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Kuala Lumpur, Kuala Lumpur, Malaysia

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Quarterly Report For The Financial Period Ended 31 December 2020

Financials Archive

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Condensed Unaudited Consolidated Statement Of Profit Or Loss for The Period Ended 31 December 2020

Income Statement

Condensed Unaudited Consolidated Statement of Financial Position As At 31 December 2020

Income Statement

Performance Review

Income Statement

4Q 2020 vs 4Q 2019 (Q-on-Q)

Revenue

The Group's revenue for the current quarter declined significantly by 80.4% over the corresponding quarter in the prior year to RM263.6 million in tandem with the significant contraction in passenger movements of 81.2% due to the global impact of COVID-19 pandemic and prolonged Movement Control Order (MCO) period in Malaysia and other countries.

The impact of prolonged MCO period and border closures, has resulted in significant decline in revenue from airport operations by 72.6% to RM350.9 million. Revenue from the aeronautical segment decreased by 68.0% to RM228.6 million over the corresponding quarter in the prior year. Passenger traffic for the Malaysia operations contracted by 83.2% (international: -97.8%, domestic: -68.7%) to 4.5 million passengers as compared to 26.8 million passengers recorded in the corresponding quarter in the prior year. The passenger traffic for Turkey operations contracted by 52.5% (international: -73.8%, domestic: -37.3%) to 4.8 million passengers as compared to 10.1 million passengers recorded in the corresponding quarter in the prior year. Non-aeronautical segment decreased by 78.3% to RM122.3 million as compared to the corresponding quarter in the prior year.

Revenue from airport operations declined by 83.2% to RM215.2 million. Revenue from the aeronautical segment decreased by 85.2% to RM109.7 million over the corresponding quarter in the prior year. Passenger traffic for the Malaysia operations contracted by 92.3% (international: -98.6%, domestic: - 85.8%) to 2.1 million passengers as compared to 27.3 million passengers recorded in the corresponding quarter in the prior year. The passenger traffic for Turkey operations contracted by 47.2% (international: -61.1%, domestic: -37.7%) to 4.7 million passengers as compared to 8.9 million passengers recorded in the corresponding quarter in the prior year. Non-aeronautical segment decreased by 80.6% to RM105.5 million as compared to the corresponding quarter in the prior year largely due to the rental rebate granted as part of assistance program to the tenants and airlines.

Revenue from the non-airport operations decreased by 20.8% or RM12.7 million due to lower revenue from the hotel business.

Overall, Malaysia and Turkey operations had recorded a significant decrease in revenue by 90.1% to RM98.5 million and 55.5% to RM141.8 million respectively. Qatar operations recorded a decrease in revenue from RM27.1 million to RM23.3 million.

(Loss)/profit before tax and zakat (LBT/PBT)

The Group recorded a higher LBT of RM1,075.1 million as compared to PBT of RM46.1 million in the corresponding quarter in the prior year mainly due to the significant decrease in revenue by 80.4% coupled with an impairment of RM500.4 million in ISG's concession rights. The impairment arose due to a significant contraction in passenger movement impacted by COVID-19 pandemic. The impairment assessment was undertaken based on a review of the recoverable amount of concession rights of ISG based on cash flow projections up to August 2032 being the end of ISG's concession period. However, the core operational expenses1 decreased by 38% as compared to the corresponding quarter in the prior year driven by cost containment initiatives executed during the period.

Malaysia and Qatar operations recorded LBT of RM448.1 million and RM0.2 million respectively as compared to PBT recorded in the corresponding quarter in the prior year. Turkey operations recorded a higher LBT of RM626.8 million as compared to LBT of RM40.4 million due to the impairment of ISG's concession rights amounting to RM500.4 million.

The higher losses however cushioned with the recognition of deferred tax asset arising from Investment Tax Allowance (ITA) amounting to RM246.5 million and from the current period business losses. Accordingly, the Group recorded loss after taxation (LAT) of RM685.0 million.

Share of results of Associates and Joint Ventures (JV)

In the current quarter under review, the share of results from associates recorded losses amounted to RM8.4 million, lower by RM17.0 million as compared to the profits of RM8.6 million for the corresponding quarter in the prior year, due to higher losses from MFMA Development Sdn. Bhd. (MFMA), KAF and Cainiao KLIA Aeropolis Sdn. Bhd. (CKASB).

Share of results of joint ventures in the current quarter under review recorded profits amounting to RM5.0 million, lower slightly by RM0.6 million as compared to the profits of RM5.6 million for the corresponding quarter in the prior year due to higher profit from Airport Cooling Energy Supply Sdn. Bhd. (ACES), however negated by loss from Segi Astana Sdn. Bhd. (SASB).


Commentary On Prospects

MAHB's network of airports recorded 43.0 million passengers in the current year under review from 1 January 2020 to 31 December 2020, a contraction of 69.5% over the prior year. During the same year, the Group's traffic for international and domestic passengers contracted by 78.1% and 61.7% respectively. Correspondingly, the Group's aircraft movements decreased by 58.1% with both international and domestic aircraft movements decreasing by 68.7% and 51.0% respectively.

  1. Malaysia Operations

    Passenger traffic at MAHB operated airports contracted by 75.5% with 25.8 million passengers in the current year under review. Traffic for international and domestic passengers contracted by 82.2% to 9.5 million passengers and 68.7% to 16.3 million passengers respectively. The Reciprocal Green Lane (RGL) arrangement between Malaysia and Singapore allowing essential travels between the two countries beginning 17 August 2020 has registered 20% to 35% month-on-month passenger growth from September to December 2020. International sector remained weak due to the international border restrictions and domestic passenger movements was effected by reinforcement of CMCO across Malaysia due to resurgence in COVID-19 cases.

  2. Overseas Operations

    ISGIA passenger traffic contracted by 52.1% to 17.2 million passengers in the current year under review. International and domestic passenger contracted by 62.7% and 45.2%, respectively. ISGIA surpassed 1 million mark per month after the ease of travel restriction in June 2020. Nonetheless, subsequently passenger movements was effected due to the curfew re-imposition in November, a measure following the resurgence of COVID-19 cases in Turkey and neighbouring countries.

  3. Outlook

    The global economy in 2020 was equally adversely affected by COVID-19. The uncertainties and degree of impact to the economy has caused the International Monetary Fund (IMF) to revise its 2020 global GDP downwards on several occasions. Nevertheless, IMF forecasted that global economy would rebound in 2021. IMF has forecasted Malaysia’s GDP to grow by 7.8% in 2021 from a negative 6.0% estimated for the year 2020. Meanwhile, Bank Negara Malaysia forecasted Malaysia’s GDP to be between 6.5% to 7.5%. The International Air Transport Association (IATA) in their latest report shows a contrast trend between air travel recovery and a strong rebound in the global economy and business confidence for the fourth quarter of 2020. On the other hand, the rebound in economy has positively pushed air cargo sector to perform better in comparison with passenger traffic.

    IATA has projected 2021 global passenger volumes to improve by 56.5% over 2020, reaching 62% of pre-COVID levels. Airport Council International (ACI) meanwhile projected a baseline scenario of 72% growth for 2021 over 2020. The Malaysian Aviation Commission (MAVCOM) has estimated Malaysia’s traffic growth for 2021 to be in the range of 94.2% and 100.3% with number of passengers between 51.7 million to 53.3 million.

    Continuous efforts and measures initiated by airports and airlines with the recommended guidelines by IATA and ACI as well as tightening of Standard Operating Procedures (SOPs) to ensure safety and health of passengers had helped to provide assurance for passengers to travel by air. The breakthrough in vaccines offers optimism for a turning point in air travel recovery while the economy picks up. Traffic recovery is expected to be gradual in line with the distribution of vaccines coupled with the ongoing recovery of the global economy. Travel bubbles arrangements and short haul travel is expected to pave the way and give air travel further momentum in 2021. In addition, the local airlines have made the strategic decision to provide new domestic routes to respond to the COVID-19 market demands. With international borders still closed, they are now focusing on enhancing local connectivity between the states, especially those with heavily frequented tourist destinations and business hubs. 28

  4. Group Cost Optimisation Initiatives

    With the aviation industry affected by the unprecedented travel restrictions and bans, MAHB had taken immediate and pre-emptive measures to mitigate its impact by implementing an aggressive cost optimisation plan. These measures include recalibrating operational efficiencies i.e. rebasing cost and prioritising capital expenditure to conserve cash reserves and ensure that the Group is able to meet its financial and operational obligations. The Group had also pared down non-essential operating costs with the aim of lowering it by at least 20%. As at 31 December 2020, the Group had achieved a reduction of 26% of the core operational expenses as compared to the prior year.