Hektar Real Estate Investment Trust Quarterly Report - 30 September 2017

Transcription

1. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2017 As at As at 30 .9.2017 31.12.2016 RM RM (Unaudited) (Audited) NON-CURRENT ASSETS Investment properties 1,194,568,739 1,092,450,000 Plant & Equipment 68,922 Capital work in progress 8,317,522 162,080 Fixed deposits with a licensed bank 665,369 665,369 1,203,620,552 1,093,277,449 CURRENT ASSETS Trade receivables Other receivables, deposits and prepayments Cash and bank balances 9,553,470 2,273,162 13,309,461 25,136,093 5,750,826 17,220,686 14,560,249 37,531,761 1,228,756,645 1,130,809,210 12,857,659 535,283,725 528,039 548,669,423 12,279,861 493,200,372 814,013 506,294,246 1,588,082 6,071,292 20,641,598 15,000,000 43,300,972 937,729 5,596,625 17,512,440 15,000,000 39,046,794 TOTAL LIABILITIES 591,970,395 545,341,040 NET ASSET VALUE 636,786,250 585,468,170 – realised – unrealised TOTAL UNITHOLDERS’ FUND 492,500,449 35,732,769 108,553,032 636,786,250 425,738,255 43,476,386 116,253,529 585,468,170 NET ASSET VALUE PER UNIT (RM) -as at the date -before distribution for the cumulative quarter NUMBER OF UNITS IN CIRCULATION 1.3784 1.4565 461,960,178 1.4614 1.5664 400,634,117 TOTAL ASSETS NON-CURRENT LIABILITIES Tenancy deposits Bank borrowings Derivative financial instrument CURRENT LIABILITIES Trade payables Other payables and accruals Tenancy deposits Bank borrowings FINANCED BY: Unitholders' capital Undistributed income Note: tenancy deposit includes RM1,831,111 (2016:RM1,939,395) which is discounted to present value in compliance with MFRS 139 as per note A14. The Condensed Statement of Financial Position should be read in conjunction with the audited financial statements for the year ended 31 December 2016 and the accompanying explanatory notes attached. Page 1 of 11
2. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE QUARTER ENDED 30 SEPTEMBER 2017 (UNAUDITED) INDIVIDUAL QUARTER Preceding Year Current Year Corresponding Quarter Quarter 30.09.2017 30.09.2016 RM RM Revenue CUMULATIVE QUARTER Current YTD 30.09.2017 RM Preceding YTD 30.09.2016 RM 30,457,907 30,859,627 92,102,033 93,403,820 (13,361,733) (12,818,525) (39,277,171) (37,798,098) Net property income 17,096,174 18,041,102 52,824,862 55,605,722 Interest income Other income Trust expenses Borrowing costs Realised income before taxation 114,244 24,892 (2,854,479) (5,758,888) 101,141 1,433 (2,427,051) (5,701,661) 226,652 131,894 (7,987,484) (16,882,471) 225,281 91,739 (7,505,177) (17,267,502) 8,621,943 10,014,964 28,313,453 31,150,063 (7,986,471) - (7,986,471) - (140,713) - 285,974 - 494,759 10,014,964 20,612,956 31,150,063 - - - - 494,759 10,014,964 20,612,956 31,150,063 Property operating expenses Change in fair value of investment properties Change in fair value of derivative financial instrument Income before taxation Taxation Net income Other comprehensive income after tax Total comprehensive income - - - - 494,759 10,014,964 20,612,956 31,150,063 Earnings per unit (sen) - realised (sen) - unrealised (sen) 0.12 a 2.11 a (1.99)a 2.44 c 2.44 c - 5.11 b 7.02 b (1.91)b 7.60 c 7.60 c - Note: a. Earnings per unit for the current quarter ended 30 September 2017 was calculated based on a weighted average of 408,810,925 units b. Earnings per unit for the cumulative quarter ended 30 September 2017 was calculated based on a weighted average of 403,359,720 units c. Earnings per unit for the preceeding quarter and cumulative preceeding year to date is based on 409,808,944 unit after taking into consideration of the bonus element in respect of the Rights Issue in accordance with the Malaysian Financial Reporting Standard 133. The Condensed Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the audited financial statements for the year ended 31 December 2016 and the accompanying explanatory notes attached. Page 2 of 11
3. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT STATEMENT OF CHANGES IN NET ASSETS VALUE FOR THE CUMULATIVE QUARTER ENDED 30 SEPTEMBER 2017 (UNAUDITED) Unitholders’ Capital RM Balance at 1 January 2017 Undistributed income Realised Unrealised RM RM Unitholders’ Fund RM 425,738,255 43,476,386 116,253,529 585,468,170 - 28,313,453 (7,700,497) 20,612,956 - (36,057,070) - (36,057,070) Unitholders’ capital 68,143,927 - - 68,143,927 Unit issuance expenses (1,381,733) - - (1,381,733) 492,500,449 35,732,769 108,553,032 636,786,250 Operation for the cumulative quarter ended 30 September 2017 Total comprehensive income for the financial quarter Unitholders' transaction Distribution to unitholders Balance at 30 September 2017 CUMULATIVE QUARTER ENDED 31 DECEMBER 2016 (AUDITED) Unitholders’ Capital RM Balance at 1 January 2016 Undistributed income Realised Unrealised RM RM Unitholders’ Fund RM 425,738,255 43,996,656 114,642,017 584,376,928 - 41,546,312 1,611,512 43,157,824 - (42,066,582) - (42,066,582) 425,738,255 43,476,386 116,253,529 585,468,170 Operation for the cumulative quarter ended 31 December 2016 Total comprehensive income for the financial year Unitholders' transaction Distribution to unitholders Balance at 31 December 2016 The Condensed Statement of Changes in Net Assets Value should be read in conjunction with the audited financial statements for the year ended 31 December 2016 and the accompanying explanatory notes. Page 3 of 11
4. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE CUMULATIVE QUARTER ENDED 30 SEPTEMBER 2017 Current YTD 30.9.2017 RM CASH FLOW FROM OPERATING ACTIVITIES Income before taxation 20,612,956 Adjustments for :Interest income (226,652) Interest expense 16,882,471 Rental under MFRS 117 271,409 Impairment loss on trade receivables 596,659 Fair value change on derivatives (285,974) Fair value adjustment 7,986,471 Operating profit before working capital changes 45,837,340 Change in working capital :Receivables Payables Net cash from operating activities CASH FLOW FROM INVESTING ACTIVITIES Purchase of investment properties/Acquisition of property Expenditure for refurbishment and enhancement of investment property incurred Interest income Net cash used in investing activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issuance of rights Expenditure in relation to issuance of rights Interest expense Distribution to Unitholders Borrowings Net cash used in financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD Preceding YTD 30.9.2016 RM 31,150,063 (225,281) 17,267,502 233,649 312,819 48,738,752 10,562,782 4,546,003 60,946,125 (12,925,106) (2,584,707) 33,228,939 (110,174,131) (330,000) (8,155,441) 226,652 (118,102,920) (1,893,940) 225,281 (1,998,659) 68,143,927 (1,381,733) (16,882,471) (36,057,070) 42,083,354 55,906,007 (17,267,502) (31,650,096) 13,796,655 (35,120,943) (1,250,788) (3,890,663) 14,560,249 19,085,638 13,309,461 15,194,975 The Condensed Statement of Cash Flows should be read in conjunction with the audited financial statements for the year ended 31 December 2016 and the accompanying explanatory notes attached. Page 4 of 11
5. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT A . EXPLANATORY NOTES FOR THE QUARTER ENDED 30 SEPTEMBER 2017 PURSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS ("MFRS") A1 BASIS OF PREPARATION The quarterly financial report is unaudited and has been prepared in compliance with MFRS 134: Interim Financial Reporting and Chapter 9, Paragraph 9.44 of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”). Hektar REIT had adopted Malaysian Financial Reporting Standard issued by Malaysian Accounting Standards Board for accounting period beginning 1 January 2012. A2 AUDIT REPORT OF PRECEDING FINANCIAL YEAR The auditors have expressed an unqualified opinion on Hektar REIT’s financial statements for the year ended 31 December 2016 in their report dated 14 February 2017. A3 SEASONALITY OR CYCLICALITY OF OPERATIONS The business of Hektar REIT is not affected by material, seasonal or cyclical factors. A4 UNUSUAL ITEMS There were no unusual items affecting assets, liabilities, equity, net income or cash flows during the current quarter. A5 CHANGES IN ESTIMATES There were no changes in estimates that have had material effect in the current quarter. A6 DEBT AND EQUITY SECURITIES There were no issuance, cancellation, repurchase, resale and repayment of debt and equity securities for the current quarter, except for the issuance of rights, details as follows:Rights Issuance to the public Issuance to the manager Total A7 No. of units 60,966,061 360,000 61,326,061 Price (RM) 1.11 1.31 RM 67,672,328 471,600 68,143,928 INCOME DISTRIBUTION A Second Interim Income Distribution for the Second Quarter ended 30 June 2017 together with an Advance Income Distribution for the period of July and August 2017 totalling 4.00 sen per unit amounting to RM16,025,365 was paid on 21 September 2017. The Board of Directors of Hektar Asset Management Sdn Bhd intends to distribute the Income Distribution for the period of September 2017 together with the Final Income Distribution for the Fourth Quarter ending 31 December 2017. Page 5 of 11
6. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT A8 SEGMENT INFORMATION The principal activity of Hektar REIT is to invest in properties in Malaysia with the primary objective to derive rental income and medium-to-long term growth . Hence, no segmental reporting is presented. A9 VALUATION OF INVESTMENT PROPERTIES The Investment Properties for Subang Parade, Mahkota Parade, Wetex Parade, Central Square and Kulim Central were last valued on 30 September 2017. Meanwhile, One Segamat was last valued on 22 June 2017. A10 MATERIAL SUBSEQUENT EVENTS TO THE END OF THE INTERIM PERIOD There were no material events subsequent to the end of the interim period. A11 CHANGES IN THE COMPOSITION OF THE TRUST During the current quarter, Hektar REIT’s fund size increased from 400,634,117 to 461,960,178 units arising from a rights issue exercise. The rights issue exercise was undertaken to part-finance the acquisition of Segamat Central in Johor. A12 CONTINGENT LIABILITIES AND CONTINGENT ASSETS There were no contingent liabilities or contingent assets to be disclosed. A13 RENTAL INCOME FROM TENANCIES (MFRS 117) Rental income receivable under tenancy agreements is recognised on a straight-line basis over the term of the lease. A14 TENANCY DEPOSITS (MFRS 139) Included in the tenancy deposit received from tenants is RM1,831,111 representing the difference between the fair value and the amount of deposits carried in the statement of financial position as a result of the recognition of the said deposits at fair value in compliance with the requirements of MFRS 139 financial instruments. A15 CAPITAL COMMITMENT (MFRS 134) Capital commitment in respect of the following has not been provided for in the financial statement:Authorised and contracted for:Refurbishment of investment properties RM 18,628,327 Page 6 of 11
7. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT B . ADDITIONAL INFORMATION PURSUANT TO PARAGRAPH 9.44 OF BURSA MALAYSIA SECURITIES BHD’S MAIN MARKET OF LISTING REQUIREMENTS B1 REVIEW OF PERFORMANCE For the cumulative quarter ended 30 September 2017, Hektar REIT generated total revenue of RM92,460,579 including interest and other income. Revenue is lower than the preceeding cumulative quarter’s corresponding period by 1%. Meanwhile, the cumulative realised net profit was lower by 9% mainly due to lower revenue from Subang Parade. Property operating expenses increased by 4%. B2 B3 VARIATION OF RESULTS AGAINST PRECEDING QUARTER Current Quarter Ended 30.9.2017 RM Preceding Quarter Ended 30.9.2016 RM Income before tax (RM) 494,759 10,014,964 - 8,621,943 (8,127,184) 10,014,964 - Realised income before tax (RM) Unrealised income before tax (RM) PROSPECTS Retail business in Malaysia continues to remain challenging. However, measures are being taken to improve the performance. Hektar has completed the acquisition of One Segamat and is exploring Asset Enhancement Initiatives (“AEI”) in this mall. In addition, Kulim Central is expected to complete its AEI by year end and this is expected to improve the mall’s performance. B4 VARIANCE OF PROFIT FORECAST OR PROFIT GUARANTEE Not applicable as there was no profit forecast or profit guarantee issued. B5 TAX EXPENSE Pursuant to the introduction of the new tax regime for Real Estate Investment Trust ("REIT"), a REIT will be fully exempted from income tax provided at least 90% of its income is distributed to unitholders with effect from the year of assessment 2007. Barring unforeseen circumstances, there will be no tax payable as Hektar REIT intends to distribute at least 90% of the distributable income to unitholders for the year ending 31 December 2017. B6 SALE OF UNQUOTED INVESTMENTS AND/OR PROPERTIES There were no sales of unquoted investments or properties during the quarter. B7 QUOTED INVESTMENTS There were no purchases or disposal of quoted investments during the quarter. Page 7 of 11
8. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT B8 CORPORATE PROPOSAL AND DEVELOPMENTS Acquisition of One Segamat & Issuance of Rights Issue The acquisition of One Segamat was completed on 18 September 2017. For further details, please refer to our announcements made to Bursa Malaysia Securities Berhad (“Bursa”) via the Bursa website: http://www.bursamalaysia.com/market/listed-companies/list-of-companies/plcprofile.html?stock_code=5121 B9 BORROWINGS AND DEBT SECURITIES Hektar REIT’s total borrowings of RM550,283,725 are secured and comprise of the following: 1. 2. B10 Current liability of RM15,000,000; and Non-current liabilities of RM535,283,725. UTILISATION OF PROCEEDS RAISED FROM ISSUANCE OF NEW UNITS On 29 August 2017, 60,966,061 units of rights were issued, which raised RM67,672,328. The utilisation of the proceeds were as follows: Part-acquisition of One Segamat RM 64,520,000 Incidental costs: 1. 2. 3. 4. Corporate Exercise Professional fees Underwriting commission Fees payable to the authorities Other Incidental cost 828,973 428,493 42,459 81,808 1. 2. 3. 4. Proposed Acquisition Acquisition fee paid to Manager Professional fees Fees in relation to bank borrowing Registration fee 568,400 279,808 538,931 210,000 Working capital 173,456 Total B11 67,672,328 OFF BALANCE SHEET FINANCIAL INSTRUMENTS There were no off balance sheet financial instruments as at date of reporting. Page 8 of 11
9. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT B12 DERIVATIVES As at 30 September 2017 , the Trust has the following Islamic Profit Rate Swap (“IPRS”) to hedge against the fluctuation of future movement in profit rate on its short term financing. The Trust is currently using the said IPRS to hedge against its other revolving credit financing and the unrealised profit of the derivatives had been recognised in the profit and loss: 5-year IPRS - derivative liability B13 Fair Value 30 September 2017 RM 528,039 Maturity Less than 1 year MATERIAL LITIGATION Writ of Summons by Mahkota Parade JMB against Hektar REIT (Guaman Sivil No: 22 NCVC-66-11) On 21 August 2017, the Melaka High Court has decided that the Mahkota Parade JMB’s claims against Hektar REIT and Hektar REIT’s subsequent counterclaim against Mahkota Parade JMB be dismissed with each party to bear their own cost. Following the High Court decision, the Mahkota Parade JMB and Hektar REIT have since filed their respective appeals to the Court of Appeal on 7 September 2017 and 13 September 2017 respectively. Strata Management Tribunal Claim Against Mahkota Parade JMB (Tribunal Court Putrajaya Case No. TPS/M-2024-11/2016) On 28 November 2016, Hektar REIT has filed a claim against the Mahkota Parade JMB and 8 other defendants at the Strata Management Tribunal to invalidate the previous annual general meeting held on 26 January 2016. The hearing of the claim was partially heard on 26 January 2017. On 18 April 2017, the Tribunal heard and dismissed Hektar REIT’s interlocutory application to refrain the Mahkota Parade JMB and 8 other defendants from calling the 5th annual general meeting or any other annual general meeting until the disposal of Hektar REIT’s claim in this case. The Tribunal also heard and dismissed the Mahkota Parade JMB’s interlocutory application to strike out Hektar REIT’s claim. On 8 May 2017, the JMB lawyer’s interlocutory application to nullify his subpoena to appear as a witness was allowed by the Tribunal. The hearing of the 28 November 2016 claim, which was earlier fixed by the Tribunal to be held on 22 June 2016 was, at the request of the JMB’s lawyer, postponed to a later date to be fixed and notified by the Tribunal. After several postponements, the Tribunal held a case management on 2 October 2017 and directed parties to file the relevant tribunal documents in preparation for the hearing. On 13 November 2017, the hearing at the Tribunal commenced with the calling of Hektar REIT’s first witness. At the end of the session, the hearing was then adjourned to be continued at a later date to be fixed by the Tribunal. The management will continue to take all necessary action to fully defend Hektar REIT’s rights and interest in this litigation matter and will provide further updates on the matter in due course. Page 9 of 11
10. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT Writ of Summons against The Store (Guaman Sivil No: WA-22NCVC-394-07, BA-A52NCVC-45-02 and WA-24NCvC-266-02) Hektar REIT is currently in the process of litigation with a major tenant, The Store (Malaysia) Sdn Bhd (“The Store”), regarding terms of their tenancies at three of its premises in Central Square in Sungai Petani, Kulim Central in Kulim and Wetex Parade in Muar. On 16 October 2017, the Kuala Lumpur High Court allowed The Store’s application to continue their tenancies for the premises in Central Square in Sungai Petani and Landmark Central in Kulim and Hektar REIT has since filed a notice of appeal to the Court of Appeal on 27 October 2017 to appeal against the decision of the Kuala Lumpur High Court. Meanwhile, the court case with The Store in relation to Wetex Parade is currently being litigated separately at the Shah Alam Sessions Court and updates will be provided once there is clarity on the outcome of the case. B14 SOFT COMMISSION For the quarter ended 30 September 2017, the Manager received a soft commission in the form of Hektar REIT units, amounting to 360,000 units (equivalent to RM471,600). This represents 45% of the total fee paid by Hektar REIT in relation to Hektar REIT’s acquisition of One Segamat in Johor. B15 INCOME DISTRIBUTION A Second Interim Income Distribution for the Second Quarter ended 30 June 2017 together with an Advance Income Distribution for the period of July and August 2017 totalling 4.00 sen per unit amounting to RM16,025,365 was distributed on 21 September 2017. The Board of Directors of Hektar Asset Management Sdn Bhd intends to distribute the Income Distribution for the period of September 2017 together with the Final Income Distribution for the Fourth Quarter ending 31 December 2017. Page 10 of 11
11. HEKTAR REAL ESTATE INVESTMENT TRUST QUARTERLY REPORT B16 DISTRIBUTION PER UNIT AND EARNINGS PER UNIT Current Quarter Ended 30 .9.2017 Income before tax (RM) - Realised income before tax (RM) 494,759 8,621,943 10,014,964 10,014,964 - 10,416,487 408,810,925a 400,634,117 Basic earnings per unit (sen) - realised (sen) Distribution per unit (sen) 0.12a 2.11a - 2.44 b 2.44 b 2.60 Market Price (RM) Distribution yield (%) 1.27 n/a 1.57 6.62 Provision for income distribution (RM) Number of units in issue Note : B17 Preceding Quarter Ended 30.9.2016 a. Earnings per unit for the current quarter ended 30 September 2017 was calculated based on a weighted average of 408,810,925 units. b. Earnings per unit for the preceeding quarter and cumulative preceeding year to date is based on 409,808,944 unit after taking into consideration of the bonus element in respect of the Rights Issue in accordance with the Malaysian Financial Reporting Standard 133. RESPONSIBILITY STATEMENT In the opinion of the Directors of the Manager, the quarterly report has been prepared in accordance with MFRSs and Paragraph 9.44 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad so as to give a true and fair view of the financial position of Hektar REIT as at 30 September 2017 and of its financial performance and cash flows for the quarter/period ended on that date and duly authorised for release by the Board of the Manager on 24 November 2017. By Order of the Board HEKTAR ASSET MANAGEMENT SDN BHD (as the Manager of Hektar Real Estate Investment Trust) Dato’ Muhammad Hafidz Nuruddin (MAICSA 7005820) Lim Seck Wah (MAICSA 0799845) Joint Company Secretaries Kuala Lumpur 24 November 2017 Page 11 of 11