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 year represented a 12-month period (“12M”) from 1 January 2020 to 31 December 2020 (“FY2020”). The comparative previous financial year was a 9-month period (“9M”) from 1 April 2019 to 31 December 2019 (“FY2019”). Hence the numbers presented for FY2020 are not comparable to those for FY2019.
Current half year represented a 6-month period from 1 July 2020 to 31 December 2020 (“2H FY2020”). The comparative previous financial period was a 6-month period from 1 July 2019 to 31 December 2019 (“2H FY2019”).
Consolidated Income Statement
Statement of Comprehensive Income
Consolidated Balance Sheet (Group)
Review of performance
2H FY2020 vs 2H FY2019
Total property income for 2H FY2020 decreased by INR154 million (3%) to INR5.1 billion. This was mainly due to lower utilities and carpark income during COVID-19 lockdown.
In SGD terms, total property income decreased by 8% to S$92.7 million. The SGD appreciated by about 4% against the INR over the same period last year.
Total property expenses decreased by 24% to INR1.0 billion (S$18.3 million) mainly due to lower operation and maintenance expenses across the properties together with lower utilities expenses during the COVID-19 lockdown and reversal of expected credit loss.
Net property income for 2H FY2020 increased by 4% to INR4.0 billion (S$74.4 million) due to the above factors.
Trustee-manager's fees increased by INR26 million (6%) to INR433 million (S$8.1 million), which is in-line with higher net property income and portfolio value as of 31 December 2020.
Other operating expenses increased by INR130 million (87%) to INR280 million (S$5.2 million) mainly due to higher provision for Singapore GST in 2H FY2020.
Finance costs decreased by INR83 million (7%) to INR1.2 billion (S$21.5 million) mainly due to lower cost of borrowings.
Interest income increased by INR254 million (22%) to INR1.4 billion (S$25.7 million) mainly due to higher interest income from investments in Arshiya, AURUM IT SEZ and BlueRidge 3.
Realised exchange loss for 2H FY2020 of INR562 million (S$10.4 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 INR3.0 billion in 2H FY2020, a decrease of 5% as compared to INR3.2 billion in 2H FY2019. In SGD terms, ordinary profit before tax dropped by 11% to S$55.0 million.
Income tax expenses decreased by INR1.2 billion (S$25.6 million) mainly due to lower deferred tax liabilities arising from the annual fair value revaluation of investment properties compared to same period last year.
- Current income tax expenses of INR669 million (S$12.4 million).
- Trustee-manager fees of INR211 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 INR593 million (S$11.1 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 INR233 million (S$4.3 million) is deducted from income available for distribution.
Income available for distribution for 2H FY2020 increased by 10% to INR2.9 billion, mainly due to increased net property income and higher interest income from investments in Arshiya, AURUM IT SEZ and BlueRidge 3, but partially offset by higher provision for Singapore GST in 2H FY2020. In SGD terms, income available for distribution increased by 3% to S$53.6 million.
Income available for distribution per unit for 2H FY2020 was INR2.55 or 4.66 S₵. DPU was INR2.29 or 4.19 S₵ after retaining 10% of income available for distribution, representing an increase of 1% in INR terms and a decrease of 5% in SGD terms respectively. This is lower than the 10% increase in income available for distribution due to the private placement in November 2019.
2H FY2020 vs 1H FY2020
Total property income for 2H FY2020 decreased by 3% to INR5.1 billion (S$92.7 million) mainly due to lower occupancy together with lower utilities and carpark income.
Total property expenses for 2H FY2020 decreased by 25% to INR1.0 billion (S$18.3 million) mainly due to lower operation and maintenance expenses across the properties during 2H FY2020 and higher allowance of expected credit loss in 1H FY2020.
As a result, net property income for 2H FY2020 increased by 5% at INR4.0 billion. In SGD terms, net property income increased by 1% to S$74.4 million.
Income available for distribution decreased by 6% to INR2.9 billion, mainly due higher provision for Singapore GST in 2H FY2020 and lower current income tax resulting from reversal of dividend distribution tax (“DDT”) in 1H FY2020. In SGD terms, income available for distribution decreased by 9% to S$53.6 million.
Income available for distribution per unit for 2H FY2020 was INR2.55, or 4.66 S₵. DPU was INR2.29 or 4.19 S₵ after retaining 10% of income available for distribution, representing decrease of 6% and 9% in both INR terms and SGD terms respectively.
India started re-opening the economy in June 2020 and as of December 2020, COVID-19 caseload were declining sharply and mortality rate continued to stay low. As a result, along with the rest of the economy, overall construction activities have resumed from the earlier labour shortage post COVID-19 lockdown. In terms of physical occupancy, tenants are expected to gradually ramp-up attendance in their offices in the coming months.
Based on the market research report by CBRE South Asia Pvt Ltd (“CBRE”) for the period ended 31 December 2020, some of the key highlights (compared to period ended 30 June 2020) include:
- In Whitefield (the micro-market where ITPB is located), vacancy decreased to 13.9%, from 14.9% as of 30 June 2020, due to stronger space take-up relative to new supply. Rental values remained stable. CBRE expects rental to remain stable in 2021 due to sustained demand.
- In Old Mahabalipuram Road (the micro-market where ITPC is located), vacancy decreased to 12.0%, from 14.9% as of 30 June 2020, due to strong pre-lease activity and limited addition of new supply. Rental values remained stable over the same time period. However, CBRE expects non-SEZ rental values to be under slight pressure in 2021, due to increase in secondary space supply.
- In Grand Southern Trunk (the micro-market where CyberVale is located), the vacancy increased to 6.5%, from 4.9% as of 30 June 2020. Rental values, particularly in the SEZ segment, declined over the same time period. CBRE expects rental to be under pressure due to expected large supply addition.
- In IT Corridor I10 (the micro-market where ITPH, CyberPearl and aVance Hyderabad are located), vacancy decreased to 5.1%, from 6.0% as of 30 June 2020, due to increase in absorption, limited tenant exits, and limited addition of new supply. Rents remained stable over the same time period. CBRE expects rental values in IT Corridor I to remain stable in the coming quarters.
- In Hinjawadi (the micro-market where aVance Pune is located), vacancy increased to 17.6%, from 10.6% as of 30 June 2020, due to release of secondary space by international BFSI firms and domestic tech firms in Quadron IT Park. 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.