AL-SALAM REIT ANNUAL REPORT 2020

162 AL-SALĀM REIT NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CONT’D) 24. CAPITAL MANAGEMENT The Group and the Fund manage their capital to ensure that the Group and the Fund will be able to continue as going concern while maximising the return to unitholders through the optimisation of the debt and equity balance. The Group’s and the Fund’s overall strategy remain unchanged from 2019. The capital structure of the Group and the Fund consist of net debt (borrowings as detailed in Note 17) offset by cash and cash equivalents in Note 14 and unitholders’ fund of the Fund (Note 18) (comprising unitholders’ capital and undistributed income). The Group and the Fund are not subject to any externally imposed capital requirements. However, the Group and the Fund are required to comply with the SC Guidelines on borrowings. The SC Guidelines requires that the total borrowings of the Group and the Fund (including borrowings through issuance of debt securities) should not exceed 60% of the total asset value of the Group and the Fund at the time the borrowings are incurred. Notwithstanding, the Group’s and the Fund’s total borrowings may exceed this limit with the sanction of the unitholders by way of an ordinary resolution. The Manager’s risk management committee reviews the capital structure of the Group and of the Fund on a regular basis to ensure that the SC Guidelines are complied with. Gearing ratios The Group’s and the Fund’s gearing ratios are calculated based on the proportion of total borrowings to the total asset value. The gearing ratios at the end of the reporting period is as follows: Group Fund 2020 2019 2020 2019 RM RM RM RM Total borrowings (Note 17) 633,855,901 597,532,653 117,108,795 435,487,807 Amount due to a subsidiary - - 511,526,831 160,303,801 633,855,901 597,532,653 628,635,626 595,791,608 Total assets value as per statements of financial position 1,254,554,026 1,249,179,745 1,249,072,423 1,246,628,307 Total borrowings to total assets value ratio 50.5% 47.8% 50.3% 47.8% 25. COMMITMENTS The Group and the Fund lease out their investment properties under operating leases. The future minimum lease payments to be received under non-cancellable leases are as follows: Group Fund 2020 2019 2020 2019 RM RM RM RM Less than one year 35,992,210 33,901,493 35,992,210 33,901,493 Between one and five years 184,366,779 174,687,104 184,366,779 174,687,104 More than five years 450,039,591 471,089,070 450,039,591 471,089,070 670,398,580 679,677,667 670,398,580 679,677,667