AL-SALAM REIT ANNUAL REPORT 2020

153 ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CONT’D) 19. MANAGEMENT EXPENSE RATIO ('MER') Fund 2020 2019 % % MER 0.66 0.60 The calculation of MER is based on the total fees of the Fund incurred for the year, including the Manager’s fees, Trustee’s fees, audit fee, tax agent’s fee and administrative expenses, to the average net asset value of the Fund during the year calculated on a monthly basis. Since the average net asset value is calculated on a monthly basis, comparison of the MER of the Fund with other Real Estate Investment Trusts (“REIT”) which use a different basis of calculation may not be an accurate comparison. 20. SIGNIFICANT RELATED PARTY TRANSACTIONS For the purposes of these have financial statements, related companies are considered to be related to the Group and the Fund if the Group and the Fund have the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the Fund and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Significant related party transactions other than those separately disclosed elsewhere in the financial statements are as follows: Group Fund 2020 2019 2020 2019 RM RM RM RM Rental income received/receivable from related companies 34,958,508 37,299,435 34,958,508 37,542,637 Other property management fees charged by related companies of the Manager (including in other operating expenses) 6,104,009 7,442,450 6,104,009 7,442,450 Finance cost paid/payable to a subsidiary - - 12,309,689 9,035,772 The related party transactions described above were entered into in the normal course of business and are based on negotiated and mutually agreed terms. Amount due to a subsidiary represents unsecured advances received from the proceeds raised from Islamic financing by the subsidiary of RM516,747,106 (2019: RM162,044,846). The finance costs and repayment terms of the unsecured advances mirror the finance costs and repayment terms of the Islamic financing of Sukuk Ijarah raised by the said subsidiary as disclosed in Note 17. Also included in the amount due to a subsidiary are the accrued profit from the cash reserves totaling RM5,220,275 (2018: RM1,741,045) that are presented as net amount as there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. The detail breakdown of amount owing to a subsidiary company are as follows: 2020 2019 RM RM Fund Amount due to a subsidiary 520,000,000 162,785,000 Less: Transaction costs (3,252,894) (740,154) 516,747,106 162,044,846 Less: Accrued interest from cash reserve (5,220,275) (1,741,045) 511,526,831 160,303,801