Investor Relations
Financial Information

Financial Statements Announcement For The Financial Period Ended 30 September 2017

Financials Archive
Get Adobe Reader
Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Consolidated Statement of Total Return

Statements of Financial Position

Variance from Forecast Statement

(a) Statement of Net Income and Distribution (Actual vs Forecast)

Notes:

  1. FLT was dormant from 30 November 2015 (the date of its constitution) until 14 June 2016, being the Non-Queensland Property Acquisition Date on which the acquisition by FLT of the 42 nonQueensland Properties forming part of its IPO portfolio was completed. The acquisition of the leasehold interests in the remaining 9 Properties located in Queensland forming part of the IPO portfolio was completed on 20 June 2016 (the Listing Date) when the grant of the leases were completed.

    The Actual results for the FLT Group for the financial period from 30 November 2015 (date of constitution) to 30 September 2017 ("Year-to date" or "YTD") is comprised of the following:

    1. the actual results for the quarters ended 31 December 2016, 31 March 2017, 30 June 2017 and 30 September 2017 and

      1. in respect of the non-Queensland Properties, 108 days of operation from 14 June 2016 to 30 September 2016; and

      2. in respect of the Queensland Properties, 102 days of operation from 20 June 2016 to 30 September 2016.

      The Forecast figures for the quarter ended 30 September 2017 ("Quarter Forecast") have been proportionally pro-rated from the Projection for the Enlarged Portfolio for Projection Year 2017 (1 October 2016 to 30 September 2017) (which takes into account the acquisition of the three Call Option Properties) which are set out in the Prospectus and excludes any contribution from the Acquisition Transaction.

      The Forecast figures for the financial period from 30 November 2015 (date of constitution) to 30 September 2017 comprises (i) Projection for the Enlarged Portfolio for Projection Year 2017 (1 October 2016 to 30 September 2017) (which takes into account the acquisition of the three Call Option Properties) which are set out in the Prospectus; and (ii) the Forecast figures for the period from 20 June 2016 to 30 September 2016 which have been extracted from the Forecast and Projected Consolidated Statements of Total Return of the IPO portfolio for the Forecast Period 2016 (1 June 2016 to 30 September 2016) which are set out in the Prospectus ("FP16 Forecast"). For the FP16 Forecast due to the difference in the periods between the actual financial statements and the FP16 Forecast figures (which were prepared based on the assumption that the completion of the acquisition of the initial 51 IPO Properties was completed on 1 June 2016), for a more meaningful comparison, the FP16 Forecast have been proportionally pro-rated: (a) (in respect of the non-Queensland Properties) 108 days of operations; and (b) (in respect of the Queensland Properties) 102 days. This is with the exception of non-recurring items such as Victorian conversion duty and one-off unit issue costs incurred for the listing, managers' management fee, trust expenses, net change in fair value of investment properties and tax expense, where additional adjustments have been made in order to arrive at a meaningful comparison with the actual results. The pro-rated figures are for comparative purposes only and do not represent the actual results of any specific 108 or 102 day period. The Forecast figures for the financial period to 30 September 2017 excludes any contribution from the Acquisition Transaction.

    (b) Review of performance (Actual vs Forecast)

    Financial quarter ended 30 September 2017 ("Quarter")

    Adjusted NPI for the Quarter at A$32.3 million was A$1.5 million or 4.7% higher than Quarter Forecast. The four completed properties of the Acquisition Transaction contributed Adjusted NPI of A$0.8 million for the two months period from its completion on 1 August 2017. The higher Adjusted NPI was also partly due to the recovery of an insurance claim which had been provided for in the previous quarter.

    Interest income of A$0.4 million for the Quarter was mainly contributed from the coupon interest income on the initial payment for the three development properties in the Acquisition Transaction.

    Actual trust expenses for the Quarter of A$0.4 million were 35.3% lower than the Quarter Forecast.

    Actual finance costs of A$4.5 million for the Quarter were A$0.7 million lower than Quarter Forecast due mainly to (a) the interest savings from an actual weighted average interest rate of 2.8% per annum which was lower than the Forecast weighted average interest rate of 3.4% per annum (both rates exclude the upfront debt related expenses); (b) lower debt funding required for the Martin Brower ("MB") acquisition as compared to Forecast which was partly offset by (c) the finance cost incurred on the A$40 million drawn for the financing for the Acquisition Transaction.

    FLT has entered into interest rate swaps to hedge 100% of the total term loan facilities of A$420 million. 72% of the interest rate risk on the total borrowings are hedged.

    The actual total return for the Quarter of A$29.0 million is A$27.5m higher than the Quarter Forecast and included (a) net fair value gain of A$11.5 million arising from the valuation of the investment properties as at 30 September 2017 compared to Forecast net fair value loss of A$19.9 million; (b) net exchange gains of A$0.2 million which relates mainly to unrealised exchange differences arising from translation of the Group's cash balance held in Singapore dollars; and (c) net fair value loss of A$0.2 million on foreign currency forward contracts to hedge the currency risk on distributions to Unitholders.

    Tax expenses for the Quarter were A$7.1 million which was 91.4% higher than the Quarter Forecast. Actual tax expenses comprised withholding tax on interest income and distributable income of A$1.8 million and deferred tax charge of A$5.3 million. The higher actual tax expenses of A$3.4 million was due mainly to a higher deferred tax charge for the properties due to the differences between the carrying values and the tax bases on 30 September 2017.

    Income available for distribution for the Quarter at A$26.5 million was 12.1% higher than the Quarter Forecast. DPU for the Quarter is 1.77 Singapore cents which is 8.6% higher than the Quarter Forecast DPU of 1.63 Singapore cents. The distributable income for the quarter ended 30 September 2017 had been hedged at a higher exchange rate compared to the Forecast exchange rate.

    Financial period from 20 June 2016 to 30 September 2017 ("FY2017")

    Actual FY2017 adjusted NPI at A$157.5 million was A$1.3 million or 0.8% higher than FY2017 Forecast. The four completed properties of the Acquisition Transaction contributed Adjusted NPI of A$0.8 million for the two months period from its completion on 1 August 2017. The higher Adjusted NPI was also due to lower land tax expense than FY2017 Forecast which was partially offset by repairs and maintenance costs incurred for some of the properties that had their leases extended and those undergoing leasing negotiations and the delay in the acquisition of the MB property.

    Interest income of A$1.0 million comprises bank interest income from deposits and the coupon interest income on the initial payment for the three development properties in the Acquisition Transaction.

    Actual FY2017 trust expenses of A$11.2 million were 22.0% lower than the FY2017 Forecast. These were due mainly to lower issue costs incurred for the IPO and a higher amount of issue costs capitalised in equity.

    Actual FY2017 finance costs of A$20.8 million were A$4.4 million lower than the FY2017 Forecast due mainly to (a) the interest savings from an actual FY2017 weighted average interest rate of 2.8% per annum which was lower than FY2017 Forecast weighted average interest rate of 3.4% per annum (both excluding upfront debt related expenses); (b) lower debt required and the delay in the acquisition of MB property as compared to Forecast, which was partly offset by (c) the finance cost incurred on the A$40 million drawn for the financing for the Acquisition Transaction.

    FLT has entered into interest rate swaps to hedge 100% of the total term loan facilities of A$420 million. 72% of the interest rate risk on the total borrowings are hedged.

    The actual FY2017 total return for the period of A$101.6 million included (a) net fair value gain of A$8.1 million comprising of A$11.5 million net fair value gain arising from the valuation of the investment properties as at 30 September 2017 which was partially offset by the net fair value loss of A$3.4 million based on the valuation as 30 September 2016; (b) FY2017 net exchange losses of A$2.1 million which relates mainly to unrealised exchange differences arising from translation of the Group's cash balance held in Singapore dollars; and (c) FY2017 net fair value change in foreign currency forward contracts of A$2.4 million which were entered into to hedge the currency risk on distributions to Unitholders.

    FY2017 actual tax expenses were A$24.9 million which were 32.8% higher than the FY2017 Forecast. FY2017 actual tax expenses comprised withholding tax on interest income and distributable income of A$8.5 million and deferred tax charge of A$16.4 million. The higher actual tax expenses of A$6.2 million was due mainly to higher deferred tax charge for the properties due to the differences between the carrying values and the tax bases at 30 September 2017.

    FY2017 Income available for distribution for the period of A$127.9 million was 6.2% higher than the FY2017 Forecast. FY2017 DPU is 8.85 Singapore cents which is 6.1% higher than the FY2017 Forecast DPU of 8.34 Singapore cents.

    Commentary on the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months

    Australian industrial supply is generally in line with the long-term average with development activity focused in the eastern seaboard cities. Demand remains strong and developments are predominately leased prior to completion. Year-to-date gross take-up levels are above the 10- year average and this strong growth is largely attributable to the benefits of population growth, increased public infrastructure investment, tenant consolidations and activity driven by withdrawals from inner locations. Prime rents in Sydney have recorded the strongest year-onyear growth in the past 10 years of 4.7% and the momentum is forecast to continue given an increasing scarcity of development land. Melbourne has experienced positive net absorption with good levels of tenant take up in existing facilities, together with high levels of precommitment for new stock. However, the strong supply levels and aggressive competition for pre-leases continue to maintain incentives at elevated levels. The Brisbane market continues to be challenging with extended letting up periods putting pressure on face rents.

    Australian investment activity has been characterised by a lack of on-market investment grade stock. Portfolio transaction levels remain strong and more than a third of the national sales volumes recorded in 2017 occurred in Sydney. Given a limited pool of stabilised assets, some institutional investors are shifting up the risk curve with a focus on land purchases and secondary assets with value-add opportunities. These transactions have underscored a tightening in the yields for secondary assets.

    In addition, merger and acquisition activity has re-emerged in Australia as seen with recent positions taken in Centuria Industrial REIT, Propertylink Group and Industria REIT by other larger institutions.

    Looking ahead, the REIT Manager will continue to grow FLT's prime industrial portfolio with a focus on generating sustainable, long-term value for our unitholders.