AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 156 26. SIGNIFICANT EVENTS On 4 December 2018, the Fund announced that the Trustee, for and on behalf of the Fund, had entered into 3 conditional sale and purchase agreements with Kentucky Fried Chicken (Malaysia) Sdn Bhd, KFC (Peninsular Malaysia) Sdn Bhd, KFC (Sabah) Sdn Bhd and SPM Restaurants Sdn Bhd on 30 November 2018 for the acquisition of 22 properties located across Malaysia for a purchase consideration of RM115 million. The purchase consideration to be satisied entirely in cash and is intended to be funded via proceeds from the proposed placement and borrowings. The proposed acquisitions are conditional upon the leaseback agreement with QSR Stores Sdn Bhd and Pizza Hut Restaurants Sdn Bhd for the lease of the properties for a period of 3 years commencing from the completion of the proposed acquisitions. The lease is renewable every 3 years up to a maximum of 15 years with an option to renew for a further period of 15 years. As of the date of the issuances of these inancial statements, the acquisitions have not been completed. 27. ADOPTION OF MFRS 9 AND MFRS 15 Adoption of MFRS 15 With the adoption of MFRS 15, revenue is recognised by reference to each distinct performance obligation in the contract with customer. Transaction price is allocated to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisied, which may be at a point in time or over time. There were no material inancial impacts to the statements of inancial position and the statements of proit or loss and other comprehensive income of the Group and of the Fund arising from the adoption of MFRS 15. Adoption of MFRS 9 The accounting policies were changed to relect the application of MFRS 9 from the beginning of the irst MFRS reporting period. MFRS 9 replaces the provisions of MFRS 139 that relate to the recognition, classiication and measurement of inancial assets and inancial liabilities; derecognition of inancial instruments; impairment of inancial assets and hedge accounting. MFRS 9 also signiicantly amends other standards dealing with inancial instruments such as MFRS 7 ‘Financial Instruments: Disclosures’. The cumulative efects of the changes are recognised in the statements of inancial position as at the beginning of the irst MFRS reporting period, which is on 1 January 2018. The nature of adjustments made to the statements of inancial position of the Fund as at 1 January 2018 in respect of items within the scope of MFRS 9 are described as follows: (a) Classiication and measurement of inancial assets Until 31 December 2017, inancial assets were classiied in the following categories: inancial assets at fair value through proit or loss (“FVTPL”), loans and receivables, and available-for-sale (“AFS”) inancial assets. Note 3 sets out the details of accounting policies for classiication and measurement of inancial instruments under MFRS 139. From 1 January 2018, the Fund adopted the following MFRS 9 classiication approach to all types of inancial assets: