AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 150 (c) Financing Rate Risk Management Financing rate risk is the risk that the fair value or future cash lows of the Group’s and the Fund’s inancial instruments will luctuate because of changes in the market inancing rates. The Group and the Fund manage their inancing rate exposure by maintaining matching their cash lows from rental income and ixed rate proit bearing deposits with the Group’s and the Fund’s variable rate proit bearing borrowings. The Group and the Fund place cash deposits on a short-term basis and therefore allows the Group and the Fund to respond to signiicant changes of inancing rate promptly. Financing rate sensitivity analysis The sensitivity analysis below has been determined based on the exposure to inancing rates on the Group’s and the Fund’s variable rate proit bearing borrowings. The analysis is prepared assuming the amount of variable rate proit bearing borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used for the analysis and this represents management’s assessment of reasonable possible change in inancing rate. If inancing rates had been 25 basis point higher/lower and all other variables were held constant, the Group’s and the Fund’s net proit/total comprehensive income for the year would decrease/increase by RM1,281,963 and RM1,281,963 (2017: RM Nil and RM882,750) respectively. The assumed movement in basis points for inancing rate sensitivity analysis is based on the currently observable market environment. The Fund 31 December 2017 Non-profit bearing financial liabilities: Other payables and accrued expenses Amount owing to related companies Profit bearing financial liabilities: Islamic Financing - Current Variable profit rate instruments - Islamic financing - Non-current Weighted Average e ective profit rate % 5.49 5.21 Carrying amount RM 21,294,725 366,571 3,100,000 347,698,967 372,460,263 Contractual cash flows RM 21,294,725 366,571 3,270,190 394,114,696 419,046,182 On demand or within 1 year RM 6,945,237 366,571 3,270,190 19,496,594 30,078,592 Within 2 to 5 years RM 14,349,488 - - 376,618,102 390,967,590