MANAGEMENT DISCUSSION AND ANALYSIS Section 1 - FINANCIAL REVIEW (CONT’D) Profit for the year was RM60.7 million (FY2022: RM60.1 million) comprising realised profit of RM63.2 million (FY2022: RM67.8 million) and unrealised loss of RM2.5 million (FY2022: RM7.6 million). Despite a higher NPI of RM10.3 million, realised profit decreased 6.7% or RM4.5 million in FY2023, mainly due to an increase in financing cost of RM11.5 million and trust expenses of RM4.6 million. The higher financing cost was due to the drawdown of additional Islamic financing in December 2022 and the full impact of a 100 basis point OPR hike in FY2022, as well as a 25 basis point OPR hike in FY2023. Higher other trust expenses were mainly due to revisions in management fee and professional fees incurred in FY2023. The unrealised loss was mainly related to the fair value adjustment of Jeta Gardens, given the changes in the Australian aged care industry landscape. PROFIT FOR THE YEAR Al-`Aqar’s total asset value decreased by RM11.1 million (or 0.6%) to RM1.8 billion as of the end-FY2023. The decrease was mainly related to fair value losses on investment properties. Al-`Aqar’s financing decreased from RM855.6 million (or 11.4 %) to RM757.7 million, resulting in a lower gearing ratio of 40.8% against 45.8% as at end-FY2022. STATEMENT OF FINANCIAL POSITION STATEMENT OF CASH FLOW FOR EACH ACTIVITY: Total income available for distribution for FY2023 of the Fund was RM64.7 million. The Fund had distributed three interim income distributions for the period from January 2023 to September 2023, totalling 5.90 sen per unit and RM47.9 million. On 24 January 2024, the Fund declared a final income distribution of 2.00 sen per unit, totalling RM16.8 million for the period from October 2023 to December 2023. The said distribution was paid on 29 February 2024. In total, the distribution per unit (‘’DPU’’) for FY2023 is 7.90 sen, a slight decrease of 2.5% compared to the DPU of 8.10 sen for FY2022. The DPU of 8.10 sen for FY2022 was boosted by the cost savings from the refinancing of Al-`Aqar’s Sukuk in FY2021. The distribution totalled RM64.7 million for FY2023, which represents 99.9% of the income available for distribution, the highest payout in the past 10 years. INCOME AVAILABLE FOR DISTRIBUTION OPERATING ACTIVITIES Net cash generated from operating activities increased to RM101.2 million in FY2023 from RM88.9 million in FY2022. This is in line with the increase in NPI. INVESTING ACTIVITIES Investment income jumped by 57.2% to RM1.5 million (FY2022: RM0.9 million) given the higher OPR. FINANCING ACTIVITIES Al-`Aqar utilised RM116.6 million for financing activities during the year. On 27 April 2023, Al-`Aqar has fully redeemed its RM100.0 million of Revolving Credit-i mainly via proceeds from the private placements of RM98.3 million and internal fund of RM1.7 million, in order to provide headroom for future acquisitions. Total financing costs paid were higher as compared to the preceding year, mainly due to an increase in OPR as well as additional financing obtained in December 2022 in relation to the acquisitions of three asset expansions. Cash and cash equivalents stood at RM84.3 million as of end-FY2023, lower by RM11.8 million (or 12.3%) from RM96.1 million as of end-FY2022. 25 BUSINESS OVERVIEW 1 3 4 5 6 AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2023
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