4 FINANCIAL RISK MANAGEMENT (continued) (b) Capital risk management policies The Group’s and Company’s primary objectives on capital management policies are to safeguard the Group’s and Company’s ability to maintain healthy capital ratios to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group and Company manage its capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial year ended 31 December 2021 and 31 December 2020. The Group considers its debts and equity attributable to owners of the Company as capital and monitor capital using gearing ratio.This ratio is calculated as net debt divided by total capital of the Group and Company. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated statement of financial position), lease liabilities and loan due to a related company less deposits, cash and bank balances. At Company level, net debt also includes loan due to a subsidiary.Total capital is calculated as ‘equity attributable to owners of the Company as shown in the consolidated statement of financial position plus the net debt of the Group and Company. The gearing ratio analysis for the Group and the Company are as disclosed below: Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000 Net debt 602,826 763,273 484,843 672,703 Equity attributable to owners of the Company 1,712,564 1,581,526 1,924,500 1,718,063 Total capital 2,315,389 2,344,799 2,409,343 2,390,766 Gearing ratio 26% 33% 20% 28% The decrease in the Company’s gearing ratio in 2021 is due to full repayment of loan due to a related company and overall lower borrowings level. NOTESTOTHE FINANCIAL STATEMENTS FORTHE FINANCIALYEAR ENDED 31 DECEMBER 2021 SUSTAINABILITY JOURNEY HOWWE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 315
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