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Quarterly Report For The Financial Period Ended 31 December 2017

Financials Archive

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Condensed Consolidated Statement Of Comprehensive Income

Condensed Consolidated Statement Of Financial Position

Review of Performance

Quarter Results (3Q 2017 vs 3Q 2016)

The Group recorded gross revenue of RM92.7 million in 3Q 2017, a decrease of RM0.8 million or 0.9% against 3Q 2016. The decrease was mainly due to negative rental reversions from Sungei Wang Plaza ("SWP"), as SWP continues to be affected by 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 3Q 2017 were RM32.6 million, an increase of RM0.5 million or 1.6% against 3Q 2016. This was mainly attributed to the increase in service charge at SWP, higher property maintenance and higher utilities consumption. The increase was offset by lower reimbursable staff costs.

The net property income for 3Q 2017 of RM60.1 million was 2.2% lower than 3Q 2016.

Finance costs for 3Q 2017 of RM15.0 million were 0.7% higher than 3Q 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 3Q 2017 was 4.41% p.a. (3Q 2016: 4.46% p.a.).

CMMT has incurred RM3.2 million of capital expenditure during the quarter. This includes tenancy works mainly at ECM, asset enhancement works on Basement 1 at GP, chiller piping installation works at TCP and reconfiguration works on the Concourse level as well as development costs relating to the construction of a link bridge and external escalators at SWP.

Overall, distributable income to unitholders for 3Q 2017 was RM42.4 million, a decrease of RM0.9 million or 2.0% against 3Q 2016.

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

The Group recorded gross revenue of RM276.9 million, a decrease of RM2.2 million or 0.8% over the previous financial period. The decrease was mainly due to negative rental reversions from SWP, as SWP was temporarily affected by the Mass Rapid Transit works in 1H 2017 and continues to be affected by 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 RM97.4 million, an increase of RM0.3 million or 0.3% over the previous financial period. This was mainly due to increase in service charge at SWP and higher property maintenance, offset by lower utilities consumption and reimbursable staff costs.

The net property income for YTD 2017 of RM179.6 million was 1.4% 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 RM44.6 million were 0.1% higher than YTD 2016. The increase was mainly due to the additional revolving credit facilities being drawn down for capital expenditure works and partly offset by impact of lower average cost of debt and commitment fees. Average cost of debt for YTD 2017 was 4.40% p.a. (YTD 2016: 4.50% p.a.).

CMMT has incurred RM13.0 million of capital expenditure for the properties during the financial period. This includes tenancy works mainly at TM, TCP and ECM, asset enhancement works on Basement 1 at GP, chiller piping installation works at TCP and reconfiguration works on the Concourse level as well as development costs relating to the construction of a link bridge and external escalators at SWP.

Overall, distributable income to unitholders for the financial period was RM126.6 million, a decrease of RM1.8 million or 1.4% against YTD 2016.

Commentary on Prospects

The Malaysian economy grew at a faster rate of 5.8% in the second quarter of 2017 on the back of strong private consumption and private investment. Given the strong performance in the first two quarters, the Malaysian economy is expected to expand by more than 4.8% for the whole of 2017 (source: Bank Negara Malaysia). Retail sales are projected to grow at 3.7% for the whole of 2017, amidst persistent concerns about the rising costs of living and uncertainties in the economy (source: Malaysia Retail Group Industry Report, August 2017).

In view of the challenges presented by economic uncertainty, the Manager expects consumer and business sentiments to remain cautious for the remaining part of the year. As more shopping malls are expected to open towards the year-end, particularly in the Klang Valley, the operating environment is expected to remain challenging. To mitigate these challenges, the Manager will continue to undertake proactive retail and asset management initiatives and introduce new offerings in CMMT’s malls to cater to the changing needs of shoppers.

Despite challenging operating conditions, the Manager is confident that the underlying strength of CMMT's portfolio of quality assets located in key urban centres across Malaysia will continue to offer sustainable returns to unitholders.

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