Al-`Aqar Healthcare REIT Annual Report 2018

MANAGEMENT DISCUSSION & ANALYSIS KEY FINANCIALS FY2017 FY2018 GROWTH RM’000 RM’000 % The Group Gross revenue 99,648 102,649 3.0 Net Property Income (NPI) 93,207 96,609 3.6 Profit for the year (realised) 59,852 61,032 2.0 EPU (realised) (sen) 8.22 8.37 1.8 The Fund Income available for distribution 58,427 56,912 (2.6) DPU (sen) 7.70 7.70 - STRATEGIC PERFORMANCE 31 PROFIT FOR THE YEAR Profit for the year was RM85.4 million (FY2017: RM82.2 million) comprising realised profit of RM61.0 million (FY2017: RM59.8 million) and unrealised profit of RM24.4 million (FY2017: RM22.3 million). Realised profit increased 2.0% or RM1.2 million in FY2018 mainly due to new rental income contributed from car park block at KPJ Selangor Specialist Hospital, which was acquired in December 2017 as well as modest rental revision for 2018 but partially offset by higher financing cost due to refinancing exercise. The unrealised profit of RM24.4 million mainly relates to fair value gains on investment properties, which was higher by RM2.0 million. The higher fair value gain for the year was mainly attributable to those properties namely KPJ Damansara Specialist Hospital, KPJ Tawakkal Specialist Hospital, KPJ Healthcare University College, Nilai, KPJ Johor Specialist Hospital and KPJ Ipoh Specialist Hospital. INCOME AVAILABLE FOR DISTRIBUTION Total income available for distribution for FY2018 of the Fund was RM56.9 million. This was derived from net realised income of RM59.7 million, less capital expenditures incurred during the year of RM2.8 million. The Fund had distributed interim income distributions of 5.63 sen per unit amounting to approximately RM41.2 million for the period from 1 January to 30 September 2018. On 30 January 2019, the Fund declared a final income distribution of 2.07 sen per unit totalling RM15.2 million for the period from 1 October to 31 December 2018. The said distribution was paid on 28 February 2019. Total distribution per unit (“DPU”) for FY2018 is 7.70 sen per unit totalling RM56.4 million, which represents 99% of the income available for distribution. CONTRIBUTION BY SEGMENT The Group has a single operating segment. For management purposes, the Group is organised into business units based on the geographical location of customers and assets, and has two reportable segments as follows: I. Malaysia II. Australia REALISED PROFIT INCREASED 2.0% OR RM1.2 MILLION IN FY2018 MAINLY DUE TO NEW RENTAL INCOME CONTRIBUTED FROM CAR PARK BLOCK AT KPJ SELANGOR SPECIALIST HOSPITAL, WHICH WAS ACQUIRED IN DECEMBER 2017 AS WELL AS MODEST RENTAL REVISION FOR 2018 BUT PARTIALLY OFFSET BY HIGHER FINANCING COST DUE TO REFINANCING EXERCISE. Financial Review