Kimlun Corporation Berhad Annual Report 2018

31. Financial risk management objectives and policies (cont'd) (c) Interest rate risk (cont'd) Sensitivity analysis for interest rate risk During the financial year, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group's net profit after tax would have increased/decreased by RM1,038,000 (2017: RM492,000) during the year. The assumed movement in basis points for interest rate sensitivity analysis was based on the prior year observable market environment. 32. Capital management The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group 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 years ended 31 December 2018 and 2017. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, loans and borrowings less cash and bank balances whereas total capital comprises equity attributable to owners of the Company. The gearing ratios are as follows: Note 31.12.2018 31.12.2017 1.1.2017 RM RM RM Group Loans and borrowings 22 273,153,771 129,602,722 115,035,316 Less: Cash and bank balances 21 (35,569,427) (86,571,902) (79,025,354) Net debt 237,584,344 43,030,820 36,009,962 Total equity 664,796,263 607,792,238 539,262,844 Capital and net debt 902,380,607 650,823,058 575,272,806 Gearing ratio 26.3% 6.6% 6.3% 33. Segment information For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows: (i) Construction (ii) Manufacturing and trading of construction materials and provision of quarry services (iii) Investment holding (iv) Property development Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties. Kimlun Corporation Berhad 115 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2018 (cont’d)