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Financial Results


2018 THIRD QUARTER UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT

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Profit & Loss

Profit & Loss 3Q2018

Balance Sheet

Balance Sheet 3Q2018

Review of Performance

3Q 2018 vs 3Q 2017

Gross rental income is S$3.8 million lower than 30 2017, mainly due to weakening of Indonesian Rupiah against Singapore Dollar by 9.4% as compared to 30 2017, and lower rental income for retail spaces due to the expiry of the master leases over the 7 Retail Spaces. The impact from weakening of Indonesian Rupiah and expiry of the master leases over the 7 Retail Spaces is partly offset by additional rental income due to acquisition of Lippe Plaza Jogya and Kediri Town Square in December 2017 respectively.

Other revenue is S$19.1 million higher than 30 2017, mainly due to collection of service charge and utilities recovery charges directly from tenants of the malls and Retail Spaces.

Property operating expenses are S$22.2 million higher than 30 2017, mainly due to:

  1. costs incurred of S$19.5 million (30 2017: Nil) for maintenance and operations of the malls and Retail Spaces; and
  2. net allowance for doubtful debts made in 30 2018 of S$2.1 million (as opposed to a net reversal of allowance of doubtful debts in 30 2017 of S$0.7 million).

Finance expenses are S$1.4 million higher than 30 2017 mainly due to additional borrowings for acquisition of Jogya and Kediri in December 2017.

Administrative expenses are S$1.0 million lower than 30 2017 mainly due to lower value of deposited property and net property income.

Income tax expense is S$2.6 million higher than 30 2017 mainly due to the new tax regulations in Indonesia which came into effect on 2 January 2018.

Other losses (net) comprise realised and unrealised foreign currency gainsf(losses) and realised and unrealised hedging contracts gainsf(losses). It also includes amortisation of intangible assets in relation to PICON, Kuta, Kendari and Jogja.

The Trust has foreign currency options contracts to mitigate its exposure on currency movement as the majority of the Trust's income is in Indonesian Rupiah. The unrealised gain/loss on foreign currency options contracts is a non-cash item and does not affect the amount of distribution to unitholders.

YTD 2018 vs YTD 2017

Gross rental income is S$5.0 million lower than YTD 2017, mainly due to weakening of Indonesian Rupiah against Singapore Dollar by 9.6% as compared to YTD 2017, and lower rental income for retail spaces due to the expiry of the master leases over the 7 Retail Spaces. The impact from weakening of Indonesian Rupiah and expiry of the master leases over the 7 Retail Spaces is partly offset by additional rental income due to acquisition of Lippe Plaza Kendari in June 2017, Lippe Plaza Jogya and Kediri Town Square in December 2017 respectively.

Other revenue is S$23.6 million higher than YTD 2017, mainly due to collection of service charge and utilities recovery charges directly from tenants of the malls and Retail Spaces.

Property operating expenses are S$31.2 million higher than YTD 2017, mainly due to:

  1. costs incurred of S$24.4 million (YTD 2017: NiQ for maintenance and operations of the malls and the Retail Spaces; and
  2. net allowance for doubtful debts made in YTD 2018 of S$4.1 million (as opposed to a net reversal of allowance of doubtful debts in YTD 2017 of S$1.5 million).

Finance expenses are S$1.3 million higher than YTD 2017, mainly due to additional borrowings for acquisition of Jogya and Kediri in December 2017.

Administrative expenses are S$1.1 million lower than YTD 2017 mainly due to lower value of deposited property and net property income.

Income tax expense is S$6.6 million higher than YTD 2017 mainly due to the new tax regulations in Indonesia which came into effect on 2 January 2018.

Other losses (net) comprise realised and unrealised foreign currency gainsf(losses) and realised and unrealised hedging contracts gainsf(losses). It also includes amortisation of intangble assets in relation to Lippe Plaza Batu, PICON, Kuta, Kendari and Jogja.

Distribution to perpetual securitities holders is S$3.7 million higher than YTD 2017, due to issuance of S$120 million of perpetual securities at a distribution rate of 6.6% per annum in June 2017.

The Trust has foreign currency options contracts to mitigate its exposure on currency movement as the majority of the Trust's income is in Indonesian Rupiah. The unrealised gain/loss on foreign currency options contracts is a non-cash item and does not affect the amount of distribution to unitholders.

Commentary

The Indonesian economy grew 5.17% y-o-yin the third quarter of 2018, compared with 5.27% in the preceding quarter on the back of capital outflows, as well as weaker exports and consumer spending during the third quarter. President Joke Widodo has announced Indonesia's growth forecast for 2019 to be 5.3%, driven by stronger domestic consumption, investment and exports, and supported by a stronger spending push planned for 2019.

Inflation in Indonesia was 3.2% in October compared to 2.9% in September as most index components saw sequentially faster growth, with health and education the main exceptions. Consumer prices were impacted by higher fuel prices, following hikes to non-subsidised fuel prices in October. However, full-year inflation remains on track to be comfortably within the Central Bank's target of 2.5-4.5% for 2018, despite the weakening of the Rupiah amidst rising US interest rates. To counter the falling Rupiah value, Bank Indonesia intervened in the foreign exchange markets, raised import taxes and also increased interest rates several times during the year, with the latest on 27 September 2018, bringing interest rate to 5.75%.

Retail sales grew 4.8% y-o-yin September, ticking down slightly from the 6.1% growth in the preceding month. Growth in September was mainly driven by an increase in clothing sales as well as higher demand for automotive fuels, which was offset by lower sales of information and communications equipment.


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