AL-SALAM REIT ANNUAL REPORT 2020

157 ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CONT’D) 22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D) (c) Interest rate risk I nterest rate risk is the risk that the fair value or future cash flows of the Group’s and the Fund’s financial instruments will fluctuate because of changes in the market interest rates. T he Group and the Fund manage their interest rate exposure by maintaining matching their cash flows from rental income and fixed rate profit bearing deposits with the Group’s and the Fund’s variable rate profit bearing borrowings. The Group and the Fund place cash deposits on a short-term basis and therefore allows the Group and the Fund to respond to significant changes of interest rate promptly. Sensitivity analysis for interest rate risk A t the reporting date, if interest rates had been 25 basis points lower/higher, with all other variables held constant, the Group's and Fund’s (loss)/profit before tax would have been: Group Fund Effect on loss Effect on profit Effect on loss Effect on profit before tax before tax before tax before tax (Decrease)/Increase (Decrease)/Increase 2020 2019 2020 2019 RM RM RM RM Interest rate decreased by 25 basis points (1,525,075) 1,409,356 (238,750) 1,008,219 Interest rate increased by 25 basis points 1,525,075 (1,409,356) 238,750 (1,008,219) T he assumed movement in basis points for interest rate sensitivity analysis is based on a prudent estimate of the current market environment. 23. SEGMENT REPORTING Segment information is presented in respect of the Group’s and the Fund’s business segments based on the nature of the industry of the Group’s and Fund’s investment properties, which reflect the Group’s and the Fund’s internal reporting structure that are regularly reviewed by the Group’s and the Fund’s chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance. For management purposes, the Group and the Fund are organised into the following operating divisions: • Retail outlets • Office buildings • Food and beverage (“F&B”) properties comprising restaurant and non-restaurant outlets • Other comprising fund level operations No information on geographical areas is presented as the Group and the Fund operate solely in Malaysia. The accounting policies of the reportable segments below are the same as the Group’s and the Fund’s accounting policies described in Note 2.