Parkway Life REIT : Financial Statements And Related Announcement :: Full Yearly Results

Microsoft Word - PLIFE REIT FS 31Dec15 - to KPMG2

(Constituted in the Republic of Singapore pursuant to a Trust Deed dated 12 July 2007 (as amended))

PARKWAY LIFE REAL ESTATE INVESTMENT TRUST FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 UNAUDITED FINANCIAL STATEMENT & DISTRIBUTION ANNOUNCEMENT

INTRODUCTION

Parkway Life Real Estate Investment Trust ("Parkway Life REIT") is a real estate investment trust constituted by the Trust Deed entered into on 12 July 2007 (as amended) between Parkway Trust Management Limited as the Manager and HSBC Institutional Trust Services (Singapore) Limited as the Trustee. Parkway Life REIT was listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") on 23 August 2007 ("Listing Date").

Parkway Life REIT is one of the largest listed healthcare REITs in Asia by asset size. It was established to invest primarily in income-producing real estate and/or real estate-related assets in the Asia-Pacific region (including Singapore) that are used primarily for healthcare and/or healthcare-related purposes (including but not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices), whether wholly or partially owned, and whether directly or indirectly held through the ownership of special purpose vehicles whose primary purpose is to own such real estate.

Parkway Life REIT owns a well-diversified portfolio of 47 properties located in the Asia-Pacific region, including three hospitals in Singapore, 43 healthcare and healthcare-related assets in Japan and strata titled units/lots in Gleneagles Intan Medical Centre, Kuala Lumpur, Malaysia. Its total portfolio size stands at approximately S$1.6 billion as at 31 December 2015.

In Singapore, Parkway Life REIT owns the largest portfolio of private hospitals comprising Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital (collectively, the "Singapore Hospital Properties").

In Japan, it owns one pharmaceutical product distributing and manufacturing facility in Chiba Prefecture, as well as 42 high quality nursing home and care facility properties located in various prefectures of Japan (collectively, the "Japan Properties").

Parkway Life REIT's policy is to distribute at least 90% of its taxable income and net overseas income, with the actual level of distribution to be determined by the Manager. Since FY 2012, S$3.0 million per annum of amount available for distribution has been retained for capital expenditure on existing properties.

SUMMARY OF PARKWAY LIFE REIT'S RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015

2015	2014	Increase
Notes	S$'000	S$'000	S$'000	%
Gross Revenue Net Property Income Total Distributable Income to Unitholders from operations from distribution of divestment gains amount retained for capital expenditure Distribution per unit (cents) Distribution yield (%), based on - Closing market price of S$2.33 as at 31 December 2015	(a) (b) (c)	102,694 95,997 80,385 74,275 9,110 (3,000) 13.29 5.70	100,382 93,775 69,698 72,698 - (3,000) 11.52 4.94	2,312 2,222 10,687 1,577 9,110 - 1.77	2.3 2.4 15.3 2.2 n.m.1 - 15.3 15.3

Note(s):

1. In relation to the divestment of seven Japan properties in December 2014 as announced on 26 December 2014. Divestment gains (after tax) of S$9,110,000 has been fully distributed to unitholders throughout the four quarters in FY2015.

   
   

2. Since FY 2012, S$3.0 million per annum of amount available for distribution has been retained for capital expenditure on existing properties.

   
   

3. In computing the Distribution per Unit ("DPU"), the number of units in issue as at the end of each period is used.

   
   

   
   

   1 The term "n.m." used throughout the financial statement and distribution announcement denotes "not meaningful".

   1(a) Income statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year

   
   

   Consolidated Statement of Total Return

   
   

   Notes	4Q 2015 S$'000	4Q 2014 S$'000	Inc/ (Dec) %	2015 S$'000	2014 S$'000	Inc/ (Dec) %
   Gross revenue Property expenses	26,308 (1,725)	25,107 (1,642)	4.8 5.1	102,694 (6,697)	100,382 (6,607)	2.3 1.4
   Net property income	(a)	24,583	23,465	4.8	95,997	93,775	2.4
   Management fees		(2,658)	(2,528)	5.1	(10,412)	(10,051)	3.6
   Trust expenses	(b)	(913)	(950)	(3.9)	(2,633)	(2,736)	(3.8)
   Net foreign exchange gain	597	442	35.1	3,092	2,313	33.7
   Interest income	-	-	-	11	6	83.3
   Finance costs	(c)	(2,282)	(1,978)	15.4	(8,778)	(8,255)	6.3
   Non-property expenses		(5,256)	(5,014)	4.8	(18,720)	(18,723)	(0.0)
   Total return before changes in	(d)	19,327	18,451	4.7	77,277	75,052	3.0
   fair value of financial derivatives
   and investment properties
   Net change in fair value of financial		39	736	(94.7)	(4,084)	36	11,444.4
   derivatives
   Net change in fair value of	5,734	45,051	(87.3)	5,734	45,051	(87.3)
   investment properties
   Gain on disposal of investment	(e)	-	13,674	(100.0)	-	13,674	(100.0)
   properties
   Total return for the period before	(f)	25,100	77,912	(67.8)	78,927	133,813	(41.0)
   tax and distribution
   Income tax expense		(7,377)	(8,360)	(11.8)	(11,939)	(12,707)	(6.0)
   Total return for the period after tax before distribution	17,723	69,552	(74.5)	66,988	121,106	(44.7)

   
   

   Note(s):

   
   

4. Management fees comprise of the Manager's management fees and asset management fees payable to the asset managers of the Japan Properties.

   
   

5. Trust expenses comprise mainly of Trustee's fees, professional fees and travelling expenses.

   
   

6. Finance costs largely comprise of interest expense on loans, settlement on interest rate swaps that provide fixed rate funding on loans and amortisation of transaction costs of establishing debt facilities.

   
   

7. The Group entered into foreign currency forward contracts to hedge its net foreign income from Japan. The changes in fair value of the foreign currency forward contracts were recognised in Statement of Total Return.

   
   

8. This relates to gain arising from the disposal of seven nursing home properties in Japan which was completed on 26 December 2014.

   
   

9. Included in 4Q 2015 income tax expense is the withholding tax of S$1.2 million (4Q 2014: S$6.1 million) and deferred tax expense amounting to S$6.2 million (4Q 2014: S$2.3 million). The deferred tax of $6.2 million in 2015 was recognised in respect of the Japan investment properties for the temporary differences between the fair value and the tax written down value at the applicable tax rate.

Comparatively, for 4Q 2014, the withholding tax of S$6.1 million consisted of a one-off S$5.1 million withholding tax imposed on the disposal gains in relation to the disposal of seven nursing home properties in Japan. At the same time, a S$2.5 million of deferred tax previously provided on these divested properties have been reversed, thereby reducing the deferred tax from S$4.8 million to S$2.3 million.




Distribution Statement




Notes	4Q 2015 S$'000	4Q 2014 S$'000	Inc/ (Dec) %	2015 S$'000	2014 S$'000	Inc/ (Dec) %
Total return after tax before distribution Non-tax deductible/(non-taxable) items: Trustee's fees Amortisation of transaction costs relating to debt facilities Net change in fair value of financial derivatives Net fair value gain on investment properties (net of deferred tax impact) Foreign exchange difference Gain on disposal of investment properties (net of withholding tax) Others Net effect of non-tax deductible/(non-taxable) items Rollover adjustment	(a)	17,723 73 168 (39) 482 (39) - 421 1,066 35	69,552 72 168 (736) (42,803) 278 (8,598) 347 (51,272) -	(74.5) 1.4 - (94.7) 101.1 114.0 (100.0) (21.3) 102.1 n.m.	66,988 290 867 4,084 1,718 (395) 203 483 7,250 37	121,106 280 897 (36) (41,616) 222 (8,598) 443 (48,408) -	(44.7) 3.6 (3.3) 11,444.4 104.1 277.9 102.4 9.0 115.0 n.m.
Amount available for distribution	(b)	18,824	18,280	3.0	74,275	72,698	2.2
to Unitholders
Distribution of divestment gains		2,277	-	n.m.	9,110	-	n.m.
Amount retained for capital	(c)	(750)	(750)	-	(3,000)	(3,000)	-
expenditure
Distributable income to Unitholders	(d)	20,351	17,530	16.1	80,385	69,698	15.3




Note(s):




1. The rollover adjustment in 2015 represented the difference between the taxable income previously distributed and the quantum finally agreed with the Inland Revenue Authority of Singapore ("IRAS") for the Year of Assessment 2013 and 2014 and had been adjusted under the rollover mechanism agreed with the IRAS.

   
   

2. This refers to the partial distribution of the gains arising from the divestment of seven Japan properties in December 2014 as announced on 26 December 2014. The gain is classified as capital distribution from a tax perspective. The divestment gains, after deducting all relevant taxes, of S$9,110,000 has been fully distributed to unitholders throughout the four quarters in FY2015.

   
   

3. Since FY 2012, S$3.0 million per annum of amount available for distribution has been retained for capital expenditure on existing properties (S$0.75 million per quarter).