Banyan Tree : Unaudited results for First Quarter ended 31 March 2016

Microsoft Word - 1Q16 SGXNet V1.4 _AFTER ARC_ PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS 1(a)(i) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year.

Notes	Group
	3 months ended 31 Mar
	2016	2015	Incr/(Decr)
	(S$'000)	(S$'000)	%
Revenue	1	99,811	97,759	2%
Other income	2	722	2,162	-67%
Costs and expenses
Cost of operating supplies	(7,801)	(7,409)	5%
Cost of properties sold	(10,075)	(3,977)	153%
Salaries and related expenses	(26,543)	(30,748)	-14%
Administrative expenses	(16,744)	(15,597)	7%
Sales and marketing expenses	(4,992)	(4,648)	7%
Other operating expenses	(16,437)	(17,217)	-5%
Total costs and expenses	3	(82,592)	(79,596)	4%
Profit before interests, taxes, depreciation and
amortisation ("EBITDA")	4	17,941	20,325	-12%
Depreciation of property, plant and equipment	(5,436)	(5,270)	3%
Amortisation expense	(684)	(622)	10%
Profit from operations and other gains	11,821	14,433	-18%
Finance income	5	1,062	416	155%
Finance costs	6	(7,356)	(6,004)	23%
Share of results of associates	17	26	-35%
Profit before taxation	5,544	8,871	-38%
Income tax expense	7	(2,437)	(3,566)	-32%
Profit after taxation	8	3,107	5,305	-41%
Attributable to:	535	4,028	-87%
Owners of the Company				10
Non-controlling interests	9	2,572	1,277	101%
Profit for the Period	3,107	5,305	-41%

1(a)(ii) Statement of Comprehensive Income

Notes	Group
	3 months ended 31 Mar
	2016	2015	Incr/(Decr)
	(S$'000)	(S$'000)	%
Profit for the Period	3,107	5,305	-41%
Other comprehensive income:
Items that may be reclassified subsequently to profit or
loss:
Exchange differences arising from consolidation of foreign
operations and net investment in foreign operations	11	(9,644)	33,891	nm
Net change in fair value adjustment reserve, net of deferred tax	12	1,460	2,242	-35%
Total comprehensive (expense)/income for the Period	(5,077)	41,438	nm
Attributable to:	(7,977)	31,625	nm
Owners of the Company
Non-controlling interests	2,900	9,813	-70%
	(5,077)	41,438	nm

1(a)(iii) Additional Disclosures

Adjustments for under or over provision of tax in respect of prior years

Included in the tax expense was adjustments for overprovision of tax relating to prior years of S$110,000 (1Q15: S$175,000).

Profit from operations and other gains is stated after charging/(crediting): (Write back of)/Allowance for doubtful debts Allowance for/(Write back of) inventory obsolescence Exchange loss/(gain) Loss on disposal of property, plant and equipment	Group 3 months ended 31 Mar
	2016 (S$'000)	2015 (S$'000)	Incr/(Decr) %
	(499) 5 2,684 15	986 (34) (1,844) 225	nm nm nm -93%

1(a)(iv) Explanatory notes on performance for 1Q16

1. Revenue

   Revenue increased by S$2.0 million from S$97.8 million in 1Q15 to S$99.8 million in 1Q16 mainly due to higher revenue from the Property Sales segment but partially offset by lower revenue from the Fee-based and Hotel Investments segments.

   For the Property Sales segment, higher revenue in 1Q16 was mainly due to completion of Cassia Phuket and Laguna Park which were progressively handed over to the buyers since 4Q15. In 1Q16, we recognized 31 units as compared to 7 units in the same period last year.

   For the Fee-based segment, lower revenue in 1Q16 was mainly due to lower hotel/fund management fees, as well as reduced architectural and design fees earned from projects in China based on project milestones.

   For the Hotel Investments segment, lower revenue in 1Q16 was mainly attributable to our hotels in Maldives, Seychelles and China which continued to be affected by decline in Russian travelers due to devaluation of the rouble, as well as decline in Chinese travelers due to economic slowdown since 3Q15. However, it was partially cushioned by higher revenue from hotels in Thailand. Although the Hotel Investments segment continued to record lower revenue compared to 1Q15, it has significantly improved compared to 4Q15. In 1Q16, the Hotel Investments segment reported a significant rebound of S$15.1 million or 30% higher revenue than 4Q15 with improvements largely from hotels in Thailand and Maldives.

2. Other income

   Other income decreased by S$1.4 million to S$0.7 million in 1Q16 mainly attributable to insurance compensation received in 1Q15 due to political events in Bangkok.

3. Total costs and expenses

   Total costs and expenses increased by S$3.0 million from S$79.6 million in 1Q15 to S$82.6 million in 1Q16. This was largely attributable to the increase of cost of properties sold and higher administrative expenses, which were partially offset by the decrease in salaries and related expenses and other operating expenses.

   Cost of properties sold increased by S$6.1 million in line with higher property sales units from completion.

   Salaries and related expenses decreased by S$4.2 million mainly due to lower headcount and lower provision for bonus and incentives following groupwide restructuring exercise carried out in late 2015 to streamline business processes and structures.

   Administrative expenses increased by S$1.1 million mainly due to higher foreign exchange loss, which was partially cushioned by reversal of allowances for doubtful debts and lower professional fees.

   Other operating expenses decreased by S$0.8 million mainly due to lower travelling expenses as well as lower repairs and maintenance.

4. Profit before interests, taxes, depreciation and amortisation ("EBITDA")

   Notwithstanding higher revenue, EBITDA decreased by S$2.4 million from S$20.3 million in 1Q15 to S$17.9 million in 1Q16. This was largely due to foreign exchange differences (i.e. exchange loss of S$2.7 million in 1Q16 as opposed to exchange gain of S$1.8 million in 1Q15). Foreign exchange losses, which were largely unrealized, was due to restating US Dollar and Chinese Renminbi denominated receivables to period end rate which had depreciated against Singapore Dollar.

   Excluding the effects of these exchange differences, EBITDA increased by S$2.1 million from S$18.5 million in 1Q15 to S$20.6 million in 1Q16.

   Higher EBITDA was mainly due to higher EBITDA from the Property Sales segment due to higher revenue and lower head office expenses, but partially offset by lower EBITDA from the Fee-based segment, coupled with lower other income as mentioned earlier.

5. Finance income

   Finance income increased by S$0.6 million mainly due to increase in the number of the Cassia Phuket and Laguna Park's properties sold under the deferred installment plans.

6. Finance costs

   Finance costs increased by S$1.4 million mainly due to additional interest expense and fee amortisation arising from the issuance of S$100 million notes in June 2015 under the S$700 million Medium Term Note programme.

7. Income tax expense

   Income tax expense was lower by S$1.1 million mainly due to lower profits for the period.

8. Profit after taxation

   Profit after taxation was lower by S$2.2 million from S$5.3 million in 1Q15 to S$3.1 million in 1Q16. This was mainly due to lower EBITDA as mentioned earlier, higher depreciation expense and finance costs, but partially cushioned by higher finance income and lower income tax expense.

9. Non-controlling interests

   Non-controlling interests' share of profits increased by S$1.3 million from S$1.3 million in 1Q15 to S$2.6 million in 1Q16 mainly due to higher profits in Laguna Resorts & Hotels Public Company Limited ("LRH") derived mainly from the revenue recognition of Cassia Phuket and Laguna Park's property developments.

10. Profit attributable to owners of the Company

    As a result of the foregoing, profit attributable to owners of the Company was decreased by S$3.5 million from S$4.0 million in 1Q15 to S$0.5 million in 1Q16.

11. Exchange differences arising from consolidation of foreign operations and net investment in foreign operations

    In 1Q16, the exchange loss on translation of foreign operations' net assets of S$9.6 million was mainly due to the depreciation of US Dollar and Chinese Renminbi against Singapore Dollar.

    In 1Q15, the exchange gain on translation of foreign operations' net assets of S$33.9 million was mainly due to the appreciation of Thai Baht, US Dollar and Chinese Renminbi against Singapore Dollar.

12. Net change in fair value adjustment reserve, net of deferred tax

Net change in fair value adjustment reserve, net of deferred tax of S$1.5 million in 1Q16 was mainly due to fair value adjustment on investment in Thai Wah Public Company Limited.