockdown.

In SGD terms, total property income increased by 3% to S$99.0 million. The SGD appreciated by about 2% against the INR over the same period last year.

Total property expenses increased by 11% to INR1.3 billion (S$25.5 million) mainly due to higher allowance for expected credit loss, but partially offset by lower utilities expenses resulting from COVID-19 lockdown.

Net property income for 1H FY2020 increased by 2% to INR3.9 billion (S$73.5 million) due to the above factors.

Trustee-manager's fees increased by INR30 million (8%) to INR415 million (S$7.9 million), which is in-line with higher net property income and portfolio value as of 30 June 2020.

Other operating expenses decreased by INR88 million (44%) to INR110 million (S$2.1 million) mainly due to higher provision for Singapore GST in 1H FY2019.

Finance costs increased by INR68 million (6%) to INR1.2 billion (S$22.8 million) mainly due to an increase in borrowings for investments into Arshiya, AURUM IT SEZ, aVance 5 & 6 and BlueRidge 3.

Interest income increased by INR370 million (37%) to INR1.4 billion (S$26.0 million) mainly due to interest income from investments in Arshiya, AURUM IT SEZ, aVance 5 & 6 and BlueRidge 3.

Realised gain on derivative financial instruments for 1H FY2019 of INR395 million (S$7.5 million) arose mainly from gains from the settlement of foreign exchange forward contracts entered into to hedge income repatriated from India to Singapore and settlement of currency swaps on SGD-denominated loans.

Realised exchange loss for 1H FY2019 of INR449 million (S$8.5 million) arose mainly from settlement of SGD-denominated loans. Realised exchange gain or loss is recognised when borrowings that are denominated in currencies other than the INR are settled.

As a result, ordinary profit before tax was INR3.5 billion in 1H FY2020, an increase of 14% as compared to INR3.0 billion in 1H FY2019. In SGD terms, ordinary profit before tax increased by 12% to S$66.0 million.

Income tax expenses decreased by INR3.1 billion (S$61.0 million) mainly due to reversal of DDT provision during the period, reduction in the MAT rate since 2H FY2019 and deferred tax liabilities arising from the annual fair value revaluation of investment properties in March 2019.

Distribution adjustments:

  • Current income tax expenses of INR381 million (S$7.3 million).
  • Trustee-manager fees of INR202 million (S$3.9 million) to be paid in units. 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.
  • Realised loss on settlement of loans of INR27 million (S$0.5 million) was added back for distribution purpose. This pertains to refinancing of SGD-denominated loans that have not been hedged into INR. Exchange gain/loss is recognised when borrowings that are denominated in currencies other than the INR are revalued. The exchange gain/loss is realised when the borrowing matures, is prepaid, or swapped to INR denomination.
  • Income due to non-controlling interests of INR224 million (S$4.3 million) is deducted from income available for distribution.

Income available for distribution for 1H FY2020 increased by 39% to INR3.1 billion, mainly due to increased net property income and higher interest income from investments in Arshiya, AURUM IT SEZ, aVance 5 & 6 and BlueRidge 3, together with lower current tax expense in 1H FY2020, due to the reversal of DDT provision and reduction of MAT. In SGD terms, income available for distribution increased by 36% to S$59.0 million.

Income available for distribution per unit for 1H FY2020 was INR2.71 or 5.15 S₵. DPU was INR2.44 or 4.64 S₵ after retaining 10% of income available for distribution, representing an increase of 26% in INR terms and 24% in SGD terms respectively. This is lower than the 39% increase in income available for distribution due to the private placement in November 2019.

1H FY2020 vs 2H FY2019

 

Total property income and total property expenses 1H FY2020 remained stable at INR5.2 billion and INR1.3 billion respectively.

As a result, net property income for 1H FY2020 decreased slightly by 1% at INR3.9 billion. In SGD terms, net property income decreased by 3% to S$ 73.5 million.

Income available for distribution increased by 16% to INR3.1 billion, mainly due to reversal of DDT provision. In SGD terms, income available for distribution increased by 14% to S$59.0 million.

Income available for distribution per unit for 1H FY2020 was INR2.71, or 5.15 S₵. DPU was INR2.44 or 4.64 S₵ after retaining 10% of income available for distribution, representing increase of 8% and 5% over 2H FY2019 in both INR terms and SGD terms respectively. These are lower than the 16% and 14% increase in income available for distribution due to the private placement in November 2019.

 

Commentary

India has been on a nationwide lockdown from 25 March 2020, with phase-wise reopening of areas outside containment zones effective from 1 June 2020. Lockdown and fresh restrictions of varying duration were re-imposed in several cities and containment zones, including Bangalore, Chennai and Pune where a-iTrust has a presence, due to resurgence of COVID-19 cases. There is gradual relaxation of restrictions of varying degree across different cities. Most occupiers remain cautious and continue to work from home due to the fluid COVID-19 situation. Prevailing labour shortage post COVID-19 lockdown may affect the timely completion of ongoing construction projects.

Based on the market research report by CBRE South Asia Pvt Ltd ("CBRE") for the period ended 30 June 2020, some of the key highlights (compared to quarter ended 31 December 2019) include:

Bangalore

  • In Whitefield (the micro-market where ITPB is located), vacancy increased to 14.9%, from 9.7% as of 31 December 2019 due to new supply and limited absorption. Rental values remained stable. CBRE expects rental values to remain stable over the next few quarters due to sustained demand.

Chennai

  • In Old Mahabalipuram Road (the micro-market where ITPC is located), vacancy increased to 14.9%, from 5.8% as of 31 December 2019 due to new supply and limited absorption. Rental values remained stable over the same time period. CBRE expects rental values to remain stable in the coming quarters. In Grand Southern Trunk (the micro-market where CyberVale is located), the vacancy increased slightly to 4.9%, from 4.8% as of 31 December 2019, while rental values remained stable. CBRE expects rental values in Grand Southern Trunk to remain largely stable over the coming quarters.

Hyderabad

  • In IT Corridor I1 (the micro-market where ITPH, CyberPearl and aVance Hyderabad are located), vacancy increased to 6.0%, from 2.6% as of 31 December 2019 due to new supply and limited absorption. Rents remained stable over the same time period. CBRE expects rental values in IT Corridor I to remain stable in the coming quarters.

Pune

  • In Hinjawadi (the micro-market where aVance Pune is located), vacancy increased to 10.6%, from 6.3% as of 31 December 2019 due to new supply and limited absorption. Rental values remained stable. CBRE expects rental values in Hinjawadi to remain largely stable over the coming quarters.

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. 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.