MANAGEMENT DISCUSSION AND ANALYSIS FUTURE POTENTIAL CHALLENGES The Manager of Al-`Aqar envisaged future potential challenges to exploit opportunities in order to mitigate any risks arising with their implementation of effective business strategies. The below paragraph highlighted the future potential challenges in the healthcare industry. The uncertainties within the aged care industry have thus affected the property value as the demand for senior living facilities is declining. Many providers appeared to be apprehensive as to the direction of the reforms, timing, and higher expectations towards the level and quality of aged care services. The pandemic has also worsened the situation when 74% of Australian COVID-19 pandemic deaths in 2020 were reported to occur in aged care facilities. This has led to a general apprehension by new tenants before commit entering into aged care facilities. There is no exception to our property in Australia, Jeta Gardens (“JG”), as the occupancy rate of JG has fallen from 95% in 2018 to 79% in 2020 and subsequently contributed to a negative financial performance of JG. The rental revision announced in October 2021 has beenmade based on advice from the appointed valuer, CBRE Australia, and the new rental arrangement is based on the current market rate and property value. The rental revision does not have a material impact on the distributable income of Al-`Aqar for the FY 31 December 2021, as the rental revision has only taken effect from 2 October 2021 and the reduction in the income is partially offset by the cost savings from the refinancing of Sukuk. In addition, the Manager of Al-`Aqar is looking into series of acquisitions from KPJ pipeline and third-party assets, which it is expected to contribute to a positive DPU growth of Al-`Aqar. Although COVID-19 has laid bare the stark weaknesses in almost every health care system due to its formidable obstacle impact on social and economic aspects, Al-`Aqar remains resilient with its sustainable business strategies. For the year under review, Al-`Aqar has recorded a slightly lower gross revenue of RM114.1 million (FY2020: RM115.7 million). Nevertheless, the Group has successfully reported a higher profit at RM73.5 million (FY2020: RM12.6 million). The increase in realised profit of RM8.2 million and unrealised profit of RM52.7 million was mainly due to saving from refinancing exercises during the year and gain on fair value adjustment respectively. CORPORATE OVERVIEW STRATEGIC PERFORMANCE THE DRIVING FORCES SUSTAINABILITY STATEMENT 049 GOVERNANCE STRUCTURE FINANCIAL REPORTS
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