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Quarterly Report For The Financial Period Ended 30 June 2017

Financials Archive

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Condensed Consolidated Statement Of Comprehensive Income

Condensed Consolidated Statement Of Financial Position

Review of Performance

Quarter Results (2Q 2017 vs 2Q 2016)

The Group recorded gross revenue of RM91.8 million in 2Q 2017, a decrease of RM0.2 million or 0.2% against 2Q 2016. The decrease was mainly due to negative rental reversions from Sungei Wang Plaza ("SWP"), as SWP continues to be temporarily affected by the ongoing Mass Rapid Transit works and the closure of BB Plaza. Lower gross revenue was recorded for The Mines ("TM") mainly due to lower rental rates and occupancy whilst lower gross revenue in Tropicana City Property ("TCP") was mainly due to lower occupancy at the office tower. The decrease was mitigated by better performance from Gurney Plaza ("GP") and East Coast Mall ("ECM") on the back of higher rental rates achieved.

Property operating expenses for 2Q 2017 were RM32.0 million, an increase of RM0.1 million or 0.2% against 2Q 2016. This was mainly attributed to the increase in service charge at SWP and marketing expenses. The increase was offset by lower utilities consumption and staff cost reimbursements.

The net property income for 2Q 2017 of RM59.8 million was 0.4% lower than 2Q 2016.

CMMT registered a net fair value loss of RM11.8 million on investment properties in 2Q 2017.

Finance costs for 2Q 2017 of RM14.9 million were 0.2% higher than 2Q 2016. The increase in finance costs was mainly due to higher interest expenses from additional revolving credit facilities drawn down for capital expenditure works, partly offset by lower average cost of debt and commitment fees. Average cost of debt for 2Q 2017 was 4.39% p.a. (2Q 2016: 4.50% p.a.).

CMMT has incurred RM5.9 million of capital expenditure during the quarter. This includes tenancy works at TM as well as reconfiguration works on the Concourse level at SWP.

Overall, distributable income to unitholders for 2Q 2017 was RM41.9 million, a decrease of RM0.3 million or 0.8% against 2Q 2016.

Financial Year-to-date Results (YTD 2017 vs YTD 2016)

The Group recorded gross revenue of RM184.3 million, a decrease of RM1.4 million or 0.8% over the previous financial period. The decrease was mainly due to negative rental reversions from SWP, as SWP continues to be temporarily affected by the ongoing Mass Rapid Transit works and the closure of BB Plaza. Lower gross revenue was recorded for TM mainly due to lower rental rates and occupancy in TM whilst lower gross revenue in TCP was mainly due to lower rental rates at the mall and lower occupancy at the office tower. The decrease was mitigated by better performance from GP and ECM on the back of higher rental rates achieved.

Property operating expenses for YTD 2017 were RM64.8 million, a decrease of RM0.3 million or 0.4% over the previous financial period. This was mainly due to lower utilities consumption and staff cost reimbursements, offset by increase in service charge at SWP.

The net property income for YTD 2017 of RM119.5 million was 0.9% lower than YTD 2016.

CMMT registered a net fair value loss of RM11.8 million on investment properties in YTD 2017.

Finance costs for YTD 2017 of RM29.5 million were 0.1% lower than YTD 2016. The decrease was mainly due to lower average cost of debt and commitment fees, partly offset by higher interest expenses from additional revolving credit facilities drawn down for capital expenditure works. Average cost of debt for YTD 2017 was 4.39% p.a. (YTD 2016: 4.50% p.a.).

CMMT has incurred RM9.8 million of capital expenditure for the properties during the financial period. This includes tenancy works at TM and TCP, asset enhancement works on Basement 1 at GP as well as reconfiguration works on the Concourse level at SWP.

Overall, distributable income to unitholders for the financial period was RM84.2 million, a decrease of RM1.0 million or 1.1% against YTD 2016.

Commentary on Prospects

The Malaysian economy grew 5.6% in the first quarter of 2017 (1Q 2017), underpinned by strong private consumption and private investment. Despite global economic uncertainties, the Malaysian economy is expected to remain on a steady growth path and achieve 4.3% to 4.8% growth for the whole of 2017 (source: Bank Negara Malaysia). Meanwhile, retail sales for 1Q 2017 have yet to recover from the impact of Goods & Services Tax and fell further by 1.2% year-on-year, following a contraction of 4.4% in 1Q 2016 against 1Q 2015 (source: Retail Group Malaysia Industry Report, June 2017).

In light of the uncertainties on the economic front, consumer and business sentiments are expected to remain cautious throughout 2017 as concerns over rising costs of living persist. As the competition in the market place heats up with the opening of new shopping malls - of which many are located in the Klang Valley - in the second half of this year (2H 2017), the Manager expects the operating environment to remain challenging. As CMMT's malls are largely focused on day-to-day necessity shopping, they have proven resilient through economic cycles in the past and should continue to do so. The Manager also expects the recent commencement of the Sungai Buloh-Kajang Mass Rapid Transit line to benefit Sungei Wang Plaza in the long term.

To ensure CMMT malls remain relevant and attractive to shoppers, the Manager continually reinvents its assets through enhancement initiatives, introduces new-to-market brands and develops unique experiential marketing initiatives. The Manager remains committed to ensure CMMT is well positioned to sustain its performance and deliver sustainable income distributions to unitholders in 2H 2017.

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