AL-SALAM REIT ANNUAL REPORT 2017

162 AL-SALĀM REIT ANNUAL REPORT 2017 24. CAPITAL MANAGEMENT The Fund manages its capital to ensure that the Fund will be able to continue as going concern while maximising the return to unitholders through the optimisation of the debt and equity balance. The Fund’s overall strategy remain unchanged from 2016. The capital structure of the Fund consists of net debt (borrowings as detailed in Note 16) offset by cash and cash equivalents (Note 14) and Unitholders’ fund of the Fund (Note 17) (comprising Unitholders’ capital and undistributed income). The Fund is not subject to any externally imposed capital requirements. However, the Fund is required to comply with the SC Guidelines on borrowings. The SC Guidelines requires that the total borrowings of the 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 unitholders by way of an ordinary resolution. The Manager’s risk management committee reviews the capital structure of the Fund on a regular basis to ensure that the SC Guidelines are complied with. Gearing ratios The Fund’s gearing ratios are calculated based on the proportion of total borrowings to the total asset value in accordance with the SC Guidelines. The gearing ratios at the end of the reporting period is as follows. 2017 2016 RM RM Total borrowings (Note 16) 350,798,967 346,804,955 Total assets value as per statement of financial position 988,755,898 978,181,989 Total borrowings to total assets value ratio 35.5% 35.5% NOTES TO THE FINANCIAL STATEMENTS - CONT’D