Reit Gains Lift Parkway Q3 Profit To $224m

Source : The Business Times, November 14, 2007

BOLSTERED by gains from spinning its local hospital properties into a real estate investment trust (Reit), Parkway Holdings' net profit for the third quarter ended Sept 30 was a whopping $224.56 million, compared with a restated $18.5 million a year ago.

Excluding net exceptional gains of $201.79 million, the group's net profit would have grown 24 per cent from a year ago to $22.76 million, driven by growth across its healthcare segments.
The group sponsored the establishment of Parkway Life Reit in July by injecting its interests in the hospital and medical centre units in Mount Elizabeth Hospital, Gleneagles Hospital and East Shore Hospital to the Reit.

Group revenue for the quarter dipped 6 per cent to $222.81 million from a restated $235.83 million, as earnings from Pantai's group of companies had been proportionately consolidated since Oct 1 last year after a restructuring of its interests in Pantai Holdings Bhd.

On a proforma basis, had the group incorporated Pantai's revenue on the same proportionate consolidation basis in 2006, the group's total revenue for the third quarter and year-to-date 2007 would have increased by 30 per cent and 29 per cent respectively from a year ago, Parkway said.

The comparative figures were restated due to a change in accounting treatment for joint venture companies from equity method of accounting to proportionate consolidation in the previous financial year and reclassification of certain items.

Parkway has signed master lease agreements to lease the Reit properties from Parkway Life Reit and hence will incur operating lease expenses on the Reit properties.

For comparative purposes, the group said it will commence reporting profit before interest, income tax, depreciation, amortisation, minority interests, exceptional items and Reit rental going forward. But the net effects of these rental expenses will be partially offset by the group's share of the Reit's results, savings in interest expenses and depreciation.

The group declared an interim dividend of two cents per share and a special dividend of 13.45 cents per share, which will result in its Section 44A tax credits fully utilised.