AL-SALAM REIT ANNUAL REPORT 2019

Financial & Business Review 32 ANNUAL REPORT 2019 BUSINESS REVIEW Retail segment remained as the key contributor to Al-Salām REIT with contribution to revenue and NPI of 63% (FY2018: 63%) and 56% (FY2018: 55%) respectively. The retail segment’s NPI increased by 19.2% to RM38.6 million from RM32.4 million in FY 2018. Despite lower NPI of KOMTAR JBCC (16.8% or RM4.2 million mainly due to lower occupancy rate, lower percentage rent and higher operating expenses) as compared to previous year, the NPI from the newly acquired Mydin Hypermart Gong Badak of RM13.8 million (which includes and unbilled rental income) has resulted in the increase. The office segment’s contribution to the total revenue and NPI was stable at 10% and 8% respectively. During the financial year, Menara KOMTAR occupancy rate decreased slightly from 91% from 89%. The food and beverage segment witnessed a higher contribution of revenue and NPI as compared to those from previous year. This is due to the rental from the newly acquired 17 QSR Properties of RM4.5 million has resulted in the increase. PROFIT FOR THE YEAR Profit for the year was RM36.2 million (FY2018: RM40.3 million) comprising realised profit of RM28.4 million (FY2018: RM31.9 million) and unrealised profit of RM7.8 million (FY2018: RM8.4 million). Realised profit was lower 10.9% from the previous year mainly due to lower NPI of KOMTAR JBCC (RM4.2 million). The unrealised profit of RM7.8 million comprised of fair value gain of RM3.6 million and unbilled rental income from Mydin Hypermart Gong Badak of RM4.2 million. The higher net fair value gain was mainly attributable to F&B related properties. DISTRIBUTION PER UNIT (DPU) Total income available for distribution for FY2019 was RM28.4 million (FY2018: RM31.9 million). The Fund had distributed interim income distributions of 3.34 sen per unit amounting approximately RM19.4 million on 12 July 2019, 17 October 2019 and 10 January 2020 respectively. On 30 January 2019, the Manager, declared a final income distribution of 1.41 sen per unit totalling RM8.2 million. The said distribution was paid on 28 February 2020 and has not been included as a liability in the financial statements as of 31 December 2019. Total income distribution for FY2019 is 4.75 sen per unit (FY2018: 5.35 sen) totaling RM27.6 million, which represents 97.0% of the income available for distribution. STATEMENT OF FINANCIAL POSITION Al-Salām REIT’s total asset value increased to RM1.25 billion as at 31 December 2019 compared to RM1.16 billion in the previous year. The increase of RM94.9 million was derived from acquisition of 17 QSR Properties of RM86.7 million and gain in fair value of investment properties and capex incurred of RM8.2 million. PERFORMANCE BENCHMARK Performance Benchmark FY2018 FY2019 Commentary i. Distribution Yield (%) 6.6% 5.86% Distribution yield has decreased from 6.6% to 5.86% due to lower DPU ii. Total Returns (%) -12.4% 5.86% Total return for the financial year was 4.7% (FY2018: -12.4%) contributed by 0% capital loss (FY2018: capital loss of 19%) plus distribution yield of 5.86% (FY2018: 6.6%) iii. NAV per unit 1.0471 1.0619 NAV per unit increased by 0.5% mainly arising (after income distribution)(RM) from gain on fair value of properties Notes: i. Based on DPU of 4.75 sen (FY2018: 5.35 sen) divided by its closing price as at 31 December 2019 of RM0.81 (FY2018: RM0.81). ii. Total return represents the change in unit price during the year plus distribution yield for the year. iii. Net asset value per unit is determined by deducting the value of all Al-Salām REIT’s liabilities from the total asset value divided by total issued units. AL-SALĀM REIT •