Datasonic Group Berhad Annual Report 2020

DATASONIC GROUP BERHAD I ANNUAL REPORT 2020 (Registration No. 200801008472 (809759-X)) 191 Notes to the Financial Statements for the financial year ended 31 March 2020 (Cont’d) 50. FINANCIAL INSTRUMENTS (CONT’D) 50.2 CAPITAL RISK MANAGEMENT The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support its businesses and maximise shareholders value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares. The Group manages its capital based on debt-to-equity ratio that complies with debt covenants and regulatory requirements, if any. The debt-to-equity ratio is calculated as total borrowings divided by total equity. The Group includeswithin total borrowings, loans and borrowings fromfinancial institutions. Capital includes equity attributable to the owners of the parent and non-controlling interest. The debt-to-equity ratio of the Group at the end of the financial year is as follows:- Group 2020 2019 RM’000 RM’000 Trade financing (Note 31) 30,336 43,888 Hire purchase and finance lease payables (Note 26) – 12,279 Lease liabilities (Note 27) 4,755 – Term financing (Note 25) 5,997 7,223 Term loans (Note 24) 57,784 73,240 Total borrowings 98,872 136,630 Total equity 256,627 262,628 Debt-to-equity ratio 0.39 0.52 There was no change in the Group’s approach to capital management during the financial year. The Group is also required to comply with certain loan covenants as disclosed in Note 24 to the financial statements, failing which, the banks may call an event of default. The Group has complied with this requirement.