AL-SALAM REIT ANNUAL REPORT 2020

38 AL-SALĀM REIT MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL AND BUSINESS REVIEW STATEMENT OF FINANCIAL POSITION Al-Salām REIT’s total asset value increased slightly at RM1.25 billion as at 31 December 2020 (FY2019: RM1.25 billion). Total liabilities were higher by 5% or RM32 million, mainly due to the drawdown of Islamic financing of RM31.0 million during the year in relation to the acquisition of 5 QSR properties. OVERVIEW OF AL-SALĀM REIT PERFORMANCE BENCHMARKS Performance Benchmarks FY2019 FY2020 Commentary i. Management expense ratio (%) 0.60 0.66 Management expense ratio of 0.66% increased by 10% due to decline in NAV. ii. Distribution Yield (%) 5.86 3.78 Distribution yield has decreased from 5.86% to 3.78% due to lower DPU. iii. Total Return (%) 5.86 (28.32) Total return for the financial year turned negative 28.32% (FY2019: 5.86%) contributed by 32.1% capital loss (FY2019: capital loss of 0%) plus distribution yield of 3.78% (FY2019: 5.86%) iv. Average annual total return (5 years) (%) 3.75 (2.95) The 5-year average annual total return decreased due to negative return recorded in 2015, 2017, 2018 and 2020. v. Average annual total return (3 years) (%) (2.36) (11.62%) The 3-year average annual total return decreased due to negative return recorded in 2017, 2018 and 2020. vi. NAV per unit (after income distribution) (RM) 1.0619 1.0178 NAV per unit decreased by 4.2% mainly due to loss in fair value of investment properties. Notes: i. The ratio of expenses incurred in operating Al-Salām REIT of RM4.1 million (FY2019: RM3.7 million) to the weighted average NAV of Al-Salām REIT of RM620.2 million (FY2019: RM617.8 million). ii. Based on DPU of 2.08 sen (FY2019: 4.75 sen) divided by its closing price as at 31 December 2020 of RM0.55 (FY2019: RM0.81). iii. Total return represents the change in unit price during the year plus distribution yield for the year. iv. Average annual total return is the sum of the return rates of Al-Salām REIT over a given number of years divided by that number of years. v. Average annual total return is the sum of the return rates of Al-Salām REIT over a given number of years divided by that number of years. vi. 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. STATEMENT OF CASH FLOWS Operating activities Net cash generated from operating activities was RM28.4 million in FY2020, lower by RM34.9 million in FY2019. This was mainly due to lower revenue from retail, segment provision of rental support to tenants and longer collection period from tenants. Investing activities Al-Salām REIT spent RM1.7 million for investing activities in FY2020 (FY2019: RM0.2 million). Investing activities for the financial year comprises the acquisition of 5 QSR properties as well as expenditure on equipment and capex.