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FY 2017 FY 2018 Quarter ended 31 December 2019
Actual Actual Actual
Total assets (RM million) 4,177.9 4,143.0 4,143,844
Gross Revenue (RM million) 368.9 350.1 85,802
Net Property Income (RM million) 237.1 215.0 49,844
Distributable Income (RM million) 167.4 161.3 31,187
Distribution Per Unit (sen) 8.22 7.90 1.52
Distribution Yield (%) 4.49 7.82 6.03

Condensed Consolidated Statement Of Comprehensive Income

Condensed Consolidated Statement Of Financial Position
Review of Performance

Quarter Results (4Q 2019 vs 4Q 2018)

The Group recorded gross revenue of RM85.8 million in 4Q 2019, a decrease of RM1.1 million or 1.3% against 4Q 2018. The decrease was mainly due to lower occupancies at The Mines (TM) and lower rental rates at TM and 3 Damansara (3D). The decrease was partially mitigated by better performance from Gurney Plaza (GP) and East Coast Mall (ECM) due to higher rental rates and higher rental income following the completion of the asset enhancement initiative (AEI) at ECM and Sungei Wang (SW).

Property operating expenses for 4Q 2019 were RM36.0 million, an increase of RM1.9 million or 5.5% against 4Q 2018 mainly due to higher building maintenance cost, higher provision for doubtful debts at 3D & TM.

The net property income (NPI) for 4Q 2019 of RM49.8 million was RM3.0 million or 5.6% lower than 4Q 2018. This is mainly due to lower revenue and increase in operating expenses as outlined.

Other non-operating income for 4Q 2019 of RM3.3 million is due to compensation income received as a result of the termination of existing easement agreement in relation to the car park area between SW and Bukit Bintang Plaza (BB Plaza) and the restriction of access to the SW rooftop car park.

Finance costs for 4Q 2019 of RM15.7 million were RM0.2 million or 1.1% higher than 4Q 2018. The increase was mainly due to higher interest expenses from additional revolving credit facilities drawn down for capital expenditure works.

Following the clarification that the applicable Real Property Gains Tax (RPGT) rate for M-REIT is 10%, an additional deferred tax liability of RM9.7 million was provided based on the RPGT rate of 10% on the net fair value gain of three (3) freehold investment properties.

CMMT has incurred RM10.6 million of capital expenditure during the quarter mainly for Jumpa retail layout design and reconfiguration works at SW.

Overall, distributable income to unitholders for 4Q 2019 was RM31.2 million, a decrease of RM9.3 million or 22.9% against 4Q 2018 due to abovementioned factors and lower tax and other adjustments.

Financial Year-to-date Results (FY 2019 vs FY 2018)

The Group recorded gross revenue of RM342.3 million, a decrease of RM7.9 million or 2.2% against last year. The decrease was mainly due to lower occupancies at TM and SW, lower rental rates at TM and downtime from AEI at SW and TM. The decrease was partially mitigated by better performance from GP, ECM and Tropicana City Office Tower (TCOT) due to higher rental rates and higher rental income, following the completion of the AEI at ECM and full occupancy at TCOT. AEI for Jumpa at Sungei Wang was completed and soft opened on 25 September 2019.

Property operating expenses for FY 2019 were RM140.2 million, an increase of RM5.0 million or 3.7% against last year due to higher utilities at GP, ECM and 3 Damansara Property (3DP) as a result of electricity surcharge with effect from 1 July 2018 as well as 1 March 2019 and one-time rebate of service charge at SW in March 2018.

The NPI for FY 2019 of RM202.1 million was RM12.8 million or 6.0% lower than FY 2018.

Other non-operating income for FY 2019 of RM3.3 million is due to compensation income received as outlined above.

CMMT registered a net fair value loss of RM30.7 million on investment properties in FY 2019.

Finance costs for FY 2019 of RM62.0 million were RM0.9 million or 1.4% higher than FY 2018. The increase was mainly due to higher interest expenses from additional revolving credit facilities drawn down for capital expenditure works. Average cost of debt for FY 2019 was 4.44% p.a. (FY 2018: 4.47% p.a.)

Following the clarification that the applicable RPGT rate for M-REIT is 10%, deferred tax liability of RM19.5 million was provided based on the RPGT rate of 10% on the net fair value gain of three (3) freehold investment properties.

CMMT has incurred RM46.7 million of capital expenditure for the year mainly for Jumpa retail layout design and reconfiguration works at SW and enhancement works of the food and beverage area on Level 2 at TM.

Overall, distributable income to unitholders for the year was RM128.0 million, a decrease of RM33.4 million or 20.7% against FY 2018 due to abovementioned factors and lower tax and other adjustments.

Commentary on Prospects

The Malaysian economy moderated to 4.4% in 3Q 2019 (2Q 2019: 4.9%) and remains largely supported by domestic demand. The Malaysian economy is projected to expand by 4.7% for the whole of 2019, in line with the government’s estimates (source: Ministry of Finance).

Amidst uncertainties in the global economy, we expect business and consumer sentiments in Malaysia to remain cautious. In view of challenges in the operating environment, the Manager proactively undertakes retail and asset management initiatives to continually refresh and introduce new experiences in CMMT’s malls to enhance their attractiveness. Following the soft opening of Jumpa @ Sungei Wang in September 2019, the Manager expects gradual improvements to Sungei Wang’s financial contribution while the completion of Gurney Plaza’s asset enhancement initiative by 1H 2020 would also contribute positively to our future performance.

The Manager remains committed to deliver long-term and sustainable income distributions to unitholders.