MANAGEMENT DISCUSSION AND ANALYSIS OPERATIONS REVIEW The re-imposition of nation-wide containment measures (MCO 2.0 in January 2021 & MCO 3.0 in May 2021) had dampened the growth momentum. Healthcare industry was not spared too. Considering that private hospitals are generally not built to handle infectious diseases like COVID-19 cases, therefore KPJ Group’s (the main sponsor of Al-`Aqar) stance and focus on the public-private partnership arrangement is to take on and treat non-COVID-19 patients. Nevertheless, throughout 2021, KPJ has worked to support the vaccination process in Malaysia, being the largest private healthcare provider supporting the National Immunisation Programme operating 25 PPVs across the country. Thus, has resulted KPJ Group to report a decline in their financial performance and the allocation of more than 10% of its workforce and clinical expertise throughout Malaysia has contributed to the higher fixed cost to the Group. As a long-term business partner, Al-`Aqar has granted the rental support initiative. However, it is expected not to recur in the long term and will be compensated by the financing cost savings initiative. It is also expected that KPJ to return to pre-COVID-19 level by financial year 2022. The gradual relaxations for more economic sectors to operate, along with higher adaptability of firms to the new operating environment and continued policy support, would partly mitigate the impact and allow the economy to resume its recovery path. The Manager also does not expect any significant disruption to the earning of Al-`Aqar as the Fund earning is underpinned by the long-term lease arrangements with the KPJ Group. ASSET ENHANCEMENT INITIATIVES The Group strategy is to enhance its initiatives in optimising the value of the stakeholders. This is achieved via asset enhancement strategy. We always put efforts on upgrading our performance in properties and services to their full potential and this milestone has increase investors’ confidence in our portfolio. This is evidenced by the efforts of the Manager in implementing asset initiatives worth up to RM4.76 million in FY2021. AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2021 046
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