Cache Logistics Trust 2016 Fourth Quarter and Unaudited Financial Statements & Distribution Announcement INTRODUCTION Cache Logistics Trust ( Cache ) is a Singapore-based real estate investment trust constituted by the Trust Deed entered into on 11 February 2010 (as amended) between ARA-CWT Trust Management (Cache) Limited, in its capacity as the manager (the Manager ), and HSBC Institutional Trust Services (Singapore) Limited, in its capacity as the trustee (the Trustee ), to invest in income-producing real estate predominantly used for logistics purposes in Asia-Pacific, as well as real estate-related assets. Cache s portfolio as at 31 December 2016 comprised of 19 high quality logistics warehouse properties located in Singapore, China and Australia (collectively Investment Properties ). The financial information for the fourth quarter and full year ended 31 December 2016 set out in this announcement has been extracted from financial information for the period from 1 January 2016 to 31 December 2016 which has been reviewed by Cache s independent auditors in accordance with Singapore Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. For the purpose of this announcement, references to Trust are to Cache; and references to are to Cache and its subsidiaries.
SUMMARY OF RESULTS FOR CACHE LOGISTICS TRUST Notes 1/10/16 to 1/10/15 to Change 1/1/16 to 1/1/15 to Change S$'000 S$'000 % S$'000 S$'000 % Gross revenue 27,266 24,028 13.5 111,271 89,721 24.0 Net property income 21,340 19,177 11.3 88,014 76,156 15.6 Income available for distribution (a) 16,658 17,571 (5.2) 69,318 67,960 2.0 - from operations 15,902 15,453 2.9 66,915 62,883 6.4 - from capital 756 2,118 (64.3) 2,403 5,077 (52.7) Distribution per unit ("DPU") (cents) (b) 1.850 2.074 (10.8) 7.725 8.500 (9.1) - from operations 1.766 1.837 (3.9) 7.457 7.886 (5.4) - from capital 0.084 0.237 (64.6) 0.268 0.614 (56.4) Annual DPU (cents) - - - 7.725 8.500 (9.1) Number of units issued and to be issued at end of period entitled to distribution 900,450,086 893,472,054 0.8 900,450,086 893,472,054 0.8 Notes: (a) (b) Includes a portion of sale proceeds from the disposal of Kim Heng warehouse of S$0.76 million for the quarter and S$2.40 million for the full year, which is classified as capital distribution from a tax perspective. Please refer to item 6 and item 11 for further details. Out of the distribution of 2.047 cents in 4Q 2015 was an advance distribution of 0.900 cents based on 785,576,123 units that was paid on 29 December 2015. Page 2 of 25
1(a) Statements of Total Return and Distribution Statements for the fourth quarter and full year ended 31 December 2016 Notes 1/10/16 to 1/10/15 to Change 1/1/16 to 1/1/15 to Change Statement of Total Return S$'000 S$'000 % S$'000 S$'000 % Gross revenue (a) 27,266 24,028 13.5 111,271 89,721 24.0 Property expenses (b) (5,926) (4,851) 22.2 (23,257) (13,565) 71.4 Net property income 21,340 19,177 11.3 88,014 76,156 15.6 Other income - - nm - 411 nm Net financing costs (c) (5,135) (4,664) 10.1 (19,499) (14,071) 38.6 Manager's base fee (d) (1,586) (1,673) (5.2) (6,514) (6,388) 2.0 Manager's performance fee (d) (320) (287) 11.5 (1,320) (1,142) 15.6 Trustee fees (128) (132) (3.0) (510) (472) 8.1 Valuation fee (53) (47) 12.8 (100) (90) 11.1 Other trust expenses (e) (826) (584) 41.4 (2,442) (1,474) 65.7 Foreign exchange gain/(loss) 7 (263) (102.7) (73) 65 (212.3) (8,041) (7,650) 5.1 (30,458) (23,161) 31.5 Net income 13,299 11,527 15.4 57,556 52,995 8.6 Net change in fair value of investment properties (f) (44,644) (64,714) (31.0) (80,744) (64,714) 24.8 Total return for the period/year before taxation and distribution (31,345) (53,187) (41.1) (23,188) (11,719) 97.9 Tax expense (h) (251) (219) 14.6 (782) (604) 29.5 Total return for the period/year after taxation before distribution (31,596) (53,406) (40.8) (23,970) (12,323) 94.5 Distribution Statement Notes 1/10/16 to 1/10/15 to Change 1/1/16 to 1/1/15 to Change S$'000 S$'000 % S$'000 S$'000 % Total return for the period/year after taxation before distribution (31,596) (53,406) (40.8) (23,970) (12,323) 94.5 Distribution adjustment: Manager's fees paid/payable in units (d) 1,430 1,470 (2.7) 5,876 5,648 4.0 Trustee fees 128 132 (3.0) 510 472 8.1 Amortisation/write-off of transaction costs (i) 757 419 80.7 2,040 1,424 43.3 Deferred taxation 63 (106) (159.4) 63 (106) (159.4) Net change in fair value of investment properties 44,644 64,714 nm 80,744 64,714 nm Depreciation (j) 261 195 33.8 946 647 46.2 Unrealised foreign exchange (gain)/loss 54 262 (79.4) 148 (67) (320.9) Gain on disposal of investment property (k) - - nm - (408) nm Commitment fee 48 57 (15.8) 284 197 44.2 Other items (l) 113 1,716 (93.4) 274 2,685 (89.8) Distribution adjustments 47,498 68,859 (31.0) 90,885 75,206 20.8 Income available for distribution to Unitholders at the end of the period 15,902 15,453 2.9 66,915 62,883 6.4 A portion of sales proceeds from the disposal of Kim Heng warehouse 756 2,118 nm 2,403 5,077 (52.7) Distributable amount to Unitholders (m) 16,658 17,571 (5.2) 69,318 67,960 2.0 nm not meaningful Page 3 of 25
Notes Trust 1/10/16 to 1/10/15 to Change 1/1/16 to 1/1/15 to Change Statement of Total Return S$'000 S$'000 % S$'000 S$'000 % Gross revenue (a) 23,097 21,377 8.0 94,735 82,671 14.6 Property expenses (b) (5,353) (4,617) 15.9 (21,065) (13,124) 60.5 Net property income 17,744 16,760 5.9 73,670 69,547 5.9 Other income - - nm - 410 nm Dividend income 1,688 1,740 (3.0) 7,303 3,351 117.9 Net financing costs (c) (3,921) (3,880) 1.1 (14,657) (12,046) 21.7 Manager's base fee (d) (1,586) (1,673) (5.2) (6,514) (6,388) 2.0 Manager's performance fee (d) (320) (287) 11.5 (1,320) (1,142) 15.6 Trustee fees (97) (101) (4.0) (394) (379) 4.0 Valuation fee (16) (15) 6.7 (63) (58) 8.6 Other trust expenses (e) (699) (477) 46.5 (1,884) (1,075) 75.3 Foreign exchange gain/(loss) 9 (270) (103.3) (21) 23 (191.3) (4,942) (4,963) (0.4) (17,550) (17,304) 1.4 Net income 12,802 11,797 8.5 56,120 52,243 7.4 Net change in fair value of investment properties (f) (47,080) (52,509) (10.3) (83,180) (52,509) 58.4 Impairment Loss (g) (4,800) - nm (4,800) - nm Total return for the period/year before taxation and distribution (39,078) (40,712) (4.0) (31,860) (266) nm Tax expense (h) (152) (223) (31.8) (565) (500) 13.0 Total return for the period/year after taxation before distribution (39,230) (40,935) (4.2) (32,425) (766) nm Distribution Statement Notes 1/10/16 to 1/10/15 to Change Trust 1/1/16 to 1/1/15 to Change S$'000 S$'000 % S$'000 S$'000 % Total return for the period/year after taxation before distribution (39,230) (40,935) (4.2) (32,425) (766) 4,133.0 Distribution adjustment: Manager's fees paid/payable in units (d) 1,430 1,470 (2.7) 5,876 5,648 4.0 Trustee fees 97 101 (4.0) 394 379 4.0 Amortisation/write-off of transaction costs (i) 725 397 82.6 1,919 1,348 42.4 Impairment Loss (g) 4,800 - nm 4,800 - nm Net change in fair value of investment properties 47,080 52,509 (10.3) 83,180 52,509 58.4 Depreciation (j) 234 180 30.0 852 611 39.4 Unrealised foreign exchange (gain)/loss 53 259 (79.5) 97 (40) (342.5) Overseas income not distributed to the Trust 563 (369) (252.6) 1,679 299 461.5 Gain on disposal of investment property (k) - - nm - (408) nm Commitment fee 48 57 (15.8) 284 197 44.2 Other items (l) 102 1,784 (94.3) 259 3,106 (91.7) Distribution adjustments 55,132 56,388 (2.2) 99,340 63,649 56.1 Income available for distribution to Unitholders at the end of the period 15,902 15,453 2.9 66,915 62,883 6.4 A portion of sales proceeds from the disposal of Kim Heng warehouse 756 2,118 (64.3) 2,403 5,077 (52.7) Distributable amount to Unitholders (m) 16,658 17,571 (5.2) 69,318 67,960 2.0 nm not meaningful Page 4 of 25
Notes: (a) Gross revenue comprises rental income from investment properties. The increase in gross revenue for the quarter and full year ended 31 December 2016 was mainly due to the rental contribution from DHL Supply Chain Advanced Regional Centre ( DSC ARC ) and the additional 3 Australian properties acquired in 4Q FY2015; offset by a lower income from 51 Alps Avenue, Singapore ( 51 Alps Ave ). In relation to 51 Alps Ave, on 26 September 2016 the Manager and the Trustee entered into a Holding Arrangement with C&P Land Pte Ltd ( C&P Land ) and Schenker Singapore (Pte) Ltd ( Schenker ). The Holding Arrangement involves, amongst others, Schenker paying Cache S$0.77 per square foot per month from 1 September 2016 pending resolution of the Court proceedings. The receipt of said income by Cache remains under protest. (b) Property expenses comprise property management fee, lease management fee, reimbursable expenses payable to the Property Manager, property maintenance, lease commissions and other property related expenses. The increase is primarily due to higher land rent, property tax, maintenance expenses, lease commission and other property-related expenses involved in the conversion of master leased premises into multi-tenancies. Page 5 of 25
(c) Included in the net financing costs are the following: Notes 1/10/16 to 1/10/15 to Change 1/1/16 to 1/1/15 to Change S$'000 S$'000 % S$'000 S$'000 % Finance income : Bank deposits 6 19 (68.4) 30 60 (50.0) Finance expenses : Bank loans (3,408) (4,128) (17.4) (15,017) (11,861) 26.6 Interest rate swaps (893) (73) nm (2,148) (637) 237.2 Amortisation/write-off of transaction costs (i) (757) (419) 80.7 (2,040) (1,424) 43.3 Others (83) (63) 31.7 (324) (209) 55.0 Net financing costs (5,135) (4,664) 10.1 (19,499) (14,071) 38.6 Note Trust 1/10/16 to 1/10/15 to Change 1/1/16 to 1/1/15 to Change S$'000 S$'000 % S$'000 S$'000 % Finance income : Bank deposits 5 13 (61.5) 18 40 (55.0) Intercompany loan 428 261 64.0 1,684 622 170.7 Finance expenses : Bank loans (2,718) (3,640) (25.3) (12,106) (10,546) 14.8 Interest rate swaps (831) (58) nm (2,017) (593) 240.1 Amortisation/write-off of transaction costs (i) (725) (397) 82.6 (1,919) (1,367) 40.4 Others (80) (59) 35.6 (317) (202) 56.9 Net financing costs (3,921) (3,880) 1.1 (14,657) (12,046) 21.7 The increase in net financing costs for the quarter and full year ended 31 December 2016 were mainly due to borrowings drawn relating to the acquisitions of Australian properties and working capital as well as financing expenses incurred for DSC ARC that cannot be capitalised after the temporary occupancy permit ( TOP ) was obtained in July 2015. (d) Consist of: A base fee of 0.5% per annum of the value of the total assets; and A performance fee of 1.5% per annum of the net property income ( NPI ). The Manager may elect to receive the base fee and performance fee in cash or Units or a combination of cash and Units (as it may in its sole discretion determine). (e) Other trust expenses include professional fees, listing fees and other non-property related expenses. The increase in other trust expenses is mainly due to the operations of the 3 additional Australian properties, fees accrued for the legal proceedings on 51 Alps Ave and reversal of accrued expenses in same period in 2015. Page 6 of 25
(f) Relates to fair valuation adjustments of investment properties as at 31 December 2016. The revaluation exercise was performed by CBRE Pte. Ltd., Knight Frank Pte Ltd, Valuations Services (SA) Pty Ltd, CBRE Limited, CIVAS (NSW) Pty Limited, CBRE Valuations Pty Limited and Jones Lang LaSalle Advisory Services Pty Limited as at 31 December 2016. Valuations of the Singapore properties were primarily affected by drop in market rent, shorter land tenure, lower rent under holding arrangement for 51 Alps, vacancy allowance, and higher operating costs associated with the converted multi-tenanted buildings. As at 31 December 2016, The Trust is undergoing legal proceedings in relation to the investment property at 51 Alps Avenue, Singapore (the Property ). As management intends to strongly defend the Trust against Schenker Singapore Pte Ltd s ( Schenker ) claim that it is entitled to renew its lease of the Property at the rental rate pre-agreed between Schenker and C&P Land Pte Ltd, the independent fair market valuation of the Property of S$80.9 million adopted as at 31 December 2016 is made on the assumption that market rental rate is achieved for the lease renewal period of five years. If the Trust is bound by Schenker s renewal rental rate as set out in the holding agreement, the independent professional valuer indicated that the fair market valuation of the Property as at 31 December 2016 would have been S$66.9 million. (g) Allowance for impairment loss in the Australian subsidiaries associated with property transaction costs capitalized since acquisitions. (h) (i) (j) Mainly due to withholding tax in relation to distributions from the Australian operations. Represents non-tax deductible amortised upfront fees on credit facilities. Relates to depreciation of plant and equipment. (k) Comprises the gain on disposal of Kim Heng warehouse in June 2015. (l) Relates to specific property and finance expenses that are non-tax deductible and other tax adjustments. (m) The current distribution policy is to distribute 100.0% of taxable and tax-exempt income. For a Real Estate Investment Trust to maintain tax transparency (such that distributions are tax exempt to eligible unitholders), it is required to distribute at least 90.0% of its taxable income. The dividends are distributed on a quarterly basis, no later than 60 days after the end of each distribution period. Page 7 of 25
1(b) Statements of Financial Position Notes Trust S$'000 S$'000 S$'000 S$'000 Non-current assets Investment properties (a) 1,210,902 1,307,959 1,018,500 1,119,900 Plant and equipment 3,116 3,049 2,810 2,807 Investments in subsidiaries (c) - - 73,310 78,110 Derivative assets (d) 43 1,836 43 1,836 Total non-current assets 1,214,061 1,312,844 1,094,663 1,202,653 Current assets Trade and other receivables 5,411 4,975 4,549 4,341 Asset held for sale (b) 25,273-25,273 - Amounts due from subsidiaries - - 38,776 38,765 Derivative assets (d) - 417-417 Cash and cash equivalents 13,561 8,054 10,562 5,529 Total current assets 44,245 13,446 79,160 49,052 Total assets 1,258,306 1,326,290 1,173,823 1,251,705 Current liabilities Trade and other payables (e) (13,855) (14,269) (11,977) (12,897) Interest bearing borrowings (f) (4,628) (8,305) (4,628) (8,305) Derivative liabilities (d) (20) - (20) - Total current liabilities (18,503) (22,574) (16,625) (21,202) Non-current liabilities Trade and other payables (2,102) (1,627) (2,102) (1,627) Interest bearing borrowings (f) (534,237) (515,143) (453,397) (435,268) Derivative liabilities (d) (1,962) (120) (1,756) - Deferred tax liabilities (364) (316) - - Total non-current liabilities (538,665) (517,206) (457,255) (436,895) Total liabilities (557,168) (539,780) (473,880) (458,097) Net assets 701,138 786,510 699,943 793,608 Represented by: Unitholders' funds (g) 701,138 786,510 699,943 793,608 Page 8 of 25
Notes: (a) Represent carrying values of the investment properties based on independent valuations carried out by CBRE Pte Ltd, Knight Frank Pte Ltd, CBRE Limited, CIVAS (NSW) Pty Limited Colliers, CBRE Valuations Pty Limited, Jones Lang LaSalle Advisory Services Pty Ltd and Valuations Services (SA) Pty Ltd Knight Frank as at 31 December 2016. As at 31 December 2016, Cache Changi Districentre 3 was classified as Asset held for sale. This classification is required by FRS 105 Non-current Assets held for Sale and Discontinued Operations as the divestment is planned within the next 12 months from the reporting date. Refer to point (b) below. (b) (c) (d) (e) (f) (g) Represents carrying value of Cache Changi Districentre 3 net of transaction costs (valuation as at 31 December 2016 was S$25.5 million). As per the announcement on 19 December 2016, a Sale and Purchase Agreement has been entered into for the divestment of the property. The transaction is expected to be completed by the first quarter of 2017. Relates to wholly-owned subsidiaries of Cache, stated at cost. The lower investment value is due to the allowance for impairment loss in the Australian subsidiaries associated with property transaction costs capitalized since acquisitions. Relates to the fair value of interest rate swaps and forward foreign currency contracts. Includes Manager s performance fee. Manager may elect to receive the performance fee in cash or Units or a combination of cash and Units (as it may in its sole discretion determine), which will crystalise not more frequent than once every financial year. Refer to Item 1(b)(i): Aggregate amount of Borrowings and Debt Securities for details. Refer to Item (1)(d), the Statement of Movements in Unitholders Funds, for details. Changes were mainly due to movement in translation reserves and changes in fair value of cashflow hedges, return and distribution to unitholders for the period. 1(b)(i) Aggregate amount of Borrowings and Debt Securities Trust S$'000 S$'000 S$'000 S$'000 Secured borrowings Amount repayable within one year 5,000 9,000 5,000 9,000 Less : Unamortised transaction costs (372) (695) (372) (695) 4,628 8,305 4,628 8,305 Amount repayable after one year 430,848 502,878 349,617 439,026 Less : Unamortised transaction costs (2,531) (4,221) (2,140) (3,758) 428,317 498,657 347,477 435,268 Unsecured borrowing Amount repayable after one year 106,706 16,531 106,706 - Less : Unamortised transaction costs (786) (45) (786) - 105,920 16,486 105,920 - Total borrowings 538,865 523,448 458,025 443,573 Page 9 of 25
Notes: (a) Cache has in place the following facilities: a secured 4-year term loan of S$185.0 million maturing in 2018; a secured 5-year term loan of S$150.0 million maturing in 2019; and a secured committed revolving credit facility of S$65.0 million maturing in 2018. The above facilities are secured by way of: a first mortgage over CWT Commodity Hub, Cache Cold Centre, Schenker Megahub, Cache Changi Districentre 1, Hi-Speed Logistics Centre, Precise Two (collectively, the Charged Properties ); a debenture creating fixed and floating charges over all assets in relation to the Charged Properties; an assignment of all leases, sale agreements and banker s guarantees and bank accounts in relation to the Charged Properties; an assignment of all insurance policies in relation to the Charged Properties. As of 31 December 2016, a total of S$340.0 million has been drawn. (b) Cache also has in place the following facility consisting of: an unsecured 5-year term loan of S$90.0 million maturing in 2021 As of 31 December 2016, the above facility was fully drawn. (c) The has in place the following facilities consisting of: secured 3-year term loans of A$14.0 million, maturing in 2018; secured 4-year term loan of A$29.3 million maturing in 2019 secured 5-year term loans of A$48.5 million maturing in 2020; and an unsecured 3-year term loan of A$16.0 million, maturing in 2018. Other than the unsecured term loan, the remaining facilities are secured by way of a legal mortgage and charges over 5 Australian properties, namely Chester Hill (NSW), Somerton (VIC), Coopers Plains (QLD), Wacol (QLD), Kidman Park (SA). As of 31 December 2016, the above facilities were fully drawn. Page 10 of 25
1 (c) Statement of Cash Flows Notes 1/10/16 to 1/10/15 to 1/1/16 to 1/1/15 to S$'000 S$'000 S$'000 S$'000 Cash flows from operating activities Total return for the period before taxation and distribution (31,345) (53,187) (23,188) (11,719) Adjustments for: Net change in fair value of investment properties 44,644 64,714 80,744 64,714 Manager's fees paid/payable in units 1,430 1,470 5,876 5,648 Depreciation 261 195 946 648 Net financing costs (a) 5,135 4,664 19,499 14,071 Fixed assets written off - - 25 Gain on disposal of investment properties - - - (408) Changes in working capital : Trade and other receivables (590) 975 (3,207) (1,520) Trade and other payables 772 102 1,530 4,225 Cash generated from operating activities 20,307 18,933 82,200 75,684 Tax paid (257) (187) (904) (576) Net cash from operating activities 20,050 18,746 81,296 75,108 Cash flows from investing activities Interest received 6 19 30 60 Capital expenditure on investment properties (b) (3,642) (20,756) (6,034) (88,040) Purchase of plant and equipment (263) (527) (1,173) (1,879) Purchase of investment properties (c) - (103,284) - (182,538) Proceeds from disposal of investment property (d) - - - 9,408 Net cash used in investing activities (3,899) (124,548) (7,177) (262,989) Cash flows from financing activities Proceeds from issue of new units - 100,000-100,000 Net proceeds from borrowings (e) 114,600 33,359 132,000 173,132 Repayment of borrowings (f) (104,630) - (119,030) - Issue expenses paid - (1,457) - (1,457) Interest paid (4,746) (3,853) (17,706) (12,101) Transaction costs paid (765) (326) (765) (661) Distributions to Unitholders (16,582) (23,881) (63,149) (74,240) Net cash (used in)/from financing activities (12,123) 103,842 (68,650) 184,673 Net increase/(decrease) in cash and cash equivalents 4,028 (1,959) 5,469 (3,208) Cash and cash equivalents at the beginning of the period/year 9,428 9,361 8,054 11,275 Effect of exchange differences on cash and cash equivalents 105 652 38 (13) Cash and cash equivalents at the end of the period/year 13,561 8,054 13,561 8,054 Page 11 of 25
Notes: (a) (b) Refer to 1(a)(c) Asset enhancement initiatives for existing investment properties. (c) Amount incurred for the acquisitions of the Australian properties in 2015. (d) Proceeds from the disposal of Kim Heng warehouse in 2015. (e) (f) Represent drawdown from revolving credit facility and S$90m term loan facility fully drawn in December 2016. Repayment of borrowings from the S$ revolving credit facility and repayment of term loan facilities. Page 12 of 25
1 (d) Statements of Movements in Unitholders Funds Notes 1/10/16 to 1/10/15 to 1/1/16 to 1/1/15 to S$'000 S$'000 S$'000 S$'000 Balance at the beginning of the period/year 743,598 761,562 786,510 766,901 Operations Total return after tax (31,596) (53,406) (23,970) (12,323) Effective portion of changes in fair value of cashflow hedges (a) 3,132 852 (4,053) 1,806 Foreign currency translation reserve Translation differences from financial statements of foreign entities 407 1,370 (75) 175 Net gain/(loss) recognised directly in Unitholders' fund 3,539 2,222 (4,128) 1,981 Unitholders' transactions Issue of new units - Private placement - 100,000-100,000 - Manager's base fees paid in units - - 3,696 3,537 - Manager's performance fees paid in units - - - 641 Units to be issued: - Manager's base fees payable in units (b) 1,189 1,254 1,189 1,254 - Manager's performance fees payable in units (b) 990 216 990 216 Issue expenses - (1,457) - (1,457) Distributions to unitholders (16,582) (23,881) (63,149) (74,240) Net (decrease)/increase in net assets resulting from unitholders' transactions (14,403) 76,132 (57,274) 29,951 Unitholders' funds at the end of the period/year 701,138 786,510 701,138 786,510 Notes Trust 1/10/16 to 1/10/15 to 1/1/16 to 1/1/15 to S$'000 S$'000 S$'000 S$'000 Balance at the beginning of the period/year 751,200 757,675 793,608 762,500 Operations Total return after tax (39,230) (40,935) (32,425) (766) Effective portion of changes in fair value of cashflow hedges (a) 2,376 736 (3,966) 1,923 Unitholders' transactions Issue of new units - Private placement - 100,000-100,000 - Manager's base fees paid in units - - 3,696 3,537 - Manager's performance fees paid in units - - - 641 Units to be issued: - Manager's base fees payable in units (b) 1,189 1,254 1,189 1,254 - Manager's performance fees payable in units (b) 990 216 990 216 Issue expenses - (1,457) (1,457) Distributions to unitholders (16,582) (23,881) (63,149) (74,240) Net (decrease)/increase in net assets resulting from unitholders' transactions (14,403) 76,132 (57,274) 29,951 Unitholders' funds at the end of the period/year 699,943 793,608 699,943 793,608 Page 13 of 25
Notes: (a) Relates to the effective portion of changes in fair values of derivative assets and liabilities designated as cashflow hedges. (b) Represent the value of units to be issued to the Manager as partial consideration of the Manager s fees incurred for the quarter. The units are to be issued within 30 days from quarter-end. 1 (d)(i) Details of any changes in the units Notes and Trust 1/10/16 to 1/10/15 to 1/1/16 to 1/1/15 to Units Units Units Units Issued units at the beginning of the period 897,759,318 785,576,123 893,472,054 781,758,464 Creation of units: - Issue of new units (Private Placement) - 106,270,000-106,270,000 - Manager's base fees paid in units - - 4,287,264 3,232,994 - Manager's performance fees paid in units - - - 584,665 Issued units at the end of the period 897,759,318 891,846,123 897,759,318 891,846,123 Units to be issued: - Manager's base fees payable in units (a) 1,468,343 1,387,203 1,468,343 1,387,203 - Manager's performance fees payable in units 1,222,425 238,728 1,222,425 238,728 Total issued and to be issued units 900,450,086 893,472,054 900,450,086 893,472,054 Notes: (a) Represent units to be issued to the Manager as partial consideration of Manager s fees incurred for the quarter. The units are to be issued within 30 days from the quarter-end. 1(d)(ii) A statement showing all sales, transfers, disposals, cancellations and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 2 Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice The financial information set out in this announcement relating to the following: Statements of Financial Position of the and the Trust as at 31 December 2016; Statements of Total Return of the and the Trust for the quarter and year ended 31 December 2016; Distribution Statements of the and the Trust for the quarter and year ended 31 December 2016; Statements of Movements in Unitholders Fund of the and the Trust for the quarter and year ended 31 December 2016; and Statement of Cash Flows of the for the quarter and year ended 31 December 2016. Page 14 of 25
have been extracted from financial information for the period from 1 January 2016 to 31 December 2016 which has been reviewed by Cache s independent auditors in accordance with Singapore Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. 3 Where the figures have been audited, or reviewed, the auditors' report (including any qualifications or emphasis of matter) Refer to the attachment for the extract of the independent auditors review report dated 23 January 2017 issued on the financial information of Cache for the quarter and full year ended 31 December 2016, which has been prepared in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts, issued by Institute of Singapore Chartered Accountants. 4 Whether the same accounting policies and methods of computation as in the issuer's most recently audited financial statements have been applied The has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current period compared with the audited financial statements for the year ended 31 December 2015. 5 If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. There is no change in the accounting policies and methods of computation adopted. 6 Earnings per unit ( EPU ) and Distribution per unit ( DPU ) for the financial period Earnings per unit Notes 1/10/16 to 1/10/15 to 1/1/16 to 1/1/15 to Weighted average number of units 897,788,565 842,194,122 895,674,543 797,895,726 Earnings per unit for the period based on the weighted average number of units in issue (cents) (a) (3.52) (6.34) (2.68) (1.54) Adjusted earnings per unit for the period based on the weighted average number of units in issue (cents) (b) 1.45 1.34 6.34 6.57 Notes: (a) EPU calculation uses the total return for the period after tax, and the weighted average number of units issued and to be issued. The diluted EPU is the same as basic EPU as no dilutive instruments were in issue during the period. (b) Adjusted EPU calculation excludes net change in fair value of the properties from the total return for the period after tax, and the weighted average number of units issued and to be issued. Page 15 of 25
Distribution per unit In computing the DPU, the number of units as at the end of each period is used for the computation. Number of units issued and to be issued at end of period entitled to distribution Distribution per unit for the period based on the total number of units entitled to distribution (cents) Notes 1/10/16 to 1/10/15 to 1/1/16 to 1/1/15 to (a) 900,450,086 893,472,054 900,450,086 893,472,054 (b) 1.850 2.074 7.725 8.500 Notes: (a) Computation of DPU for the period from 1 October 2016 to 31 December 2016 is based on the number of units entitled to distribution: (i) (ii) Number of units in issue as at 31 December 2016 of 897,759,318; and Units to be issued to the Manager by 31 January 2017 as partial consideration of Manager s base fees incurred for the quarter ended 31 December 2016 of 1,468,343 and Manager s performance fees incurred for the year ended 31 December 2016 of 1,222,425. (b) Distribution of 1.850 cents per unit for the period 1 October 2016 to 31 December 2016 will be paid on 27 February 2017. 7 Net asset value ( NAV ) per unit at the end of current period Trust 31/12/2016 (a) 31/12/2015 (b) 31/12/2016 (a) 31/12/2015 (b) NAV per unit (S$) 0.78 0.88 0.78 0.89 Notes: (a) Number of units used to compute NAV per unit as at 31 December 2016 was 900,450,086, comprising the number of units in issue as at 31 December 2016 of 900,450,186 and units to be issued to the Manager as partial consideration of Manager s base fees incurred for the quarter ended 31 December 2016 of 1,468,343 and Manager s performance fees incurred for the year ended 31 December 2016 of 1,222,425. (b) Number of units used to compute NAV per unit as at 31 December 2015 was 893,472,054, comprising of the number of units in issue as at 31 December 2015 of 891,846,123 and units issued to the Manager as partial consideration of Manager s fees incurred for the quarter ended 31 December 2015 of 1,625,931. Page 16 of 25
8 (i) Review of the performance for the quarter ended 31 December 2016 Gross revenue for the quarter-ended was S$27.3 million, an increase of S$3.24 million or 13.5% compared to 4Q FY2015. NPI for the quarter was S$21.3 million, an increase of S$2.16 million or 11.3% compared to 4Q FY2015. The increase in NPI is mainly due to rental contribution from DSC ARC and Australian properties offset by a lower income received under protest for 51 Alps Ave and higher property related expenses from those recently converted multi-tenanted buildings. Net financing costs for the quarter were S$5.1 million, 10.1% higher than 4Q FY2015. The increase is due to borrowings drawn relating to the acquisitions of Australian properties and working capital as well as financing expenses incurred for DSC ARC that could not be capitalised after obtaining the temporary occupancy permit ( TOP ) in July 2015. All-in-financing cost averaged 3.52% for the quarter and the gearing ratio for the stood at 43.1% as at 31 December 2016. Assuming the proceeds from Cache Changi Districentre 3 were applied towards repaying debt, the gearing would have been 41.9%. Distributable Income in 4Q FY2016 amounted to S$16.7 million, a 5.2% decrease from the corresponding period last year. (ii) Review of the performance for the full year ended 31 December 2016 Gross revenue for the full year ended was S$111.3 million, an increase of S$21.6 million or 24.0% higher than the same period in 2015. NPI for the full year ended was S$88.0 million, an increase of S$11.8 million or 15.6% higher than the same period in 2015. The increase in NPI is mainly due to rental contribution from DSC ARC and Australian properties offset by a lower income received under protest for 51 Alps Ave and higher related expenses from those recently converted multi-tenanted buildings. Net financing costs for FY 2016 were S$19.5 million, a 38.6% increase from the same period in 2015. The increase is due to interest expense on borrowings related to the acquisitions of Australian properties and working capital as well as financing expenses incurred for DSC ARC that could not be capitalised after obtaining the TOP in July 2015. All-in-financing cost averaged 3.60% for the full year. 9 Variance between the projection and actual results The current results are broadly in line with the Trust s commentary made in the third quarter 2016 financial results announcement under Item 10. The Trust has not disclosed any financial forecast to the market. Page 17 of 25
10 Commentary on the 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. Based on advance estimates from the Ministry of Trade & Industry, Singapore s economy expanded by 1.8% year-on-year ( yoy ) in the fourth quarter of 2016. The faster-than-expected economic growth was underpinned by strong improvements in the manufacturing and services sectors. The full-year GDP growth is expected to be 1.8%, above the Government's revised forecast for 2016 growth to be between 1.0 and 1.5% 1, but lower than the GDP growth of 2.0% and 3.3% in 2015 and 2014 respectively. The Purchasing Managers Index ( PMI ) recorded its fourth month of expansion, albeit rather muted, increasing from 50.2 in November 2016 to 50.6 in December 2016. According to CBRE, industrial rents continued to decline for the sixth consecutive quarter and leasing volume declined 18.2% yoy from 2015. Tenant enquiries did however picked up in the second half of 2016, relative to the first half of the year, driven by consolidations of operations from multiple locations into a single development or lease renewals 2. The Australian economy, ranked 12 th largest in the world, is in its 25 th year of consecutive growth 3. Low interest rates and a lower exchange rate since 2013 continue to support domestic demand and external trade. Although the labour market indicators remain somewhat mixed, inflation remains low. The Australian cash rate remains unchanged in December 2016 at 1.5% 4. According to Colliers International, the Australian industrial market has performed well in 2016, with investment volumes rising strongly on the back of offshore interest 5. The government is also expected to increase infrastructure spending, focusing on large-scale projects for transportation facilities, which is positive for the logistics sector. During the final quarter of 2016, the Manager announced the divestment of Cache Changi Districentre 3 for at a sale price of S$25.5 million. The divestment is in line with the Manager s objective to rebalance the portfolio and recycle capital into higher-performing assets while maintaining a prudent capital structure. In relation to the 51 Alps Ave, Singapore matter, as announced under the Holding Arrangement, Cache has accepted a payment of S$0.77 per square foot per month from Schenker Singapore Pte Ltd under protest, pending the resolution of the Court proceedings. The Manager will continue to vigorously defend Cache in the interest of Unitholders and will provide further updates as and when material developments arise. For the financial year ended 31 December 2016, Cache s portfolio committed occupancy stood at 96.4% with a long WALE of 3.9 years 6. The Manager remains focused on maintaining high occupancy in view of the industry oversupply and continued increase in new warehouse supply in Singapore. By way of the Manager s portfolio rebalancing strategy to replace lower-performing assets with those with more sustainable earnings, efforts continue to expand Cache s presence in Australia where the Trust currently owns a portfolio of six freehold logistics warehouses with a longer WALE of 6.1 years. The Manager will continue to drive long-term sustainable growth through its strategy of proactive lease management, portfolio rebalancing and prudent capital management. 1 Ministry of Trade and Industry, Press Release, 3 January 2017 2 CBRE Marketview Singapore Q4 2016, Headwinds and Headways 3 The Australian Trade Commission, Why Australia Benchmark Report 2016 4 Reserve Bank of Australia, 6 December 2016, Statement by Philip Lowe, Governor: Monetary Policy Decision, http://www.rba.gov.au/media-releases/2016/mr-16-30.html 5 Colliers International, Industrial Research and Forecast Report Second Half 2016, 19 Oct 2016 6 As at 31 December 2016, by net lettable area Page 18 of 25
11 Distributions (a) Current financial period Any distribution declared for the current period? Yes Name of distribution: Distribution for the period from 1 October 2016 to 31 December 2016 Distribution Type: 1/10/16 to Distributable Income Period Distribution Type cents Tax exempt income component 0.263 Taxable income component 1.503 Capital component 0.084 Total 1.850 Number of units entitled to distribution: 900,450,086 Par value of units: Tax rate: Not meaningful Tax exempt income component The tax-exempt income component of the distribution is exempt from tax in the hands of all Unitholders. Taxable income component Distributions are derived from Cache s taxable income. Unitholders receiving distributions will be assessable to Singapore income tax on the distributions received except for individuals where these distributions are exempt from tax. Distributions made to individuals, irrespective of their nationality or tax residence status, who hold units as investment assets will be tax exempt. However, distributions made to individuals who hold units as trading assets or through a partnership in Singapore will be taxed at their applicable income tax rates. All Unitholders who are not individuals are subject to Singapore income tax / withholding tax on distributions of Cache. Page 19 of 25
Capital component The capital component of the distribution represents a return of capital to Unitholders for tax purposes and is therefore not subject to income tax. For Unitholders holding units as trading assets, the amount of capital distribution will be applied to reduce the cost base of their Units for the purpose of calculating the amount of taxable trading gains arising from the disposal of the Units. Remarks: Nil (b) Corresponding period of the immediately preceding financial year Any distribution declared for the previous corresponding financial period? Yes Name of distribution: Distribution for the period from 1 October 2015 to 12 November 2015 (paid on 29 December 2015) Distribution Type: 1/10/15 to Distributable Income Period 12/11/15 Distribution Type cents Taxable income component 0.823 Capital component 0.077 Total 0.900 Number of units entitled to distribution: 785,576,123 Par value of units: Tax rate: Not meaningful Taxable income component Distributions are derived from Cache s taxable income. Unitholders receiving distributions will be assessable to Singapore income tax on the distributions received except for individuals where these distributions are exempt from tax. Distributions made to individuals, irrespective of their nationality or tax residence status, who hold units as investment assets will be tax exempt. However, distributions made to individuals who hold units as trading assets or through a partnership in Singapore will be taxed at their applicable income tax rates. All Unitholders who are not individuals are subject to Singapore income tax / withholding tax on distributions of Cache. Page 20 of 25
Capital component The capital component of the distribution represents a return of capital to Unitholders for tax purposes and is therefore not subject to income tax. For Unitholders holding units as trading assets, the amount of capital distribution will be applied to reduce the cost base of their Units for the purpose of calculating the amount of taxable trading gains arising from the disposal of the Units. Remarks: In connection with the private placement launched on 3 November 2015, the Manager has declared an advanced distribution of 0.90 cents per unit for the period from 1 October 2015 to 12 November 2015, being the day immediately prior to the date on which the new units were issued. This is to ensure that the total amount available for distribution, accrued by Cache up to the day immediately prior to the date on which the new units were issued, is only distributed to the Existing Unitholders. The advanced distribution book closure date was 12 November 2015 and was paid on 29 December 2015. Name of distribution: Distribution for the period from 13 November 2015 to 31 December 2015 Distribution Type: 13/11/15 to Distributable Income Period Distribution Type cents Tax exempt income component 0.051 Taxable income component 0.886 Capital component 0.237 Total 1.174 Number of units entitled to distribution: 893,472,054 Par value of units: Tax rate: Not meaningful Tax exempt income component The tax-exempt income component of the distribution is exempt from tax in the hands of all Unitholders. Taxable income component Distributions are derived from Cache s taxable income. Unitholders receiving distributions will be assessable to Singapore income tax on the distributions received except for individuals where these distributions are exempt from tax. Distributions made to individuals, irrespective of their nationality or tax residence status, who hold units as investment assets will be tax exempt. However, Page 21 of 25
distributions made to individuals who hold units as trading assets or through a partnership in Singapore will be taxed at their applicable income tax rates. All Unitholders who are not individuals are subject to Singapore income tax / withholding tax on distributions of Cache. Capital component The capital component of the distribution represents a return of capital to Unitholders for tax purposes and is therefore not subject to income tax. For Unitholders holding units as trading assets, the amount of capital distribution will be applied to reduce the cost base of their Units for the purpose of calculating the amount of taxable trading gains arising from the disposal of the Units. Remarks: Nil (c) Date Payable 27 February 2017 (d) Books Closure Date / Record Date 03 February 2017 12 If no distribution has been declared/(recommended), a statement to that effect Not applicable. 13. Segmented revenue and results for business or geographical segments (of the ) with comparative information for the immediately preceding year 1/10/16 to % 1/10/15 to % 1/1/16 to % 1/1/15 to % Gross Revenue Singapore 23,096 84.7 21,377 89.0 94,734 85.2 82,671 92.2 Australia 3,866 14.2 2,332 9.7 15,377 13.8 5,874 6.5 China 304 1.1 319 1.3 1,160 1.0 1,176 1.3 27,266 100.0 24,028 100.0 111,271 100.0 89,721 100.0 1/10/16 to % 1/10/15 to % 1/1/16 to % 1/1/15 to % Net Property Income Singapore 17,743 83.2 16,760 87.4 73,670 83.7 69,547 91.3 Australia 3,334 15.6 2,139 11.2 13,346 15.2 5,551 7.3 China 263 1.2 278 1.4 999 1.1 1,058 1.4 21,340 100.0 19,177 100.0 88,015 100.0 76,156 100.0 Page 22 of 25
14. In review of performance, the factors leading to any changes in contributions to turnover and earnings by the business or geographical segments Please refer to Sections 8 and 9 for the review of the actual performance. 15. Breakdown of sales 1/1/16 to 1/1/15 to Change S$'000 S$'000 % First half of year Gross Revenue 55,956 42,555 31.5 Net Property Income 44,604 38,195 16.8 Second half of year Gross Revenue 55,315 47,166 17.3 Net Property Income 43,410 37,961 14.4 Notes: Please refer to Sections 8 and 9 for review of actual performance. 16. Breakdown of the total distribution for the financial year ended 31 December 2016 and 31 December 2015 1/1/16 to 1/1/15 to S$'000 S$'000 In respect of the period: 1 January 2015 to 31 March 2015-16,802 1 April 2015 to 30 June 2015-16,781 1 July 2015 to 30 September 2015-16,811 1 October 2015 to 12 November 2015-7,070 13 November 2015 to 31 December 2015-10,489 1 January 2016 to 31 March 2016 18,248-1 April 2016 to 30 June 2016 17,830-1 July 2016 to 30 September 2016 16,582-1 October 2016 to 31 December 2016 16,658 - (Payable on or about 27 February 2017) 17 Interested Party Transaction Mandate 69,318 67,953 Cache does not have in place a general mandate for interested party transactions. Page 23 of 25
18 Confirmation pursuant to Rule 704(13) of the Listing Manual Pursuant to Rule 704(13) of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Board of Directors of ARA-CWT Trust Management (Cache) Limited (the Company ), as manager of Cache, confirms that there are no persons occupying managerial positions in the Company or any of its principal subsidiaries who are relatives of a Director or Chief Executive Officer or substantial unitholders of Cache. 19 Confirmation pursuant to Rule 720(1) of the Listing Manual The Board of Directors of the Manager hereby confirms that the undertakings from all its directors and executive officers as required in the format as set out in Appendix 7.7 under Rule 720(1) of the Listing Manual were procured. 20 Certificate pursuant to Paragraph 7.3 of the Property Funds Appendix The Manager hereby certifies that in relation to the distribution to the Unitholders of Cache REIT for the quarter ended 31 December 2016: a. Cache REIT will declare a distribution which is classified as capital distribution from a tax perspective, being derived from a portion of the sales proceeds from Kim Heng warehouse in June 2015, in addition to the income available for distribution for the quarter ended 31 December 2016, b. The Manager is satisfied on reasonable grounds that, immediately after making the distributions, Cache REIT will be able to fulfill, from its deposited properties, its liabilities as they fall due. The distribution is computed based on the accounts of Cache REIT for the quarter ended 31 December 2016 and is verified by our external tax consultant. Cache REIT s current distribution policy is to distribute at least 100.0% of its taxable income to Unitholders. On behalf of the Board of the Manager ARA-CWT TRUST MANAGEMENT (CACHE) LIMITED Lim How Teck Director Lim Hwee Chiang Director Page 24 of 25
This release may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in operating expenses (including employee wages, benefits and training costs), property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the current views of management on future events. The value of units in Cache ( Units ) and the income derived from them, if any, may fall or rise. Units are not obligations of, deposits in, or guaranteed by, ARA-CWT Trust Management (Cache) Limited (as the manager of Cache) (the Manager ) or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors should note that they will have no right to request the Manager to redeem or purchase their Units for so long as the Units are listed on Singapore Exchange Securities Trading Limited (the SGX- ST ). It is intended that holders of Units may only deal in their Units through trading on the SGX-ST. The listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of Cache is not necessarily indicative of the future performance of Cache. BY ORDER OF THE BOARD ARA-CWT TRUST MANAGEMENT (CACHE) LIMITED AS MANAGER OF CACHE LOGISTICS TRUST (Company registration no. 200919331H) Lim Hwee Chiang Director 23 January 2017 For enquiries, please contact: ARA-CWT Trust Management (Cache) Limited Ms Judy Tan Assistant Director, Investor Relations Tel: +65 6512 5161 Email: judytan@ara.com.hk Page 25 of 25