Wah Seong Corporation Berhad Annual Report 2021 201 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 46 FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) Fair value hierarchy (continued) Level 1 Level 2 Level 3 Total Group RM’000 RM’000 RM’000 RM’000 2021 Financial assets/(liabilities) Derivative financial assets - 135 - 135 Derivative financial liabilities - (533) - (533) Short term investments - 653 - 653 - 255 - 255 2020 Financial assets/(liabilities) Investment in equity instruments 5 - - 5 Derivative financial assets - 2,256 - 2,256 Derivative financial liabilities - (99) - (99) Short term investments - 642 - 642 5 2,799 - 2,804 Level 1 Level 2 Level 3 Total Company RM’000 RM’000 RM’000 RM’000 2021 Financial assets Short term investments - 653 - 653 2020 Financial assets Short term investments - 642 - 642 47 CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital structure in order to continue supporting its businesses, maximise shareholders’ value and sustain future development of businesses within the Group. The Group strives to monitor and maintain an optimal gearing ratio. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as loans and borrowings less time deposits, cash and bank balances. Total capital includes paid-up share capital and reserves attributable to owners of the Company. The Group’s net gearing ratio is 0.87 times (2020: 0.91 times).
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