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In the Prospectus dated June 30, 2005, the Trust forecasted an amount of RM 7.908 million of Earnings after Tax for the period ending 31 December 2005 whereas the unaudited results were RM 10.018 million. The deviation of RM 2.110 million representing 26.7% between the forecast and unaudited results were largely due to :-
Timing of income recognition
The Prospectus’s had forecasted gross rental income recognition of the five (5) properties acquired by the Trust to commence on 15 August 2005 but listing was brought forward to 3 August 2005 instead. Proceeds from the IPO were used to settle four (4) properties on 4 August and one (1) property on 8 August 2005. The additional gross rental income generated by the five (5) properties amounted to RM 871,000 but is also set off by recognition of additional property expenses.
Acquisition of Kompleks Kemajuan on 16 December 2005
Kompleks Kemajuan contributed RM 95,000 of Net Property Income from 16 December 2005 till 31 December 2005. This new acquisition was not reflected in the Prospectus’ forecast.
Strong Leasing Results
The Trust was able to secure higher than anticipated rental rates for new tenancies as well as tenancy renewals during the period. The annualized income for these new and renewed tenancies is RM 1,120,000.
Reduction in Interest Expense
The Prospectus has assumed a book building price of RM 1.25 per unit for the institutional investors’ portion but due to overwhelming subscription the book building price achieved was RM 1.38 per unit. As a result, the Trust was able to raise additional RM 10.6 million cash. Together with the crossing over of tenants’ security deposit of close to M 10.5 million, the Trust was able to reduce its initial borrowings to fund the acquisitions of the five (5) properties. Secondly, the Prospectus had assumed an interest rate cost of 5.00% per annum whereas the Trust was able to fund its borrowings at a rate of between 4.40% to 4.5% per annum. For the period ended 31 December 2005, the interest expense was RM 738,000 as compared to the Prospectus’s forecast of RM 1,161,000 – a total reduction of RM 423,000.
Listing expenses charged against Unitholders’ Fund
For the period ended 31 December 2005 a sum of RM 230,000 in respect of facility fees paid to a financial institution, stamp duty, legal and loan documentation fees for securing bank borrowings were included as ‘Listing Expenses’ and charged directly against Unitholders’ Fund.
Provision for Taxation
There was a reduction in tax provision for the period ended by RM 209,000 mainly due to tax exempt interest income of RM 309,000.
Provision for Doubtful Debts
There was a non occurrence of bad debt for a specific tenant and the provision made amounting to RM 150,000 was written back.
Others
The additional gross rental income, as mentioned above, has also resulting in a higher payout for property management fees. There was also an overall reduction in total expenditure due to economies of scale and favorable terms extended by the various service providers.
The favorable deviation mentioned above, of RM 2.110 million, has enable the Trust to make a higher (by RM 1.934 million) than disclosed income distribution for the period ended 31 December 2005 for the benefit of all unitholders.
