AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 146 Carrying amount Fair value The Fund RM RM 2018 Financial liability at amortised cost Islamic inancing - non-current 348,592,979 323,399,500 Amount owing to a subsidiary 159,317,928 157,415,808 507,910,907 480,815,308 2017 Financial liability at amortised cost Islamic inancing - non-current 347,698,967 341,932,000 The fair value of the non-current Islamic inancing was estimated using discounted cash low analysis based on market equivalent proit rate of 5.58% (2017: 5.21%) per annum for similar type of instruments of similar risk and cash low proiles. The disclosure of the fair value of the non-current Islamic inancing is considered a Level 2 fair value hierarchy disclosure. 22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s and the Fund’s inancial risk management policies seek to ensure that adequate inancial resources are available for the development of the Group’s and Fund’s portfolios whilst managing their credit risks, liquidity risks and inancing rate risks. The Group and the Fund have taken measures to minimise their exposure to the risks associated with its inancing, investing and operating activities and operates within clearly deined guidelines as set out in the SC Guidelines and the Fund’s Trust Deed. The following sections provide details regarding the Group’s and the Fund’s exposure to the above-mentioned inancial risks and the objectives, policies and procedures for the management of these risks: (a) Credit Risk Management Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in inancial loss to the Group and the Fund. Credit risk with respect to trade and other receivables is managed through the application of credit approvals, credit limits and monitoring procedures. Credit is extended to the customers based upon careful evaluation of the customers’ inancial condition and credit history. Exposure to credit risk At the reporting date, the Group’s and the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of inancial assets recognised in the statements of inancial position. Information regarding credit enhancements for trade and other receivables is disclosed in Note 14. Credit risk concentration profile The Group and the Fund determine concentrations of credit risk by monitoring individual profile of their trade receivables on an ongoing basis. At the end of the reporting period, the Group and the Fund do not have any significant exposure to any individual customer or counterparty nor do they have any major concentration of credit risk related to any financial instrument.