20
PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
LETTER TO SHAREHOLDERS
NEW HEALTHCARE BUSINESS IN CHINA
The healthcare business is a natural extension of our
real estate business with potential synergy that can be
achieved between the various components within our
portfolio of large-scale integrated developments which
are directly connected to major transportation hubs.
The strategic move into the healthcare industry in
China will allow Perennial to ride on the strong growth
trajectory of the country’s healthcare industry driven by
rapid urbanisation, growing affluence of the Chinese
consumers, favourable regulatory changes and its
ageing population
6
.
We entered into a 40-60 JV with a subsidiary of China
Boai Medical Group (“
BOAI
”), one of the largest private
hospital and medical services operators in China, to
acquire, develop and manage hospital and medical
services business in China. Our JV also acquired its
first operational medical business, Modern Hospital
Guangzhou, one of the top private general and cancer
hospitals, from BOAI. Perennial’s 40% stake in the
JV amounted to RMB286.7 million (approximately
S$61.7 million).
The JV has access to BOAI’s existing portfolio of
hospitals and medical centres and future acquisition
pipeline across China, as well as Perennial’s portfolio of
greenfield and/or completed integrated developments.
Leveraging on this pipeline to grow the business, the
JV established the St. Stamford Plastic Surgery and
Aesthetic Hospital, which will be operating an about
90,400 sq ft facility at PIHMH.
In January 2016, we expanded our healthcare business
scope to include eldercare and senior housing by entering
into a Memorandum of Understanding with Shanghai
Summit Property Development Limited (“
Shanghai
Summit
”) and Shanghai RST Chinese Medicine
Co., Ltd (“
Shanghai Renshoutang
”) to establish a
40-40-20 JV management company to operate
Chengdu Xiehe Home at Chengdu Plot D2. Perennial
and Shanghai Summit jointly-own (50-50) Chengdu Plot
D2. Shanghai Renshoutang is one of the largest pioneer
quality private eldercare home operators in Shanghai.
The JV’s total investment sum amounts to approximately
RMB150 million (approximately S$32.3 million).
With the healthcare business identified as a new wing
of growth for Perennial in the long term, we intend to
execute the following two-pronged strategy to grow our
healthcare business in China:
(1) Introduce healthcare real estate as an asset class
within our large-scale integrated developments to
create synergy between the various components
with a view to enhancing the value of the entire
development; and
(2) Form strategic partnerships with established local
and foreign medical or healthcare-related operators
with extensive local and international networks, and
strong operating track records to scale our business.
FINANCIAL REVIEW
For the Period, Perennial achieved a revenue of
S$132.6 million, which comprised mainly rental income
from operating properties such as CHIJMES and
TripleOne Somerset in Singapore, Perennial Qingyang
Mall and Perennial Jihua Mall in China, as well as a one-
off acquisition fee of S$11.7 million from the acquisition
of AXA Tower.
Earnings Before Interest and Tax (“
EBIT
”) for the Period
was S$197.1 million. Excluding the one-off transaction
cost of S$11.4 million relating to the corporate
restructuring exercise, EBIT was S$208.5 million.
The main contributors to EBIT were income from
operating properties in Singapore and China, and fair
value gains from the revaluation of investment properties,
such as PIHMH, CHIJMES, Capitol Singapore and AXA
Tower, totalling S$115.6 million.
Overall, operating assets within the Singapore portfolio
were the major contributors to Revenue and EBIT for
the Period, accounting for about 54.1% and 60.2%
of Revenue and EBIT respectively. Profit After Tax and
Minority Interest for the Period was S$90.8 million
(excluding one-off transaction cost) and S$79.4 million
(including one-off transaction cost).
As at 31 December 2015, our NAV per share stood at
S$1.688. For the financial period ended 31 December 2015,
a first and final dividend of 0.4 Singapore cents per share
was declared.
6 Source: Deloitte Report 2015.
