Datasonic Group Berhad Annual Report 2021

DATASONIC GROUP BERHAD 186 48. FINANCIAL INSTRUMENTS (CONT’D) 48.2 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 includes within total borrowings, loans and borrowings from financial 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 2021 2020 RM’000 RM’000 Trade financing (Note 30) 7,259 30,336 Lease liabilities (Note 26) 912 4,755 Term financing (Note 25) 4,693 5,997 Term loans (Note 24) 47,033 57,784 Total borrowings 59,897 98,872 Total equity 226,316 256,627 Debt-to-equity ratio 0.26 0.39 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. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 (CONT’D)