AL-SALAM REIT ANNUAL REPORT 2019

Exposure to credit risk At the end of the reporting period, the Group’s and the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. Information regarding credit enhancements for trade receivables, other receivables and amount owing from related companies 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. Financial instruments that are neither past due nor impaired Information regarding receivables that are neither past due nor impaired is disclosed in Note 14. Deposits with banks and other financial institutions are placed with reputable financial institutions with good credit ratings. (b) Liquidity Risk Management Liquidity risk is the risk that the Group and the Fund may encounter difficulty in meeting financial obligations on time due to shortage of funds. The Group’s and the Fund’s exposure to liquidity risk arises from mismatches of the maturities of financial assets and liabilities. The Group’s and the Fund’s approach are to maintain a balance between continuity of funding and flexibility through the use of their credit and financing facilities. The Group and the Fund manage liquidity risk by maintaining adequate reserves, banking facilities and financing facilities, by continuously monitoring forecast and actual cash flow from their portfolios, and by matching the maturity profiles of financial assets and liabilities. As of 31 December 2019, the current liabilities of the Group and of the Fund have exceeded the current assets by RM464,160,448 and RM464,069,211 respectively. The net current liabilities position are mainly derived from the CMTF-I and IMTNs of Issue 1 which will come due in May 2020 and August 2020 respectively as disclosed in Note 17. The Manager believes that the Group and the Fund will meet their short term obligation as and when they fall due based on the assumption that the Group and the Fund will be able to refinance their borrowings when it matures. The refinancing of CMTF-I and IMTNs Issue 1 will be done via the second issuance of RM512,785,000 in nominal value of IMTNs (“Issue 2”) under the same Sukuk Ijarah Programme. The Group and the Fund are actively pursuing the issuance with the bankers. Financial assets The following table details the Group’s and the Fund’s expected contractual maturity for its non-derivative financial assets: Weighted average On demand effective Carrying Contractual or within profit rate amount cash flows 1 year % RM RM RM The Group 31 December 2019 Non-profit bearing financial assets: Trade receivables 6,538,562 6,538,562 6,538,562 Other receivables 1,794,908 1,794,908 1,794,908 Amount owing by related companies 785,646 785,646 785,646 Profit bearing financial asset: Fixed profit rate instruments - deposits financial institutions 3.19 36,069,000 34,449,337 34,449,337 Cash and bank balances 8,422,103 8,422,103 8,422,103 53,610,219 51,990,556 51,990,556 AL-SALĀM REIT • 142 ANNUAL REPORT 2019 For The Financial Year Ended 31 December 2019 (Cont’d) Notes To The Financial Statements