UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 295 294 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Fair value Financial instruments that are not measured at fair value and whose carrying amounts are reasonable approximation of fair value Included in these classes of financial instruments are certain financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value: Note Trade and other receivables 20 Cash, bank balances and deposits 23 Borrowings 27 Trade and other payables 28 The carrying amounts of these financial assets and financial liabilities are reasonable approximation of fair values due either to the short term nature or insignificant impact of discounting or that they are floating rate instruments that are repriced to market interest rates on or near the reporting date. Determination of fair value The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities: Significant observable inputs Level 2 RM’000 Group 2021 Assets measured at fair value: Short term investments* 28,310 2020 Assets measured at fair value: Short term investments** 11,799 * The valuation date of these financial instruments is 31 December 2021. ** The valuation date of these financial instruments is 31 December 2020. There have been no transfers between levels during the period. Short term investments are valued based on currently available deposits with similar terms and maturities. 40. CAPITAL MANAGEMENT The primary objective of the Group’s and of the Company’s capital management is to ensure that they maintain a strong credit rating and healthy capital ratios in order to support their business and maximise shareholder value. The Group and the Company also aim to maintain a capital structure that has an appropriate cost of capital available to the Group and the Company. In order to achieve this overall objective, the Group’s capital management, among other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches of the financial covenants of any interest-bearing loans and borrowing in the current period. The Group and the Company manage capital by reference to the debt to asset ratio. The Group’s and the Company’s debt to asset ratio is as follows: Group Company 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Murabahah Term Facility - 38,089 - - Term loans 71,389 78,949 - - Revolving credit 119,948 64,057 52,000 - ICPs - 50,000 - 50,000 IMTNs 252,184 252,059 252,184 252,059 Total debt 443,521 483,154 304,184 302,059 Total assets 2,855,070 2,807,353 1,897,173 1,987,497 Debt to asset ratio 16% 17% 16% 15%
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