Al-`Aqar Healthcare REIT Annual Report 2019

06 FINANCIAL STATEMENT 154 Notes To The Financial Statements For The Financial Year Ended 31 December 2019 (Continued) The Group The Fund 2019 2018 2019 2018 RM RM RM RM Financial liabilities at amortised cost Other payables and accrued expenses 30,950,003 27,002,050 25,880,741 22,792,859 Amount due to a subsidiary - - 555,577,717 556,002,050 Islamic financing 683,435,584 603,705,130 109,136,526 29,683,646 714,385,587 630,707,180 690,594,984 608,478,555 Fair value of financial instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: • in the principal market for the asset or liability; • in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group and the Fund. The Manager considers that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair values and categorised under level 3 of fair value hierarchy. 23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group and the Fund are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, financing rate risk and foreign currency risk. The Group and the Fund have taken measures to minimise their exposure to risks associated with their financing, investing and operating activities and operate within clearly defined guidelines as set out in the SC Guidelines. The following sections provide details regarding the Group’s and the Fund’s exposure to the above-mentioned financial risks and the objectives, policies and procedures for the management of these risks: (a) Credit Risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its contractual obligations. Credit risk arises from cash and cash equivalents, amount due from a subsidiary as well as credit exposures primarily from outstanding trade and other receivables. 22. FINANCIAL INSTRUMENTS (CONTINUED)