Al-`Aqar Healthcare REIT Annual Report 2020

Strategic Performance 37 STATEMENT OF FINANCIAL POSITION Al-`Aqar’s total asset value decreased by RM26.4 million to RM1.65 billion for the current year. The decrease was mainly relating to fair value loss on investment properties. Al-`Aqar’s borrowing increased minimally from RM683.4 million to RM683.6 million, resulting in a gearing ratio of 41.48% against the previous year-end of 40.82%. STATEMENT OF CASH FLOW FOR EACH ACTIVITY Operating Activities Net cash generated from operating activities was RM82.6 million in FY2020 which was lower than RM83.7 million in FY2019. The lower amount in FY2020 was mainly due to COVID-19 rental support. Investing Activities Al-`Aqar used RM2.4 million for enhancements of investment properties during the financial year and offset by income received on investment of RM1.0 million. Financing Activities Net cash used in financing activities was RM90.3 million, contributed by income distribution paid to unitholders of RM54.0 million, financing cost paid of RM35.1 million and increase in restricted cash of RM1.2 million partially offset by net proceeds from borrowing amounting of RM0.1 million. Cash and bank balances stood at RM61.1 million as of 31 December 2020, lower by RM6.3 million from RM67.5 million (FY2019). PERFORMANCE BENCHMARK PERFORMANCE BENCHMARK FY2019 FY2020 COMMENTARY Management expense ratio (%) 0.25 0.32 Management expenses ratio increase by 28% mainly due to increase in managers’ fee and trustee fee. Total return (%) 6.63 4.44 Total return for the financial year was 4.44% due to lower distribution yield. Average annual total return (5 years) (%) 4.90 4.41 The 5-year average annual total return decreased due to negative return achieved in FY2017 and FY2018. Average annual total return (3 years) (%) 0.19 2.80 The 3-year average annual total return increased due to positive return achieved in FY2019 and FY2020. Distribution yield (%) 5.87 5.20 Distribution yield has decreased from 5.87% to 5.20% due to decrease in DPU. NAV per unit 1.3024 1.2819 NAV per unit recorded a decrease of 1.5% due to the total comprehensive income recorded for the year 2020 (RM24.6 million) and payment of final income distribution FY2019 (RM14.9 million) and interim income distributions FY2020 (RM24.7 million). Notes: i. The ratio of expenses incurred in operating Al-`Aqar of RM3.1 million (FY2019: RM2.4 million) to the weighted average NAV of Al-`Aqar of RM964.0 million (FY2019: RM944.6 million). ii. Total return represents the change in unit price during the year plus distribution yield for the year. iii. Average annual total return is the sum of the return rates of Al-`Aqar over a given numbers of years divided by that number of years. iv. Based on DPU of 6.81 sen (FY2019: DPU of 7.75 sen) divided by its closing price as at 31 December 2020 of RM1.31 (31 December 2019: RM1.32). v. Net asset value of Al-`Aqar is determined by deducting the value of all Al-`Aqar’s liabilities from the total asset value, divided by total issued units. Management Discussion and Analysis