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FINANCIAL
REVIEW
MTN issued in October 2016 and one-
time write off of upfront borrowing
costs following the repayment of
loans in FY 2016/17, partially offset
by full amortisation of the remaining
capitalised premium on the interest
rate caps in FY 2015/16 and lower
interest costs on other existing
borrowings for FY 2016/17.
Management fees for FY 2016/17
were S$16.2 million, S$0.3 million
or 1.8% higher than in FY 2015/16,
mainly in line with the higher average
value of trust property during the
current year.
Trust expenses for FY 2016/17 were
S$3.5 million, S$0.1 million or 2.3%
higher than in FY 2015/16. This was
mainly due to higher expenses
incurred by Australia Properties
and Malaysia Properties.
The net gain on derivative
instruments of S$1.4 million for
FY 2016/17 represents mainly the
change in the fair value of interest
rate swaps and caps entered into for
the Group’s borrowings, as well as
foreign exchange forward contracts.
The net foreign exchange gain for
FY 2016/17 arose mainly from the
unrealised foreign exchange gain
on the translation of JPY term loan,
offset by realised foreign exchange
differences from the settlement of
forward contracts.
The change in fair value on investment
properties of S$16.3 million for
FY 2016/17 represented the net
revaluation loss on the Group’s
investment properties.
The gain on divestment for FY 2016/17
represented the difference between
the net proceeds (including directly
attributable costs) from divestment
and the carrying amount of Harajuku
Secondo divested in May 2017
(January 2016: loss on divestment of
Roppongi Terzo).
The impairment loss on intangible
asset for FY 2015/16 represented the
impairment of goodwill arising from
acquisition of Top Sure Investment
Limited recorded in June 2016 and
determined based on the difference
between carrying amount and the
recoverable amount.
The variance in income tax credit was
mainly attributed to lower deferred
tax reversal arising from downward
revaluation of the China Property as
well as withholding tax payment for
the Malaysia Properties in FY 2016/17,
partially offset by lower corporate
tax and withholding tax provisions
for China Property and lower
withholding tax provision for the
Australia Properties.
Income available for distribution for
FY 2016/17 was S$110.4 million, a
decrease of S$6.1 million or 5.2% over
FY 2015/16. Income to be distributed
to the Unitholders for FY 2016/17
was S$107.3 million, a decrease of
S$5.7 million or 5.0% over FY 2015/16,
mainly due to lower NPI, the effects of
straight-lining rent adjustments and
withholding tax for Malaysia income.
Total DPU for FY 2016/17 was 4.92 cents,
representing a decrease of 5.0% over
DPU of 5.18 cents achieved in FY 2015/16.
ASSETS AND LIABILITIES
The Group’s total assets as at
30 June 2017 were S$3,219.4 million,
representing a decrease of
approximately S$2.7 million or 0.1%,
compared to S$3,222.2 million as
at 30 June 2016, mainly due to
the decrease in trade and other
receivables. The Group’s portfolio
of 11 prime properties across five
countries was independently revalued
at S$3,136.3 million as at 30 June
2017 (June 2016: 12 properties,
S$3,136.6 million), resulting in a net
revaluation loss of S$16.3 million for
the current year. The lower portfolio
valuation was mainly due to downward
revaluation of the China Property
(following the conversion to a single
tenancy model) and the Malaysia
Properties (softer retail outlook and
new upcoming supply), as well as the
divestment of Harajuku Secondo.
The decrease was partially offset by
upward revaluation of the Australia
Properties and Singapore Properties,
as well as positive net movement in
foreign currencies in relation to the
overseas properties. The fair values
of the properties include capital
expenditure incurred and straight-line
rental adjustments during the current
year. The geographic breakdown of
the portfolio by asset value as at
30 June 2017 was as follows:
Singapore 68.5%, Australia 17.2%,
Malaysia 11.4%, Japan 1.9%, and
China 1.0%.
The Group’s total liabilities as at
30 June 2017 were S$1,210.1 million,
representing an increase of
S$5.5 million or 0.5%, compared to
S$1,204.6 million as at 30 June 2016,
mainly due to increase in borrowings,
partially offset by decrease in
deferred tax liabilities, and trade and
other payables. The net increase in
total borrowings was mainly due to
the issuance of S$70 million Series
004 MTN, partially offset by the net
repayment of RCF of S$2 million,
S$10.1 million (JPY0.8 billion) of JPY loan
and S$50 million of term loan during
the current year. The decrease in
deferred tax liabilities was mainly due
to the downward revaluation of China
Property. Gearing increased slightly
from 35.0% as at 30 June 2016 to 35.3%
as at 30 June 2017.
The Group’s net asset value as at
30 June 2017 was S$2,009.3 million
(NAV per Unit of S$0.92), representing
a decrease of approximately
S$8.2 million or 0.4%, compared to
S$2,017.6 million (NAV per Unit of S$0.92)
as at 30 June 2016.
CASH FLOW
Total net cash inflow (excluding
effects of exchange rate differences)
for FY 2016/17 was S$0.1 million,
largely comprising cash flows
generated from operating activities
of S$141.1 million, partially offset by
cash outflow from financing activities
of S$137.9 million and investing
activities of S$3.1 million. Cash
outflows from financing activities
comprised mainly repayment of
borrowings and distributions paid
to Unitholders, partially offset by
proceeds from borrowings. The cash
outflow from investing activities related
mainly to capital expenditure on
investment properties, partially offset
by net proceeds on divestment of
Harajuku Secondo in May 2017.
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STARHILL GLOBAL REIT ANNUAL REPORT FY 2016/17