The Group has adopted a new financial year ending 31 December effective Financial Period beginning 1 April 2011. As a result, the period under review covers only nine months as opposed to the usual twelve months. In order to ensure a meaningful analysis, all comparative numbers in this report relating to profi t and loss items are for a nine-month period from 1 April 2010 to 31 December 2010. For Statement of Financial Position however, the comparatives are as at 31 March 2011.
Statement ofComprehensive Income
The Group continued to record positive growth in revenue by registering a 6.9% increase from the same period last year to stand at RM746 million. The increase was supported by improved performance in all segments especially retail and hotel. Further to the revenue growth, the market values of the properties are also on the upward trend owing to the steady future cash flow to be generated by these properties. This resulted in fair value gain recognition of RM1.1 billion for the period in line with the requirements of FRS 140 adopted by the Group. The significant gain, which does not have any cash flow impact in the current period, is attributable mainly to the PETRONAS Twin Towers and Suria KLCC. The improvement in revenue combined with the fair value gain and on-going cost optimisation efforts resulted in profit attributable to the equity holders of the Company of RM658 million. This refl ects a 22% improvement from the corresponding period last year. Removing the impact of the fair value adjustment would result in profi t attributable to the equity holders of the Company of RM209 million, which refl ected a 6% growth from the same period last year of RM197 million. Consequently, the Group’s Earnings per Share (EPS), excluding the fair value adjustment, also improved to 22.40 sen from 21.11 sen last year.
Total assets of the Group as at 31 December 2011 have further strengthened to RM14.0 billion from RM12.6 billion at the beginning of the period. The increase of 11% was mainly driven by the appreciation in fair value of the investment properties as mentioned earlier. In tandem with the above, equity attributable to equity holders of the Company rose by 9% to RM6.5 billion from RM5.9 billion at 31 March 2011. Consequently, net assets per share excluding RCULS also improved from RM5.60 to RM6.18 during the same period. During the period, the Group adopted additional relevant FRSs which became effective for annual periods beginning on or after 1 July 2010 and 1 January 2011. The adoption of these FRSs did not have any signifi can’t financial impact on the Group.
Total assets of the Group as at 31 December 2011 have further strengthened to RM14.0 billion from RM12.6 billion at the beginning of the period.
Despite the soft office market condition in 2011, our commercial properties continued to perform strongly on the back of long term leases with quality tenants. The strong performance is expected to continue in the long term considering that PETRONAS has given an irrevocable written undertaking to enter into a 15-year lease on triple net basis for Tower 3. PETRONAS has also given a similar undertaking to renew the current lease for the Twin Towers which is due to expire in September 2012 for another 15-year term also on triple net basis. Hence, the over-supply situation which is expected to continue for the next couple of years will not have a signifi cant impact on the performance of this segment.For the period ended 31 December 2011, Commercial properties remained the major contributor towards the Group’s revenue and operating profi t with contribution of about 42% and 55%, respectively. The performance of this segment would be further enhanced with the inclusion of Tower 3 performance in 2012 and beyond.
Suria KLCC further strengthened its position as the premier shopping destination in the country by registering yet another strong performance in 2011. It has maintained its contribution to the overall Group revenue at 33%, second only to the Twin Towers. Its net operating income for the nine-month period exceeded that of a similar period last year by 7%. The key contributing factors for the outstanding results include redevelopment and refurbishment works which it undertook throughout the year as well as effective marketing, promotion and corporate social responsibility initiatives. This has resulted in the achievement of RM2 billion sales turnover by its retailers and sustained customer footfalls of above 40 million in the last 12 months. Suria embarked on an exciting path of transformation which saw the refurbishment and reconfiguration of Isetan to unveil new amenities, an international food market as well as the convenience of travelators that link the concourse level directly to levels one and two of the car park where dedicated parking for food shopping is available.
These works also added some 50,000 square feet of specialty stores to Suria KLCC. The completion of Tower 3 afforded Suria KLCC the opportunity to embark on further expansion on behalf of the owner with the addition of 36 retailers spanning 140,000 square feet in the base of Tower 3, which is referred to as the Ramlee expansion. Suria KLCC’s signature CSR program, Purple Day, successfully raised over RM150,000 for the benefi t of the National Autism Society of Malaysia. Increased retailer participation in this event demonstrates the strength of Suria KLCC’s partnership with its retailers.
Mandarin Oriental, Kuala Lumpur (MOKUL) saw a sustained performance amidst slow growth in an over-supplied market, resulting in occupancy increasing by 0.5% points to 66.4% and average rates remaining consistent at RM586 for the financial period ended 31 December 2011. The hotel retained its number one position in terms of market share within the city’s luxury hotel industry, reflecting well upon the marketing strategies used to balance optimum room rates and occupancy under the prevailing market conditions.
Commercial properties remained as the major contributor towards the Group’s revenue and operating profit with contribution of about 42% and55%, respectively.
The Hotel continued its award-winning performance for quality of service with significant recognition in 2011. The Hotel received the Malaysia Tourism Awards 2010/2011 honor for Best Hotel Services for 5-star City Category. The Hospitality Asia Platinum Awards (HAPA) 2011/2012 bestowed 8 awards upon MOKUL including Hotel of the Year. MOKUL also still holds The Brand Laureate Awards Best Brands category for HOTEL Luxury 2010 / 2011 from the Asia Pacific Brands Foundation.
Asset Management & Services
Asset management plays a strategic role to the operations and performance of the properties within the Group. This is critical in ensuring that the integrity of the properties are well preserved, which in turn would be able to sustain the condition and improve yield generation and values of the properties over thelong term.
Asset management together with general management services contributed RM72.1 million of revenue to the Group for the period ended 31 December 2011, reflecting a growth of 31% from the same period the previous year. The growth was driven by the parking management services arising from higher traffic volume and the reclassification of facilities manpower reimbursement to revenue.
The Group’s performance is expected to remain strong over the long term with the undertaking by PETRONAS to renew the lease for the Twin Towers and to enter into a similar long term lease for Tower 3. The performance will be further supported by the hotel and retail segments, though these two segments would continue to be exposed to the market volatility to a certain extent. The Group will continue its discipline and efforts to manage costs in ensuring continuous value enhancement to the shareholders.
I would like to humbly record my sincere appreciation to the KLCCP Board members for their continuous support and guidance. Likewise, my sincere appreciation also goes to all our shareholders and stakeholders for the support and trust placed in us. Finally, I would like to extend my deepest gratitude to all the KLCCP staff for their contribution, sacrifice and commitment towards achieving the Group’s goals and objectives.
Hashim Bin Wahir
Chief Executive Officer