Al-`Aqar Healthcare REIT Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS 25. CAPITAL MANAGEMENT The Group and the Fund manage their capital to ensure that entities in the Group and the Fund will be able to continue as going concerns while maximising the return to unitholders through the optimisation of the debt and equity balance. The Group’s and the Fund’s overall strategy remain unchanged from 2017. The capital structure of the Group and of the Fund consists of net debt (borrowings as detailed in Note 17) offset by cash and cash equivalents and unitholders’ fund of the Group and of the Fund (comprising unitholders’ capital and undistributed income). The Group and the Fund are required to comply with the financial covenants as disclosed in Note 17 and the SC Guidelines on capital requirements. As at 31 December 2017, the Group and the Fund had complied with all financial covenants as disclosed in Note 17. The SC Guidelines require that the total borrowings of a fund (including borrowings through issuance of debt securities) should not exceed 50% of the total asset value of the Fund at the time the borrowings are incurred. Notwithstanding, the Fund’s total borrowings may exceed this limit with the sanction of the unit holders by way of an ordinary resolution. The Manager’s risk management committee reviews the capital structure of the Group and of the Fund on a regular basis to ensure that the SC Guidelines are complied with. Gearing ratios The Group’s and the Fund’s gearing ratio are calculated based on the proportion of total borrowings to the total asset value in accordance with the SC Guidelines. The gearing ratio at the end of the reporting period is as follow: The Group The Fund 2018 2017 2018 2017 RM RM RM RM Total borrowings 603,705,130 573,580,634 585,685,696 555,538,535 Total assets value 1,580,468,414 1,556,424,952 1,551,718,035 1,525,031,371 Total borrowings to total assets value ratio 38.20% 36.85% 37.74% 36.43% 26. PORTFOLIO TURNOVER RATIO (“PTR”) The Fund 2018 2017 PTR (times) - 0.06 The calculation of PTR is based on the average of total acquisitions and total disposals of investments in the Fund for the year to the average net asset value during the year calculated on a monthly basis. 27. SIGNIFICANT EVENT On 4 May 2018, the Group successfully refinanced its Issue 1 IMTNs that had reached maturity. The refinancing of the Issue 1 IMTNs was effected via the second issuance of IMTNS of RM575,000,000 in nominal value (“Issue 2”) under the same Sukuk Ijarah Programme as disclosed in Note 17. FINANCIAL REPORTS 149 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 (CONTINUED)