Dear Unitholders,
On behalf of the Board of Directors, we are
pleased to present the annual report of RHT
for the financial year ended 31 March 2016
(“FY2016”) (the “Annual Report”).
Stable and
Growing Portfolio
The financial year 2016 has been interesting
and unpredictable for many of the world’s
major economies, both emerging and
mature. The volatility in the financial markets,
the slowing down of the China economy
and the challenges in the US economy
have served to increase challenges in our
operating environment.
Notwithstanding the unpredictability in the
global economy, we are pleased to present
a stable yet growing set of results for
FY2016. The factors driving the growth
and the resilience of the demand in the
Indian healthcare industry which RHT
operates, have enabled us to navigate
through the uncertainty.
In FY2016, the focus was on enhancing
RHT’s assets and expanding the capacity for
future growth. While these enhancements
and expansions will only come into play in
FY2017 and beyond, we were nevertheless
able to achieve a good set of results in
FY2016. Total Revenue increased 6% from
S$130.6 million to S$138.4 million between
the financial year ended 31 March 2015
(“FY2015”) and FY2016, while Net Service
Fee and Hospital Income grew 2% from
S$91.6 million to S$93.6 million. Under RHT’s
revenue model, Base Fee grows steadily at
3% annually, thereby providing a source of
stability to the revenue base for the Trust.
However, the growth was also driven by
an increase in Variable Fee earned, which
stems from a share of the revenue of the
operator of the Clinical Establishments. Due
to the increase in demand for healthcare
in India, the operator’s revenue increased
as well. In particular, certain high end
medical treatments such as nephrology
and cardiology saw increased volume. This
growth in high end medical treatment
provided is also reflected in an increase
in the average revenue per operating bed
Letter to
Unitholders
S$
93.6
m
NET SERVICE FEE AND
HOSPITAL INCOME
(“ARPOB”). ARPOB for the portfolio grew by
approximately 4.8% in FY 2016 compared
to FY2015.
Overall the performance translated to a
higher Distributable Income in FY2016 of
$61.6 million, an increase of S$3.4 million
compared to the previous financial year.
Various enhancement and expansion
projects which we are undertaking in the
current year had resulted in higher capital
expenditure in FY2016 compared to
FY2015. The existing portfolio currently has
room to expand by 948 beds with minimal
capital expenditure, and by another 2,283
beds through greenfield development or
by adding a new block or wing. We will be
capitalising on this expansion capability
over the next few years.
MANAGING RISK
Apart from developing the current portfolio
to cater for future growth, there were a
few key steps which management took in
FY2016 to enhance the stability of RHT.
One of them was to issue our first series of
notes under RHT’s S$500 million medium
term note programme (“Notes”), in order
to refinance an existing commercial loan.
As the existing commercial loan was on
a floating rate basis, refinancing it with
the Notes which carry a fixed coupon rate
of 4.5% for three years served to convert
approximately half of RHT’s outstanding
debt into that of a fixed rate nature. This
will help shelter RHT from excessive
movements in the interest rates.
When RHT acquired FHTL during the
IPO, RHT acquired 49% of the issued and
paid up equity of FHTL, and 100% of the
economic interest in FHTL. With a view to
derisk the RHT portfolio, we are proposing
to dispose of RHT’s 51% economic interest
in FHTL (the “Proposed Disposal”). You
would have received, together with this
Annual Report, a copy of the Circular to
Unitholders, seeking approval for the
Proposed Disposal and other Related
Arrangements. After taking into account
the returns from the FHTL investment,
which includes future potential earnings on
a fully expanded operating capacity, it was
deemed prudent to realise the investment
value. Furthermore, RHT continues to retain
a 49% interest in FHTL after the Proposed
Disposal. With this Proposed Disposal, we
look forward to realising and distributing the
gain from the investment to Unitholders.
Poised for Growth
Management recognises that healthcare
is an attractive growing industry, and this
is evidenced by RHT’s growing Variable
Fee. Between FY2013 to FY2016, the
Variable Fee in INR terms has grown by
approximately 100%. If we were to assess
the growth of the Variable Fee without
taking into account the Gurgaon Clinical
Establishment and the Mohali Clinical
Establishment which came on board in
FY2015, the growth in Variable Fee in INR
terms between the same period would
still been an impressive 40%. This is a
demonstration of the ability of the portfolio
to grow organically and the potential that
exists in the Indian healthcare space.
This potential in Indian healthcare attracts
many new entrants and investors into the
sector. We are also putting into action, plans
to differentiate our Clinical Establishments
from competitors and enhance them to
generate higher returns for Unitholders.
S$
138.4
m
TOTAL Revenue
excludes straight-lining
Annual report FY2016
015
