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Religare Health Trust posts lower profit, higher distributable income for Q3

RELIGARE Health Trust (RHT) on Wednesday posted a 3 per cent drop in net profit for the three months ended Dec 31, 2015, to S$11.2 million, but the total distributable income rose 5.7 per cent to S$15.3 million.

The company said the higher distributable income in the third quarter of FY2016 was "due to improved forward Indian rupee/Sing dollar as a result of lower hedging costs and better spot rate, as well as higher net service fee and hospital income, which were partially offset by higher finance costs.

Revenue for the quarter climbed 5 per cent year on year to S$35.9 million, lifted by a higher operating revenue from Fortis and higher hospital income recorded in the two operating hospitals as a result of greater occupancy.

Service fee rose 5 per cent to S$32.6 million year on year, while hospital income climbed 12 per cent to S$2.4 million.

These increases were offset by higher doctor charges as a result of expansion of the out-patient capacity in various clinical establishments and higher housekeeping expense in connection with increased utilisation of bed, the trust said. It added that there were more maintenance works being carried out and this resulted in higher maintenance expenses in the quarter compared to the year-ago period.

Finance expenses in Q3 rose 49 per cent to S$2.4 million, corresponding with the higher swap offer rate and higher fixed interest rate on the bonds issued to replace a floating rate debt.

The group also said it utilised a S$30 million facility during the quarter to fund the acquisition of land and expansion projects, which contributed to the higher finance expenses as well.

Religare recorded a foreign currency translation loss of S$13 million in Q3, which arose from the depreciation of the Indian rupee against the Sing dollar on the rupee-denominated interest receivables and realised loss from the settlement of forward contracts.

In its outlook, the group said the Indian healthcare industry presents both opportunities and challenges.

"The potential room for growth in the industry is attractive, with the country's large, expanding and increasingly affluent population requiring more sophisticated and better medical services. In the near term, the increasing and ageing population and rising affluence, coupled with the shortage of healthcare infrastructure in India, are expected to be the immediate drivers of growth for the industry. We expect the private sector to play a key role in filling the demand for these medical services."

But the group noted that there is increasing competition from new entrants and said it will continue to look at expanding its portfolio both organically and inorganically.