AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 155 24. CAPITAL MANAGEMENT The Group and the Fund manage their capital to ensure that the Group and 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 Group’s and the Fund’s overall strategy remain unchanged from 2017. The capital structure of the Group and the Fund consist of net debt (borrowings as detailed in Note 17) ofset by cash and cash equivalents (Note 15) and Unitholders’ fund of the Fund (Note 18) (comprising Unitholders’ capital and undistributed income). The Group and the Fund are not subject to any externally imposed capital requirements. However, the Group and the Fund are required to comply with the SC Guidelines on borrowings. The SC Guidelines requires that the total borrowings of the Group and the Fund (including borrowings through issuance of debt securities) should not exceed 50% of the total asset value of the Group and the Fund at the time the borrowings are incurred. Notwithstanding, the Group’s and 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 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 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. The Group The Fund 2018 2018 2017 RM RM RM Total borrowings (Note 17) 509,527,596 348,592,979 350,798,967 Amount due to a subsidiary - 159,317,928 - 509,527,596 507,910,907 350,798,967 Total assets value as per statements of inancial position 1,156,439,206 1,153,934,355 988,755,898 Total borrowings to total assets value ratio 44.1% 44.0% 35.5% 25. COMMITMENTS The Group and the Fund lease out their investment properties under operating leases. The future minimum lease payments to be received under non-cancellable leases are as follows: The Group The Fund 2018 2018 2017 RM RM RM Less than one year 19,773,000 19,773,000 50,262,021 Between one and ive years 350,000,000 350,000,000 211,516,053 More than ive years 162,785,000 162,785,000 168,244,931 532,558,000 532,558,000 430,023,005