Al-`Aqar Healthcare REIT Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS 4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) 4.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (a) Fair value of investment properties The fair value of the Group’s and of the Fund’s investment properties has been arrived at on the basis of a valuation carried out by Messrs. Cheston International (KL) Sdn Bhd, Messrs. Knight Frank Malaysia Sdn Bhd and Messrs. Henry Butcher Malaysia Sdn Bhd, independent valuers not related to the Group and the Fund, in accordance with Malaysia Valuation Standards issued by the Board of Valuers, Appraisers and Estate Agents, Malaysia. The fair value was determined based on capitalisation of net income method (“investment method”) as the primary valuation method with comparison and cost methodologies as a secondary check. In estimating the fair value of the investment properties, the highest and best use of the investment properties is their current use. The valuers have considered the results of the above methods in their valuation and applied professional judgement in the determination of the fair value of the Group’s and of the Fund’s investment properties. Further details are disclosed in Note 11. (b) Impairment of investment in a subsidiary The Fund reviews the carrying amount of investment in subsidiary at the end of each reporting period. The recoverable amount of the investment in subsidiary has been determined on the basis of its fair value less cost of disposal. The fair value of disposal is determined based on the realisable value of the assets of the subsidiary to the Fund determined using the foreign exchange rate at the end of the reporting period. The net carrying amount of investment in subsidiary as at 31 December 2018 is RM35,492,186 and an impairment loss amounting to RM7,000,000 has been recognised in profit or loss during the current financial year. Further details are disclosed in Note 12. 5. REVENUE The Group The Fund 2018 2017 2018 2017 RM RM RM RM Rental income from: KPJ Ampang Puteri Specialist Hospital 9,750,629 9,559,440 9,750,629 9,559,440 KPJ Tawakkal Specialist Hospital 8,774,968 8,602,910 8,774,968 8,602,910 KPJ Damansara Specialist Hospital 8,568,734 8,400,720 8,568,734 8,400,720 KPJ Johor Specialist Hospital 8,420,998 8,255,880 8,420,998 8,255,880 KPJ Klang Specialist Hospital 7,294,165 7,316,432 7,294,165 7,316,432 KPJ Ipoh Specialist Hospital 5,355,459 5,250,450 5,355,459 5,250,450 KPJ Selangor Specialist Hospital 5,687,512 4,683,496 5,687,512 4,683,496 KPJ Penang Specialist Hospital 4,624,162 4,552,991 4,624,162 4,552,991 KPJ Seremban Specialist Hospital 4,746,045 4,672,998 4,746,045 4,672,998 KPJ Healthcare University College, Nilai 4,406,749 4,170,903 4,406,749 4,170,903 FINANCIAL REPORTS 123 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 (CONTINUED)